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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: October 17, 2000
MAXICARE HEALTH PLANS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 0-12024 95-3615709
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1149 South Broadway Street
Los Angeles, California
(Address of principal executive office)
90015
(Zip Code)
(213) 765-2000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
COMPLETION OF RIGHTS OFFERING
As previously announced, the Company granted to its shareholders of record
as of September 14, 2000 a right to purchase 1-1/2 shares of the Company's
common stock for $1.00 per share for every share of common stock owned by such
shareholders as of such date, as well as certain over-subscription rights
subject to availability. Those shareholders who exercised their
over-subscription rights were not subjected to pro-ration. If fully subscribed,
the Rights Offering would have raised approximately $28,000,000. The
subscription period for the Rights Offering, as extended, was September 15, 2000
through October 6, 2000 at 5:00 p.m. New York Time, and the consummation of the
Rights Offering and issuance of the shares subscribed for therein occurred on
October 12, 2000. The Company received approximately $22,000,000 from
subscribers to the Rights Offering through the exercise of subscription and
over-subscription rights.
DESCRIPTION OF REGISTERED SECURITIES
The Company's amended and restated articles of incorporation authorizes the
issuance of up to 80,000,000 shares of common stock, par value $.01 per share,
and 5,000,000 shares of preferred stock, par value $.01 per share, of which
2,500,000 shares are designated as Series A Cumulative Convertible Preferred
Stock and 500,000 shares as Series B Preferred Stock. As of October 12, 2000, we
had approximately 40,650,000 shares of our common stock outstanding. No shares
of preferred stock are currently outstanding.
The following description of our common stock is a summary and is qualified
in its entirety by the provisions of our articles of incorporation, bylaws and
applicable law.
COMMON STOCK
The holders of common stock are entitled to one vote per share on all
matters submitted to a vote of the stockholders. Holders of common stock are
entitled to share in any and all dividends that our board of directors, in its
discretion, declares from funds legally available for that purpose. Historically
we have not declared dividends and do not intend to do so for the foreseeable
future. In the event of our liquidation or dissolution, the holders of common
stock are entitled to participate in and share pro rata in the assets available
for distribution to stockholders. Any distribution would be subsequent to
payment of our liabilities and may be subject to any preferential rights of any
preferred stock or other senior security then outstanding. Except for rights of
the Company's shareholders to subscribe to the Company's recently concluded
Rights Offering and as described below, the holders of common stock have no
cumulative voting, preemptive or other subscription rights, and there are no
conversion rights or redemption or sinking fund provisions with respect to the
common stock. The rights, preferences and privileges of the holders of common
stock are subject to, and may be adversely affected by, the rights of the
holders of any shares of preferred stock or senior securities which we may
designate in the future. Our common stock is traded on the Nasdaq National
Market under the trading symbol MAXI.
RESTRICTIONS ON TRANSFER OF OUR COMMON STOCK
At the 2000 annual meeting, our shareholders approved an amendment to our
certificate of incorporation that prohibits transfer of our capital stock,
unless approved by our board, to the extent the transfer would cause the
ownership interest of the transferee or any other person to equal 5% or more of
our fair market value; or increase the ownership interest of the transferee or
any other person where such transferee's or other person's ownership interest
equalled 5% or more of our fair market value before the transfer. This amendment
was filed with the Secretary of State of Delaware and became effective on
September 14, 2000. This amendment may be utilized to prohibit acquisitions of
5% or more of our common stock, without the approval of our board, by any
shareholder through the exercise of basic or over-subscription rights in the
rights offering. The purpose of this certificate of incorporation amendment is
to allow us to minimize the chance of an "ownership change" as defined by the
tax code in order to preserve our significant accrued tax benefits.
Although it was not principally intended for this purpose, this amendment
could have an anti-takeover effect by prohibiting shareholders from increasing
their ownership interest to 5% or more and prohibiting any increase in the
ownership interest of shareholders already holding 5% or more of our
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fair market value. These limitations could enable our board to render more
difficult or discourage a hostile transaction to take control of us. The
presence of these limitations could also discourage unsolicited takeover
attempts, thereby limiting the opportunity for our shareholders to realize a
higher price for their shares than would be generally available in the public
markets. Our board is not aware of any attempt, or contemplated attempt, to
acquire control of us, and this proposal is not being presented with the intent
that it be utilized as a type of anti-takeover device.
The amendment is also not intended to supercede or terminate our
shareholders rights plan. Our shareholders rights plan does not prohibit
transfer of our common stock; rather it is an anti-takeover device triggered by
certain acquisitions of our common stock. Because the restrictions on transfer
imposed by the charter amendment may be waived at our board's discretion, if we
are faced with a hostile transaction to take control of us, our board may choose
to permit only the shareholder rights plan to operate and not the restrictions
imposed by the amendment.
SHAREHOLDERS RIGHTS PLAN
In February 1998, our board adopted the shareholders rights plan and
declared a dividend distribution of one preferred share purchase right for each
outstanding share of common stock to shareholders of record on March 16, 1998.
Each share of common stock issued after that date, including the shares of
common stock being offered in this prospectus, until the designated distribution
date as set forth in the shareholders rights plan and, in certain circumstances,
shares of common stock issued after the distribution date, includes a preferred
share purchase right. Except as set forth below, each preferred share purchase
right, when it becomes exercisable, entitles the registered holder to purchase
from us one five-hundredth of a share of our Series B Preferred Stock, $0.01 par
value, at a price of $45.00 per one five-hundredth of a preferred share, subject
to adjustment.
The description and terms of the shareholders rights plan are set forth in
a Rights Agreement, dated as of February 24, 1998, as amended on October 9, 1998
and June 6, 2000, with American Stock Transfer & Trust Company, as rights agent.
Initially, the preferred share purchase rights will be attached to all
certificates representing common stock then outstanding, and no separate
certificates representing the preferred share purchase rights will be
distributed. The rights agreement provides that the preferred share purchase
rights will separate from the common stock and become exercisable upon the
distribution date, which is the earliest to occur of:
- the date of a public announcement that, without the prior consent of a
majority of the disinterested directors, a person or group of affiliated
or associated persons has acquired beneficial ownership of 5% or more of
our outstanding common stock, except pursuant to a permitted offer, or
owning 5% or more of our outstanding common stock acquires any additional
common stock; or
- 10 days or such later date as the board may determine following the
commencement or announcement of an intention to make a tender or exchange
offer, the consummation of which would result in a person or as set forth
above, effectuating a transaction as described in the preceding item.
Upon exercise, each holder of a preferred share purchase right will
thereafter have the right to receive common stock or one five-hundredth of a
share of preferred shares or, in certain circumstances, other securities of ours
having a value, immediately prior to such triggering event, equal to two times
the exercise price of the preferred share purchase right. Notwithstanding the
foregoing, following the occurrence of one of the events described above, all
preferred share purchase rights that are, or under certain circumstances
specified in the rights agreement were, beneficially owned by an acquiring
person, which is defined as any person or group acquiring beneficial ownership
of 5% of our stock or any of their affiliates or associates, will be null and
void.
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Any holder that had held in excess of 5% of the common stock as of June 6,
2000 has been "grandfathered" with respect to its then position. Disinterested
directors are members of the board who are not officers or employees, acquiring
persons or their affiliates, or any person proposed or nominated as a director
by an acquiring person and certain other persons.
The preferred share purchase rights will also become exercisable if any of
the following occur:
- We consolidate with, or merge into, an acquiring person or certain of the
acquiring person's affiliates, or
- Certain affiliates of an acquiring person or any other entity, if all
holders of common stock are not treated alike in such transaction,
consolidate with, or merge into us, other than certain reorganization
transactions, or
- We sell or otherwise transfer 50% or more of our assets or earning power
to certain affiliates of an acquiring person or to any other entity, if
all holders of common stock are not treated alike in such transaction.
Upon exercise as provided immediately above, proper provision shall be made
so that each holder of a preferred share purchase right, except preferred share
purchase rights which previously have been voided, shall have the right to
receive, common shares of the acquiring or surviving company or, in the event
there is more than one acquiring company, the acquiring company receiving the
greatest portion of the assets or earning power transferred, having a value
equal to two times the exercise price of the preferred share purchase right.
The purchase price payable, and the number of preferred shares, common
stock or other securities issuable upon exercise of the preferred share purchase
rights are subject to adjustment from time to time to prevent dilution upon
certain events.
Preferred shares purchasable upon exercise of the preferred share purchase
rights will not be redeemable, except at our election, for common stock. Each
preferred share will be entitled to a dividend per share of 500 times the
dividend declared per share of common stock. In the event of liquidation, the
holders of the preferred shares will be entitled, after the payment of any
liquidation preference on any other series of preferred stock, to $100 per
share, plus the holders of the preferred shares and the holders of the common
stock will share the remaining assets in the ratio of 500 to 1, as adjusted, for
each preferred share and share of common stock so held, respectively. Finally,
in the event of any merger, consolidation or other transaction in which common
stock is exchanged, each preferred share will be entitled to receive 500 times
the amount received per share of common stock. These rights are protected by
customary antidilution provisions.
At any time after a person becomes an acquiring person and prior to the
acquisition by such person or group of 50% or more of the common stock, the
board, with the approval of a majority of the disinterested directors, may
exchange the preferred share purchase rights, other than the preferred share
purchase rights owned by the acquiring person or certain of its associates,
which shall have become void, at an exchange ratio of one share of common stock
per preferred share purchase right, subject to adjustment. The board can
substitute one five-hundredths of a preferred share for some or all of the
common stock per preferred share purchase right.
At any time prior to the earlier to occur of a person's becoming an
acquiring person or the expiration of the preferred share purchase rights, and
under certain other circumstances, we may redeem the preferred share purchase
rights in whole, but not in part, at a price of $.01 per preferred share
purchase right.
Additionally, subsequent to the date of public announcement by a person or
group that they are an acquiring person, we may redeem the then outstanding
preferred share purchase rights in whole, but not in part, at a price of $.01
per preferred share purchase right. This redemption must be in
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connection with a merger or other business combination transaction or series of
transactions involving us in which all holders of common stock are treated alike
but not involving an acquiring person or its affiliates or associates. This
redemption right will not exist for 180 days following the date of public
announcement by the acquiring person under certain circumstances.
All of the provisions of the rights agreement may be amended by the board,
with the approval of a majority of the disinterested directors, prior to the
distribution date. After the distribution date, the provisions of the rights
agreement may be amended by the board in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of preferred share purchase rights, excluding the interests of any
acquiring person, or, subject to certain limitations, to shorten or lengthen any
time period under the rights agreement.
Until a preferred share purchase right is exercised, the holder of the
right, as such, will have no rights as a shareholder, including, without
limitation, the right to vote or to receive dividends. While the distribution of
the preferred share purchase rights will not be taxable to our shareholders,
shareholders may, depending upon the circumstances, recognize taxable income
should the preferred share purchase rights become exercisable or upon the
occurrence of certain events thereafter.
ANTI-TAKEOVER PROVISIONS
Because we are incorporated under the laws of the state of Delaware, we are
subject to the anti-takeover provisions of Section 203 of the Delaware General
Corporation Law. In general, the statute prohibits a publicly-held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. For purposes of Section 203, a
"business combination" includes a merger, asset sale or other transaction
resulting in a financial benefit to an interested stockholder. For purposes of
Section 203, an "interested stockholder" is a person who, together with
affiliates and associates, owns, or within three years prior, did own, 15
percent or more of the corporation's voting capital stock.
The provisions of our shareholders rights plan and Delaware law are
intended to encourage potential acquirers to negotiate with us and to allow the
board the opportunity to consider alternative proposals in the interest of
maximizing shareholder value. These provisions, and the restrictive charter
amendment described above, however, may also have the effect of discouraging
acquisition proposals or delaying or preventing a change in control, which may
have an adverse effect on our stock price.
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ITEM 7. FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
5.1 Certificate of Incorporation, as amended and restated, which
includes, Restated Certificate of Incorporation of
Healthcare USA Inc. filed with the Office of the Secretary
of State of Delaware on July 19, 1985, Certificate of Merger
of MHP Acquisition Corp into Healthcare USA Inc. filed with
the Office of the Secretary of State of Delaware on
September 13, 1986, Certificate of Change of Registered
Agent and Registered Office filed with the Office of
Secretary of State of Delaware on August 17, 1987
Certificate of Merger Merging Maxicare Health Plans, Inc.
with and into Healthcare USA Inc. (including as Exhibit A
thereto the Restated Certificate of Incorporation of
Healthcare USA Inc. filed with the Office of the Secretary
of State of Delaware on May 17, 1991, Certificate of
Ownership and Merger Merging HealthAmerica Corporation into
Maxicare Health Plans, Inc. filed with the Office of the
Secretary of State of Delaware on November 22 1991,
Certificate of Amendment of Restated Certificate of
Incorporation of Maxicare Health Plans, Inc. filed with the
Office of the Secretary of State of Delaware on March 9,
1992, Certificate of Ownership and Merger Merging HCS
Computer, Inc. into Maxicare Health Plans, Inc. filed with
the Office of the Secretary of State of Delaware on November
6, 1992, and Certificate of Designation of Series B
Preferred Stock of Maxicare Health Plans, Inc. filed with
the Office of the Secretary of State of Delaware on February
27, 1998, Certificate of Amendment of Certificate of
Incorporation of Maxicare Health Plans, Inc. filed with the
Office of the Secretary of State of Delaware on July 30,
1998. Incorporated by reference from the Company's Quarterly
Report on Form 10-Q for the quarterly period ended September
30, 1998 in which this exhibit bore exhibit number 3.5.
5.1A Certificate of Amendment of Certificate of Incorporation of Maxicare
Health Plans, Inc., filed with the Office of the Secretary of State
of Delaware on September 14, 2000.
5.2A Rights Agreement, dated as of February 24, 1998, between
Maxicare Health Plans, Inc. and American Stock Transfer &
Trust Company as Rights Agent, which includes, as Exhibit A
thereto, the Certificate of Designation of Series B
Preferred Stock of Maxicare Health Plans, Inc., as Exhibit B
thereto, the Form of Right Certificate, Form of Assignment,
and Form of Election to Purchase, and as Exhibit C thereto,
the Summary of Rights Agreement. Incorporated by reference
from the Company's Report on Form 8-K dated May 4, 1999 in
which this exhibit bore exhibit number 4.13.
5.2B First Amendment to Rights Agreement of Maxicare Health
Plans, Inc., entered into and between Maxicare Health Plans,
Inc. and American Stock Transfer & Trust Company as of
October 9, 1999. Incorporated by reference from the
Company's Quarterly Report on Form 10-Q for the three months
ended September 30, 1998 in which this exhibit bore exhibit
number 4.13a.
5.2C Second Amendment to Rights Agreement of Maxicare Health
Plans, Inc., entered into by and between Maxicare Health Plans,
Inc. and American Stock Transfer & Trust Company as of June
6, 2000.
99.1 Press Release dated October 9, 2000 announcing expiration of
subscription period for Rights Offering.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
MAXICARE HEALTH PLANS, INC.
(Registrant)
Date: October 17, 2000 By: /s/ Richard A. Link
-------------------------------------
Chief Financial Officer
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