<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
(AMENDMENT NO. __)*
MAXICARE HEALTH PLANS, INC.
- --------------------------------------------------------------------------------
(Name of issuer)
COMMON STOCK, par value $.01 per share
- --------------------------------------------------------------------------------
(Title of class of securities)
577904204
-----------------------------------------------------------------------
(CUSIP number)
Arthur G. Epker, III
Vice President
Par Capital Management, Inc.
One Financial Center, Suite 1600
(617) 526-8990
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(Name, address and telephone number of person authorized to receive
notices and communications)
May 8, 1998
-----------------------------------------------------------------------
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13(d)-1(g), check the
following box |_|.
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule. See Rule 13d-7(b) for other parties to whom copies
are to be sent.
(Continued on the following pages)
(Page 1 of 11 Pages)
- ---------------------
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, see the Notes).
<PAGE> 2
SCHEDULE 13D
- ------------------------------ ----------------------------
CUSIP NO. 577904204 Page 2 of 11 Pages
================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
PAR Investment Partners, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
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NUMBER OF 7 SOLE VOTING POWER
SHARES 520,500
-----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH None
-----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 520,500
-----------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
None
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
520,500 shares of Common Stock
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.9%
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14 TYPE OF REPORTING PERSON *
PN
================================================================================
* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
SCHEDULE 13D
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CUSIP NO. 577904204 Page 3 of 11 Pages
================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
PAR Group, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
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3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
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NUMBER OF 7 SOLE VOTING POWER
SHARES 520,500
-----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH None
-----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 520,500
-----------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
None
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
520,500 shares of Common Stock
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON *
PN
================================================================================
* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 4
SCHEDULE 13D
- ------------------------------ ----------------------------
CUSIP NO. 577904204 Page 4 of 11 Pages
================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
PAR Capital Management, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |X|
(b) |_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 520,500
-----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH None
-----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 520,500
-----------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
None
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
520,500 shares of Common Stock
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON *
CO
================================================================================
* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 5
ITEM 1. SECURITY AND ISSUER.
This Statement relates to the common stock, par value $.01 ("Common
Stock"), of Maxicare Health Plans, Inc. (the "Issuer"). The principal executive
offices of the Issuer are located at 1149 S. Broadway Street, No. 925, Los
Angeles, CA 90015.
ITEM 2. IDENTITY AND BACKGROUND.
(a), (b) and (c). The persons filing this Statement are PAR Investment
Partners, L.P., ("PIP"), PAR Group, L.P. ("PAR Group") and PAR Capital
Management, Inc. ("PAR Capital").
PIP is a Delaware limited partnership. Its principal business is that
of a private investment partnership engaging in the purchase and sale of
securities for its own account and its address is Suite 1600, One Financial
Center, Boston, MA 02111.
The sole general partner of PIP is PAR Group, a Delaware limited
partnership. The principal business of PAR Group is that of a private investment
partnership engaging in the purchase and sale of securities for its own account
and its address is Suite 1600, One Financial Center, Boston, MA 02111.
The sole general partner of PAR Group, is PAR Capital, a Delaware S
corporation. The principal business of PAR Capital is to act as the general
partner of PAR Group. Its offices are located at Suite 1600, One Financial
Center, Boston, MA 02111.
Paul A. Reeder, III is the President and sole director of PAR Capital.
He is a controlling shareholder of PAR Capital. Frederick S. Downs, Jr. is a
vice president and a controlling shareholder of PAR Capital. Arthur G. Epker,
III is a vice president and a controlling shareholder of PAR Capital. The
business address of Paul A. Reeder, III, Frederick S. Downs, Jr. and Arthur G.
Epker, III is Suite 1600, One Financial Center, Boston, MA 02111.
(d) and (e). During the last five years PIP, PAR Group, and PAR
Capital have not (i) been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction as a result of
which they were or are subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violations with respect to such laws.
During the last five years Paul A. Reeder, III, Frederick S. Downs,
Jr. and Arthur G. Epker, III have not (i) been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which they were or are subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violations with respect to such laws.
5 of 11
<PAGE> 6
(f) Paul A. Reeder, III, Frederick S. Downs, Jr. and Arthur G. Epker,
III are all citizens of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS.
PIP purchased 520,500 shares of Common Stock of the Issuer in open
market transactions. The sole source of the funds used in making purchases of
the Common Stock was the PIP cash account. No part of the purchase price is
represented by funds or other consideration borrowed or otherwise obtained for
the purpose of acquiring, holding, trading or voting the Common Stock. No source
of the funds is a loan made in the ordinary course of business by a bank, as
defined in Section 3(a)(6) of the Act. The amount of funds used in making the
purchases is set forth in Item 5.
ITEM 4. PURPOSE OF TRANSACTION.
PIP acquired the shares of Common Stock in the ordinary course of
business for investment purposes only.
The Issuer entered into a settlement agreement (the "Settlement
Agreement"), dated as of May 8, 1998, with the American Opportunity Trust Plc
("Opportunity"), North Atlantic Smaller Companies Investment Trust Plc ("North
Atlantic"), J.O. Hambro Capital Management Limited ("Hambro") and Paul R. Dupee,
Jr. ("Dupee") (North Atlantic, Opportunity, Hambro and Dupee are herein referred
to as the "Settling Shareholders").
Pursuant to the Settlement Agreement, the Issuer agreed, among other
things, to cause the then-existing board of directors (the "Board") to (a)
increase the number of authorized directors on the Board to nine and to fill the
one existing vacancy and two newly-created directorships with Dupee, Elwood I.
Cleaver, Jr. and Robert M. Davies (the "New Directors") and (b) approve certain
amendments to the Issuer's bylaws, certificate of incorporation and the
shareholder rights agreement between the Issuer and American Stock Transfer and
Trust Company dated as of February 24, 1998 (such amendments collectively
referred to as the "Amendments"). The Issuer agreed to submit the Amendments to
a shareholder vote at the 1998 annual meeting of shareholders (the "Annual
Meeting"), to renominate two of the New Directors for election at the Annual
Meeting (such slate of nominees recommended by the Issuer is referred to as the
"Board Slate") and to use its best efforts to obtain proxies from shareholders
to vote in favor of the Amendments and the Board Slate.
Under the Settlement Agreement, each Settling Shareholder agreed to
vote those shares over which it has the power to direct the vote in favor of the
Board Slate, the Amendments, and the reimbursement of Dupee's filing expenses in
connection with the solicitation of consents commenced by Dupee in accordance
with applicable proxy regulations (the "Filing Party Reimbursement"; the Board
Slate, the Amendments and the Filing Party Reimbursement are collectively
referred to as the "Proposals"). Each Settling Shareholder also agreed not to
take certain actions in respect of the Company prior to the Annual Meeting,
including voting in favor of a special meeting of shareholders.
6 of 11
<PAGE> 7
In addition to the Settlement Agreement, the Issuer entered into a
voting agreement (each, a "Voting Agreement") with each of PIP, Franklin
Resources, Inc., King Investment Advisors, Inc., Heartland Advisors, Inc. and
Snyder Capital Management, L.P. (each, a "Settling Fund"), pursuant to which the
Issuer agreed to propose the Proposals at the Annual Meeting and each Settling
Fund agreed to vote all Shares over which it has the power to direct the vote in
favor of the Proposals. Each Settling Fund also agreed not to take certain
actions in respect of the Issuer prior to the Annual Meeting, including voting
in favor of a special meeting of shareholders.
Except as aforesaid, PIP, PAR Group and PAR Capital do not have any
plans or proposals which relate to or would result in:
(a) the acquisition by any person of additional securities of the
Issuer or the disposition of securities of the Issuer;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries;
(c) a sale or transfer of a material amount of assets of the Issuer or
any of its subsidiaries;
(d) any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
(e) any material change in the present capitalization or dividend
policy of the Issuer;
(f) any other material change in the Issuer's business or corporate
structure;
(g) any changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Issuer by any person;
(h) causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) a class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Act; or
(j) any action similar to any of those enumerated in (a) through (i)
above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b) As of the date of this statement, PIP beneficially owns and
PAR Group and PAR Capital may be deemed to beneficially own 520,500 shares of
the Common Stock of the Issuer, representing approximately 2.9% of the number of
shares of Common Stock of the
7 of 11
<PAGE> 8
Issuer currently outstanding. The number of shares of Common Stock of the Issuer
believed to be outstanding as of March 25, 1998, as reported in the Form 10-K of
the Issuer for the year ending December 31, 1997 (which is the most recently
available filing by the Issuer with the Commission) is 17,925,381. The total
amount of funds used in purchasing the 520,500 shares of Common Stock was
$7,945,534.64.
To the best knowledge of PIP, PAR Group and PAR Capital, none of PIP,
PAR Group or PAR Capital, nor any officer or director of PIP, PAR Group or PAR
Capital beneficially owns any other shares of Common Stock of the Issuer.
Set forth below is the aggregate number of shares and percentage of
the outstanding Common Stock of the Issuer beneficially owned (i) by PIP, and
(ii) to the knowledge of PIP, PAR Group and PAR Capital, by each other person or
entity that may be deemed to be a member of a group with PIP for the purposes of
Section 13(d) of the Exchange Act and the rules promulgated thereunder:
<TABLE>
- --------------------------------------------------------------------------------------------------
<CAPTION>
NUMBER OF NUMBER OF
AGGREGATE SHARES: SOLE NUMBER OF SHARES: SOLE OR
NUMBER POWER TO SHARES: SHARED SHARED POWER TO APPROX.
FILING PARTY OF SHARES VOTE POWER TO VOTE DISPOSE PERCENTAGE*
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Paul R. Dupee 327,100 327,100 0 327,100 1.82%
(1)
- --------------------------------------------------------------------------------------------------
J. O. Hambro 480,200 0 480,200 480,200 2.7%
Capital
Management
(1)
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North Atlantic 305,000 0 305,000 305,000 1.7%
Smaller
Investment
Trust (1)
- --------------------------------------------------------------------------------------------------
American 90,000 0 90,000 90,000 0.5%
Opportunity
Trust (1)
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Franklin 1,789,779 0 1,789,779 1,789,779 10%
Resources,
Inc. (1)
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Heartland 3,312,000 3,142,500 0 3,312,000 18.5%
Advisors, Inc.
(1)
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</TABLE>
8 of 11
<PAGE> 9
<TABLE>
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<CAPTION>
NUMBER OF NUMBER OF
AGGREGATE SHARES: SOLE NUMBER OF SHARES: SOLE OR
NUMBER POWER TO SHARES: SHARED SHARED POWER TO APPROX.
FILING PARTY OF SHARES VOTE POWER TO VOTE DISPOSE PERCENTAGE*
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
King 922,270 846,662 992,270 5.5%
Investment
Advisors, Inc.
(1)
- --------------------------------------------------------------------------------------------------
Snyder Capital 2,053,700 117,500 1,811,800 2,053,700 11.5%
Management,
L.P. (1)
- --------------------------------------------------------------------------------------------------
Par Investment 520,500 520,500 520,000 520,500 2.9%
Partners LP
(1)
- --------------------------------------------------------------------------------------------------
* Based on 17,925,381 shares of Common Stock, par value $.01 per share,
outstanding as of March 25, 1998, as reported in the Issuer's Annual
Report on Form 10-K for the year ended December 31, 1997.
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) These entities may be deemed to be part of a group with PIP within the
meaning of Rule 13d-3 under the Exchange Act by virtue of (a) in the case of
J.O. Hambro Capital Management, North Atlantic, Opportunity and Dupee, the fact
that they are signatories to the Settlement Agreement, and (b) with respect to
PIP and the other entities, by virtue of their having entering into Voting
Agreements with the Issuer provided for in the Settlement Agreement. Since the
Voting Agreement was executed, PIP, PAR Group and PAR Capital have not acted in
concert with any such persons or entities in connection with the Issuer or its
Common Stock, and do not believe that the execution of the Voting Agreement
makes the entities a group within the meaning of Rule 13d-3 under the Exchange
Act. Accordingly, PIP, PAR Group and PAR Capital do not believe they are members
of a group that includes such entities and disclaims beneficial ownership of the
shares owned by such entities. Information regarding the share ownership of such
entities is based on their most recent Statement on Schedule 13D or 13G and
amendments thereto and may not be current.
(c) Except for the purchase of the securities reported above, to the
best knowledge of PIP, PAR Group and PAR Capital, none of PIP, PAR Group and PAR
Capital, nor any officer or director of PAR Capital has effected any
transactions in the Common Stock during the past 60 days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
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<PAGE> 10
Except as set forth in Item 4 hereof, there are no agreements,
understandings or relationships between PIP, PAR Group and PAR Capital and any
other person with respect to the securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
7(a) Joint Filing Agreement
7(b) Voting Agreement by and between PIP and the Issuer, May 8, 1998.
10 of 11
<PAGE> 11
SIGNATURE
After due inquiry, to the best of our knowledge and belief, we certify that
the information set forth in this statement is true, complete and correct.
Dated: May 18, 1998
PAR INVESTMENT PARTNERS, L.P.
By: PAR GROUP, L.P.
its general partner
By: PAR CAPITAL MANAGEMENT, INC.
its general partner
By: /s/ Arthur G. Epker, III, Vice President
------------------------------------------
PAR GROUP, L.P.
By: PAR CAPITAL MANAGEMENT, INC.,
its general partner
By: /s/ Arthur G. Epker, III, Vice President
------------------------------------------
PAR CAPITAL MANAGEMENT, INC.
By: /s/ Arthur G. Epker, III, Vice President
------------------------------------------
11 of 11
<PAGE> 1
EXHIBIT 7(a)
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934,
as amended, the undersigned agree to the joint filing on behalf of each of them
of a statement on Schedule 13G (including amendments thereto) with respect to
the Common Stock of Maxicare Health Plans, Inc., and further agree that this
agreement be included as an exhibit to such filing. Each party to the agreement
expressly authorizes each other party to file on its behalf any and all
amendments to such statement. Each party to this agreement agrees that this
joint filing agreement may be signed in counterparts.
In evidence whereof, the undersigned have caused this Agreement to be
executed on their behalf this 18 day of May, 1998
PAR INVESTMENT PARTNERS, L.P.
By: PAR GROUP, L.P.
its general partner
By: PAR CAPITAL MANAGEMENT, INC.
its general partner
By: /s/ Arthur G. Epker, III, Vice President
------------------------------------------
PAR GROUP, L.P.
By: PAR CAPITAL MANAGEMENT, INC.,
its general partner
By: /s/ Arthur G. Epker, III, Vice President
------------------------------------------
PAR CAPITAL MANAGEMENT, INC.
By: /s/ Arthur G. Epker, III, Vice President
------------------------------------------
<PAGE> 1
EXHIBIT 7(b)
VOTING AGREEMENT dated as of May 8, 1998 between P.A.R. Investment
Partners, L.P. (the "Shareholder") and Maxicare Health Plans, Inc. (the
"Company").
WHEREAS, the board of directors of the Company (the "Board") has increased
the number of directors which constitutes the Board to nine and has filled the
one existing vacancy and two newly created directorships on the Board with
Ellwood Cleaver and Paul R. Dupee, Jr. (the "Soliciting Shareholder"), who have
been named Class II directors with terms expiring in 1998 and Robert M. Davies
who has been named a Class I director with a term expiring in 2000, and the
Board has added the Soliciting Shareholder to the Board's executive committee
which has been increased from three to four members;
WHEREAS, the Board intends that Mr. Cleaver and the Soliciting Shareholder
and Ms. Florence F. Courtright shall be the slate of nominees recommended by the
Board for election as the directors (the "Board Slate") at the Company's 1998
annual meeting of shareholders ("1998 Annual Meeting"); and
WHEREAS, the Board has approved the amendments to the Bylaws, Certificate
and the rights agreement between the Company and American Stock Transfer & Trust
Company, as Rights Agent, dated as of February 24, 1998 (the "Rights Agreement")
attached as Exhibit A (the "Amendments"), subject to approval of the Amendments
by a majority of the outstanding shares of common stock, par value $.01 per
share (the "Shares") at the 1998 Annual Meeting; and
WHEREAS, in connection with the termination of a solicitation of written
consents from the Company's shareholders by the Soliciting Shareholder (the
"Consent Solicitation"), the Company has agreed to reimburse the Soliciting
Shareholder's fees and expenses (not to exceed $450,000) related to the Consent
Solicitation and the negotiation of related agreements (the "Expense
Reimbursement") promptly after the satisfaction of the conditions to such
reimbursement subject to reasonable documentation of such fees and expenses and
approval of such reimbursement by (a) holders of at least 50% of the outstanding
Shares (with such approval deemed to have been given by all Shares covered by
agreements with the Company to vote in favor of the Expense Reimbursement at the
1998 Annual Meeting, or (b) the affirmative vote of the majority of the Shares
present in person or by proxy at the 1998 Annual Meeting and entitled to vote on
such matter; and
WHEREAS, the parties desire to agree on certain actions to be taken at the
1998 Annual Meeting,
NOW, THEREFORE, in consideration of the agreements contained herein, the
parties agree as follows:
1. PROPOSALS BY THE COMPANY. The Company will propose the election of the
Board Slate, the adoption of the Amendments and the approval of the Expense
Reimbursement
<PAGE> 2
at the 1998 Annual Meeting.
2. VOTING AGREEMENT OF SHAREHOLDER. The Shareholder agrees that all
shares of Common Stock of the Company ("Share") as to which the Shareholder or
any of its affiliates has the power to direct the vote on the record date for
the 1998 Annual Meeting, shall be voted at such meeting in favor of the Board
Slate, the Amendments and the Expense Reimbursement, and the Shareholder shall
not execute a written consent of shareholders in lieu of a meeting or vote to
call a special meeting prior to the 1998 Annual Meeting which will be held by
July 31, 1998. Such record date shall be June 8, 1998 or the earliest possible
date thereafter and, in no event, later than June 12, 1998. If any Shares as to
which the Shareholder has the power to direct the vote are transferred prior to
such record date, the Shareholder shall obtain an agreement from the transferee
assuming the Shareholder's obligations under this sentence and the immediately
preceding sentence; provided, however, that the Shareholder shall not be
required to obtain such an agreement from the transferee of Shares which the
Shareholder sells as a result of instructions from clients or customers
requiring the Shareholder to sell such Shares, or to liquidate such clients'
accounts in whole or in part or changing the investment objectives of such
accounts.
3. MISCELLANEOUS.
(a) This agreement shall not be altered, amended, changed, waived,
terminated or otherwise modified except by a writing signed by the party to be
charged.
(b) This agreement shall be interpreted and enforced in accordance
with the laws of the State of Delaware applicable to contracts made and to be
performed there, and any legal action or proceeding with respect to this
agreement may be brought in the courts of the State of Delaware or the United
States District Court of the District of Delaware, and each party accepts the
exclusive jurisdiction of such courts.
(c) This agreement may be executed in several counterparts, each of
which will be deemed an original.
(d) Each of the parties acknowledges and agrees that irreparable
damages would occur if any of the provisions of this agreement were not
performed in accordance with their specific terms or were otherwise breached.
Accordingly, it is agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this agreement and to enforce specifically
the terms of this agreement in any court having jurisdiction, in addition to any
other remedy to which they may be entitled at law or equity.
(e) The parties acknowledge and agree that this Agreement is not an
agreement, arrangement or understanding of the type referred to in Section
1(d)(iii) of the Company's Shareholders Rights Plan, and the Shareholder and
other shareholders entering into agreements containing the covenants contained
in Section 2 shall not be deemed an Acquiring Person as that term is used in the
Shareholders Rights Plan by virtue of anything contained in this Agreement or
those agreements or any acts or transactions contemplated thereby.
<PAGE> 3
(f) This Agreement shall inure to the benefit of, and be enforceable
by, the Soliciting Shareholder, as if he were a party hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
MAXICARE HEALTH PLANS, INC.
By:
---------------------------------------------
P.A.R. INVESTMENT PARTNERS LP
By: PAR Group LP, General Partner
By: PAR Capital Management, Inc., General Partner
By: Arthur G. Epker, III
---------------------------------------------
Arthur G. Epker, III, Vice President
