SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31,
1993; or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number: 0-12024
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MAXICARE HEALTH PLANS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 95-3615709
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1149 South Broadway Street, Los Angeles, California 90015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (213) 765-2000
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
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(Title of Class)
Warrants to purchase 555,555 shares of Common Stock
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(Title of Class)
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Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
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Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K.
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Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
YES X NO
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The aggregate market value of the voting stock held by non-
affiliates of the registrant as of March 18, 1994:
Common Stock, $.01 par value - $147,322,656
Preferred Stock, $.01 par value - $96,693,480
The number of shares outstanding of each of the issuer's classes
of capital stock, as of March 18, 1994:
Common Stock, $.01 par value - 10,073,344 shares
Preferred Stock, $.01 par value 2,400,000 shares
As of March 18, 1994, Registrant had 1,075,085 shares of Common
Stock being held by the Registrant, as disbursing agent for the
benefit of holders of allowed claims and interests under the
Registrant's Joint Plan of Reorganization.
DOCUMENTS INCORPORATED BY REFERENCE
None.
<PAGE>
PART I
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Item 1. Business
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General
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Maxicare Health Plans, Inc., a Delaware corporation (the "Company")
is a managed health care company, with a combined enrollment of
approximately 293,000 at January 1, 1994. The Company owns and
operates a system of 7 health maintenance organizations ("HMOs") in
7 states including California, Indiana, Illinois, Louisiana, North
Carolina, South Carolina, and Wisconsin and three preferred provider
organizations ("PPOs") called Maxiselect. Through its HMO
operations, the Company arranges for comprehensive health care
services to its members for a predetermined prepaid fee. The
Company provides these services by contracting on a prospective
basis with physician groups for a fixed fee per member per month
regardless of the extent and nature of services, and with hospitals
and other providers under a variety of fee arrangements. The
Company believes that an HMO offers certain advantages over
traditional health insurance:
- To the member, an HMO offers comprehensive and coordinated
health care programs, including preventive services,
generally without requiring claims forms.
- To the employer, an HMO offers an opportunity to improve the
breadth and quality of health benefit programs available to
employees and their families without a significant increase
in cost or administrative burdens.
- To the health care provider, such as physician groups and
hospitals, an HMO provides a more predictable revenue
source.
The Company's executive offices are located at 1149 South Broadway
Street, Los Angeles, California 90015, and its telephone number is
(213)765-2000.
History
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On December 5, 1990, Maxicare Health Plans, Inc., a California
corporation whose shares were publicly traded and the former parent
company of the Company's businesses ("MHP"), merged with and into
HealthCare USA Inc., a Delaware corporation ("HealthCare"), one of
its wholly-owned subsidiaries, for the purpose of reincorporating
from the state of California into the state of Delaware.
Except as expressly provided herein or where the context requires,
references to "MHP" and the "Company" herein pertain to both pre-
merger Maxicare Health Plans, Inc., a California corporation, and to
post-merger Maxicare Health Plans, Inc., a Delaware corporation.
<PAGE>
The HMO business of the Company originated in California in 1973.
The business was operated as a nonprofit corporation through 1980.
The Company was incorporated in California on December 23, 1980, to
serve as a holding company for the California HMO and related
entities. At the end of 1980, the California HMO was converted to a
for-profit corporation. The Company began multi-state operations in
June 1982 by purchasing 100% of CNA Health Plans, Inc.
As part of its expansion strategy, the Company acquired all of the
stock of HealthCare and HealthAmerica Corporation ("HealthAmerica")
in the fourth quarter of 1986. At that time, HealthCare owned or
managed HMOs in three states and HealthAmerica owned or managed HMOs
in 17 states, including 11 states not previously serviced by the
Company.
The business of the Company's corporate predecessor, HealthCare,
commenced in December 1968 when, through a predecessor corporation,
it opened its first hospital. HealthCare was initially incorporated
in January 1981 under the name of Greatwest Hospitals Inc.
HealthCare's first HMO was acquired on December 30, 1981 through a
merger with General Medical Centers, Inc.
The acquisitions of HealthCare and HealthAmerica were highly
leveraged and resulted in a substantial increase in the Company's
long-term debt. These acquisitions, combined with adverse industry
conditions and inadequate pricing policies, produced a dramatic
deterioration in the Company's operating performance and financial
condition.
These financial difficulties ultimately caused certain of the
Company's HMOs to fall out of compliance with state regulations and
its loan agreement with various banks (the "Bank Group") and to
default under the terms of its public indebtedness.
As a result of deteriorating financial, operational and regulatory
situations, MHP and forty-seven affiliated entities filed for
protection under Chapter 11 of the United States Bankruptcy Code
(the "Bankruptcy Code") in March and April of 1989 (the "Petition
Dates"). Hereinafter, all 48 entities which filed bankruptcy
petitions may from time to time be referred to as the "Debtors".
Under the Bankruptcy Code, substantially all pre-petition
liabilities, contingencies and other contractual obligations of the
Debtors, except those expressly assumed by them, were discharged
upon emergence from Chapter 11 on December 5, 1990, the "Effective
Date" of the plan of reorganization (the "Reorganization Plan"). On
or shortly after the Effective Date, the Company transferred
approximately $85.4 million of cash to be distributed under the
Reorganization Plan to segregated bank accounts and issued global
certificates evidencing $67.0 million principal amount of 13.5%
Senior Notes due December 5, 2000 (the "Senior Notes"), 10,000,000
shares of Common Stock and warrants to purchase an additional
555,555 shares of Common Stock (the "Warrants") to be distributed to
holders of allowed claims and interests under the Reorganization
Plan.
As of January 31, 1994, approximately $85.5 million in cash, $39.7
million principal amount of Senior Notes, $18.2 million of cash in
lieu of the now redeemed Senior Notes (see "Item 8. Financial
Statements and Supplementary Data - Note 3 to the Company's
Consolidated Financial Statements"), 8.9 million shares of Common
<PAGE>
Stock and 8,858 Warrants to purchase Common Stock had been
distributed to holders of allowed claims. The remaining amounts of
cash and securities will be distributed to holders of allowed claims
upon adjudication of the remaining disputed claims pursuant to a
formula set forth in the Reorganization Plan.
In addition to the foregoing, certain assets of the Debtors which
were not retained by the reorganized Company were transferred to a
distribution trust for liquidation on behalf of the creditors (the
"Distribution Trust") after reimbursement of expenses of the
Distribution Trust. As of January 31, 1994, $8.9 million has been
disbursed by the Distribution Trust to the disbursing agent. The
Company anticipates that future distributions will be made from the
Distribution Trust.
Pursuant to the Reorganization Plan, the Company is required to make
distributions based on its consolidated net worth in excess of $2.0
million at December 31, 1991 and 1992 (the "Consolidated Net Worth
Distribution"). In March 1992, the Company consummated the sale of
$60 million of Series A Cumulative Convertible Preferred Stock (the
"Series A Stock") (see "Item 8. Financial Statements and
Supplementary Data - Note 6 to the Company's Consolidated Financial
Statements"). The proceeds from this sale, plus internally
generated cash, were utilized to redeem in April 1992 the entire
outstanding Senior Notes. The sale of the Series A Stock had the
effect of significantly increasing the net worth of the Company.
The Company does not believe the Reorganization Plan contemplated
either the issuance of the Series A Stock or the redemption of the
Senior Notes, and accordingly, the Company believes the Consolidated
Net Worth Distribution required by the Reorganization Plan should be
calculated on a basis as if the sale of the Series A Stock had not
been consummated and the Senior Notes had not been redeemed. As a
result of the foregoing, the Company calculated the December 31,
1992 Consolidated Net Worth Distribution amount to be approximately
$971,000, which was deposited for distribution to certain creditors
under the Reorganization Plan in March 1993. In addition, the
Company believes that any Consolidated Net Worth Distribution which
under the Reorganization Plan is to be utilized to redeem the Senior
Notes is no longer due as the Senior Notes have been fully redeemed.
The committee representing the creditors (the "New Committee") has
stated it does not agree with the Company's interpretation of the
the Reorganization Plan and believes that additional amounts may be
due under the Consolidated Net Worth Distribution provision of the
Reorganization Plan. The Company has responded to various inquiries
of the New Committee and may engage in future discussions in an
attempt to resolve any disputed items. Notwithstanding the
foregoing, the Company elected to accrue in its consolidated
financial statements for the year ended December 31, 1992 the
maximum potential liability of $7.2 million on this matter (see
"Item 8. Financial Statements and Supplementary Data").
The Bankruptcy Court retains jurisdiction over implementation and
interpretation of the Reorganization Plan and, pursuant to a
stipulation with the South Carolina regulators, over the operations
of the South Carolina HMO, until all regulatory approvals regarding
this HMO have been obtained (see "Item 1. Business - Government
Regulation").
<PAGE>
The Managed Health Care Industry
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The Company owns and operates a multi-state system of HMOs. An HMO
is an organization that arranges for health care services to its
members. For these services, the members' employers pay all or most
of the predetermined fee that does not vary with the nature or
extent of health care services provided to the member, and the
member pays a relatively small copayment or deductible for certain
services. The fixed payment distinguishes HMOs from conventional
health insurance plans that contain customary copayment and
deductible features and also require the submission of claims forms.
An HMO receives a fixed amount from its members regardless of the
nature and extent of health care services provided, and as a result,
an HMO has an incentive to keep its members healthy and to manage
its costs through strategies such as monitoring hospital admissions
and reviewing specialist referrals by primary care physicians. The
goal is to combine the delivery of and access to quality health care
services with effective management controls to make the most cost-
effective use of health care resources.
Although HMOs have been operating in the United States for half a
century, their popularity began increasing in the 1970's in response
to rapidly escalating health care costs and enactment of the Federal
Health Maintenance Organization Act of 1973, a federal statute
designed to promote the establishment and growth of HMOs (see "Item
1. Business - Government Regulation").
There are four basic organizational models of HMOs which are the
staff, group, independent practice association and network models.
The distinguishing feature between models is the HMO's relationship
with its physicians. In the staff model, the HMO employs the
physicians directly at an HMO facility and compensates the
physicians by salary and other incentive plans. In the group model,
the HMO contracts with a multi-specialty physician group which
provides services primarily for HMO members and receives a fixed
monthly fee, known as capitation, for each HMO member, regardless of
the number of physician visits. Under the independent practice
association model, the HMO either contracts with a physicians'
association, which in turn contracts directly with individual
physicians, or contracts directly with individual physicians. In
either case, these physicians provide care in their own offices.
Under the network model of organization, the HMO contracts with
numerous community multi-specialty physician groups, hospitals and
other health care providers. The physician groups are paid on a
capitation basis, as in the group model, but medical care is usually
provided in the physician's own facilities. The Company's HMOs
include only network, group and independent practice association
models. For the year ended December 31, 1993, 58% of the Company's
health care expenses represented capitation payments to providers.
PPOs are generally a network of health care providers which offer
their services to health care purchasers, such as employers. PPO
members choose from among the various contracting physician groups
and independent practice associations (the "Physician Groups") the
particular group from which they desire to receive their medical
care, or choose a noncontracting physician and are reimbursed on a
traditional indemnity plan basis after reaching an annual
deductible. Payment is based on some variation of fee-for-service
<PAGE>
reimbursement and health care services are determined by the terms
of the contract. The Company's PPO business began in Indiana,
California and Louisiana in the fourth quarters of 1989, 1990 and
1992, respectively. In the third quarter of 1993 the Company
introduced a primary care physician network product ("PCPN") to a
Louisiana employer group with a health care plan which is self-
insured. Under the PCPN, eligible members of the employer group may
choose the Company's contracted physician network for their primary
care services for a period of one year. The Company's PPO and PCPN
lines of business represent approximately five percent (5%) of the
Company's combined enrollment at December 31, 1993. The Company
believes that the PPO and PCPN products offered by Maxicare Life and
Health Insurance Company, a wholly-owned subsidiary of the Company,
expand the options for members, while maintaining the concept of
managed health care and is exploring the possibility of offering the
PPO business and additional products and indemnity services in other
markets.
Health Care Services
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In exchange for a predetermined monthly payment, an HMO member is
entitled to receive a broad range of health care services. Various
state and federal regulations require an HMO to offer its members
physician and hospital services, and permit an HMO to offer certain
supplemental services such as dental care and prescription drug
services at an additional cost (see "Item 1. Business - Government
Regulation"). As of December 31, 1993, the Company's HMOs had
contracts with approximately 300 hospitals in 7 states and the
Company owns and operates 3 pharmacies in California.
The Company's members generally receive the following range of
health care services:
Primary Care Physician Services - medical care provided by
primary care physicians (typically family practitioners,
general internists and pediatricians). Such care generally
includes periodic physical examinations, well-baby care and
other preventive health services, as well as the treatment of
illnesses not requiring referral to a specialist.
Specialist Physician Services - medical care provided by
specialist physicians on referral from the responsible primary
care physicians. The most commonly used specialist physicians
include obstetrician-gynecologists, cardiologists, surgeons and
radiologists.
Hospital Care - inpatient and outpatient hospital care
including room and board, diagnostic tests, and medical and
surgical procedures.
Diagnostic Laboratory Services - inpatient and outpatient
laboratory tests.
Diagnostic and Therapeutic Radiology Services - X-ray and
nuclear medicine services, including CT scans and therapeutic
radiological procedures.
<PAGE>
Home Health Services - medical and surgical procedures
performed on an outpatient basis, including emergency room
services where such services are medically necessary,
outpatient surgical procedures, evaluation and crisis
intervention, mental health services, physical therapy and
other similar services in which hospitalization is not
medically necessary or appropriate.
Other Services - other related health care services such as
ambulance, family planning and infertility services and health
education (including prenatal nutritional counseling, weight-
loss and stop-smoking programs).
Additional optional services include in-patient psychiatric care,
hearing aids, durable medical supplies and equipment, dental care,
vision care, chiropractic care and prescription drug services.
Delivery of Health Care Services
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The Company's HMOs provide for a portion of the health care
services to its members by contracting on a prepaid basis with
physician groups. The Company's HMOs typically pay to the
physician groups a monthly capitation fee for each member assigned
to the group. The amount of the capitation fee does not vary with
the nature or extent of services utilized. In exchange for the
capitation fee, the physician groups provide professional services
to members, including laboratory services and X-rays. Members
choose from among the various contracting physician groups the
particular group from which they desire to receive their medical
care.
Members select a primary care physician to serve as their personal
physician from the physician group. This physician will oversee
their medical care and refer them to a specialist when medically
necessary. In order to attract new members and retain existing
members, the Company's HMOs must retain a network of quality
physician groups and develop agreements with new physician groups.
The Company's HMOs contract for hospital services with various
hospitals under a variety of arrangements, including fee-for-
service, discounted fee-for-service, per diem and capitation.
Hospitalization costs are not generally included in the capitation
fee paid by the Company's HMOs to physician groups. Except in
emergency situations, a member's hospitalization must be approved
in advance by the utilization review committee of the member's
physician group and must take place in hospitals affiliated with
the Company's HMOs. When emergency situations arise, however,
which require medical care by physicians or hospitals not
affiliated with the Company's HMOs, the Company's HMOs assume
financial responsibility for the cost of such care.
In mid 1992 the Company began restructuring its provider network in
the Indianapolis marketplace as a result of the termination of
contract negotiations with MH Healthcare, Inc. ("MetroHealth"), a
health care provider in that market. Pursuant to the contract
which expired on December 31, 1992, the enrollees in Indianapolis
who use the MetroHealth facilities, comprising approximately 8% of
the Company's total enrollment at December 31, 1993, will continue
to have access to MetroHealth providers through March 31, 1994.
<PAGE>
MetroHealth currently offers its own HMO in the Indianapolis area.
The restructuring of the Company's relationships among health care
providers in the Indiana marketplace contributed to an increase in
health care expenses (see "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations"). The
provider network restructuring which began in mid 1992 has been
substantially completed as of the first quarter of 1994. Total
enrollment in the Indiana HMO decreased approximately 22% during
the first quarter of 1994 from December 31, 1993 but the Company
believes that it will ultimately be able to replace a substantial
number of the members who remain with MetroHealth and that the
restructuring of the provider network will not have a long-term
adverse impact on the Company's operations.
Premium Structure and Cost Control
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The Company generally sets its membership fees, or premiums,
pursuant to a community rating system which means that it charges
the same nominal premium per class of subscriber within a
geographic area for like services; however, groups which meet
certain enrollment requirements are charged premiums based on prior
cost experience (see "Item 1. Business - Government Regulation").
The Company has attempted to develop uniform procedures and
guidelines to manage medical care costs. These procedures and
guidelines include the annual negotiation of the capitation fee
paid to physician groups, hospitals, dentists and pharmacies, the
negotiation of discount contracts with other health care providers
and the placement of financial responsibility on the primary care
physician for the initiation of specialist referrals and hospital
utilization. In situations where the Company assumes the financial
responsibility for specialist referrals and hospital utilization,
health care providers are rewarded monetarily for specified levels
of utilization through incentive programs.
In addition to directing the Company's health care providers toward
capitation arrangements, the Company has a variety of programs and
procedures in place to effect cost containment. These programs are
intended to address utilization of inpatient services, outpatient
services and referral services which: (i) verify the medical
necessity of inpatient nonemergency treatment or surgery, (ii)
establish whether services must be performed in an inpatient
setting or could be done on an outpatient basis; and (iii)
determine the appropriate length of stay for inpatient services,
which may involve concurrent and/or retrospective review. In
addition, the Company revised the terms and procedures of its
pharmacy plan which incorporates such cost containment features as
drug formularies (a Company-developed listing of preferred, cost-
effective drugs).
The Company establishes an annual budget for each geographic area
and determines the expected costs of providing services in such
areas. The budget is calculated on a per member per month basis
for specific components. These include professional care by the
contracting Physician Groups; hospitals; prescription drug and
<PAGE>
dental care services; emergency care; other health care services;
and administration. The Company budgets hospital costs on the
basis of utilization experience, actual cost per member per month,
expected inflation and anticipated changes in health care delivery.
For further information, see "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
"Item 8. Financial Statements and Supplementary Data-Consolidated
Statements of Operations" included herein.
Management Information Systems
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All of the Company's HMOs are currently linked through a network of
data lines to the corporate data center, allowing the Company to
prepare and make available management and accounting reports
including eligibility, capitation, billing and claims information
on an ongoing basis. System generated reports contain budgeted and
actual monthly cost and utilization statistics relating to
physician initiated services and hospitalization. Hospital
reports, which are available on a daily basis, are further analyzed
by the type of service, days paid, and actual and average length
and cost of stay by type of admission. The corporate data center
is located in Los Angeles.
Quality Assurance
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As required by federal and state law, the Company evaluates the
quality and appropriateness of the medical care delivered to its
members by its independently contracted providers in a number of
ways including performing periodic medical care evaluation studies,
analyzing monthly utilization of certain services, conducting
periodic member satisfaction studies and reviewing and responding
to member and physician grievances.
The Company compiles a variety of statistical information
concerning the utilization of various services, including emergency
room care, outpatient care, out-of-area services, hospital services
and physician visits. Under-utilization as well as over-
utilization is closely evaluated in an effort to monitor the
quality of care provided to the Company's members by physician
groups.
The Company has a member services department which deals directly
with members concerning their health care questions, comments,
concerns or grievances. The Company conducts annual surveys
questioning members about their level of satisfaction with the
services they receive. Management reviews any problems that are
presented by members concerning the delivery of medical care and
receives periodic reports summarizing member grievances.
Marketing
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Primary responsibility for the Company's marketing efforts rests
with a marketing director and sales representatives for each HMO
operated by the Company. Members typically join the Company's HMOs
through an employer, who pays all or most of the monthly premium.
In most instances, employers offer employees a choice of
<PAGE>
traditional health insurance or membership with HMOs such as those
operated by the Company. The Company's HMOs' agreements with
employers are generally for a term of 12 months subject to renewal
annually. Once the Company's relationship with the employer is
established, marketing efforts are then focused on employees.
During an annual "open enrollment period", employees may select
their desired health care coverage. The primary annual open
enrollment period occurs in the month of January. By the end of
January, approximately 62% of the Company's members select their
desired health care coverage for the ensuing annual period. New
employees make their choices at the time of employment. The
Company's HMO membership is widely diverse, with no employer group
comprising 10% or more of the Company's total enrollment. As of
December 31, 1993, the Company's HMOs were offered by more than
1,400 employer groups.
The Company has also developed a multi-state account program which
offers employers having multiple locations in areas served by the
Company's HMOs the opportunity to deal with one primary account
manager. Billing and enrollment procedures are handled at a plan
level giving the multi-state employer the opportunity to monitor
individual areas within his employer group. For certain multi-
state employers, the Company develops individual marketing and
benefit programs for separate divisions, locations or benefit
classes within the same employer.
The Company believes that attracting employers is only the first
step toward increasing enrollment at each of its HMOs; ultimately,
the Company's ability to retain and increase membership will depend
upon how users of the health care system assess its benefit
package, rates, quality of service, financial condition and
responsiveness to user demands.
Competition
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The health care industry is highly competitive and the managed
health care industry is becoming increasingly competitive in all
markets. The HMO industry continues to gain market share,
particularly at the expense of the indemnity carriers. The Company
competes in its regional markets for employers and members with
other HMOs, conventional health insurers and PPOs as well as
employers who elect to self-insure, and for quality physician
groups with other HMOs and PPOs. Many of these competitors are
larger or have greater financial resources than the Company. The
level of competition varies from state to state depending on the
variety and size of other conventional insurance, HMO and PPO
health care services offered in each state. Competitors of the
Company include such well known entities as Kaiser, Health Net and
Pacificare (in California), MetroHealth (in Indiana), and HMO
Illinois, Partners National Health Plan, Humana and Chicago HMO (in
Illinois).
The Company believes the principal competitive factors it faces are
premium rates, the quality of contracted providers, the variety of
health care coverage options offered and the quality of service to
members and providers. Competition may result in pressure to
reduce rates or limit the growth potential of HMOs in any
particular market. Employers, for example, are increasingly cost
sensitive in selecting health care providers for their employees,
which provides an incentive for the Company to keep its rates
competitive. In addition to the above, the Company has recently
<PAGE>
faced increased competition from health care providers which offer
not only HMO services but PPO and indemnity health care services to
employer groups. In an effort to remain competitive, the Company
has begun to offer a variety of health care services, including
PPOs, and is actively exploring offering additional PPO and
indemnity services through joint ventures or other arrangements.
Competition may also be affected by mergers and acquisitions in the
managed care and general health care industries as companies
respond to proposed health care reform and seek to expand their
operating territories to gain economies of scale and market share.
Government Regulation
---------------------
The federal government and each of the states in which the
Company's HMOs operate have enacted statutes regulating the
activities of HMOs. The most important laws affecting the Company
are the Federal Health Maintenance Organization Act of 1973, as
amended (the "HMO Act"), and the regulations thereunder promulgated
by the Secretary of Health and Human Services, and the various
state regulations mandating compliance with certain net worth and
other financial tests.
Federal Regulations. All of the Company's HMOs are federally
qualified under the HMO Act. The HMO Act and regulations provide
that, with certain exceptions, each employer of at least 25
employees must permit two "qualified" HMOs to market a health
benefits plan to its employees, with the employer contributing the
same amount toward the employee's HMO enrollment fee as it would
otherwise have paid for conventional health care insurance. Under
federal regulations, services to members must be provided
substantially on a fixed prepaid monthly basis, without regard to
the actual level of utilization of services. Premiums established
by HMOs may vary from employer to employer through composite rate
factors and special treatment of certain broad classes of members,
including geographical location ("community rating"). Experience
rating of accounts (i.e., setting premiums for a group account
based on that group's past use of health care services) is also
permitted under federal regulations in certain circumstances. From
time to time, modifications to the HMO Act have been considered by
Congress. The Company is unable to predict what, if any,
modifications to the HMO Act will be passed into law or what
effect, if any, such legislation would have upon the operations,
profitability or business prospects of the Company.
Among other areas regulated by federal and state law, although not
necessarily by each state, are the scope of benefits available to
members, the manner in which premiums are structured, procedures
for review of quality assurance, enrollment requirements, the
relationship between the HMO and its health care providers,
procedures for resolving grievances, licensure, expansion of
service area, and financial condition. The HMOs are subject to
periodic review by the federal and state licensing authorities
which regulate the HMOs.
State Regulations. With the exception of the Company's South
Carolina HMO, all of the Company's operational HMOs are licensed by
pertinent state authorities. The operations of the South Carolina
HMO are currently under Bankruptcy Court jurisdiction pending a
<PAGE>
reorganization of that entity as a division of one of the Company's
other HMOs. The Company believes that it will be able to
ultimately resolve the South Carolina HMO's licensing situation by
changing its legal structure to that of a division of another one
of its operating HMOs, or as a separately licensed HMO in the state
of South Carolina. Presently, the Company is discussing with the
North Carolina Department of Insurance the possibility of operating
the South Carolina HMO as a division of the North Carolina HMO. In
any event, the Company does not believe that the resolution of this
situation will have a materially adverse effect on the Company
taken as a whole.
All of the Company's HMOs are subject to extensive state
regulations which require the HMO to comply with certain net worth
and other financial tests. A number of states have recently
enacted legislation which increases these financial tests. To the
extent an HMO fails to satisfy these regulatory requirements, MHP
may need to infuse the HMO with additional capital in order to
maintain the good standing of the HMO in the state. Under the
HMO's business plans and in order to ensure financial compliance
with state regulators, the Company is currently operating under a
decentralized and segregated cash management system. The Company
has implemented administrative services agreements which provide
for MHP to furnish various management, financial, legal, computer
and telecommunication services to the HMOs pursuant to the terms of
the agreement with each HMO.
The Company believes that it is currently operating in compliance
with the state regulations and has obtained regulatory approval of
the operational and financial plans and related administrative
services agreements for its HMOs.
The issue of health care reform continues to undergo intense
discussion and examination by the public and private sectors. A
number of proposals for health care reform have been introduced by
both state and federal governments which include such concepts as
universal coverage, comprehensive benefits, quality in the delivery
of health care at an affordable price and portability of coverage
for the insured. Many proposals are still being developed. Though
the role of managed care appears to be an integral part in most
proposals, the Company cannot determine the effect, if any, these
proposals may have on the business or operations of the Company, if
adopted.
Employees
---------
As of December 31, 1993, the Company employed approximately 465
full-time employees. None of the Company's employees are
represented by a labor union or covered by a collective bargaining
arrangement and the Company believes its employee relations are
good.
<PAGE>
Directors and Executive Officers of the Registrant
--------------------------------------------------
The directors and executive officers of the Company at December 31,
1993 were as follows:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Peter J. Ratican 50 Chairman of the Board of
Directors, Chief Executive
Officer and President
Eugene L. Froelich 52 Chief Financial Officer,
Executive Vice President -
Finance and Administration
and Director
Alan D. Bloom 48 Senior Vice President,
Secretary and General
Counsel
Aivars L. Jerumanis 55 Senior Vice President -
Management Information
Systems and Chief
Information Officer
Richard A. Link 39 Chief Accounting Officer
and Senior Vice President -
Accounting
Samuel W. Warburton, M.D. 50 Senior Vice President -
Medical Affairs
William B. Caswell 38 Vice President, General
Manager - Maxicare California
David J. Hammons 43 Vice President -
Administrative Services,
Chief Actuary
Robert J. Landis 34 Treasurer
Vicki F. Perry 41 Vice President, General
Manager - Maxicare Indiana
Claude S. Brinegar 67 Director
Leon M. Clements 52 Director
Florence F. Courtright 61 Director
Thomas W. Field, Jr. 60 Director
Charles E. Lewis 65 Director
</TABLE>
<PAGE>
Peter J. Ratican was appointed Chairman of the Board of Directors,
Chief Executive Officer and President of the Company in August
1988. Prior to joining the Company, Mr. Ratican was a senior
executive of DeLaurentiis Entertainment Group Inc. and MCA INC.
Prior to joining MCA INC., Mr. Ratican was a Senior Audit Manager
for the Los Angeles Office of Price Waterhouse, specializing in the
entertainment and health care industries. He is a member of the
California Knox-Keene Health Care Services Advisory Committee,
which assists the California Department of Corporations in
regulating prepaid health plans (HMOs). Mr. Ratican has been a
director of the Company since August 1983. He received a Bachelor
of Science degree in Accounting from the University of California
at Los Angeles and is a certified public accountant.
Eugene L. Froelich was appointed Chief Financial Officer, Executive
Vice President - Finance and Administration and director in March
1989. From 1984 to March 1989, Mr. Froelich was President of GFE,
Inc., where he engaged in financial and business consulting for a
variety of industries. Previously, Mr. Froelich was Vice President
of MCA INC. Mr. Froelich graduated from Adelphi University and is
a certified public accountant.
Alan D. Bloom has been Senior Vice President - Secretary and
General Counsel to the Company since July 1987. Mr. Bloom joined
the Company as General Counsel in 1981 and from 1983 to 1987, he
was Secretary and General Counsel. Mr. Bloom received a Bachelor's
degree in Biology from the University of Chicago, a Master of
Public Health from the University of Michigan, and a J.D. degree
from American University.
Aivars L. Jerumanis was appointed Senior Vice President -
Management Information Systems and Chief Information Officer of the
Company in January 1990. From May 1989 to January 1990, Mr.
Jerumanis was a private consultant in advising companies on
management information services matters and from June 1973 to May
1989 he was with MCA INC., where he served as Director of Corporate
Data Processing and Vice President of Universal Studios. He
received a Masters in Business Administration from Columbia
University, a Masters in Civil Engineering from Rensselaer
Polytechnic Institute and a Bachelor's degree in Civil Engineering
from Lafayette College.
Richard A. Link was appointed Chief Accounting Officer and Senior
Vice President - Accounting of the Company in September 1988.
Previously, Mr. Link was in the Los Angeles offices of Price
Waterhouse where he had been Senior Audit Manager with an emphasis
in health care. He has a Bachelor's degree in Business
Administration from the University of Southern California and is a
certified public accountant.
Samuel W. Warburton, M.D. has been Senior Vice President - Medical
Affairs of the Company since December 1988. As of April 1993, Dr.
Warburton serves in this position as well as medical director of
the North Carolina ACCESS program, a primary care case management
program for medicaid enrollees. He has also served as Vice
President of Medical Affairs of Maxicare North Carolina, Inc. since
May 1985. From January 1980 to April 1985, Dr. Warburton was Chief
of the Division of Family Medicine at Duke University and a
Director of the Duke-Watts Family Medicine Program. Dr. Warburton
has had a number of teaching and clinical appointments and
<PAGE>
published numerous articles on family medicine. He received his
Bachelor of Arts from John Hopkins University and his Medical
degree from the University of Pennsylvania School of Medicine.
William B. Caswell was appointed Vice President, General Manager of
the California HMO in February 1992. From March 1988 to January
1992 Mr. Caswell served as President of VertiHealth, a subsidiary
of UniHealth America. Prior to joining VertiHealth he was Senior
Vice President of California Medical Center - Los Angeles. Mr.
Caswell serves on the board of directors of the University of
Southern California School of Nursing as well as the Southern
California Chapter of the Arthritis Foundation. He received a
Master's degree in Business Administration and a Master of Public
Health from the University of California at Los Angeles.
David J. Hammons was appointed Vice President - Administrative
Services and Chief Actuary of the Company in August 1993. From
January 1988 to July 1993 Mr. Hammons was Vice President and Chief
Actuary of the Company. He has a Bachelor's degree in Mathematics
from the State University of New York and is a Fellow of the
Society of Actuaries and a member of the American Academy of
Actuaries.
Robert J. Landis has served as Treasurer since November 1988.
Prior to this date, he served as Assistant Treasurer since December
1983. Mr. Landis received a Bachelor's degree in Business
Administration from the University of Southern California, a
Master's degree in Business Administration from California State
University at Northridge and is a certified public accountant.
Vicki F. Perry was appointed Vice President, General Manager of
Maxicare Indiana, Inc. in January 1992. From January 1990 to
December 1991 she served as Executive Vice President - Plan
Operations Support of the Company. Ms. Perry, who has been with
the Company since 1982, previously served as Executive Director of
the Indiana HMO. Ms. Perry is a graduate of Indiana University.
Claude S. Brinegar is currently Vice Chairman of the board of
directors of Unocal Corporation and served as Executive Vice
President of Administration and Planning until May 1992. In 1985,
Mr. Brinegar was elected Executive Vice President of Unocal and he
became Chief Financial Officer in 1986. In 1989, Mr. Brinegar was
elected as Vice Chairman of Unocal and has been a director of the
Company since December 20, 1991. He is also a member of the board
of directors of Consolidated Rail Corporation and a visiting
scholar at Stanford University.
Leon M. Clements served as Chief Administrative Officer and
Associate Director of the UCLA Medical Group Practice from April
1993 to October 1993. Mr. Clements is currently self-employed as a
consultant. From July 1990 to October 1992 Mr. Clements served as
Chief Administrative Officer of Cleveland Clinic in Fort Lauderdale
Florida. From November 1986 to June 1990 Mr. Clements was Chief
Executive Officer with Browne-McHardy Clinic, a major health care
provider for the Company's HMO in New Orleans, Louisiana. Mr.
Clements has a Bachelor of Science degree in Economics and Finance
and a Masters of Business Administration from the University of
Southwestern Louisiana and served as a director of the Company from
August 31, 1990 to January 28, 1994. Mr. Clements was the chairman
<PAGE>
of the Official Committee of Unsecured Creditors (the "OCC") during
the Company's bankruptcy reorganization proceedings.
Florence F. Courtright has been a private investor for the last
five years and was elected a director of the Company on November 5,
1993. She is a founding Limited Partner of Bainco International
Investors, 1.p and a Trustee of Loyola Marymount University.
Further, Ms. Courtright is a former co-owner of the Beverly
Wilshire Hotel and the Beverly Hills Hotel.
Thomas W. Field, Jr. was appointed the Chairman of the Board of
ABCO Markets in December 1991. ABCO Markets is in the grocery
business. He has been President of Field & Associates, a
management consulting firm, since October 1989. From 1984 to
September 1989 Mr. Field was with McKesson Corporation in a number
of executive capacities, most recently as Chairman of the Board,
President and Chief Executive Officer. Mr. Field has been a
director of the Company since April 1, 1992. Mr. Field also holds
directorships at Campbell Soup Company, Bromar Inc. and Hume
Medical.
Charles E. Lewis has been a Professor of Medicine, Public Health
and Nursing at the University of California at Los Angeles, since
1970. As of July 1993, he was appointed Director of the Center of
Health Promotion and Disease Prevention. He is a member of the
Institute of Medicine, National Academy of Sciences and is a
graduate of the Harvard Medical School and of the University of
Cincinnati School of Public Health where he received a Doctorate of
Science degree. Dr. Lewis is a Regent of the American College of
Physicians and a member of the Board of Commissioners of the Joint
Commission on Accreditation of Health Care Organizations. Dr. Lewis
has been a director of the Company since August 1983.
The Board of Directors (the "Board") is classified into Class I,
Class II and Class III directors. Class I directors include Dr.
Lewis and Mr. Brinegar and they will serve until the 1994 annual
meeting of stockholders and until their successors are duly
qualified and elected. Class II directors include Mr. Froelich and
Ms. Courtright and they will serve until the 1995 annual meeting of
stockholders and until their successors are duly qualified and
elected. Class III directors include Mr. Ratican, Mr. Field and
Mr. Clements and they will serve until the 1993 annual meeting of
stockholders and until their successors are duly qualified and
elected. Officers are elected annually and serve at the pleasure
of the Board, subject to all rights, if any, under certain
contracts of employment (see "Item 11. Executive Compensation").
Pursuant to the Reorganization Plan, Mr. Clements was added to the
Board as a designee of the pre-petition creditors. Dr. Lewis was
added to the Board as an independent director and Messrs. Ratican
and Froelich continued to serve as directors. Messrs. Brinegar and
Field and Ms. Courtright were appointed to the Board.
On January 28, 1994 the Company's shareholders at the 1993 Annual
Meeting of Stockholders elected Alan S. Manne as a Class I
director, replacing Leon Clements, and re-elected Peter Ratican and
Thomas Field each for three year terms ending at the 1996 Annual
Meeting of Stockholders or until his successor is duly qualified
and elected. Mr. Manne is currently a professor emeritus and from
<PAGE>
1961 to 1992 was a professor of operations research at Stanford
University. He is an author, or co-author, of seven books and
received his Ph.D. in economics from Harvard University. He is co-
organizer of the International Energy Workshop.
<PAGE>
Item 2. Properties
----------
The Company's operating facilities are held through leaseholds. At
December 31, 1993, the Company or its HMOs leased approximately
222,000 square feet at 21 locations with an aggregate current
monthly rental of approximately $250,000. These leases have
remaining terms of up to eight years.
In August 1990, the Company entered into a lease for new corporate
office space in Los Angeles. The lease commenced in February 1991
and is for a term of sixty-four (64) months. The lease is for
approximately 83,000 square feet with a monthly base rental expense
of approximately $98,500 excluding the Company's percentage share
of all increases in the landlord's operating cost of the building.
At December 31, 1993 the Company leased other properties including
administrative locations, 3 pharmacies, and other miscellaneous
facilities. The Company has subleased approximately 11,000 square
feet to contracting medical groups, with current monthly rentals
totaling $16,000 and monthly subrental revenue of $17,000.
<PAGE>
Item 3. Legal Proceedings
-----------------
a. JURISDICTIONAL CHALLENGES AND APPEALS TO THE CHAPTER 11
REORGANIZATION PROCEEDINGS
Immediately after the filing of the petitions, the Debtors were
faced with several motions challenging the jurisdiction of the
Bankruptcy Court over the Debtors' Chapter 11 cases. As of March
11, 1994, the only remaining jurisdictional appeals are the appeals
filed by the State of Wisconsin (the "Wisconsin Appeals"), which
affect the Maxicare Health Insurance Company, ("MHIC") one of the
Company's HMO subsidiaries. The Wisconsin Appeals challenge MHIC's
eligibility to be a debtor under the Bankruptcy Code. The
Bankruptcy Court, the District Court and the United States Court of
Appeals for the Ninth Circuit denied the State of Wisconsin's
motions for a stay of consummation of the Reorganization Plan
pending determination of the Wisconsin Appeals.
On July 9, 1992, the United States District Court for the Central
District of California entered a Ruling on Appeal (the "Ruling")
concerning this matter. In its Ruling, the District Court held
that MHIC is a domestic insurance company under Wisconsin state law
and MHIC was therefore not eligible for relief under the Bankruptcy
Code which excludes domestic insurance companies from entities
eligible for relief thereunder. The District Court remanded the
matter back to the Bankruptcy Court and ordered the Bankruptcy
Court to take action consistent with the Ruling.
The Company, MHIC and other affiliates filed a motion for rehearing
of the Ruling and on August 27, 1992, the District Court denied the
motion for rehearing. The Company has appealed the Ruling and the
District Court's denial of the motion for rehearing to the United
States Court of Appeals for the Ninth Circuit. In addition, the
Company, MHIC and other affiliates have filed a motion in the
District Court to stay implementation of the Ruling while the
Ruling is on appeal. A hearing on the motion to stay the Ruling
has been set for June 23, 1994.
The Company has reached a settlement agreement in principle with
the State of Wisconsin memorialized in a written memorandum of
understanding. Pursuant to the agreement, a reorganization plan
for MHIC, in accordance with Wisconsin state law, will be submitted
without prejudice for approval by the Wisconsin State Court. Under
the terms of the agreement in principle, the reorganization of MHIC
must be on terms consistent with the Reorganization Plan. The
implementation of the agreement in principle will have no material
adverse impact on the Company's business or its operations. The
agreement is subject to approval by the Bankruptcy Court and the
non-occurrence of certain contingencies.
The United States Court of Appeals for the Ninth Circuit has issued
an order extending the time for the filing of briefs in connection
with the Company's appeal of the Ruling in order to allow the
parties an opportunity to implement and consummate the settlement.
In the event the settlement cannot be fully implemented, the
Company may pursue the appeal. If prosecution of the appeal
resumes and the Ruling is upheld after MHIC's appellate rights have
been exhausted, creditors of MHIC will likely only have the
protections and recoveries afforded under applicable state law.
<PAGE>
In addition to the Wisconsin Appeals, twenty-four appeals were
filed challenging various aspects of the Reorganization Plan's
confirmation order. As of March 1, 1993, twenty-one of these
appeals have been withdrawn or dismissed, two have been stayed
subject to Bankruptcy Court and U.S. District Court approval of
settlement agreements with the class action appellants discussed
below and one has been stayed subject to Bankruptcy Court and
United States District Court approval of the class action
settlement agreements and the non-occurrence of certain other
conditions.
The Company believes it has a meritorious position and will prevail
on its appeal of the Ruling or on the stayed appeals if prosecution
of these appeals resumes.
b. CLASS ACTION LITIGATIONS
On July 15, 1988, a class action complaint alleging various
violations of federal and state securities law arising from the
purchase of the Company's old common stock was filed by Gerald D.
Mirkin in the Superior Court for the County of Los Angeles against
the Company, its former and current officers and directors,
including Peter Ratican, and others including the Company's former
accountants and investment bankers (Mirkin and Miller, et al. v.
Fred W. Wasserman, et al. (Superior Court, Los Angeles County, CA)
(Case No. CA 01122)). This action has been consolidated with two
other actions. These other actions include (i) a class action
lawsuit filed by Charles Miller against the Company and its former
and current officers in the Superior Court of the State of
California for the County of Los Angeles for violation of the
California Corporations Code and California State common law
arising from the purchase and sale of the Company's old common
stock or the Company's 11 3/4% Notes, and (ii) a class action filed
by William Steiner, on behalf of himself and other Company
shareholders, against former and current officers and directors,
and others including the Company's former accountants and
investment bankers in the Superior Court of the State of California
for the County of Los Angeles alleging violation of federal and
state securities laws arising from the purchase and sale of the
Company's old common stock. No class was certified in this
consolidated action. In January, 1990, the trial court dismissed
the action without leave to file an amended complaint, and the
plaintiffs appealed the dismissal. In March, 1991, the Court of
Appeals upheld the trial court dismissal. The plaintiffs
subsequently appealed the Court of Appeals' ruling to the
California Supreme Court. On September 19, 1993 the California
Supreme Court affirmed the Court of Appeals' order precluding the
Plaintiffs from pursuing the consolidated actions. The Plaintiffs
did not seek review of the California Supreme Court's decision by
the United States Supreme Court within the requisite time,
rendering the California Supreme Court's decision final.
Accordingly, the Company will no longer be reporting on this
matter.
On May 4, 1988, a class action complaint alleging violations of
federal and state securities laws was filed by Murray Zucker on
behalf of himself and other Company shareholders in the United
States District Court for the Central District of California.
Murray Zucker, et al. v. Maxicare Health Plans, Inc., et al.
<PAGE>
(United States District Court, Central District of CA) (Case No. 88
02499 LEW (TX)) (the "Zucker Action"). A class has been certified
in the Zucker Action.
The Company and certain of its current and former directors and
officers who are named defendants have entered into a settlement
agreement with respect to all of the claims in the aforementioned
actions. Amounts to be paid under the settlement agreement have
been funded entirely by the Company's directors and officers
insurance policy with First State Insurance Company. The
settlement agreement has been approved by the United States
District Court, the class members and the Bankruptcy Court. The
non-settling defendants appealed certain aspects of the District
Court's approval of the settlement agreement (the "Zucker Appeal")
which would preclude such non-settling defendants from seeking
indemnification or contribution from the settling defendants, and
the investment bankers appealed their exclusion from the class, to
the United States Court of Appeals for the Ninth Circuit. On
January 26, 1994, the Ninth Circuit Court of Appeals dismissed the
Zucker Appeal for lack of jurisdiction over the appeal. Under the
Reorganization Plan, former officers and directors who may have
pre-petition claims against the Company for indemnification for
damages in excess of insurance coverage are general unsecured
creditors.
An agreement has been executed between the non-settling defendants
and the settling defendants, pursuant to which the non-settling
defendants have agreed to waive their right to appeal the portion
of the District Court's order approving the settlement agreement
that precludes the non-settling defendants from seeking
contribution or indemnification from the settling defendants.
Under the agreement, the non-settling defendants retain the right
to appeal their exclusion by the District Court from membership in
the settling class. The Company does not believe that the ultimate
resolution of any subsequent appeal by the non-settling defendants
of their exclusion from membership in the settling class by the
District Court, will impact the settlement of the Zucker Action.
c. PENN HEALTH
During the period from March 1, 1986 through June 30, 1989, Penn
Health Corporation ("Penn Health"), a subsidiary of the Company,
contracted with the Commonwealth of Pennsylvania through the
Pennsylvania Department of Public Welfare (the "DPW") to provide a
full range of health care services to Medicaid enrollees under the
Pennsylvania Medical Assistance Program known as the HealthPass
Program. The DPW was the sole subscriber group of Penn Health.
These services were rendered by providers pursuant to contracts
with Penn Health ("Penn Health Providers"). In consideration for
these services, subject to certain adjustments, the DPW was
obligated to pay to Penn Health a fixed monthly fee per enrollee
based upon Penn Health's fee-for-service costs and a charge for
administration. In addition, for the first two years of the
contract, the DPW agreed to reimburse Penn Health for any financial
losses in excess of $2 million. Under the applicable provisions of
the contract, at the Petition Dates, the Company believes that the
DPW owed Penn Health in excess of $24 million plus accrued
interest, for reimbursement and adjustment of the cost of pre-
petition services, an amount which the DPW disputes.
<PAGE>
After the Petition Dates, the DPW advanced funds directly to the
Penn Health Providers for pre-petition services performed under the
contracts with Penn Health. In certain cases the amount of the
advanced funds may have been in excess of the amounts due to the
Provider for such services. The payments made by the DPW
approximated $16 million. The Penn Health Providers filed proofs
of claim against Penn Health and other subsidiaries of the Company,
without making deductions for the payments made by the DPW,
although they noted receipt of such funds on their proofs of claim.
In February, 1990, the Company filed a proceeding in the Bankruptcy
Court against the DPW and the major Penn Health Providers to
recover preferential transfers, to compel the turnover of property
and to raise all objections to the proofs of claim of the Penn
Health Providers, including that the claims asserted therein were
overstated (the "Bankruptcy Action"). The disputes with the DPW
and the major Penn Health Providers, in the Bankruptcy Action
constitute the majority of the claims filed against Penn Health.
On December 13, 1990, the Bankruptcy Court entered an order
dismissing the Bankruptcy Action as against the DPW on
jurisdictional grounds (the "Dismissal Order"). The Company filed
an appeal of the Dismissal Order to the United States District
Court for the Central District of California, which was
subsequently resolved by a stipulation approved by the District
Court. Pursuant to the stipulation, the jurisdictional issue was
remanded to the Bankruptcy Court for redetermination in light of
developments in the case law.
On February 27, 1991 the Company filed a petition against the DPW
in the Pennsylvania Board of Claims, seeking damages in excess of
$24 million (the "Board Action"). In July 1992, the Pennsylvania
Board of Claims (the "Board") denied DPW's preliminary objections
to the Company's petition. In August 1992, the DPW answered the
Company's petition and asserted counterclaims to recover (i) $16
million of payments that the DPW made to HealthPass healthcare
providers purportedly to satisfy Penn Health's obligations to the
providers; (ii) the costs the DPW incurred in processing and
mailing the payments to the healthcare providers; and (iii) $6
million which the DPW alleges was distributed by Penn Health to the
Company, but should have been retained by Penn Health to satisfy
healthcare providers' claims. In the Company's October 14, 1992
answer to the counterclaim, the Company denied the allegations set
forth in the counterclaim. The Company also asserted as an
affirmative defense that Penn Health's discharge in bankruptcy
under the Reorganization Plan is a complete bar to the DPW's
counterclaim. In the event the DPW is successful in its
counterclaims, all of which arose out of pre-petition activities of
the Company and Penn Health, any recovery would be paid out of the
Reorganization Plan funds and there will be no impact on the
Company's cash resources. The Company believes that it has a
meritorious defense to the counterclaim and will prevail on the
counterclaim.
On October 4, 1993 Penn Health filed a remand motion with the
Bankruptcy Court for a determination that the DPW waived its
sovereign immunity by asserting an offset against Penn Health. DPW
opposed the remand motion and subsequently filed a motion with the
<PAGE>
Bankruptcy Court requesting that the Court abstain from
adjudicating the Bankruptcy Action and require that Penn Health's
claims against DPW be adjudicated by the Board in the Board Action.
Pursuant to an order of the Bankruptcy Court entered on February
24, 1994, Penn Health's remand motion was granted in all respects
and the Dismissal Order was vacated. Under an order entered by the
Bankruptcy Court on January 24, 1994, the Court abstained on a
preliminary basis from adjudicating the Bankruptcy Action and
stayed all proceedings in the action until September 1, 1994 to
allow the Board an opportunity to adjudicate the Board Action. The
Bankruptcy Court retains jurisdiction over the Bankruptcy Action to
try or hear the action on the merits in the event that the Board
Action is not tried or heard by September 1, 1994, or no
significant progress is made in trying or hearing the Board Action.
In an order dated December 21, 1993 the Board consolidated the
Board Action and two separate actions filed by Penn Health
Providers against DPW to recover payment from DPW for services
rendered to HealthPass members (the "Provider Actions") and set
trial dates in the consolidated actions. Contractual issues
pertaining to the DPW's liability to Penn Health in the Board
Action and to Penn Health providers in the Provider Actions will be
tried by the Board in a trial scheduled to commence on July 6,
1994. A trial to determine damages will be held by the Board on
December 12, 1994.
The Company has, in the past, engaged in settlement discussions
with the DPW and representatives of the major Penn Health Providers
but an agreement was not reached. The pre-petition amounts due to
Penn Health Providers will be treated as unsecured class 11 claims
under the Reorganization Plan. The Company is currently holding
approximately $225,000 in an escrow account, which the Company
believes will be sufficient to satisfy any remaining post-petition
claims of Penn Health Providers.
d. OTHER LITIGATION
On March 12, 1993, MH Healthcare, Affiliate of Methodist Hospital
of Indiana, Inc. ("MH") submitted a demand (the "Demand") to the
American Arbitration Association (the "AAA") for arbitration of a
contractual dispute between MH and Maxicare Indiana, Inc.
("Indiana") concerning interpretation of the provisions of a Master
Agreement dated February 8, 1988, as subsequently amended, (the
"Agreement") by and among MHP, Indiana and MH. MH Healthcare,
Affiliate of Methodist Hospital of Indiana, Inc. v. Maxicare
Indiana, Inc. Under the terms of the Agreement MH agreed to
provide designated healthcare services to members of the health
care plan operated by Indiana in exchange for the rates and fees
designated in the Agreement. In the Demand MH: (i) contends that it
was not paid the appropriate amounts due under the Agreement for
1992; (ii) disputes certain of the premium rates upon which Indiana
based its calculation of payments made to MH under the Agreement;
and (iii) contends that in accordance with the Agreement changes
made by Indiana to the covered services provided to plan members
have materially impacted the actuarial value of the payments due
under the Agreement, entitling MH to an upward adjustment in the
rates specified in the Agreement.
<PAGE>
Based on the Pre-Hearing Statement which MH submitted to the
Arbitrator, the Company has been advised that MH is seeking a
damage award of approximately $7.9 million plus interest. In the
event MH prevails in the arbitration, there may be additional
amounts due to MH for the 1993 contract year. Indiana disputes the
allegations of the Demand and MH's damages computation and has
asserted a counterclaim to the Demand to recover overpayments
erroneously made to MH under the Agreement. The parties are
currently engaged in arbitration of the allegations of the Demand
by the AAA which commenced on March 21, 1994. The Company believes
that Indiana has meritorious defenses to the Demand and that
Indiana will prevail in the arbitration.
The Company is a defendant in a number of other lawsuits arising in
the ordinary course from the operations of its HMOs, including
cases in which the plaintiffs assert claims against the Company or
third parties that might assert indemnity or contribution claims
against the Company for malpractice, negligence, bad faith in the
failure to pay claims on a timely basis or denial of coverage. The
Company does not believe that adverse determination in any one or
more of these cases would have a material, adverse effect on the
Company's business and operations.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
No matter was submitted to a vote of security holders during the
three months ended December 31, 1993.
<PAGE>
PART II
-------
Item 5. Market for the Registrant's Common Stock and Related
----------------------------------------------------
Stockholder Matters
-------------------
The Company emerged from Chapter 11 on December 5, 1990. Pursuant
to the Reorganization Plan, its pre-petition creditors were
entitled to receive 98% of the 10 million shares of Common Stock
authorized for distribution under the Reorganization Plan; the
remaining 2% of the Common Stock is to be distributed to equity and
interest holders.
(a) Market Information
The Company's Common Stock appears on the National Association of
Securities Dealers Automated Quotation National Market Systems
("NASDAQ-NMS") under the trading symbol MAXI.
The following table sets forth the range of high and low bid and
asked quotations of the Common Stock as reported by the National
Quotation Bureau, Incorporated from January 1, 1992 to April 6,
1992. Thereafter, the table sets forth the high and low sale
prices per share on the NASDAQ-NMS. The quotations are interdealer
prices without retail mark-ups, markdowns, or commissions, and may
not represent actual transactions.
<TABLE>
<CAPTION>
Common Stock
Bid Bid Ask Ask
high low high low
<S> <C> <C> <C> <C> <C>
1992 First Quarter $11.50 $8.00 $12.00 $ 8.50
Second Quarter
(April 1, 1992
through April 6, 1992) $10.50 $9.75 $10.75 $10.25
Sale Price
--------------
Second Quarter high low
(April 7, 1992
through June 30, 1992) $10.50 $8.25
Third Quarter $12.00 $9.00
Fourth Quarter $14.50 $9.50
1993 First Quarter $14.25 $7.50
Second Quarter $11.75 $8.25
Third Quarter $11.00 $7.50
Fourth Quarter $11.88 $9.13
</TABLE>
<PAGE>
(b) Holders
The number of holders of record of the Company's Common Stock on
December 31, 1993 was 17,892. As of such date, the Company held
1,164,778 shares of Common Stock (the "Unallocated Shares") as
disbursing agent for the benefit of creditors and holders of interests
and equity claims under the Reorganization Plan. Of the Unallocated
Shares held as of December 31, 1993, 752,236 were held for the benefit
of creditors of the Company's operating subsidiaries (Reorganization
Plan classes 5A through 5H), 118,400 shares were held for bank group
creditors (Reorganization Plan class 7), 97,272 shares were held for
bondholder creditors (Reorganization Plan classes 8A through 8D), and
196,870 were held for former stockholders (Reorganization Plan class
12). As of December 31, 1993, no shares were being held for the
benefit of Maxicare Health Plans, Inc. creditors (Reorganization Plan
class 9), however, certain of the shares held for the benefit of
Reorganization Plan classes 7 and 8A through 8D will be reallocated to
Reorganization Plan class 9 pursuant to a formula set forth in the
Reorganization Plan. The Reorganization Plan provides that until such
time as any share of Common Stock reserved for a holder of an allowed
claim or allowed interest under the Reorganization Plan is allocated,
the disbursing agent shall deliver an irrevocable proxy to vote the
Unallocated Shares to the independent directors of the Board (as such
term is defined by the Reorganization Plan). Currently, the
independent directors are Messrs. Brinegar and Lewis (the "Independent
Directors"). The Reorganization Plan provides that the Unallocated
Shares shall be voted in the following manner:
(i) 949,106 shares which were held in the claims reserves as of
December 31, 1993 for the holders of Reorganization Plan classes
5A through 5H and Reorganization Plan class 9 allowed claims and
Reorganization Plan class 12 allowed interests and equity holder
claims, shall (a) as to proposals made by the Company, be voted
in the same manner and the same degree as all of the allocated
shares of Common Stock; and (b) as to proposals made by any
person or entity other than the Company, be voted in accordance
with the vote of a majority of the Independent Directors; and
(ii) 215,672 shares which were held in the claims reserves as of
December 31, 1993 for holders of Reorganization Plan class 7 and
Reorganization Plan classes 8A through 8D allowed claims, shall
be voted in the same manner and the same degree as all of the
allocated shares of Common Stock.
(c) Dividends
The Company has not paid any cash dividends on its Common Stock.
<PAGE>
Item 6. Selected Financial Data
-----------------------
<TABLE>
<CAPTION>
At And For The Years Ended December 31,
---------------------------------------
(Amounts in thousands except per share and
membership data)
<S> <C> <C> <C> <C> <C>
1993 1992 1991 1990 1989
-------- -------- -------- -------- ---------
OPERATING REVENUES $440,186 $414,454 $388,694 $386,897 $ 516,346
-------- -------- -------- -------- ---------
TOTAL HEALTH CARE EXPENSES 394,721 362,627 330,529 328,436 445,776
Marketing, general and administrative expenses 40,998 37,930 41,008 48,066 79,252
Depreciation and amortization 4,054 5,238 6,535 7,925 10,041
Reorganization expenses (1) 895 3,661 8,142 11,947
-------- -------- -------- -------- ---------
TOTAL OPERATING EXPENSES 439,773 406,690 381,733 392,569 547,016
-------- -------- -------- -------- ---------
INCOME (LOSS) FROM OPERATIONS 413 7,764 6,961 (5,672) (30,670)
Investment income 2,636 3,121 4,039 3,054 4,329
Interest expense (32) (2,773) (9,570) (1,111) (9,708)
Minority interest 1,544
-------- -------- -------- -------- ---------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY ITEMS 3,017 8,112 1,430 (3,729) (34,505)
BENEFIT FOR INCOME TAXES 2,571 3,058 18
-------- -------- -------- --------- ---------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS 5,588 11,170 1,430 (3,729) (34,487)
EXTRAORDINARY ITEMS (net of income taxes of $0) (2) (14,241) (905) 680,444
-------- -------- -------- -------- ---------
NET INCOME (LOSS) 5,588 (3,071) 525 676,715 (34,487)
PREFERRED STOCK DIVIDENDS (5,400) (4,350)
-------- -------- -------- -------- ---------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ 188 $ (7,421) $ 525 $676,715 $ (34,487)
======== ======== ======== ======== =========
NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT
SHARE:
Income (Loss) Before Extraordinary Items Available to
Common Shareholders $ .02 $ .66 $ .14 $ (.37)
Extraordinary Items (2) (1.37) (.09) 67.30
-------- -------- -------- --------
Net Income (Loss) Available to Common Shareholders $ .02 $ (.71) $ .05 $ 66.93
======== ======== ======= ========
Weighted average number of
common and common equivalent
shares outstanding (3) 10,416 10,414 10,253 10,111
BALANCE SHEET DATA:
Total assets $106,807 $ 97,278 $105,922 $114,577 $ 233,148
Total indebtedness (4) $ 54,422 $ 45,217 $102,874 $112,054 $ 907,260
Shareholders' equity (deficit) $ 52,385 $ 52,061 $ 3,048 $ 2,523 $(674,112)
MEMBERSHIP DATA:
Number of members 308,000 283,000 277,000 287,000 379,000
</TABLE>
<PAGE>
Notes to Selected Financial Data
(1) Expenses were offset by $5,218 and $3,055 of investment
income for the years ended December 31, 1990 and 1989,
respectively, that was estimated would not have been earned
but for the Chapter 11 reorganization proceedings.
Subsequent to the Effective Date, investment income is no
longer offset against reorganization expenses.
(2) Includes a 1992 write-off of unamortized original issue
discount and unamortized issuance costs on the Senior Notes
that were redeemed and a 1992 accrual of a distribution
payable pursuant to the Reorganization Plan based on the
Company's consolidated net worth as of December 31, 1992.
Includes a 1991 accrual of a distribution payable pursuant
to the Reorganization Plan based on the Company's
consolidated net worth as of December 31, 1991 and a write-
off of original issue discount on Senior Notes that were to
be redeemed. Includes a 1990 gain with respect to the
Independence Health Plan of Southeastern Michigan, Inc.
settlement and the discharge of pre-petition liabilities
pursuant to the Reorganization Plan (see "Item 8. Financial
Statements and Supplementary Data - Note 3 to the Company's
Consolidated Financial Statements").
(3) As provided in the Reorganization Plan, previously
outstanding common stock was cancelled, and 10,000 shares of
Common Stock were issued. Accordingly, per share
information for 1990 was calculated by using the 10,000
shares plus common equivalent shares of stock options and
Warrants when dilutive. Net loss per common and common
equivalent share previously reported for 1989 was calculated
based on 34,640 shares of old common stock. Therefore, the
net loss per common and common equivalent share amount for
1989 is not comparable to 1993, 1992, 1991 and 1990 and,
accordingly, has been omitted.
(4) Includes long-term liabilities of $504, $1,015, $63,177,
$63,388 and $12,323 in 1993, 1992, 1991, 1990 and 1989,
respectively, and in 1989 pre-petition liabilities of
$843,713.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------
and Results of Operations
-------------------------
The year ended December 31, 1993 compared to the year ended December
--------------------------------------------------------------------
31, 1992.
---------
Maxicare Health Plans, Inc. (the "Company") reported net income of
$5.6 million for the year ended December 31, 1993, compared to a net
loss of $3.1 million, including extraordinary charges of $14.2
million, for the same period of 1992. Net income per common share
available to common shareholders increased to $.02 for the year
ended December 31, 1993 compared to a net loss per common share
available to common shareholders of $.71 for the same period in
1992.
For the year ended December 31, 1993, the Company reported operating
revenues of $440.2 million, a 6% increase over the $414.5 million
reported for the year ended December 31, 1992. The increase in
revenues primarily results from the Company experiencing an increase
in membership and modest premium rate increases. The increase in
year-to-date operating revenues for 1993 was more than offset by an
increase in health care expenses, contributing to a decrease in
income from operations to $413,000 from $7.8 million for fiscal year
1992. Health care expenses increased for the year ended December
31, 1993 primarily because of a $7.0 million one-time charge
reported in the third quarter of 1993 for previously unanticipated
actual and projected health care costs. These costs primarily
resulted from changes in the Indiana marketplace, the restructuring
of relationships among the Company and its health care providers as
well as unanticipated increases in high cost health care procedures.
The provider network restructuring which began in mid 1992 has been
substantially completed as of the first quarter of 1994.
Marketing, general and administrative expenses increased $2.2
million to $41.0 million for the year ended December 31, 1993 as
compared to 1992; however, these expenses have decreased as a
percentage of operating revenues.
The Company's consummation of the sale of $60 million of Series A
preferred stock on March 11, 1992 and the redemption on April 13,
1992 of the entire outstanding principal, plus accrued interest on,
the Senior Notes resulted in the Company reporting a $14.2 million
extraordinary loss in the first quarter of 1992, the payment of $5.4
million in preferred stock dividends in 1993 and a decrease in year-
to-date interest expense of $2.7 million for 1993 (see "Item 8.
Financial Statements and Supplementary Data - Notes 3 and 6 to the
Company's Consolidated Financial Statements").
The Company accounts for income taxes in accordance with Statement
of Financial Accounting Standards No. 109 - Accounting for Income
Taxes ("FAS 109"). This standard requires, among other things,
recognition of future tax benefits, measured by enacted tax rates,
attributable to deductible temporary differences between financial
statement and income tax bases of assets and liabilities and to tax
<PAGE>
NOLs, to the extent that realization of such benefits is more likely
than not. Management has estimated, based on the Company's recent
history of operating results and its expectations for the future,
that future taxable income of the Company will more likely than not
be sufficient to utilize a minimum of approximately $15 million of
NOLs; accordingly, the Company increased its deferred tax asset by
$2.8 million to $6.0 million in the fourth quarter of 1993. The
Company has remaining a maximum of $87 million of unutilized net
operating loss carryforwards ("NOLs") as of December 31, 1993 which
are subject to annual limitations under Section 382 of the Internal
Revenue Code (see "Item 8. Financial Statements and Supplementary
Data - Note 7 to the Company's Consolidated Financial Statements").
The year ended December 31, 1992 compared to the year ended December
--------------------------------------------------------------------
31, 1991.
---------
The Company reported an $803,000 increase in income from operations
for the year ended December 31, 1992 compared to the same period of
1991. Income per common share before extraordinary items available
to common shareholders increased to $.66 for fiscal year 1992
compared to $.14 for fiscal year 1991. The increase in the 1992
annual income from operations is due to decreases of $3.1 million in
marketing, general and administrative expenses, $2.8 million in
reorganization expenses, and $1.3 million in depreciation and
amortization expenses which were substantially offset by a $6.3
million decrease in the gross margin due to higher health care
costs. For the year ended December 31, 1992, operating revenues
increased $25.8 million to $414.5 million due to an 80,000 increase
in member months and an increase in revenue per member per month of
$5.00. (Member months is the sum of the total members in each month
during the reporting period). This increase in operating revenues
was offset by an increase in health care expenses as a percentage of
operating revenues (the "medical loss ratio") to 87.5% for the
twelve months ended December 31, 1992 from 85.0% for the twelve
months ended December 31, 1991. The Company experienced an increase
in the medical loss ratio to 90.9% for the fourth quarter of 1992.
This fourth quarter increase is primarily due to higher pharmacy
costs and adverse claims development primarily resulting from
unusually high catastrophic claims.
The Company's consummation of the sale of $60 million of Series A
Stock on March 11, 1992 and the redemption on April 13, 1992 of the
entire outstanding principal, plus accrued interest on, the Senior
Notes resulted in the payment of $4.4 million in preferred stock
dividends while decreasing interest expense by $6.8 million for
fiscal year 1992. In addition, investment income decreased $918,000
for the year ended December 31, 1992 as compared to the year ended
December 31, 1991 because of the lower cash and marketable
securities balance resulting from the redemption of the Senior Notes
and the decline in market interest rates (see "Item 8. Financial
Statements and Supplementary Data - Note 6 to the Company's
Consolidated Financial Statements").
In anticipation of the redemption of the Senior Notes, the Company
reported in the first quarter of 1992 a $14.2 million extraordinary
loss for the write-off of unamortized original issue discount and
unamortized issuance costs, an accrual for Senior Notes redemption
<PAGE>
costs and an accrual for the maximum potential payments, based on
the Company's net worth at December 31, 1992, which may be required
to be made by the Company to creditors pursuant to the
Reorganization Plan (see "Item 8. Financial Statements and
Supplementary Data - Note 3 to the Company's Consolidated Financial
Statements").
Management estimated, based on its expectations for the future, that
future taxable income of the Company will more likely than not be
sufficient to utilize a minimum of approximately $8 million of NOLs;
accordingly, the Company recorded a $3.2 million deferred tax asset
as of December 31, 1992 for the recognition of future utilization of
NOLs in accordance with FAS 109.
The aforementioned income from operations and tax benefit were
offset by the extraordinary charges of $14.2 million, resulting in
the Company reporting a $3.1 million net loss for the year ended
December 31, 1992.
<PAGE>
Liquidity and Capital Resources
Certain of MHP's operating subsidiaries are subject to state
regulations which require compliance with certain statutory deposit,
reserve and net worth requirements. To the extent the operating
subsidiaries must comply with these regulations, they may not have
the financial flexibility to transfer funds to MHP. MHP's
proportionate share of net assets (after inter-company eliminations)
which, at December 31, 1993, may not be transferred to MHP by
subsidiaries in the form of loans, advances or cash dividends
without the consent of a third party is referred to as "Restricted
Net Assets". Total Restricted Net Assets of these operating
subsidiaries was $23.7 million at December 31, 1993, with deposit
and reserve requirements representing $13.5 million of the
Restricted Net Assets and net worth requirements, in excess of
deposit and reserve requirements, representing the remaining $10.2
million. The total Restricted Net Assets of $23.9 million includes
the restricted cash and marketable securities for MHP and all
subsidiaries. Because of the aforementioned deposit, reserve and
net worth requirements, approximately $7.9 million of the $49.0
million in cash, cash equivalents and marketable securities held by
subsidiaries of MHP could be considered available to transfer to
MHP.
All of MHP's operational subsidiaries are direct subsidiaries of
MHP. With the exception of the Company's South Carolina HMO, all of
the Company's operational HMOs are licensed by pertinent state
authorities; all of the Company's HMOs are federally qualified. The
operations of the South Carolina HMO are currently under Bankruptcy
Court jurisdiction pending a reorganization of that entity to
operate as a licensed HMO in the state of South Carolina. The
Company believes that it will be able to ultimately resolve the
South Carolina HMO's licensing situation with the state of South
Carolina as a separately licensed HMO in such state or,
alternatively, as a division of one of its other operating HMOs to
be licensed to do business in the state of South Carolina.
Presently, the Company is discussing with the North Carolina
Department of Insurance the possibility of operating the South
Carolina HMO as a division of the North Carolina HMO. The Company
can not predict at this time the required capital infusion, if any,
which may result from the separate licensing of the South Carolina
HMO in the state of South Carolina or operating it as a division of
one of the Company's operating HMOs. If infusion of additional cash
resources is required to ensure compliance with statutory deposit
and net worth requirements, the Company does not believe such an
infusion will have a material adverse effect on its operations taken
as a whole.
The operating HMOs currently pay monthly fees to MHP pursuant to
administrative services agreements for various management,
financial, legal, computer and telecommunications services. The
Company believes that for the foreseeable future, it will have
sufficient resources to fund ongoing operations, meet preferred
stock dividend requirements of $2.25 per share annually and remain
in compliance with statutory financial requirements.
Pursuant to the Reorganization Plan, the Company is required to make
distributions based on its consolidated net worth in excess of $2.0
million at December 31, 1991 and 1992 (the "Consolidated Net Worth
Distribution"). In March 1992, the Company consummated the sale of
<PAGE>
$60 million of Series A Stock. The proceeds from this sale, plus
internally generated cash, were utilized to redeem in April 1992 the
entire outstanding Senior Notes. The sale of the Series A Stock had
the effect of significantly increasing the net worth of the Company.
The Company does not believe the Reorganization Plan contemplated
either the issuance of the Series A Stock or the redemption of the
Senior Notes, and accordingly, the Company believes the Consolidated
Net Worth Distribution required by the Reorganization Plan should be
calculated on a basis as if the sale of the Series A Stock had not
been consummated and the Senior Notes had not been redeemed. As a
result of the foregoing, the Company calculated the December 31,
1992 Consolidated Net Worth Distribution amount to be approximately
$971,000, which was deposited for distribution to certain creditors
under the Reorganization Plan in March 1993. In addition, the
Company believes that any Consolidated Net Worth Distribution which
under the Reorganization Plan is to be utilized to redeem the Senior
Notes is no longer due as the Senior Notes have been fully redeemed.
Notwithstanding the foregoing, the Company elected to accrue in its
consolidated financial statements for the year ended December 31,
1992 the maximum potential liability of $7.2 million on this matter.
The amount that may be ultimately payable pursuant to this
Reorganization Plan provision, if any, could be less than the amount
accrued. Any additional Consolidated Net Worth Distribution that
may be required will be made from the Company's available cash.
In mid 1992 the Company began restructuring its provider network in
the Indianapolis marketplace as a result of the termination of
contract negotiations with MH Healthcare, Inc. ("MetroHealth"), a
health care provider in that market. Pursuant to the contract which
expired on December 31, 1992, the enrollees in Indianapolis who use
the MetroHealth facilities, comprising approximately 8% of the
Company's total enrollment at December 31, 1993, will continue to
have access to MetroHealth providers through March 31, 1994.
MetroHealth currently offers its own health care product in the
Indianapolis area. Total enrollment in the Indiana HMO decreased
approximately 22% during the first quarter of 1994 from December 31,
1993 but the Company believes that it will ultimately be able to
replace a substantial number of the members who remain with
MetroHealth and that the restructuring of the provider network will
not have a long-term adverse impact on the Company's operations.
MetroHealth and the Indiana HMO are currently engaged in arbitration
of a contractual dispute (see "Item 3. Legal Proceedings - d. Other
Litigation"). The Company believes that the Indiana HMO has
meritorious defenses and will prevail in the arbitration. In the
event MetroHealth is awarded damages in an amount which proximates
the damages MetroHealth contends it is entitled to, and such award
is upheld on review, the award could have a material adverse impact
on the liquidity of the Indiana HMO and the Company.
Although, the Company does not believe that it needs additional
working capital at this time, it has from time to time had
discussions with lenders concerning a possible standby working
capital line. The Company cannot state with any degree of certainty
at this time whether additional equity capital or working capital
would be available to the Company, and if available, would be at
terms and conditions acceptable to the Company.
<PAGE>
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Board of Directors and Shareholders
of Maxicare Health Plans, Inc.
In our opinion, the consolidated financial statements listed in the
index appearing under Part IV Item 14(a)(1) and (2) on page 70
present fairly, in all material respects, the financial position of
Maxicare Health Plans, Inc. and its subsidiaries at December 31,
1993 and 1992, and the results of their operations and their cash
flows for each of the three years in the period ended December 31,
1993, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits
of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for the opinion expressed above.
As discussed in Note 2 to the consolidated financial statements, the
Company changed its method of accounting for income taxes in 1991.
PRICE WATERHOUSE
Los Angeles, California
March 4, 1994
<PAGE>
MAXICARE HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except par value)
<TABLE>
<CAPTION>
December 31,
1993 1992
CURRENT ASSETS --------- ---------
<S> <C> <C>
Cash and cash equivalents - Note 2........................ $ 38,672 $ 21,527
Marketable securities - Note 2............................ 19,448 27,318
Accounts receivable, net - Note 2......................... 19,174 20,787
Deferred tax asset........................................ 6,000 3,200
Prepaid expenses.......................................... 3,717 1,495
Other current assets...................................... 406 772
--------- ---------
TOTAL CURRENT ASSETS.................................... 87,417 75,099
--------- ---------
PROPERTY AND EQUIPMENT
Leasehold improvements.................................... 5,466 5,482
Furniture and equipment................................... 36,878 36,851
--------- ---------
42,344 42,333
Less accumulated depreciation and amortization.......... 38,715 35,108
--------- ---------
NET PROPERTY AND EQUIPMENT.............................. 3,629 7,225
--------- ---------
LONG-TERM ASSETS
Long-term receivables..................................... 2,004 2,036
Statutory deposits........................................ 13,610 12,802
Intangible assets, net - Note 2........................... 147 116
--------- ---------
TOTAL LONG-TERM ASSETS.................................. 15,761 14,954
--------- ---------
TOTAL ASSETS............................................ $ 106,807 $ 97,278
========= =========
CURRENT LIABILITIES
Estimated claims and incentives payable................... $ 38,895 $ 28,986
Accounts payable.......................................... 401 77
Deferred income........................................... 2,682 1,933
Accrued salary expense.................................... 2,732 2,759
Payable to disbursing agent............................... 6,248 7,219
Other current liabilities................................. 2,960 3,228
--------- ---------
TOTAL CURRENT LIABILITIES............................... 53,918 44,202
LONG-TERM LIABILITIES....................................... 504 1,015
--------- ---------
TOTAL LIABILITIES....................................... 54,422 45,217
--------- ---------
COMMITMENTS AND CONTINGENCIES - Note 5
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value - 5,000 shares
authorized, 2,400 shares issued and outstanding......... 24 24
Common stock, $.01 par value - 40,000 shares authorized,
1993 - 10,033 shares and 1992 - 10,017 shares issued and
outstanding - Note 6.................................... 100 100
Additional paid-in capital................................ 241,151 241,015
Accumulated deficit....................................... (188,890) (189,078)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY.............................. 52,385 52,061
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.............. $ 106,807 $ 97,278
========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
MAXICARE HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands except per share data)
<TABLE>
<CAPTION>
Years ended December 31,
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
OPERATING REVENUES.................................... $440,186 $414,454 $388,694
-------- -------- --------
OPERATING EXPENSES
Physician services................................. 170,377 159,081 146,883
Hospital services.................................. 146,998 139,568 132,003
Outpatient services................................ 62,565 52,541 42,333
Other health care expense.......................... 14,781 11,437 9,310
-------- -------- --------
TOTAL HEALTH CARE EXPENSES....................... 394,721 362,627 330,529
Marketing, general and administrative expenses..... 40,998 37,930 41,008
Depreciation and amortization...................... 4,054 5,238 6,535
Reorganization expenses - Note 2................... 895 3,661
-------- -------- --------
TOTAL OPERATING EXPENSES......................... 439,773 406,690 381,733
-------- -------- --------
INCOME FROM OPERATIONS................................ 413 7,764 6,961
Investment income.................................. 2,636 3,121 4,039
Interest expense................................... (32) (2,773) (9,570)
-------- -------- --------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEMS.... 3,017 8,112 1,430
INCOME TAX BENEFIT.................................... 2,571 3,058
-------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEMS..................... 5,588 11,170 1,430
EXTRAORDINARY ITEMS (net of income taxes of $0) -
Note 3............................................. (14,241) (905)
-------- -------- --------
NET INCOME (LOSS)..................................... 5,588 (3,071) 525
PREFERRED DIVIDENDS................................... (5,400) (4,350)
-------- -------- --------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS.... $ 188 $ (7,421) $ 525
======== ======== ========
NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT
SHARE - Note 2:
Income Before Extraordinary Items Available
to Common Shareholders............................. $ .02 $ .66 $ .14
Extraordinary Items................................... (1.37) (.09)
-------- -------- --------
Net Income (Loss) Available to Common Shareholders.... $ .02 $ (.71) $ .05
======== ======== ========
Weighted average number of common and common equivalent
shares outstanding................................. 10,416 10,414 10,253
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
MAXICARE HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
Years ended December 31,
1993 1992 1991
-------- --------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (loss)................................................ $ 5,588 $ (3,071) $ 525
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation expense........................................... 4,027 5,187 6,458
Amortization of Senior Notes discount.......................... 139 461
Amortization expense........................................... 27 51 77
Extraordinary items............................................ 14,241 905
Provision for bad debt......................................... 397
Loss on dispositions of property and equipment................. 19 298 1,452
Net cash provided by (used for) changes in assets and
liabilities:
Decrease (increase) in accounts receivable................... 1,613 (3,083) 10,890
Increase (decrease) in estimated claims and incentives
payable.................................................... 9,909 1,871 (1,925)
Changes in other miscellaneous assets and
liabilities................................................ (4,066) (5,650) (200)
-------- -------- --------
Net cash provided by operating activities........................ 17,117 9,983 19,040
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Dispositions of property and equipment......................... 7 33 254
Purchases of property and equipment............................ (457) (88) (480)
Increase in statutory deposits................................. (808) (928) (1,980)
Decrease in long-term receivables.............................. 32 373 103
Proceeds from sales of marketable securities................... 26,245 55,048 19,353
Purchases of marketable securities............................. (18,375) (67,268) (21,725)
-------- -------- --------
Net cash provided by (used for) investing activities............. 6,644 (12,830) (4,475)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Senior Notes redemption........................................ (67,000)
Issuance of preferred stock.................................... 60,000
Issuance costs paid on preferred stock......................... (3,700)
Payment of preferred stock dividends........................... (5,400) (4,350)
Cash transferred to disbursing agent........................... (971) (4,281) (7,548)
Payments on capital lease obligations.......................... (381) (477) (418)
Stock options exercised........................................ 136 134
-------- -------- --------
Net cash used for financing activities........................... (6,616) (19,674) (7,966)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents............. 17,145 (22,521) 6,599
Cash and cash equivalents at beginning of period................. 21,527 44,048 37,449
-------- -------- --------
Cash and cash equivalents at end of period....................... $ 38,672 $ 21,527 $ 44,048
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for -
Interest $ 31 $ 2,594 $ 9,674
Income taxes $ 284 $ 43
Supplemental schedule of non-cash investing activities:
Book value of assets exchanged for assets $ 40
Fair value of assets exchanged (25)
--------
Loss on assets exchanged $ 15
========
Capital lease obligations incurred for purchase of
property and equipment:
Fair value of assets acquired $ 1,850
Trade-in allowance (685)
--------
Capital lease assumed $ 24 $ 1,165
========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
MAXICARE HEALTH PLANS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Amounts in thousands)
<TABLE>
<CAPTION>
Number of Number of Additional
Preferred Preferred Common Common Paid-in Accumulated
Shares Stock Shares Stock Capital Deficit Total
--------- --------- ------ -------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1990..... 10,000 $100 $184,605 $(182,182) $ 2,523
Net income................... 525 525
------ ---- -------- --------- -------
Balance at December 31, 1991..... 10,000 100 184,605 (181,657) 3,048
Issuance of preferred stock
(net of issuance costs)...... 2,400 $24 56,276 56,300
Stock options exercised...... 17 134 134
Preferred stock dividends.... (4,350) (4,350)
Net loss..................... (3,071) (3,071)
----- --- ------ ---- -------- --------- -------
Balance at December 31, 1992..... 2,400 24 10,017 100 241,015 (189,078) 52,061
Stock options exercised...... 16 136 136
Preferred stock dividends.... (5,400) (5,400)
Net income................... 5,588 5,588
----- --- ------ ---- -------- --------- -------
Balance at December 31, 1993..... 2,400 $24 10,033 $100 $241,151 $(188,890) $52,385
===== === ====== ==== ======== ========= =======
</TABLE>
See notes to consolidated financial statements.
<PAGE>
MAXICARE HEALTH PLANS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BUSINESS DESCRIPTION
Maxicare Health Plans, Inc., a Delaware corporation ("MHP"), is a
holding company which owns various subsidiaries, primarily health
maintenance organizations ("HMOs"). MHP operates HMOs in California,
Indiana, Illinois, Louisiana, North Carolina, South Carolina and
Wisconsin. All of MHP's HMOs are federally qualified by the United
States Department of Health and Human Services and are generally
regulated by the Department of Insurance of the state in which they
are domiciled (except Maxicare, which is regulated by the California
Department of Corporations).
Maxicare Life and Health Insurance Company ("MLH"), a licensed
insurance company and wholly-owned subsidiary of MHP, operates
preferred provider organizations ("PPOs") or primary care provider
network products in Indiana, Louisiana and California and represents
approximately five percent (5%) of the consolidated enrollment of
MHP and subsidiaries (the "Company") at December 31, 1993. In
addition, MLH writes policies for group life and accidental death
and dismemberment insurance; however, these lines of business make
up less than one percent (1%) of the Company's operating revenues
for the year ended December 31, 1993.
NOTE 2-SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
The accompanying consolidated financial statements include the
accounts of the Company. All significant inter-company balances and
transactions have been eliminated.
Cash and Cash Equivalents
For purposes of the Consolidated Statements of Cash Flows, the
Company considers all highly liquid investments that are both
readily convertible into known amounts of cash and mature within 90
days from their date of purchase to be cash equivalents.
Cash and cash equivalents consist of the following at December 31:
<TABLE>
<CAPTION>
1993 1992
(Amounts in thousands) ------- -------
<S> <C> <C>
Cash.............................. $ 8,398 $ 9,861
Certificates of deposit........... 3,463 1,001
Commercial paper.................. 6,091
Money market funds................ 7,531 5,728
Repurchase agreements............. 8,194 440
U.S. Treasury obligations......... 4,995 4,497
------- -------
$38,672 $21,527
======= =======
</TABLE>
<PAGE>
Marketable Securities
Marketable securities are stated at the lower of amortized cost,
which typically approximates market, or market value. Market value
is estimated using published or broker quoted prices. Gains or
losses on disposal of marketable securities are determined on a
specific identification basis and are included in investment income
in the Consolidated Statements of Operations. Included in
investment income for the year ended December 31, 1993 is $375,000
of gains recognized on the sale of marketable securities.
Marketable securities consist of the following at December 31:
<TABLE>
<CAPTION>
1993 1992
(Amounts in thousands) ------- -------
<S> <C> <C>
Certificates of deposit........... $ 70 $ 75
U.S. Treasury obligations......... 8,992 10,121
Bonds............................. 13,088
Municipal obligations............. 825 1,033
Auction rate preferred stocks..... 9,526 3,001
Other............................. 35
------- -------
$19,448 $27,318
======= =======
</TABLE>
All bonds in which the Company has invested are rated A or better by
Moody's or Standard and Poor's rating agencies.
Accounts Receivable
Accounts receivable consist of the following at December 31:
<TABLE>
<CAPTION>
1993 1992
(Amounts in thousands) ------ -------
<S> <C> <C>
Premiums.......................... $13,217 $12,253
Notes............................. 1,432 2,866
Other............................. 7,231 7,992
------- -------
21,880 23,111
Allowance for retroactive
billing adjustments......... (2,706) (2,324)
------- -------
Accounts receivable, net...... $19,174 $20,787
======= =======
</TABLE>
<PAGE>
Property and Equipment
Property and equipment are recorded at cost and include assets
acquired through capital leases and improvements that significantly
add to the productive capacity or extend the useful life of the
asset. Costs of maintenance and repairs are charged to expense as
incurred. Depreciation for financial reporting purposes is provided
on the straight-line method over the estimated useful lives of the
assets. The costs of major remodeling and improvements are
capitalized as leasehold improvements. Leasehold improvements are
amortized using the straight-line method over the shorter of the
remaining term of the applicable lease or the life of the asset.
Statutory Deposits
Statutory deposits include cash investments that are limited to
specific purposes as required by federal regulations, regulations
in states in which the Company operates or employer groups with
which the Company contracts. The Company had $12.6 million and
$11.4 million in such investments limited by federal or state
regulations at December 31, 1993 and 1992, respectively, and
$850,000 and $500,000 in such investments limited by employer groups
at December 31, 1993 and 1992, respectively. These investments are
stated at the lower of amortized cost, which approximates market, or
market value. Market value is estimated using published or broker
quoted prices.
Intangible Assets
Intangible assets are amortized using the straight-line method over
five years. Accumulated amortization of intangible assets at
December 31, 1993 and 1992 is $1.7 million and $1.6 million,
respectively.
Long-term Liabilities
Long-term liabilities include reserves for various legal matters,
including reserves for medical malpractice claims, and various other
miscellaneous long-term liabilities.
Reorganization Accounting
Costs incurred relating to the reorganization of the Company under
Chapter 11 of Title 11 of the United States Bankruptcy Code are
reflected in the accompanying consolidated financial statements as
reorganization expenses. These costs consisted primarily of legal,
accounting, compensatory and financial consulting expenses.
Revenue Recognition
Premiums are recorded as revenue in the month for which the
enrollees are entitled to health care service. Premiums collected
in advance are deferred. A portion of premiums is subject to
possible retroactive adjustment. Provision has been made for
estimated retroactive adjustments to the extent the probable outcome
of such adjustments can be determined. Any other revenues are
recognized as services are rendered.
<PAGE>
Cost Recognition
The cost of health care services is expensed in the period the
Company is obligated to provide such services. Estimated claims
payable includes claims reported as of the balance sheet date and
estimated (based upon utilization trends and projections of
historical developments) costs of health care services rendered but
not reported. Reserves are continually monitored and reviewed and
as settlements are made or reserves adjusted, differences are
reflected in current operations.
Insurance
Due to the high costs of insurance coverages, the Company's
operating entities, except in South Carolina, are self-insured for
risks on certain medical and hospital claims incurred by their
members. The Indiana operations were reinsured through August 31,
1991 by a wholly-owned subsidiary of MHP and have been self-insured
for such risks subsequent to this date. The North Carolina HMO
maintained reinsurance coverage with a third party insurance carrier
through December 31, 1992 but subsequently has been reinsured
through MLH. The South Carolina HMO continues to maintain
reinsurance coverage with a third party insurance carrier.
In addition, the Company's operating entities are self-insured for
medical malpractice claims.
Premium Deficiencies
Estimated future health care costs and maintenance expenses under a
group of contracts in excess of estimated future premiums and
reinsurance recoveries on those contracts are recorded as a loss
when determinable.
Income Taxes
In February 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" ("FAS 109"). The Company elected to adopt the
Statement for the year ended December 31, 1991. This Statement
requires, among other things, recognition of future tax benefits
measured by enacted tax rates, attributable to deductible temporary
differences between financial statement and income tax bases of
assets and liabilities and to net operating loss carryforwards
("NOLs") to the extent that realization of such benefits is more
likely than not.
Net Income (Loss) Per Common and Common Equivalent Share
Primary earnings per share is computed by adjusting the net income
(loss) for the preferred stock dividends in order to determine net
income (loss) attributable to common shareholders. This amount is
then divided by the weighted average number of common shares and
common equivalent shares for stock options and warrants (when
dilutive) outstanding during the period. Earnings per share
assuming full dilution is reported when the assumption that the
preferred stock is converted to Common Stock is dilutive. Earnings
per share assuming full dilution is determined by dividing net
income (loss) by the weighted average number of common shares and
common stock equivalents for stock options and warrants and for
preferred stock assumed converted to Common Stock (when dilutive).
<PAGE>
Stock Options
With respect to stock options granted at an exercise price which is
less than the fair market value on the date of grant, the difference
between the option exercise price and market value at date of grant
is charged to operations over the period the options vest. Income
tax benefits attributable to stock options are credited to
additional paid-in capital when exercised.
Restriction on Fund Transfers
Certain of the Company's operating subsidiaries are subject to state
regulations which require compliance with certain deposit, reserve
and net worth requirements. To the extent the operating
subsidiaries must comply with these regulations, they may not have
the financial flexibility to transfer funds to MHP. MHP's
proportionate share of net assets (after inter-company eliminations)
which, at December 31, 1993, may not be transferred to MHP by
subsidiaries in the form of loans, advances or cash dividends
without the consent of a third party is referred to as "Restricted
Net Assets". Total Restricted Net Assets of these operating
subsidiaries is $23.7 million at December 31, 1993, with deposit and
reserve requirements representing $13.5 million of the Restricted
Net Assets and net worth requirements, in excess of deposit and
reserve requirements, representing the remaining $10.2 million.
Total Restricted Net Assets at December 31, 1993 of $23.9 million
includes restricted cash of $225,000 held by a non-operating
subsidiary of MHP.
Reclassifications
Certain amounts for 1992 and 1991 have been reclassified to conform
to the 1993 presentation.
NOTE 3 - EXTRAORDINARY ITEMS
On December 5, 1990 (the "Effective Date") the Company emerged from
protection under Chapter 11 pursuant to the Company's joint plan of
reorganization, as modified (the "Reorganization Plan") which
provides that on December 31, 1991 and 1992 or within 90 days
thereafter, the Company will make additional distributions, not to
exceed $20.0 million in the aggregate, in an amount equal to its
then consolidated net worth (as determined in the Company's audited
consolidated financial statements) less $2.0 million (the
"Consolidated Net Worth Distribution"). The Consolidated Net Worth
Distribution will be distributed and applied in the following
manner: 40% of the Consolidated Net Worth Distribution will be
distributed ratably to the holders of certain allowed claims in
accordance with the terms of the Reorganization Plan and the
remaining 60% will be applied ratably against mandatory redemptions
of the 13.5% Senior Notes due December 5, 2000 (the "Senior Notes")
as set forth in the indenture governing the Senior Notes (the
"Indenture").
On March 12, 1992, MHP noticed the redemption of the Senior Notes
for April 13, 1992. In anticipation of this redemption, a $7.0
million extraordinary loss was recorded in the first quarter of 1992
for the write-off of unamortized original issue discount and
unamortized issuance costs on the Senior Notes and an accrual for
Senior Notes redemption costs. Also, a $7.2 million extraordinary
<PAGE>
loss ($20 million * 40% less $781,000 previously recorded) was
reported in the first quarter of 1992 to accrue payments which may
be made pursuant to the Reorganization Plan, based on the Company's
consolidated net worth at December 31, 1992, to certain holders of
allowed claims. The Company does not believe the Reorganization Plan
contemplated either the issuance of convertible preferred stock (see
Note 6) or the redemption of the Senior Notes, and accordingly, the
Company believes the Consolidated Net Worth Distribution required by
the Reorganization Plan should be calculated on a basis as if the
sale of convertible preferred stock had not been consummated and the
Senior Notes had not been redeemed. The Company has thus determined
the December 31, 1992 Consolidated Net Worth Distribution amount to
be approximately $971,000, which has been deposited for distribution
to certain creditors under the Reorganization Plan. In addition, the
Company believes that any Consolidated Net Worth Distribution which
under the Reorganization Plan is to be utilized to redeem the Senior
Notes is no longer due as the Senior Notes have been fully redeemed.
Notwithstanding the foregoing, the Company has elected to accrue in
its consolidated financial statements the maximum potential
liability pending clarification of this matter. The amount that may
be ultimately payable pursuant to this Reorganization Plan
provision, if any, could be less than the amount accrued. The
Consolidated Net Worth Distribution will be made from the Company's
available cash.
The Company's consolidated net worth of $4.0 million at December 31,
1991, before the recognition of the Consolidated Net Worth
Distribution, resulted in an approximate $2.0 million Consolidated
Net Worth Distribution payable being recorded in the fourth quarter
of 1991 ($1.2 million representing the redemption of Senior Notes
and $781,000 representing the distribution to holders of certain
allowed claims). Payment of the December 31, 1991 Consolidated Net
Worth Distribution was made in March 1992. The $781,000
distribution to holders of certain allowed claims, along with the
write-off of $124,000 in original issue discount on the Senior Notes
to be redeemed, was recorded as an extraordinary item in December
1991.
NOTE 4 - LITIGATION
The Company has reached a settlement agreement in principle with the
State of Wisconsin regarding its appeal challenging confirmation of
the Reorganization Plan on jurisdictional grounds. Pursuant to the
agreement, a reorganization plan for Maxicare Health Insurance
Company, a Wisconsin HMO subsidiary of MHP ("MHIC"), in accordance
with Wisconsin state law, will be submitted without prejudice for
approval by the Wisconsin State Court. Under the terms of the
agreement in principle, MHIC's reorganization under Wisconsin law
must be on terms consistent with the Reorganization Plan. The
Company believes the implementation of the agreement in principle
will have no material adverse impact on the Company's business or
its operations. The agreement is subject to approval by the United
States Bankruptcy Court and the non-occurence of certain
contingencies.
In the event the settlement cannot be implemented, the Company may
pursue the appeal. If prosecution of the appeal resumes and the
United States District Court's ruling is upheld after MHIC's
appellate rights have been exhausted, creditors of MHIC will likely
<PAGE>
only have the protections and recoveries afforded under applicable
state law. The Company believes that it has a meritorious position
and will prevail on its appeal of the United States District Court's
ruling, if prosecution of the appeal resumes.
On March 12, 1993, MH Healthcare, Affiliate of Methodist Hospital of
Indiana, Inc. ("MH") submitted a demand (the "Demand") to the
American Arbitration Association (the "AAA") for arbitration of a
contractual dispute between MH and Maxicare Indiana, Inc.
("Indiana") concerning interpretation of the provisions of a Master
Agreement dated February 8, 1988, as subsequently amended, (the
"Agreement") by and among MHP, Indiana and MH. Based on the Pre-
Hearing Statement which MH submitted to the Arbitrator and
communications with MH, the Company has been advised that MH is
seeking a damage award of approximately $7.9 million plus interest.
In the event MH prevails in the arbitration, there may be an
additional amount due to MH for the 1993 contract year. Indiana
disputes the allegations of the Demand and MH's damages computation
and has asserted a counterclaim to the Demand to recover
overpayments erroneously made to MH under the Agreement. The
Company believes that Indiana has meritorious defenses to the Demand
and that Indiana will prevail in the arbitration. In the event MH
is awarded damages in an amount which proximates the damages MH
contends it is entitled to, and such award is upheld on review, the
award could have an adverse financial impact on Indiana and the
Company.
The Company is involved in litigation arising in the normal course
of business, which, in the opinion of management, will not adversely
affect the Company's consolidated financial position.
NOTE 5 - COMMITMENTS AND OTHER CONTINGENCIES
Excluded Cash Claims Reserve
On the Effective Date, the Company estimated that payments to
administration creditors and holders of allowed priority tax claims,
allowed claims of secured creditors, enrollee claims, allowed
priority employee claims and allowed convenience claims (the
"Excluded Cash claims") would not exceed $10.3 million; however, if
required the Reorganization Plan further provides for the payment of
up to $16.0 million of such claims. Pursuant to a stipulation, the
creditor committees agreed, provided the creditors have received the
full amount of minimum cash pursuant to the Reorganization Plan
($77.3 million), to make up to the $5.7 million differential out of
cash proceeds from the sales of assets or the settlement of
litigation which were transferred to a trust established for the
benefit of creditors pursuant to the Distribution Trust Agreement in
order to provide for the payment of these claims in excess of $10.3
million. In the event that the Company's exposure to these claims
significantly exceeds $16.0 million, this could have a material
adverse effect on the viability of the Reorganization Plan and the
Company's business and operations. The Company believes that
reserves for the Excluded Cash claims will be adequate to satisfy
these claims.
Leases
The Company has operating leases, some of which provide for initial
free rent and all of which provide for subsequent rent increases.
Rental expense is recognized on a straight-line basis with rental
<PAGE>
expense of $2.7 million, $2.8 million and $2.8 million reported for
the years ended December 31, 1993, 1992 and 1991, respectively.
Sublease rental revenue of $209,000, $198,000, $191,000 is reported
for the years ended December 31, 1993, 1992 and 1991, respectively.
Assets held under capital leases at December 31, 1993 and 1992 of
$153,000 and $761,000, respectively, (net of $1.6 million and $1.1
million, respectively, of accumulated amortization) are comprised
primarily of equipment leases. Amortization expense for capital
leases is included in depreciation expense.
Future minimum lease commitments for noncancelable leases at
December 31, 1993 were as follows:
<TABLE>
<CAPTION>
Operating Capitalized
Leases Leases
(Amounts in thousands) --------- -----------
<S> <C> <C>
1994.......................... $2,784 $105
1995.......................... 2,543
1996.......................... 1,381
1997.......................... 273
1998.......................... 257
Thereafter.................... 640
------ ----
Total minimum
obligations $7,878 105
======
Less current
portion 105
Long-term ----
obligations $ 0
====
</TABLE>
Total future minimum rentals to be received under noncancelable
operating subleases at December 31, 1993 were as follows:
<TABLE>
<CAPTION>
(Amounts in thousands)
<S> <C>
1994.......................... $209
1995.......................... 104
----
Total $313
====
</TABLE>
NOTE 6 - CAPITAL STOCK
On March 9, 1992 the shareholders voted to amend MHP's current
Restated Certificate of Incorporation to increase the authorized
Capital Stock of the Company from 18 million shares to 45 million
shares through: (i) an increase in the amount of authorized Common
Stock of the Company, par value $.01, from 18 million shares to 40
million shares, and (ii) the authorization of 5 million shares of
Preferred Stock of which 2.5 million shares will be designated
Series A Cumulative Convertible Preferred Stock, par value $.01,
("Series A Stock").
<PAGE>
Preferred Stock
MHP entered into Stock Purchase Agreements dated December 17, 1991
and January 31, 1992 (the "Purchase Agreements"), pursuant to
which, MHP issued an aggregate of 2,400,000 shares of Series A
Stock to certain institutional investors in a private placement at
a purchase price of $25.00 per share. Each share of Series A Stock
accrues quarterly cash dividends at an annual rate of $2.25 per
share and is currently convertible into approximately 2.7548 shares
of Common Stock. The stock conversion ratio is subject to
adjustment upon the occurrence of certain events. The transactions
contemplated by the Purchase Agreements were consummated on March
11, 1992.
Upon any liquidation, dissolution or winding up of the Company,
holders of the Series A Stock are entitled to receive a
preferential payment equal to $25.00 per share, plus all accrued
and unpaid dividends. In the event of a sale of all or
substantially all of the Company's stock or assets, or under
certain circumstances, if the Company merges or combines with
another entity, holders of the Series A Stock, at the election of
holders of at least 75% of the Series A Stock then outstanding, may
request to have their Series A Stock redeemed in which case they
will receive a redemption price equal to the liquidation preference
amount described above. In certain circumstances, the Company will
have the right to redeem the Series A Stock at a redemption price
of $25.00 per share, plus all accrued and unpaid dividends.
Additionally, the Company may not create, issue, or increase the
authorized number of shares of any class or series of stock which
will rank senior to the Series A Stock as to liquidation rights
without the affirmative vote or consent of holders of at least
sixty-six and two-thirds percent (66 2/3%) of the outstanding
shares of Series A Stock.
Common Stock
On the Effective Date, the Company issued 10.0 million shares of
Common Stock to itself, as disbursing agent for the benefit of
holders of allowed claims, interest and equity claims under the
Reorganization Plan. The shares of Common Stock will be validly
issued, fully paid and nonassessable upon issuance pursuant to the
Reorganization Plan in accordance with the terms thereof. The
Common Stock has been recorded at a value equal to the book value
of the old common stock, less issuance costs. The Certificate of
Incorporation of the Company prohibits the issuance of certain non-
voting equity securities as required by the United States
Bankruptcy Code.
Stock Option Plans
Pursuant to the Reorganization Plan, Messrs. Ratican and Froelich
("Senior Management") each received options to purchase up to
277,778 shares of Common Stock at a price of $6.54 per option
share. At December 31, 1991, 100% of these options were fully
vested. The difference of $905,000 between the option exercise
price and market value at date of grant was charged to operations
and accrued as a liability during 1991. As of January 1, 1992, the
Company entered into employment agreements with Senior Management.
Under the terms of these employment agreements, each member of
<PAGE>
Senior Management received on February 25, 1992 options to purchase
up to 150,000 shares of Common Stock at a price of $8.00 per option
share. One third of the options vested on the date of grant and
one third of the options vest on both the first and second
anniversaries of the date of grant.
In December of 1990, the Company approved the 1990 Stock Option
Plan (the "Stock Option Plan"). Under the terms of the Stock
Option Plan, as amended, the Company may issue up to an aggregate
of 1,000,000 stock options to directors, officers and other
employees.
<TABLE>
<CAPTION>
December 31, December 31,
1993 1992
(Amounts in thousands, except ------------ ------------
price range)
<S> <C> <C>
Outstanding, beginning of year.... 593 605
Granted........................... 218 55
Exercised......................... 16 17
Forfeited......................... 52 50
End of year
Outstanding..................... 743 593
Exercisable..................... 385 197
Price Range..................... $8.00-$12.75 $8.00-$10.50
Available....................... 224 390
</TABLE>
Warrants
In accordance with the Reorganization Plan, the Company issued
warrants to itself, as disbursing agent for the allowed interests
and equity holder claims. Upon issuance of the warrants (the
"Warrants"), to these holders pursuant to the terms of the
Reorganization Plan, the registered holders thereof will be entitled
to purchase, in the aggregate, 555,555 shares of Common Stock. Such
Warrants (i) are exercisable for the period commencing 180 days
after the first distribution date and ending on December 5, 1995,
(ii) bear an exercise price of $9.98 per Warrant, and (iii) have
such other terms and conditions (including the right of the Company,
at its option, to redeem the Warrants). As of December 31, 1993, 12
Warrants have been exercised for the purchase of Common Stock.
<PAGE>
NOTE 7 - INCOME TAXES
The benefit for income taxes at December 31 consisted of the
following:
<TABLE>
<CAPTION>
1993 1992 1991
(Amounts in thousands) ------- ------- ------
Current:
<S> <C> <C> <C>
Federal $ 120 $ 75
State 109 67
------- ------- ------
229 142
------- ------- ------
Deferred:
Federal (2,380) (2,720)
State (420) (480)
------- ------- ------
(2,800) (3,200)
------- ------- ------
Benefit for income taxes $(2,571) $(3,058) $ 0
======= ======= ======
</TABLE>
The federal and state deferred tax liabilities (assets) are comprised
of the following at December 31:
<TABLE>
<CAPTION>
1993 1992 1991
(Amounts in thousands) -------- -------- --------
<S> <C> <C> <C>
Loss carryforwards $(30,202) $(35,616) $(37,148)
Depreciation (602) 1,193 2,164
Amortization of intangibles (1,996)
Other (2,137) (1,851) (1,809)
-------- -------- --------
Gross deferred tax assets (32,941) (36,274) (38,789)
-------- -------- --------
Deferred tax assets valuation
allowance 26,941 33,074 38,789
-------- -------- --------
Deferred tax asset $ (6,000) $ (3,200) $ 0
======== ======== ========
</TABLE>
<PAGE>
The differences between the benefit for income taxes at the federal
statutory rate of 34% and that shown in the Consolidated Statements
of Operations are summarized as follows for the years ended December
31:
<TABLE>
<CAPTION>
1993 1992 1991
(Amounts in thousands) ------- ------- -------
<S> <C> <C> <C>
Tax provision at statutory rate..... $ 1,026 $ 2,758 $ 486
State income taxes.................. 109 67
Benefit of NOL carryforward......... (906) (2,683) (486)
Anticipation of future benefit of
NOLs.............................. (2,800) (3,200)
------- ------- -----
Benefit for income taxes............ $(2,571) $(3,058) $ 0
======= ======= =====
</TABLE>
Upon the Effective Date of the Reorganization Plan, the Company
experienced a "change of ownership" pursuant to applicable provisions
of the Internal Revenue Code. As a result of the ownership change,
the Company's utilization of pre-change NOLs is limited to $6.3
million per year. In the event the annual amount is not fully
utilized, the Company is allowed to carryover such amount to
subsequent years during the carryover period. Should the Company
experience a second "change of ownership", the annual limitations on
NOLs would be recalculated.
FAS 109 requires that the tax benefit of such NOLs be recorded as an
asset to the extent that management assesses the utilization of such
NOLs to be more likely than not. Management has estimated, based on
the Company's recent history of operating results and its
expectations for the future, that future taxable income of the
Company will more likely than not be sufficient to utilize a minimum
of approximately $15 million of NOLs. Accordingly, the Company
recorded an increase of $2.8 million in 1993 to its deferred tax
asset, from $3.2 million recorded as of December 31, 1992, resulting
in an aggregate deferred tax asset of $6.0 million recorded as of
December 31, 1993 for the recognition of anticipated future
utilization of NOLs. The maximum amount of remaining NOLs that may be
utilized in future years before expiring in the years 2002 to 2006 is
limited to approximately $87 million.
The Company's income before taxes for financial statement purposes
for the period of 1991 to 1993 was impacted by the incurrence of
reorganization expenses and interest expense on the Senior Notes.
The Company incurred reorganization expenses of $3.7 million and
$895,000 in 1991 and 1992, respectively. The Company incurred
interest expense related to the Senior Notes, which were issued in
December of 1990 and redeemed in March of 1992, in the amounts of
$9.5 million and $2.7 million in 1991 and 1992, respectively.
Excluding reorganization expenses and interest expense on the Senior
Notes, the Company's cumulative pre-tax income for the period of 1991
to 1993 would have been approximately $29.4 million on a pro forma
basis after reflecting these adjustments.
<PAGE>
Quarterly Results of Operations (Unaudited)
The following is a tabulation of the quarterly results of operations
for the years ended December 31:
<TABLE>
<CAPTION>
(Amounts in thousands, Three months ended,
except per share data) ----------------------------------------------------
--------------------- March 31 June 30 Sept 30 Dec 31
--------- --------- --------- ---------
1993
----
<S> <C> <C> <C> <C>
Operating revenues $109,175 $109,897 $108,986 $112,128
Income (loss) from operations $ 2,321 $ 2,012 $ (5,335) $ 1,415
Net income (loss) (1) $ 3,036 $ 2,565 $ (4,689) $ 4,676
Net income (loss) available to common
shareholders $ 1,686 $ 1,215 $ (6,039) $ 3,326
Net income (loss) per share available
to common shareholders (2) $ .16 $ .12 $ (.60) $ .27
1992
----
Operating revenues $104,085 $104,444 $103,799 $102,126
Income (loss) from operations $ 3,349 $ 2,778 $ 2,736 $ (1,099)
Net income before extraordinary
items (3) $ 1,872 $ 3,257 $ 3,078 $ 2,963
Net income (loss) (4) $(12,369) $ 3,257 $ 3,078 $ 2,963
Net income (loss) available to common
shareholders $(12,669) $ 1,907 $ 1,728 $ 1,613
Net loss per share from extraordinary
items $ (1.38)
Net income (loss) per share available
to common shareholders $ (1.23) $ .19 $ .17 $ .15
</TABLE>
(1) Includes a $2.8 million tax benefit from the recording of a
deferred tax asset in the fourth quarter of 1993 (see "Item 8.
Financial Statements and Supplementary Data - Note 7 to the
Company's Consolidated Financial Statements").
(2) Earnings per share are computed on a primary basis for the three
months ended March 31, June 30 and September 30, 1993 due to the
anti-dilutive effect of the assumed conversion of the Company's
Preferred Stock to Common Stock. Earnings per share assuming full
dilution are reported for the three months ended December 31, 1993
due to the dilutive effect of assuming conversion of the Company's
Preferred Stock to Common Stock for that period.
(3) Includes a $3.2 million tax benefit from the recording of a
deferred tax asset in the fourth quarter of 1992 (see "Item 8.
Financial Statements and Supplementary Data - Note 7 to the
Company's Consolidated Financial Statements").
(4) A $7.0 million extraordinary loss was recorded in the first
quarter of 1992 for the write-off of unamortized original issue
discount and unamortized issuance costs on the Senior Notes and an
accrual for the Senior Notes redemption costs. Also, a $7.2
million extraordinary loss was reported in the first quarter of
1992 to accrue payments which may be made pursuant to the
Reorganization Plan, based on the Company's consolidated net worth
at December 31, 1992, to certain holders of allowed claims (see
"Item 8. Financial Statements and Supplementary Data - Note 3 to
the Company's Consolidated Financial Statements").
<PAGE>
Item 9. Changes in and Disagreements with Accountants on
------------------------------------------------
Accounting and Financial Disclosures
------------------------------------
None
<PAGE>
PART III
--------
Item 10. Directors, Executive Officers, Promoters and Control
----------------------------------------------------
Persons of the Registrant
-------------------------
The information set forth in the table, the notes thereto and the
paragraphs thereunder, in Part I, Item 1. of this Form 10-K under
the caption "Directors and Executive Officers of the Registrant" is
incorporated herein by reference.
During 1993, a report required by Section 16(a) of the Securities
Exchange Act of 1934 covering the initial statement of beneficial
ownership of the Company's securities for Florence F. Courtright
was not filed on a timely basis; however, such report was
subsequently filed. In making this statement, the Company has
relied on the written representations of its incumbent directors
and officers and copies of the reports that they have filed with
the Commission.
<PAGE>
Item 11. Executive Compensation
----------------------
Shown below is information concerning the annual and long-term
compensation for services in all capacities to the Company for the
years ended December 31, 1993, 1992 and 1991, of those persons who
were, at December 31, 1992 (i) the chief executive officer and (ii)
the other four most highly compensated executive officers of the
Company (collectively the "Named Officers"):
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------- ------------
Stock
Options
Awards All Other
Name and Principal Position Year Salary(1) Bonus(2) (#) Compensation(3)(4)
--------------------------- ---- --------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C>
Peter J. Ratican 1993 $425,000 $ 18,513 $7,075
Chairman of the Board 1992 $423,653 $148,122 150,000 $6,866
of Directors, Chief 1991 $374,999
Executive Officer and
President
Eugene L. Froelich 1993 $325,000 $ 18,513 $7,075
Executive Vice President - 1992 $323,654 $148,122 150,000 $6,866
Finance and Administration, 1991 $274,999
Chief Financial Officer
and Director
Alan D. Bloom 1993 $200,000 7,500 $6,000
Senior Vice President, 1992 $195,000 $5,850
Secretary and General 1991 $195,000
Counsel
Richard A. Link 1993 $195,000 5,000 $5,850
Chief Accounting Officer 1992 $190,008 $5,700
and Senior Vice President 1991 $175,000 20,000
-Accounting
William B. Caswell 1993 $182,000 10,000 $4,200
Vice President, General 1992 $154,818 25,000
Manager - Maxicare
California (5)
</TABLE>
(1) Excludes distributions received during the year ended December
31, 1992 paid with respect to claims for pre-petition
compensation paid pursuant to the Reorganization Plan.
(2) These amounts are bonuses payable pursuant to the Reorganization
Plan and were paid from funds held by the Disbursing Agent in a
segregated account and were not paid out of the Company's
available cash.
(3) These amounts include contributions made by the Company on behalf
of the Named Officer under the Company's 401(k) Savings Incentive
Plan.
(4) In accordance with the transitional provisions applicable to the
revised rules on executive officer and director compensation
disclosure adopted by the Securities and Exchange Commission, as
informally interpreted by the Commission's Staff, amounts of
Other Annual Compensation and All Other Compensation are excluded
for the Company's 1991 fiscal year.
(5) William B. Caswell's employment at the Company began in February
1992.
<PAGE>
Option Grants
-------------
Shown below is further information on grants of stock options
pursuant to the 1990 Incentive Stock Option Plan during the year
ended December 31, 1993, to the Named Officers which are reflected
in the Summary Compensation Table.
<TABLE>
<CAPTION>
Number of
Securities Percentage of Potential Realizable
Underlying Total Options Value at Assumed
Options Granted to Exercise or Annual Rates of Stock
Granted (1) Employees in Base Price Expiration Price Appreciation for
Name (#) Fiscal 1993 ($/share)(2) Date Option Term (3)
------------------ ----------- ------------- ------------ ---------- ----------------------
5% 10%
--------- ---------
<S> <C> <C> <C> <C> <C> <C>
Alan D. Bloom 7,500 3.4% $9.63 12/20/98 $ 82,575 $104,250
Richard A. Link 5,000 2.3% $9.63 12/20/98 $ 55,050 $ 69,500
William B. Caswell 10,000 4.6% $9.63 12/20/98 $110,100 $139,000
</TABLE>
(1) The options were granted as of December 20, 1993 and vest in one-
third installments on the first, second and third anniversaries
of the date of grant. If the grantee's employment is terminated
under certain circumstances or there is a restructuring of the
Company (as set forth in the option agreement) these options
would become immediately exercisable.
(2) The option exercise price is subject to adjustment in the event
of a stock split or dividend, recapitalization or certain other
events.
(3) The actual value, if any, the Named Officer may realize will
depend on the excess of the stock price over the exercise price
on the date the option is exercised, so that there is no
assurance the value realized by the Named Officer will be at or
near the value estimated. This amount is net of the option
exercise price.
Option Exercises and Fiscal Year-End Values
-------------------------------------------
Shown below is information with respect to the unexercised options
to purchase the Company's Common Stock granted in fiscal 1993 and
prior years under employment agreements and the 1990 Incentive
Stock Option Plan to the Named Officers and held by them at
December 31, 1993. None of the Named Officers exercised any stock
options during fiscal 1993.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options Held At In-the-Money Options At
December 31, 1993 (#) December 31, 1993 (1)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Peter J. Ratican 377,778 50,000 $1,066,667 $87,500
Eugene L. Froelich 377,778 50,000 $1,066,667 $87,500
Alan D. Bloom 6,667 10,833 $ 11,667 $ 6,733
Richard A. Link 46,667 28,333 $ 78,333 $39,767
William B. Caswell 8,333 26,667 $ 4,167 9,533
</TABLE>
(1) Based on the closing price on the NASDAQ-NMS on that date ($9.75),
net of the option exercise price.
<PAGE>
Employment Agreements
---------------------
As of January 1, 1992, the Company has entered into five-year
employment agreements with Peter J. Ratican and Eugene L. Froelich
("Senior Management"). These employment agreements provide for
annual base compensation of $425,000 for Mr. Ratican and $325,000
for Mr. Froelich, subject to increases and bonuses, as may be
determined by the Board based on annual reviews. The employment
agreements provide that upon the termination of either member of
Senior Management by the Company without Cause or reasons other
than death or incapacity or the voluntary termination by either
member of Senior Management for certain reasons as set forth in
their employment agreements, the terminated member will be entitled
to receive (i) a payment equal to the balance of the terminated
member's annual base salary which would have been paid over the
remainder of the term of the employment agreement; (ii) an
additional one year's annual base salary; (iii) payment of any
performance bonus amounts which would have otherwise been payable
over the remainder of the term of the agreement; (iv) immediate
vesting of all stock options; (v) the continuation of the right to
participate in any profit sharing, bonus, stock option, pension,
life, health and accident insurance, or other employee benefits
plans including a car allowance through December 31, 1996. Cause
is defined as: (i) the willful or habitual failure to perform
requested duties commensurate with his employment without good
cause; (ii) the willful engaging in misconduct or inaction
materially injurious to the Company; or (iii) the conviction for a
felony or of a crime involving moral turpitude, dishonesty or
theft. In the event of a Change in Control of the Company, either
member may elect to terminate the employment contract in which case
the electing member will be entitled to receive a payment equal to
2.99 times that member's average annualized compensation from the
Company over a certain period. Change of Control is defined as:
(i) any transaction or occurence which results in the Company
ceasing to be publically owned with at least 300 stockholders; (ii)
any person or group becoming beneficial owner of more than forty
percent (40%) of the combined voting power of the Company's
outstanding securities; (iii) a change in the composition of the
Board, as set forth in the employment agreement; (iv) the merger or
consolidation of the Company with or into any other non-affiliated
entity whereby the Company's equity security holders, immediately
prior to such transaction, own less than sixty percent (60%) of the
equity; or (v) the sale or transfer of all or substantially all of
its assets. In the event of death or incapacity, the member, or
his estate, shall receive the equivalent of ninety (90) days base
salary and in the case of incapacity, the continuation of health
and disability benefits. The employment agreements also provide
that in the event either member of Senior Management does not
receive an offer for a new employment agreement containing terms at
least as favorable as those contained in the existing employment
agreements before the expiration of such employment agreements,
such member will be entitled to receive a payment equal to one
year's base salary under the terminating agreement. Under these
agreements, each member of Senior Management will be entitled to
receive an annual performance bonus calculated using a formula, as
set forth in the employment agreements, which is based on the
Company's annual pre-tax earnings, before extraordinary items, over
$10 million. In addition, upon the sale of the Company, a sale of
<PAGE>
substantially all of its assets or a merger where the Company
shareholders cease to own a majority of the outstanding voting
capital stock, Senior Management will be entitled to a sale bonus
calculated using a formula which is based on a percentage of the
excess value of the Company over an initial value as set forth in
the employment agreements.
In addition, Senior Management remains entitled to receive certain
additional compensation out of funds set aside for distribution
under the Reorganization Plan on the Effective Date or from the
proceeds of assets liquidated on behalf of pre-petition creditors
under the Reorganization Plan.
As of January 1, 1993 the Company entered into an employment
agreement, effective through December 31, 1994, with Richard A.
Link. As of January 1, 1994 the Company entered into an employment
agreement, effective through December 31, 1994, with Alan D. Bloom
and an employment agreement, effective through December 31, 1995,
with William B. Caswell. The contracts provide a minimum base
salary of $197,500, $203,000 and $195,000 for Messrs. Link, Bloom
and Caswell, respectively, subject to increases and bonuses, as may
be determined from time to time by the Chief Executive Officer of
the Company. The contract with Mr. Caswell also provides that: (i)
should he die, his estate shall receive the equivalent of thirty
(30) days base salary; (ii) should the Company terminate his
employment prior to the first anniversary of the contract for any
reason other than death, incapacity, or Cause, he shall receive the
equivalent of his annual base salary; (iii) should the Company
terminate his employment on or after the first anniversary of the
contract for any reason other than death, incapacity, or Cause, he
shall receive the amount of the remainder of his annual base salary
as would have been paid had the contract not been terminated which
amount shall in no event be less than the equivalent of six (6)
months base salary; and (iv) should his employment be terminated
for any reason other than death, voluntary resignation, incapacity
or Cause within six (6) months of a Change of Control, he shall
receive the equivalent of his annual base salary. Cause is defined
as (i) the willful and continued failure to perform duties pursuant
to the employment agreement without good cause; (ii) the willful
engaging in misconduct or inaction materially injurious to the
Company; or (iii) the conviction of a felony or of a crime
involving moral turpitude. Change of Control is defined as (i) the
merger or consolidation of the Company with or into any other non-
affiliated entity whereby the Company's equity security holders,
immediately prior to such transaction, own less than fifty percent
(50%) of the equity; or (ii) the sale or transfer of all or
substantially all of its assets. The contracts with Messrs. Link
and Bloom provide that should their employment be terminated under
certain circumstances, they would receive up to the equivalent of
four (4) months base salary.
<PAGE>
Compensation of Directors
-------------------------
During 1993, certain members of the Board received compensation for
their services as directors. These members included Claude
Brinegar, Leon Clements, Florence Courtright, Thomas Field, Jr.,
Walter Filkowski and Charles Lewis and they received cash payments
of $33,000, $29,250, $6,000, $31,500, $6,000 and $30,750,
respectively. During 1994, current directors, excluding directors
who are also officers of the Company, will receive compensation for
their services in the amount of $24,000 per year, plus $750 per
meeting. In addition, these directors are entitled to be
reimbursed for all of their reasonable out-of-pocket expenses
incurred in connection with their services as directors of the
Company.
Non-employee directors of the Company have received options to
purchase shares of Common Stock which are immediately exercisable
at an exercise price equal to the market price at the date of
grant. Set forth below is a schedule of the outstanding options at
December 31, 1993 held by each of the current and former directors,
the date of grant and the exercise price of such options:
<TABLE>
<CAPTION>
Exercise Price
Director # of Options Date of Grant Per Share
----------------- ------------ ------------- -------------
<S> <C> <C> <C>
Leon Clements 10,000 May 20, 1991 $ 8.00
Walter Filkowski 10,000 May 20, 1991 $ 8.00
Charles Lewis 10,000 May 20, 1991 $ 8.00
10,000 December 20, 1993 $ 9.63
Claude Brinegar 10,000 July 18, 1991 $ 9.25
10,000 December 20, 1993 $ 9.63
Thomas Field 10,000 April 1, 1992 $10.50
10,000 December 20, 1993 $ 9.63
Florence Courtright 10,000 November 5, 1993 $10.88
</TABLE>
Provided these directors continue to serve as directors of the
Company, the exercise term of these options is five years. If the
directorship is terminated, the options expire thirty (30) days
from the date of such termination. Upon the expiration of his term
as a director on February 10, 1993, the Board voted to extend the
period in which Mr. Filkowski could exercise his options to one
year from the termination date of his directorship. In February
1994, Mr. Filkowski exercised all options held.
Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------
Peter Ratican, the Company's President and Chief Executive Officer,
served as an ex-officio member of the Compensation Committee of the
Company for the year ended December 31, 1993. Although Mr. Ratican
served as an ex-officio member of this Compensation Committee, he
did not participate in any decisions regarding his own compensation
as an executive officer. The Company's Board of Directors as a
whole determines Mr. Ratican's total compensation package.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and
---------------------------------------------------
Management
----------
The following table sets forth the number and percentage of the
outstanding shares of Common Stock and Series A Stock owned
beneficially as of December 31, 1993 by each director or nominee for
director as of such date, by the Company's chief executive officer
("CEO"), by the four other most highly compensated executive
officers other than the CEO, by all directors and executive officers
as a group, and by each person who, to the knowledge of the Company,
beneficially owned more than 5% of any class of the Company's voting
stock on such date.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership(1)
------------------------
Percentage Percentage Percentage
of of of Total
Name and Address of Common Series A Common Series A Voting
Person or Group Stock(2)(3) Stock(2) Stock Stock Power(4)
------------------- ----------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Maxicare Health Plans, Inc., 1,164,778 11.61% 7.00%
as disbursing agent (5)
1149 South Broadway Street
Los Angeles, California 90015
Cede & Co. (6) 6,303,227 62.82% 37.87%
P.O. Box 20
Bowling Green Station
New York, New York 10274
Chilmark Capital Corp. (7)(8) 1,228,725 12.25% 7.38%
139 West Saddle River Road
Saddle River, New Jersey 07458
Peter J. Ratican (8)(9) 427,996 4.09% 2.51%
1149 South Broadway Street
Los Angeles, California 90015
Eugene L. Froelich (10) 427,778 4.09% 2.51%
1149 South Broadway Street
Los Angeles, California 90015
Alan D. Bloom (9)(11) 7,026 * *
1149 South Broadway Street
Los Angeles, California 90015
Richard A. Link (12) 46,686 * *
1149 South Broadway Street
Los Angeles, California 90015
William B. Caswell (13) 21,867 * *
1149 South Broadway Street
Los Angeles, California 90015
Claude S. Brinegar (14)(15) 21,000 * *
1149 South Broadway Street
Los Angeles, California 90015
Leon M. Clements (9)(10) 10,000 * *
1149 South Broadway Street
Los Angeles, California 90015
</TABLE>
-------------------------
* - Less than one percent
<TABLE>
<CAPION>
Amount and Nature of
Beneficial Ownership(1)
------------------------
Percentage Percentage Percentage
of of of Total
Name and Address of Common Series A Common Series A Voting
Person or Group Stock(2)(3) Stock(2) Stock Stock Power(4)
------------------- ----------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Florence F. Courtright (10)(15) 10,000 * *
1149 South Broadway Street
Los Angeles, California 90015
Thomas W. Field, Jr. (10) 20,000 * *
1149 South Broadway Street
Los Angeles, California 90015
Charles E. Lewis (9)(10)(15)(16) 20,000 * *
1149 South Broadway Street
Los Angeles, California 90015
Alan S. Manne 500 * *
1149 South Broadway Street
Los Angeles, California 90015
General Motors Hourly-Rate 446,535 153,200 4.27% 6.38% 2.68%
Employes Pension Trust (17)
767 Fifth Avenue
New York, New York 10153
General Motors Salaried Employes 417,066 144,100 4.00% 6.00% 2.51%
Pension Trust (17)
767 Fifth Avenue
New York, New York 10153
J.P. Morgan & Co. Incorporated (18) 535,612 190,000 5.07% 7.92% 3.22%
23 Wall Street
New York, New York 10015
Froley, Revy Investment Co., 650,133 236,000 6.09% 9.83% 3.91%
Inc. (19)(20)
10900 Wilshire Boulevard, #1050
Los Angeles, California 90024
Mutual Series Fund Inc. (19)(21) 518,178 188,100 4.91% 7.84% 3.11%
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
Ryback Management Corporation (22) 1,040,554 193,500 9.85% 8.06% 6.25%
7711 Carondelet Avenue
St. Louis, Missouri 63105
Snyder Capital Management, Inc. (23) 843,480 100,000 8.18% 4.17% 5.07%
350 California Street
San Francisco, California 94104
Smith Barney Shearson Holdings Inc. (24) 997,151 328,500 9.12% 13.69% 5.99%
1345 Avenue of the Americas
New York, New York 10105
Bear Stearns Securities Corp. (19)(25) 572,998 208,000 5.40% 8.67% 3.44%
One Metrotech Center North
Brooklyn, New York 11201-3862
All Directors and Executive Officers 1,102,455 9.91% 6.21%
as a Group (15 persons) (26)
</TABLE>
-------------------------
* - less than one percent
<PAGE>
(1) Except as otherwise set forth herein, all information
pertaining to the holdings of persons who beneficially own
more than 5% of any class of the Company's voting stock (other
than the Company or its executive officers and directors) is
based on filings with the Securities and Exchange Commission
and information provided by the record holders.
(2) In setting forth "beneficial" ownership, the rules of the
Securities and Exchange Commission require that shares
underlying currently exercisable options or issuable upon
conversion of the Series A Stock, including options which
become exercisable within 60 days, held by a described person
be treated as "beneficially" owned and further require that
every person who has or shares the power to vote or to dispose
of shares of stock be reported as a "beneficial" owner of all
shares as to which any such sole or shared power exists. As a
consequence, shares which are not yet outstanding are, if
obtainable upon exercise of an option which is exercisable or
will become exercisable within sixty (60) days or upon
conversion of the Series A Stock, nevertheless treated as
"beneficially" owned by the designated person, and several
persons may be deemed to be the "beneficial" owners of the
same securities if they share the power to vote or dispose of
them.
(3) In the event that a tender offer for the Company's shares of
Common Stock is commenced prior to the final distribution of
the Company's Common Stock pursuant to the Reorganization
Plan, the committee elected to oversee the implementation of
the Reorganization Plan after the Effective Date (the "New
Committee") will have certain rights to direct the tender of
the Unallocated Shares. The New Committee disclaims
beneficial ownership over any such shares.
(4) Assumes 10,033,345 shares of Common Stock outstanding, the
conversion of all 2,400,000 shares of Series A Stock
outstanding (or 6,611,520 shares) and, with respect to each
listed beneficial owner, the exercise or conversion of any
option, warrant or right held by each such owner exercisable
or convertible within 60 days.
(5) These shares are held by the Company, as disbursing agent for
the benefit of holders of Reorganization Plan classes 5A
through 5H, 7 and 8A through 8D allowed claims and
Reorganization Plan class 12 allowed interests and equity
holder claims. The Company disclaims beneficial ownership of
these shares. For information concerning the voting of these
shares, see "General Information - Outstanding Shares and
Voting Rights".
(6) Cede & Co. holds these shares as a nominee for the Depository
Trust Company, which is the securities depository for various
segments of the financial industry. None of these shares are
owned beneficially by Cede & Co. Includes 1,228,725 shares
beneficially owned by Chilmark Capital Corp. and Neil Jonathan
Weisman; for further information with respect to these shares,
see footnote (7), below.
<PAGE>
(7) Includes 40,000 shares of Common Stock held by the Chilmark
Capital Corp. ("Chilmark") profit sharing plan, and 755,100
shares of Common Stock held in a partnership, of which,
Chilmark is general partner and 433,625 shares of Common Stock
held for two managed accounts for which Chilmark has
investment discretion. Neil Jonathan Weisman is president and
sole shareholder of Chilmark.
(8) Includes 427,778 shares which are subject to options which are
currently exercisable or will become exercisable within 60
days.
(9) On December 5, 1990, the effective date of the Reorganization
Plan, Messrs. Ratican, Lewis, Bloom and Clements held 350;
490; 150 and 2,000 shares, respectively, of common stock of
Maxicare Health Plans, Inc., a California corporation ("MHP"),
the Company's predecessor in interest; Mr. Ratican's shares
were held in his individual retirement account. These shares
were cancelled as of that date in accordance with the terms of
the Reorganization Plan. As a result, Messrs. Ratican, Lewis,
Bloom and Clements each holds a class 12 claim under the
Reorganization Plan which will entitle Mr. Ratican to receive
2 shares of Common Stock and 5 warrants, Dr. Lewis to receive
2 shares of Common Stock and 8 warrants, Mr. Bloom to receive
2 warrants and Mr. Clements to receive 11 shares of Common
Stock and 32 warrants. The total number of shares of Common
Stock and warrants which these individuals will receive are
excluded from the shares disclosed as beneficially owned.
(10) All shares (and the calculation of the percentage owned
assumes such shares are outstanding) are subject to options
which are currently exercisable.
(11) Includes 6,666 shares which are subject to options which are
currently exercisable or will become exercisable within 60
days.
(12) Includes 46,664 shares which are subject to options which are
currently exercisable or will become exercisable within 60
days.
(13) Includes 16,667 shares which are subject to options which are
currently exercisable or will become exercisable within 60
days.
(14) Includes 20,000 shares which are subject to options which are
currently exercisable or will become exercisable within 60
days.
(15) Does not include the Unallocated Shares, held of record by the
Company. Under certain circumstances, the Independent
Directors, currently Messrs. Brinegar and Lewis and Ms.
Courtright, have rights to vote the Unallocated Shares. The
Independent Directors disclaim beneficial ownership of these
shares. For further information on the voting of these
shares, see "General Information - Outstanding Shares and
Voting Rights", above.
<PAGE>
(16) Dr. Lewis, a director of the Company, is employed by a
creditor and/or affiliate of a creditor which have filed
claims under the Reorganization Plan which may entitle such
creditor, or affiliate thereof, to receive distributions of
Common Stock. The total number of shares of Common Stock
which these creditors will receive has not yet been
determined. Dr. Lewis disclaims beneficial ownership of these
shares.
(17) The shares of Common Stock and Series A Stock are held by
Mellon Bank, N.A., acting as trustee (the "Trustee") under two
separate trust agreements for the General Motors employee
pension trusts (the "Trusts"). The Trustee may act for the
Trusts with respect to such shares only pursuant to direction
of one of the Trusts' applicable investment managers. General
Motors Investment Management Corporation ("GMIMCo") is the
investment manager with respect to 200,000 shares (in the
aggregate) of Series A Stock. The shares of Series A Stock
are convertible into an aggregate of 819,002 shares of Common
Stock; the shares of Common Stock issuable upon conversion of
the Series A Stock are included in the number of shares of
Common Stock attributable to these holders. Investment and
disposition decisions regarding the shares of Series A Stock
and Common Stock managed by the Trusts' other investment
managers are made by the personnel of such managers, who act
independently of GMIMCo, although the continued engagement of
such managers as investment managers for the Trusts is subject
to the authorization of GMIMCo. Because of the Trustee's
limited role, beneficial ownership of the shares of Series A
Stock and Common Stock by the Trustee is disclaimed.
(18) Includes 12,200 shares of Common Stock and 190,000 shares of
Series A Stock held in a fiduciary capacity by J.P. Morgan and
Co. Incorporated through its subsidiaries J.P. Morgan
Investment Management, Inc. and Morgan Guaranty Trust Company
of New York. All shares of Common Stock and Series A Stock
are subject to the sole dispositive authority of these
subsidiaries of J.P. Morgan and Co. Incorporated and the
shares of Series A Stock are subject to the sole voting
authority of these entities. The shares of Series A Stock are
convertible into an aggregate of 523,412 shares of Common
Stock; the shares of Common Stock issuable upon conversion of
the Series A Stock are included in the number of shares of
Common Stock attributable to these holders.
(19) The shares of Common Stock issuable upon conversion of the
Series A Stock are included in the number of shares of Common
Stock attributable to these holders. None of the holders
currently hold shares of Common Stock.
(20) All shares are held on behalf of institutional investors and
are subject to the sole voting and dispositive authority of
Froley, Revy Investment Co., Inc.
(21) Mutual Series Fund Inc. (the "Fund") is an investment company
consisting of four separate series of stock. Two of the
series, namely, Mutual Beacon Fund and Mutual Qualified Fund,
are the beneficial owners of 58,000 shares and 130,100 shares,
respectively, of Series A Stock. The shares owned by these
<PAGE>
funds are registered in nominee name. Pursuant to investment
advisory contracts with each of the series, Heine Securities
Corporation ("Heine"), an investment advisor, and Michael F.
Price, president of Heine, have sole investment and voting
power over the securities beneficially owned by the series.
However, Heine and Mr. Price disclaim any beneficial ownership
in such shares owned by the Fund.
(22) Linder Fund, Inc. ("Linder") is an investment company which
beneficially owns 507,500 shares of Common Stock and 193,500
shares of Series A Stock. The shares owned by Linder are
registered in nominee name. Pursuant to an investment
advisory contract with Linder, Ryback Management Corporation,
an investment advisor, shares investment and voting power over
the securities beneficially owned by Linder. The shares of
Series A Stock are convertible into an aggregate of 533,054
shares of Common Stock; the shares of Common Stock issuable
upon conversion of the Series A Stock are included in the
number of shares of Common Stock attributable to these
holders.
(23) Includes 568,000 shares of Common Stock and 100,000 shares of
Series A Stock held in a fiduciary capacity by Snyder Capital
Management, Inc. ("Snyder"), an investment advisor for a
number of investors. No individual investor beneficially owns
more than 5% of any class of the Company's voting stock.
Snyder has sole voting power over 47,000 shares of Common
Stock and 63,600 shares of Series A Stock. Voting power is
shared by Snyder on 442,000 shares of Common Stock and 31,500
shares of Series A Stock. The shares of Series A Stock are
convertible into an aggregate of 275,480 shares of Common
Stock; the shares of Common Stock issuable upon conversion of
the Series A Stock are included in the number of shares of
Common Stock attributable to this holder.
(24) Includes 92,199 shares of Common Stock and 328,500 shares of
Series A Stock held in a fiduciary capacity by Smith Barney
Shearson Inc. ("SBS"), a registered broker/dealer. Smith
Barney Shearson Holdings Inc. ("SBH") is the sole common
shareholder of SBS and The Travelers Inc. ("TRV") is the sole
shareholder of SBH. However, SBH and TRV disclaim any
beneficial ownership in such shares. The shares of Series A
Stock are convertible into an aggregate of 904,952 shares of
Common Stock; the shares of Common Stock issuable upon
conversion of the Series A Stock are included in the number of
shares of Common Stock attributable to this holder. SBS has
sole voting power over approximately 915,315 shares, including
those shares issuable upon conversion of Series A Stock.
(25) Bear Stearns Securities Corp. is the record holder of these
shares; however, all shares are held on behalf of investors.
Bear Stearns Securities Corp. disclaims beneficial ownership
of all shares.
(26) Includes 1,093,880 shares which are subject to options which
are currently exercisable or will become exercisable within 60
days. Also, on December 5, 1990, the Effective Date of the
Reorganization Plan, certain officers and directors of the
Company held an aggregate of 3,790 shares of common stock of
MHP, the Company's predecessor in interest. These shares were
<PAGE>
cancelled as of that date in accordance with the terms of the
Reorganization Plan. As a result, these executive officers
and directors each holds a class 12 claim under the
Reorganization Plan which entitle them to receive an aggregate
of 19 shares of Common Stock and 60 warrants to purchase
Common Stock. The total number of shares of Common Stock and
warrants which these individuals will receive are excluded
from the shares disclosed as beneficially owned.
<PAGE>
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
None.
<PAGE>
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports on
-------------------------------------------------------
Form 8-K
--------
(a) 1. Financial Statements
The following consolidated financial statements of Maxicare
Health Plans, Inc. and subsidiaries are included in this
report in response to Item 8.
Report of Independent Accountants
Consolidated Balance Sheets - At December 31, 1993
and 1992
Consolidated Statements of Operations - Years ended
December 31, 1993, 1992 and 1991
Consolidated Statements of Cash Flows - Years ended
December 31, 1993, 1992 and 1991
Consolidated Statements of Changes in Shareholders'
Equity - Years ended December 31, 1993,
1992 and 1991
Notes to Consolidated Financial Statements
(a) 2. Financial Statement Schedules
Schedule I - Marketable Securities and Other Investments at
December 31, 1993
Schedule III - Condensed Financial Information of Registrant
- Condensed Balance Sheets at December 31, 1993 and 1992,
Condensed Statements of Operations and Condensed Statements
of Cash Flows for the years ended December 31, 1993, 1992
and 1991, Notes to Condensed Financial Information of
Registrant
Schedule V - Property, Plant and Equipment for the years
ended December 31, 1993, 1992 and 1991
Schedule VI - Accumulated Depreciation, Depletion and
Amortization of Property, Plant and Equipment for the years
ended December 31, 1993, 1992 and 1991
Schedule VIII - Valuation and Qualifying Accounts for the
years ended December 31, 1993, 1992 and 1991
(a) 3. Exhibits
2.1 Joint Plan of Reorganization dated May 14, 1990, as
modified on May 24 and July 12, 1990 (without schedules)*
2.2 Order Confirming Joint Plan of Reorganization dated May
14, 1990, as Modified, entered on August 31, 1990
(without exhibits or schedules)*
2.3 Amendment to Order Confirming Joint Plan of
Reorganization dated May 14, 1990, as Modified, entered
on August 31, 1990*
<PAGE>
2.4 Stipulation and Order Re Conditions to Effectiveness of
the Plan, entered on December 3, 1990*
2.5 Notice That The Conditions to Effectiveness of the Plan
Have Been Met or Waived, filed on December 4, 1990*
2.6 Agreement and Plan of Merger of Maxicare Health Plans,
Inc. and HealthCare USA Inc., dated as of December 5,
1990 (without exhibits or schedules)*
3.1 Charter of Maxicare Health Plans, Inc., a Delaware
corporation*
3.3 Amendment to Charter of Maxicare Health Plans, Inc., a
Delaware corporation@
3.4 Amended Bylaws of Maxicare Health Plans, Inc., a Delaware
corporation
4.1 Form of Certificate of New Common Stock of Maxicare
Health Plans, Inc.*
4.2 Form of Certificate of Warrant of Maxicare Health Plans,
Inc.*
4.4 Warrant Agreement by and between Maxicare Health Plans,
Inc. and American Stock Transfer & Trust Company, dated
as of December 5, 1990*
4.5 Stock Transfer Agent Agreement by and between Maxicare
Health Plans, Inc., and American Stock Transfer & Trust
Company, dated as of December 5, 1990*
4.6 Registration Undertaking by Maxicare Health Plans, Inc.,
dated as of December 5, 1990*
4.8 Portions of Charter of Maxicare Health Plans, Inc.,
relating to the rights of holders of the New Common
Stock, the Warrants, or the New Senior Notes*
4.9 Portions of Bylaws of Maxicare Health Plans, Inc.,
relating to the rights of holders of the New Common
Stock, the Warrants, or the New Senior Notes*
4.10 Series A Cumulative Convertible Preferred Stock Purchase
Agreement dated as of December 17, 1991**
4.11 Series A Cumulative Convertible Preferred Stock Purchase
Agreement dated as of January 31, 1992**
4.12 Form of Certificate of Preferred Stock of Maxicare Health
Plans, Inc.@
10.1 Management Incentive Program*
10.2 Incentive Compensation Agreement*
<PAGE>
10.3b Employment and Indemnification Agreement by and between
Maxicare Health Plans, Inc. and Peter J. Ratican, dated
as of January 1, 1992@
10.4b Employment and Indemnification Agreement by and between
Maxicare Health Plans, Inc. and Eugene L. Froelich dated
January 1, 1992@
10.5b Employment Agreement by and between Maxicare Health
Plans, Inc. and Samuel W. Warburton, dated as of January
1, 1993@@
10.7c Employment and Indemnification Agreement by and between
Maxicare Health Plans, Inc. and Vicki F. Perry, dated as
of January 1, 1993@@
10.7d Employment and Indemnification Agreement by and between
Maxicare Health Plans, Inc. and Vicki F. Perry, dated as
of January 1, 1994
10.8b Employment and Indemnification Agreement by and between
Maxicare Health Plans, Inc. and Alan D. Bloom, dated as
of January 1, 1993@@
10.8c Employment and Indemnification Agreement by and between
Maxicare Health Plans, Inc. and Alan D. Bloom, dated as
of January 1, 1994
10.9c Form of Employment and Indemnification Agreement by and
between Maxicare Health Plans, Inc. and Richard A. Link,
dated as of January 1, 1993@@
10.12c Employment and Indemnification Agreement by and between
Maxicare Health Plans, Inc. and Aivars Jerumanis, dated
as of January 1, 1993@@
10.12d Employment and Indemnification Agreement by and between
Maxicare Health Plans, Inc. and Aivars Jerumanis, dated
as of January 1, 1994
10.14 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Peter J. Ratican, dated as of December 5,
1990*
10.15 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Eugene L. Froelich, dated as of December
5, 1990*
10.16 Form of Stock Option Agreement by and between Maxicare
Health Plans, Inc. and Samuel Warburton, dated as of
December 5, 1990*
10.18 Form of Stock Option Agreement by and between Maxicare
Health Plans, Inc. and Vicki F. Perry, dated as of
December 5, 1990*
10.19 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Alan D. Bloom, dated as of December 5,
1990*
<PAGE>
10.20 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Richard A. Link, dated as of December 5,
1990*
10.23 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Aivars Jerumanis, dated as of December 5,
1990*
10.28 Form of Distribution Trust Agreement*
10.29 Lease by and between Maxicare Health Plans, Inc. and
Transamerica Occidental Life Insurance Company, dated as
of June 1, 1990*
10.30 Maxicare Health Plans, Inc. 401(k) Plan*
10.32 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Leon M. Clements, dated as of May 20,
1991@
10.33 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Walter J. Filkowski, dated as of May 20,
1991@
10.35 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Charles E. Lewis, dated as of May 20,
1991@
10.36 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Claude S. Brinegar, dated as of July 18,
1991@
10.38 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Richard A. Link, dated as of December 20,
1991@
10.40 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Aivars Jerumanis, dated as of December
20, 1991@
10.41 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Samuel W. Warburton, dated as of December
20, 1991@
10.42 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Peter J. Ratican, dated as of February
25, 1992@
10.43 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Eugene L. Froelich, dated as of February
25, 1992@
10.44 Amended Maxicare Health Plans, Inc. 1990 Stock Option
Plan@
10.48 Employment and Indemnification Agreement by and between
Maxicare Health Plans, Inc. and William B. Caswell, dated
as of January 8, 1992@@
<PAGE>
10.48a Employment and Indemnification Agreement by and between
Maxicare Health Plans, Inc. and William B. Caswell, dated
as of January 1, 1994
10.49 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and William B. Caswell, dated as of February
3, 1992@@
10.50 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Thomas W. Field, Jr., dated as of April
1, 1992@@
10.51b Employment and Indemnification Agreement by and between
Maxicare Health Plans, Inc. and Robert Landis, dated as
of January 1, 1993@@
10.51c Employment and Indemnification Agreement by and between
Maxicare Health Plans, Inc. and Robert Landis, dated as
of January 1, 1994
10.52 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Robert Landis, dated as of December 5,
1990@@
10.53 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Robert Landis, dated as of December 20,
1991@@
10.54 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Florence Courtright, dated as of November
5, 1993
10.55 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Vicki F. Perry, dated as of December 20,
1993
10.56 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Alan D. Bloom, dated as of December 20,
1993
10.57 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Richard Link, dated as of December 20,
1993
10.58 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Aivars Jerumanis, dated as of December
20, 1993
10.59 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Robert Landis, dated as of December 20,
1993
10.60 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and William Caswell, dated as of December 20,
1993
10.61 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Thomas W. Field, Jr., dated as of
December 20, 1993
<PAGE>
10.62 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Dr. Charles E. Lewis, dated as of
December 20, 1993
10.63 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and Claude S. Brinegar, dated as of December
20, 1993
10.64 Employment and Indemnification Agreement by and between
Maxicare Health Plans, Inc. and David Hammons, dated as
of January 1, 1994
10.65 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and David J. Hammons, dated as of May 20,
1991
10.66 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and David J. Hammons, dated as of December
20, 1991
10.67 Stock Option Agreement by and between Maxicare Health
Plans, Inc. and David Hammons, dated as of December 20,
1993
21 List of Subsidiaries
23.1 Consent of Independent Accountants
28.1 Notice That The Conditions to Effectiveness of the Plan
Have Been Met or Waived***
28.2 Stipulation and Order Regarding Conditions to
Effectiveness of Joint Plan of Reorganization***
-------------------
* Incorporated by reference from the Company's Registration
Statement on Form 10, declared effective March 18, 1991, in
which these exhibits bore the same exhibit numbers.
** Incorporated by reference from the Company's Reports on
Form 8-K dated December 17, 1991 and January 31, 1992, in
which these exhibits bore the same exhibit numbers.
*** Incorporated by reference from the Company's Report on Form
8-K dated December 5, 1990, in which these exhibits bore
the same exhibit numbers.
@ Incorporated by reference from the Company's Annual Report
on Form 10-K for the year ended December 31, 1991, in which
these exhibits bore the same exhibit numbers.
@@ Incorporated by reference from the Company's Annual Report
on Form 10-K for the year ended December 31, 1992, in which
these exhibits bore the same exhibit numbers.
(b) Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
March 25, 1994 /s/ PETER J. RATICAN
-------------- ------------------------
Date Peter J. Ratican
Chief Executive Officer
March 25, 1994 /s/ EUGENE L. FROELICH
-------------- ------------------------
Date Eugene L. Froelich
Chief Financial Officer
March 25, 1994 /s/ RICHARD A. LINK
-------------- ------------------------
Date Richard A. Link
Principal Accounting
Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates
indicated.
Signatures Title Date
---------- ----- ----
/s/ PETER J. RATICAN Chairman and Director March 25, 1994
--------------------
Peter J. Ratican
/s/ EUGENE L. FROELICH Director March 25, 1994
----------------------
Eugene L. Froelich
Director March __, 1994
----------------------
Claude S. Brinegar
/s/ FLORENCE F. COURTRIGHT Director March 25, 1994
--------------------------
Florence F. Courtright
/s/ THOMAS W. FIELD, JR. Director March 25, 1994
------------------------
Thomas W. Field, Jr.
/s/ CHARLES E. LEWIS Director March 25, 1994
--------------------
Charles E. Lewis
/s/ ALAN S. MANNE Director March 25, 1994
-----------------
Alan S. Manne
<PAGE>
MAXICARE HEALTH PLANS, INC. AND SUBSIDIARIES
SCHEDULE I - MARKETABLE SECURITIES AND OTHER INVESTMENTS
(Amounts in thousands)
At December 31, 1993
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Amount at which
Number of each portfolio
shares or of equity security
units- Market value issues and each
Name of principal of each other security
issuer amount of issue at issue carried in
and title bonds and Cost of balance sheet the balance
of each issue notes each issue date (1) sheet (1)
------------- ---------- ---------- ------------- ------------------
<S> <C> <C> <C> <C>
U.S. Treasury Obligations $ 8,915 $ 8,824 $ 9,019 $ 8,992
Intercapital Insured
Municipal Trust Auction
Rate Preferred Stock 4,000 4,000 4,011 4,011
Muniyield New York Insured
Fund Auction Rate Preferred
Stock 1,500 1,504 1,504 1,505
Munivest Fund II
Auction Rate Preferred Stock 1,000 1,000 1,003 1,003
Nuveen Insured Quality
Municipal Fund Auction Rate
Preferred Stock 1,000 1,000 1,002 1,002
Van Kampen Merritt Advantage
Municipal Income Trust
Auction Rate Preferred Stock 1,000 1,000 1,003 1,003
Muniyield California Insured
Fund Auction Rate Preferred
Stock 1,000 999 1,002 1,002
Municipal Obligations 815 815 824 825
Various Banks
Certificates of Deposit 36 36 70 70
Common Stock 4 35 35
------- ------- ------- -------
Total Marketable
Securities 19,270 19,178 19,473 19,448
U.S. Treasury Obligations 10,120 10,112 10,097 10,035
Whitney National Bank
Certificates of Deposit 1,100 1,100 1,100 1,100
Nations Bank
Certificates of Deposit 700 700 700 700
Various Banks
Certificates of Deposit 1,775 1,775 1,775 1,775
------- ------- ------- -------
Total Marketable Securities
and Other Investments $32,965 $32,865 $33,145 $33,058
======= ======= ======= =======
(1) Including accrued interest.
</TABLE>
<PAGE>
MAXICARE HEALTH PLANS, INC.
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEETS
(Amounts in thousands)
<TABLE>
<CAPTION>
December 31,
1993 1992
-------- -------
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 6,586 $ 3,886
Marketable securities 2,524 11,469
Accounts receivable 286 932
Amounts due from affiliates 2,128
Deferred tax asset 6,000 3,200
Other current assets 571 898
------- -------
TOTAL CURRENT ASSETS 18,095 20,385
PROPERTY AND EQUIPMENT, NET 3,229 6,704
INVESTMENT IN SUBSIDIARIES 36,467 35,797
OTHER LONG-TERM ASSETS 2,146 2,120
------- -------
TOTAL ASSETS $59,937 $65,006
======= =======
CURRENT LIABILITIES
Accounts payable $ 59 $ 33
Amounts due to affiliates 4,534
Payable to disbursing agent 6,248 7,219
Other current liabilities 1,100 963
------- -------
TOTAL CURRENT LIABILITIES 7,407 12,749
OTHER LONG-TERM LIABILITIES 145 196
------- -------
TOTAL LIABILITIES 7,552 12,945
------- -------
TOTAL SHAREHOLDERS' EQUITY 52,385 52,061
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $59,937 $65,006
======= =======
</TABLE>
See notes to condensed financial information of registrant.
<PAGE>
MAXICARE HEALTH PLANS, INC.
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF OPERATIONS
(Amounts in thousands)
<TABLE>
<CAPTION>
Years ended December 31,
1993 1992 1991
-------- -------- -------
REVENUES
<S> <C> <C> <C>
Equity in earnings (losses) of subsidiaries $(1,208) $ 2,295 $ 2,758
Service agreement income 15,419 15,215 18,287
Other income 4 707 299
------- -------- -------
TOTAL REVENUES 14,215 18,217 21,344
------- -------- -------
EXPENSES
Health care expenses (2,004)
Marketing, general and administrative expenses 12,531 7,534 6,872
Depreciation expense 3,872 1,648 471
Reorganization expenses 895 3,661
------- -------- -------
TOTAL EXPENSES 16,403 8,073 11,004
------- -------- -------
INCOME (LOSS) FROM OPERATIONS (2,188) 10,144 10,340
Investment income 504 973 959
Interest expense, net of inter-company interest income
and expense (62) (3,005) (9,869)
------- -------- -------
INCOME (LOSS) BEFORE TAXES AND EXTRAORDINARY ITEMS (1,746) 8,112 1,430
INCOME TAX BENEFIT 7,334 3,058
------- -------- -------
INCOME BEFORE EXTRAORDINARY ITEMS 5,588 11,170 1,430
EXTRAORDINARY ITEMS (net of income taxes of $0) (14,241) (905)
------- -------- -------
NET INCOME (LOSS) 5,588 (3,071) 525
PREFERRED DIVIDENDS 5,400 4,350
------- -------- -------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ 188 $ (7,421) $ 525
======= ======== =======
</TABLE>
See notes to condensed financial information of registrant.
<PAGE>
MAXICARE HEALTH PLANS, INC.
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
Years ended December 31,
1993 1992 1991
-------- -------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (loss)..................................... $ 5,588 $ (3,071) $ 525
Adjustments to reconcile net income (loss) to
net cash provided by operating activities
Depreciation expense............................... 3,872 1,648 471
Amortization of Senior Notes discount.............. 139 461
Extraordinary items................................ 14,241 905
Equity in (earnings) losses of subsidiaries........ 1,208 (2,295) (2,758)
Net cash provided by (used for) changes in
assets and liabilities:
Decrease (increase) in accounts receivable..... 646 (877) 4,423
Changes in other miscellaneous assets and
liabilities.................................. (7,551) (6,336) (1,804)
------- -------- -------
Net cash provided by operating activities............... 3,763 3,449 2,223
------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales (purchases) of marketable securities, net....... 8,945 (11,444) (25)
Capital contributions to subsidiaries, net............ (12,443) (150) (4,621)
Dividends received from subsidiaries.................. 10,490 7,287 14,583
Purchases of property and equipment................... (397)
Increase due to merger with HCS Computer, Inc......... 171
------- -------- -------
Net cash provided by (used for) investing activities.... 6,595 (4,136) 9,937
------- -------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Senior Notes redemption............................... (67,000)
Issuance of preferred stock........................... 60,000
Issuance costs paid on preferred stock................ (3,700)
Payment of preferred stock dividends.................. (5,400) (4,350)
Cash transferred to disbursing agent.................. (971) (781)
Payments on capital lease obligations................. (373) (340) (281)
Payments on long-term debt to affiliates.............. (1,050) (1,050) (2,450)
Stock options exercised............................... 136 134
------- -------- -------
Net cash used for financing activities.................. (7,658) (17,087) (2,731)
------- -------- -------
Net increase (decrease) in cash and cash equivalents.... 2,700 (17,774) 9,429
Cash and cash equivalents at beginning of period........ 3,886 21,660 12,231
------- -------- -------
Cash and cash equivalents at end of period.............. $ 6,586 $ 3,886 $21,660
======= ======== =======
Supplemental disclosures of cash flow information:
Cash paid during the year for -
Interest $ 28 $ 2,582 $ 9,674
Income taxes $ 284 $ 43
Supplemental schedule of non-cash investing activities:
Book value of assets exchanged for assets $ 40
Fair value of assets exchanged 25
-------
Loss on assets exchanged $ 15
=======
In conjunction with the merger of HCS Computer, Inc.
the following assets and liabilities were assumed:
Non-cash assets $ 7,978
Liabilities 483
--------
$ 7,495
========
</TABLE>
See notes to condensed financial information of registrant.
<PAGE>
MAXICARE HEALTH PLANS, INC.
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Note 1 - General
----------------
The condensed financial information of the registrant ("MHP")
should be read in conjunction with the consolidated financial
statements and the notes to consolidated financial statements which
are included elsewhere herein.
Note 2 - Transactions with Affiliates
-------------------------------------
The Company is operating on a post-Effective Date basis under a
decentralized and segregated cash management system. The operating
subsidiaries currently pay monthly fees to MHP pursuant to
administrative services agreements.
Effective January 1, 1991 MHP acquired the stock of Maxicare
Southeast Health Plans, Inc. from Maxicare (a California
corporation and wholly-owned subsidiary of MHP) for $2.8 million
through the issuance of a two year, 9% promissory note with
principal and interest payable semi-annually. Effective July 1,
1991 MHP acquired the stock of Maxicare Health Plans of the
Midwest, Inc. from Maxicare for $4.2 million through the issuance
of a two year, 9% promissory note with principal and interest
payable semi-annually.
On October 1, 1992 MHP and HCS Computer, Inc. (a wholly-owned
subsidiary of MHP that provides computer and telecommunications
services to the Company) merged their operations. Accordingly,
MHP's Condensed Statement of Operations for the year ended December
31, 1992 includes the results of operations of the computer and
telecommunications operations for the three months ended December
31, 1992.
Note 3 - Commitments and Other Contingencies
--------------------------------------------
MHP's assets held under capital leases at December 31, 1993 and
1992 of $145,000 and $745,000, respectively, (net of $1.6 million
and $1.1 million, respectively, of accumulated amortization) are
comprised primarily of equipment leases.
Future minimum lease commitments of $97,000 for noncancelable
leases at December 31, 1993 are all payable in 1994; therefore,
there are no long-term lease obligations.
<PAGE>
MAXICARE HEALTH PLANS, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(Amounts in thousands)
For the Year Ended December 31, 1993
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- --------- ----------- ------------ ----------------- ------------
Balance at
beginning Additions Other changes-add Balance at
Classification of period at cost Retirements (deduct)-(1) end of period
-------------- ---------- --------- ----------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Leasehold Improv. $ 5,482 $ (16) $ 5,466
Furniture & Fixtures 4,074 (13) 4,061
Office Equipment 491 $ 5 496
Leased Equipment 904 904
Auto & Truck 19 19
Medical Equipment 114 114
Computer Equipment 20,692 157 (363) $ 1 20,487
Communications Equip. 10,557 319 (49) (30) 10,797
------- ---- ----- ---- -------
TOTAL $42,333 $481 $(441) $(29) $42,344
======= ==== ===== ==== =======
</TABLE>
For the Year Ended December 31, 1992
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- --------- ----------- ------------ ----------------- ------------
Balance at
beginning of Additions Other changes-add Balance at
Classification period at cost Retirements (deduct)-(1) end of period
-------------- ------ ------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Leasehold Improv. $ 5,468 $ 14 $ 5,482
Furniture & Fixtures 4,080 $ (6) 4,074
Office Equipment 454 30 (2) $ 9 491
Leased Equipment 907 24 (27) 904
Auto & Truck 23 (4) 19
Medical Equipment 114 114
Computer Equipment 22,277 43 (994) (634) 20,692
Communications Equip. 12,813 1 (2,234) (23) 10,557
------- ---- ------- ----- -------
TOTAL $46,136 $112 $(3,240) $(675) $42,333
======= ===== ======= ===== =======
</TABLE>
(1) Adjustments as a result of physical inventory.
<PAGE>
MAXICARE HEALTH PLANS, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(Amounts in thousands)
For the Year Ended December 31, 1991
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- --------- ----------- ------------ ----------------- ------------
Balance at
beginning of Additions Other changes-add Balance at
Classification period at cost Retirements (deduct)-(1) end of period
-------------- ------ ------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Leasehold Improv. $ 5,271 $ 440 $ (192) $ (51) $ 5,468
Furniture & Fixtures 5,359 6 (645) (640) 4,080
Office Equipment 465 3 (14) 454
Leased Equipment 1,054 3 (247) 97 907
Auto & Truck 20 3 23
Medical Equipment 121 (7) 114
Computer Equipment 25,680 1,763 (5,166) 22,277
Communications Equip. 13,790 119 (1,130) 34 12,813
------- ------ ------- ----- -------
TOTAL $51,760 $2,337 $(7,401) $(560) $46,136
======= ====== ======= ===== =======
</TABLE>
(1) Adjustments as a result of physical inventory.
<PAGE>
MAXICARE HEALTH PLANS, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
(Amounts in thousands)
For the Year Ended December 31, 1993
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- --------- ----------- ------------ ----------------- ------------
Additions
Balance at charged to
beginning of costs and Other changes-add Balance at
Description period expenses Retirements (deduct)-(1) end of period
----------- ------ -------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Leasehold Improv. $ 3,106 $ 613 $ (10) $ 3,709
Furniture & Fixtures 4,054 14 (13) 4,055
Office Equipment 455 10 465
Leased Equipment 886 10 896
Auto & Truck 15 3 18
Medical Equipment 114 114
Computer Equipment 17,354 2,352 (323) 19,383
Communications Equip. 9,124 1,025 (46) $(28) 10,075
------- ------ ----- ---- -------
TOTAL $35,108 $4,027 $(392) $(28) $38,715
======= ====== ===== ==== =======
</TABLE>
For the Year Ended December 31, 1992
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- --------- ----------- ------------ ----------------- ------------
Additions
Balance at charged to
beginning of costs and Other changes-add Balance at
Description period expenses Retirements (deduct)-(1) end of period
----------- ------ -------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Leasehold Improv. $ 2,494 $ 612 $ 3,106
Furniture & Fixtures 4,027 33 $ (6) 4,054
Office Equipment 441 13 (2) $ 3 455
Leased Equipment 843 70 (27) 886
Auto & Truck 15 4 (4) 15
Medical Equipment 114 114
Computer Equipment 15,917 2,968 (978) (553) 17,354
Communications Equip. 9,654 1,487 (2,010) (7) 9,124
------- ------ ------- ------- -------
TOTAL $33,505 $5,187 $(3,000) $ (584) $35,108
======= ====== ======= ======= =======
</TABLE>
(1) Adjustments as a result of physical inventory.
<PAGE>
MAXICARE HEALTH PLANS, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
(Amounts in thousands)
For the Year Ended December 31, 1991
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- --------- ----------- ------------ ----------------- ------------
Additions
Balance at charged to
beginning of costs and Other changes-add Balance at
Description period expenses Retirements (deduct)-(1) end of period
----------- ------ -------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Leasehold Improv. $ 2,032 $ 605 $ (143) $ 2,494
Furniture & Fixtures 4,701 566 (600) $ (640) 4,027
Office Equipment 394 60 (13) 441
Leased Equipment 877 154 (247) 59 843
Auto & Truck 11 4 15
Medical Equipment 101 19 (6) 114
Computer Equipment 14,840 3,049 (3,194) 1,222 15,917
Communications Equip. 9,644 2,001 (801) (1,190) 9,654
------- ------ ------- ------- -------
TOTAL $32,600 $6,458 $(5,004) $ (549) $33,505
======= ====== ======= ======= =======
</TABLE>
(1) Reclassifications as a result of physical inventory.
<PAGE>
MAXICARE HEALTH PLANS, INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(Amounts in thousands)
For the Year Ended December 31, 1993
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- --------- -------------------------- ---------- ------------
Additions
--------------------------
Balance at Charged to Charged to
beginning costs and other accounts Deductions Balance at
Description of period expenses - describe - describe end of period
----------- ---------- --------- -------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Allowance for
doubtful accounts
and retroactive
billing adjustments: $2,324 $382(1) $2,706
Other valuation
accounts: 34 34
------ ---- ------
$2,358 $382 $2,740
====== ==== ======
</TABLE>
For the Year Ended December 31, 1992
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------------------------- ----------- ------------
Additions
--------------------------
Balance at Charged to Charged to
beginning costs and other accounts Deductions Balance at
Description of period expenses - describe - describe end of period
----------- ---------- --------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Allowance for
doubtful accounts
and retroactive
billing adjustments: $2,853 $ 529(2) $2,324
Other valuation
accounts: 3,154 3,120(3) 34
------ ------ ------
$6,007 $3,649 $2,358
======= ====== ======
</TABLE>
(1) Reduction in premium revenue.
(2) Write-off of aged retroactive billing adjustments.
(3) Write-off of notes receivable reserve.
<PAGE>
MAXICARE HEALTH PLANS, INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(Amounts in thousands)
For the Year Ended December 31, 1991
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- --------- ----------------------- -------- --------
Additions
-----------------------
Balance at Charged to Charged to
beginning costs and other accounts Deductions Balance at
Description of period expenses - describe - describe end of period
----------- ---------- --------- --------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Allowance for
doubtful accounts
and retroactive
billing adjustments: $ 4,025 $397 $ 1,569(1) $2,853
Other valuation
accounts: 3,679 525(2) 3,154
------- ---- ------- ------
$ 7,704 $397 $ 2,094 $6,007
======= ==== ======= ======
</TABLE>
(1) Write-off of aged retroactive billing adjustments.
(2) Write-off of fully reserved notes receivable.
<PAGE>
INDEX TO EXHIBITS
Exhibit Sequential
Number Description Page Number
------ ---------------------------------------- -----------
2.1 Joint Plan of Reorganization dated May 14,
1990, as modified on May 24 and July 12,
1990 (without schedules)*
2.2 Order Confirming Joint Plan of
Reorganization dated May 14, 1990, as
Modified, entered on August 31, 1990
(without exhibits or schedules)*
2.3 Amendment to Order Confirming Joint Plan
of Reorganization dated May 14, 1990, as
Modified, entered on August 31, 1990*
2.4 Stipulation and Order Re Conditions to
Effectiveness of the Plan, entered on
December 3, 1990*
2.5 Notice That The Conditions to Effectiveness
of the Plan Have Been Met or Waived, filed
on December 4, 1990*
2.6 Agreement and Plan of Merger of Maxicare
Health Plans, Inc. and HealthCare USA Inc.,
dated as of December 5, 1990 (without
exhibits or schedules)*
3.1 Charter of Maxicare Health Plans, Inc.,
a Delaware corporation*
3.3 Amendment to Charter of Maxicare Health
Plans, Inc., a Delaware corporation@
3.4 Amended Bylaws of Maxicare Health 95 of 319
Plans, Inc., a Delaware corporation
4.1 Form of Certificate of New Common Stock of
Maxicare Health Plans, Inc.*
4.2 Form of Certificate of Warrant of Maxicare
Health Plans, Inc.*
-------------------------
* Incorporated by reference from the Company's Registration
Statement on Form 10, declared effective March 18, 1991, in which
these exhibits bore the same exhibit numbers.
@ Incorporated by reference from the Company's Annual Report on
Form 10-K for the year ended December 31, 1991, in which these
exhibits bore the same exhibit numbers.
<PAGE>
Exhibit Sequential
Number Description Page Number
------ ---------------------------------------- -----------
4.4 Warrant Agreement by and between Maxicare
Health Plans, Inc. and American Stock
Transfer & Trust Company, dated as of
December 5, 1990*
4.5 Stock Transfer Agent Agreement by and
between Maxicare Health Plans, Inc.,
and American Stock Transfer & Trust
Company, dated as of December 5, 1990*
4.6 Registration Undertaking by Maxicare Health
Plans, Inc., dated as of December 5, 1990*
4.8 Portions of Charter of Maxicare Health
Plans, Inc., relating to the rights of
holders of the New Common Stock, the
Warrants, or the New Senior Notes*
4.9 Portions of Bylaws of Maxicare Health Plans,
Inc., relating to the rights of holders of
the New Common Stock, the Warrants, or the
New Senior Notes*
4.10 Series A Cumulative Convertible Preferred
Stock Purchase Agreement dated as of
December 17, 1991**
4.11 Series A Cumulative Convertible Preferred
Stock Purchase Agreement dated as of
January 31, 1992**
4.12 Form of Certificate of Preferred Stock of
Maxicare Health Plans, Inc.@
10.1 Management Incentive Program*
10.2 Incentive Compensation Agreement*
10.3b Employment and Indemnification Agreement by
and between Maxicare Health Plans, Inc.
and Peter J. Ratican, dated as of January 1,
1992@
-------------------------
* Incorporated by reference from the Company's Registration
Statement on Form 10, declared effective March 18, 1991, in which
these exhibits bore the same exhibit numbers.
** Incorporated by reference from the Company's Reports on Form 8-K
dated December 17, 1991 and January 31, 1992, in which these
exhibits bore the same exhibit numbers.
@ Incorporated by reference from the Company's Annual Report on
Form 10-K for the year ended December 31, 1991, in which these
exhibits bore the same exhibit numbers.
<PAGE>
Exhibit Sequential
Number Description Page Number
------ ---------------------------------------- -----------
10.4b Employment and Indemnification Agreement
by and between Maxicare Health Plans, Inc.
and Eugene L. Froelich dated January 1,
1992@
10.5b Employment Agreement by and between
Maxicare Health Plans, Inc. and
Samuel W. Warburton, dated as of
January 1, 1993@@
10.7c Employment and Indemnification Agreement by
and between Maxicare Health Plans, Inc. and
Vicki F. Perry, dated as of January 1, 1993@@
10.7d Employment and Indemnification Agreement by 115 of 319
and between Maxicare Health Plans, Inc. and
Vicki F. Perry, dated as of January 1, 1994
10.8b Employment and Indemnification Agreement
by and between Maxicare Health Plans, Inc.
and Alan D. Bloom, dated as of January 1,
1993@@
10.8c Employment and Indemnification Agreement 125 of 319
by and between Maxicare Health Plans, Inc.
and Alan D. Bloom, dated as of January 1,
1994
10.9c Form of Employment and Indemnification
Agreement by and between Maxicare Health
Plans, Inc. and Richard A. Link, dated as
of January 1, 1993@@
10.12c Employment and Indemnification Agreement by
and between Maxicare Health Plans, Inc. and
Aivars Jerumanis, dated as of January 1,
1993@@
10.12d Employment and Indemnification Agreement by 135 of 319
and between Maxicare Health Plans, Inc. and
Aivars Jerumanis, dated as of January 1,
1994
-------------------------
@ Incorporated by reference from the Company's Annual Report on
Form 10-K for the year ended December 31, 1991, in which these
exhibits bore the same exhibit numbers.
@@ Incorporated by reference from the Company's Annual Report on
Form 10-K for the year ended December 31, 1992, in which these
exhibits bore the same exhibit numbers.
<PAGE>
Exhibit Sequential
Number Description Page Number
------ ---------------------------------------- -----------
10.14 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and Peter J.
Ratican, dated as of December 5, 1990*
10.15 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and Eugene L.
Froelich, dated as of December 5, 1990*
10.16 Form of Stock Option Agreement by and
between Maxicare Health Plans, Inc. and
Samuel Warburton, dated as of December 5,
1990*
10.18 Form of Stock Option Agreement by and
between Maxicare Health Plans, Inc. and
Vicki F. Perry, dated as of December 5,
1990*
10.19 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and Alan D.
Bloom, dated as of December 5, 1990*
10.20 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and Richard A.
Link, dated as of December 5, 1990*
10.23 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and Aivars
Jerumanis, dated as of December 5, 1990*
10.28 Form of Distribution Trust Agreement*
10.29 Lease by and between Maxicare Health Plans,
Inc. and Transamerica Occidental Life
Insurance Company, dated as of June 1, 1990*
10.30 Maxicare Health Plans, Inc. 401(k) Plan*
10.32 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and Leon M.
Clements, dated as of May 20, 1991@
10.33 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and Walter
J. Filkowski, dated as of May 20, 1991@
-------------------------
* Incorporated by reference from the Company's Registration
Statement on Form 10, declared effective March 18, 1991, in which
these exhibits bore the same exhibit numbers.
@ Incorporated by reference from the Company's Annual Report on
Form 10-K for the year ended December 31, 1991, in which these
exhibits bore the same exhibit numbers.
<PAGE>
Exhibit Sequential
Number Description Page Number
------ ---------------------------------------- -----------
10.35 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and Charles
E. Lewis, dated as of May 20, 1991@
10.36 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and Claude
S. Brinegar, dated as of July 18, 1991@
10.38 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and Richard
A. Link, dated as of December 20, 1991@
10.40 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and Aivars
Jerumanis, dated as of December 20, 1991@
10.41 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and Samuel
W. Warburton, dated as of December 20, 1991@
10.42 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and Peter J.
Ratican, dated as of February 25, 1992@
10.43 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and Eugene
L. Froelich, dated as of February 25,
1992@
10.44 Amended Maxicare Health Plans, Inc.
1990 Stock Option Plan@
10.48 Employment and Indemnification Agreement
by and between Maxicare Health Plans, Inc.
and William B. Caswell, dated as of January
8, 1992@@
10.48a Employment and Indemnification Agreement 145 of 319
by and between Maxicare Health Plans, Inc.
and William B. Caswell, dated as of January
1, 1994
10.49 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and William
B. Caswell, dated as of February 3, 1992@@
-------------------------
@ Incorporated by reference from the Company's Annual Report on
Form 10-K for the year ended December 31, 1991, in which these
exhibits bore the same exhibit numbers.
@@ Incorporated by reference from the Company's Annual Report on
Form 10-K for the year ended December 31, 1992, in which these
exhibits bore the same exhibit numbers.
<PAGE>
Exhibit Sequential
Number Description Page Number
------ ---------------------------------------- -----------
10.50 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and Thomas W.
Field, Jr., dated as of April 1, 1992@@
10.51b Employment and Indemnification Agreement
by and between Maxicare Health Plans, Inc.
and Robert Landis, dated as of January 1,
1993@@
10.51c Employment and Indemnification Agreement 155 of 319
by and between Maxicare Health Plans, Inc.
and Robert Landis, dated as of January 1,
1994
10.52 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and Robert
Landis, dated as of December 5, 1990@@
10.53 Stock Option Agreement by and between
Maxicare Health Plans, Inc. and Robert
Landis, dated as of December 20, 1991@@
10.54 Stock Option Agreement by and between 165 of 319
Maxicare Health Plans, Inc. and Florence
Courtright, dated as of November 5, 1993
10.55 Stock Option Agreement by and between 176 of 319
Maxicare Health Plans, Inc. and Vicki
F. Perry, dated as of December 20, 1993
10.56 Stock Option Agreement by and between 187 of 319
Maxicare Health Plans, Inc. and Alan D.
Bloom, dated as of December 20, 1993
10.57 Stock Option Agreement by and between 198 of 319
Maxicare Health Plans, Inc. and Richard
Link, dated as of December 20, 1993
10.58 Stock Option Agreement by and between 209 of 319
Maxicare Health Plans, Inc. and Aivars
Jerumanis, dated as of December 20, 1993
10.59 Stock Option Agreement by and between 220 of 319
Maxicare Health Plans, Inc. and Robert
Landis, dated as of December 20, 1993
10.60 Stock Option Agreement by and between 231 of 319
Maxicare Health Plans, Inc. and William
Caswell, dated as of December 20, 1993
-------------------------
@@ Incorporated by reference from the Company's Annual Report on Form
10-K for the year ended December 31, 1992, in which these exhibits
bore the same exhibit numbers.
<PAGE>
Exhibit Sequential
Number Description Page Number
------ ---------------------------------------- -----------
10.61 Stock Option Agreement by and between 242 of 319
Maxicare Health Plans, Inc. and Thomas
W. Field, Jr., dated as of December 20,
1993
10.62 Stock Option Agreement by and between 253 of 319
Maxicare Health Plans, Inc. and Dr. Charles
E. Lewis, dated as of December 20, 1993
10.63 Stock Option Agreement by and between 264 of 319
Maxicare Health Plans, Inc. and Claude
S. Brinegar, dated as of December 20, 1993
10.64 Employment and Indemnification Agreement 275 of 319
by and between Maxicare Health Plans, Inc.
and David Hammons, dated as of January
1, 1994
10.65 Stock Option Agreement by and between 285 of 319
Maxicare Health Plans, Inc. and David
J. Hammons, dated as of May 20, 1991
10.66 Stock Option Agreement by and between 296 of 319
Maxicare Health Plans, Inc. and David
J. Hammons, dated as of December 20, 1991
10.67 Stock Option Agreement by and between 307 of 319
Maxicare Health Plans, Inc. and David
Hammons, dated as of December 20, 1993
21 List of Subsidiaries 318 of 319
23.1 Consent of Independent Accountants 319 of 319
28.1 Notice That The Conditions to
Effectiveness of the Plan Have Been
Met or Waived***
28.2 Stipulation and Order Regarding Conditions
to Effectiveness of Joint Plan of
Reorganization***
-------------------------
*** Incorporated by reference from the Company's Report on Form 8-K
dated December 5, 1990, in which these exhibits bore the same
exhibit numbers.
<PAGE>
Exhibit 3.4
MAXICARE HEALTH PLANS, INC.
BYLAWS
As Amended through January 28, 1994
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. OFFICES. . . . . . . . . . . . . . . . . . 4
Section 1. PRINCIPAL OFFICE. . . . . . . . . . . . 4
Section 2. OTHER OFFICES . . . . . . . . . . . . . 4
ARTICLE II. MEETINGS OF STOCKHOLDERS . . . . . . . . . 4
Section 1. PLACE OF MEETINGS. . . . . . . . . . . 4
Section 2. ANNUAL MEETINGS OF STOCKHOLDERS. . . . 4
Section 3. SPECIAL MEETINGS . . . . . . . . . . . 4
Section 4. NOTICE OF STOCKHOLDERS' MEETINGS . . . 4
Section 5. MANNER OF GIVING NOTICE; AFFIDAVIT
OF NOTICE. . . . . . . . . . . . . . . 5
Section 6. QUORUM . . . . . . . . . . . . . . . . 5
Section 7. ADJOURNED MEETING AND NOTICE THEREOF . 5
Section 8. ORGANIZATION . . . . . . . . . . . . . 5
Section 9. VOTING . . . . . . . . . . . . . . . . 6
Section 10. WAIVER OF NOTICE OR CONSENT BY ABSENT
STOCKHOLDERS . . . . . . . . . . . . . 6
Section 11. RECORD DATE. . . . . . . . . . . . . . 6
Section 12. PROXIES. . . . . . . . . . . . . . . . 7
Section 13. INSPECTORS OF ELECTION . . . . . . . . 7
Section 14. NOTICE OF STOCKHOLDER BUSINESS AND
NOMINATIONS. . . . . . . . . . . . . . 8
ARTICLE III. DIRECTORS. . . . . . . . . . . . . . . . . 10
Section 1. POWERS . . . . . . . . . . . . . . . . 10
Section 2. NUMBERS OF DIRECTORS . . . . . . . . . 10
Section 3. RESIGNATIONS; VACANCIES. . . . . . . . 10
Section 4. PLACE OF MEETINGS AND TELEPHONIC
MEETINGS . . . . . . . . . . . . . . . 11
Section 5. ANNUAL MEETINGS . . . . . . . . . . . 11
Section 6. OTHER REGULAR MEETINGS . . . . . . . . 11
Section 7. SPECIAL MEETINGS . . . . . . . . . . . 11
Section 8. DISPENSING WITH NOTICE . . . . . . . . 12
Section 9. QUORUM . . . . . . . . . . . . . . . . 12
Section 10. ADJOURNMENT. . . . . . . . . . . . . . 12
Section 11. ACTION WITHOUT MEETING . . . . . . . . 12
Section 12. FEES AND COMPENSATION OF DIRECTORS . . 12
ARTICLE IV. COMMITTEES . . . . . . . . . . . . . . . . 12
Section 1. COMMITTEES OF DIRECTORS. . . . . . . . 12
Section 2. MEETINGS AND ACTION OF COMMITTEES. . . 13
<PAGE>
ARTICLE V. OFFICERS . . . . . . . . . . . . . . . . . 13
Section 1. OFFICERS . . . . . . . . . . . . . . . 13
Section 2. ELECTION OF OFFICERS . . . . . . . . . 13
Section 3. SUBORDINATE OFFICERS, ETC. . . . . . . 14
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. . 14
Section 5. VACANCIES IN OFFICES . . . . . . . . . 14
Section 6. CHAIRMAN OF THE BOARD. . . . . . . . . 14
Section 7. VICE CHAIRMAN OF THE BOARD . . . . . . 14
Section 8. PRESIDENT. . . . . . . . . . . . . . . 14
Section 9. VICE PRESIDENTS. . . . . . . . . . . . 15
Section 10. SECRETARY. . . . . . . . . . . . . . . 15
Section 11. TREASURER. . . . . . . . . . . . . . . 15
ARTICLE VI. RECORDS AND REPORTS. . . . . . . . . . . . 16
Section 1. MAINTENANCE AND INSPECTION OF SHARE
REGISTER . . . . . . . . . . . . . . . 16
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS . 16
Section 3. MAINTENANCE AND INSPECTION OF OTHER
CORPORATE RECORDS. . . . . . . . . . . 16
Section 4. INSPECTION BY DIRECTORS. . . . . . . . 17
ARTICLE VII. GENERAL CORPORATE MATTERS. . . . . . . . . 17
Section 1. CHECKS, DRAFTS, EVIDENCES OF
INDEBTEDNESS . . . . . . . . . . . . . 17
Section 2. CORPORATE CONTRACTS AND INSTRUMENTS;
HOW EXECUTED . . . . . . . . . . . . . 17
Section 3. CERTIFICATES FOR SHARES. . . . . . . . 17
Section 4 LOST CERTIFICATES. . . . . . . . . . . 17
Section 5. TRANSFER OF SHARES . . . . . . . . . . 18
Section 6. TRANSFER AND REGISTRY AGENTS . . . . . 18
Section 7. REGULATIONS. . . . . . . . . . . . . . 18
Section 8. RESTRICTION ON TRANSFER OF STOCK . . . 18
Section 9. REPRESENTATION OF SHARES OF OTHER
CORPORATIONS . . . . . . . . . . . . . 19
Section 10. DIVIDENDS, SURPLUS, ETC. . . . . . . . 19
ARTICLE VIII. GENERAL. . . . . . . . . . . . . . . . . . 19
Section 1. CONSTRUCTION AND DEFINITIONS . . . . . 19
Section 2. SEAL . . . . . . . . . . . . . . . . . 19
Section 3. FISCAL YEAR. . . . . . . . . . . . . . 20
ARTICLE IX. AMENDMENTS . . . . . . . . . . . . . . . . 20
Section 1. AMENDMENT BY STOCKHOLDERS. . . . . . . 20
Section 2. AMENDMENT BY DIRECTORS . . . . . . . . 20
<PAGE>
BYLAWS
OF
MAXICARE HEALTH PLANS, INC.
ARTICLE I.
OFFICES
Section 1. PRINCIPAL OFFICE. The Board of Directors
shall fix the location of the principal executive office of the
Corporation at any place within or outside the State of Delaware.
Section 2. OTHER OFFICES. The Board of Directors may at
any time establish branch or subordinate offices at any place or
places where the Corporation shall determine.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of stockholders
shall be held at any place within or outside the State of Delaware
designated by the Board of Directors. In the absence of any such
designation, stockholders' meetings shall be held at the principal
executive office of the Corporation.
Section 2. ANNUAL MEETINGS OF STOCKHOLDERS. The annual
meeting of stockholders shall be held each year on a date and at a
time designated by the Board of Directors. At each annual meeting
directors shall be elected and any other proper business may be
transacted.
Section 3. SPECIAL MEETINGS. A special meeting of the
stockholders may be called at any time for any purpose or purposes
by the Board of Directors, the Chairman or Vice-President of the
Board, the President of the Corporation or by a committee of the
Board which has been duly designated by the Board and whose powers
and authority, as provided in a resolution of the Board or in these
bylaws, include the power to call such meetings, and such special
meetings shall be called by the President of the Corporation at the
request in writing of stockholders owning at least a majority in
amount of the entire capital stock of the Corporation issued and
outstanding and entitled to vote. Such stockholders' request shall
state the purpose or purposes of the proposed meeting. Business
transacted at any special meeting shall be limited to matters
relating to the purpose or purposes stated in the notice of
meeting.
Section 4. NOTICE OF STOCKHOLDERS' MEETINGS. All
notices of meetings of stockholders shall be sent or otherwise
given in accordance with Section 5 of this Article II not less than
ten (10) nor more than sixty (60) days before the date of the
meeting being noticed. The notice shall specify the place, date
and hour of the meeting and in the case of a special meeting, the
<PAGE>
purpose(s) for which the meeting is called. The notice of any
meeting at which directors are to be elected shall include the name
of any nominee or nominees.
Section 5. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.
Notice of any meeting of stockholders shall be given either
personally or by first-class mail or telegraphic or other written
communication, charges prepaid, addressed to the stockholder at the
address of such stockholder appearing on the books of the
Corporation. If mailed, notice is given when deposited in the
United States mail, postage prepaid, directed to the stockholder at
his address as it appears on the records of the Corporation.
An affidavit of the mailing or other means of giving an
notice of any stockholders' meeting shall be executed by the
Secretary, Assistant Secretary or any transfer agent of the
Corporation giving such notice, and shall be filed and maintained
in the minute books of the Corporation.
Section 6. QUORUM. At all meetings of stockholders,
except as otherwise required by statute or by the Certificate of
Incorporation, the presence in person or by proxy of the holders of
a majority of the shares of stock outstanding and entitled to vote
at any meeting of stockholders shall constitute a quorum for the
transaction of business. The stockholders present at a duly called
or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum, if any action
taken (other than adjournment) is approved by at least a majority
of the shares required to constitute a quorum.
Section 7. ADJOURNED MEETING AND NOTICE THEREOF. Any
stockholders' meeting, annual or special, whether or not a quorum
is present, may by adjourned from time to time by the vote of the
majority of the shares represented at such meeting, either in
person or by proxy.
When any meeting of stockholders, either annual or
special, is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken, unless
a new record date for the adjourned meeting is fixed, or unless the
adjournment is for more than thirty (30) days from the date set for
the original meeting, in which case the Board of Directors shall
set a new record date. Notice of any such adjourned meeting, if
required, shall be given to each stockholder of record entitled to
vote at the adjourned meeting in accordance with the provisions of
Sections 4 and 5 of this Article II. At any adjourned meeting the
Corporation may transact any business which might have been
transacted at the original meeting.
Section 8. ORGANIZATION. At every meeting of
stockholders, the President, or in his absence the Chairman or Vice
Chairman of the Board, shall act as chairman of the meeting and the
Secretary shall act as secretary of the meeting. In case none of
the officers designated above to act as chairman or secretary of
<PAGE>
the meeting, respectively, shall be present, a chairman or a
secretary of the meeting, as the case may be, may be chosen by a
majority of the votes cast at such meeting by the holders of shares
present in person or represented by proxy and entitled to vote at
the meeting.
Section 9. VOTING. The stockholders entitled to vote at
any meeting of stockholders shall be determined in accordance with
the provisions of Section 11 of this Article II, subject to the
provisions of Section 217 the Delaware General Corporation Law
(relating to voting rights of fiduciaries, pledgors and joint
owners of stock). Any stockholder entitled to vote on any matter
(other than the election of directors) may vote part of the shares
in favor of the proposal and refrain from voting the remaining
shares or vote them against the proposal but, if the stockholder
fails to specify the number of shares such stockholder is voting
affirmatively, it will be conclusively presumed that the
stockholder's approving vote is with respect to all shares such
stockholder is entitled to vote. If a quorum is present, the
affirmative vote of the majority of the shares represented at the
meeting and voting on any matter shall be the act of the
stockholders, unless the vote of a greater number or voting by
classes is required by these Bylaws, the Certificate of
Incorporation or by statute. Directors shall be elected by a
plurality of the votes of the shares represented at the meeting and
entitled to vote on the election of directors. No stockholder shall
be entitled to cumulate votes on any matter at any meeting of
stockholders.
Section 10. WAIVER OF NOTICE OR CONSENT BY ABSENT
STOCKHOLDERS. Whenever notice is required to be given to the
stockholders under any provision of the General Corporation Law or
the Certificate of Incorporation or the Bylaws, a written waiver
thereof, signed by a stockholder entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a stockholder at a meeting shall constitute
a waiver of notice of such meeting, except when the stockholder
attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular
or special meeting of the stockholders need be specified in any
written waiver of notice.
Section 11. RECORD DATE. In order that the Corporation
may determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise
any rights in respect of any change, conversion or exchange of
stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors and which record date: (1) in
the case of determination of stockholders entitled to vote at any
<PAGE>
meeting of stockholders or adjournment thereof, shall not be more
than sixty (60) nor less than ten (10) days before the date of
such meeting; (2) in the case of determination of stockholders
entitled to express consent to corporate action in writing without
a meeting, shall not be more than ten (10) days from the date upon
which the resolution fixing the record date is adopted by the Board
of Directors; and (3) in the case of any such action, shall not be
more than sixty (60) days prior to such other action. If no record
date is fixed: (1) the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on
which notice is given, or, if notice is waived, at the close of
business on the day next preceding the day on which the meeting is
held; (2) the record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting
when no prior action of the Board of Directors is required by law,
shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the
Corporation in accordance with applicable law, or, if prior action
by the Board of Directors is required by law, shall be at the close
of business on the day on which the Board of Directors adopts the
resolution relating to taking such prior action; and (3) the record
date for determining stockholders for any other purpose shall be at
the close of business on the day on which the Board of Directors
adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a
new record date for the adjourned meeting.
Section 12. PROXIES. Each stockholder entitled to vote
at a meeting of stockholders may authorize another person or
persons to act for him by proxy, but no such proxy shall be voted
or acted upon after three years from its date, unless the proxy
provides for a longer period.
Section 13. INSPECTORS OF ELECTION. The Board, in
advance of any meeting of stockholders, may appoint one or more
inspectors to act at the meeting or any adjournment thereof. If
inspectors are not so appointed, the person presiding at such
meeting may, and on the request of any stockholder entitled to vote
thereat shall, appoint one or more inspectors. In case any person
appointed fails to appear or act, the vacancy may be filled by
appointment made by the Board in advance of the meeting or at the
meeting by the person presiding thereat. Each inspector, before
entering upon the discharge of his duties, shall take and sign an
oath faithfully to execute the duties of inspector at such meeting
with strict impartiality and according to the best of his ability.
The inspector or inspectors shall determine the number of shares
outstanding and the voting power of each, the shares represented at
the meeting, the existence of a quorum, the validity and effect of
proxies, and shall receive votes or ballots, hear and determine all
challenges and questions arising in connection with the right to
vote, count and tabulate all votes or ballots, determine the
result, and shall do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of
<PAGE>
the person presiding at the meeting or any stockholder entitled to
vote thereat, the inspector or inspectors shall make a report in
writing of any challenge, question or matter determined by him or
them and execute a certificate of any fact found by him or them.
Any report or certificate made by the inspector or inspectors shall
be prima facie evidence of the facts stated and of the vote as
certified by him or them.
Section 14. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.
(A) ANNUAL MEETING OF STOCKHOLDERS
(1) Nominations of persons for election to the Board of
Directors of the corporation and the proposal of business to be
considered by the stockholders may be made at an annual meeting of
stockholders (a) pursuant to the Corporation's notice of meeting
delivered pursuant to Section 4 of Article II of these bylaws, (b)
by or at the direction of the Chairman of the Board of Directors,
or (c) by any stockholder who is entitled to vote at the meeting,
who complied with the notice procedures set forth in clauses (2)
and (3) or this subsection (A) and this bylaw and who was a
stockholder of record at the time such notice is delivered to the
Secretary of the Corporation.
(2) For nominations or other business to be properly
brought before an annual meeting by a stockholder pursuant to
clause (c) of the foregoing subsection (A) (1) of this bylaw, the
stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a stockholder's notice
shall be delivered to the Secretary at the principal executive
officers of the Corporation not less than seventy (70) days nor
more than ninety (90) days prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the
event that the date of the annual meeting is advanced by more than
twenty (20) days or delayed by more than seventy (70) days from
such anniversary date, notice by the stockholder to be timely must
be so delivered not earlier than the ninetieth (90th) day prior to
such annual meeting and not later than the close of business on the
later of the seventieth (70th) day prior to such annual meeting or
the tenth (10th) day following the day on which public announcement
of the date of such meeting is first made. Such stockholder's
notice shall set forth (a) as to each person who the stockholder
proposes to nominate for election or reelection as a director, all
information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or
is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including such person's written consent to being
named in the proxy statement as a nominee and to serving as a
director if elected; (b) as to any other business that the
stockholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the
meeting, the reasons for conducting such business at the meeting
and any material interest in such business of such stockholder and
the beneficial owner, if any on whose behalf the proposal is made,
<PAGE>
and (c) as to the stockholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is made,
(i) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner, and (ii) the
class and number of shares of the capital stock of the Corporation
which are owned beneficially and of record by such stockholder and
such beneficial owner.
(3) Notwithstanding anything in the second sentence of
subsection (a) (2) of this bylaw to the contrary, in the event that
the number of directors to be elected to the Board of Directors of
the Corporation is increased and there is no public announcement
naming all of the nominees for director or specifying the size of
the increased Board of Directors made by the Corporation at least
eighty (80) days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice required by this
bylaw shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it
shall be delivered to the Secretary of the Corporation at the
principal executive offices of the Corporation not later than the
close of business on the tenth (10th) day following the day on
which such public announcement is first made by the Corporation.
(B) SPECIAL MEETINGS OF STOCKHOLDERS
As set forth in Section 3 of Article II above, only such
business shall be conducted at a special meeting of stockholders as
shall have been brought before the meeting pursuant to Section 4 of
Article II of these bylaws. Nominations of persons for election to
the Board of Directors shall be made at a special meeting of
stockholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (a) by or at the direction of the
Board of Directors, or (b) by any stockholder of the Corporation
who is entitled to vote at the meeting, who complies with the
notice procedures set forth in this bylaw and who is a stockholder
of record at the time such notice is delivered to the Secretary of
the Corporation. Nominations by stockholders of person for
election to the Board of Directors may be made at such a special
meeting of stockholders if the stockholder's notice as required by
subsection (A) (2) of this bylaw shall be delivered to the
Secretary of the Corporation at the principal executive offices of
the Corporation no later than the close of business on the
thirtieth (30th) day prior to such special meeting or, if fewer
than thirty (30) days notice of such meeting is given, no later
than the fifth (5th) day following the day on which public
announcement is first made of the date of the special meeting and
of the nominees proposed by the Board of Directors to be elected at
such meeting.
(C) GENERAL
(1) Only persons who are nominated in accordance with the
procedures set forth in this bylaw shall be eligible to serve as
directors and only such business shall be conducted at a meeting of
stockholders as shall have been brought before the meeting in
<PAGE>
accordance with the procedures set forth in this bylaw. Except as
otherwise provide by law, the Restated Certificate of Incorporation
of the Corporation, as amended, or these bylaws, the chairman of
the meeting shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the
meeting was made in accordance with the procedures set forth in
this bylaw and, if any proposed nomination or business is not in
compliance with this bylaw, to declare that such defective proposal
or nomination shall be disregarded.
(2) For purposes of this bylaw, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones
News Service Associated Press or comparable national news service
or in a document publicly filed by the Corporation with the
Securities and Exchange Commission pursuant to Section 13, 14 or 15
(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this
bylaw, a stockholder shall also comply with all applicable
requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth in this bylaw.
Nothing in this bylaw shall be deemed to affect any rights of
stockholders to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.
ARTICLE III.
DIRECTORS
Section 1. POWERS. The Board of Directors shall exercise
all of the powers of the Corporation except such as are by law, or
by the Certificate of Incorporation of the Corporation or by these
Bylaws, conferred upon or reserved to the stockholders.
Section 2. NUMBER OF DIRECTORS. The number of directors
which shall constitute the Board of Directors of the Corporation
shall initially be nine (9). The number of directors may from time
to time by changed, by resolution of the Board of Directors or a
majority vote of the outstanding shares entitled to vote thereon.
The directors shall, except for filling vacancies (whether
resulting from an increase in the number of directors,
resignations, removals or otherwise), be elected at the annual
meeting of the stockholders and each director shall be elected to
serve until his successor is elected and qualifies. Directors need
not be stockholders.
Section 3. RESIGNATIONS; VACANCIES. Any director or
member of a committee may resign at any time. Such resignation
shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its
receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective. Vacancies
in the Board of Directors may be filled in the manner provided in
the Certificate of Incorporation. A vacancy or vacancies in the
Board of Directors shall be deemed to exist in the case of the
death, resignation or removal of any director, or if the authorized
number of directors be increased, or if the stockholders fail, at
<PAGE>
any meeting of stockholders at which any director or directors are
elected, to elect the full authorized number of directors to be
voted for that meeting.
No reduction of the authorized number of directors shall
have the effect of removing any director prior to the expiration of
his term of office.
Section 4. PLACE OF MEETING AND TELEPHONIC MEETINGS.
Regular meetings of the Board of Directors may be held at any place
within or without the State of Delaware that has been designated
from time to time by resolution of the Board of Directors. In the
absence of such designation, regular meetings shall be held at the
principal executive office of the Corporation. Special meetings of
the Board of Directors shall be held at any place within or without
the State of Delaware that has been designated in the notice of the
meeting or, if not stated in the notice or there is no notice, at
the principal executive office of the Corporation. Any meeting,
regular or special, may be held by conference, telephone or similar
communication equipment, so long as all directors participating in
such meeting can hear one another, and all such directors shall be
deemed to be present in person at such meeting.
Section 5. ANNUAL MEETINGS. Immediately following each
annual meeting of stockholders, the Board of Directors shall hold a
regular meeting for the purpose of organization, any desired
election of officers and the transaction of other business. Notice
of this meeting shall not be required.
Section 6. OTHER REGULAR MEETINGS. Other regular
meetings of the Board of Directors shall be held without call at
such time as shall from time to time be fixed by the Board of
Directors. Such regular meetings may be held without notice.
Section 7. SPECIAL MEETINGS. Special meetings of the
Board of Directors for any purpose or purposes may be called at any
time by the Chairman of the Board or the President or any Vice
President or the Secretary or any two directors.
Notice of the time and place of special meetings shall be
delivered personally or by telephone to each director or sent by
first-class mail, telegram or facsimile, charges prepaid, addressed
to each director at his or her address as it is shown upon the
records of the Corporation. In case such notice is mailed, it
shall be deposited in the United States mail at least four (4) days
prior to the time of the holding of the meeting. In case such
notice is delivered personally, or by telephone, telegram or
facsimile, it shall be delivered personally or by telephone or the
telegraph company at least forty-eight (48) hours prior to the time
of the holding of the meeting. Any oral notice given personally or
by telephone may be communicated to either the director or to a
person at the office of the director who the person giving the
notice has reason to believe will promptly communicate it to the
director. The notice need not specify the purpose of the meeting
nor the place if the meeting is to be held at the principal
executive office of the Corporation.
<PAGE>
Section 8. DISPENSING WITH NOTICE. The transaction of
any business at any meeting of the Board of Directors, however
called and noticed or wherever held, shall be as valid as though
had at a meeting duly held after regular call and notice if a
quorum be present and if, either before or after the meeting, each
of the directors not present signs a written waiver of notice, a
consent to holding the meeting or an approval of the minutes
thereof. The waiver of notice or consent need not specify the
purpose of the meeting. All such waivers, consents and approvals
shall be filed with the corporate records or made a part of the
minutes of the meeting. Notice of a meeting need not be given to
any director who attends the meeting without protesting, prior
thereto or at its commencement, the lack of notice to such
director.
Section 9. QUORUM. A majority of the authorized number
of directors shall constitute a quorum for the transaction of
business, except to adjourn as hereinafter provided. Every act or
decision done or made by a majority of the directors present at a
meeting duly held at which a quorum is present shall be regarded as
the act of the Board of Directors, subject to the provisions of
Section 144 of the Delaware General Corporation Law (approval of
contracts or transactions in which a director has a financial
interest), Section 141(c) (appointment of committees), and Section
145 (indemnification of directors). A meeting at which a quorum is
initially present may continue to transact business notwithstanding
the withdrawal of directors, if any action taken is approved by at
least a majority of the required quorum of such meeting.
Section 10. ADJOURNMENT. A majority of the directors
present, whether or not constituting a quorum, may adjourn any
meeting to another time and place.
Section 11. ACTION WITHOUT MEETING. Any action required
or permitted to be taken by the Board of Directors may be taken
without a meeting, if all members of the Board of Directors shall
individually or collectively consent in writing to such action.
Such action by written consent shall have the same force and effect
as a unanimous vote of the Board of Directors. Such written
consent or consents shall be filed with the minutes of the
proceedings of the Board of Directors.
Section 12. FEES AND COMPENSATION OF DIRECTORS.
Directors and members of committees may receive such compensation,
if any, for their services, and such reimbursement of expenses, as
may be fixed or determined by resolution of the Board of Directors.
Nothing contained in these Bylaws shall be construed to preclude
any director from serving the Corporation in any other capacity as
an officer, agent, employee, or otherwise, and receiving
compensation for such services.
ARTICLE IV.
COMMITTEES
Section 1. COMMITTEES OF DIRECTORS. The Board of
Directors may, by resolution adopted by a majority of the
authorized number of directors, designate one or more committees,
<PAGE>
each consisting of two or more directors, to serve at the pleasure
of the Board of Directors. The Board of Directors may designate
one or more directors as alternate members of any committee, who
may replace any absent member at any meeting of the committee. Any
such committee, to the extent provided in the resolution of the
Board of Directors, shall have all the authority of the Board of
Directors, except with respect to the power or authority in
reference to amending the Certificate of Incorporation, adopting an
agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially
all the Corporations's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a
dissolution, or amending the Bylaws of the Corporation; and, unless
the resolution designating such committee or the Certificate of
Incorporation expressly so provide, no such committee shall have
the power of authority to declare a dividend or to authorize the
issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution
adopted by the Board of Directors.
Section 2. MEETINGS AND ACTION OF COMMITTEES. Meetings
and action of committees shall be governed by, and held and taken
in accordance with, the provisions of Article III of these Bylaws,
Section 4 (place of meetings), 6 (regular meetings), 7 (special
meetings and notice), 8 (dispensing with notice), 9 (quorum), 10
(adjournment), and 11 (action without meeting), with such changes
in the context of those Bylaws as are necessary to substitute the
committee and its members for the Board of Directors and its
members, except that the time of regular meetings of committees may
be determined by resolution of the Board of Directors as well as
the committee, special meetings of committees may also be called by
resolution of the Board of Directors and notice of special meetings
of committees shall also be given to alternate members, who shall
have the right to attend all meetings of the committee. The Board
of Directors and any committee may adopt rules for the government
of any committee not inconsistent with the provisions of these
Bylaws.
ARTICLE V.
OFFICERS
Section 1. OFFICERS. The officers of the Corporation
shall be a President, a Secretary and a Treasurer. The Corporation
may also have, at the discretion of the Board of Directors, a
Chairman and/or Vice Chairman of the Board, one or more Vice-
Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers, and such other officers as may be appointed
in accordance with the provisions of Section 3 of this Article V.
Any number of offices may be held by the same person.
Section 2. ELECTION OF OFFICERS. The officers of the
Corporation, except such officers as may be appointed in accordance
with the provisions of Section 3 of this Article V, shall be chosen
by the Board of Directors, and each shall serve at the pleasure of
1
the Board of Directors, subject to the rights, if any, of an
officer under any contract of employment.
Section 3. SUBORDINATE OFFICERS, ETC. The Board of
Directors may appoint, and may empower the President to appoint,
such other officers as the business of the Corporation may require,
each of whom shall hold office for such period, have such authority
and perform such duties as are provided in these Bylaws or as the
Board of Directors may from time to time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject
to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without
cause, by the Board of Directors, at any regular or special meeting
thereof, or, except in case of an officer chosen by the Board of
Directors, by any officer upon whom such power of removal may be
conferred by the Board of Directors.
Any officer may resign at any time by giving written
notice to the Corporation. Any such resignation shall take effect
at the date of the receipt of such notice or at any later time
specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it
effective. Any such resignation is without prejudice to the
rights, if any, of the Corporation under any contract to which the
officer is a party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office
because of death, resignation, removal, disqualification or any
other cause shall be filled in the manner prescribed in these
Bylaws for regular appointments to such office.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the
Board, if such an officer be elected, shall, if present, preside at
all meetings of the Board of Directors and exercise and perform
such other powers and duties as may be from time to time assigned
to him by the Board of Directors or prescribed by these Bylaws. If
there is no President, the Chairman of the Board shall in addition
be the Chief Executive Officer of the Corporation and shall have
the powers and duties prescribed in Section 8 of this Article V.
Section 7. VICE CHAIRMAN OF THE BOARD. The Vice Chairman
of the Board, if such an officer is elected shall, in the absence
or disability of the Chairman, perform all the duties of the
Chairman, and when so acting, shall have all the powers of, and be
subject to all the restrictions upon the Chairman. The Vice
Chairman shall exercise and perform such other powers and duties as
may be from time to time assigned to him by the Board of Directors
or prescribed by these Bylaws.
Section 8. PRESIDENT. Subject to such supervisory
powers, if any, as may be given by the Board of Directors to the
Chairman or Vice Chairman of the Board, if there be such an officer
or officers, the President shall be the Chief Executive Officer of
the Corporation and shall, subject to the control of the Board of
Directors, have general supervision, direction and control of the
<PAGE>
business and the officers of the Corporation. He shall preside at
all meetings of the stockholders and, in the absence of the
Chairman or Vice Chairman of the Board, or if there be none, at all
meetings of the Board of Directors. He shall have the general
powers and duties of management usually vested in the office of
President of a corporation and shall have such other powers and
duties as may be prescribed by the Board of Directors or these
Bylaws.
Section 9. VICE PRESIDENTS. In the absence or disability
of the President, the Vice Presidents, if any, in order of their
rank as fixed by the Board of Directors or, if not ranked, a Vice
President designated by the Board of Directors, shall perform all
the duties of the President, and when so acting shall have all the
powers of, and be subject to all the restrictions upon, the
President. The Vice Presidents shall have such other powers and
perform such other duties as from time to time may be prescribed
for them respectively by the Board of Directors, these Bylaws, or
the President or the Chairman or Vice Chairman of the Board if
there is no President.
Section 10. SECRETARY. The Secretary shall keep or cause
to be kept, at the principal executive office or such other place
as the Board of Directors may order, a book of minutes of all
meetings and actions of directors, committees of directors and
stockholders, with the time and place of holding, whether regular
or special, and, if special, how authorized, the notice thereof
given, the names of those present at director's and committee
meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof.
The Secretary shall keep, or cause to be kept, at the
principal executive office or at the office of the Corporation's
transfer agent or registrar, as determined by resolution of the
Board of Directors, a share register, or a duplicate share
register, showing the names of all stockholders and their
addresses, the number and classes of shares held by each, the
number and date of certificates issued for the same, and the number
and date of cancellation of every certificate surrendered for
cancellation.
The Secretary shall give, or cause to be given, notice of
all meetings of the stockholders and of the Board of Directors
required by these Bylaws or by law to be given, and he shall keep
the seal of the Corporation in safe custody, and shall have such
other powers and perform such other duties as may be prescribed by
the Board of Directors or by these Bylaws.
Section 11. TREASURER. The Treasurer shall keep and
maintain, or cause to be kept and maintained, adequate and correct
books and records of accounts of the properties and business
transactions of the Corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall be open
at all reasonable times to inspection by any director.
<PAGE>
The Treasurer shall deposit all moneys and other valuables
in the name and to the credit of the Corporation with such
depositories as may be designated by the Board of Directors. He
shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, shall render to the President and
directors, whenever they request it, an account of all of his
transactions as Treasurer and of the financial condition of the
Corporation, and shall have other powers and perform such other
duties as may be prescribed by the Board of Directors or these
Bylaws.
ARTICLE VI.
RECORDS AND REPORTS
Section 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER.
The Corporation shall keep at its principal executive office, or at
the office of its transfer agent or registrar, if either be
appointed and as determined by resolution of the Board of
Directors, a record of its stockholders, giving the names and
addresses of all stockholders and the number and class of shares
held by each stockholder.
Any stockholder, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof,
have the right during the usual hours for business to inspect for
any proper purpose the Corporation's stock ledger and a list of its
stockholders and to make copies or extracts therefrom. A proper
purpose shall mean a purpose reasonably related to such person's
interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection,
the demand under oath shall be accompanied by a power of attorney
or such other writing which authorizes the attorney or other agent
to so act on behalf of the stockholder. The demand under oath
shall be directed to the Corporation at its registered office in
the State of Delaware or at its principal place of business.
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS. The
Corporation shall keep at its principal executive office the
original or a copy of these Bylaws as amended to date, which shall
be open to inspection by the stockholders at all reasonable times
during usual business hours.
Section 3. MAINTENANCE AND INSPECTION OF OTHER CORPORATE
RECORDS. The accounting books and records and minutes of
proceedings of the stockholders and the Board of Directors and any
committee or committees of the Board of Directors shall be kept at
such place or places designated by the Board of Directors, or, in
the absence of such designation, at the principal executive office
of the Corporation. The minutes shall be kept in written form and
the accounting books and records shall be kept either in written
form in any other form capable of being converted into written
form. Such minutes, accounting books and records shall be open to
inspection upon the written demand of any stockholder in the same
manner and subject to the same limitations specified in Section 1
of this Article VI with respect to the identities of stockholders.
<PAGE>
Section 4. INSPECTION BY DIRECTORS. Any director shall
have the right to examine the Corporation's stock ledger, a list of
its stockholders and its books and records for a purpose reasonably
related to his position as a director.
ARTICLE VII.
GENERAL CORPORATE MATTERS
Section 1. CHECKS, DRAFTS, EVIDENCE OF INDEBTEDNESS. All
checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable by the
Corporation, shall be signed or endorsed by such person or persons
and in such manner as, from time to time, shall be determined by
resolution of the Board of Directors.
Section 2. CORPORATE CONTRACTS AND INSTRUMENTS; HOW
EXECUTED. The Board of Directors, except as otherwise provided in
these Bylaws, may authorize any officer or officers, agent or
agents, to enter into any contract or execute any instrument in the
name of and on behalf of the Corporation, and such authority may be
general or confined to specific instances; and, unless so
authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall
have any power or authority to bind the Corporation by any contract
or engagement or to pledge its credit or to render it liable for
any purpose or to any amount.
Section 3. CERTIFICATES FOR SHARES. A certificate or
certificates for shares of the Common Stock of the Corporation
shall be issued to each stockholder when any such shares are fully
paid, and the Board of Directors may authorize the issuance of
certificates or shares as partly paid provided that such
certificates shall state the amount of the consideration to be paid
therefor and the amount paid thereon. All certificates shall be
signed in the name of the Corporation by the Chairman or Vice
Chairman of the Board or the President or Vice President and by the
Treasurer or an Assistant Treasurer or the Secretary or any
Assistant Secretary. Any or all of the signatures on the
certificate may be facsimile, if the certificate is countersigned
by a transfer agent or registered by a registrar other than the
Corporation itself or its employee. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as
if such person were an officer, transfer agent or registrar at the
date of issue.
Section 4. LOST CERTIFICATES. Except as hereinafter in
this Section 5 provided, no new certificate for shares shall be
issued in lieu of an old certificate unless the latter is
surrendered to the Corporation and cancelled at the same time. The
Board of Directors may in case any share certificate or certificate
for any other security is lost, stolen or destroyed, authorize the
issuance of a new certificate in lieu thereof, upon such terms and
conditions as the Board of Directors may require, including
<PAGE>
provision for indemnification of the Corporation secured by a bond
or other adequate security sufficient to protect the Corporation
against any claim that may be made against it, including any
expense or liability, on account of the alleged loss, theft or
destruction of such certificate or the issuance of such new
certificate.
Section 5. TRANSFER OF SHARES. Transfers of shares of
capital stock of the Corporation shall be made only on the books of
the Corporation by the holder thereof or by his duly authorized
attorney appointed by a power of attorney duly executed and filed
with the Secretary or a transfer agent of the Corporation, and on
surrender of the certificate or certificates representing such
shares of capital stock properly endorsed for transfer and upon
payment of all necessary transfer taxes. Every certificate
exchanged, returned or surrendered to the Corporation shall be
marked "Cancelled," with the date of cancellation, by the Secretary
or an Assistant Secretary or the transfer agent of the Corporation.
A person in whose name shares of capital stock shall stand on the
books of the Corporation shall be deemed the owner thereof to
receive dividends, to vote as such owner and for all other purposes
as respects the Corporation, its stockholders and creditors for any
purpose, until such transfer shall have been entered on the books
of the Corporation by an entry showing from and to whom
transferred.
Section 6. TRANSFER AND REGISTRY AGENTS. The Corporation
may from time to time maintain one or more transfer offices or
agents and registry offices or agents at such place or places as
may be determined from time to time by the Board.
Section 7. REGULATIONS. The Board may make rules and
regulations as it may deem expedient, not inconsistent with the
Bylaws or with the Certificate of Incorporation, concerning the
issue, transfer and registration of certificates representing
shares of its capital stock.
Section 8. RESTRICTION ON TRANSFER OF STOCK. A written
restriction on the transfer or registration of transfer of capital
stock of the Corporation, if permitted by Section 202 of the
General Corporation Law and noted conspicuously on the certificate
representing such capital stock, may be enforced against the holder
of the restricted capital stock of any successor or transferee of
the holder including an executor, administrator, trustee, guardian
or other fiduciary entrusted with like responsibility for the
person or estate of the holder. A restriction on the transfer or
registration of transfer of capital stock of the Corporation may be
imposed either by the Certificate of Incorporation or by an
agreement among any number of stockholders or among such
stockholders and the Corporation. No restriction so imposed shall
be binding with respect to capital stock issued prior to the
adoption of the restriction unless the holders of such capital
stock are parties to an agreement or voted in favor of the
restriction.
<PAGE>
Section 9. REPRESENTATION OF SHARES OF OTHER
CORPORATIONS. The Chairman of the Board, the President, or any
Vice President, or any other person authorized by resolution of the
Board of Directors or by any of the foregoing designated officers,
is authorized to vote on behalf of the Corporation any and all
shares of any other corporation or corporations, foreign or
domestic, standing in the name of the Corporation. The authority
herein granted to said officers to vote or represent on behalf of
the Corporation any and all shares held by the Corporation in any
other corporation or corporations may be exercised by any such
officer in person or by any person authorized to do so by proxy
duly executed by said officer.
Section 10. DIVIDENDS, SURPLUS, ETC. Subject to the
provisions of the Certificate of Incorporation and of applicable
law, the Board of Directors:
(a) may declare and pay dividends or make other
distributions on the outstanding shares of capital stock in such
amounts and at such time or times as, in its discretion, the
conditions of the affairs of the Corporation shall render
advisable;
(b) may use and apply, in its discretion, any of the
surplus of the Corporation in purchasing or acquiring any shares of
capital stock of the Corporation, or purchase warrants therefor, in
accordance with law, or any of its bonds, debentures, notes, scrip
or other securities or evidences indebtedness;
(c) may set aside from time to time out of such surplus
or net profits such sum or sums as, in its discretion, it may think
proper, as a reserve fund to meet contingencies, or for equalizing
dividends or for the purpose of maintaining or increasing the
property or business of the Corporation, or for any other purpose
it may think conducive to the best interests of the Corporation.
ARTICLE VIII.
GENERAL
Section 1. CONSTRUCTION AND DEFINITIONS. Unless the
context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation
Law shall govern the construction of these Bylaws. Without
limiting the generality of the foregoing, the singular number
includes the plural, the plural number includes the singular, and
the term "person" includes both a corporation and a natural person.
Section 2. SEAL. The corporate seal of the Corporation
shall bear the name of the Corporation and the words "Delaware
[year]." The Corporation may also have such other seals as the
Board of Directors shall deem appropriate, including "OFFICIAL
CORPORATE SEAL." A corporate seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced.
<PAGE>
Section 3. FISCAL YEAR. The fiscal year of the
Corporation shall be determined, and may be changed, by resolution
of the Board of Directors.
ARTICLE IX.
AMENDMENTS
Section 1. AMENDMENT BY STOCKHOLDERS. New Bylaws may be
adopted or these Bylaws may be amended or repealed by the vote of
holders of a majority of the outstanding shares entitled to vote,
unless, as to a particular provision, a higher vote is required by
the Certificate of Incorporation or by statute; provided, however,
that Section 3 of Article II, and Sections 1 and 2 of Article IX of
these Bylaws may not be amended or repealed in any respect except
by the affirmative vote of the holders of not less than eighty
percent (80%) of the outstanding shares entitled to vote thereon
("Voting Shares"), regardless of class and voting class, and, where
such action is proposed by an Interested Stockholder or by an
Associate or Affiliate of an Interested Stockholder (as such
capitalized terms are defined in the Certificate of Incorporation
of the Corporation), the affirmative vote of the holders of a
majority of all Voting Shares, regardless of class and voting
together as a single class, other than shares held by the
Interested Stockholder which proposed (or the Affiliate or
Associate of which proposed) such action, or any Affiliate or
Associate of such Interested Stockholder; provided, however, that
where such action is approved by a majority of the Disinterested
Directors (as defined in the Certificate of Incorporation of the
Corporation), the affirmative vote of a majority of the Voting
Shares, regardless of class and voting class, shall be required for
approval of such action.
Section 2. AMENDMENT BY DIRECTORS. Subject to the rights of the
Stockholders as provided in Section 1 of this Article IX to adopt,
amend or repeal bylaws, bylaws may be adopted, amended or repealed
by the Board of Directors.
<PAGE>
Exhibit 10.7d
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), dated as of January
1, 1994, is made by and between Maxicare Health Plans, Inc., a
Delaware corporation (the "Company"), and Vicki F. Perry, an
individual ("Employee").
R E C I T A L S
---------------
WHEREAS, Employee is knowledgeable and skillful in the
Company's business;
WHEREAS, the Company wishes to retain the services of
Employee as Vice President/General Manager of the Company and
Employee has agreed to render services as such;
WHEREAS, Employee is willing to be employed by the Company
under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, and for other good and valuable
consideration, the receipt of which is hereby acknowledged the
parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following
capitalized terms shall have the following meanings, unless
otherwise expressly provided or unless the context otherwise
requires:
(a) "Board of Directors" means the Board of Directors of
the Company.
(b) "Cause" means, as used with respect to the involuntary
termination of Employee:
(i) The willful and continued failure by Employee
to substantially perform his duties pursuant to the terms of
this Agreement without good cause; or
(ii) The willful engaging by Employee in misconduct
or inaction materially injurious to the Company; or
<PAGE>
(iii) The conviction of Employee for a felony or of a
crime involving moral turpitude.
No act, or failure to act, on the Employee's part shall be
considered "willful" if done or omitted to be done by the
Employee in good faith and with reasonable belief that the
Employee's action or omission was in the best interest of the
Company.
(c) "Change of Control" means (i) the merger or
consolidation of the Company with or into any other person or
entity other than an affiliate or subsidiary of the Company if
upon the consummation of the transaction, holders of the
Company's equity securities, immediately prior to such
transaction own less than fifty percent (50%) of the equity; or
(ii) the sale or transfer by the Company of all or substantially
all of its assets.
(d) "Incapacity" means the absence of the Employee from
his employment or the inability of Employee to perform his
duties pursuant to this Agreement by reason of mental or
physical illness, disability or incapacity for a period of
thirty (30) consecutive days and such determination is based
upon a certificate as to such mental or physical disability
issued by a licensed physician and/or psychiatrist, as the case
may be, employed by the Company.
2. EMPLOYMENT, SERVICES AND DUTIES. The Company hereby
employs Employee as Vice President/General Manager. Subject to
his continued employment as such by the Board of Directors,
Employee shall have and perform the duties and have the powers,
authority and responsibilities ordinarily associated with a
person in such position and shall be subject to the direction of
the Company's Board of Directors. Employee shall render his
services at such locations as the Company's Board of Directors
may designate.
3. ACCEPTANCE OF EMPLOYMENT. Employee hereby accepts
employment hereunder and agrees to devote his full time to the
Company's business and shall in no way be involved in any
<PAGE>
activities whatsoever which might interfere with his employment
with the Company.
4. COMPENSATION. As compensation for all services to be
rendered by Employee hereunder, the Company agrees to provide
Employee with the following:
(a) BASE SALARY. The Company shall pay to Employee a base
salary at the rate of $160,000.00 per annum, with such increases
and bonuses, as may be determined from time to time by the Chief
Executive Officer of the Company. Said salary shall be payable
in equal semi-monthly installments or in such other installments
as may be agreed upon between the parties.
(b) STOCK OPTIONS. The Company shall grant to Employee an
option (the "Stock Option") to purchase 7,500 shares of the
Company's Common Stock. The Stock Option shall be granted
pursuant to the terms of the Company's 1990 Stock Option Plan
and a Stock Option Agreement in the form attached hereto as
Exhibit A. Employee acknowledges that he is entitled to only
one such Stock Option grant pursuant to this Agreement.
Employee's interest in and rights to the Stock Option shall vest
in accordance with the terms of the Stock Option Agreement.
5. BENEFITS. In addition to the compensation provided
for in Section 4 of this Agreement, Employee shall have the
right to participate in any profit-sharing, pension, life,
health and accident insurance, or other employee benefit plans
presently adopted or which hereafter may be adopted by the
Company in a manner comparable to those offered or available to
other employees of the Company. Employee shall be entitled to
four (4) weeks annual vacation time, during which time his
compensation will be paid in full. Unused vacation days in any
year(s) may be carried over to a subsequent year(s) provided,
however, the cumulative number of vacation days which may be
carried over in any one year shall not exceed four (4) weeks.
6. EXPENSES. The Company shall promptly reimburse
Employee for all reasonable travel, hotel, entertainment and
other expenses incurred by Employee in the discharge of
<PAGE>
Employee's duties hereunder, upon receipt from Employee of
vouchers, receipts or other reasonable substantiation of such
expenses acceptable to the Company.
7. TERM OF EMPLOYMENT. The term of employment hereunder
shall be for a period of one (1) year, commencing as of the date
of this Agreement, unless earlier terminated as herein provided.
This Agreement shall terminate upon the occurrence of any of the
following events:
(a) The death of Employee;
(b) Employee voluntarily leaves the employ of the Company,
with or without the consent of the Company;
(c) The Incapacity of Employee;
(d) The Company terminates this Agreement for Cause;
(e) The Company terminates this Agreement for any reason
other than as set forth in Sections 7(a), 7(c) or 7(d) hereof;
or
(f) The appointment of a trustee for the Company for the
purpose of liquidating and winding up the Company pursuant to
Chapter 7 of the Federal Bankruptcy Code.
8. COMPENSATION UPON TERMINATION. In the event this
Agreement is terminated pursuant to Section 7, the Company shall
pay to Employee such compensation as Employee is entitled to
receive pursuant to Section 4, prorated through the date of said
termination. In the event that such termination arises under
Section 7(a), Employee's estate shall be entitled to receive
severance compensation equal to such amount of Employee's annual
base salary as would have been paid over a thirty (30) day
period. In the event that such termination arises under Section
7(e), Employee shall be entitled to receive severance
compensation in an amount equal to such amount of Employee's
annual base salary as would have been paid over a four (4) month
period. In the event that this Agreement is terminated by the
Company or its successor in interest in connection with, or as a
result of, a Change in Control or for any reason other than as
set forth in Sections 7(a) - (d) hereof within six (6) months of
<PAGE>
a Change in Control, Employee shall, in lieu of any severance
compensation payable pursuant to the immediately preceding
sentence, be entitled to receive severance compensation in an
amount equal to such amount of Employee's annual base salary as
would have been paid over a four (4) month period. Any and all
severance amounts paid pursuant to the provisions of this
Section 8 shall be paid in one lump sum installment. The
treatment of Employee's Stock Options shall be governed by the
terms of the Company's 1990 Stock Option Plan and the Stock
Option Agreement.
9. COVENANT NOT TO COMPETE. Employee covenants and
agrees that during the term of his employment by the Company
pursuant to this Agreement he will not, directly or indirectly,
own, manage, operate, join, control or become employed by, or
render any services of any advisory nature or otherwise, or
participate in the ownership, management, operation or control
of, any business which competes with the business of the Company
or any of its affiliates. Notwithstanding the foregoing,
Employee shall not be prevented from investing his assets in
such form or manner as will not require any services on the part
of Employee in the operation of the affairs of a company in
which investments are made, provided such company is not engaged
in a business competitive to the Company, or if it is in
competition with the Company, provided its stock is publicly
traded and Employee owns less than one percent (1%) of the
outstanding stock of that company.
10. CONFIDENTIALITY. Employee covenants and agrees that
he will not at any time during or after the termination of his
employment by the Company reveal, divulge or make known to any
person, firm or corporation any information, knowledge or data
of a proprietary nature relating to the business of the Company
or any of its affiliates which is not or has not become
generally known or public. Employee shall hold, in a fiduciary
capacity, for the benefit of the Company, all information,
knowledge or data of a proprietary nature, relating to or
<PAGE>
concerned with, the operations, customers, developments, sales,
business and affairs of the Company and its affiliates which is
not generally known to the public and which is or was obtained
by the Employee during his employment by the Company. Employee
recognizes and acknowledges that all such information, knowledge
or data is a valuable and unique asset of the Company and
accordingly he will not discuss or divulge any such information,
knowledge or data to any person, firm, partnership, corporation
or organization other than to the Company, its affiliates,
designees, assignees or successors or except as may otherwise be
required by the law, as ordered by a court or other governmental
body of competent jurisdiction, or in connection with the
business and affairs of the Company.
11. EQUITABLE REMEDIES. In the event of a breach or
threatened breach by Employee of any of his obligations under
Sections 9 and 10 hereof, Employee acknowledges that the Company
may not have an adequate remedy at law and therefore it is
mutually agreed between Employee and the Company that in
addition to any other remedies at law or in equity which the
Company may have, the Company shall be entitled to seek in a
court of law and/or equity a temporary and/or permanent
injunction restraining Employee from any continuing violation or
breach of this Agreement.
12. MISCELLANEOUS.
(a) This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company. This
Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company or by any merger,
reorganization or other transaction in which the Company is not
the surviving or resulting corporation or upon any transfer of
all or substantially all of the assets of Company in the event
of any such merger, or transfer of assets. The provisions of
this Agreement shall be binding upon and shall inure to the
benefit of the surviving business entity or the business entity
to which such assets shall be transferred in the same manner and
<PAGE>
to the same extent that the Company would be required to perform
as if no such transaction had taken place.
Neither this Agreement nor any rights arising hereunder may
be assigned or pledged by Employee. Employee's rights to the
compensation provided for under Section 4 of this Agreement (as
may be limited by Section 8 of the Agreement) and to the
reimbursement for expenses under Section 6 hereof, shall
continue, despite the fact that Employee may cease to be
employed by the Company, and shall survive the termination of
this Agreement regardless of cause. This Agreement shall inure
to the benefit of and be enforceable by Employee's personal or
legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
(b) Except as otherwise provided by law or elsewhere
herein, Employee shall be entitled to all benefits as set forth
herein notwithstanding the occurrence of the following events:
(i) any act of force majeure which materially and
adversely affect the Company's business and operations,
including but not limited to, the Company having sustained a
material loss, whether or not insured, by reason of fire,
earthquake, flood, epidemic, explosion, accident, calamity or
other act of God;
(ii) any strike or labor dispute or court or
government action, order or decree;
(iii) a banking moratorium having been declared by
federal or state authorities;
(iv) an outbreak of major armed conflict, blockade,
embargo, or other international hostilities or restraints or
orders of civic, civil defense, or military authorities, or
other national or international calamity having occurred;
(v) any act of public enemy, riot or civil
disturbance or threat thereof; or
(vi) a pending or threatened legal or governmental
proceeding or action relating generally to the Company's
business, or a notification having been received by the Company
<PAGE>
of the threat of any such proceeding or action, which could
materially adversely affect the Company.
(c) Except as expressly provided herein, this Agreement
contains the entire understanding between the parties with
respect to the subject matter hereof, and may not be modified,
altered or amended except by an instrument in writing signed by
the parties hereto. This Agreement supersedes all prior
agreements of the parties with respect to the subject matter
hereof. In the event of termination of employment of Employee
pursuant to this Agreement, the arrangements provided for by
this Agreement, by any Stock Option Agreement or other written
agreement between the Company or any of its affiliates and
Employee in effect at the time, and by any other applicable
benefit plan of the Company or any of its affiliates, will
constitute the entire obligation of the Company to the Employee
and performance thereof by the Company will constitute full
settlement of any and all claims, whether in contract or tort,
that Employee might otherwise assert against the Company or any
of its affiliates on account of such termination.
(d) This Agreement shall be construed in accordance with
the laws of the State of California applicable to agreements
made and to be performed entirely within such state and without
regard to the conflict of law principals thereof.
(e) Nothing in the Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do
any act in violation of applicable law. The Company's inability
pursuant to court order to perform its obligations under this
Agreement shall not constitute a breach of this Agreement. If
any provision of this Agreement is invalid or unenforceable, the
remainder of this Agreement shall nevertheless remain in full
force and effect. If any provision is held invalid or
unenforceable with respect to particular circumstances, it
shall, nevertheless, remain in full force and effect in all
other circumstances.
<PAGE>
(f) With the exception of disputes arising under or with
respect to Sections 9 or 10 hereof, any and all disputes
hereunder shall be resolved by arbitration. Any party hereto
electing to commence an action shall give written notice to the
other parties hereto of such election. The dispute shall be
settled by arbitration in accordance with the then rules of the
American Arbitration Association; provided, however, in the
event the parties are unable to agree on an arbitrator within
twenty (20) days after receipt of the aforementioned notice of
arbitration, a single arbitrator shall be selected by the Chief
Judge of the Superior Court of the State of California for the
County of Los Angeles. The award of such arbitrator may be
confirmed or enforced in any court of competent jurisdiction.
The costs and expenses of the arbitrator, including the
attorney's fees and costs of each of the parties, shall be
apportioned between the parties by such arbitrator, based upon
such arbitrator's determination of the merits of their
respective positions. With respect to such arbitration, the
parties shall have those rights of discovery as may be granted
by the arbitrator in accordance with California law.
(g) Any notice to the Company required or permitted
hereunder shall be given in writing to the Company, either by
personal service, telex, telecopier or, if by mail, by
registered or certified mail return receipt requested, postage
prepaid, duly addressed to the Secretary of the Company at its
then principal place of business. Any such notice to Employee
shall be given in a like manner, and if mailed shall be
addressed to Employee at Employee's home address then shown in
the files of the Company. For the purpose of determining
compliance with any time limit herein, a notice shall be deemed
given on the fifth day following the postmarked date, if mailed,
or the date of delivery if personally delivered.
(h) A waiver by either party of any term or condition of
this Agreement or any breach thereof, in any one instance, shall
<PAGE>
not be deemed or construed to be a waiver of such term or
condition or of any subsequent breach thereof.
(i) The paragraph and subparagraph headings contained in
this Agreement are solely for convenience and shall not be
considered in its interpretation.
(j) This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the day and year first written above.
COMPANY:
MAXICARE HEALTH PLANS, INC.,
a Delaware corporation
By: /s/ Peter J. Ratican
Title: Chairman, President and
Chief Executive Officer
EMPLOYEE:
/s/ Vicki F. Perry
<PAGE>
Exhibit 10.8c
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), dated as of
January 1, 1994, is made by and between Maxicare Health Plans,
Inc., a Delaware corporation (the "Company"), and Alan D. Bloom,
an individual ("Employee").
R E C I T A L S
---------------
WHEREAS, Employee is knowledgeable and skillful in the
Company's business;
WHEREAS, the Company wishes to retain the services of
Employee as Senior Vice President, Secretary and General Counsel
of the Company and Employee has agreed to render services as
such;
WHEREAS, Employee is willing to be employed by the Company
under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and
conditions hereinafter set forth, and for other good and
valuable consideration, the receipt of which is hereby
acknowledged the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following
capitalized terms shall have the following meanings, unless
otherwise expressly provided or unless the context otherwise
requires:
(a) "Board of Directors" means the Board of Directors of
the Company.
(b) "Cause" means, as used with respect to the involuntary
termination of Employee:
(i) The willful and continued failure by Employee
to substantially perform his duties pursuant to the terms of
this Agreement without good cause; or
(ii) The willful engaging by Employee in misconduct
or inaction materially injurious to the Company; or
<PAGE>
(iii) The conviction of Employee for a felony or of a
crime involving moral turpitude.
No act, or failure to act, on the Employee's part shall be
considered "willful" if done or omitted to be done by the
Employee in good faith and with reasonable belief that the
Employee's action or omission was in the best interest of the
Company.
(c) "Change of Control" means (i) the merger or
consolidation of the Company with or into any other person or
entity other than an affiliate or subsidiary of the Company if
upon the consummation of the transaction, holders of the
Company's equity securities, immediately prior to such
transaction own less than fifty percent (50%) of the equity; or
(ii) the sale or transfer by the Company of all or substantially
all of its assets.
(d) "Incapacity" means the absence of the Employee from
his employment or the inability of Employee to perform his
duties pursuant to this Agreement by reason of mental or
physical illness, disability or incapacity for a period of
thirty (30) consecutive days and such determination is based
upon a certificate as to such mental or physical disability
issued by a licensed physician and/or psychiatrist, as the case
may be, employed by the Company.
2. EMPLOYMENT, SERVICES AND DUTIES. The Company hereby
employs Employee as Senior Vice President, Secretary and General
Counsel. Subject to his continued employment as such by the
Board of Directors, Employee shall have and perform the duties
and have the powers, authority and responsibilities ordinarily
associated with a person in such position and shall be subject
to the direction of the Company's Board of Directors. Employee
shall render his services at such locations as the Company's
Board of Directors may designate.
3. ACCEPTANCE OF EMPLOYMENT. Employee hereby accepts
employment hereunder and agrees to devote his full time to the
Company's business and shall in no way be involved in any
<PAGE>
activities whatsoever which might interfere with his employment
with the Company.
4. COMPENSATION. As compensation for all services to be
rendered by Employee hereunder, the Company agrees to provide
Employee with the following:
(a) BASE SALARY. The Company shall pay to Employee a base
salary at the rate of $203,000.00 per annum, with such increases
and bonuses, as may be determined from time to time by the Chief
Executive Officer of the Company. Said salary shall be payable
in equal semi-monthly installments or in such other installments
as may be agreed upon between the parties.
(b) STOCK OPTIONS. The Company shall grant to Employee an
option (the "Stock Option") to purchase 7,500 shares of the
Company's Common Stock. The Stock Option shall be granted
pursuant to the terms of the Company's 1990 Stock Option Plan
and a Stock Option Agreement in the form attached hereto as
Exhibit A. Employee acknowledges that he is entitled to only
one such Stock Option grant pursuant to this Agreement.
Employee's interest in and rights to the Stock Option shall vest
in accordance with the terms of the Stock Option Agreement.
5. BENEFITS. In addition to the compensation provided
for in Section 4 of this Agreement, Employee shall have the
right to participate in any profit-sharing, pension, life,
health and accident insurance, or other employee benefit plans
presently adopted or which hereafter may be adopted by the
Company in a manner comparable to those offered or available to
other employees of the Company. Employee shall be entitled to
four (4) weeks annual vacation time, during which time his
compensation will be paid in full. Unused vacation days in any
year(s) may be carried over to a subsequent year(s) provided,
however, the cumulative number of vacation days which may be
carried over in any one year shall not exceed four (4) weeks.
6. EXPENSES. The Company shall promptly reimburse
Employee for all reasonable travel, hotel, entertainment and
other expenses incurred by Employee in the discharge of
<PAGE>
Employee's duties hereunder, upon receipt from Employee of
vouchers, receipts or other reasonable substantiation of such
expenses acceptable to the Company.
7. TERM OF EMPLOYMENT. The term of employment hereunder
shall be for a period of one (1) year, commencing as of the date
of this Agreement, unless earlier terminated as herein provided.
This Agreement shall terminate upon the occurrence of any of the
following events:
(a) The death of Employee;
(b) Employee voluntarily leaves the employ of the Company,
with or without the consent of the Company;
(c) The Incapacity of Employee;
(d) The Company terminates this Agreement for Cause;
(e) The Company terminates this Agreement for any reason
other than as set forth in Sections 7(a), 7(c) or 7(d) hereof;
or
(f) The appointment of a trustee for the Company for the
purpose of liquidating and winding up the Company pursuant to
Chapter 7 of the Federal Bankruptcy Code.
8. COMPENSATION UPON TERMINATION. In the event this
Agreement is terminated pursuant to Section 7, the Company shall
pay to Employee such compensation as Employee is entitled to
receive pursuant to Section 4, prorated through the date of said
termination. In the event that such termination arises under
Section 7(a), Employee's estate shall be entitled to receive
severance compensation equal to such amount of Employee's annual
base salary as would have been paid over a thirty (30) day
period. In the event that such termination arises under Section
7(e), Employee shall be entitled to receive severance
compensation in an amount equal to such amount of Employee's
annual base salary as would have been paid over a four (4) month
period. In the event that this Agreement is terminated by the
Company or its successor in interest in connection with, or as a
result of, a Change in Control or for any reason other than as
set forth in Sections 7(a) - (d) hereof within six (6) months of
<PAGE>
a Change in Control, Employee shall, in lieu of any severance
compensation payable pursuant to the immediately preceding
sentence, be entitled to receive severance compensation in an
amount equal to such amount of Employee's annual base salary as
would have been paid over a four (4) month period. Any and all
severance amounts paid pursuant to the provisions of this
Section 8 shall be paid in one lump sum installment. The
treatment of Employee's Stock Options shall be governed by the
terms of the Company's 1990 Stock Option Plan and the Stock
Option Agreement.
9. COVENANT NOT TO COMPETE. Employee covenants and
agrees that during the term of his employment by the Company
pursuant to this Agreement he will not, directly or indirectly,
own, manage, operate, join, control or become employed by, or
render any services of any advisory nature or otherwise, or
participate in the ownership, management, operation or control
of, any business which competes with the business of the Company
or any of its affiliates. Notwithstanding the foregoing,
Employee shall not be prevented from investing his assets in
such form or manner as will not require any services on the part
of Employee in the operation of the affairs of a company in
which investments are made, provided such company is not engaged
in a business competitive to the Company, or if it is in
competition with the Company, provided its stock is publicly
traded and Employee owns less than one percent (1%) of the
outstanding stock of that company.
10. CONFIDENTIALITY. Employee covenants and agrees that
he will not at any time during or after the termination of his
employment by the Company reveal, divulge or make known to any
person, firm or corporation any information, knowledge or data
of a proprietary nature relating to the business of the Company
or any of its affiliates which is not or has not become
generally known or public. Employee shall hold, in a fiduciary
capacity, for the benefit of the Company, all information,
knowledge or data of a proprietary nature, relating to or
<PAGE>
concerned with, the operations, customers, developments, sales,
business and affairs of the Company and its affiliates which is
not generally known to the public and which is or was obtained
by the Employee during his employment by the Company. Employee
recognizes and acknowledges that all such information, knowledge
or data is a valuable and unique asset of the Company and
accordingly he will not discuss or divulge any such information,
knowledge or data to any person, firm, partnership, corporation
or organization other than to the Company, its affiliates,
designees, assignees or successors or except as may otherwise be
required by the law, as ordered by a court or other governmental
body of competent jurisdiction, or in connection with the
business and affairs of the Company.
11. EQUITABLE REMEDIES. In the event of a breach or
threatened breach by Employee of any of his obligations under
Sections 9 and 10 hereof, Employee acknowledges that the Company
may not have an adequate remedy at law and therefore it is
mutually agreed between Employee and the Company that in
addition to any other remedies at law or in equity which the
Company may have, the Company shall be entitled to seek in a
court of law and/or equity a temporary and/or permanent
injunction restraining Employee from any continuing violation or
breach of this Agreement.
12. MISCELLANEOUS.
(a) This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company. This
Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company or by any merger,
reorganization or other transaction in which the Company is not
the surviving or resulting corporation or upon any transfer of
all or substantially all of the assets of Company in the event
of any such merger, or transfer of assets. The provisions of
this Agreement shall be binding upon and shall inure to the
benefit of the surviving business entity or the business entity
to which such assets shall be transferred in the same manner and
<PAGE>
to the same extent that the Company would be required to perform
as if no such transaction had taken place.
Neither this Agreement nor any rights arising hereunder may
be assigned or pledged by Employee. Employee's rights to the
compensation provided for under Section 4 of this Agreement (as
may be limited by Section 8 of the Agreement) and to the
reimbursement for expenses under Section 6 hereof, shall
continue, despite the fact that Employee may cease to be
employed by the Company, and shall survive the termination of
this Agreement regardless of cause. This Agreement shall inure
to the benefit of and be enforceable by Employee's personal or
legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
(b) Except as otherwise provided by law or elsewhere
herein, Employee shall be entitled to all benefits as set forth
herein notwithstanding the occurrence of the following events:
(i) any act of force majeure which materially and
adversely affect the Company's business and operations,
including but not limited to, the Company having sustained a
material loss, whether or not insured, by reason of fire,
earthquake, flood, epidemic, explosion, accident, calamity or
other act of God;
(ii) any strike or labor dispute or court or
government action, order or decree;
(iii) a banking moratorium having been declared by
federal or state authorities;
(iv) an outbreak of major armed conflict, blockade,
embargo, or other international hostilities or restraints or
orders of civic, civil defense, or military authorities, or
other national or international calamity having occurred;
(v) any act of public enemy, riot or civil
disturbance or threat thereof; or
(vi) a pending or threatened legal or governmental
proceeding or action relating generally to the Company's
business, or a notification having been received by the Company
<PAGE>
of the threat of any such proceeding or action, which could
materially adversely affect the Company.
(c) Except as expressly provided herein, this Agreement
contains the entire understanding between the parties with
respect to the subject matter hereof, and may not be modified,
altered or amended except by an instrument in writing signed by
the parties hereto. This Agreement supersedes all prior
agreements of the parties with respect to the subject matter
hereof. In the event of termination of employment of Employee
pursuant to this Agreement, the arrangements provided for by
this Agreement, by any Stock Option Agreement or other written
agreement between the Company or any of its affiliates and
Employee in effect at the time, and by any other applicable
benefit plan of the Company or any of its affiliates, will
constitute the entire obligation of the Company to the Employee
and performance thereof by the Company will constitute full
settlement of any and all claims, whether in contract or tort,
that Employee might otherwise assert against the Company or any
of its affiliates on account of such termination.
(d) This Agreement shall be construed in accordance with
the laws of the State of California applicable to agreements
made and to be performed entirely within such state and without
regard to the conflict of law principals thereof.
(e) Nothing in the Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do
any act in violation of applicable law. The Company's inability
pursuant to court order to perform its obligations under this
Agreement shall not constitute a breach of this Agreement. If
any provision of this Agreement is invalid or unenforceable, the
remainder of this Agreement shall nevertheless remain in full
force and effect. If any provision is held invalid or
unenforceable with respect to particular circumstances, it
shall, nevertheless, remain in full force and effect in all
other circumstances.
<PAGE>
(f) With the exception of disputes arising under or with
respect to Sections 9 or 10 hereof, any and all disputes
hereunder shall be resolved by arbitration. Any party hereto
electing to commence an action shall give written notice to the
other parties hereto of such election. The dispute shall be
settled by arbitration in accordance with the then rules of the
American Arbitration Association; provided, however, in the
event the parties are unable to agree on an arbitrator within
twenty (20) days after receipt of the aforementioned notice of
arbitration, a single arbitrator shall be selected by the Chief
Judge of the Superior Court of the State of California for the
County of Los Angeles. The award of such arbitrator may be
confirmed or enforced in any court of competent jurisdiction.
The costs and expenses of the arbitrator, including the
attorney's fees and costs of each of the parties, shall be
apportioned between the parties by such arbitrator, based upon
such arbitrator's determination of the merits of their
respective positions. With respect to such arbitration, the
parties shall have those rights of discovery as may be granted
by the arbitrator in accordance with California law.
(g) Any notice to the Company required or permitted
hereunder shall be given in writing to the Company, either by
personal service, telex, telecopier or, if by mail, by
registered or certified mail return receipt requested, postage
prepaid, duly addressed to the Secretary of the Company at its
then principal place of business. Any such notice to Employee
shall be given in a like manner, and if mailed shall be
addressed to Employee at Employee's home address then shown in
the files of the Company. For the purpose of determining
compliance with any time limit herein, a notice shall be deemed
given on the fifth day following the postmarked date, if mailed,
or the date of delivery if personally delivered.
(h) A waiver by either party of any term or condition of
this Agreement or any breach thereof, in any one instance, shall
<PAGE>
not be deemed or construed to be a waiver of such term or
condition or of any subsequent breach thereof.
(i) The paragraph and subparagraph headings contained in
this Agreement are solely for convenience and shall not be
considered in its interpretation.
(j) This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the day and year first written above.
COMPANY:
MAXICARE HEALTH PLANS, INC.,
a Delaware corporation
By: /s/ Peter J. Ratican
Title: Chairman, President and
Chief Executive Officer
EMPLOYEE:
/s/ Alan D. Bloom
<PAGE>
Exhibit 10.12d
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), dated as of January
1, 1994, is made by and between Maxicare Health Plans, Inc., a
Delaware corporation (the "Company"), and Aivars Jerumanis, an
individual ("Employee").
R E C I T A L S
---------------
WHEREAS, Employee is knowledgeable and skillful in the
Company's business;
WHEREAS, the Company wishes to retain the services of
Employee as Senior Vice President, Chief Information Officer of
the Company and Employee has agreed to render services as such;
WHEREAS, Employee is willing to be employed by the Company
under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, and for other good and valuable
consideration, the receipt of which is hereby acknowledged the
parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following
capitalized terms shall have the following meanings, unless
otherwise expressly provided or unless the context otherwise
requires:
(a) "Board of Directors" means the Board of Directors of
the Company.
(b) "Cause" means, as used with respect to the involuntary
termination of Employee:
(i) The willful and continued failure by Employee
to substantially perform his duties pursuant to the terms of
this Agreement without good cause; or
(ii) The willful engaging by Employee in misconduct
or inaction materially injurious to the Company; or
<PAGE>
(iii) The conviction of Employee for a felony or of a
crime involving moral turpitude.
No act, or failure to act, on the Employee's part shall be
considered "willful" if done or omitted to be done by the
Employee in good faith and with reasonable belief that the
Employee's action or omission was in the best interest of the
Company.
(c) "Change of Control" means (i) the merger or
consolidation of the Company with or into any other person or
entity other than an affiliate or subsidiary of the Company if
upon the consummation of the transaction, holders of the
Company's equity securities, immediately prior to such
transaction own less than fifty percent (50%) of the equity; or
(ii) the sale or transfer by the Company of all or substantially
all of its assets.
(d) "Incapacity" means the absence of the Employee from
his employment or the inability of Employee to perform his
duties pursuant to this Agreement by reason of mental or
physical illness, disability or incapacity for a period of
thirty (30) consecutive days and such determination is based
upon a certificate as to such mental or physical disability
issued by a licensed physician and/or psychiatrist, as the case
may be, employed by the Company.
2. EMPLOYMENT, SERVICES AND DUTIES. The Company hereby
employs Employee as Senior Vice President, Chief Information
Officer. Subject to his continued employment as such by the
Board of Directors, Employee shall have and perform the duties
and have the powers, authority and responsibilities ordinarily
associated with a person in such position and shall be subject
to the direction of the Company's Board of Directors. Employee
shall render his services at such locations as the Company's
Board of Directors may designate.
3. ACCEPTANCE OF EMPLOYMENT. Employee hereby accepts
employment hereunder and agrees to devote his full time to the
Company's business and shall in no way be involved in any
<PAGE>
activities whatsoever which might interfere with his employment
with the Company.
4. COMPENSATION. As compensation for all services to be
rendered by Employee hereunder, the Company agrees to provide
Employee with the following:
(a) BASE SALARY. The Company shall pay to Employee a base
salary at the rate of $185,000.00 per annum, with such increases
and bonuses, as may be determined from time to time by the Chief
Executive Officer of the Company. Said salary shall be payable
in equal semi-monthly installments or in such other installments
as may be agreed upon between the parties.
(b) STOCK OPTIONS. The Company shall grant to Employee an
option (the "Stock Option") to purchase 5,000 shares of the
Company's Common Stock. The Stock Option shall be granted
pursuant to the terms of the Company's 1990 Stock Option Plan
and a Stock Option Agreement in the form attached hereto as
Exhibit A. Employee acknowledges that he is entitled to only
one such Stock Option grant pursuant to this Agreement.
Employee's interest in and rights to the Stock Option shall vest
in accordance with the terms of the Stock Option Agreement.
5. BENEFITS. In addition to the compensation provided
for in Section 4 of this Agreement, Employee shall have the
right to participate in any profit-sharing, pension, life,
health and accident insurance, or other employee benefit plans
presently adopted or which hereafter may be adopted by the
Company in a manner comparable to those offered or available to
other employees of the Company. Employee shall be entitled to
three (3) weeks annual vacation time, during which time his
compensation will be paid in full. Unused vacation days in any
year(s) may be carried over to a subsequent year(s) provided,
however, the cumulative number of vacation days which may be
carried over in any one year shall not exceed three (3) weeks.
6. EXPENSES. The Company shall promptly reimburse
Employee for all reasonable travel, hotel, entertainment and
other expenses incurred by Employee in the discharge of
<PAGE>
Employee's duties hereunder, upon receipt from Employee of
vouchers, receipts or other reasonable substantiation of such
expenses acceptable to the Company.
7. TERM OF EMPLOYMENT. The term of employment hereunder
shall be for a period of one (1) year, commencing as of the date
of this Agreement, unless earlier terminated as herein provided.
This Agreement shall terminate upon the occurrence of any of the
following events:
(a) The death of Employee;
(b) Employee voluntarily leaves the employ of the Company,
with or without the consent of the Company;
(c) The Incapacity of Employee;
(d) The Company terminates this Agreement for Cause;
(e) The Company terminates this Agreement for any reason
other than as set forth in Sections 7(a), 7(c) or 7(d) hereof;
or
(f) The appointment of a trustee for the Company for the
purpose of liquidating and winding up the Company pursuant to
Chapter 7 of the Federal Bankruptcy Code.
8. COMPENSATION UPON TERMINATION. In the event this
Agreement is terminated pursuant to Section 7, the Company shall
pay to Employee such compensation as Employee is entitled to
receive pursuant to Section 4, prorated through the date of said
termination. In the event that such termination arises under
Section 7(a), Employee's estate shall be entitled to receive
severance compensation equal to such amount of Employee's annual
base salary as would have been paid over a thirty (30) day
period. In the event that such termination arises under Section
7(e), Employee shall be entitled to receive severance
compensation in an amount equal to such amount of Employee's
annual base salary as would have been paid over a four (4) month
period. In the event that this Agreement is terminated by the
Company or its successor in interest in connection with, or as a
result of, a Change in Control or for any reason other than as
set forth in Sections 7(a) - (d) hereof within six (6) months of
<PAGE>
a Change in Control, Employee shall, in lieu of any severance
compensation payable pursuant to the immediately preceding
sentence, be entitled to receive severance compensation in an
amount equal to such amount of Employee's annual base salary as
would have been paid over a four (4) month period. Any and all
severance amounts paid pursuant to the provisions of this
Section 8 shall be paid in one lump sum installment. The
treatment of Employee's Stock Options shall be governed by the
terms of the Company's 1990 Stock Option Plan and the Stock
Option Agreement.
9. COVENANT NOT TO COMPETE. Employee covenants and
agrees that during the term of his employment by the Company
pursuant to this Agreement he will not, directly or indirectly,
own, manage, operate, join, control or become employed by, or
render any services of any advisory nature or otherwise, or
participate in the ownership, management, operation or control
of, any business which competes with the business of the Company
or any of its affiliates. Notwithstanding the foregoing,
Employee shall not be prevented from investing his assets in
such form or manner as will not require any services on the part
of Employee in the operation of the affairs of a company in
which investments are made, provided such company is not engaged
in a business competitive to the Company, or if it is in
competition with the Company, provided its stock is publicly
traded and Employee owns less than one percent (1%) of the
outstanding stock of that company.
10. CONFIDENTIALITY. Employee covenants and agrees that
he will not at any time during or after the termination of his
employment by the Company reveal, divulge or make known to any
person, firm or corporation any information, knowledge or data
of a proprietary nature relating to the business of the Company
or any of its affiliates which is not or has not become
generally known or public. Employee shall hold, in a fiduciary
capacity, for the benefit of the Company, all information,
knowledge or data of a proprietary nature, relating to or
<PAGE>
concerned with, the operations, customers, developments, sales,
business and affairs of the Company and its affiliates which is
not generally known to the public and which is or was obtained
by the Employee during his employment by the Company. Employee
recognizes and acknowledges that all such information, knowledge
or data is a valuable and unique asset of the Company and
accordingly he will not discuss or divulge any such information,
knowledge or data to any person, firm, partnership, corporation
or organization other than to the Company, its affiliates,
designees, assignees or successors or except as may otherwise be
required by the law, as ordered by a court or other governmental
body of competent jurisdiction, or in connection with the
business and affairs of the Company.
11. EQUITABLE REMEDIES. In the event of a breach or
threatened breach by Employee of any of his obligations under
Sections 9 and 10 hereof, Employee acknowledges that the Company
may not have an adequate remedy at law and therefore it is
mutually agreed between Employee and the Company that in
addition to any other remedies at law or in equity which the
Company may have, the Company shall be entitled to seek in a
court of law and/or equity a temporary and/or permanent
injunction restraining Employee from any continuing violation or
breach of this Agreement.
12. MISCELLANEOUS.
(a) This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company. This
Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company or by any merger,
reorganization or other transaction in which the Company is not
the surviving or resulting corporation or upon any transfer of
all or substantially all of the assets of Company in the event
of any such merger, or transfer of assets. The provisions of
this Agreement shall be binding upon and shall inure to the
benefit of the surviving business entity or the business entity
to which such assets shall be transferred in the same manner and
<PAGE>
to the same extent that the Company would be required to perform
as if no such transaction had taken place.
Neither this Agreement nor any rights arising hereunder may
be assigned or pledged by Employee. Employee's rights to the
compensation provided for under Section 4 of this Agreement (as
may be limited by Section 8 of the Agreement) and to the
reimbursement for expenses under Section 6 hereof, shall
continue, despite the fact that Employee may cease to be
employed by the Company, and shall survive the termination of
this Agreement regardless of cause. This Agreement shall inure
to the benefit of and be enforceable by Employee's personal or
legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
(b) Except as otherwise provided by law or elsewhere
herein, Employee shall be entitled to all benefits as set forth
herein notwithstanding the occurrence of the following events:
(i) any act of force majeure which materially and
adversely affect the Company's business and operations,
including but not limited to, the Company having sustained a
material loss, whether or not insured, by reason of fire,
earthquake, flood, epidemic, explosion, accident, calamity or
other act of God;
(ii) any strike or labor dispute or court or
government action, order or decree;
(iii) a banking moratorium having been declared by
federal or state authorities;
(iv) an outbreak of major armed conflict, blockade,
embargo, or other international hostilities or restraints or
orders of civic, civil defense, or military authorities, or
other national or international calamity having occurred;
(v) any act of public enemy, riot or civil
disturbance or threat thereof; or
(vi) a pending or threatened legal or governmental
proceeding or action relating generally to the Company's
business, or a notification having been received by the Company
<PAGE>
of the threat of any such proceeding or action, which could
materially adversely affect the Company.
(c) Except as expressly provided herein, this Agreement
contains the entire understanding between the parties with
respect to the subject matter hereof, and may not be modified,
altered or amended except by an instrument in writing signed by
the parties hereto. This Agreement supersedes all prior
agreements of the parties with respect to the subject matter
hereof. In the event of termination of employment of Employee
pursuant to this Agreement, the arrangements provided for by
this Agreement, by any Stock Option Agreement or other written
agreement between the Company or any of its affiliates and
Employee in effect at the time, and by any other applicable
benefit plan of the Company or any of its affiliates, will
constitute the entire obligation of the Company to the Employee
and performance thereof by the Company will constitute full
settlement of any and all claims, whether in contract or tort,
that Employee might otherwise assert against the Company or any
of its affiliates on account of such termination.
(d) This Agreement shall be construed in accordance with
the laws of the State of California applicable to agreements
made and to be performed entirely within such state and without
regard to the conflict of law principals thereof.
(e) Nothing in the Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do
any act in violation of applicable law. The Company's inability
pursuant to court order to perform its obligations under this
Agreement shall not constitute a breach of this Agreement. If
any provision of this Agreement is invalid or unenforceable, the
remainder of this Agreement shall nevertheless remain in full
force and effect. If any provision is held invalid or
unenforceable with respect to particular circumstances, it
shall, nevertheless, remain in full force and effect in all
other circumstances.
<PAGE>
(f) With the exception of disputes arising under or with
respect to Sections 9 or 10 hereof, any and all disputes
hereunder shall be resolved by arbitration. Any party hereto
electing to commence an action shall give written notice to the
other parties hereto of such election. The dispute shall be
settled by arbitration in accordance with the then rules of the
American Arbitration Association; provided, however, in the
event the parties are unable to agree on an arbitrator within
twenty (20) days after receipt of the aforementioned notice of
arbitration, a single arbitrator shall be selected by the Chief
Judge of the Superior Court of the State of California for the
County of Los Angeles. The award of such arbitrator may be
confirmed or enforced in any court of competent jurisdiction.
The costs and expenses of the arbitrator, including the
attorney's fees and costs of each of the parties, shall be
apportioned between the parties by such arbitrator, based upon
such arbitrator's determination of the merits of their
respective positions. With respect to such arbitration, the
parties shall have those rights of discovery as may be granted
by the arbitrator in accordance with California law.
(g) Any notice to the Company required or permitted
hereunder shall be given in writing to the Company, either by
personal service, telex, telecopier or, if by mail, by
registered or certified mail return receipt requested, postage
prepaid, duly addressed to the Secretary of the Company at its
then principal place of business. Any such notice to Employee
shall be given in a like manner, and if mailed shall be
addressed to Employee at Employee's home address then shown in
the files of the Company. For the purpose of determining
compliance with any time limit herein, a notice shall be deemed
given on the fifth day following the postmarked date, if mailed,
or the date of delivery if personally delivered.
(h) A waiver by either party of any term or condition of
this Agreement or any breach thereof, in any one instance, shall
<PAGE>
not be deemed or construed to be a waiver of such term or
condition or of any subsequent breach thereof.
(i) The paragraph and subparagraph headings contained in
this Agreement are solely for convenience and shall not be
considered in its interpretation.
(j) This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the day and year first written above.
COMPANY:
MAXICARE HEALTH PLANS, INC.,
a Delaware corporation
By: /s/ Peter J. Ratican
Title: Chairman, President and
Chief Executive Officer
EMPLOYEE:
/s/ Aivars Jerumanis
<PAGE>
Exhibit 10.48a
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), dated as of
January 1, 1994, is made by and between MAXICARE, a California
corporation (the "Company"), and William B. Caswell, an
individual ("Employee").
R E C I T A L S
---------------
WHEREAS, Employee is knowledgeable and skillful in the
Company's business;
WHEREAS, the Company wishes to retain the services of
Employee as Vice President - General Manager of the Company and
Employee has agreed to render services as such;
WHEREAS, Employee is willing to be employed by the Company
under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and
conditions hereinafter set forth, and for other good and
valuable consideration, the receipt of which is hereby
acknowledged the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following
capitalized terms shall have the following meanings, unless
otherwise expressly provided or unless the context otherwise
requires:
(a) "Board of Directors" means the Board of Directors of
the Company.
(b) "Cause" means, as used with respect to the involuntary
termination of Employee:
(i) The willful and continued failure by Employee
to substantially perform his duties pursuant to the terms of
this Agreement without good cause; or
(ii) The willful engaging by Employee in misconduct
or inaction materially injurious to the Company; or
(iii) The conviction of Employee for a felony or of a
crime involving moral turpitude.
<PAGE>
No act, or failure to act, on the Employee's part shall be
considered "willful" if done or omitted to be done by the
Employee in good faith and with reasonable belief that the
Employee's action or omission was in the best interest of the
Company.
(c) "Change of Control" means (i) the merger or
consolidation of the Company or the Company's parent, Maxicare
Health Plans, Inc., a Delaware corporation ("Maxicare") with or
into any other person or entity other than an affiliate or
subsidiary of the Company or Maxicare, as the case may be, if
upon the consummation of the transaction, holders of Maxicare's
or the Company's equity securities, as the case may be,
immediately prior to such transaction own less than fifty
percent (50%) of the equity securities of the surviving or
consolidated entity; or (ii) the sale or transfer by the Company
or Maxicare of all or substantially all of their respective
assets.
(d) "Incapacity" means the absence of the Employee from
his employment or the inability of Employee to perform his
duties pursuant to this Agreement by reason of mental or
physical illness, disability or incapacity for a period of
forty-five (45) consecutive days and such determination is based
upon a certificate as to such mental or physical disability
issued by a licensed physician and/or psychiatrist, as the case
may be, employed by the Company.
2. EMPLOYMENT, SERVICES AND DUTIES. The Company hereby
employs Employee as Vice President - General Manager. Subject
to his continued employment as such by the Board of Directors or
the President of the Company, Employee shall have and perform
the duties and have the powers, authority and responsibilities
ordinarily associated with a person in such position and shall
be subject to the direction of the Company's Board of Directors
and the President of the Company or such other person(s) as they
may designate. Employee shall render his services at such
locations as the Company's Board of Directors or the President
of the Company may designate.
<PAGE>
3. ACCEPTANCE OF EMPLOYMENT. Employee hereby accepts
employment hereunder and agrees to devote his full time to the
Company's business and shall in no way be involved in any
activities whatsoever which might interfere with his employment
with the Company.
4. COMPENSATION. As compensation for all services to be
rendered by Employee hereunder, the Company agrees to provide
Employee with the following:
(a) BASE SALARY. The Company shall pay to Employee an
initial base salary at the rate of $195,000 per annum, with such
increases and bonuses, as may be determined from time to time by
the Board of Directors of the Company. Said salary shall be
payable in equal semi-monthly installments or in such other
installments as may be agreed upon between the parties.
(b) STOCK OPTIONS. The Company shall grant to Employee an
option (the "Stock Option") to purchase 10,000 shares of
Maxicare's Common Stock. The Stock Option shall be granted
pursuant to the terms of Maxicare's 1990 Stock Option Plan and a
Stock Option Agreement in the form attached hereto as Exhibit A.
Employee acknowledges that he is entitled to only one such Stock
Option grant pursuant to this Agreement. Employee's interest in
and rights to the Stock Option shall vest in accordance with the
terms of the Stock Option Agreement.
5. BENEFITS. In addition to the compensation provided
for in Section 4 of this Agreement, Employee shall receive an
automobile allowance in the amount of $275.00 per month and
shall have the right to participate in any profit-sharing,
pension, life, health and accident insurance, or other employee
benefit plans presently adopted or which hereafter may be
adopted by the Company in a manner comparable to those offered
or available to other comparatively situated executives of the
Company. Employee shall be entitled to three (3) weeks annual
vacation time, during which time his compensation will be paid
in full. Unused vacation days in any year(s) may be carried
over to a subsequent year(s) provided, however, the cumulative
<PAGE>
number of vacation days which may be carried over in any one
year shall not exceed three (3) weeks.
6. EXPENSES. The Company shall promptly reimburse
Employee for all reasonable travel, hotel, entertainment and
other expenses incurred by Employee in the discharge of
Employee's duties hereunder, including parking, the cost of
purchase, installation and operation of a car phone, upon
receipt from Employee of vouchers, receipts or other reasonable
substantiation of such expenses acceptable to the Company.
7. TERM OF EMPLOYMENT. The term of employment hereunder
shall be for a period of two (2) years, commencing as of the
date of this Agreement, unless earlier terminated as herein
provided. This Agreement shall terminate upon the occurrence of
any of the following events:
(a) The death of Employee;
(b) Employee voluntarily leaves the employ of the Company,
with or without the consent of the Company;
(c) The Incapacity of Employee;
(d) The Company terminates this Agreement for Cause;
(e) The Company terminates this Agreement for any reason
other than as set forth in Sections 7(a), 7(c) or 7(d) hereof;
or
(f) The appointment of a trustee for the Company for the
purpose of liquidating and winding up the Company pursuant to
Chapter 7 of the Federal Bankruptcy Code.
Subject to the provisions of 7(a) through (f) above, in the
event the Company, in its sole discretion, wishes to engage
Employee's services beyond the term of this Agreement, the
Company agrees to notify Employee, in writing, no less than 120
days prior to the expiration of the term hereof, of the terms
and conditions of such proposed ongoing employment.
8. COMPENSATION UPON TERMINATION. In the event this
Agreement is terminated pursuant to Section 7, the Company shall
pay to Employee such compensation as Employee is entitled to
receive pursuant to Section 4 and vacation benefits pursuant to
<PAGE>
Section 5, prorated through the date of said termination. In
the event that such termination arises under Section 7(a),
Employee's estate shall be entitled to receive severance
compensation equal to such amount of Employee's annual base
salary as would have been paid over a thirty (30) day period.
In the event that such termination arises under Section 7(e),
(i) prior to the first anniversary of the date of this
Agreement, Employee shall be entitled to receive severance
compensation in an amount equal to Employee's annual base
salary; or (ii) on or after the first anniversary of the date of
this Agreement, Employee shall be entitled to receive severance
compensation equal to the amount of the remainder of Employee's
annual base salary as would have been paid had this Agreement
not been terminated which amount shall in no event be less than
Employee's annual base for a six (6) month period. In the event
that this Agreement is terminated by the Company or its
successor in interest in connection with, or as a result of, a
Change in Control or for any reason other than as set forth in
Sections 7(a) - (d) hereof within six (6) months of a Change in
Control, Employee shall be entitled to receive severance
compensation in an amount equal to Employee's annual base
salary. Any and all severance amounts paid pursuant to the
provisions of this Section 8 shall be paid in one lump sum
installment. The treatment of Employee's Stock Options shall be
governed by the terms of Maxicare's 1990 Stock Option Plan and
the Stock Option Agreement.
9. COVENANT NOT TO COMPETE. Employee covenants and
agrees that during the term of this Agreement he will not,
directly or indirectly, own, manage, operate, join, control or
become employed by, or render any services of any advisory
nature or otherwise, or participate in the ownership,
management, operation or control of, any business which competes
with the business of the Company or any of its affiliates.
Notwithstanding the foregoing, Employee shall not be prevented
from investing his assets in such form or manner as will not
<PAGE>
require any services on the part of Employee in the operation of
the affairs of a company in which investments are made, provided
such company is not engaged in a business competitive to the
Company, or if it is in competition with the Company, provided
its stock is publicly traded and Employee owns less than one
percent (1%) of the outstanding stock of that company.
10. CONFIDENTIALITY. Employee covenants and agrees that
he will not at any time during or after the termination of his
employment by the Company reveal, divulge or make known to any
person, firm or corporation any information, knowledge or data
of a proprietary nature relating to the business of the Company
or any of its affiliates which is not or has not become
generally known or public. Employee shall hold, in a fiduciary
capacity, for the benefit of the Company, all information,
knowledge or data of a proprietary nature, relating to or
concerned with, the operations, customers, developments, sales,
business and affairs of the Company and its affiliates which is
not generally known to the public and which is or was obtained
by the Employee during his employment by the Company. Employee
recognizes and acknowledges that all such information, knowledge
or data is a valuable and unique asset of the Company and
accordingly he will not discuss or divulge any such information,
knowledge or data to any person, firm, partnership, corporation
or organization other than to the Company, its affiliates,
designees, assignees or successors or except as may otherwise be
required by the law, as ordered by a court or other governmental
body of competent jurisdiction, or in connection with the
business and affairs of the Company.
11. EQUITABLE REMEDIES. In the event of a breach or
threatened breach by Employee of any of his obligations under
Sections 9 and 10 hereof, Employee acknowledges that the Company
may not have an adequate remedy at law and therefore it is
mutually agreed between Employee and the Company that in
addition to any other remedies at law or in equity which the
Company may have, the Company shall be entitled to seek in a
<PAGE>
court of law and/or equity a temporary and/or permanent
injunction restraining Employee from any continuing violation or
breach of this Agreement.
12. MISCELLANEOUS.
(a) This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company. This
Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company or by any merger,
reorganization or other transaction in which the Company is not
the surviving or resulting corporation or upon any transfer of
all or substantially all of the assets of Company in the event
of any such merger, or transfer of assets. The provisions of
this Agreement shall be binding upon and shall inure to the
benefit of the surviving business entity or the business entity
to which such assets shall be transferred in the same manner and
to the same extent that the Company would be required to perform
it if no such transaction had taken place.
Neither this Agreement nor any rights arising hereunder may
be assigned or pledged by Employee. Employee's rights to the
compensation provided for under Section 4 of this Agreement (as
may be limited by Section 8 of the Agreement) and to the
reimbursement for expenses under Section 6 hereof, shall
continue, despite the fact that Employee may cease to be
employed by the Company, and shall survive the termination of
this Agreement regardless of cause. This Agreement shall inure
to the benefit of and be enforceable by Employee's personal or
legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
(b) Except as otherwise provided by law or elsewhere
herein, Employee shall be entitled to all benefits as set forth
herein notwithstanding the occurrence of the following events:
(i) any act of force majeure which materially and
adversely affect the Company's business and operations,
including but not limited to, the Company having sustained a
material loss, whether or not insured, by reason of fire,
<PAGE>
earthquake, flood, epidemic, explosion, accident, calamity or
other act of God;
(ii) any strike or labor dispute or court or
government action, order or decree;
(iii) a banking moratorium having been declared by
federal or state authorities;
(iv) an outbreak of major armed conflict, blockade,
embargo, or other international hostilities or restraints or
orders of civic, civil defense, or military authorities, or
other national or international calamity having occurred;
(v) any act of public enemy, riot or civil
disturbance or threat thereof; or
(vi) a pending or threatened legal or governmental
proceeding or action relating generally to the Company's
business, or a notification having been received by the Company
of the threat of any such proceeding or action, which could
materially adversely affect the Company.
(c) Except as expressly provided herein, this Agreement
contains the entire understanding between the parties with
respect to the subject matter hereof, and may not be modified,
altered or amended except by an instrument in writing signed by
the parties hereto. This Agreement supersedes all prior
agreements of the parties with respect to the subject matter
hereof. In the event of termination of employment of Employee
pursuant to this Agreement, the arrangements provided for by
this Agreement, by any Stock Option Agreement or other written
agreement between the Company or any of its affiliates and
Employee in effect at the time, and by any other applicable
benefit plan of the Company or any of its affiliates, will
constitute the entire obligation of the Company to the Employee
and performance thereof by the Company will constitute full
settlement of any and all claims, whether in contract or tort,
that Employee might otherwise assert against the Company or any
of its affiliates on account of such termination.
<PAGE>
(d) This Agreement shall be construed in accordance with
the laws of the State of California applicable to agreements
made and to be performed entirely within such state and without
regard to the conflict of law principals thereof.
(e) Nothing in the Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do
any act in violation of applicable law. The Company's inability
pursuant to court order to perform its obligations under this
Agreement shall not constitute a breach of this Agreement. If
any provision of this Agreement is invalid or unenforceable, the
remainder of this Agreement shall nevertheless remain in full
force and effect. If any provision is held invalid or
unenforceable with respect to particular circumstances, it
shall, nevertheless, remain in full force and effect in all
other circumstances.
(f) With the exception of disputes arising under or with
respect to Sections 9 or 10 hereof, any and all disputes
hereunder shall be resolved by arbitration. Any party hereto
electing to commence an action shall give written notice to the
other parties hereto of such election. The dispute shall be
settled by arbitration in accordance with the then rules of the
American Arbitration Association; provided, however, in the
event the parties are unable to agree on an arbitrator within
twenty (20) days after receipt of the aforementioned notice of
arbitration, a single arbitrator shall be selected by the Chief
Judge of the Superior Court of the State of California for the
County of Los Angeles. The award of such arbitrator may be
confirmed or enforced in any court of competent jurisdiction.
The costs and expenses of the arbitrator, including the
attorney's fees and costs of each of the parties, shall be
apportioned between the parties by such arbitrator, based upon
such arbitrator's determination of the merits of their
respective positions. With respect to such arbitration, the
parties shall have those rights of discovery as may be granted
by the arbitrator in accordance with California law.
<PAGE>
(g) Any notice to the Company required or permitted
hereunder shall be given in writing to the Company, either by
personal service, telex, telecopier or, if by mail, by
registered or certified mail return receipt requested, postage
prepaid, duly addressed to the Secretary of the Company at its
then principal place of business. Any such notice to Employee
shall be given in a like manner, and if mailed shall be
addressed to Employee at Employee's home address then shown in
the files of the Company. For the purpose of determining
compliance with any time limit herein, a notice shall be deemed
given on the fifth day following the postmarked date, if mailed,
or the date of delivery if personally delivered.
(h) A waiver by either party of any term or condition of
this Agreement or any breach thereof, in any one instance, shall
not be deemed or construed to be a waiver of such term or
condition or of any subsequent breach thereof.
(i) The paragraph and subparagraph headings contained in
this Agreement are solely for convenience and shall not be
considered in its interpretation.
(j) This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the day and year first written above.
COMPANY:
MAXICARE, a California Corporation
By: /s/ Peter J. Ratican
Title: Chairman, President
and Chief Executive Officer
EMPLOYEE:
/s/ William B. Caswell
<PAGE>
Exhibit 10.51c
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), dated as of January
1, 1994, is made by and between Maxicare Health Plans, Inc., a
Delaware corporation (the "Company"), and Robert Landis, an
individual ("Employee").
R E C I T A L S
---------------
WHEREAS, Employee is knowledgeable and skillful in the
Company's business;
WHEREAS, the Company wishes to retain the services of
Employee as Treasurer of the Company and Employee has agreed to
render services as such;
WHEREAS, Employee is willing to be employed by the Company
under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, and for other good and valuable
consideration, the receipt of which is hereby acknowledged the
parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following
capitalized terms shall have the following meanings, unless
otherwise expressly provided or unless the context otherwise
requires:
(a) "Board of Directors" means the Board of Directors of
the Company.
(b) "Cause" means, as used with respect to the involuntary
termination of Employee:
(i) The willful and continued failure by Employee
to substantially perform his duties pursuant to the terms of
this Agreement without good cause; or
(ii) The willful engaging by Employee in misconduct
or inaction materially injurious to the Company; or
<PAGE>
(iii) The conviction of Employee for a felony or of a
crime involving moral turpitude.
No act, or failure to act, on the Employee's part shall be
considered "willful" if done or omitted to be done by the
Employee in good faith and with reasonable belief that the
Employee's action or omission was in the best interest of the
Company.
(c) "Change of Control" means (i) the merger or
consolidation of the Company with or into any other person or
entity other than an affiliate or subsidiary of the Company if
upon the consummation of the transaction, holders of the
Company's equity securities, immediately prior to such
transaction own less than fifty percent (50%) of the equity; or
(ii) the sale or transfer by the Company of all or substantially
all of its assets.
(d) "Incapacity" means the absence of the Employee from
his employment or the inability of Employee to perform his
duties pursuant to this Agreement by reason of mental or
physical illness, disability or incapacity for a period of
thirty (30) consecutive days and such determination is based
upon a certificate as to such mental or physical disability
issued by a licensed physician and/or psychiatrist, as the case
may be, employed by the Company.
2. EMPLOYMENT, SERVICES AND DUTIES. The Company hereby
employs Employee as Treasurer. Subject to his continued
employment as such by the Board of Directors, Employee shall
have and perform the duties and have the powers, authority and
responsibilities ordinarily associated with a person in such
position and shall be subject to the direction of the Company's
Board of Directors. Employee shall render his services at such
locations as the Company's Board of Directors may designate.
3. ACCEPTANCE OF EMPLOYMENT. Employee hereby accepts
employment hereunder and agrees to devote his full time to the
Company's business and shall in no way be involved in any
<PAGE>
activities whatsoever which might interfere with his employment
with the Company.
4. COMPENSATION. As compensation for all services to be
rendered by Employee hereunder, the Company agrees to provide
Employee with the following:
(a) BASE SALARY. The Company shall pay to Employee a base
salary at the rate of $150,000.00 per annum, with such increases
and bonuses, as may be determined from time to time by the Chief
Executive Officer of the Company. Said salary shall be payable
in equal semi-monthly installments or in such other installments
as may be agreed upon between the parties.
(b) STOCK OPTIONS. The Company shall grant to Employee an
option (the "Stock Option") to purchase 10,000 shares of the
Company's Common Stock. The Stock Option shall be granted
pursuant to the terms of the Company's 1990 Stock Option Plan
and a Stock Option Agreement in the form attached hereto as
Exhibit A. Employee acknowledges that he is entitled to only
one such Stock Option grant pursuant to this Agreement.
Employee's interest in and rights to the Stock Option shall vest
in accordance with the terms of the Stock Option Agreement.
5. BENEFITS. In addition to the compensation provided
for in Section 4 of this Agreement, Employee shall have the
right to participate in any profit-sharing, pension, life,
health and accident insurance, or other employee benefit plans
presently adopted or which hereafter may be adopted by the
Company in a manner comparable to those offered or available to
other employees of the Company. Employee shall be entitled to
four (4) weeks annual vacation time, during which time his
compensation will be paid in full. Unused vacation days in any
year(s) may be carried over to a subsequent year(s) provided,
however, the cumulative number of vacation days which may be
carried over in any one year shall not exceed four (4) weeks.
6. EXPENSES. The Company shall promptly reimburse
Employee for all reasonable travel, hotel, entertainment and
other expenses incurred by Employee in the discharge of
<PAGE>
Employee's duties hereunder, upon receipt from Employee of
vouchers, receipts or other reasonable substantiation of such
expenses acceptable to the Company.
7. TERM OF EMPLOYMENT. The term of employment hereunder
shall be for a period of one (1) year, commencing as of the date
of this Agreement, unless earlier terminated as herein provided.
This Agreement shall terminate upon the occurrence of any of the
following events:
(a) The death of Employee;
(b) Employee voluntarily leaves the employ of the Company,
with or without the consent of the Company;
(c) The Incapacity of Employee;
(d) The Company terminates this Agreement for Cause;
(e) The Company terminates this Agreement for any reason
other than as set forth in Sections 7(a), 7(c) or 7(d) hereof;
or
(f) The appointment of a trustee for the Company for the
purpose of liquidating and winding up the Company pursuant to
Chapter 7 of the Federal Bankruptcy Code.
8. COMPENSATION UPON TERMINATION. In the event this
Agreement is terminated pursuant to Section 7, the Company shall
pay to Employee such compensation as Employee is entitled to
receive pursuant to Section 4, prorated through the date of said
termination. In the event that such termination arises under
Section 7(a), Employee's estate shall be entitled to receive
severance compensation equal to such amount of Employee's annual
base salary as would have been paid over a thirty (30) day
period. In the event that such termination arises under Section
7(e), Employee shall be entitled to receive severance
compensation in an amount equal to such amount of Employee's
annual base salary as would have been paid over a four (4) month
period. In the event that this Agreement is terminated by the
Company or its successor in interest in connection with, or as a
result of, a Change in Control or for any reason other than as
set forth in Sections 7(a) - (d) hereof within six (6) months of
<PAGE>
a Change in Control, Employee shall, in lieu of any severance
compensation payable pursuant to the immediately preceding
sentence, be entitled to receive severance compensation in an
amount equal to such amount of Employee's annual base salary as
would have been paid over a four (4) month period. Any and all
severance amounts paid pursuant to the provisions of this
Section 8 shall be paid in one lump sum installment. The
treatment of Employee's Stock Options shall be governed by the
terms of the Company's 1990 Stock Option Plan and the Stock
Option Agreement.
9. COVENANT NOT TO COMPETE. Employee covenants and
agrees that during the term of his employment by the Company
pursuant to this Agreement he will not, directly or indirectly,
own, manage, operate, join, control or become employed by, or
render any services of any advisory nature or otherwise, or
participate in the ownership, management, operation or control
of, any business which competes with the business of the Company
or any of its affiliates. Notwithstanding the foregoing,
Employee shall not be prevented from investing his assets in
such form or manner as will not require any services on the part
of Employee in the operation of the affairs of a company in
which investments are made, provided such company is not engaged
in a business competitive to the Company, or if it is in
competition with the Company, provided its stock is publicly
traded and Employee owns less than one percent (1%) of the
outstanding stock of that company.
10. CONFIDENTIALITY. Employee covenants and agrees that
he will not at any time during or after the termination of his
employment by the Company reveal, divulge or make known to any
person, firm or corporation any information, knowledge or data
of a proprietary nature relating to the business of the Company
or any of its affiliates which is not or has not become
generally known or public. Employee shall hold, in a fiduciary
capacity, for the benefit of the Company, all information,
knowledge or data of a proprietary nature, relating to or
<PAGE>
concerned with, the operations, customers, developments, sales,
business and affairs of the Company and its affiliates which is
not generally known to the public and which is or was obtained
by the Employee during his employment by the Company. Employee
recognizes and acknowledges that all such information, knowledge
or data is a valuable and unique asset of the Company and
accordingly he will not discuss or divulge any such information,
knowledge or data to any person, firm, partnership, corporation
or organization other than to the Company, its affiliates,
designees, assignees or successors or except as may otherwise be
required by the law, as ordered by a court or other governmental
body of competent jurisdiction, or in connection with the
business and affairs of the Company.
11. EQUITABLE REMEDIES. In the event of a breach or
threatened breach by Employee of any of his obligations under
Sections 9 and 10 hereof, Employee acknowledges that the Company
may not have an adequate remedy at law and therefore it is
mutually agreed between Employee and the Company that in
addition to any other remedies at law or in equity which the
Company may have, the Company shall be entitled to seek in a
court of law and/or equity a temporary and/or permanent
injunction restraining Employee from any continuing violation or
breach of this Agreement.
12. MISCELLANEOUS.
(a) This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company. This
Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company or by any merger,
reorganization or other transaction in which the Company is not
the surviving or resulting corporation or upon any transfer of
all or substantially all of the assets of Company in the event
of any such merger, or transfer of assets. The provisions of
this Agreement shall be binding upon and shall inure to the
benefit of the surviving business entity or the business entity
to which such assets shall be transferred in the same manner and
<PAGE>
to the same extent that the Company would be required to perform
as if no such transaction had taken place.
Neither this Agreement nor any rights arising hereunder may
be assigned or pledged by Employee. Employee's rights to the
compensation provided for under Section 4 of this Agreement (as
may be limited by Section 8 of the Agreement) and to the
reimbursement for expenses under Section 6 hereof, shall
continue, despite the fact that Employee may cease to be
employed by the Company, and shall survive the termination of
this Agreement regardless of cause. This Agreement shall inure
to the benefit of and be enforceable by Employee's personal or
legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
(b) Except as otherwise provided by law or elsewhere
herein, Employee shall be entitled to all benefits as set forth
herein notwithstanding the occurrence of the following events:
(i) any act of force majeure which materially and
adversely affect the Company's business and operations,
including but not limited to, the Company having sustained a
material loss, whether or not insured, by reason of fire,
earthquake, flood, epidemic, explosion, accident, calamity or
other act of God;
(ii) any strike or labor dispute or court or
government action, order or decree;
(iii) a banking moratorium having been declared by
federal or state authorities;
(iv) an outbreak of major armed conflict, blockade,
embargo, or other international hostilities or restraints or
orders of civic, civil defense, or military authorities, or
other national or international calamity having occurred;
(v) any act of public enemy, riot or civil
disturbance or threat thereof; or
(vi) a pending or threatened legal or governmental
proceeding or action relating generally to the Company's
business, or a notification having been received by the Company
<PAGE>
of the threat of any such proceeding or action, which could
materially adversely affect the Company.
(c) Except as expressly provided herein, this Agreement
contains the entire understanding between the parties with
respect to the subject matter hereof, and may not be modified,
altered or amended except by an instrument in writing signed by
the parties hereto. This Agreement supersedes all prior
agreements of the parties with respect to the subject matter
hereof. In the event of termination of employment of Employee
pursuant to this Agreement, the arrangements provided for by
this Agreement, by any Stock Option Agreement or other written
agreement between the Company or any of its affiliates and
Employee in effect at the time, and by any other applicable
benefit plan of the Company or any of its affiliates, will
constitute the entire obligation of the Company to the Employee
and performance thereof by the Company will constitute full
settlement of any and all claims, whether in contract or tort,
that Employee might otherwise assert against the Company or any
of its affiliates on account of such termination.
(d) This Agreement shall be construed in accordance with
the laws of the State of California applicable to agreements
made and to be performed entirely within such state and without
regard to the conflict of law principals thereof.
(e) Nothing in the Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do
any act in violation of applicable law. The Company's inability
pursuant to court order to perform its obligations under this
Agreement shall not constitute a breach of this Agreement. If
any provision of this Agreement is invalid or unenforceable, the
remainder of this Agreement shall nevertheless remain in full
force and effect. If any provision is held invalid or
unenforceable with respect to particular circumstances, it
shall, nevertheless, remain in full force and effect in all
other circumstances.
<PAGE>
(f) With the exception of disputes arising under or with
respect to Sections 9 or 10 hereof, any and all disputes
hereunder shall be resolved by arbitration. Any party hereto
electing to commence an action shall give written notice to the
other parties hereto of such election. The dispute shall be
settled by arbitration in accordance with the then rules of the
American Arbitration Association; provided, however, in the
event the parties are unable to agree on an arbitrator within
twenty (20) days after receipt of the aforementioned notice of
arbitration, a single arbitrator shall be selected by the Chief
Judge of the Superior Court of the State of California for the
County of Los Angeles. The award of such arbitrator may be
confirmed or enforced in any court of competent jurisdiction.
The costs and expenses of the arbitrator, including the
attorney's fees and costs of each of the parties, shall be
apportioned between the parties by such arbitrator, based upon
such arbitrator's determination of the merits of their
respective positions. With respect to such arbitration, the
parties shall have those rights of discovery as may be granted
by the arbitrator in accordance with California law.
(g) Any notice to the Company required or permitted
hereunder shall be given in writing to the Company, either by
personal service, telex, telecopier or, if by mail, by
registered or certified mail return receipt requested, postage
prepaid, duly addressed to the Secretary of the Company at its
then principal place of business. Any such notice to Employee
shall be given in a like manner, and if mailed shall be
addressed to Employee at Employee's home address then shown in
the files of the Company. For the purpose of determining
compliance with any time limit herein, a notice shall be deemed
given on the fifth day following the postmarked date, if mailed,
or the date of delivery if personally delivered.
(h) A waiver by either party of any term or condition of
this Agreement or any breach thereof, in any one instance, shall
<PAGE>
not be deemed or construed to be a waiver of such term or
condition or of any subsequent breach thereof.
(i) The paragraph and subparagraph headings contained in
this Agreement are solely for convenience and shall not be
considered in its interpretation.
(j) This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the day and year first written above.
COMPANY:
MAXICARE HEALTH PLANS, INC.,
a Delaware corporation
By: /s/ Peter J. Ratican
Title: Chairman, President and
Chief Executive Officer
EMPLOYEE:
/s/ Robert Landis
<PAGE>
Exhibit 10.54
MAXICARE HEALTH PLANS, INC.
STOCK OPTION AGREEMENT
Maxicare Health Plans, Inc., a Delaware corporation
(the "Company"), hereby grants as of this 5th day of
November, 1993, to Florence Courtright (the "Optionee"), an
option to purchase a maximum of 10,000 shares of its common
stock (the "Common Stock"), at a price per share (the
"Exercise Price") of $10.88 per share (the "Option"), on the
following terms and conditions:
1. GRANT UNDER 1990 STOCK PLAN. The Option is
granted pursuant to and is governed by the Company's 1990
Stock Option Plan (the "Plan") and, unless the context
otherwise requires, terms used and/or defined herein shall
have the same meaning as in the Plan. Determinations made
in connection with this Option pursuant to the Plan shall be
governed by the Plan as it exists on this date. This Option
is not intended to be and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code.
2. EXTENT OF OPTION. As an officer, employee, or
director with the Company, the Optionee's rights in and to
the Option shall vest as of the date hereof, and the
Optionee may, subject to Section 13 hereof, exercise this
Option immediately for up to the total number of shares set
forth in the first sentence of this Agreement.
<PAGE>
While the Optionee continues to serve as an officer,
director or employee of the Company (or a subsidiary
thereof, as the case may be), the Option may be exercised up
to and including the earlier of the date which is five years
from the date this Option is granted (the "Fifth Anniversary
Date"). For purposes of this Agreement, any accrued
installment shall be referred to as an "Accrued
Installment". All of the foregoing rights are subject to
Sections 3 and 4 hereof, as appropriate, if the Optionee
ceases to serve as an officer, director or employee of the
Company (or a subsidiary thereof, as the case may be) or
becomes disabled or dies while serving as an officer,
director or employee of the Company (or a subsidiary
thereof, as the case may be).
3. TERMINATION OF BUSINESS RELATIONSHIP. If the
Optionee ceases to remain an officer, director or employee
of the Company (or subsidiary thereof, as the case may be),
other than by reason of death or disability as defined in
Section 4, any unexercised Accrued Installments of the
Option shall expire and become unexercisable as of the
earlier of (i) the Fifth Anniversary Date, or (ii) thirty
(30) days following the termination of Optionee's employment
or termination of Optionee's directorship. No further
installments of this Option shall become exercisable. The
<PAGE>
Board of Directors of the Company may extend such thirty
(30) day period for a period not to exceed one (1) year
following the Termination Date (as defined in the Plan), but
in no event beyond the applicable Fifth Anniversary Date.
In such a case, the Optionee's only rights hereunder shall
be those which are properly exercised before the termination
of this Option. Any portion of an Option that expires
hereunder shall remain unexercisable and be of no effect
whatsoever after such expiration notwithstanding that such
Optionee may be reemployed by, or again become a director
of, the Company (or a subsidiary thereof, as the case may
be).
4. DEATH OR DISABILITY. In the event of the death
of the Optionee while an officer, employee or director of
the Company (or a subsidiary thereof, as the case may be),
or in the event of termination of employment or directorship
by reason of the Optionee's Disability (as defined in the
Plan), any unexercised Accrued Installments of the Option
granted to Optionee shall expire and become unexercisable as
of the earlier of (i) the Fifth Anniversary Date, or (ii)
the first anniversary date of the Optionee's death (if
applicable) or (iii) the first anniversary date of the
termination of employment or directorship by reason of
Disability (if applicable). Any such Accrued Installments
of a deceased Optionee may be exercised prior to their
<PAGE>
expiration by (and only by) the person or persons to whom
the Optionee's Option rights shall pass by will or by the
laws of descent and distribution. Any installments under a
deceased Optionee's Option that have not accrued as of the
date of his death shall expire and become unexercisable as
of said date of death. For purposes of this Agreement, the
Optionee shall be deemed employed by the Company (or a
subsidiary thereof, as the case may be) during any period of
leave of absence from active employment as authorized by the
Company (or a subsidiary thereof, as the case may be).
5. PARTIAL EXERCISE. Exercise of this Option up to
the extent above stated may be in part at any time and from
time to time with the above limits, except that this Option
may not be exercised for a fraction of a share. Upon the
exercise of the final installment of this Option, the
Optionee shall be entitled to receive cash with respect to
the value of any fraction of a share (in lieu of any said
fractional share).
6. PAYMENT OF EXERCISE PRICE. The Exercise Price
is payable in United States dollars and may be paid in cash
or by certified or cashier's check, or any combination of
the foregoing, equal in amount to the Exercise Price.
7. INVESTMENT REPRESENTATIONS; RESTRICTIONS ON
TRANSFER.
<PAGE>
(a) The Optionee represents, warrants and covenants
to the Company that:
(i) Any Common Stock acquired by the Optionee upon
exercise of the Option will be acquired for the Optionee's
own account and not with a view to resale on distribution in
violation of the Securities Act of 1933, as amended (the
"1933 Act").
(ii) The Optionee has such knowledge and experience
in business and financial matters as to be capable of
utilizing the information which is available to the Optionee
to evaluate the merits and risks of an investment in the
Common Stock, and is able to bear the economic risks of any
Common Stock or other securities which the Optionee may
acquire upon exercise of the Option.
(iii) The Optionee understands that the Option has not
been registered under the Securities Act of 1933, as amended
(the "1933 Act"), that the Option has been issued in
reliance upon certain exemptions contained therein. The
Optionee further understands that because the Option has not
been registered under the 1933 Act or registered or
qualified pursuant to applicable "blue sky" statutes, the
Optionee may not, and Optionee covenants and agrees that
<PAGE>
Optionee will not, sell, offer to sell or otherwise dispose
of any such Option in violation of the 1933 Act or any
applicable "blue sky" or securities law of any state. The
Optionee acknowledges and understands that Optionee has no
independent right to require the Company to register the
Option.
8. METHOD OF EXERCISING OPTION. Subject to the
terms and conditions of this Agreement, this Option may be
exercised by written notice to the Company, at the principal
executive office of the Company, or to such transfer agent
as the Company shall designate. Such notice shall state the
election to exercise this Option and the number of shares in
respect of which it is being exercised and shall be signed
by the Optionee or person or persons entitled to so exercise
this Option. Such notice shall be accompanied by payment of
the full Exercise Price of such shares, and the Company
shall deliver a certificate or certificates representing
such shares as soon as practicable after the notice is
received. The certificate or certificates for the shares as
to which this Option shall have been so exercised shall be
registered in the name of the person or persons so
exercising this Option (or, if this Option shall be
exercised by the Optionee and if the Optionee shall so
request in the notice exercising this Option, shall be
registered in the name of the Optionee and another person
<PAGE>
jointly, with right of if Optionee is entitled to exercise
any unexercised if Optionee is entitled to exercise any
unexercised survivorship) and shall be delivered to or upon
the written order of the person or persons exercising this
Option. In the event this Option shall be exercised,
pursuant to Section 4 hereof, by any person or persons other
than the Optionee, such notice shall be accompanied by
appropriate proof of the right of such person or persons to
exercise this Option. All shares that shall be purchased
upon the exercise of this Option as provided herein shall be
fully paid and non-assessable.
9. OPTION NOT TRANSFERABLE; TRANSFER OF STOCK.
This Option is not transferable or assignable except by will
or by the laws of descent and distribution. During the
Optionee's lifetime, only the Optionee may exercise this
Option.
10. NO OBLIGATION TO EXERCISE OPTION. The grant and
acceptance of this Option imposes no obligation on the
Optionee to exercise it.
11. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither
the Company nor any subsidiary thereof is by the Plan or
this Option obligated to continue to employ Optionee and
neither the Plan nor this Option shall otherwise interfere
<PAGE>
with the Company's or any of the Company's subsidiary's
right to discharge or retire any employee, including
Optionee, at any time.
12. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The
Optionee shall have no rights as a stockholder with respect
to shares subject to this Agreement until a stock
certificate therefore has been issued to the Optionee and is
fully paid for. Except as is expressly provided in the Plan
with respect to certain changes in the capitalization of the
Company, no adjustment shall be made for dividends or
similar rights for which the record date is prior to the
date such stock certificate is issued.
13. REORGANIZATION OF COMPANY.
(a) Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation
of the Company as a result of which the Company's
outstanding Common Stock is changed into or exchanged for
cash or property or securities not of the Company's issue,
or upon a sale of all or substantially all property of the
Company to, or the acquisition of all or substantially all
of the stock of the Company then outstanding by, another
corporation or person, the Plan shall terminate, and the
Option granted hereunder shall terminate; provided, however,
<PAGE>
Optionee shall be entitled, at such time prior to the
consummation of the transaction causing such termination as
the Company shall designate, to exercise the unexercised
installments of the Option.
(b) In addition to and not in lieu of those rights
granted pursuant to subsection 13(a) above, if provisions
shall be made in writing in connection with such transaction
for the continuance of the Plan and/or the assumption of
options theretofore granted, or the substitution for such
options of options covering the stock of the successor
corporation, or a parent or subsidiary thereof with
appropriate adjustments as to the number and kind of shares
and prices, the unexercised Option shall continue in the
manner and under the terms so provided.
(c) The Company shall have no obligation to provide
for the continuance, assumption or substitution of the Plan
or the Option by any successor corporation or parent or
subsidiary thereof.
14. WITHHOLDING TAXES. The Optionee hereby agrees
that the Company (or a subsidiary thereof, as the case may
be) may withhold from the Optionee's wages or other
remuneration the appropriate amount of federal, state and
local taxes attributable to the Optionee's exercise of any
<PAGE>
installment of this Option. The Optionee further agrees
that, if the Company (or a subsidiary thereof, as the case
may be) does not withhold an amount from the Optionee's
wages or other remuneration sufficient to satisfy the
Company's (or any such subsidiary's) withholding obligation,
the Optionee will reimburse the Company (or any such
subsidiary) on demand, in cash, for the amount
underwithheld.
15. GOVERNING LAW. This Agreement shall be governed
by and interpreted in accordance with the laws of the State
of California applicable to agreements made and to be
performed entirely within such State and without regard to
the conflict of law principals thereof.
16. AMENDMENTS. No amendment, modification,
termination or waiver of any provision of this Agreement
shall be effective unless the same shall be in writing
signed by all parties hereto.
17. COUNTERPARTS. This Agreement may be signed in
one or more counterparts, each of which shall be deemed to
be an original, but all of which together shall constitute
one and the same instrument.
18. SURVIVAL OF REPRESENTATIONS. All
representations, covenants and warranties of the parties
hereto shall survive the execution of this Agreement.
IN WITNESS WHEREOF the Company and the Optionee have
caused this instrument to be executed as of the date first
written above, and the Optionee whose signature appears
below acknowledges receipt of a copy of the Plan and
acceptance of an original copy of this Agreement.
THE COMPANY:
MAXICARE HEALTH PLANS, INC.
By: /s/ Peter J. Ratican
Chairman, President and
Chief Executive Officer
OPTIONEE:
/s/ Florence Courtright
<PAGE>
Exhibit 10.55
MAXICARE HEALTH PLANS, INC.
STOCK OPTION AGREEMENT
Maxicare Health Plans, Inc., a Delaware corporation
(the "Company"), hereby grants as of this 20th day of
December, 1993, to Vicki F. Perry (the "Optionee"), an
option to purchase a maximum of 7,500 shares of its common
stock (the "Common Stock"), at a price per share (the
"Exercise Price") of $9.63 per share (the "Option"), on the
following terms and conditions:
1. GRANT UNDER 1990 STOCK PLAN. The Option is
granted pursuant to and is governed by the Company's 1990
Stock Option Plan (the "Plan") and, unless the context
otherwise requires, terms used and/or defined herein shall
have the same meaning as in the Plan. Determinations made
in connection with this Option pursuant to the Plan shall be
governed by the Plan as it exists on this date. This Option
is not intended to be and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code.
2. EXTENT OF OPTION. If the Optionee has continued
to serve in the capacity of an officer, employee, or
director with the Company (or a subsidiary thereof, as the
case may be) on the following dates, the Optionee may,
subject to Section 13 hereof, exercise this Option for the
portion of the total number of shares subject to this Option
set opposite the applicable date:
<PAGE>
Less than one year from the - 0 shares
date hereof
One year but less than two years - 2,500 shares
from the date hereof
Two years but less than three - 2,500 shares
years from the date hereof
Three years but less than four - 2,500 shares
years from the date hereof
The foregoing rights are cumulative and, while the Optionee
continues to serve as an officer, director or employee of
the Company (or a subsidiary thereof, as the case may be),
may be exercised up to and including the earlier of the date
which is five years from the date this Option is granted
(the "Fifth Anniversary Date"). For purposes of this
Agreement, any accrued installment shall be referred to as
an "Accrued Installment". All of the foregoing rights are
subject to Sections 3 and 4 hereof, as appropriate, if the
Optionee ceases to serve as an officer, director or employee
of the Company (or a subsidiary thereof, as the case may be)
or becomes disabled or dies while serving as an officer,
director or employee of the Company (or a subsidiary
thereof, as the case may be).
3. TERMINATION OF BUSINESS RELATIONSHIP. If the
Optionee ceases to remain an officer, director or employee
of the Company (or subsidiary thereof, as the case may be),
other than by reason of death or disability as defined in
Section 4, any unexercised Accrued Installments of the
Option shall expire and become unexercisable as of the
<PAGE>
earlier of (i) the Fifth Anniversary Date, or (ii) thirty
(30) days following the termination of Optionee's employment
or termination of Optionee's directorship. No further
installments of this Option shall become exercisable. The
Board of Directors of the Company may extend such thirty
(30) day period for a period not to exceed one (1) year
following the Termination Date (as defined in the Plan), but
in no event beyond the applicable Fifth Anniversary Date.
In such a case, the Optionee's only rights hereunder shall
be those which are properly exercised before the termination
of this Option. Any portion of an Option that expires
hereunder shall remain unexercisable and be of no effect
whatsoever after such expiration notwithstanding that such
Optionee may be reemployed by, or again become a director
of, the Company (or a subsidiary thereof, as the case may
be).
4. DEATH OR DISABILITY. In the event of the death
of the Optionee while an officer, employee or director of
the Company (or a subsidiary thereof, as the case may be),
or in the event of termination of employment or directorship
by reason of the Optionee's Disability (as defined in the
Plan), any unexercised Accrued Installments of the Option
granted to Optionee shall expire and become unexercisable as
of the earlier of (i) the Fifth Anniversary Date, or (ii)
the first anniversary date of the Optionee's death (if
applicable) or (iii) the first anniversary date of the
<PAGE>
termination of employment or directorship by reason of
Disability (if applicable). Any such Accrued Installments
of a deceased Optionee may be exercised prior to their
expiration by (and only by) the person or persons to whom
the Optionee's Option rights shall pass by will or by the
laws of descent and distribution. Any installments under a
deceased Optionee's Option that have not accrued as of the
date of his death shall expire and become unexercisable as
of said date of death. For purposes of this Agreement, the
Optionee shall be deemed employed by the Company (or a
subsidiary thereof, as the case may be) during any period of
leave of absence from active employment as authorized by the
Company (or a subsidiary thereof, as the case may be).
5. PARTIAL EXERCISE. Exercise of this Option up to
the extent above stated may be in part at any time and from
time to time with the above limits, except that this Option
may not be exercised for a fraction of a share. Upon the
exercise of the final installment of this Option, the
Optionee shall be entitled to receive cash with respect to
the value of any fraction of a share (in lieu of any said
fractional share).
6. PAYMENT OF EXERCISE PRICE. The Exercise Price
is payable in United States dollars and may be paid in cash
or by certified or cashier's check, or any combination of
the foregoing, equal in amount to the Exercise Price.
<PAGE>
7. INVESTMENT REPRESENTATIONS; RESTRICTIONS ON
TRANSFER.
(a) The Optionee represents, warrants and covenants
to the Company that:
(i) Any Common Stock acquired by the Optionee upon
exercise of the Option will be acquired for the Optionee's
own account and not with a view to resale on distribution in
violation of the Securities Act of 1933, as amended (the
"1933 Act").
(ii) The Optionee has such knowledge and experience
in business and financial matters as to be capable of
utilizing the information which is available to the Optionee
to evaluate the merits and risks of an investment in the
Common Stock, and is able to bear the economic risks of any
Common Stock or other securities which the Optionee may
acquire upon exercise of the Option.
(iii) The Optionee understands that the Option has not
been registered under the Securities Act of 1933, as amended
(the "1933 Act"), that the Option has been issued in
reliance upon certain exemptions contained therein. The
Optionee further understands that because the Option has not
been registered under the 1933 Act or registered or
<PAGE>
qualified pursuant to applicable "blue sky" statutes, the
Optionee may not, and Optionee covenants and agrees that
Optionee will not, sell, offer to sell or otherwise dispose
of any such Option in violation of the 1933 Act or any
applicable "blue sky" or securities law of any state. The
Optionee acknowledges and understands that Optionee has no
independent right to require the Company to register the
Option.
8. METHOD OF EXERCISING OPTION. Subject to the
terms and conditions of this Agreement, this Option may be
exercised by written notice to the Company, at the principal
executive office of the Company, or to such transfer agent
as the Company shall designate. Such notice shall state the
election to exercise this Option and the number of shares in
respect of which it is being exercised and shall be signed
by the Optionee or person or persons entitled to so exercise
this Option. Such notice shall be accompanied by payment of
the full Exercise Price of such shares, and the Company
shall deliver a certificate or certificates representing
such shares as soon as practicable after the notice is
received. The certificate or certificates for the shares as
to which this Option shall have been so exercised shall be
registered in the name of the person or persons so
exercising this Option (or, if this Option shall be
exercised by the Optionee and if the Optionee shall so
request in the notice exercising this Option, shall be
<PAGE>
registered in the name of the Optionee and another person
jointly, with right of survivorship) and shall be delivered
to or upon the written order of the person or persons
exercising this Option. In the event this Option shall be
exercised, pursuant to Section 4 hereof, by any person or
persons other than the Optionee, such notice shall be
accompanied by appropriate proof of the right of such person
or persons to exercise this Option. All shares that shall
be purchased upon the exercise of this Option as provided
herein shall be fully paid and non-assessable.
9. OPTION NOT TRANSFERABLE; TRANSFER OF STOCK.
This Option is not transferable or assignable except by will
or by the laws of descent and distribution. During the
Optionee's lifetime, only the Optionee may exercise this
Option.
10. NO OBLIGATION TO EXERCISE OPTION. The grant and
acceptance of this Option imposes no obligation on the
Optionee to exercise it.
11. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither
the Company nor any subsidiary thereof is by the Plan or
this Option obligated to continue to employ Optionee and
neither the Plan nor this Option shall otherwise interfere
with the Company's or any of the Company's subsidiary's
right to discharge or retire any employee, including
Optionee, at any time.
<PAGE>
12. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The
Optionee shall have no rights as a stockholder with respect
to shares subject to this Agreement until a stock
certificate therefore has been issued to the Optionee and is
fully paid for. Except as is expressly provided in the Plan
with respect to certain changes in the capitalization of the
Company, no adjustment shall be made for dividends or
similar rights for which the record date is prior to the
date such stock certificate is issued.
13. REORGANIZATION OF COMPANY.
(a) Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation
of the Company as a result of which the Company's
outstanding Common Stock is changed into or exchanged for
cash or property or securities not of the Company's issue,
or upon a sale of all or substantially all property of the
Company to, or the acquisition of all or substantially all
of the stock of the Company then outstanding by, another
corporation or person, the Plan shall terminate, and the
Option granted hereunder shall terminate; provided, however,
Optionee shall be entitled, at such time prior to the
consummation of the transaction causing such termination as
the Company shall designate, to exercise the unexercised
installments of the Option including all unaccrued
<PAGE>
installments thereof which would, but for this subsection
13(a), not yet be exercisable. Notwithstanding the
foregoing, in the event that any transaction causing such
termination is not consummated, any unexercised unaccrued
installments that had become exercisable solely by reason of
the provisions of this subsection 13(a) shall again become
unaccrued and unexercisable as of said termination of such
transaction, subject, however, to such installments accruing
pursuant to the normal accrual schedule provided in the
terms under which the Option was granted.
(b) In addition to and not in lieu of those rights
granted pursuant to subsection 13(a) above, if provisions
shall be made in writing in connection with such transaction
for the continuance of the Plan and/or the assumption of
options theretofore granted, or the substitution for such
options of options covering the stock of the successor
corporation, or a parent or subsidiary thereof with
appropriate adjustments as to the number and kind of shares
and prices, the unexercised Option shall continue in the
manner and under the terms so provided.
(c) The Company shall have no obligation to provide
for the continuance, assumption or substitution of the Plan
or the Option by any successor corporation or parent or
subsidiary thereof.
<PAGE>
14. WITHHOLDING TAXES. The Optionee hereby agrees
that the Company (or a subsidiary thereof, as the case may
be) may withhold from the Optionee's wages or other
remuneration the appropriate amount of federal, state and
local taxes attributable to the Optionee's exercise of any
installment of this Option. The Optionee further agrees
that, if the Company (or a subsidiary thereof, as the case
may be) does not withhold an amount from the Optionee's
wages or other remuneration sufficient to satisfy the
Company's (or any such subsidiary's) withholding obligation,
the Optionee will reimburse the Company (or any such
subsidiary) on demand, in cash, for the amount
underwithheld.
15. GOVERNING LAW. This Agreement shall be governed
by and interpreted in accordance with the laws of the State
of California applicable to agreements made and to be
performed entirely within such State and without regard to
the conflict of law principals thereof.
16. AMENDMENTS. No amendment, modification,
termination or waiver of any provision of this Agreement
shall be effective unless the same shall be in writing
signed by all parties hereto.
17. COUNTERPARTS. This Agreement may be signed in
one or more counterparts, each of which shall be deemed to
<PAGE>
be an original, but all of which together shall constitute
one and the same instrument.
18. SURVIVAL OF REPRESENTATIONS. All
representations, covenants and warranties of the parties
hereto shall survive the execution of this Agreement.
IN WITNESS WHEREOF the Company and the Optionee have
caused this instrument to be executed as of the date first
written above, and the Optionee whose signature appears
below acknowledges receipt of a copy of the Plan and
acceptance of an original copy of this Agreement.
THE COMPANY:
MAXICARE HEALTH PLANS, INC.
By: /s/ Peter J. Ratican
Chairman, President and
Chief Executive Officer
OPTIONEE:
/s/ Vicki F. Perry
<PAGE>
Exhibit 10.56
MAXICARE HEALTH PLANS, INC.
STOCK OPTION AGREEMENT
Maxicare Health Plans, Inc., a Delaware corporation
(the "Company"), hereby grants as of this 20th day of
December, 1993, to Alan D. Bloom (the "Optionee"), an option
to purchase a maximum of 7,500 shares of its common stock
(the "Common Stock"), at a price per share (the "Exercise
Price") of $9.63 per share (the "Option"), on the following
terms and conditions:
1. GRANT UNDER 1990 STOCK PLAN. The Option is
granted pursuant to and is governed by the Company's 1990
Stock Option Plan (the "Plan") and, unless the context
otherwise requires, terms used and/or defined herein shall
have the same meaning as in the Plan. Determinations made
in connection with this Option pursuant to the Plan shall be
governed by the Plan as it exists on this date. This Option
is not intended to be and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code.
2. EXTENT OF OPTION. If the Optionee has continued
to serve in the capacity of an officer, employee, or
director with the Company (or a subsidiary thereof, as the
case may be) on the following dates, the Optionee may,
subject to Section 13 hereof, exercise this Option for the
portion of the total number of shares subject to this Option
set opposite the applicable date:
<PAGE>
Less than one year from the - 0 shares
date hereof
One year but less than two years - 2,500 shares
from the date hereof
Two years but less than three - 2,500 shares
years from the date hereof
Three years but less than four - 2,500 shares
years from the date hereof
The foregoing rights are cumulative and, while the Optionee
continues to serve as an officer, director or employee of
the Company (or a subsidiary thereof, as the case may be),
may be exercised up to and including the earlier of the date
which is five years from the date this Option is granted
(the "Fifth Anniversary Date"). For purposes of this
Agreement, any accrued installment shall be referred to as
an "Accrued Installment". All of the foregoing rights are
subject to Sections 3 and 4 hereof, as appropriate, if the
Optionee ceases to serve as an officer, director or employee
of the Company (or a subsidiary thereof, as the case may be)
or becomes disabled or dies while serving as an officer,
director or employee of the Company (or a subsidiary
thereof, as the case may be).
3. TERMINATION OF BUSINESS RELATIONSHIP. If the
Optionee ceases to remain an officer, director or employee
of the Company (or subsidiary thereof, as the case may be),
other than by reason of death or disability as defined in
Section 4, any unexercised Accrued Installments of the
Option shall expire and become unexercisable as of the
<PAGE>
earlier of (i) the Fifth Anniversary Date, or (ii) thirty
(30) days following the termination of Optionee's employment
or termination of Optionee's directorship. No further
installments of this Option shall become exercisable. The
Board of Directors of the Company may extend such thirty
(30) day period for a period not to exceed one (1) year
following the Termination Date (as defined in the Plan), but
in no event beyond the applicable Fifth Anniversary Date.
In such a case, the Optionee's only rights hereunder shall
be those which are properly exercised before the termination
of this Option. Any portion of an Option that expires
hereunder shall remain unexercisable and be of no effect
whatsoever after such expiration notwithstanding that such
Optionee may be reemployed by, or again become a director
of, the Company (or a subsidiary thereof, as the case may
be).
4. DEATH OR DISABILITY. In the event of the death
of the Optionee while an officer, employee or director of
the Company (or a subsidiary thereof, as the case may be),
or in the event of termination of employment or directorship
by reason of the Optionee's Disability (as defined in the
Plan), any unexercised Accrued Installments of the Option
granted to Optionee shall expire and become unexercisable as
of the earlier of (i) the Fifth Anniversary Date, or (ii)
the first anniversary date of the Optionee's death (if
applicable) or (iii) the first anniversary date of the
<PAGE>
termination of employment or directorship by reason of
Disability (if applicable). Any such Accrued Installments
of a deceased Optionee may be exercised prior to their
expiration by (and only by) the person or persons to whom
the Optionee's Option rights shall pass by will or by the
laws of descent and distribution. Any installments under a
deceased Optionee's Option that have not accrued as of the
date of his death shall expire and become unexercisable as
of said date of death. For purposes of this Agreement, the
Optionee shall be deemed employed by the Company (or a
subsidiary thereof, as the case may be) during any period of
leave of absence from active employment as authorized by the
Company (or a subsidiary thereof, as the case may be).
5. PARTIAL EXERCISE. Exercise of this Option up to
the extent above stated may be in part at any time and from
time to time with the above limits, except that this Option
may not be exercised for a fraction of a share. Upon the
exercise of the final installment of this Option, the
Optionee shall be entitled to receive cash with respect to
the value of any fraction of a share (in lieu of any said
fractional share).
6. PAYMENT OF EXERCISE PRICE. The Exercise Price
is payable in United States dollars and may be paid in cash
or by certified or cashier's check, or any combination of
the foregoing, equal in amount to the Exercise Price.
<PAGE>
7. INVESTMENT REPRESENTATIONS; RESTRICTIONS ON
TRANSFER.
(a) The Optionee represents, warrants and covenants
to the Company that:
(i) Any Common Stock acquired by the Optionee upon
exercise of the Option will be acquired for the Optionee's
own account and not with a view to resale on distribution in
violation of the Securities Act of 1933, as amended (the
"1933 Act").
(ii) The Optionee has such knowledge and experience
in business and financial matters as to be capable of
utilizing the information which is available to the Optionee
to evaluate the merits and risks of an investment in the
Common Stock, and is able to bear the economic risks of any
Common Stock or other securities which the Optionee may
acquire upon exercise of the Option.
(iii) The Optionee understands that the Option has not
been registered under the Securities Act of 1933, as amended
(the "1933 Act"), that the Option has been issued in
reliance upon certain exemptions contained therein. The
Optionee further understands that because the Option has not
been registered under the 1933 Act or registered or
<PAGE>
qualified pursuant to applicable "blue sky" statutes, the
Optionee may not, and Optionee covenants and agrees that
Optionee will not, sell, offer to sell or otherwise dispose
of any such Option in violation of the 1933 Act or any
applicable "blue sky" or securities law of any state. The
Optionee acknowledges and understands that Optionee has no
independent right to require the Company to register the
Option.
8. METHOD OF EXERCISING OPTION. Subject to the
terms and conditions of this Agreement, this Option may be
exercised by written notice to the Company, at the principal
executive office of the Company, or to such transfer agent
as the Company shall designate. Such notice shall state the
election to exercise this Option and the number of shares in
respect of which it is being exercised and shall be signed
by the Optionee or person or persons entitled to so exercise
this Option. Such notice shall be accompanied by payment of
the full Exercise Price of such shares, and the Company
shall deliver a certificate or certificates representing
such shares as soon as practicable after the notice is
received. The certificate or certificates for the shares as
to which this Option shall have been so exercised shall be
registered in the name of the person or persons so
exercising this Option (or, if this Option shall be
exercised by the Optionee and if the Optionee shall so
request in the notice exercising this Option, shall be
<PAGE>
registered in the name of the Optionee and another person
jointly, with right of survivorship) and shall be delivered
to or upon the written order of the person or persons
exercising this Option. In the event this Option shall be
exercised, pursuant to Section 4 hereof, by any person or
persons other than the Optionee, such notice shall be
accompanied by appropriate proof of the right of such person
or persons to exercise this Option. All shares that shall
be purchased upon the exercise of this Option as provided
herein shall be fully paid and non-assessable.
9. OPTION NOT TRANSFERABLE; TRANSFER OF STOCK.
This Option is not transferable or assignable except by will
or by the laws of descent and distribution. During the
Optionee's lifetime, only the Optionee may exercise this
Option.
10. NO OBLIGATION TO EXERCISE OPTION. The grant and
acceptance of this Option imposes no obligation on the
Optionee to exercise it.
11. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither
the Company nor any subsidiary thereof is by the Plan or
this Option obligated to continue to employ Optionee and
neither the Plan nor this Option shall otherwise interfere
with the Company's or any of the Company's subsidiary's
right to discharge or retire any employee, including
Optionee, at any time.
<PAGE>
12. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The
Optionee shall have no rights as a stockholder with respect
to shares subject to this Agreement until a stock
certificate therefore has been issued to the Optionee and is
fully paid for. Except as is expressly provided in the Plan
with respect to certain changes in the capitalization of the
Company, no adjustment shall be made for dividends or
similar rights for which the record date is prior to the
date such stock certificate is issued.
13. REORGANIZATION OF COMPANY.
(a) Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation
of the Company as a result of which the Company's
outstanding Common Stock is changed into or exchanged for
cash or property or securities not of the Company's issue,
or upon a sale of all or substantially all property of the
Company to, or the acquisition of all or substantially all
of the stock of the Company then outstanding by, another
corporation or person, the Plan shall terminate, and the
Option granted hereunder shall terminate; provided, however,
Optionee shall be entitled, at such time prior to the
consummation of the transaction causing such termination as
the Company shall designate, to exercise the unexercised
installments of the Option including all unaccrued
<PAGE>
installments thereof which would, but for this subsection
13(a), not yet be exercisable. Notwithstanding the
foregoing, in the event that any transaction causing such
termination is not consummated, any unexercised unaccrued
installments that had become exercisable solely by reason of
the provisions of this subsection 13(a) shall again become
unaccrued and unexercisable as of said termination of such
transaction, subject, however, to such installments accruing
pursuant to the normal accrual schedule provided in the
terms under which the Option was granted.
(b) In addition to and not in lieu of those rights
granted pursuant to subsection 13(a) above, if provisions
shall be made in writing in connection with such transaction
for the continuance of the Plan and/or the assumption of
options theretofore granted, or the substitution for such
options of options covering the stock of the successor
corporation, or a parent or subsidiary thereof with
appropriate adjustments as to the number and kind of shares
and prices, the unexercised Option shall continue in the
manner and under the terms so provided.
(c) The Company shall have no obligation to provide
for the continuance, assumption or substitution of the Plan
or the Option by any successor corporation or parent or
subsidiary thereof.
<PAGE>
14. WITHHOLDING TAXES. The Optionee hereby agrees
that the Company (or a subsidiary thereof, as the case may
be) may withhold from the Optionee's wages or other
remuneration the appropriate amount of federal, state and
local taxes attributable to the Optionee's exercise of any
installment of this Option. The Optionee further agrees
that, if the Company (or a subsidiary thereof, as the case
may be) does not withhold an amount from the Optionee's
wages or other remuneration sufficient to satisfy the
Company's (or any such subsidiary's) withholding obligation,
the Optionee will reimburse the Company (or any such
subsidiary) on demand, in cash, for the amount
underwithheld.
15. GOVERNING LAW. This Agreement shall be governed
by and interpreted in accordance with the laws of the State
of California applicable to agreements made and to be
performed entirely within such State and without regard to
the conflict of law principals thereof.
16. AMENDMENTS. No amendment, modification,
termination or waiver of any provision of this Agreement
shall be effective unless the same shall be in writing
signed by all parties hereto.
17. COUNTERPARTS. This Agreement may be signed in
one or more counterparts, each of which shall be deemed to
<PAGE>
be an original, but all of which together shall constitute
one and the same instrument.
18. SURVIVAL OF REPRESENTATIONS. All
representations, covenants and warranties of the parties
hereto shall survive the execution of this Agreement.
IN WITNESS WHEREOF the Company and the Optionee have
caused this instrument to be executed as of the date first
written above, and the Optionee whose signature appears
below acknowledges receipt of a copy of the Plan and
acceptance of an original copy of this Agreement.
THE COMPANY:
MAXICARE HEALTH PLANS, INC.
By: /s/ Peter J. Ratican
Chairman, President and
Chief Executive Officer
OPTIONEE:
/s/ Alan D. Bloom
<PAGE>
Exhibit 10.57
MAXICARE HEALTH PLANS, INC.
STOCK OPTION AGREEMENT
Maxicare Health Plans, Inc., a Delaware corporation
(the "Company"), hereby grants as of this 20th day of
December, 1993, to Richard Link (the "Optionee"), an option
to purchase a maximum of 5,000 shares of its common stock
(the "Common Stock"), at a price per share (the "Exercise
Price") of $9.63 per share (the "Option"), on the following
terms and conditions:
1. GRANT UNDER 1990 STOCK PLAN. The Option is
granted pursuant to and is governed by the Company's 1990
Stock Option Plan (the "Plan") and, unless the context
otherwise requires, terms used and/or defined herein shall
have the same meaning as in the Plan. Determinations made
in connection with this Option pursuant to the Plan shall be
governed by the Plan as it exists on this date. This Option
is not intended to be and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code.
2. EXTENT OF OPTION. If the Optionee has continued
to serve in the capacity of an officer, employee, or
director with the Company (or a subsidiary thereof, as the
case may be) on the following dates, the Optionee may,
subject to Section 13 hereof, exercise this Option for the
portion of the total number of shares subject to this Option
set opposite the applicable date:
<PAGE>
Less than one year from the - 0 shares
date hereof
One year but less than two years - 1,667 shares
from the date hereof
Two years but less than three - 1,667 shares
years from the date hereof
Three years but less than four - 1,666 shares
years from the date hereof
The foregoing rights are cumulative and, while the Optionee
continues to serve as an officer, director or employee of
the Company (or a subsidiary thereof, as the case may be),
may be exercised up to and including the earlier of the date
which is five years from the date this Option is granted
(the "Fifth Anniversary Date"). For purposes of this
Agreement, any accrued installment shall be referred to as
an "Accrued Installment". All of the foregoing rights are
subject to Sections 3 and 4 hereof, as appropriate, if the
Optionee ceases to serve as an officer, director or employee
of the Company (or a subsidiary thereof, as the case may be)
or becomes disabled or dies while serving as an officer,
director or employee of the Company (or a subsidiary
thereof, as the case may be).
3. TERMINATION OF BUSINESS RELATIONSHIP. If the
Optionee ceases to remain an officer, director or employee
of the Company (or subsidiary thereof, as the case may be),
other than by reason of death or disability as defined in
Section 4, any unexercised Accrued Installments of the
Option shall expire and become unexercisable as of the
<PAGE>
earlier of (i) the Fifth Anniversary Date, or (ii) thirty
(30) days following the termination of Optionee's employment
or termination of Optionee's directorship. No further
installments of this Option shall become exercisable. The
Board of Directors of the Company may extend such thirty
(30) day period for a period not to exceed one (1) year
following the Termination Date (as defined in the Plan), but
in no event beyond the applicable Fifth Anniversary Date.
In such a case, the Optionee's only rights hereunder shall
be those which are properly exercised before the termination
of this Option. Any portion of an Option that expires
hereunder shall remain unexercisable and be of no effect
whatsoever after such expiration notwithstanding that such
Optionee may be reemployed by, or again become a director
of, the Company (or a subsidiary thereof, as the case may
be).
4. DEATH OR DISABILITY. In the event of the death
of the Optionee while an officer, employee or director of
the Company (or a subsidiary thereof, as the case may be),
or in the event of termination of employment or directorship
by reason of the Optionee's Disability (as defined in the
Plan), any unexercised Accrued Installments of the Option
granted to Optionee shall expire and become unexercisable as
of the earlier of (i) the Fifth Anniversary Date, or (ii)
the first anniversary date of the Optionee's death (if
applicable) or (iii) the first anniversary date of the
<PAGE>
termination of employment or directorship by reason of
Disability (if applicable). Any such Accrued Installments
of a deceased Optionee may be exercised prior to their
expiration by (and only by) the person or persons to whom
the Optionee's Option rights shall pass by will or by the
laws of descent and distribution. Any installments under a
deceased Optionee's Option that have not accrued as of the
date of his death shall expire and become unexercisable as
of said date of death. For purposes of this Agreement, the
Optionee shall be deemed employed by the Company (or a
subsidiary thereof, as the case may be) during any period of
leave of absence from active employment as authorized by the
Company (or a subsidiary thereof, as the case may be).
5. PARTIAL EXERCISE. Exercise of this Option up to
the extent above stated may be in part at any time and from
time to time with the above limits, except that this Option
may not be exercised for a fraction of a share. Upon the
exercise of the final installment of this Option, the
Optionee shall be entitled to receive cash with respect to
the value of any fraction of a share (in lieu of any said
fractional share).
6. PAYMENT OF EXERCISE PRICE. The Exercise Price
is payable in United States dollars and may be paid in cash
or by certified or cashier's check, or any combination of
the foregoing, equal in amount to the Exercise Price.
<PAGE>
7. INVESTMENT REPRESENTATIONS; RESTRICTIONS ON
TRANSFER.
(a) The Optionee represents, warrants and covenants
to the Company that:
(i) Any Common Stock acquired by the Optionee upon
exercise of the Option will be acquired for the Optionee's
own account and not with a view to resale on distribution in
violation of the Securities Act of 1933, as amended (the
"1933 Act").
(ii) The Optionee has such knowledge and experience
in business and financial matters as to be capable of
utilizing the information which is available to the Optionee
to evaluate the merits and risks of an investment in the
Common Stock, and is able to bear the economic risks of any
Common Stock or other securities which the Optionee may
acquire upon exercise of the Option.
(iii) The Optionee understands that the Option has not
been registered under the Securities Act of 1933, as amended
(the "1933 Act"), that the Option has been issued in
reliance upon certain exemptions contained therein. The
Optionee further understands that because the Option has not
been registered under the 1933 Act or registered or
<PAGE>
qualified pursuant to applicable "blue sky" statutes, the
Optionee may not, and Optionee covenants and agrees that
Optionee will not, sell, offer to sell or otherwise dispose
of any such Option in violation of the 1933 Act or any
applicable "blue sky" or securities law of any state. The
Optionee acknowledges and understands that Optionee has no
independent right to require the Company to register the
Option.
8. METHOD OF EXERCISING OPTION. Subject to the
terms and conditions of this Agreement, this Option may be
exercised by written notice to the Company, at the principal
executive office of the Company, or to such transfer agent
as the Company shall designate. Such notice shall state the
election to exercise this Option and the number of shares in
respect of which it is being exercised and shall be signed
by the Optionee or person or persons entitled to so exercise
this Option. Such notice shall be accompanied by payment of
the full Exercise Price of such shares, and the Company
shall deliver a certificate or certificates representing
such shares as soon as practicable after the notice is
received. The certificate or certificates for the shares as
to which this Option shall have been so exercised shall be
registered in the name of the person or persons so
exercising this Option (or, if this Option shall be
exercised by the Optionee and if the Optionee shall so
request in the notice exercising this Option, shall be
<PAGE>
registered in the name of the Optionee and another person
jointly, with right of survivorship) and shall be delivered
to or upon the written order of the person or persons
exercising this Option. In the event this Option shall be
exercised, pursuant to Section 4 hereof, by any person or
persons other than the Optionee, such notice shall be
accompanied by appropriate proof of the right of such person
or persons to exercise this Option. All shares that shall
be purchased upon the exercise of this Option as provided
herein shall be fully paid and non-assessable.
9. OPTION NOT TRANSFERABLE; TRANSFER OF STOCK.
This Option is not transferable or assignable except by will
or by the laws of descent and distribution. During the
Optionee's lifetime, only the Optionee may exercise this
Option.
10. NO OBLIGATION TO EXERCISE OPTION. The grant and
acceptance of this Option imposes no obligation on the
Optionee to exercise it.
11. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither
the Company nor any subsidiary thereof is by the Plan or
this Option obligated to continue to employ Optionee and
neither the Plan nor this Option shall otherwise interfere
with the Company's or any of the Company's subsidiary's
right to discharge or retire any employee, including
Optionee, at any time.
<PAGE>
12. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The
Optionee shall have no rights as a stockholder with respect
to shares subject to this Agreement until a stock
certificate therefore has been issued to the Optionee and is
fully paid for. Except as is expressly provided in the Plan
with respect to certain changes in the capitalization of the
Company, no adjustment shall be made for dividends or
similar rights for which the record date is prior to the
date such stock certificate is issued.
13. REORGANIZATION OF COMPANY.
(a) Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation
of the Company as a result of which the Company's
outstanding Common Stock is changed into or exchanged for
cash or property or securities not of the Company's issue,
or upon a sale of all or substantially all property of the
Company to, or the acquisition of all or substantially all
of the stock of the Company then outstanding by, another
corporation or person, the Plan shall terminate, and the
Option granted hereunder shall terminate; provided, however,
Optionee shall be entitled, at such time prior to the
consummation of the transaction causing such termination as
the Company shall designate, to exercise the unexercised
installments of the Option including all unaccrued
<PAGE>
installments thereof which would, but for this subsection
13(a), not yet be exercisable. Notwithstanding the
foregoing, in the event that any transaction causing such
termination is not consummated, any unexercised unaccrued
installments that had become exercisable solely by reason of
the provisions of this subsection 13(a) shall again become
unaccrued and unexercisable as of said termination of such
transaction, subject, however, to such installments accruing
pursuant to the normal accrual schedule provided in the
terms under which the Option was granted.
(b) In addition to and not in lieu of those rights
granted pursuant to subsection 13(a) above, if provisions
shall be made in writing in connection with such transaction
for the continuance of the Plan and/or the assumption of
options theretofore granted, or the substitution for such
options of options covering the stock of the successor
corporation, or a parent or subsidiary thereof with
appropriate adjustments as to the number and kind of shares
and prices, the unexercised Option shall continue in the
manner and under the terms so provided.
(c) The Company shall have no obligation to provide
for the continuance, assumption or substitution of the Plan
or the Option by any successor corporation or parent or
subsidiary thereof.
<PAGE>
14. WITHHOLDING TAXES. The Optionee hereby agrees
that the Company (or a subsidiary thereof, as the case may
be) may withhold from the Optionee's wages or other
remuneration the appropriate amount of federal, state and
local taxes attributable to the Optionee's exercise of any
installment of this Option. The Optionee further agrees
that, if the Company (or a subsidiary thereof, as the case
may be) does not withhold an amount from the Optionee's
wages or other remuneration sufficient to satisfy the
Company's (or any such subsidiary's) withholding obligation,
the Optionee will reimburse the Company (or any such
subsidiary) on demand, in cash, for the amount
underwithheld.
15. GOVERNING LAW. This Agreement shall be governed
by and interpreted in accordance with the laws of the State
of California applicable to agreements made and to be
performed entirely within such State and without regard to
the conflict of law principals thereof.
16. AMENDMENTS. No amendment, modification,
termination or waiver of any provision of this Agreement
shall be effective unless the same shall be in writing
signed by all parties hereto.
17. COUNTERPARTS. This Agreement may be signed in
one or more counterparts, each of which shall be deemed to
<PAGE>
be an original, but all of which together shall constitute
one and the same instrument.
18. SURVIVAL OF REPRESENTATIONS. All
representations, covenants and warranties of the parties
hereto shall survive the execution of this Agreement.
IN WITNESS WHEREOF the Company and the Optionee have
caused this instrument to be executed as of the date first
written above, and the Optionee whose signature appears
below acknowledges receipt of a copy of the Plan and
acceptance of an original copy of this Agreement.
THE COMPANY:
MAXICARE HEALTH PLANS, INC.
By: /s/ Peter J. Ratican
Chairman, President and
Chief Executive Officer
OPTIONEE:
/s/ Richard Link
<PAGE>
Exhibit 10.58
MAXICARE HEALTH PLANS, INC.
STOCK OPTION AGREEMENT
Maxicare Health Plans, Inc., a Delaware corporation
(the "Company"), hereby grants as of this 20th day of
December, 1993, to Aivars Jerumanis (the "Optionee"), an
option to purchase a maximum of 5,000 shares of its common
stock (the "Common Stock"), at a price per share (the
"Exercise Price") of $9.63 per share (the "Option"), on the
following terms and conditions:
1. GRANT UNDER 1990 STOCK PLAN. The Option is
granted pursuant to and is governed by the Company's 1990
Stock Option Plan (the "Plan") and, unless the context
otherwise requires, terms used and/or defined herein shall
have the same meaning as in the Plan. Determinations made
in connection with this Option pursuant to the Plan shall be
governed by the Plan as it exists on this date. This Option
is not intended to be and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code.
2. EXTENT OF OPTION. If the Optionee has continued
to serve in the capacity of an officer, employee, or
director with the Company (or a subsidiary thereof, as the
case may be) on the following dates, the Optionee may,
subject to Section 13 hereof, exercise this Option for the
portion of the total number of shares subject to this Option
set opposite the applicable date:
<PAGE>
Less than one year from the - 0 shares
date hereof
One year but less than two years - 1,667 shares
from the date hereof
Two years but less than three - 1,667 shares
years from the date hereof
Three years but less than four - 1,666 shares
years from the date hereof
The foregoing rights are cumulative and, while the Optionee
continues to serve as an officer, director or employee of
the Company (or a subsidiary thereof, as the case may be),
may be exercised up to and including the earlier of the date
which is five years from the date this Option is granted
(the "Fifth Anniversary Date"). For purposes of this
Agreement, any accrued installment shall be referred to as
an "Accrued Installment". All of the foregoing rights are
subject to Sections 3 and 4 hereof, as appropriate, if the
Optionee ceases to serve as an officer, director or employee
of the Company (or a subsidiary thereof, as the case may be)
or becomes disabled or dies while serving as an officer,
director or employee of the Company (or a subsidiary
thereof, as the case may be).
3. TERMINATION OF BUSINESS RELATIONSHIP. If the
Optionee ceases to remain an officer, director or employee
of the Company (or subsidiary thereof, as the case may be),
other than by reason of death or disability as defined in
Section 4, any unexercised Accrued Installments of the
Option shall expire and become unexercisable as of the
<PAGE>
earlier of (i) the Fifth Anniversary Date, or (ii) thirty
(30) days following the termination of Optionee's employment
or termination of Optionee's directorship. No further
installments of this Option shall become exercisable. The
Board of Directors of the Company may extend such thirty
(30) day period for a period not to exceed one (1) year
following the Termination Date (as defined in the Plan), but
in no event beyond the applicable Fifth Anniversary Date.
In such a case, the Optionee's only rights hereunder shall
be those which are properly exercised before the termination
of this Option. Any portion of an Option that expires
hereunder shall remain unexercisable and be of no effect
whatsoever after such expiration notwithstanding that such
Optionee may be reemployed by, or again become a director
of, the Company (or a subsidiary thereof, as the case may
be).
4. DEATH OR DISABILITY. In the event of the death
of the Optionee while an officer, employee or director of
the Company (or a subsidiary thereof, as the case may be),
or in the event of termination of employment or directorship
by reason of the Optionee's Disability (as defined in the
Plan), any unexercised Accrued Installments of the Option
granted to Optionee shall expire and become unexercisable as
of the earlier of (i) the Fifth Anniversary Date, or (ii)
the first anniversary date of the Optionee's death (if
applicable) or (iii) the first anniversary date of the
<PAGE>
termination of employment or directorship by reason of
Disability (if applicable). Any such Accrued Installments
of a deceased Optionee may be exercised prior to their
expiration by (and only by) the person or persons to whom
the Optionee's Option rights shall pass by will or by the
laws of descent and distribution. Any installments under a
deceased Optionee's Option that have not accrued as of the
date of his death shall expire and become unexercisable as
of said date of death. For purposes of this Agreement, the
Optionee shall be deemed employed by the Company (or a
subsidiary thereof, as the case may be) during any period of
leave of absence from active employment as authorized by the
Company (or a subsidiary thereof, as the case may be).
5. PARTIAL EXERCISE. Exercise of this Option up to
the extent above stated may be in part at any time and from
time to time with the above limits, except that this Option
may not be exercised for a fraction of a share. Upon the
exercise of the final installment of this Option, the
Optionee shall be entitled to receive cash with respect to
the value of any fraction of a share (in lieu of any said
fractional share).
6. PAYMENT OF EXERCISE PRICE. The Exercise Price
is payable in United States dollars and may be paid in cash
or by certified or cashier's check, or any combination of
the foregoing, equal in amount to the Exercise Price.
<PAGE>
7. INVESTMENT REPRESENTATIONS; RESTRICTIONS ON
TRANSFER.
(a) The Optionee represents, warrants and covenants
to the Company that:
(i) Any Common Stock acquired by the Optionee upon
exercise of the Option will be acquired for the Optionee's
own account and not with a view to resale on distribution in
violation of the Securities Act of 1933, as amended (the
"1933 Act").
(ii) The Optionee has such knowledge and experience
in business and financial matters as to be capable of
utilizing the information which is available to the Optionee
to evaluate the merits and risks of an investment in the
Common Stock, and is able to bear the economic risks of any
Common Stock or other securities which the Optionee may
acquire upon exercise of the Option.
(iii) The Optionee understands that the Option has not
been registered under the Securities Act of 1933, as amended
(the "1933 Act"), that the Option has been issued in
reliance upon certain exemptions contained therein. The
Optionee further understands that because the Option has not
been registered under the 1933 Act or registered or
<PAGE>
qualified pursuant to applicable "blue sky" statutes, the
Optionee may not, and Optionee covenants and agrees that
Optionee will not, sell, offer to sell or otherwise dispose
of any such Option in violation of the 1933 Act or any
applicable "blue sky" or securities law of any state. The
Optionee acknowledges and understands that Optionee has no
independent right to require the Company to register the
Option.
8. METHOD OF EXERCISING OPTION. Subject to the
terms and conditions of this Agreement, this Option may be
exercised by written notice to the Company, at the principal
executive office of the Company, or to such transfer agent
as the Company shall designate. Such notice shall state the
election to exercise this Option and the number of shares in
respect of which it is being exercised and shall be signed
by the Optionee or person or persons entitled to so exercise
this Option. Such notice shall be accompanied by payment of
the full Exercise Price of such shares, and the Company
shall deliver a certificate or certificates representing
such shares as soon as practicable after the notice is
received. The certificate or certificates for the shares as
to which this Option shall have been so exercised shall be
registered in the name of the person or persons so
exercising this Option (or, if this Option shall be
exercised by the Optionee and if the Optionee shall so
request in the notice exercising this Option, shall be
<PAGE>
registered in the name of the Optionee and another person
jointly, with right of survivorship) and shall be delivered
to or upon the written order of the person or persons
exercising this Option. In the event this Option shall be
exercised, pursuant to Section 4 hereof, by any person or
persons other than the Optionee, such notice shall be
accompanied by appropriate proof of the right of such person
or persons to exercise this Option. All shares that shall
be purchased upon the exercise of this Option as provided
herein shall be fully paid and non-assessable.
9. OPTION NOT TRANSFERABLE; TRANSFER OF STOCK.
This Option is not transferable or assignable except by will
or by the laws of descent and distribution. During the
Optionee's lifetime, only the Optionee may exercise this
Option.
10. NO OBLIGATION TO EXERCISE OPTION. The grant and
acceptance of this Option imposes no obligation on the
Optionee to exercise it.
11. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither
the Company nor any subsidiary thereof is by the Plan or
this Option obligated to continue to employ Optionee and
neither the Plan nor this Option shall otherwise interfere
with the Company's or any of the Company's subsidiary's
right to discharge or retire any employee, including
Optionee, at any time.
<PAGE>
12. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The
Optionee shall have no rights as a stockholder with respect
to shares subject to this Agreement until a stock
certificate therefore has been issued to the Optionee and is
fully paid for. Except as is expressly provided in the Plan
with respect to certain changes in the capitalization of the
Company, no adjustment shall be made for dividends or
similar rights for which the record date is prior to the
date such stock certificate is issued.
13. REORGANIZATION OF COMPANY.
(a) Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation
of the Company as a result of which the Company's
outstanding Common Stock is changed into or exchanged for
cash or property or securities not of the Company's issue,
or upon a sale of all or substantially all property of the
Company to, or the acquisition of all or substantially all
of the stock of the Company then outstanding by, another
corporation or person, the Plan shall terminate, and the
Option granted hereunder shall terminate; provided, however,
Optionee shall be entitled, at such time prior to the
consummation of the transaction causing such termination as
the Company shall designate, to exercise the unexercised
installments of the Option including all unaccrued
<PAGE>
installments thereof which would, but for this subsection
13(a), not yet be exercisable. Notwithstanding the
foregoing, in the event that any transaction causing such
termination is not consummated, any unexercised unaccrued
installments that had become exercisable solely by reason of
the provisions of this subsection 13(a) shall again become
unaccrued and unexercisable as of said termination of such
transaction, subject, however, to such installments accruing
pursuant to the normal accrual schedule provided in the
terms under which the Option was granted.
(b) In addition to and not in lieu of those rights
granted pursuant to subsection 13(a) above, if provisions
shall be made in writing in connection with such transaction
for the continuance of the Plan and/or the assumption of
options theretofore granted, or the substitution for such
options of options covering the stock of the successor
corporation, or a parent or subsidiary thereof with
appropriate adjustments as to the number and kind of shares
and prices, the unexercised Option shall continue in the
manner and under the terms so provided.
(c) The Company shall have no obligation to provide
for the continuance, assumption or substitution of the Plan
or the Option by any successor corporation or parent or
subsidiary thereof.
<PAGE>
14. WITHHOLDING TAXES. The Optionee hereby agrees
that the Company (or a subsidiary thereof, as the case may
be) may withhold from the Optionee's wages or other
remuneration the appropriate amount of federal, state and
local taxes attributable to the Optionee's exercise of any
installment of this Option. The Optionee further agrees
that, if the Company (or a subsidiary thereof, as the case
may be) does not withhold an amount from the Optionee's
wages or other remuneration sufficient to satisfy the
Company's (or any such subsidiary's) withholding obligation,
the Optionee will reimburse the Company (or any such
subsidiary) on demand, in cash, for the amount
underwithheld.
15. GOVERNING LAW. This Agreement shall be governed
by and interpreted in accordance with the laws of the State
of California applicable to agreements made and to be
performed entirely within such State and without regard to
the conflict of law principals thereof.
16. AMENDMENTS. No amendment, modification,
termination or waiver of any provision of this Agreement
shall be effective unless the same shall be in writing
signed by all parties hereto.
17. COUNTERPARTS. This Agreement may be signed in
one or more counterparts, each of which shall be deemed to
<PAGE>
be an original, but all of which together shall constitute
one and the same instrument.
18. SURVIVAL OF REPRESENTATIONS. All
representations, covenants and warranties of the parties
hereto shall survive the execution of this Agreement.
IN WITNESS WHEREOF the Company and the Optionee have
caused this instrument to be executed as of the date first
written above, and the Optionee whose signature appears
below acknowledges receipt of a copy of the Plan and
acceptance of an original copy of this Agreement.
THE COMPANY:
MAXICARE HEALTH PLANS, INC.
By: /s/ Peter J. Ratican
Chairman, President and
Chief Executive Officer
OPTIONEE:
/s/ Aivars Jerumanis
<PAGE>
Exhibit 10.59
MAXICARE HEALTH PLANS, INC.
STOCK OPTION AGREEMENT
Maxicare Health Plans, Inc., a Delaware corporation
(the "Company"), hereby grants as of this 20th day of
December, 1993, to Robert Landis (the "Optionee"), an option
to purchase a maximum of 10,000 shares of its common stock
(the "Common Stock"), at a price per share (the "Exercise
Price") of $9.63 per share (the "Option"), on the following
terms and conditions:
1. GRANT UNDER 1990 STOCK PLAN. The Option is
granted pursuant to and is governed by the Company's 1990
Stock Option Plan (the "Plan") and, unless the context
otherwise requires, terms used and/or defined herein shall
have the same meaning as in the Plan. Determinations made
in connection with this Option pursuant to the Plan shall be
governed by the Plan as it exists on this date. This Option
is not intended to be and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code.
2. EXTENT OF OPTION. If the Optionee has continued
to serve in the capacity of an officer, employee, or
director with the Company (or a subsidiary thereof, as the
case may be) on the following dates, the Optionee may,
subject to Section 13 hereof, exercise this Option for the
portion of the total number of shares subject to this Option
set opposite the applicable date:
<PAGE>
Less than one year from the - 0 shares
date hereof
One year but less than two years - 3,333 shares
from the date hereof
Two years but less than three - 3,333 shares
years from the date hereof
Three years but less than four - 3,334 shares
years from the date hereof
The foregoing rights are cumulative and, while the Optionee
continues to serve as an officer, director or employee of
the Company (or a subsidiary thereof, as the case may be),
may be exercised up to and including the earlier of the date
which is five years from the date this Option is granted
(the "Fifth Anniversary Date"). For purposes of this
Agreement, any accrued installment shall be referred to as
an "Accrued Installment". All of the foregoing rights are
subject to Sections 3 and 4 hereof, as appropriate, if the
Optionee ceases to serve as an officer, director or employee
of the Company (or a subsidiary thereof, as the case may be)
or becomes disabled or dies while serving as an officer,
director or employee of the Company (or a subsidiary
thereof, as the case may be).
3. TERMINATION OF BUSINESS RELATIONSHIP. If the
Optionee ceases to remain an officer, director or employee
of the Company (or subsidiary thereof, as the case may be),
other than by reason of death or disability as defined in
Section 4, any unexercised Accrued Installments of the
Option shall expire and become unexercisable as of the
<PAGE>
earlier of (i) the Fifth Anniversary Date, or (ii) thirty
(30) days following the termination of Optionee's employment
or termination of Optionee's directorship. No further
installments of this Option shall become exercisable. The
Board of Directors of the Company may extend such thirty
(30) day period for a period not to exceed one (1) year
following the Termination Date (as defined in the Plan), but
in no event beyond the applicable Fifth Anniversary Date.
In such a case, the Optionee's only rights hereunder shall
be those which are properly exercised before the termination
of this Option. Any portion of an Option that expires
hereunder shall remain unexercisable and be of no effect
whatsoever after such expiration notwithstanding that such
Optionee may be reemployed by, or again become a director
of, the Company (or a subsidiary thereof, as the case may
be).
4. DEATH OR DISABILITY. In the event of the death
of the Optionee while an officer, employee or director of
the Company (or a subsidiary thereof, as the case may be),
or in the event of termination of employment or directorship
by reason of the Optionee's Disability (as defined in the
Plan), any unexercised Accrued Installments of the Option
granted to Optionee shall expire and become unexercisable as
of the earlier of (i) the Fifth Anniversary Date, or (ii)
the first anniversary date of the Optionee's death (if
applicable) or (iii) the first anniversary date of the
<PAGE>
termination of employment or directorship by reason of
Disability (if applicable). Any such Accrued Installments
of a deceased Optionee may be exercised prior to their
expiration by (and only by) the person or persons to whom
the Optionee's Option rights shall pass by will or by the
laws of descent and distribution. Any installments under a
deceased Optionee's Option that have not accrued as of the
date of his death shall expire and become unexercisable as
of said date of death. For purposes of this Agreement, the
Optionee shall be deemed employed by the Company (or a
subsidiary thereof, as the case may be) during any period of
leave of absence from active employment as authorized by the
Company (or a subsidiary thereof, as the case may be).
5. PARTIAL EXERCISE. Exercise of this Option up to
the extent above stated may be in part at any time and from
time to time with the above limits, except that this Option
may not be exercised for a fraction of a share. Upon the
exercise of the final installment of this Option, the
Optionee shall be entitled to receive cash with respect to
the value of any fraction of a share (in lieu of any said
fractional share).
6. PAYMENT OF EXERCISE PRICE. The Exercise Price
is payable in United States dollars and may be paid in cash
or by certified or cashier's check, or any combination of
the foregoing, equal in amount to the Exercise Price.
<PAGE>
7. INVESTMENT REPRESENTATIONS; RESTRICTIONS ON
TRANSFER.
(a) The Optionee represents, warrants and covenants
to the Company that:
(i) Any Common Stock acquired by the Optionee upon
exercise of the Option will be acquired for the Optionee's
own account and not with a view to resale on distribution in
violation of the Securities Act of 1933, as amended (the
"1933 Act").
(ii) The Optionee has such knowledge and experience
in business and financial matters as to be capable of
utilizing the information which is available to the Optionee
to evaluate the merits and risks of an investment in the
Common Stock, and is able to bear the economic risks of any
Common Stock or other securities which the Optionee may
acquire upon exercise of the Option.
(iii) The Optionee understands that the Option has not
been registered under the Securities Act of 1933, as amended
(the "1933 Act"), that the Option has been issued in
reliance upon certain exemptions contained therein. The
Optionee further understands that because the Option has not
been registered under the 1933 Act or registered or
<PAGE>
qualified pursuant to applicable "blue sky" statutes, the
Optionee may not, and Optionee covenants and agrees that
Optionee will not, sell, offer to sell or otherwise dispose
of any such Option in violation of the 1933 Act or any
applicable "blue sky" or securities law of any state. The
Optionee acknowledges and understands that Optionee has no
independent right to require the Company to register the
Option.
8. METHOD OF EXERCISING OPTION. Subject to the
terms and conditions of this Agreement, this Option may be
exercised by written notice to the Company, at the principal
executive office of the Company, or to such transfer agent
as the Company shall designate. Such notice shall state the
election to exercise this Option and the number of shares in
respect of which it is being exercised and shall be signed
by the Optionee or person or persons entitled to so exercise
this Option. Such notice shall be accompanied by payment of
the full Exercise Price of such shares, and the Company
shall deliver a certificate or certificates representing
such shares as soon as practicable after the notice is
received. The certificate or certificates for the shares as
to which this Option shall have been so exercised shall be
registered in the name of the person or persons so
exercising this Option (or, if this Option shall be
exercised by the Optionee and if the Optionee shall so
request in the notice exercising this Option, shall be
<PAGE>
registered in the name of the Optionee and another person
jointly, with right of survivorship) and shall be delivered
to or upon the written order of the person or persons
exercising this Option. In the event this Option shall be
exercised, pursuant to Section 4 hereof, by any person or
persons other than the Optionee, such notice shall be
accompanied by appropriate proof of the right of such person
or persons to exercise this Option. All shares that shall
be purchased upon the exercise of this Option as provided
herein shall be fully paid and non-assessable.
9. OPTION NOT TRANSFERABLE; TRANSFER OF STOCK.
This Option is not transferable or assignable except by will
or by the laws of descent and distribution. During the
Optionee's lifetime, only the Optionee may exercise this
Option.
10. NO OBLIGATION TO EXERCISE OPTION. The grant and
acceptance of this Option imposes no obligation on the
Optionee to exercise it.
11. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither
the Company nor any subsidiary thereof is by the Plan or
this Option obligated to continue to employ Optionee and
neither the Plan nor this Option shall otherwise interfere
with the Company's or any of the Company's subsidiary's
right to discharge or retire any employee, including
Optionee, at any time.
<PAGE>
12. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The
Optionee shall have no rights as a stockholder with respect
to shares subject to this Agreement until a stock
certificate therefore has been issued to the Optionee and is
fully paid for. Except as is expressly provided in the Plan
with respect to certain changes in the capitalization of the
Company, no adjustment shall be made for dividends or
similar rights for which the record date is prior to the
date such stock certificate is issued.
13. REORGANIZATION OF COMPANY.
(a) Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation
of the Company as a result of which the Company's
outstanding Common Stock is changed into or exchanged for
cash or property or securities not of the Company's issue,
or upon a sale of all or substantially all property of the
Company to, or the acquisition of all or substantially all
of the stock of the Company then outstanding by, another
corporation or person, the Plan shall terminate, and the
Option granted hereunder shall terminate; provided, however,
Optionee shall be entitled, at such time prior to the
consummation of the transaction causing such termination as
the Company shall designate, to exercise the unexercised
installments of the Option including all unaccrued
<PAGE>
installments thereof which would, but for this subsection
13(a), not yet be exercisable. Notwithstanding the
foregoing, in the event that any transaction causing such
termination is not consummated, any unexercised unaccrued
installments that had become exercisable solely by reason of
the provisions of this subsection 13(a) shall again become
unaccrued and unexercisable as of said termination of such
transaction, subject, however, to such installments accruing
pursuant to the normal accrual schedule provided in the
terms under which the Option was granted.
(b) In addition to and not in lieu of those rights
granted pursuant to subsection 13(a) above, if provisions
shall be made in writing in connection with such transaction
for the continuance of the Plan and/or the assumption of
options theretofore granted, or the substitution for such
options of options covering the stock of the successor
corporation, or a parent or subsidiary thereof with
appropriate adjustments as to the number and kind of shares
and prices, the unexercised Option shall continue in the
manner and under the terms so provided.
(c) The Company shall have no obligation to provide
for the continuance, assumption or substitution of the Plan
or the Option by any successor corporation or parent or
subsidiary thereof.
<PAGE>
14. WITHHOLDING TAXES. The Optionee hereby agrees
that the Company (or a subsidiary thereof, as the case may
be) may withhold from the Optionee's wages or other
remuneration the appropriate amount of federal, state and
local taxes attributable to the Optionee's exercise of any
installment of this Option. The Optionee further agrees
that, if the Company (or a subsidiary thereof, as the case
may be) does not withhold an amount from the Optionee's
wages or other remuneration sufficient to satisfy the
Company's (or any such subsidiary's) withholding obligation,
the Optionee will reimburse the Company (or any such
subsidiary) on demand, in cash, for the amount
underwithheld.
15. GOVERNING LAW. This Agreement shall be governed
by and interpreted in accordance with the laws of the State
of California applicable to agreements made and to be
performed entirely within such State and without regard to
the conflict of law principals thereof.
16. AMENDMENTS. No amendment, modification,
termination or waiver of any provision of this Agreement
shall be effective unless the same shall be in writing
signed by all parties hereto.
17. COUNTERPARTS. This Agreement may be signed in
one or more counterparts, each of which shall be deemed to
<PAGE>
be an original, but all of which together shall constitute
one and the same instrument.
18. SURVIVAL OF REPRESENTATIONS. All
representations, covenants and warranties of the parties
hereto shall survive the execution of this Agreement.
IN WITNESS WHEREOF the Company and the Optionee have
caused this instrument to be executed as of the date first
written above, and the Optionee whose signature appears
below acknowledges receipt of a copy of the Plan and
acceptance of an original copy of this Agreement.
THE COMPANY:
MAXICARE HEALTH PLANS, INC.
By: /s/ Peter J. Ratican
Chairman, President and
Chief Executive Officer
OPTIONEE:
/s/ Robert Landis
<PAGE>
Exhibit 10.60
MAXICARE HEALTH PLANS, INC.
STOCK OPTION AGREEMENT
Maxicare Health Plans, Inc., a Delaware corporation
(the "Company"), hereby grants as of this 20th day of
December, 1993, to William Caswell (the "Optionee"), an
option to purchase a maximum of 10,000 shares of its common
stock (the "Common Stock"), at a price per share (the
"Exercise Price") of $9.63 per share (the "Option"), on the
following terms and conditions:
1. GRANT UNDER 1990 STOCK PLAN. The Option is
granted pursuant to and is governed by the Company's 1990
Stock Option Plan (the "Plan") and, unless the context
otherwise requires, terms used and/or defined herein shall
have the same meaning as in the Plan. Determinations made
in connection with this Option pursuant to the Plan shall be
governed by the Plan as it exists on this date. This Option
is not intended to be and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code.
2. EXTENT OF OPTION. If the Optionee has continued
to serve in the capacity of an officer, employee, or
director with the Company (or a subsidiary thereof, as the
case may be) on the following dates, the Optionee may,
subject to Section 13 hereof, exercise this Option for the
portion of the total number of shares subject to this Option
set opposite the applicable date:
<PAGE>
Less than one year from the - 0 shares
date hereof
One year but less than two years - 3,333 shares
from the date hereof
Two years but less than three - 3,333 shares
years from the date hereof
Three years but less than four - 3,334 shares
years from the date hereof
The foregoing rights are cumulative and, while the Optionee
continues to serve as an officer, director or employee of
the Company (or a subsidiary thereof, as the case may be),
may be exercised up to and including the earlier of the date
which is five years from the date this Option is granted
(the "Fifth Anniversary Date"). For purposes of this
Agreement, any accrued installment shall be referred to as
an "Accrued Installment". All of the foregoing rights are
subject to Sections 3 and 4 hereof, as appropriate, if the
Optionee ceases to serve as an officer, director or employee
of the Company (or a subsidiary thereof, as the case may be)
or becomes disabled or dies while serving as an officer,
director or employee of the Company (or a subsidiary
thereof, as the case may be).
3. TERMINATION OF BUSINESS RELATIONSHIP. If the
Optionee ceases to remain an officer, director or employee
of the Company (or subsidiary thereof, as the case may be),
other than by reason of death or disability as defined in
Section 4, any unexercised Accrued Installments of the
Option shall expire and become unexercisable as of the
<PAGE>
earlier of (i) the Fifth Anniversary Date, or (ii) thirty
(30) days following the termination of Optionee's employment
or termination of Optionee's directorship. No further
installments of this Option shall become exercisable. The
Board of Directors of the Company may extend such thirty
(30) day period for a period not to exceed one (1) year
following the Termination Date (as defined in the Plan), but
in no event beyond the applicable Fifth Anniversary Date.
In such a case, the Optionee's only rights hereunder shall
be those which are properly exercised before the termination
of this Option. Any portion of an Option that expires
hereunder shall remain unexercisable and be of no effect
whatsoever after such expiration notwithstanding that such
Optionee may be reemployed by, or again become a director
of, the Company (or a subsidiary thereof, as the case may
be).
4. DEATH OR DISABILITY. In the event of the death
of the Optionee while an officer, employee or director of
the Company (or a subsidiary thereof, as the case may be),
or in the event of termination of employment or directorship
by reason of the Optionee's Disability (as defined in the
Plan), any unexercised Accrued Installments of the Option
granted to Optionee shall expire and become unexercisable as
of the earlier of (i) the Fifth Anniversary Date, or (ii)
the first anniversary date of the Optionee's death (if
applicable) or (iii) the first anniversary date of the
<PAGE>
termination of employment or directorship by reason of
Disability (if applicable). Any such Accrued Installments
of a deceased Optionee may be exercised prior to their
expiration by (and only by) the person or persons to whom
the Optionee's Option rights shall pass by will or by the
laws of descent and distribution. Any installments under a
deceased Optionee's Option that have not accrued as of the
date of his death shall expire and become unexercisable as
of said date of death. For purposes of this Agreement, the
Optionee shall be deemed employed by the Company (or a
subsidiary thereof, as the case may be) during any period of
leave of absence from active employment as authorized by the
Company (or a subsidiary thereof, as the case may be).
5. PARTIAL EXERCISE. Exercise of this Option up to
the extent above stated may be in part at any time and from
time to time with the above limits, except that this Option
may not be exercised for a fraction of a share. Upon the
exercise of the final installment of this Option, the
Optionee shall be entitled to receive cash with respect to
the value of any fraction of a share (in lieu of any said
fractional share).
6. PAYMENT OF EXERCISE PRICE. The Exercise Price
is payable in United States dollars and may be paid in cash
or by certified or cashier's check, or any combination of
the foregoing, equal in amount to the Exercise Price.
<PAGE>
7. INVESTMENT REPRESENTATIONS; RESTRICTIONS ON
TRANSFER.
(a) The Optionee represents, warrants and covenants
to the Company that:
(i) Any Common Stock acquired by the Optionee upon
exercise of the Option will be acquired for the Optionee's
own account and not with a view to resale on distribution in
violation of the Securities Act of 1933, as amended (the
"1933 Act").
(ii) The Optionee has such knowledge and experience
in business and financial matters as to be capable of
utilizing the information which is available to the Optionee
to evaluate the merits and risks of an investment in the
Common Stock, and is able to bear the economic risks of any
Common Stock or other securities which the Optionee may
acquire upon exercise of the Option.
(iii) The Optionee understands that the Option has not
been registered under the Securities Act of 1933, as amended
(the "1933 Act"), that the Option has been issued in
reliance upon certain exemptions contained therein. The
Optionee further understands that because the Option has not
been registered under the 1933 Act or registered or
<PAGE>
qualified pursuant to applicable "blue sky" statutes, the
Optionee may not, and Optionee covenants and agrees that
Optionee will not, sell, offer to sell or otherwise dispose
of any such Option in violation of the 1933 Act or any
applicable "blue sky" or securities law of any state. The
Optionee acknowledges and understands that Optionee has no
independent right to require the Company to register the
Option.
8. METHOD OF EXERCISING OPTION. Subject to the
terms and conditions of this Agreement, this Option may be
exercised by written notice to the Company, at the principal
executive office of the Company, or to such transfer agent
as the Company shall designate. Such notice shall state the
election to exercise this Option and the number of shares in
respect of which it is being exercised and shall be signed
by the Optionee or person or persons entitled to so exercise
this Option. Such notice shall be accompanied by payment of
the full Exercise Price of such shares, and the Company
shall deliver a certificate or certificates representing
such shares as soon as practicable after the notice is
received. The certificate or certificates for the shares as
to which this Option shall have been so exercised shall be
registered in the name of the person or persons so
exercising this Option (or, if this Option shall be
exercised by the Optionee and if the Optionee shall so
request in the notice exercising this Option, shall be
<PAGE>
registered in the name of the Optionee and another person
jointly, with right of survivorship) and shall be delivered
to or upon the written order of the person or persons
exercising this Option. In the event this Option shall be
exercised, pursuant to Section 4 hereof, by any person or
persons other than the Optionee, such notice shall be
accompanied by appropriate proof of the right of such person
or persons to exercise this Option. All shares that shall
be purchased upon the exercise of this Option as provided
herein shall be fully paid and non-assessable.
9. OPTION NOT TRANSFERABLE; TRANSFER OF STOCK.
This Option is not transferable or assignable except by will
or by the laws of descent and distribution. During the
Optionee's lifetime, only the Optionee may exercise this
Option.
10. NO OBLIGATION TO EXERCISE OPTION. The grant and
acceptance of this Option imposes no obligation on the
Optionee to exercise it.
11. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither
the Company nor any subsidiary thereof is by the Plan or
this Option obligated to continue to employ Optionee and
neither the Plan nor this Option shall otherwise interfere
with the Company's or any of the Company's subsidiary's
right to discharge or retire any employee, including
Optionee, at any time.
<PAGE>
12. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The
Optionee shall have no rights as a stockholder with respect
to shares subject to this Agreement until a stock
certificate therefore has been issued to the Optionee and is
fully paid for. Except as is expressly provided in the Plan
with respect to certain changes in the capitalization of the
Company, no adjustment shall be made for dividends or
similar rights for which the record date is prior to the
date such stock certificate is issued.
13. REORGANIZATION OF COMPANY.
(a) Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation
of the Company as a result of which the Company's
outstanding Common Stock is changed into or exchanged for
cash or property or securities not of the Company's issue,
or upon a sale of all or substantially all property of the
Company to, or the acquisition of all or substantially all
of the stock of the Company then outstanding by, another
corporation or person, the Plan shall terminate, and the
Option granted hereunder shall terminate; provided, however,
Optionee shall be entitled, at such time prior to the
consummation of the transaction causing such termination as
the Company shall designate, to exercise the unexercised
installments of the Option including all unaccrued
<PAGE>
installments thereof which would, but for this subsection
13(a), not yet be exercisable. Notwithstanding the
foregoing, in the event that any transaction causing such
termination is not consummated, any unexercised unaccrued
installments that had become exercisable solely by reason of
the provisions of this subsection 13(a) shall again become
unaccrued and unexercisable as of said termination of such
transaction, subject, however, to such installments accruing
pursuant to the normal accrual schedule provided in the
terms under which the Option was granted.
(b) In addition to and not in lieu of those rights
granted pursuant to subsection 13(a) above, if provisions
shall be made in writing in connection with such transaction
for the continuance of the Plan and/or the assumption of
options theretofore granted, or the substitution for such
options of options covering the stock of the successor
corporation, or a parent or subsidiary thereof with
appropriate adjustments as to the number and kind of shares
and prices, the unexercised Option shall continue in the
manner and under the terms so provided.
(c) The Company shall have no obligation to provide
for the continuance, assumption or substitution of the Plan
or the Option by any successor corporation or parent or
subsidiary thereof.
<PAGE>
14. WITHHOLDING TAXES. The Optionee hereby agrees
that the Company (or a subsidiary thereof, as the case may
be) may withhold from the Optionee's wages or other
remuneration the appropriate amount of federal, state and
local taxes attributable to the Optionee's exercise of any
installment of this Option. The Optionee further agrees
that, if the Company (or a subsidiary thereof, as the case
may be) does not withhold an amount from the Optionee's
wages or other remuneration sufficient to satisfy the
Company's (or any such subsidiary's) withholding obligation,
the Optionee will reimburse the Company (or any such
subsidiary) on demand, in cash, for the amount
underwithheld.
15. GOVERNING LAW. This Agreement shall be governed
by and interpreted in accordance with the laws of the State
of California applicable to agreements made and to be
performed entirely within such State and without regard to
the conflict of law principals thereof.
16. AMENDMENTS. No amendment, modification,
termination or waiver of any provision of this Agreement
shall be effective unless the same shall be in writing
signed by all parties hereto.
17. COUNTERPARTS. This Agreement may be signed in
one or more counterparts, each of which shall be deemed to
<PAGE>
be an original, but all of which together shall constitute
one and the same instrument.
18. SURVIVAL OF REPRESENTATIONS. All
representations, covenants and warranties of the parties
hereto shall survive the execution of this Agreement.
IN WITNESS WHEREOF the Company and the Optionee have
caused this instrument to be executed as of the date first
written above, and the Optionee whose signature appears
below acknowledges receipt of a copy of the Plan and
acceptance of an original copy of this Agreement.
THE COMPANY:
MAXICARE HEALTH PLANS, INC.
By: /s/ Peter J. Ratican
Chairman, President and
Chief Executive Officer
OPTIONEE:
/s/ William Caswell
<PAGE>
Exhibit 10.61
MAXICARE HEALTH PLANS, INC.
STOCK OPTION AGREEMENT
Maxicare Health Plans, Inc., a Delaware corporation
(the "Company"), hereby grants as of this 20th day of
December, 1993, to Thomas W. Field, Jr. (the "Optionee"), an
option to purchase a maximum of 10,000 shares of its common
stock (the "Common Stock"), at a price per share (the
"Exercise Price") of $9.63 per share (the "Option"), on the
following terms and conditions:
1. GRANT UNDER 1990 STOCK PLAN. The Option is
granted pursuant to and is governed by the Company's 1990
Stock Option Plan (the "Plan") and, unless the context
otherwise requires, terms used and/or defined herein shall
have the same meaning as in the Plan. Determinations made
in connection with this Option pursuant to the Plan shall be
governed by the Plan as it exists on this date. This Option
is not intended to be and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code.
2. EXTENT OF OPTION. As an officer, employee, or
director with the Company, the Optionee's rights in and to
the Option shall vest as of the date hereof, and the
Optionee may, subject to Section 13 hereof, exercise this
<PAGE>
Option immediately for up to the total number of shares set
forth in the first sentence of this Agreement.
While the Optionee continues to serve as an officer,
director or employee of the Company (or a subsidiary
thereof, as the case may be), the Option may be exercised up
to and including the earlier of the date which is five years
from the date this Option is granted (the "Fifth Anniversary
Date"). For purposes of this Agreement, any accrued
installment shall be referred to as an "Accrued
Installment". All of the foregoing rights are subject to
Sections 3 and 4 hereof, as appropriate, if the Optionee
ceases to serve as an officer, director or employee of the
Company (or a subsidiary thereof, as the case may be) or
becomes disabled or dies while serving as an officer,
director or employee of the Company (or a subsidiary
thereof, as the case may be).
3. TERMINATION OF BUSINESS RELATIONSHIP. If the
Optionee ceases to remain an officer, director or employee
of the Company (or subsidiary thereof, as the case may be),
other than by reason of death or disability as defined in
Section 4, any unexercised Accrued Installments of the
Option shall expire and become unexercisable as of the
earlier of (i) the Fifth Anniversary Date, or (ii) thirty
(30) days following the termination of Optionee's employment
<PAGE>
or termination of Optionee's directorship. No further
installments of this Option shall become exercisable. The
Board of Directors of the Company may extend such thirty
(30) day period for a period not to exceed one (1) year
following the Termination Date (as defined in the Plan), but
in no event beyond the applicable Fifth Anniversary Date.
In such a case, the Optionee's only rights hereunder shall
be those which are properly exercised before the termination
of this Option. Any portion of an Option that expires
hereunder shall remain unexercisable and be of no effect
whatsoever after such expiration notwithstanding that such
Optionee may be reemployed by, or again become a director
of, the Company (or a subsidiary thereof, as the case may
be).
4. DEATH OR DISABILITY. In the event of the death
of the Optionee while an officer, employee or director of
the Company (or a subsidiary thereof, as the case may be),
or in the event of termination of employment or directorship
by reason of the Optionee's Disability (as defined in the
Plan), any unexercised Accrued Installments of the Option
granted to Optionee shall expire and become unexercisable as
of the earlier of (i) the Fifth Anniversary Date, or (ii)
the first anniversary date of the Optionee's death (if
applicable) or (iii) the first anniversary date of the
termination of employment or directorship by reason of
<PAGE>
Disability (if applicable). Any such Accrued Installments
of a deceased Optionee may be exercised prior to their
expiration by (and only by) the person or persons to whom
the Optionee's Option rights shall pass by will or by the
laws of descent and distribution. Any installments under a
deceased Optionee's Option that have not accrued as of the
date of his death shall expire and become unexercisable as
of said date of death. For purposes of this Agreement, the
Optionee shall be deemed employed by the Company (or a
subsidiary thereof, as the case may be) during any period of
leave of absence from active employment as authorized by the
Company (or a subsidiary thereof, as the case may be).
5. PARTIAL EXERCISE. Exercise of this Option up to
the extent above stated may be in part at any time and from
time to time with the above limits, except that this Option
may not be exercised for a fraction of a share. Upon the
exercise of the final installment of this Option, the
Optionee shall be entitled to receive cash with respect to
the value of any fraction of a share (in lieu of any said
fractional share).
6. PAYMENT OF EXERCISE PRICE. The Exercise Price
is payable in United States dollars and may be paid in cash
or by certified or cashier's check, or any combination of
the foregoing, equal in amount to the Exercise Price.
<PAGE>
7. INVESTMENT REPRESENTATIONS; RESTRICTIONS ON
TRANSFER.
(a) The Optionee represents, warrants and covenants
to the Company that:
(i) Any Common Stock acquired by the Optionee upon
exercise of the Option will be acquired for the Optionee's
own account and not with a view to resale on distribution in
violation of the Securities Act of 1933, as amended (the
"1933 Act").
(ii) The Optionee has such knowledge and experience
in business and financial matters as to be capable of
utilizing the information which is available to the Optionee
to evaluate the merits and risks of an investment in the
Common Stock, and is able to bear the economic risks of any
Common Stock or other securities which the Optionee may
acquire upon exercise of the Option.
(iii) The Optionee understands that the Option has not
been registered under the Securities Act of 1933, as amended
(the "1933 Act"), that the Option has been issued in
reliance upon certain exemptions contained therein. The
Optionee further understands that because the Option has not
been registered under the 1933 Act or registered or
<PAGE>
qualified pursuant to applicable "blue sky" statutes, the
Optionee may not, and Optionee covenants and agrees that
Optionee will not, sell, offer to sell or otherwise dispose
of any such Option in violation of the 1933 Act or any
applicable "blue sky" or securities law of any state. The
Optionee acknowledges and understands that Optionee has no
independent right to require the Company to register the
Option.
8. METHOD OF EXERCISING OPTION. Subject to the
terms and conditions of this Agreement, this Option may be
exercised by written notice to the Company, at the principal
executive office of the Company, or to such transfer agent
as the Company shall designate. Such notice shall state the
election to exercise this Option and the number of shares in
respect of which it is being exercised and shall be signed
by the Optionee or person or persons entitled to so exercise
this Option. Such notice shall be accompanied by payment of
the full Exercise Price of such shares, and the Company
shall deliver a certificate or certificates representing
such shares as soon as practicable after the notice is
received. The certificate or certificates for the shares as
to which this Option shall have been so exercised shall be
registered in the name of the person or persons so
exercising this Option (or, if this Option shall be
exercised by the Optionee and if the Optionee shall so
<PAGE>
request in the notice exercising this Option, shall be
registered in the name of the Optionee and another person
jointly, with right of if Optionee is entitled to exercise
any unexercised if Optionee is entitled to exercise any
unexercised survivorship) and shall be delivered to or upon
the written order of the person or persons exercising this
Option. In the event this Option shall be exercised,
pursuant to Section 4 hereof, by any person or persons other
than the Optionee, such notice shall be accompanied by
appropriate proof of the right of such person or persons to
exercise this Option. All shares that shall be purchased
upon the exercise of this Option as provided herein shall be
fully paid and non-assessable.
9. OPTION NOT TRANSFERABLE; TRANSFER OF STOCK.
This Option is not transferable or assignable except by will
or by the laws of descent and distribution. During the
Optionee's lifetime, only the Optionee may exercise this
Option.
10. NO OBLIGATION TO EXERCISE OPTION. The grant and
acceptance of this Option imposes no obligation on the
Optionee to exercise it.
11. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither
the Company nor any subsidiary thereof is by the Plan or
this Option obligated to continue to employ Optionee and
<PAGE>
neither the Plan nor this Option shall otherwise interfere
with the Company's or any of the Company's subsidiary's
right to discharge or retire any employee, including
Optionee, at any time.
12. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The
Optionee shall have no rights as a stockholder with respect
to shares subject to this Agreement until a stock
certificate therefore has been issued to the Optionee and is
fully paid for. Except as is expressly provided in the Plan
with respect to certain changes in the capitalization of the
Company, no adjustment shall be made for dividends or
similar rights for which the record date is prior to the
date such stock certificate is issued.
13. REORGANIZATION OF COMPANY.
(a) Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation
of the Company as a result of which the Company's
outstanding Common Stock is changed into or exchanged for
cash or property or securities not of the Company's issue,
or upon a sale of all or substantially all property of the
Company to, or the acquisition of all or substantially all
of the stock of the Company then outstanding by, another
corporation or person, the Plan shall terminate, and the
Option granted hereunder shall terminate; provided, however,
<PAGE>
Optionee shall be entitled, at such time prior to the
consummation of the transaction causing such termination as
the Company shall designate, to exercise the unexercised
installments of the Option.
(b) In addition to and not in lieu of those rights
granted pursuant to subsection 13(a) above, if provisions
shall be made in writing in connection with such transaction
for the continuance of the Plan and/or the assumption of
options theretofore granted, or the substitution for such
options of options covering the stock of the successor
corporation, or a parent or subsidiary thereof with
appropriate adjustments as to the number and kind of shares
and prices, the unexercised Option shall continue in the
manner and under the terms so provided.
(c) The Company shall have no obligation to provide
for the continuance, assumption or substitution of the Plan
or the Option by any successor corporation or parent or
subsidiary thereof.
14. WITHHOLDING TAXES. The Optionee hereby agrees
that the Company (or a subsidiary thereof, as the case may
be) may withhold from the Optionee's wages or other
remuneration the appropriate amount of federal, state and
local taxes attributable to the Optionee's exercise of any
<PAGE>
installment of this Option. The Optionee further agrees
that, if the Company (or a subsidiary thereof, as the case
may be) does not withhold an amount from the Optionee's
wages or other remuneration sufficient to satisfy the
Company's (or any such subsidiary's) withholding obligation,
the Optionee will reimburse the Company (or any such
subsidiary) on demand, in cash, for the amount
underwithheld.
15. GOVERNING LAW. This Agreement shall be governed
by and interpreted in accordance with the laws of the State
of California applicable to agreements made and to be
performed entirely within such State and without regard to
the conflict of law principals thereof.
16. AMENDMENTS. No amendment, modification,
termination or waiver of any provision of this Agreement
shall be effective unless the same shall be in writing
signed by all parties hereto.
17. COUNTERPARTS. This Agreement may be signed in
one or more counterparts, each of which shall be deemed to
be an original, but all of which together shall constitute
one and the same instrument.
18. SURVIVAL OF REPRESENTATIONS. All
representations, covenants and warranties of the parties
hereto shall survive the execution of this Agreement.
<PAGE>
IN WITNESS WHEREOF the Company and the Optionee have
caused this instrument to be executed as of the date first
written above, and the Optionee whose signature appears
below acknowledges receipt of a copy of the Plan and
acceptance of an original copy of this Agreement.
THE COMPANY:
MAXICARE HEALTH PLANS, INC.
By: /s/ Peter J. Ratican
Chairman, President and
Chief Executive Officer
OPTIONEE:
/s/ Thomas W. Field, Jr.
<PAGE>
Exhibit 10.62
MAXICARE HEALTH PLANS, INC.
STOCK OPTION AGREEMENT
Maxicare Health Plans, Inc., a Delaware corporation
(the "Company"), hereby grants as of this 20th day of
December, 1993, to Dr. Charles E. Lewis (the "Optionee"), an
option to purchase a maximum of 10,000 shares of its common
stock (the "Common Stock"), at a price per share (the
"Exercise Price") of $9.63 per share (the "Option"), on the
following terms and conditions:
1. GRANT UNDER 1990 STOCK PLAN. The Option is
granted pursuant to and is governed by the Company's 1990
Stock Option Plan (the "Plan") and, unless the context
otherwise requires, terms used and/or defined herein shall
have the same meaning as in the Plan. Determinations made
in connection with this Option pursuant to the Plan shall be
governed by the Plan as it exists on this date. This Option
is not intended to be and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code.
2. EXTENT OF OPTION. As an officer, employee, or
director with the Company, the Optionee's rights in and to
the Option shall vest as of the date hereof, and the
Optionee may, subject to Section 13 hereof, exercise this
<PAGE>
Option immediately for up to the total number of shares set
forth in the first sentence of this Agreement.
While the Optionee continues to serve as an officer,
director or employee of the Company (or a subsidiary
thereof, as the case may be), the Option may be exercised up
to and including the earlier of the date which is five years
from the date this Option is granted (the "Fifth Anniversary
Date"). For purposes of this Agreement, any accrued
installment shall be referred to as an "Accrued
Installment". All of the foregoing rights are subject to
Sections 3 and 4 hereof, as appropriate, if the Optionee
ceases to serve as an officer, director or employee of the
Company (or a subsidiary thereof, as the case may be) or
becomes disabled or dies while serving as an officer,
director or employee of the Company (or a subsidiary
thereof, as the case may be).
3. TERMINATION OF BUSINESS RELATIONSHIP. If the
Optionee ceases to remain an officer, director or employee
of the Company (or subsidiary thereof, as the case may be),
other than by reason of death or disability as defined in
Section 4, any unexercised Accrued Installments of the
Option shall expire and become unexercisable as of the
earlier of (i) the Fifth Anniversary Date, or (ii) thirty
(30) days following the termination of Optionee's employment
<PAGE>
or termination of Optionee's directorship. No further
installments of this Option shall become exercisable. The
Board of Directors of the Company may extend such thirty
(30) day period for a period not to exceed one (1) year
following the Termination Date (as defined in the Plan), but
in no event beyond the applicable Fifth Anniversary Date.
In such a case, the Optionee's only rights hereunder shall
be those which are properly exercised before the termination
of this Option. Any portion of an Option that expires
hereunder shall remain unexercisable and be of no effect
whatsoever after such expiration notwithstanding that such
Optionee may be reemployed by, or again become a director
of, the Company (or a subsidiary thereof, as the case may
be).
4. DEATH OR DISABILITY. In the event of the death
of the Optionee while an officer, employee or director of
the Company (or a subsidiary thereof, as the case may be),
or in the event of termination of employment or directorship
by reason of the Optionee's Disability (as defined in the
Plan), any unexercised Accrued Installments of the Option
granted to Optionee shall expire and become unexercisable as
of the earlier of (i) the Fifth Anniversary Date, or (ii)
the first anniversary date of the Optionee's death (if
applicable) or (iii) the first anniversary date of the
termination of employment or directorship by reason of
<PAGE>
Disability (if applicable). Any such Accrued Installments
of a deceased Optionee may be exercised prior to their
expiration by (and only by) the person or persons to whom
the Optionee's Option rights shall pass by will or by the
laws of descent and distribution. Any installments under a
deceased Optionee's Option that have not accrued as of the
date of his death shall expire and become unexercisable as
of said date of death. For purposes of this Agreement, the
Optionee shall be deemed employed by the Company (or a
subsidiary thereof, as the case may be) during any period of
leave of absence from active employment as authorized by the
Company (or a subsidiary thereof, as the case may be).
5. PARTIAL EXERCISE. Exercise of this Option up to
the extent above stated may be in part at any time and from
time to time with the above limits, except that this Option
may not be exercised for a fraction of a share. Upon the
exercise of the final installment of this Option, the
Optionee shall be entitled to receive cash with respect to
the value of any fraction of a share (in lieu of any said
fractional share).
6. PAYMENT OF EXERCISE PRICE. The Exercise Price
is payable in United States dollars and may be paid in cash
or by certified or cashier's check, or any combination of
the foregoing, equal in amount to the Exercise Price.
<PAGE>
7. INVESTMENT REPRESENTATIONS; RESTRICTIONS ON
TRANSFER.
(a) The Optionee represents, warrants and covenants
to the Company that:
(i) Any Common Stock acquired by the Optionee upon
exercise of the Option will be acquired for the Optionee's
own account and not with a view to resale on distribution in
violation of the Securities Act of 1933, as amended (the
"1933 Act").
(ii) The Optionee has such knowledge and experience
in business and financial matters as to be capable of
utilizing the information which is available to the Optionee
to evaluate the merits and risks of an investment in the
Common Stock, and is able to bear the economic risks of any
Common Stock or other securities which the Optionee may
acquire upon exercise of the Option.
(iii) The Optionee understands that the Option has not
been registered under the Securities Act of 1933, as amended
(the "1933 Act"), that the Option has been issued in
reliance upon certain exemptions contained therein. The
Optionee further understands that because the Option has not
been registered under the 1933 Act or registered or
<PAGE>
qualified pursuant to applicable "blue sky" statutes, the
Optionee may not, and Optionee covenants and agrees that
Optionee will not, sell, offer to sell or otherwise dispose
of any such Option in violation of the 1933 Act or any
applicable "blue sky" or securities law of any state. The
Optionee acknowledges and understands that Optionee has no
independent right to require the Company to register the
Option.
8. METHOD OF EXERCISING OPTION. Subject to the
terms and conditions of this Agreement, this Option may be
exercised by written notice to the Company, at the principal
executive office of the Company, or to such transfer agent
as the Company shall designate. Such notice shall state the
election to exercise this Option and the number of shares in
respect of which it is being exercised and shall be signed
by the Optionee or person or persons entitled to so exercise
this Option. Such notice shall be accompanied by payment of
the full Exercise Price of such shares, and the Company
shall deliver a certificate or certificates representing
such shares as soon as practicable after the notice is
received. The certificate or certificates for the shares as
to which this Option shall have been so exercised shall be
registered in the name of the person or persons so
exercising this Option (or, if this Option shall be
exercised by the Optionee and if the Optionee shall so
<PAGE>
request in the notice exercising this Option, shall be
registered in the name of the Optionee and another person
jointly, with right of if Optionee is entitled to exercise
any unexercised if Optionee is entitled to exercise any
unexercised survivorship) and shall be delivered to or upon
the written order of the person or persons exercising this
Option. In the event this Option shall be exercised,
pursuant to Section 4 hereof, by any person or persons other
than the Optionee, such notice shall be accompanied by
appropriate proof of the right of such person or persons to
exercise this Option. All shares that shall be purchased
upon the exercise of this Option as provided herein shall be
fully paid and non-assessable.
9. OPTION NOT TRANSFERABLE; TRANSFER OF STOCK.
This Option is not transferable or assignable except by will
or by the laws of descent and distribution. During the
Optionee's lifetime, only the Optionee may exercise this
Option.
10. NO OBLIGATION TO EXERCISE OPTION. The grant and
acceptance of this Option imposes no obligation on the
Optionee to exercise it.
11. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither
the Company nor any subsidiary thereof is by the Plan or
this Option obligated to continue to employ Optionee and
<PAGE>
neither the Plan nor this Option shall otherwise interfere
with the Company's or any of the Company's subsidiary's
right to discharge or retire any employee, including
Optionee, at any time.
12. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The
Optionee shall have no rights as a stockholder with respect
to shares subject to this Agreement until a stock
certificate therefore has been issued to the Optionee and is
fully paid for. Except as is expressly provided in the Plan
with respect to certain changes in the capitalization of the
Company, no adjustment shall be made for dividends or
similar rights for which the record date is prior to the
date such stock certificate is issued.
13. REORGANIZATION OF COMPANY.
(a) Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation
of the Company as a result of which the Company's
outstanding Common Stock is changed into or exchanged for
cash or property or securities not of the Company's issue,
or upon a sale of all or substantially all property of the
Company to, or the acquisition of all or substantially all
of the stock of the Company then outstanding by, another
corporation or person, the Plan shall terminate, and the
Option granted hereunder shall terminate; provided, however,
<PAGE>
Optionee shall be entitled, at such time prior to the
consummation of the transaction causing such termination as
the Company shall designate, to exercise the unexercised
installments of the Option.
(b) In addition to and not in lieu of those rights
granted pursuant to subsection 13(a) above, if provisions
shall be made in writing in connection with such transaction
for the continuance of the Plan and/or the assumption of
options theretofore granted, or the substitution for such
options of options covering the stock of the successor
corporation, or a parent or subsidiary thereof with
appropriate adjustments as to the number and kind of shares
and prices, the unexercised Option shall continue in the
manner and under the terms so provided.
(c) The Company shall have no obligation to provide
for the continuance, assumption or substitution of the Plan
or the Option by any successor corporation or parent or
subsidiary thereof.
14. WITHHOLDING TAXES. The Optionee hereby agrees
that the Company (or a subsidiary thereof, as the case may
be) may withhold from the Optionee's wages or other
remuneration the appropriate amount of federal, state and
local taxes attributable to the Optionee's exercise of any
<PAGE>
installment of this Option. The Optionee further agrees
that, if the Company (or a subsidiary thereof, as the case
may be) does not withhold an amount from the Optionee's
wages or other remuneration sufficient to satisfy the
Company's (or any such subsidiary's) withholding obligation,
the Optionee will reimburse the Company (or any such
subsidiary) on demand, in cash, for the amount
underwithheld.
15. GOVERNING LAW. This Agreement shall be governed
by and interpreted in accordance with the laws of the State
of California applicable to agreements made and to be
performed entirely within such State and without regard to
the conflict of law principals thereof.
16. AMENDMENTS. No amendment, modification,
termination or waiver of any provision of this Agreement
shall be effective unless the same shall be in writing
signed by all parties hereto.
17. COUNTERPARTS. This Agreement may be signed in
one or more counterparts, each of which shall be deemed to
be an original, but all of which together shall constitute
one and the same instrument.
18. SURVIVAL OF REPRESENTATIONS. All
representations, covenants and warranties of the parties
hereto shall survive the execution of this Agreement.
<PAGE>
IN WITNESS WHEREOF the Company and the Optionee have
caused this instrument to be executed as of the date first
written above, and the Optionee whose signature appears
below acknowledges receipt of a copy of the Plan and
acceptance of an original copy of this Agreement.
THE COMPANY:
MAXICARE HEALTH PLANS, INC.
By: /s/ Peter J. Ratican
Chairman, President and
Chief Executive Officer
OPTIONEE:
/s/ Dr. Charles E. Lewis
<PAGE>
Exhibit 10.63
MAXICARE HEALTH PLANS, INC.
STOCK OPTION AGREEMENT
Maxicare Health Plans, Inc., a Delaware corporation
(the "Company"), hereby grants as of this 20th day of
December, 1993, to Claude S. Brinegar (the "Optionee"), an
option to purchase a maximum of 10,000 shares of its common
stock (the "Common Stock"), at a price per share (the
"Exercise Price") of $9.63 per share (the "Option"), on the
following terms and conditions:
1. GRANT UNDER 1990 STOCK PLAN. The Option is
granted pursuant to and is governed by the Company's 1990
Stock Option Plan (the "Plan") and, unless the context
otherwise requires, terms used and/or defined herein shall
have the same meaning as in the Plan. Determinations made
in connection with this Option pursuant to the Plan shall be
governed by the Plan as it exists on this date. This Option
is not intended to be and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code.
2. EXTENT OF OPTION. As an officer, employee, or
director with the Company, the Optionee's rights in and to
the Option shall vest as of the date hereof, and the
Optionee may, subject to Section 13 hereof, exercise this
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Option immediately for up to the total number of shares set
forth in the first sentence of this Agreement.
While the Optionee continues to serve as an officer,
director or employee of the Company (or a subsidiary
thereof, as the case may be), the Option may be exercised up
to and including the earlier of the date which is five years
from the date this Option is granted (the "Fifth Anniversary
Date"). For purposes of this Agreement, any accrued
installment shall be referred to as an "Accrued
Installment". All of the foregoing rights are subject to
Sections 3 and 4 hereof, as appropriate, if the Optionee
ceases to serve as an officer, director or employee of the
Company (or a subsidiary thereof, as the case may be) or
becomes disabled or dies while serving as an officer,
director or employee of the Company (or a subsidiary
thereof, as the case may be).
3. TERMINATION OF BUSINESS RELATIONSHIP. If the
Optionee ceases to remain an officer, director or employee
of the Company (or subsidiary thereof, as the case may be),
other than by reason of death or disability as defined in
Section 4, any unexercised Accrued Installments of the
Option shall expire and become unexercisable as of the
earlier of (i) the Fifth Anniversary Date, or (ii) thirty
(30) days following the termination of Optionee's employment
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or termination of Optionee's directorship. No further
installments of this Option shall become exercisable. The
Board of Directors of the Company may extend such thirty
(30) day period for a period not to exceed one (1) year
following the Termination Date (as defined in the Plan), but
in no event beyond the applicable Fifth Anniversary Date.
In such a case, the Optionee's only rights hereunder shall
be those which are properly exercised before the termination
of this Option. Any portion of an Option that expires
hereunder shall remain unexercisable and be of no effect
whatsoever after such expiration notwithstanding that such
Optionee may be reemployed by, or again become a director
of, the Company (or a subsidiary thereof, as the case may
be).
4. DEATH OR DISABILITY. In the event of the death
of the Optionee while an officer, employee or director of
the Company (or a subsidiary thereof, as the case may be),
or in the event of termination of employment or directorship
by reason of the Optionee's Disability (as defined in the
Plan), any unexercised Accrued Installments of the Option
granted to Optionee shall expire and become unexercisable as
of the earlier of (i) the Fifth Anniversary Date, or (ii)
the first anniversary date of the Optionee's death (if
applicable) or (iii) the first anniversary date of the
termination of employment or directorship by reason of
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Disability (if applicable). Any such Accrued Installments
of a deceased Optionee may be exercised prior to their
expiration by (and only by) the person or persons to whom
the Optionee's Option rights shall pass by will or by the
laws of descent and distribution. Any installments under a
deceased Optionee's Option that have not accrued as of the
date of his death shall expire and become unexercisable as
of said date of death. For purposes of this Agreement, the
Optionee shall be deemed employed by the Company (or a
subsidiary thereof, as the case may be) during any period of
leave of absence from active employment as authorized by the
Company (or a subsidiary thereof, as the case may be).
5. PARTIAL EXERCISE. Exercise of this Option up to
the extent above stated may be in part at any time and from
time to time with the above limits, except that this Option
may not be exercised for a fraction of a share. Upon the
exercise of the final installment of this Option, the
Optionee shall be entitled to receive cash with respect to
the value of any fraction of a share (in lieu of any said
fractional share).
6. PAYMENT OF EXERCISE PRICE. The Exercise Price
is payable in United States dollars and may be paid in cash
or by certified or cashier's check, or any combination of
the foregoing, equal in amount to the Exercise Price.
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7. INVESTMENT REPRESENTATIONS; RESTRICTIONS ON
TRANSFER.
(a) The Optionee represents, warrants and covenants
to the Company that:
(i) Any Common Stock acquired by the Optionee upon
exercise of the Option will be acquired for the Optionee's
own account and not with a view to resale on distribution in
violation of the Securities Act of 1933, as amended (the
"1933 Act").
(ii) The Optionee has such knowledge and experience
in business and financial matters as to be capable of
utilizing the information which is available to the Optionee
to evaluate the merits and risks of an investment in the
Common Stock, and is able to bear the economic risks of any
Common Stock or other securities which the Optionee may
acquire upon exercise of the Option.
(iii) The Optionee understands that the Option has not
been registered under the Securities Act of 1933, as amended
(the "1933 Act"), that the Option has been issued in
reliance upon certain exemptions contained therein. The
Optionee further understands that because the Option has not
been registered under the 1933 Act or registered or
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qualified pursuant to applicable "blue sky" statutes, the
Optionee may not, and Optionee covenants and agrees that
Optionee will not, sell, offer to sell or otherwise dispose
of any such Option in violation of the 1933 Act or any
applicable "blue sky" or securities law of any state. The
Optionee acknowledges and understands that Optionee has no
independent right to require the Company to register the
Option.
8. METHOD OF EXERCISING OPTION. Subject to the
terms and conditions of this Agreement, this Option may be
exercised by written notice to the Company, at the principal
executive office of the Company, or to such transfer agent
as the Company shall designate. Such notice shall state the
election to exercise this Option and the number of shares in
respect of which it is being exercised and shall be signed
by the Optionee or person or persons entitled to so exercise
this Option. Such notice shall be accompanied by payment of
the full Exercise Price of such shares, and the Company
shall deliver a certificate or certificates representing
such shares as soon as practicable after the notice is
received. The certificate or certificates for the shares as
to which this Option shall have been so exercised shall be
registered in the name of the person or persons so
exercising this Option (or, if this Option shall be
exercised by the Optionee and if the Optionee shall so
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request in the notice exercising this Option, shall be
registered in the name of the Optionee and another person
jointly, with right of if Optionee is entitled to exercise
any unexercised if Optionee is entitled to exercise any
unexercised survivorship) and shall be delivered to or upon
the written order of the person or persons exercising this
Option. In the event this Option shall be exercised,
pursuant to Section 4 hereof, by any person or persons other
than the Optionee, such notice shall be accompanied by
appropriate proof of the right of such person or persons to
exercise this Option. All shares that shall be purchased
upon the exercise of this Option as provided herein shall be
fully paid and non-assessable.
9. OPTION NOT TRANSFERABLE; TRANSFER OF STOCK.
This Option is not transferable or assignable except by will
or by the laws of descent and distribution. During the
Optionee's lifetime, only the Optionee may exercise this
Option.
10. NO OBLIGATION TO EXERCISE OPTION. The grant and
acceptance of this Option imposes no obligation on the
Optionee to exercise it.
11. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither
the Company nor any subsidiary thereof is by the Plan or
this Option obligated to continue to employ Optionee and
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neither the Plan nor this Option shall otherwise interfere
with the Company's or any of the Company's subsidiary's
right to discharge or retire any employee, including
Optionee, at any time.
12. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The
Optionee shall have no rights as a stockholder with respect
to shares subject to this Agreement until a stock
certificate therefore has been issued to the Optionee and is
fully paid for. Except as is expressly provided in the Plan
with respect to certain changes in the capitalization of the
Company, no adjustment shall be made for dividends or
similar rights for which the record date is prior to the
date such stock certificate is issued.
13. REORGANIZATION OF COMPANY.
(a) Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation
of the Company as a result of which the Company's
outstanding Common Stock is changed into or exchanged for
cash or property or securities not of the Company's issue,
or upon a sale of all or substantially all property of the
Company to, or the acquisition of all or substantially all
of the stock of the Company then outstanding by, another
corporation or person, the Plan shall terminate, and the
Option granted hereunder shall terminate; provided, however,
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Optionee shall be entitled, at such time prior to the
consummation of the transaction causing such termination as
the Company shall designate, to exercise the unexercised
installments of the Option.
(b) In addition to and not in lieu of those rights
granted pursuant to subsection 13(a) above, if provisions
shall be made in writing in connection with such transaction
for the continuance of the Plan and/or the assumption of
options theretofore granted, or the substitution for such
options of options covering the stock of the successor
corporation, or a parent or subsidiary thereof with
appropriate adjustments as to the number and kind of shares
and prices, the unexercised Option shall continue in the
manner and under the terms so provided.
(c) The Company shall have no obligation to provide
for the continuance, assumption or substitution of the Plan
or the Option by any successor corporation or parent or
subsidiary thereof.
14. WITHHOLDING TAXES. The Optionee hereby agrees
that the Company (or a subsidiary thereof, as the case may
be) may withhold from the Optionee's wages or other
remuneration the appropriate amount of federal, state and
local taxes attributable to the Optionee's exercise of any
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installment of this Option. The Optionee further agrees
that, if the Company (or a subsidiary thereof, as the case
may be) does not withhold an amount from the Optionee's
wages or other remuneration sufficient to satisfy the
Company's (or any such subsidiary's) withholding obligation,
the Optionee will reimburse the Company (or any such
subsidiary) on demand, in cash, for the amount
underwithheld.
15. GOVERNING LAW. This Agreement shall be governed
by and interpreted in accordance with the laws of the State
of California applicable to agreements made and to be
performed entirely within such State and without regard to
the conflict of law principals thereof.
16. AMENDMENTS. No amendment, modification,
termination or waiver of any provision of this Agreement
shall be effective unless the same shall be in writing
signed by all parties hereto.
17. COUNTERPARTS. This Agreement may be signed in
one or more counterparts, each of which shall be deemed to
be an original, but all of which together shall constitute
one and the same instrument.
18. SURVIVAL OF REPRESENTATIONS. All
representations, covenants and warranties of the parties
hereto shall survive the execution of this Agreement.
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IN WITNESS WHEREOF the Company and the Optionee have
caused this instrument to be executed as of the date first
written above, and the Optionee whose signature appears
below acknowledges receipt of a copy of the Plan and
acceptance of an original copy of this Agreement.
THE COMPANY:
MAXICARE HEALTH PLANS, INC.
By: /s/ Peter J. Ratican
Chairman, President and
Chief Executive Officer
OPTIONEE:
/s/ Claude S. Brinegar
<PAGE>
Exhibit 10.64
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), dated as of January
1, 1994, is made by and between Maxicare Health Plans, Inc., a
Delaware corporation (the "Company"), and David Hammons, an
individual ("Employee").
R E C I T A L S
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WHEREAS, Employee is knowledgeable and skillful in the
Company's business;
WHEREAS, the Company wishes to retain the services of
Employee as Vice President, Administrative Services of the
Company and Employee has agreed to render services as such;
WHEREAS, Employee is willing to be employed by the Company
under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, and for other good and valuable
consideration, the receipt of which is hereby acknowledged the
parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following
capitalized terms shall have the following meanings, unless
otherwise expressly provided or unless the context otherwise
requires:
(a) "Board of Directors" means the Board of Directors of
the Company.
(b) "Cause" means, as used with respect to the involuntary
termination of Employee:
(i) The willful and continued failure by Employee
to substantially perform his duties pursuant to the terms of
this Agreement without good cause; or
(ii) The willful engaging by Employee in misconduct
or inaction materially injurious to the Company; or
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(iii) The conviction of Employee for a felony or of a
crime involving moral turpitude.
No act, or failure to act, on the Employee's part shall be
considered "willful" if done or omitted to be done by the
Employee in good faith and with reasonable belief that the
Employee's action or omission was in the best interest of the
Company.
(c) "Change of Control" means (i) the merger or
consolidation of the Company with or into any other person or
entity other than an affiliate or subsidiary of the Company if
upon the consummation of the transaction, holders of the
Company's equity securities, immediately prior to such
transaction own less than fifty percent (50%) of the equity; or
(ii) the sale or transfer by the Company of all or substantially
all of its assets.
(d) "Incapacity" means the absence of the Employee from
his employment or the inability of Employee to perform his
duties pursuant to this Agreement by reason of mental or
physical illness, disability or incapacity for a period of
thirty (30) consecutive days and such determination is based
upon a certificate as to such mental or physical disability
issued by a licensed physician and/or psychiatrist, as the case
may be, employed by the Company.
2. EMPLOYMENT, SERVICES AND DUTIES. The Company hereby
employs Employee as Senior Vice President, Administrative
Services. Subject to his continued employment as such by the
Board of Directors, Employee shall have and perform the duties
and have the powers, authority and responsibilities ordinarily
associated with a person in such position and shall be subject
to the direction of the Company's Board of Directors. Employee
shall render his services at such locations as the Company's
Board of Directors may designate.
3. ACCEPTANCE OF EMPLOYMENT. Employee hereby accepts
employment hereunder and agrees to devote his full time to the
Company's business and shall in no way be involved in any
<PAGE>
activities whatsoever which might interfere with his employment
with the Company.
4. COMPENSATION. As compensation for all services to be
rendered by Employee hereunder, the Company agrees to provide
Employee with the following:
(a) BASE SALARY. The Company shall pay to Employee a base
salary at the rate of $134,000.00 per annum, with such increases
and bonuses, as may be determined from time to time by the Chief
Executive Officer of the Company. Said salary shall be payable
in equal semi-monthly installments or in such other installments
as may be agreed upon between the parties.
(b) STOCK OPTIONS. The Company shall grant to Employee an
option (the "Stock Option") to purchase 5,000 shares of the
Company's Common Stock. The Stock Option shall be granted
pursuant to the terms of the Company's 1990 Stock Option Plan
and a Stock Option Agreement in the form attached hereto as
Exhibit A. Employee acknowledges that he is entitled to only
one such Stock Option grant pursuant to this Agreement.
Employee's interest in and rights to the Stock Option shall vest
in accordance with the terms of the Stock Option Agreement.
5. BENEFITS. In addition to the compensation provided
for in Section 4 of this Agreement, Employee shall have the
right to participate in any profit-sharing, pension, life,
health and accident insurance, or other employee benefit plans
presently adopted or which hereafter may be adopted by the
Company in a manner comparable to those offered or available to
other employees of the Company. Employee shall be entitled to
four (4) weeks annual vacation time, during which time his
compensation will be paid in full. Unused vacation days in any
year(s) may be carried over to a subsequent year(s) provided,
however, the cumulative number of vacation days which may be
carried over in any one year shall not exceed four (4) weeks.
6. EXPENSES. The Company shall promptly reimburse
Employee for all reasonable travel, hotel, entertainment and
other expenses incurred by Employee in the discharge of
<PAGE>
Employee's duties hereunder, upon receipt from Employee of
vouchers, receipts or other reasonable substantiation of such
expenses acceptable to the Company.
7. TERM OF EMPLOYMENT. The term of employment hereunder
shall be for a period of one (1) year, commencing as of the date
of this Agreement, unless earlier terminated as herein provided.
This Agreement shall terminate upon the occurrence of any of the
following events:
(a) The death of Employee;
(b) Employee voluntarily leaves the employ of the Company,
with or without the consent of the Company;
(c) The Incapacity of Employee;
(d) The Company terminates this Agreement for Cause;
(e) The Company terminates this Agreement for any reason
other than as set forth in Sections 7(a), 7(c) or 7(d) hereof;
or
(f) The appointment of a trustee for the Company for the
purpose of liquidating and winding up the Company pursuant to
Chapter 7 of the Federal Bankruptcy Code.
8. COMPENSATION UPON TERMINATION. In the event this
Agreement is terminated pursuant to Section 7, the Company shall
pay to Employee such compensation as Employee is entitled to
receive pursuant to Section 4, prorated through the date of said
termination. In the event that such termination arises under
Section 7(a), Employee's estate shall be entitled to receive
severance compensation equal to such amount of Employee's annual
base salary as would have been paid over a thirty (30) day
period. In the event that such termination arises under Section
7(e), Employee shall be entitled to receive severance
compensation in an amount equal to such amount of Employee's
annual base salary as would have been paid over a four (4) month
period. In the event that this Agreement is terminated by the
Company or its successor in interest in connection with, or as a
result of, a Change in Control or for any reason other than as
set forth in Sections 7(a) - (d) hereof within six (6) months of
<PAGE>
a Change in Control, Employee shall, in lieu of any severance
compensation payable pursuant to the immediately preceding
sentence, be entitled to receive severance compensation in an
amount equal to such amount of Employee's annual base salary as
would have been paid over a four (4) month period. Any and all
severance amounts paid pursuant to the provisions of this
Section 8 shall be paid in one lump sum installment. The
treatment of Employee's Stock Options shall be governed by the
terms of the Company's 1990 Stock Option Plan and the Stock
Option Agreement.
9. COVENANT NOT TO COMPETE. Employee covenants and
agrees that during the term of his employment by the Company
pursuant to this Agreement he will not, directly or indirectly,
own, manage, operate, join, control or become employed by, or
render any services of any advisory nature or otherwise, or
participate in the ownership, management, operation or control
of, any business which competes with the business of the Company
or any of its affiliates. Notwithstanding the foregoing,
Employee shall not be prevented from investing his assets in
such form or manner as will not require any services on the part
of Employee in the operation of the affairs of a company in
which investments are made, provided such company is not engaged
in a business competitive to the Company, or if it is in
competition with the Company, provided its stock is publicly
traded and Employee owns less than one percent (1%) of the
outstanding stock of that company.
10. CONFIDENTIALITY. Employee covenants and agrees that
he will not at any time during or after the termination of his
employment by the Company reveal, divulge or make known to any
person, firm or corporation any information, knowledge or data
of a proprietary nature relating to the business of the Company
or any of its affiliates which is not or has not become
generally known or public. Employee shall hold, in a fiduciary
capacity, for the benefit of the Company, all information,
knowledge or data of a proprietary nature, relating to or
<PAGE>
concerned with, the operations, customers, developments, sales,
business and affairs of the Company and its affiliates which is
not generally known to the public and which is or was obtained
by the Employee during his employment by the Company. Employee
recognizes and acknowledges that all such information, knowledge
or data is a valuable and unique asset of the Company and
accordingly he will not discuss or divulge any such information,
knowledge or data to any person, firm, partnership, corporation
or organization other than to the Company, its affiliates,
designees, assignees or successors or except as may otherwise be
required by the law, as ordered by a court or other governmental
body of competent jurisdiction, or in connection with the
business and affairs of the Company.
11. EQUITABLE REMEDIES. In the event of a breach or
threatened breach by Employee of any of his obligations under
Sections 9 and 10 hereof, Employee acknowledges that the Company
may not have an adequate remedy at law and therefore it is
mutually agreed between Employee and the Company that in
addition to any other remedies at law or in equity which the
Company may have, the Company shall be entitled to seek in a
court of law and/or equity a temporary and/or permanent
injunction restraining Employee from any continuing violation or
breach of this Agreement.
12. MISCELLANEOUS.
(a) This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company. This
Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company or by any merger,
reorganization or other transaction in which the Company is not
the surviving or resulting corporation or upon any transfer of
all or substantially all of the assets of Company in the event
of any such merger, or transfer of assets. The provisions of
this Agreement shall be binding upon and shall inure to the
benefit of the surviving business entity or the business entity
to which such assets shall be transferred in the same manner and
<PAGE>
to the same extent that the Company would be required to perform
as if no such transaction had taken place.
Neither this Agreement nor any rights arising hereunder may
be assigned or pledged by Employee. Employee's rights to the
compensation provided for under Section 4 of this Agreement (as
may be limited by Section 8 of the Agreement) and to the
reimbursement for expenses under Section 6 hereof, shall
continue, despite the fact that Employee may cease to be
employed by the Company, and shall survive the termination of
this Agreement regardless of cause. This Agreement shall inure
to the benefit of and be enforceable by Employee's personal or
legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
(b) Except as otherwise provided by law or elsewhere
herein, Employee shall be entitled to all benefits as set forth
herein notwithstanding the occurrence of the following events:
(i) any act of force majeure which materially and
adversely affect the Company's business and operations,
including but not limited to, the Company having sustained a
material loss, whether or not insured, by reason of fire,
earthquake, flood, epidemic, explosion, accident, calamity or
other act of God;
(ii) any strike or labor dispute or court or
government action, order or decree;
(iii) a banking moratorium having been declared by
federal or state authorities;
(iv) an outbreak of major armed conflict, blockade,
embargo, or other international hostilities or restraints or
orders of civic, civil defense, or military authorities, or
other national or international calamity having occurred;
(v) any act of public enemy, riot or civil
disturbance or threat thereof; or
(vi) a pending or threatened legal or governmental
proceeding or action relating generally to the Company's
business, or a notification having been received by the Company
<PAGE>
of the threat of any such proceeding or action, which could
materially adversely affect the Company.
(c) Except as expressly provided herein, this Agreement
contains the entire understanding between the parties with
respect to the subject matter hereof, and may not be modified,
altered or amended except by an instrument in writing signed by
the parties hereto. This Agreement supersedes all prior
agreements of the parties with respect to the subject matter
hereof. In the event of termination of employment of Employee
pursuant to this Agreement, the arrangements provided for by
this Agreement, by any Stock Option Agreement or other written
agreement between the Company or any of its affiliates and
Employee in effect at the time, and by any other applicable
benefit plan of the Company or any of its affiliates, will
constitute the entire obligation of the Company to the Employee
and performance thereof by the Company will constitute full
settlement of any and all claims, whether in contract or tort,
that Employee might otherwise assert against the Company or any
of its affiliates on account of such termination.
(d) This Agreement shall be construed in accordance with
the laws of the State of California applicable to agreements
made and to be performed entirely within such state and without
regard to the conflict of law principals thereof.
(e) Nothing in the Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do
any act in violation of applicable law. The Company's inability
pursuant to court order to perform its obligations under this
Agreement shall not constitute a breach of this Agreement. If
any provision of this Agreement is invalid or unenforceable, the
remainder of this Agreement shall nevertheless remain in full
force and effect. If any provision is held invalid or
unenforceable with respect to particular circumstances, it
shall, nevertheless, remain in full force and effect in all
other circumstances.
<PAGE>
(f) With the exception of disputes arising under or with
respect to Sections 9 or 10 hereof, any and all disputes
hereunder shall be resolved by arbitration. Any party hereto
electing to commence an action shall give written notice to the
other parties hereto of such election. The dispute shall be
settled by arbitration in accordance with the then rules of the
American Arbitration Association; provided, however, in the
event the parties are unable to agree on an arbitrator within
twenty (20) days after receipt of the aforementioned notice of
arbitration, a single arbitrator shall be selected by the Chief
Judge of the Superior Court of the State of California for the
County of Los Angeles. The award of such arbitrator may be
confirmed or enforced in any court of competent jurisdiction.
The costs and expenses of the arbitrator, including the
attorney's fees and costs of each of the parties, shall be
apportioned between the parties by such arbitrator, based upon
such arbitrator's determination of the merits of their
respective positions. With respect to such arbitration, the
parties shall have those rights of discovery as may be granted
by the arbitrator in accordance with California law.
(g) Any notice to the Company required or permitted
hereunder shall be given in writing to the Company, either by
personal service, telex, telecopier or, if by mail, by
registered or certified mail return receipt requested, postage
prepaid, duly addressed to the Secretary of the Company at its
then principal place of business. Any such notice to Employee
shall be given in a like manner, and if mailed shall be
addressed to Employee at Employee's home address then shown in
the files of the Company. For the purpose of determining
compliance with any time limit herein, a notice shall be deemed
given on the fifth day following the postmarked date, if mailed,
or the date of delivery if personally delivered.
(h) A waiver by either party of any term or condition of
this Agreement or any breach thereof, in any one instance, shall
<PAGE>
not be deemed or construed to be a waiver of such term or
condition or of any subsequent breach thereof.
(i) The paragraph and subparagraph headings contained in
this Agreement are solely for convenience and shall not be
considered in its interpretation.
(j) This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the day and year first written above.
COMPANY:
MAXICARE HEALTH PLANS, INC.,
a Delaware corporation
By: /s/ Peter J. Ratican
Title: Chairman, President and
Chief Executive Officer
EMPLOYEE:
/s/ David Hammons
<PAGE>
Exhibit 10.65
MAXICARE HEALTH PLANS, INC.
STOCK OPTION AGREEMENT
Maxicare Health Plans, Inc., a Delaware corporation (the
"Company"), hereby grants as of this 20th day of May, 1991, to
Dave Hammons (the "Optionee"), an option to purchase a maximum of
10,000 shares of its common stock (the "Common Stock"), at a
price per share (the "Exercise Price") equal to the weighted
average price per share for the first twenty trading days after
December 5, 1990, of (i) the closing bid price of the Company's
Common stock in the principal national securities exchange in
which the Common Stock is traded, or (ii) if the Company's Common
Stock is not traded on a national securities exchange, the last
reported sale price of the Common Stock on the NASDAQ National
Market List, or (iii) if the common stock is not reported on the
NASDAQ National Market List, the closing bid price (or average of
bid prices) last quoted by an established quotation service for
over-the-counter securities (the "Option"), on the following
terms and conditions:
1. GRANT UNDER 1990 STOCK PLAN. This Option is
granted pursuant to and is governed by the Company's 1990 Stock
Option Plan (the "Plan") and, unless the context otherwise
requires, terms used and/or defined herein shall have the same
meaning as in the Plan. Determinations made in connection with
this Option pursuant to the Plan shall be governed by the Plan as
it exists on this date.
<PAGE>
2. EXTENT OF OPTION. If the Optionee has continued
to serve the Company in the capacity of an officer, employee, or
director with the Company on the following dates, the Optionee
may, subject to Section 13 hereof, exercise this Option for the
portion of the total number of shares set forth opposite the
applicable date:
December 5, 1992 One-third (1/3) of the total
number of shares subject to this
option
December 5, 1993 An additional one third (1/3) of
the total number of shares
subject to this option
December 5, 1994 An additional one-third (1/3) of
the total number of shares
subject to this option
The foregoing right are cumulative and, while the Optionee
continues to serve as an officer, director or employee of the
Company, may be exercised up to and including the earlier of the
date which is 5 years from December 5, 1990 or the expiration
date of the Plan (the earlier of such dates being hereinafter
referred to as the "Option Expiration Date"). For purposes of
this Agreement, any accrued installment shall be referred to as
"Accrued Installment". All of the foregoing rights are subject
to Sections 3 and 4 hereof, as appropriate, if the Optionee
ceases to serve as an officer, director or employee of the
Company or becomes disabled or dies while serving as an officer,
director or employee of the Company.
3. TERMINATION OF BUSINESS RELATIONSHIP. If the
Optionee ceases to remain an officer, director or employee of the
Company, other than by reason of death or disability as defined
in Section 4, any unexercised Accrued Installments of the Option
<PAGE>
shall expire and become unexercisable as of the earlier of (i)
the Option Expiration Date, or (ii) thirty (30) days following
the termination of Optionee's employment or termination of
Optionee's directorship. No further installment of this Option
shall become exercisable. The Board of Directors of the Company
may extend such thirty (30) day period for a period not to exceed
one (1) year following the Termination Date, (as defined in the
Plan), but in no event beyond the applicable Option Expiration
Date. In such a case, the Optionee's only rights hereunder shall
be those which are properly exercised before the termination of
this Option. Any portion of an Option that expires hereunder
shall remain unexercisable and be of no effect whatsoever after
such expiration notwithstanding that such Optionee may be
reemployed by, or again become a director of, the Company.
4. DEATH OR DISABILITY. In the event of the death of
the Optionee while an officer, employee or director of the
Company, or in the event of termination of employment or
directorship by reason of the Optionee's Disability (as defined
in the Plan), any unexercised Accrued Installments of the Option
granted to the Optionee shall expire and become unexercisable as
of the earlier of (i) the Option Expiration Date, or (ii) the
first anniversary date of the Optionee's death (if applicable) or
(iii) the first anniversary date of the termination of employment
or directorship by reason of Disability (if applicable). Any
such Accrued Installments of a deceased Optionee may be exercised
prior to their expiration by (and only by) the person or persons
to whom the Optionee's Option rights shall pass by will or by the
laws of descent and distribution. Any installments under a
deceased Optionee's Option that have not accrued as of the date
<PAGE>
of his/her death shall expire and become unexercisable as of said
date of death. For purposes of this Agreement, the Optionee
shall be deemed employed by the Company during any period of
leave of absence from active employment as authorized by the
Company.
5. PARTIAL EXERCISE. Exercise of this Option up to
the extent above stated may be made in part at any time and from
time to time with the above limits, except that this Option may
be exercised for a fraction of a share. Upon the exercise of the
final installment of this Option, the Optionee shall be entitled
to receive cash with respect to the value of any fraction of a
share (in lieu of any said fractional share).
6. PAYMENT OF EXERCISE PRICE. The Exercise Price is
payable in United States Dollars and may be paid in cash or by
certified or cashier's check, or any combination of the
foregoing, equal in the amount to the Exercise Price.
7. INVESTMENT REPRESENTATIONS; RESTRICTIONS ON
TRANSFER.
(a) The Optionee represents, warrants and covenants to
the Company that:
(i) Any Common Stock acquired by the Optionee upon
exercise of the Option will be acquired of the Optionee's own
account and not with a view of resale or distribution in
violation of the Securities Act of 1933, as amended (the "1933
Act").
<PAGE>
(ii) The Optionee has such knowledge and experience in
business and financial matters as to be capable of utilizing the
information which is available to the Optionee to evaluate the
merits and risks of an investment in the Common Stock, and is
able to tear the economic risks of any Common Stock or other
securities which the Optionee may acquire upon exercise of the
Option.
(iii) The Optionee understands that neither the Option
nor the Common Stock to be issued upon exercise of the Option
have been registered under the Securities Act of 1933, as amended
(the "1933 Act"), that the Option has been, and the shares of
Common Stock issuable upon exercise of the Option will be, issued
in reliance upon certain exemptions contained therein, and that
the Company's reliance on such exemption is predicated on
Optionee's representations set forth herein. The Optionee
further understands that because neither the Option nor the
shares of Common Stock to be issued up on exercise of the Option
have been registered under the 1993 Act, the Optionee may not and
Optionee covenants and agrees that Optionee will not, sell, offer
to sell or otherwise dispose of any such securities in violation
of the 1933 Act or any applicable "blue sky" or securities law of
any state. The Optionee acknowledges and understands that
Optionee has no independent right to require the Company to
register the Option or the Common Stock to be issued upon
exercise of the Option.
<PAGE>
(b) The Optionee consents to the placing of
restrictive legends in substantially the following form on any
stock certificate(s) representing Common Stock issued upon
exercise of the Option:
"The Shares represented by this
Certificate have not been registered under the
Securities Act of 1933, as amended, or the
blue sky laws of any state. These shares have
been acquired for investment and not with a
view to distribution or resale, and may not be
sold, mortgaged, pledged, hypothecated or
otherwise transferred without an effective
registration statement for such shares under
the Securities Act of 1933, as amended, or
until the issuer has been furnished with an
opinion of counsel for the registered owner of
these shares, reasonably satisfactory to
counsel for the issurer, that such sale,
transfer or disposition is exempt from the
registration or qualification provisions of
the Securities Act of 1933, as amended, or the
blue sky laws of any state having
jurisdiction."
(c) The Optionee also hereby consents and agrees to
the placing of stop transfer instructions against any subsequent
transfer(s) of shares of Common Stock issued upon exercise of the
Option. The Company hereby agrees to remove the legend and stop
transfer instructions upon receipt of an opinion of counsel from
the registered owner of the shares of Common Stock issued upon
exercises of the Option, in form and substance acceptable to
counsel for the Company, to the effect that such shares may be
transferred without violation of the 1933 Act or the blue sky
laws of any state having jurisdiction.
8. METHOD OF EXERCISING OPTION. No Option may be
exercised in whole or in part until two (2) years after December
5, 1990. Subject to the terms and conditions of this Agreement,
this Option may be exercised by written notice to the Company, at
<PAGE>
the principal executive office of the Company, or to such
transfer agent as the Company shall designate. Such notice shall
state the election to exercise this Option and the number of
shares in respect of which it is being exercised and shall be
signed by the Optionee or person or persons entitled to so
exercise this Option. Such notice shall be accompanied by
payment of the full Exercise Price of such shares, and the
Company shall deliver a certificate or certificates representing
such shares as soon as practicable after the notice is received.
The certificate or certificates for the shares as to which this
Option shall have been so exercised shall be registered in the
name of the person or persons so exercising this Option (or, if
this Option shall be exercised by the Optionee and if the
Optionee shall so request in the notice exercising this Option,
shall be registered in the name of the Optionee and another
person jointly, with right of survivorship) and shall be
delivered to or upon the written order of the person or persons
exercising this Option. In the event this Option shall be
exercised, pursuant to Section 4 hereof, by any person or persons
other than the Optionee, such notice shall be accompanied by
appropriate proof of the right of such person or persons to
exercise this Option. All shares that shall be purchased upon
the exercise of this Option as provided herein shall be fully
paid and non-assessable.
9. OPTION NOT TRANSFERABLE; TRANSFER OF STOCK. This
Option is not transferable or assignable except by will or by the
laws of descent and distribution. During the Optionee's
lifetime, only the Optionee may exercise this Option. Common
Stock issued pursuant to the exercise of this Option or any
<PAGE>
interest in such Common Stock, may be sold, assigned, gifted,
pledged, hypothecated, encumbered or otherwise transferred to
alienated in any manner by the holder(s) thereof, subject,
however, to the provisions of the Plan, including any
representations or warranties requested under Section 22 thereof,
and also subject to compliance with any applicable federal,
state, local or other law, regulations or rule governing the sale
or transfer of stock or securities, and provided, further than in
all cases, the Optionee may not sell or otherwise transfer shares
acquired upon the exercise of an Option for a period of six (6)
months following the date of acquisition (within the meaning of
Section 16-b (3) of the Security Exchange Act of 1934) of such
Option without the prior written consent of the Board.
10. NO OBLIGATION TO EXERCISE OPTION. The grant and
acceptance of this Option imposes no obligation on the Optionee
to exercise it.
11. NO OBLIGATION TO CONTINUE EMPLOYMENT. The Company
is not by the Plan or this Option obligated to continue to employ
Optionee and neither the Plan nor this Option shall otherwise
interfere with the Company's right to discharge or retire any
employee, including Optionee, at any time.
12. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The
Optionee shall have no rights as a stockholder with respect to
shares subject to this Agreement until a stock certificate
therefore has been issued to the Optionee and is fully paid for.
Except as is expressly provided in the Plan with respect to
<PAGE>
certain changes in the capitalization of the Company, no
adjustment shall be made for dividends or similar rights for
which the record date is prior to the date such stock certificate
is issued.
13. REORGANIZATION OF COMPANY.
(a) Upon the dissolution or liquidation of Company, or
upon a reorganization, merger or consolidation of the Company as
a result of which the Company's outstanding Common Stock is
changed into or exchanged for cash or property or securities not
of the Company's issue, or upon a sale of all or substantially
all property of the Company to, or the acquisition of all or
substantially all of the stock of the Company then outstanding
by, another corporation or person, the Plan shall terminate, and
the Option granted hereunder shall terminate; provided, however,
if Optionee is entitled to exercise any unexercised installment
of the Option then outstanding, then Optionee may, at such time
prior to the consummation of the transaction causing such
termination as the Company shall designate, exercise the
unexercised installments of the Option including all unaccrued
installments thereof which would, but for this subsection 13(a),
not yet be exercisable. Notwithstanding the foregoing, in the
event that any transaction causing such termination is not
consummated, any unexercised unaccrued installments that had
become exercisable solely by reason of the provisions of this
subsection 13(a) shall again become unaccrued and unexercisable
as of said termination of such transaction, subject, however, to
such installments accruing pursuant to the normal accrual
schedule provided in the terms under which the Option was
granted.
<PAGE>
(b) In addition to and not in lieu of those rights
granted pursuant to subsection 13(a) above, if provisions shall
be made in writing in connection with such transaction for the
continuance of the Plan and/or the assumption of options
theretofore granted, or the substitution for such options of
options covering the stock of the successor corporation, or a
parent or subsidiary thereof with appropriate adjustments as to
the number and kind of shares and prices, the unexercised Option
shall continue in the manner and under the terms so provided.
(c) The Company shall have no obligation to provide
for the continuance, assumption or substitution of the Plan or
the Option by any successor corporation or parent or subsidiary
thereof.
14. WITHHOLDING TAXES. The Optionee hereby agrees
that the Company may withhold from the Optionee's wages or other
remuneration the appropriate amount of federal, state and local
taxes attributable to the Optionee's exercise of any installment
of this Option. The Optionee further agrees that, if the Company
does not withhold an amount from the Optionee's wages or other
remuneration sufficient to satisfy the Company's withholding
obligation, the Optionee will reimburse the Company on demand, in
cash, for the amount underwithheld.
15. GOVERNING LAW. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of
California applicable to agreements made and to be performed
entirely within such State and without regard to the conflict of
law principals thereof.
<PAGE>
16. AMENDMENTS. No amendment, modification,
termination or waiver of any provision of this Agreement shall be
effective unless the same shall be in writing signed by all
parties hereto.
17. COUNTERPARTS. This Agreement may be signed in one
or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the
same instrument.
18. SURVIVAL OF REPRESENTATIONS. All representations,
covenants and warranties of the parties hereto shall survive the
execution of this Agreement.
IN WITNESS WHEREOF the Company and the Optionee have
caused this instrument to be executed as of the date first
written above, and the Optionee whose signature appears below
acknowledges receipt of a copy of the Plan and acceptance of an
original copy of this Agreement.
THE COMPANY:
MAXICARE HEALTH PLANS, INC.
By: /s/ Peter J. Ratican
President and Chief
Executive Officer
OPTIONEE:
/s/ Dave Hammons
<PAGE>
Exhibit 10.66
MAXICARE HEALTH PLANS, INC.
STOCK OPTION AGREEMENT
Maxicare Health Plans, Inc., a Delaware corporation (the
"Company"), hereby grants as of this 20th day of December, 1991,
to Dave Hammons (the "Optionee"), an option to purchase a maximum
of 5,000 shares of its common stock (the "Common Stock"), at a
price per share (the "Exercise Price") of $8.25 per share (the
"Option"), on the following terms and conditions:
1. GRANT UNDER 1990 STOCK PLAN. This Option is
granted pursuant to and is governed by the Company's 1990 Stock
Option Plan (the "Plan") and, unless the context otherwise
requires, terms used and/or defined herein shall have the same
meaning as in the Plan. Determinations made in connection with
this Option pursuant to the Plan shall be governed by the Plan as
it exists on this date. This Option is not intended to be and
shall not be treated as an incentive stock option under Section
422 of the Internal Revenue Code.
2. EXTENT OF OPTION. If the Optionee has continued
to serve the Company in the capacity of an officer, employee, or
director with the Company (or a subsidiary thereof, as the case
may be) on the following dates, the Optionee may, subject to
<PAGE>
Section 13 hereof, exercise this Option for the portion of the
total number of shares set opposite the applicable date:
Less than one year from the date hereof - 0
One year but less than two years from
the date hereof - 1,667
Two years but less than three years
from the date hereof - 1,667
Three years but less than four years
from the date hereof - 1,666
The foregoing right are cumulative and, while the Optionee
continues to serve as an officer, director or employee of the
Company (or a subsidiary thereof, as the case may be), may be
exercised up to and including the earlier of the date which is
five years from the date this Option is granted (the "Fifth
Anniversary Date"). For purposes of this Agreement, any accrued
installment shall be referred to as "Accrued Installment". All
of the foregoing rights are subject to Sections 3 and 4 hereof,
as appropriate, if the Optionee ceases to serve as an officer,
director or employee of the Company (or a subsidiary thereof, as
the case may be) or becomes disabled or dies while serving as an
officer, director or employee of the Company (or a subsidiary
thereof, as the case may be).
3. TERMINATION OF BUSINESS RELATIONSHIP. If the
Optionee ceases to remain an officer, director or employee of the
Company (or a subsidiary thereof, as the case may be), other than
by reason of death or disability as defined in Section 4, any
unexercised Accrued Installments of the Option shall expire and
become unexercisable as of the earlier of (i) the Option
Expiration Date, or (ii) thirty (30) days following the
<PAGE>
termination of Optionee's employment or termination of Optionee's
directorship. No further installment of this Option shall become
exercisable. The Board of Directors of the Company may extend
such thirty (30) day period for a period not to exceed one (1)
year following the Termination Date (as defined in the Plan), but
in no event beyond the applicable Option Expiration Date. In
such a case, the Optionee's only rights hereunder shall be those
which are properly exercised before the termination of this
Option. Any portion of an Option that expires hereunder shall
remain unexercisable and be of no effect whatsoever after such
expiration notwithstanding that such Optionee may be reemployed
by, or again become a director of, the Company (or a subsidiary
thereof, as the case may be).
4. DEATH OR DISABILITY. In the event of the death of
the Optionee while an officer, employee or director of the
Company (or a subsidiary thereof, as the case may be), or in the
event of termination of employment or directorship by reason of
the Optionee's Disability (as defined in the Plan), any
unexercised Accrued Installments of the Option granted to
Optionee shall expire and become unexercisable as of the earlier
of (i) the Fifth Anniversary Date, or (ii) the first anniversary
date of the Optionee's death (if applicable) or (iii) the first
anniversary date of the termination of employment or directorship
by reason of Disability (if applicable). Any such Accrued
Installments of a deceased Optionee may be exercised prior to
their expiration by (and only by) the person or persons to whom
the Optionee's Option rights shall pass by will or by the laws of
descent and distribution. Any installments under a deceased
Optionee's Option that have not accrued as of the date of his/her
<PAGE>
death shall expire and become unexercisable as of said date of
death. For purposes of this Agreement, the Optionee shall be
deemed employed by the Company (or a subsidiary thereof, as the
case may be) during any period of leave of absence from active
employment as authorized by the Company (or a subsidiary thereof,
as the case may be).
5. PARTIAL EXERCISE. Exercise of this Option up to
the extent above stated may be made in part at any time and from
time to time with the above limits, except that this Option may
be exercised for a fraction of a share. Upon the exercise of the
final installment of this Option, the Optionee shall be entitled
to receive cash with respect to the value of any fraction of a
share (in lieu of any said fractional share).
6. PAYMENT OF EXERCISE PRICE. The Exercise Price is
payable in United States Dollars and may be paid in cash or by
certified or cashier's check, or any combination of the
foregoing, equal in the amount to the Exercise Price.
7. INVESTMENT REPRESENTATIONS; RESTRICTIONS ON
TRANSFER.
(a) The Optionee represents, warrants and covenants to
the Company that:
(i) Any Common Stock acquired by the Optionee upon
exercise of the Option will be acquired of the Optionee's own
account and not with a view of resale or distribution in
violation of the Securities Act of 1933, as amended (the "1933
Act").
<PAGE>
(ii) The Optionee has such knowledge and experience in
business and financial matters as to be capable of utilizing the
information which is available to the Optionee to evaluate the
merits and risks of an investment in the Common Stock, and is
able to tear the economic risks of any Common Stock or other
securities which the Optionee may acquire upon exercise of the
Option.
(iii) The Optionee understands that neither the Option
nor the Common Stock to be issued upon exercise of the Option
have been registered under the Securities Act of 1933, as amended
(the "1933 Act"), that the Option has been, and the shares of
Common Stock issuable upon exercise of the Option will be, issued
in reliance upon certain exemptions contained therein, and that
the Company's reliance on such exemption is predicated on
Optionee's representations set forth herein. The Optionee
further understands that because neither the Option nor the
shares of Common Stock to be issued up on exercise of the Option
have been registered under the 1993 Act, the Optionee may not and
Optionee covenants and agrees that Optionee will not, sell, offer
to sell or otherwise dispose of any such securities in violation
of the 1933 Act or any applicable "blue sky" or securities law of
any state. The Optionee acknowledges and understands that
Optionee has no independent right to require the Company to
register the Option or the Common Stock to be issued upon
exercise of the Option.
<PAGE>
(b) The Optionee consents to the placing of
restrictive legends in substantially the following form on any
stock certificate(s) representing Common Stock issued upon
exercise of the Option:
"The Shares represented by this
Certificate have not been registered under the
Securities Act of 1933, as amended. These
shares have been acquired for investment and
not with a view to distribution or resale, and
may not be sold, mortgaged, pledged,
hypothecated or otherwise transferred without
an effective registration statement for such
shares under the Securities Act of 1933, as
amended, or until the issuer has been
furnished with an opinion of counsel for the
registered owner of these shares, reasonably
satisfactory to counsel for the issuer, that
such sale, transfer or disposition is exempt
from the registration or qualification
provisions of the Securities Act of 1933, as
amended."
(c) The Optionee also hereby consents and agrees to
the placing of stop transfer instructions against any subsequent
transfer(s) of shares of Common Stock issued upon exercise of the
Option. The Company hereby agrees to remove the legend and stop
transfer instructions upon receipt of an opinion of counsel from
the registered owner of the shares of Common Stock issued upon
exercises of the Option, in form and substance acceptable to
counsel for the Company, to the effect that such shares may be
transferred without violation of the 1933 Act.
8. METHOD OF EXERCISING OPTION. Subject to the terms
and conditions of this Agreement, this Option may be exercised by
written notice to the Company, at the principal executive office
of the Company, or to such transfer agent as the Company shall
designate. Such notice shall state the election to exercise this
<PAGE>
Option and the number of shares in respect of which it is being
exercised and shall be signed by the Optionee or person or
persons entitled to so exercise this Option. Such notice shall
be accompanied by payment of the full Exercise Price of such
shares, and the Company shall deliver a certificate or
certificates representing such shares as soon as practicable
after the notice is received. The certificate or certificates
for the shares as to which this Option shall have been so
exercised shall be registered in the name of the person or
persons so exercising this Option (or, if this Option shall be
exercised by the Optionee and if the Optionee shall so request in
the notice exercising this Option, shall be registered in the
name of the Optionee and another person jointly, with right of
survivorship) and shall be delivered to or upon the written order
of the person or persons exercising this Option. In the event
this Option shall be exercised, pursuant to Section 4 hereof, by
any person or persons other than the Optionee, such notice shall
be accompanied by appropriate proof of the right of such person
or persons to exercise this Option. All shares that shall be
purchased upon the exercise of this Option as provided herein
shall be fully paid and non-assessable.
9. OPTION NOT TRANSFERABLE; TRANSFER OF STOCK. This
Option is not transferable or assignable except by will or by the
laws of descent and distribution. During the Optionee's
lifetime, only the Optionee may exercise this Option. Common
Stock issued pursuant to the exercise of this Option or any
interest in such Common Stock, may be sold, assigned, gifted,
pledged, hypothecated, encumbered or otherwise transferred to
alienated in any manner by the holder(s) thereof, subject,
<PAGE>
however, to the provisions of the Plan, including any
representations or warranties requested under Section 22 thereof,
and also subject to compliance with any applicable federal,
state, local or other law, regulations or rule governing the sale
or transfer of stock or securities, and provided, further than in
all cases, the Optionee may not sell or otherwise transfer shares
acquired upon the exercise of an Option for a period of six (6)
months following the date of acquisition (within the meaning of
Section 16-b (3) of the Security Exchange Act of 1934) of such
Option without the prior written consent of the Board.
10. NO OBLIGATION TO EXERCISE OPTION. The grant and
acceptance of this Option imposes no obligation on the Optionee
to exercise it.
11. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither the
Company nor any subsidiary thereof is by the Plan or this Option
obligated to continue to employ Optionee and neither the Plan nor
this Option shall otherwise interfere with the Company's right to
discharge or retire any employee, including Optionee, at any
time.
12. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The
Optionee shall have no rights as a stockholder with respect to
shares subject to this Agreement until a stock certificate
therefore has been issued to the Optionee and is fully paid for.
Except as is expressly provided in the Plan with respect to
certain changes in the capitalization of the Company, no
adjustment shall be made for dividends or similar rights for
which the record date is prior to the date such stock certificate
is issued.
<PAGE>
13. REORGANIZATION OF COMPANY.
(a) Upon the dissolution or liquidation of Company, or
upon a reorganization, merger or consolidation of the Company as
a result of which the Company's outstanding Common Stock is
changed into or exchanged for cash or property or securities not
of the Company's issue, or upon a sale of all or substantially
all property of the Company to, or the acquisition of all or
substantially all of the stock of the Company then outstanding
by, another corporation or person, the Plan shall terminate, and
the Option granted hereunder shall terminate; provided, however,
if Optionee is entitled to exercise any unexercised installment
of the Option then outstanding, then Optionee may, at such time
prior to the consummation of the transaction causing such
termination as the Company shall designate, exercise the
unexercised installments of the Option including all unaccrued
installments thereof which would, but for this subsection 13(a),
not yet be exercisable. Notwithstanding the foregoing, in the
event that any transaction causing such termination is not
consummated, any unexercised unaccrued installments that had
become exercisable solely by reason of the provisions of this
subsection 13(a) shall again become unaccrued and unexercisable
as of said termination of such transaction, subject, however, to
such installments accruing pursuant to the normal accrual
schedule provided in the terms under which the Option was
granted.
(b) In addition to and not in lieu of those rights
granted pursuant to subsection 13(a) above, if provisions shall
be made in writing in connection with such transaction for the
<PAGE>
continuance of the Plan and/or the assumption of options
theretofore granted, or the substitution for such options of
options covering the stock of the successor corporation, or a
parent or subsidiary thereof with appropriate adjustments as to
the number and kind of shares and prices, the unexercised Option
shall continue in the manner and under the terms so provided.
(c) The Company shall have no obligation to provide
for the continuance, assumption or substitution of the Plan or
the Option by any successor corporation or parent or subsidiary
thereof.
14. WITHHOLDING TAXES. The Optionee hereby agrees
that the Company (or a subsidiary thereof, as the case may be)
may withhold from the Optionee's wages or other remuneration the
appropriate amount of federal, state and local taxes attributable
to the Optionee's exercise of any installment of this Option.
The Optionee further agrees that, if the Company (or a subsidiary
thereof, as the case may be) does not withhold an amount from the
Optionee's wages or other remuneration sufficient to satisfy the
Company's (or any such subsidiary's) withholding obligation, the
Optionee will reimburse the Company (or any such subsidiary) on
demand, in cash, for the amount underwithheld.
15. GOVERNING LAW. This Agreement shall be governed
by and interpreted in accordance with the laws of the State of
California applicable to agreements made and to be performed
entirely within such State and without regard to the conflict of
law principals thereof.
<PAGE>
16. AMENDMENTS. No amendment, modification,
termination or waiver of any provision of this Agreement shall be
effective unless the same shall be in writing signed by all
parties hereto.
17. COUNTERPARTS. This Agreement may be signed in one
or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the
same instrument.
18. SURVIVAL OF REPRESENTATIONS. All representations,
covenants and warranties of the parties hereto shall survive the
execution of this Agreement.
IN WITNESS WHEREOF the Company and the Optionee have
caused this instrument to be executed as of the date first
written above, and the Optionee whose signature appears below
acknowledges receipt of a copy of the Plan and acceptance of an
original copy of this Agreement.
THE COMPANY:
MAXICARE HEALTH PLANS, INC.
By: /s/ Peter J. Ratican
Chairman, Chief Executive
Officer and President
OPTIONEE:
/s/ Dave Hammons
<PAGE>
Exhibit 10.67
MAXICARE HEALTH PLANS, INC.
STOCK OPTION AGREEMENT
Maxicare Health Plans, Inc., a Delaware corporation
(the "Company"), hereby grants as of this 20th day of
December, 1993, to David Hammons (the "Optionee"), an option
to purchase a maximum of 5,000 shares of its common stock
(the "Common Stock"), at a price per share (the "Exercise
Price") of $9.63 per share (the "Option"), on the following
terms and conditions:
1. GRANT UNDER 1990 STOCK PLAN. The Option is
granted pursuant to and is governed by the Company's 1990
Stock Option Plan (the "Plan") and, unless the context
otherwise requires, terms used and/or defined herein shall
have the same meaning as in the Plan. Determinations made
in connection with this Option pursuant to the Plan shall be
governed by the Plan as it exists on this date. This Option
is not intended to be and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code.
2. EXTENT OF OPTION. If the Optionee has continued
to serve in the capacity of an officer, employee, or
director with the Company (or a subsidiary thereof, as the
case may be) on the following dates, the Optionee may,
subject to Section 13 hereof, exercise this Option for the
portion of the total number of shares subject to this Option
set opposite the applicable date:
<PAGE>
Less than one year from the - 0 shares
date hereof
One year but less than two years - 1,667 shares
from the date hereof
Two years but less than three - 1,667 shares
years from the date hereof
Three years but less than four - 1,666 shares
years from the date hereof
The foregoing rights are cumulative and, while the Optionee
continues to serve as an officer, director or employee of
the Company (or a subsidiary thereof, as the case may be),
may be exercised up to and including the earlier of the date
which is five years from the date this Option is granted
(the "Fifth Anniversary Date"). For purposes of this
Agreement, any accrued installment shall be referred to as
an "Accrued Installment". All of the foregoing rights are
subject to Sections 3 and 4 hereof, as appropriate, if the
Optionee ceases to serve as an officer, director or employee
of the Company (or a subsidiary thereof, as the case may be)
or becomes disabled or dies while serving as an officer,
director or employee of the Company (or a subsidiary
thereof, as the case may be).
3. TERMINATION OF BUSINESS RELATIONSHIP. If the
Optionee ceases to remain an officer, director or employee
of the Company (or subsidiary thereof, as the case may be),
other than by reason of death or disability as defined in
Section 4, any unexercised Accrued Installments of the
Option shall expire and become unexercisable as of the
<PAGE>
earlier of (i) the Fifth Anniversary Date, or (ii) thirty
(30) days following the termination of Optionee's employment
or termination of Optionee's directorship. No further
installments of this Option shall become exercisable. The
Board of Directors of the Company may extend such thirty
(30) day period for a period not to exceed one (1) year
following the Termination Date (as defined in the Plan), but
in no event beyond the applicable Fifth Anniversary Date.
In such a case, the Optionee's only rights hereunder shall
be those which are properly exercised before the termination
of this Option. Any portion of an Option that expires
hereunder shall remain unexercisable and be of no effect
whatsoever after such expiration notwithstanding that such
Optionee may be reemployed by, or again become a director
of, the Company (or a subsidiary thereof, as the case may
be).
4. DEATH OR DISABILITY. In the event of the death
of the Optionee while an officer, employee or director of
the Company (or a subsidiary thereof, as the case may be),
or in the event of termination of employment or directorship
by reason of the Optionee's Disability (as defined in the
Plan), any unexercised Accrued Installments of the Option
granted to Optionee shall expire and become unexercisable as
of the earlier of (i) the Fifth Anniversary Date, or (ii)
the first anniversary date of the Optionee's death (if
applicable) or (iii) the first anniversary date of the
<PAGE>
termination of employment or directorship by reason of
Disability (if applicable). Any such Accrued Installments
of a deceased Optionee may be exercised prior to their
expiration by (and only by) the person or persons to whom
the Optionee's Option rights shall pass by will or by the
laws of descent and distribution. Any installments under a
deceased Optionee's Option that have not accrued as of the
date of his death shall expire and become unexercisable as
of said date of death. For purposes of this Agreement, the
Optionee shall be deemed employed by the Company (or a
subsidiary thereof, as the case may be) during any period of
leave of absence from active employment as authorized by the
Company (or a subsidiary thereof, as the case may be).
5. PARTIAL EXERCISE. Exercise of this Option up to
the extent above stated may be in part at any time and from
time to time with the above limits, except that this Option
may not be exercised for a fraction of a share. Upon the
exercise of the final installment of this Option, the
Optionee shall be entitled to receive cash with respect to
the value of any fraction of a share (in lieu of any said
fractional share).
6. PAYMENT OF EXERCISE PRICE. The Exercise Price
is payable in United States dollars and may be paid in cash
or by certified or cashier's check, or any combination of
the foregoing, equal in amount to the Exercise Price.
<PAGE>
7. INVESTMENT REPRESENTATIONS; RESTRICTIONS ON
TRANSFER.
(a) The Optionee represents, warrants and covenants
to the Company that:
(i) Any Common Stock acquired by the Optionee upon
exercise of the Option will be acquired for the Optionee's
own account and not with a view to resale on distribution in
violation of the Securities Act of 1933, as amended (the
"1933 Act").
(ii) The Optionee has such knowledge and experience
in business and financial matters as to be capable of
utilizing the information which is available to the Optionee
to evaluate the merits and risks of an investment in the
Common Stock, and is able to bear the economic risks of any
Common Stock or other securities which the Optionee may
acquire upon exercise of the Option.
(iii) The Optionee understands that the Option has not
been registered under the Securities Act of 1933, as amended
(the "1933 Act"), that the Option has been issued in
reliance upon certain exemptions contained therein. The
Optionee further understands that because the Option has not
been registered under the 1933 Act or registered or
<PAGE>
qualified pursuant to applicable "blue sky" statutes, the
Optionee may not, and Optionee covenants and agrees that
Optionee will not, sell, offer to sell or otherwise dispose
of any such Option in violation of the 1933 Act or any
applicable "blue sky" or securities law of any state. The
Optionee acknowledges and understands that Optionee has no
independent right to require the Company to register the
Option.
8. METHOD OF EXERCISING OPTION. Subject to the
terms and conditions of this Agreement, this Option may be
exercised by written notice to the Company, at the principal
executive office of the Company, or to such transfer agent
as the Company shall designate. Such notice shall state the
election to exercise this Option and the number of shares in
respect of which it is being exercised and shall be signed
by the Optionee or person or persons entitled to so exercise
this Option. Such notice shall be accompanied by payment of
the full Exercise Price of such shares, and the Company
shall deliver a certificate or certificates representing
such shares as soon as practicable after the notice is
received. The certificate or certificates for the shares as
to which this Option shall have been so exercised shall be
registered in the name of the person or persons so
exercising this Option (or, if this Option shall be
exercised by the Optionee and if the Optionee shall so
request in the notice exercising this Option, shall be
<PAGE>
registered in the name of the Optionee and another person
jointly, with right of survivorship) and shall be delivered
to or upon the written order of the person or persons
exercising this Option. In the event this Option shall be
exercised, pursuant to Section 4 hereof, by any person or
persons other than the Optionee, such notice shall be
accompanied by appropriate proof of the right of such person
or persons to exercise this Option. All shares that shall
be purchased upon the exercise of this Option as provided
herein shall be fully paid and non-assessable.
9. OPTION NOT TRANSFERABLE; TRANSFER OF STOCK.
This Option is not transferable or assignable except by will
or by the laws of descent and distribution. During the
Optionee's lifetime, only the Optionee may exercise this
Option.
10. NO OBLIGATION TO EXERCISE OPTION. The grant and
acceptance of this Option imposes no obligation on the
Optionee to exercise it.
11. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither
the Company nor any subsidiary thereof is by the Plan or
this Option obligated to continue to employ Optionee and
neither the Plan nor this Option shall otherwise interfere
with the Company's or any of the Company's subsidiary's
right to discharge or retire any employee, including
Optionee, at any time.
<PAGE>
12. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The
Optionee shall have no rights as a stockholder with respect
to shares subject to this Agreement until a stock
certificate therefore has been issued to the Optionee and is
fully paid for. Except as is expressly provided in the Plan
with respect to certain changes in the capitalization of the
Company, no adjustment shall be made for dividends or
similar rights for which the record date is prior to the
date such stock certificate is issued.
13. REORGANIZATION OF COMPANY.
(a) Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation
of the Company as a result of which the Company's
outstanding Common Stock is changed into or exchanged for
cash or property or securities not of the Company's issue,
or upon a sale of all or substantially all property of the
Company to, or the acquisition of all or substantially all
of the stock of the Company then outstanding by, another
corporation or person, the Plan shall terminate, and the
Option granted hereunder shall terminate; provided, however,
Optionee shall be entitled, at such time prior to the
consummation of the transaction causing such termination as
the Company shall designate, to exercise the unexercised
installments of the Option including all unaccrued
<PAGE>
installments thereof which would, but for this subsection
13(a), not yet be exercisable. Notwithstanding the
foregoing, in the event that any transaction causing such
termination is not consummated, any unexercised unaccrued
installments that had become exercisable solely by reason of
the provisions of this subsection 13(a) shall again become
unaccrued and unexercisable as of said termination of such
transaction, subject, however, to such installments accruing
pursuant to the normal accrual schedule provided in the
terms under which the Option was granted.
(b) In addition to and not in lieu of those rights
granted pursuant to subsection 13(a) above, if provisions
shall be made in writing in connection with such transaction
for the continuance of the Plan and/or the assumption of
options theretofore granted, or the substitution for such
options of options covering the stock of the successor
corporation, or a parent or subsidiary thereof with
appropriate adjustments as to the number and kind of shares
and prices, the unexercised Option shall continue in the
manner and under the terms so provided.
(c) The Company shall have no obligation to provide
for the continuance, assumption or substitution of the Plan
or the Option by any successor corporation or parent or
subsidiary thereof.
<PAGE>
14. WITHHOLDING TAXES. The Optionee hereby agrees
that the Company (or a subsidiary thereof, as the case may
be) may withhold from the Optionee's wages or other
remuneration the appropriate amount of federal, state and
local taxes attributable to the Optionee's exercise of any
installment of this Option. The Optionee further agrees
that, if the Company (or a subsidiary thereof, as the case
may be) does not withhold an amount from the Optionee's
wages or other remuneration sufficient to satisfy the
Company's (or any such subsidiary's) withholding obligation,
the Optionee will reimburse the Company (or any such
subsidiary) on demand, in cash, for the amount
underwithheld.
15. GOVERNING LAW. This Agreement shall be governed
by and interpreted in accordance with the laws of the State
of California applicable to agreements made and to be
performed entirely within such State and without regard to
the conflict of law principals thereof.
16. AMENDMENTS. No amendment, modification,
termination or waiver of any provision of this Agreement
shall be effective unless the same shall be in writing
signed by all parties hereto.
17. COUNTERPARTS. This Agreement may be signed in
one or more counterparts, each of which shall be deemed to
<PAGE>
be an original, but all of which together shall constitute
one and the same instrument.
18. SURVIVAL OF REPRESENTATIONS. All
representations, covenants and warranties of the parties
hereto shall survive the execution of this Agreement.
IN WITNESS WHEREOF the Company and the Optionee have
caused this instrument to be executed as of the date first
written above, and the Optionee whose signature appears
below acknowledges receipt of a copy of the Plan and
acceptance of an original copy of this Agreement.
THE COMPANY:
MAXICARE HEALTH PLANS, INC.
By: /s/ Peter J. Ratican
Chairman, President and
Chief Executive Officer
OPTIONEE:
/s/ David Hammons
<PAGE>
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
JURISDICTION OF
NAME INCORPORATION
<S> <C>
HEALTH CARE ASSURANCE COMPANY, LTD. CAYMAN ISLANDS
MAXICARE CALIFORNIA
MAXICARE HEALTH INSURANCE COMPANY WISCONSIN
MAXICARE HEALTH PLANS OF THE MIDWEST, INC. ILLINOIS
MAXICARE INDIANA, INC. INDIANA
MAXICARE LIFE AND HEALTH INSURANCE COMPANY MISSOURI
MAXICARE LOUISIANA, INC. LOUISIANA
MAXICARE NORTH CAROLINA, INC. NORTH CAROLINA
MAXICARE PHARMACIES, INC. CALIFORNIA
MAXICARE SOUTHEAST HEALTH PLANS, INC. GEORGIA
</TABLE>
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 (No. 33-50508) of
Maxicare Health Plans, Inc. of our report dated March 4,
1994 appearing on page 37 of this Form 10-K.
PRICE WATERHOUSE
Los Angeles, California
March 25, 1994
