Exhibit 10.3l
SETTLEMENT AND RELEASE AGREEMENT
This Settlement and Release Agreement (this "Agreement")
is entered into this 16 day of April, 1999 (the "Execution Date"), by
and between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Employee") located at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and Maxicare Health Plans, Inc., a Delaware
corporation, located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Maxicare").
WHEREAS, Employee has been employed as Chairman of the
Board ("Chairman"), President and Chief Executive Officer ("CEO") of
Maxicare pursuant to the terms of that certain Amended and Restated
Employment and Indemnification Agreement dated as of April 1, 1996, as
amended by Amendment No. 1 thereto, dated February 11, 1997, Amendment
No. 2 thereto, dated March 28, 1998 and Amendment No. 3 thereto, dated
May 8, 1998 by and between Maxicare and Employee (collectively, the
"Employment Agreement");
WHEREAS, the Board of Directors of Maxicare (the
"Board") has indicated that they continue to support Employee as
Chairman, President and CEO and believe that Employee and the other
two directors up for reelection at the 1999 Annual Meeting of
Shareholders (the "1999 Annual Meeting"), Messrs. Field and Manne,
should be renominated for election should they choose to run (the
"Board Slate");
WHEREAS, Employee and Maxicare have been advised that
certain of its shareholders intend to propose a slate of directors at
the 1999 Annual Meeting which (i) does not include Employee and (ii)
which will include at least two new directors (collectively, the
"Shareholder Slate");
WHEREAS, election of the Shareholder Slate over the
Board Slate would trigger a "Change of Control" as such term is
defined under the Employment Agreement which would entitle the
Employee to terminate the Employment Agreement pursuant to Sections
7(f) and 9(a) thereof and to receive a lump sum cash payment
calculated pursuant to Section 8(a)(i) and (ii) of the Employment
Agreement (the "Parachute Payment");
WHEREAS, the Parachute Payment is estimated at
approximately $3.61 million if the trading price of Maxicare's Common
Stock is $5.00 or less at the time of the 1999 Annual Meeting and
$3.96 million in the event the trading price of Maxicare's Common
Stock is $8.00 at the time of the 1999 Annual Meeting;
WHEREAS, the Board and the Employee wish to save
Maxicare the expense, publicity and distraction of a proxy contest
between the Board Slate and the Shareholder Slate;
WHEREAS, effective as of the Effective Date, as such
term is hereinafter defined, and subject to the terms and conditions
set forth in this Agreement, on June 30, 1999 Employee is willing to
terminate the Employment Agreement, his service as a director of
Maxicare, his employment with Maxicare and to resign as Chairman, CEO
and President and to waive and release certain of his rights under the
Employment Agreement, including but not limited to payments pursuant
to Sections 8 (a)(i) and (ii) as a result of Change of Control and
Section 8(a)(iv) as a result of a termination pursuant to Section 7(b)
for "Good Reason" as such term is defined in the Employment Agreement
or Section 7(e) of the Employment Agreement;
NOW, THEREFORE, in consideration of the promises and
releases given herein, the parties hereby agree as follows:
1. Capitalized Terms. Except as expressly defined
herein, capitalized terms shall have the meanings
ascribed to them in the Amended Employment
Agreement.
2. Effectiveness of this Agreement. This Agreement
shall be deemed effective and shall be enforceable solely upon the
occurrence of the Effective Date. For purposes of this Agreement, the
"Effective Date" is defined as the date when all of the requirements
of the following Sections 2(a) and 2(b) are met:
(a) The occurrence of both of the following time
periods which shall run consecutively: (i) the Release Review Period
which shall be deemed to be a period consisting of either: (y) twenty-
one (21) days following the date of delivery of this Agreement to the
Employee, which Employee acknowledges to be April 9, 1999 (the
"Release Delivery Date") or (z) such lesser period as the Employee may
agree to in writing and (ii) the Release Revocation Period which shall
be deemed to be a period consisting of seven (7) days following the
Execution Date of this Agreement by the Employee. During the Release
Revocation Period, Employee may revoke and rescind this Agreement at
any time by delivering written notice thereof to Maxicare. The Release
Revocation Period shall terminate at 12:01 a.m., Los Angeles time on
the Effective Date which shall be the eighth (8th) day following the
commencement date thereof; and
(b) The following occur: (i) the delivery of the
fully executed Exhibits "A - I" hereof (hereinafter, collectively the
"Related Agreements"); (ii) the Effective Date of the Consulting
Agreement between the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. ("▇▇▇▇▇▇▇")
pursuant to which ▇▇▇▇▇▇▇ agrees to function as the Company's Chief
Operating Officer ("COO"); and (iii) unanimous approval of this
Agreement by the Board provided, however, that if such approval is not
unanimous, Employee may elect to declare this Agreement and the
Related Agreements null and void.
3. Amendment No. 4 to the Employment Agreement.
Subject to and conditioned upon the occurrence of the Effective Date,
Maxicare and the Employee agree that, as of the Effective Date, the
Employment Agreement shall be further amended by Amendment No. 4
thereto, as attached hereto and made a part hereof as Exhibit "A" (the
Employment Agreement, as amended by Amendment No. 4 thereto,
hereinafter referred to "Amended Employment Agreement"). The Amended
Employment Agreement shall provide that: (i) the expiration of the
term thereof shall be June 30, 1999 (the "Termination Date"), and (ii)
effective as of the Effective Date thereof, Employee agrees that he
will not stand for re-election for Director of Maxicare nor shall
Employee consent to be nominated as a Director of Maxicare at the
Annual Meeting of Shareholders scheduled for June 30, 1999. On the
Termination Date, Employee shall resign as Chairman, CEO, President
and a director of Maxicare and as an employee, officer and/or director
of Maxicare's subsidiaries through the delivery to Maxicare of a
resignation executed by Employee as attached hereto and made a part
hereof as Exhibit "B" (the "Resignation"). Except as otherwise
provided herein or in Section 7 or Section 17 below, all rights to any
compensation or benefits enjoyed by or due to Employee as part of
Employee's employment with Employer pursuant to the Employment
Agreement or the Amended Employment Agreement shall cease as of the
Termination Date; including but not limited to any rights to office or
parking space, vacation or sick pay, use of telephones, xeroxing or
facsimile equipment, secretarial assistance, all benefits and/or
rights pursuant to Section 5 of the Employment Agreement and
additional Stock Options grants after the Termination Date pursuant to
Section 4(c) of the Employment Agreement. Employee further
acknowledges and agrees that effective as of the Effective Date: (i)
Employee shall not be entitled to any Performance Bonus pursuant to
Section 4(b) of the Employment Agreement or Amended Employment
Agreement for 1999 or any period thereafter; (ii) Employee shall waive
any future rights to a Sale Bonus under Section 10 of the Employment
Agreement; and (iii) Employee shall not be entitled to receive any
additional stock option grants pursuant to Section 4(c) of the
Employment Agreement. Employee further acknowledges that through the
Execution Date, Employee has been reimbursed in full by Maxicare for
all reimbursable expenses that Employee would be entitled to
reimbursement for pursuant to Section 6 of the Employment Agreement or
otherwise. During the period from the Effective Date through the
Termination Date (the "Transition Period"), Employee shall continue to
serve as the Chairman, CEO, President and a director of Maxicare;
however, Employee's powers and duties during the Transition Period
shall be solely as set forth by the Executive Committee of the Board
(the "Executive Committee"). Employee acknowledges that on the
Effective Date, Maxicare shall engage ▇▇▇▇▇▇▇ as Chief Operating
Officer and all of Maxicare's officers and employees (other than
Employee) shall report to ▇▇▇▇▇▇▇ during the Transition Period.
During the Transition Period, Maxicare shall only be entitled to
terminate the Amended Employment Agreement (i) for "Cause" pursuant to
Section 7(d) of the Amended Employment Agreement, (ii) due to the
"Incapacity" of the Employee or (iii) as a result of the Employee's
death.
4. Consulting Agreement. On the Execution Date,
Employee and Maxicare shall execute a four year consulting agreement,
as attached hereto and made a part hereof as Exhibit "C" (the
"Consulting Agreement"). Unless the Amended Employment Agreement
terminates as a result of Sections 7(a), 7(b) without "Good Reason",
7(c), 7(d) or 7(f) during the Transition Period, the Consulting
Agreement shall commence on July 1, 1999 (the "Commencement Date")
and, unless terminated sooner pursuant to the terms thereof, shall
terminate on June 30, 2003. During the term of the Consulting
Agreement, Employee shall receive a consulting fee of $500,000 per
annum. In addition, during the term of the Consulting Agreement,
Employee shall receive solely those benefits currently received by
Employee pursuant to Section 5 of the Employment Agreement and which
are expressly set forth in Schedule 1 attached hereto and made a part
hereof. The effectiveness of the Consulting Agreement shall be
subject to and conditioned upon the occurrence of the Effective Date
unless Employee terminates the Amended Employment Agreement pursuant
to Section 7(b) thereof for Good Reason.
5. Amendments to Loan Agreement and Promissory Notes.
On the Execution Date, Employee and Maxicare shall execute Amendment
No. 1 to the Loan Agreement dated as of February 18, 1997 between
Maxicare and Employee as attached hereto and made a part hereof as
Exhibit "D" (the "Amendment No. 1 to the Loan Agreement") and execute
Amendment No. 1 to the Pledge Agreement dated as of February 18, 1997
between Maxicare and Employee as attached hereto and made a part
hereof as Exhibit "E" (the "Amendment No. 1 to the Pledge Agreement").
On the Effective Date, Employee shall execute and deliver an Amended
and Restated Secured Promissory Note that amends and restates the
Secured Promissory Note of the Employee dated February 18, 1997 and
such Amended and Restated Secured Promissory Note shall be attached
hereto and made a part hereof as Exhibit "F" ("Amended and Restated
Secured Promissory Note"). The effectiveness of Amendments No.1 to
the Loan and Pledge Agreements and the Amended and Restated Secured
Promissory Note shall be subject to and conditioned upon both (i) the
occurrence of the Effective Date and (ii) expiration of the Amended
Employment Agreement on the Termination Date or its earlier
termination for any reason, except (y) by Employee pursuant to Section
7(b) of the Amended Employment Agreement without "Good Reason" or (z)
for "Cause" pursuant to Section 7(d) of the Amended Employment
Agreement. Upon the effectiveness of the Amended and Restated Secured
Promissory Note, Maxicare shall cancel and deliver to Employee the
Secured Promissory Note of the Employee dated February 18, 1997.
6. Cancellation of Promissory Note dated July 30, 1998.
On the Effective Date, Maxicare shall cancel and deliver to Employee
the Promissory Note dated July 30, 1998, in the principal amount of
$143,118 (the "1998 Note"). The effectiveness of the cancellation of
the 1998 Note shall be subject to and conditioned upon both (i) the
occurrence of the Effective Date and (ii) expiration of the Amended
Employment Agreement on the Termination Date or its earlier
termination for any reason, except (y) by Employee pursuant to Section
7(b) of the Amended Employment Agreement without "Good Reason" or (z)
for "Cause" pursuant to Section 7(d) of the Amended Employment
Agreement.
7. Payments to Executive. Maxicare agrees to pay
Employee all salary, wages, vacation pay or other compensation and
benefits due, accrued and unpaid pursuant to the Amended Employment
Agreement through the Termination Date, or its earlier termination
pursuant to Section 7 thereof.
8. Amendments to outstanding Options under the 1996
Senior Executive Stock Option Plan. On the Execution Date, Maxicare
shall deliver to Employee an Amendment No.1 to the Option Agreement
and shall approve and implement Amendment No.2 to the Maxicare Health
Plans, Inc. Senior Executives 1996 Stock Option Plan ("Plan Amendment
No.2"), as attached hereto and made a part hereof, as Exhibits "G-1"
and ""G-2", respectively, with respect to those options granted prior
to the Execution Date to Employee under the Maxicare Health Plans,
Inc. Senior Executives 1996 Stock Option Plan listed in Schedule 2 as
attached hereto and made a part hereof (the "Amended Options"). The
Amended Options shall have a term expiring on January 1, 2005 and an
exercise price equal to $1.875 over the average closing trade price of
Maxicare's Common Stock for the last five trading days immediately
preceding the Effective Date. The effectiveness of Amendment No.1 to
the Option Agreement and Plan Amendment No. 2, shall be subject to and
conditioned upon both (i) the occurrence of the Effective Date and
(ii) expiration of the Amended Employment Agreement on the Termination
Date or its earlier termination for any reason, except (y) by Employee
pursuant to Section 7(b) of the Amended Employment Agreement without
"Good Reason" or (z) for "Cause" pursuant to Section 7(d) of the
Amended Employment Agreement.
9. Amendment to outstanding Options dated as of August
31, 1989. On the Execution Date, Maxicare shall deliver to Employee
an Amended and Restated Option Agreement, as attached hereto and made
a part hereof as Exhibit "H", with respect to options to purchase
277,777.5 shares of Maxicare's Common Stock at $6.54 per share granted
to Employee pursuant to that certain Option Agreement with Maxicare
dated, as of August 31, 1989, as amended by Amendment No. 1 dated
April 1, 1996 (the "Amended and Restated Confirmation Options"). The
Amended and Restated Confirmation Options shall provide that Employee
shall be entitled to exercise all outstanding Options subject thereto
through and until December 5, 2000. The effectiveness of the Amended
and Restated Option Agreement shall be subject to and conditioned upon
both (i) the occurrence of the Effective Date and (ii) expiration of
the Amended Employment Agreement on the Termination Date or its
earlier termination for any reason, except (y) by Employee pursuant to
Section 7(b) of the Amended Employment Agreement without "Good Reason"
or (z) for "Cause" pursuant to Section 7(d) of the Amended Employment
Agreement.
10. Amendment to Supplemental Executive Retirement Plan.
On the Execution Date, Maxicare shall execute Amendment No. 3, as
attached hereto and made a part hereto as Exhibit "I" to the Maxicare
Health Plans, Inc. Supplemental Executive Retirement Plan (the "SERP")
dated as of January 1, 1997, as amended by Amendment No. 1, dated as
of March 28, 1998 and Amendment No. 2, dated as of May 8, 1998
("Amendment No. 3 to the SERP"). Amendment No. 3 to the SERP which
shall become effective on the Commencement Date, shall provide among
other things that Employee shall continue to accrue rights and
benefits under the SERP during the term of the Consulting Agreement.
The effectiveness of Amendment No. 3 to the SERP shall be subject to
and conditioned upon both (i) the occurrence of the Effective Date and
(ii) expiration of the Amended Employment Agreement on the Termination
Date or its earlier termination for any reason, except (y) by Employee
pursuant to Section 7(b) of the Amended Employment Agreement without
"Good Reason" or (z) for "Cause" pursuant to Section 7(d) of the
Amended Employment Agreement.
11. Attorneys Fees. On the Effective Date, in
connection with the negotiation and documentation of this Agreement
and the Related Agreements, Maxicare agrees to pay the Firm of
Valensi, Rose & Magaram ("VR&M") the sum of $50,000.
12. Release of Maxicare Released Parties.
(a) Except as expressly set forth in Section 12(b)
below and subject to and conditioned upon the occurrence of each of
the following conditions: (i) the Effective Date; (ii) Maxicare's
satisfactions of its obligations under the Amended Employment
Agreement through the expiration of the Amended Employment Agreement
Termination Date or its earlier termination for any reason, except
such termination by reason of Section 7(b) for "Good Reason"; and
(iii) the delivery of each of the Related Agreements which have been
fully executed, this Section 12 shall become effective on the
Termination Date or the earlier termination of the Amended Employment
Agreement for any reason, except by Employee pursuant to Section 7(b)
thereof for "Good Reason", Employee, on his own behalf and on behalf
of his agents, attorneys, representatives, assigns, transferees,
predecessors in interest, successors in interest, joint venturers,
partners, employees, officers, directors, heirs, legatees, executors,
administrators, and servants (all of which for convenience are
hereinafter referred to as the "Employee Releasing Parties"), hereby
releases and absolutely and forever discharges Maxicare, its agents,
attorneys, representatives, assigns, transferees, predecessors in
interest, successors in interest, affiliates, subsidiaries, joint
venturers, partners, and their respective employees, officers,
directors, heirs, legatees, executors, administrators, and servants
(all of which for convenience are hereinafter referred to as "Maxicare
Released Parties"), from, and shall indemnify and hold Maxicare and
the Maxicare Released Parties harmless from and against, any and all
rights, claims, demands, damages, debts, liabilities, accounts,
obligations, reckonings, liens, attorney's fees, costs, expenses,
actions and causes of action of every kind and nature whatsoever,
whether now known or unknown, suspected or unsuspected, based upon
statute, common law or otherwise, which Employee and/or any of the
Employee Releasing Parties has, own or hold, or at any time heretofore
ever had, owned or held, or may hereafter have, own or hold based upon
or related to any fact, thing, act, event, happening, inaction or
omission occurring or existing at any time up to and including the
Termination Date (collectively "Employee Claims"), including but not
limited to those arising out of, relating to or in connection with
Employee's employment with Maxicare, the Employment Agreement, the
Amended Employment Agreement and any compensation or benefit of any
nature whatsoever which may be due Employee or which may become due
Employee as a result of Employee's employment or consulting services
by Maxicare or any of the Maxicare Released Parties, and the
termination thereof; severance benefits or other compensation or
benefits due to Employee pursuant to Sections 4, 5, 6, 8, 9, 10, 16
and 18(f) of the Employment Agreement and the Amended Employment
Agreement and all Employee Claims, compensation and/or benefits
arising out of or relating to the Employment Agreement, the Amended
Employment Agreement or the termination thereof (all of which for
convenience are hereinafter referred to as the "Employee Released
Matters").
(b) Employee Released Matters shall not extend to
any rights or claims which: (i) Employee may have or which may in the
future arise under Sections 11 ("Indemnification"), 14 ("Advance of
Fees and Expenses"), 18(d) ("Construction") and 18(g) ("Jurisdiction")
of the Amended Employment Agreement or (ii) which may arise with
respect to any breach by the Company of the Amended Employment
Agreement.
13. Release of Employee.
(a) Except as set forth in Section 13 (b) below
and subject to and conditioned upon the occurrence of each of the
following: (i) the Effective Date, (ii) expiration of the Amended
Employment Agreement on the Termination Date or its earlier
termination for any reason, except (y) by Employee pursuant to Section
7(b) of the Amended Employment Agreement without "Good Reason" or (z)
for "Cause" pursuant to Section 7(d) of the Amended Employment
Agreement and (iii) the delivery of each of the Related Agreements
which have been fully executed, on the Termination Date, this Section
13 shall become effective and Maxicare, on its own behalf and on
behalf of its subsidiaries, "affiliates" (as such term is defined
under the Securities Exchange Act of 1934, as amended), officers,
directors, employees, shareholders, agents, attorneys, accountants,
representatives, assigns, transferees, predecessors in interest,
successors in interest, joint venturers, partners and servants (all
of which for convenience are hereinafter referred to as the "Maxicare
Releasing Parties"), shall hereby release and absolutely and forever
discharges Employee, its agents, attorneys, representatives, assigns,
transferees, successors in interest, and their respective employees,
officers, directors, heirs, legatees, executors, administrators, and
servants (all of which for convenience are hereinafter referred to as
"Employee Released Parties"), from, and shall indemnify and hold
Employee and the Employee Released Parties harmless from and against,
any and all rights, claims, demands, damages, debts, liabilities,
accounts, obligations, reckonings, liens, attorney's fees, costs,
expenses, actions and causes of action of every kind and nature
whatsoever, whether now known or unknown, suspected or unsuspected,
based upon statute, common law or otherwise, which Maxicare and/or any
of the Maxicare Releasing Parties has, own or hold, or at any time
heretofore ever had, owned or held, or may hereafter have, own or hold
based upon or related to any fact, thing, act, event, happening,
inaction or omission occurring or existing at any time up to,
including the Termination Date (collectively "Maxicare Claims"),
arising out of or in connection with (i) Employee's employment with
Maxicare; (ii) Employee's service as a Director of Maxicare; (iii)
Employee's services as an officer and/or director of any parent,
subsidiary or affiliate of Maxicare (collectively with Maxicare,
hereinafter the "Company"); (iv) Employee's service as a consultant;
(v) any actions or failure to act by the Employee on behalf of the
Company; and (vi) all obligations of Employee to the Company pursuant
to the Amended Employment Agreement, Employment Agreement or the Old
Employment Agreement (all of which for convenience are hereinafter
referred to as the "Maxicare Released Matters").
(b) Maxicare Released Matters shall not extend to
any rights or claims which Company may have or which may in the future
arise with respect to (i) (y) "willful" actions or misconduct which
are materially injurious to the Company; provided, however that to
be considered willful an act must be done in bad faith and without
reasonable belief on the part of the Employee that the action was in
the interests of the Company or (z) conviction by final judgment of
Employee of a felony or a crime involving moral turpitude, theft,
fraud or dishonesty with respect to Employee's actions or failure to
act as an officer, director or employee of the Company; or (ii)
Sections 11 ("Indemnification'), 14 ("Advance of Fees and Expenses"),
18(d) ("Construction") and 18(g) ("Jurisdiction") of the Amended
Employment Agreement or (iii) any breaches by Employee of the Amended
Employment Agreement.
14. Applicability of California Civil Code Section 1542.
Employee Releasing Parties and Maxicare Releasing Parties
(collectively the "Releasing Parties") waive and relinquish all
rights and benefits afforded by Section 1542 of the Civil Code of
State of California with respect to the Employee Released Matters and
Maxicare Released Matters. The Releasing Parties understand that the
facts with respect to the releases contained in this Agreement may
hereinafter turn out to be other than or different from the facts in
that connection now known or believed by the Releasing Parties to be
true; and the Releasing Parties hereby accepts and assumes the risk of
the facts turning out to be different and agrees that this Agreement
shall be and remain in all respects effective and not subject to
termination or rescission by virtue of any such difference in facts.
Section 1542 of the Civil Code of the State of
California reads as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor."
15. Releases Contained Herein Irrevocable; Covenant Not
to ▇▇▇. Upon the effectiveness of the releases set forth in Sections
12 and 13 above, the releases contained herein shall become
irrevocable with respect to the Maxicare and/or Employee Released
Parties (collectively, the "Released Parties") as to the Maxicare
and/or Employee Released Matters (collectively, the "Released
Matters"). Furthermore, the Releasing Parties hereby covenant and
agree that they will forever refrain and forebear from commencing,
instituting or prosecuting any lawsuit, action or other proceeding
against the Released Parties based on, arising out of, or in
connection with the Released Matters. Notwithstanding the foregoing,
nothing contained herein shall preclude Employee or Maxicare from
exercising their respective rights subject to Section 23(h) hereof in
the event the other party breaches any of its obligations hereunder.
16. Withholding Taxes. Employee understands and agrees
that Maxicare shall be entitled to and shall withhold from any payment
required hereby such applicable state and federal withholding or
similar taxes as may be required.
17. Survival of Amended Employment Agreement Provisions.
The rights and/or obligations of Maxicare and Employee under Sections
11, 12, 13, 14, 18(d) and 18(g) of the Amended Employment Agreement
shall not be affected hereby, which rights and obligations or
provisions shall survive in accordance with the terms of the Amended
Employment Agreement. Except as expressly set forth above all of the
terms and provisions of the Amended Employment Agreement shall be
terminated and no longer of any force or effect as of the Termination
Date.
18. No Representations. The parties hereto represent and
acknowledge that in executing this Agreement they do not rely and have
not relied upon any representation or statement made by any of the
parties or by any of the parties' agents, attorneys or representatives
with regard to the subject matter, basis or effect of this Agreement
or otherwise, other than those specifically stated in this written
Agreement.
19. Federal Age Discrimination in Employment Act.
Employee acknowledges and agrees that:
(a) This Agreement constitutes a voluntary waiver
of any and all rights and claims Employee has against the Maxicare
Released Parties as of the date of the Employee's execution of this
Agreement under the Federal Age Discrimination in Employment Act of
1986, 29 U.S.C. Section 621, et. seq.;
(b) Employee has waived rights or Employee Claims
pursuant to this Agreement, including, but not limited to,
remuneration for which Employee is entitled, in exchange for the
consideration received from Maxicare, including but not limited to
agreements and obligations of Maxicare contained in the Related
Agreements, the value of which exceeds payment or remuneration to
which Employee was already entitled;
(c) Employee has been advised to consult with an
attorney concerning this Agreement prior to executing it;
(d) Employee was given twenty-one (21) days to
consider the terms of this Agreement or expressly waived such
consideration period; and
(e) Employee may revoke this Agreement at any time
during the seven (7) days following Employee's execution of this
Agreement and that this Agreement does not become effective or
enforceable until the Release Revocation Period has expired, which
will be the Effective Date of this Agreement.
20. Release of Future Rights and Benefits. Employee
acknowledges and agrees that the Company, at the Employee's request,
has agreed to the agreements and obligations contained in the Related
Agreements as full satisfaction and discharge of Employee's rights and
any Employee Claims with respect to certain benefits and future
contingent compensation under the Employment Agreement and the Amended
Employment Agreement, including but not limited to (i) Employee's
relinquishment of all rights and future benefits after the Termination
Date under Section 5 of the Employment Agreement in existing benefit
plans and plans which may in the future be established; (ii) potential
Sale Bonuses after the Effective Date pursuant to Section 10 of the
Employment Agreement; (iii) payments as a result of a Change of
Control after the Termination Date pursuant to Sections 8 (a)(i) and 8
(a)(ii) of the Employment Agreement (the "Change of Control Payment");
and (iv) potential Performance Bonuses payable after the Effective
Date under Section 4(b) of the Employment Agreement. Employee is
aware that the value of the future benefits being relinquished by such
Employee could greatly exceed the payments and obligations of Maxicare
under the Related Agreements and the value of the future Performance
Bonuses, Change of Control Payment and Sale Bonus could in the
aggregate exceed $8,000,000. Except for those benefits set forth in
Schedule 1, nothing contained herein, shall require Maxicare to
maintain any plan or benefit program for its employees or executives
or prohibit Maxicare from establishing any new benefits or plans in
the future any rights or interests to which Employee is expressly
waiving by the terms hereof. Notwithstanding the foregoing and
without the encouragement by or request of the Company, the Employee
has elected to forego these rights and benefits and certain other
rights in return for the consideration to be received by Employee
pursuant to the Related Agreements.
21. Non-Assignment of Released Matters. Employee
represents and warrants that Employee has not heretofore assigned or
transferred, or purported to assign or transfer, to any person, firm
or corporation whomsoever any Employee Claim. In the event that any
Employee Claim arising out of or relating to an Employee Released
Matter should be made or instituted against any Maxicare Released
Parties because of any such purported assignment or transfer, Employee
agrees to indemnify and hold harmless such Maxicare Released Parties
and to satisfy any such Employee Claim, including reasonable expenses
of investigation, attorneys' fees and costs relating thereto.
22. Representation by Counsel. Employee acknowledges
that Maxicare has advised Employee to seek the advice of counsel in
connection with Employee's rights with respect to the Employment
Agreement, Amended Employment Agreement, Related Agreements, the
termination of his employment with Maxicare and this Agreement. In
connection therewith, Employee has been represented by and has
consulted with counsel of his own choice throughout the Release Review
Period, VR&M, with respect to the above and the negotiations which
preceded Employee's execution of this Agreement and during the Release
Revocation Period. In connection with the foregoing, Employee and
Maxicare acknowledge that Maxicare has been represented by the firm of
Jeffer, Mangels, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP ("JMBM") in connection with the
negotiation, documentation and execution of this Agreement and the
Related Agreements. Employee and Maxicare further acknowledge that
JMBM has in the past represented Diane's Designs, a corporation owned
by Employee and Employee's spouse and that JMBM does not now currently
represent Diane's Designs. In connection with all matters relating to
this Agreement and Related Agreements, JMBM has represented solely the
interest of Maxicare.
23. Miscellaneous
(a) Employee acknowledges that this Agreement
affects the settlement of claims which are denied and contested by
Maxicare, and that nothing contained herein shall be construed as an
admission of liability by or on behalf of Maxicare, by whom liability
is expressly denied. In addition, Maxicare acknowledges that this
Agreement affects the settlement of claims which are denied and
contested by Employee, and that nothing contained herein shall be
construed as an admission of liability by or on behalf of Employee, by
whom liability is expressly denied.
(b) This Agreement shall be binding upon and shall
inure to the benefit of (and be enforceable by) Employee and his
respective legal heirs in the event of Employee's death or
incompetency. All of the covenants and arguments herein contained in
favor of the Maxicare Released Parties are for the express benefit of
each and all of them.
(c) This Agreement is made and entered into in the
State of California and shall be interpreted and enforced under and
pursuant to the laws of said jurisdiction.
(d) Wherever in this Agreement the context may
require, the masculine gender shall be deemed to include the feminine
and/or neuter, and the singular to include the plural.
(e) This Agreement shall be binding upon and inure
to the benefit of Maxicare, Employee, the Released Parties and their
respective successors and assigns. This Agreement shall not be
terminated by the voluntary or involuntary dissolution of Maxicare or
by any merger, reorganization or other transaction in which Maxicare
is not the surviving or resulting corporation or upon any transfer of
all or substantially all of the assets of Maxicare in the event of any
such merger, or transfer of assets.
(f) This Agreement may not be modified, altered or
amended except by an instrument in writing signed by the parties
hereto.
(g) Nothing in the Agreement is intended to
require or shall be construed as requiring Maxicare to do or fail to
do any act in violation of applicable law. 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.
(h) The parties hereto agree that any and all
disputes hereunder, including but not limited to, any purported breach
by Maxicare or Employee of their obligations pursuant to this
Agreement, shall be submitted to a court located in Los Angeles,
California and in this regard, the parties agree that they shall
consent to personal jurisdiction in any state and/or the United States
District Court for the Central District of California sitting in Los
Angeles, California and agree to venue in the State of California.
All costs and expenses (including attorneys' fees) incurred by the
parties in connection with any dispute arising under this Agreement,
shall be apportioned between the parties by such court based upon such
court's determination of the merits of their respective positions.
(i) Any notice to Maxicare required or permitted
hereunder shall be given in writing to Maxicare, 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 Maxicare at the address set forth above or to such other
addresses as Maxicare may hereinafter notify Employee, with a copy to
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., Jeffer, Mangels, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. 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 set forth
above with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., Valensi Rose & Magaram
PLC, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇. For the purpose of determining compliance with any time limit
herein, a notice shall be deemed given on the fifth business day
following the postmarked date, if mailed, or the date of delivery if
personally delivered or delivered by telex or telecopier.
(j) 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.
(k) The paragraph and subparagraph headings
contained in this Agreement are solely for convenience and shall not
be considered in its interpretation.
(l) This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
(m) Employee represents and agrees that Employee
has carefully read and fully understands all of the provisions of this
Agreement and is voluntarily entering into this Agreement.
(n) Employee and Maxicare hereby agree that there
will be a mutually agreeable press release upon the occurrence of
execution of this Agreement and the Related Agreements.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first written above.
MAXICARE HEALTH PLANS, INC.
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. Link
▇▇▇▇ ▇. ▇▇▇▇▇, Secretary ▇▇▇▇▇▇▇ ▇. Link, Executive
Vice President and Chief
Financial Officer
"EMPLOYEE"
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Schedule 1
Description of Company Benefits
o Basic life insurance (underwritten by Maxicare Life and
Health Insurance Company - "MLH"); face value of
$1,200,000.
o Basic Accidental Death and Dismemberment (underwritten
by Transamerica); policy value of $500,000.
o Long term disability (underwritten by UNUM).
o Indemnity medical coverage (underwritten by MLH);
subscriber and dependents.
o Indemnity dental coverage (underwritten by SafeHealth
Insurance Company); subscriber and dependents.
o Maxicare medical coverage; subscriber and dependents.
o Maxicare dental coverage; subscriber and dependents.
o Maxicare Health Plans, Inc. - Supplemental Executive
Retirement Plan.
Schedule 2
Options Previously Granted Under the Maxicare Health
Plans, Inc. 1996 Senior Executives Stock Option Plan
Exercise
Number of Shares Date of ▇▇▇▇▇ ▇▇▇▇▇ Expiration Date
70,000 July 26, 1996 $14.75 July 26, 2006
70,000 January 1, 1997 $22.25 January 1, 2007
70,000 January 1, 1998 $10.88 January 1, 2008