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EXHIBIT 99.1
MAXICARE HEALTH PLANS, INC.
COMMON STOCK
PURCHASE AGREEMENT
October 17, 2000
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TABLE OF CONTENTS
Page
SECTION 1. AUTHORIZATION OF SALE OF THE SHARES..................................................-1-
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES............................................-1-
2.1 Sale of Shares.......................................................................-1-
2.2 Acceptance of Proposed Purchase of Shares............................................-1-
SECTION 3. CLOSING AND DELIVERY.................................................................-1-
3.1 Closing..............................................................................-1-
3.2 Delivery of the Shares at the Closing................................................-2-
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.............................-2-
4.1 Organization and Standing............................................................-2-
4.2 Corporate Power; Authorization.......................................................-2-
4.3 Issuance and Delivery of the Shares..................................................-3-
4.4 Offering Memorandum; Additional Disclosure Documents; Financial
Statements...........................................................................-3-
4.5 Intellectual Property................................................................-4-
4.6 Capitalization.......................................................................-4-
4.7 Litigation...........................................................................-5-
4.8 No Defaults..........................................................................-5-
4.9 Governmental Consents................................................................-5-
4.10 Taxes................................................................................-5-
4.11 Insurance............................................................................-5-
4.12 Investment Company...................................................................-6-
4.13 Listing; Maintenance of Listing......................................................-6-
4.14 No Registration......................................................................-6-
4.15 Subsidiaries.........................................................................-6-
4.16 Material Adverse Effect. ..........................................................-6-
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER...........................-6-
SECTION 6. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING...................................-9-
6.1 Representations and Warranties Correct...............................................-9-
6.2 No General Solicitation; Blue Sky....................................................-9-
SECTION 7. CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING.
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7.1 Registration Statement Effective.....................................................-9-
7.2 Representations and Warranties Correct...............................................-9-
7.3 Legal Opinions......................................................................-10-
7.4 Material Adverse Effect. . ........................................................-10-
7.5 Equity Financings..................................................................-10-
SECTION 8. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.....................-10-
8.1 Registration Procedures and Expenses................................................-10-
8.2 Transfer of Shares..................................................................-12-
8.3 Indemnification.....................................................................-12-
8.4 Termination of Conditions and Obligations...........................................-13-
8.5 Changes in Purchaser Information....................................................-14-
SECTION 9. MISCELLANEOUS.......................................................................-14-
9.1 Waivers and Amendments..............................................................-14-
9.2 Headings............................................................................-14-
9.3 Broker's Fee........................................................................-14-
9.4 Severability........................................................................-14-
9.5 Notices.............................................................................-14-
9.6 Governing Law.......................................................................-15-
9.7 No Joint Liability. ...............................................................-15-
9.8 Counterparts........................................................................-15-
9.9 Survival of Representations, Warranties and Agreements, Definition of "Knowledge"...-15-
9.10 Successors and Assigns..............................................................-15-
9.11 Entire Agreement....................................................................-16-
9.12 Payment of Fees and Expenses........................................................-16-
9.13 Confidentiality.....................................................................-16-
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ATTACHMENTS:
Exhibit A Offering Memorandum
Exhibit B Form of Legal Opinion of Jeffer, Mangels, Xxxxxx & Xxxxxxx LLP
Exhibit C Form of Legal Opinion of Xxxx Xxxxx, general counsel to
the Company
Exhibit D Press Releases
Schedule 4.3
Schedule 4.4(c)
Schedule 4.6
Appendix I Stock Certificate Questionnaire
Appendix II Registration Statement Questionnaire
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COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made as of
October 17, 2000 (the "EFFECTIVE DATE"), by and among Maxicare Health Plans,
Inc., a Delaware corporation with its principal place of business at 0000 Xxxxx
Xxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (the "COMPANY") and the
purchaser signatory hereto (the "PURCHASER").
AGREEMENT
In consideration of the mutual covenants contained in this Agreement, and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Purchaser hereby agree as follows:
SECTION 1. AUTHORIZATION OF SALE OF THE SHARES. Subject to the terms and
conditions of this Agreement, the Company has, or before the Closing (as defined
below) will have, authorized the sale and issuance of ________________ shares of
its common stock (the "COMMON STOCK") to the Purchaser. The shares of Common
Stock sold hereunder shall be referred to herein as the "SHARES."
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES.
2.1 SALE OF SHARES. At the Closing (as defined in Section 3.1 hereof), the
Company shall sell, and the Purchaser shall purchase, at a purchase price of One
Dollar ($1.00) per Share and for an aggregate purchase price of
___________________ Dollars ($________), the Shares.
2.2 ACCEPTANCE OF PROPOSED PURCHASE OF SHARES. The Company shall have no
obligation hereunder with respect to the Purchaser until the Company shall
execute and deliver to the Purchaser an executed copy of this Agreement. If this
Agreement is not executed and delivered by the Company or the sale of Shares
contemplated hereby is terminated by the Company, this Agreement shall be of no
further force and effect.
SECTION 3. CLOSING AND DELIVERY.
3.1 CLOSING. The closing of the purchase and sale of the Shares pursuant to
this Agreement (the "CLOSING") shall be held as soon as practicable after the
effectiveness of the Registration Statement (as defined and set forth in Section
8.1(a) hereof), to be filed with the Securities and Exchange Commission (the
"SEC"), and the satisfaction or waiver of all other conditions to Closing set
forth in Sections 6 and 7 hereof, at 10:00 a.m. (Pacific Time) at the offices of
Jeffer, Mangels, Xxxxxx & Xxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxx, 00xx Xxxxx, Xxx
Xxxxxxx, XX 00000, or on such other date and place as may be agreed to by the
Company and the Purchaser. The Company shall give at least three (3) business
days prior written notice to the Purchaser, in a manner provided for in Section
9.5 hereof, of the date, time and location of the
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Closing. At or prior to the Closing, the Purchaser shall execute any related
agreements or other documents required to be executed hereunder, dated as of the
date of the Closing (the "CLOSING DATE").
3.2 DELIVERY OF THE SHARES AT THE CLOSING. At the Closing, the Company
shall deliver to the Purchaser one or more stock certificate(s) registered in
the name of the Purchaser, or in such nominee name(s) as designated by the
Purchaser, representing the Shares to be purchased by the Purchaser at the
Closing against payment of the purchase price for the Shares by wire transfer of
immediately available funds. The name(s) in which the stock certificates are to
be issued to the Purchaser are set forth in the Stock Certificate Questionnaire
in the form attached hereto as APPENDIX I, as completed by the Purchaser.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
The representations and warranties of the Company are qualified in their
entirety by the information and statements contained in (i) the Offering
Memorandum, dated September, 2000 attached as EXHIBIT A hereto (together with
the attachments thereto, the " OFFERING MEMORANDUM"), (ii) the Rights Prospectus
dated September 14, 2000, forming part of the Registration Statement on Form S-2
(SEC File No. 333-41510) originally filed with the SEC on or about July 14, 2000
(together with any amendments thereto, the "RIGHTS REGISTRATION STATEMENT"), or
(iii) the documents incorporated by reference into the Rights Prospectus, which,
together with the Proxy Statement dated August 31, 2000 and the press releases
attached hereto as EXHIBIT D shall be hereafter referred to as the "ADDITIONAL
DISCLOSURE DOCUMENTS". Subject to the foregoing, the Company hereby represents
and warrants as of the date hereof to, and covenants with, the Purchaser as
follows:
4.1 ORGANIZATION AND STANDING. Each of the Company and its subsidiaries has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has full corporate
power and authority to own or lease its properties and conduct its business as
presently conducted.
4.2 CORPORATE POWER; AUTHORIZATION. The Company has all requisite corporate
power, and has taken all requisite corporate action, to execute and deliver this
Agreement, sell and issue the Shares and carry out and perform all of its
obligations under this Agreement. This Agreement constitutes the legal, valid
and binding obligation of the Company, enforceable in accordance with its terms,
except (a) as limited by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium and other laws of general applicability relating to or
affecting creditors' rights, (b) as limited by equitable principles generally,
whether such enforceability is considered in a proceeding in equity or at law,
and (c) as rights to indemnity or contribution hereunder may be limited by
federal or state securities laws or principles of public policy. Except as would
not individually or in the aggregate have a material adverse effect on, or
result in a material adverse change in, the business, properties, operations,
condition (financial or
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other) or results of operations of the Company and its subsidiaries, taken as a
whole, or render this Agreement, or any portion hereof, invalid or unenforceable
or impair in any material respect the ability of the Company to perform fully
its obligations hereunder (any of the foregoing shall be referred to herein as a
"MATERIAL ADVERSE EFFECT"), the execution and delivery of this Agreement does
not, and the performance of this Agreement and the compliance with the
provisions hereof and the issuance, sale and delivery of the Shares by the
Company will not conflict with, or result in a breach or violation of the terms,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of any lien pursuant to the terms of (i) the Certificate
of Incorporation or Bylaws of the Company, (ii) any statute, law, rule or
regulation applicable to the Company, (iii) any state or federal order, judgment
or decree applicable to the Company, or (iv) any indenture, mortgage, lease or
other agreement or instrument to which the Company or any of its properties is
subject.
4.3 ISSUANCE AND DELIVERY OF THE SHARES. The Shares have been duly
authorized and, when issued and paid for in compliance with the provisions of
this Agreement, will be validly issued, fully paid and nonassessable and will
conform to the description thereof contained in the Rights Prospectus. The
issuance and delivery of the Shares is not subject to preemptive, co-sale, right
of first refusal or any other similar rights of the shareholders of the Company
or its subsidiaries or any liens or encumbrances. Except as otherwise set forth
in SCHEDULE 4.3 attached hereto, no holder of any of the Company's securities
has been granted any registration rights other than the registration rights set
forth herein.
4.4 OFFERING MEMORANDUM; ADDITIONAL DISCLOSURE DOCUMENTS; FINANCIAL
STATEMENTS.
(A) Each complete or partial statement or report included as part of
the Offering Memorandum under Tabs (iii) - (v) is a true and complete copy of or
excerpt from such document as filed by the Company with the SEC. The Company has
filed in a timely manner all documents that the Company was required to file
with the SEC under Sections 13, 14(a) and 15(d) of the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT"), during the twelve (12) months
preceding the date of this Agreement. The Company satisfies the requirements for
the use of Form S-3 under the Securities Act of 1933, as amended (the
"Securities Act") with respect to any registration of the Shares for resale by
the holders thereof.
(B) As of their respective filing dates (or, if amended, when
amended), the Additional Disclosure Documents complied in all material respects
with the requirements of the Exchange Act and the information contained therein
as of the date thereof did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein in light of the circumstances under which they were made
not misleading, except to the extent that information contained in any such
document has been revised or superseded by a later filed SEC Document. The
Offering Memorandum, when taken together as a whole with the Additional
Disclosure Documents, did not contain any untrue statement of fact or omit to
state facts required to be stated therein or necessary to make the
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statements made therein, in light of the circumstances under which they were
made, not misleading.
(C) The financial statements of the Company and its subsidiaries
included or incorporated by reference in the Offering Memorandum under Tabs
(iii) - (v) (the "Financial Statements") comply in all respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto. The Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied ("GAAP") and
fairly present the financial position of the Company and its subsidiaries at the
dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of the unaudited statements having been
prepared in accordance with GAAP for interim financial information including
normal recurring adjustments). Except as set forth in SCHEDULE 4.4(C), since the
date of the Financial Statements, there has been no material commitment of the
Company or any of its subsidiaries which is not reflected in the Financial
Statements except commitments made in the ordinary course of business.
4.5 INTELLECTUAL PROPERTY. Each of the Company and its subsidiaries owns
or, to the Company's knowledge, possesses adequate rights to use all material
patents, patent rights, inventions, trade secrets and know-how described or
referred to in the Offering Memorandum as owned or used by it or that are
necessary for the conduct of its business as presently conducted and as
described in the Offering Memorandum. Each of the Company and its subsidiaries
has not received any notice of, nor has any knowledge of, any infringement of or
conflict with asserted rights of others with respect to any patent, patent
right, invention, trade secret or know how that, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a Material Adverse Effect.
4.6 CAPITALIZATION. The Company has authorized and, as of the date of the
Rights Prospectus, had outstanding capital stock as set forth in the Rights
Prospectus under the heading "Description of Securities to Be Registered."
Except as set forth in SCHEDULE 4.6, there have been no changes in the
outstanding capital stock of the Company since that date except for issuances of
Common Stock and warrants to purchase shares of Common Stock contemplated by the
Rights Prospectus, grants of options pursuant to option plans described in the
Additional Disclosure Documents and shares of Common Stock sold pursuant to the
Rights Offering (the "RIGHTS OFFERING") described in the Rights Prospectus and
to the extent that certain outstanding options, convertible securities and
warrants may have been exercised. The certificates evidencing the Shares are in
due and proper legal form and have been duly authorized for issuance by the
Company. All of the issued and outstanding securities of the Company have been
duly authorized and validly issued, are fully paid and nonassessable, have been
issued in compliance with Federal, state and other applicable laws and were
issued without violation of any preemptive, co-sale or other right. Except as
otherwise disclosed in the Offering Memorandum and the Additional Disclosure
Documents or as set forth on Schedule 4.6 attached hereto, there are no
outstanding options, warrant, agreement or other right calling for the issuance
or redemption of, and there is no commitment, plan or arrangement to issue or
redeem, any
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securities of the Company. The Company owns, beneficially and of record, all of
the securities of each of its subsidiaries. Except as set forth in Schedule 4.6
to this Agreement, neither the Company nor any of its subsidiaries has any
binding agreement with respect to the acquisition or purchase of the securities
of or owned by any person or entity or the acquisition of the business, assets
or liabilities of any person or entity, and neither the Company nor any of its
subsidiaries has any agreement or understanding with respect to the disposition
or sale of their business, assets or property other than in the ordinary course
of their business.
4.7 LITIGATION. Except as disclosed in the Additional Disclosure Documents,
there is no pending or, to the Company's knowledge, threatened action, suit or
other proceeding to which the Company or its subsidiaries is a party or to which
its property or assets are subject which would have a Material Adverse Effect;
and no labor disturbance by the employees of the Company or any subsidiary
exists or is imminent which would have a Material Adverse Effect.
4.8 NO DEFAULTS. Neither the Company nor any of its subsidiaries is in
violation or default of any provision of its certificate of incorporation or
bylaws, or any organizational documents, or is in breach with respect to any
provision of any agreement, judgment, decree, order, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument to which it is
a party or by which it or any of its properties are bound which violation,
default or breach would have a Material Adverse Effect; and there does not exist
any state of facts which constitutes an event of default on the part of the
Company or any such subsidiary as defined in such documents or which, with
notice or lapse of time or both, would constitute such an event of default.
4.9 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state, or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement ("CONSENTS") except for (a) such Consents which are not material,
(b) compliance with the securities and blue sky laws in the states and other
jurisdictions in which Shares are offered and/or sold, which compliance will be
effected in accordance with such laws, and (c) the filing and effectiveness of a
Registration Statement and any amendments thereto with the SEC as contemplated
by Section 8.1 hereof. To the Company's knowledge, the Company and its
subsidiaries are conducting business in compliance with all applicable laws,
rules and regulations of the jurisdictions in which it is conducting business,
including but not limited to, all applicable local, state and federal
environmental laws and regulations, except where the failure to so comply would
not have a Material Adverse Effect.
4.10 TAXES. Each of the Company and its subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns and have
paid or accrued all taxes shown as due thereon except for such taxes as are
being contested in good faith, and the Company has no knowledge of any tax
deficiency which has been or might be asserted or threatened against the Company
or its subsidiaries which would have a Material Adverse Effect.
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4.11 INSURANCE. The Company and its subsidiaries maintain property, general
liability, directors and officers and errors and omissions insurance policies of
the types and in the amounts generally deemed adequate for its business covering
all risks customarily insured against, all of which insurance is in full force
and effect.
4.12 INVESTMENT COMPANY. The Company is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
4.13 LISTING; MAINTENANCE OF LISTING. The Common Stock is traded on The
Nasdaq National Market (the "NATIONAL MARKET"). For so long as the Company is
obligated to keep in effect the Registration Statement provided under Section 8
hereof, the Company shall use commercially reasonable efforts to maintain its
listing on the National Market or a national securities exchange, as defined in
the Exchange Act.
4.14 NO REGISTRATION. Assuming the accuracy of the representations and
warranties made by, and compliance with the covenants of, the Purchaser in
Section 5 hereof and other purchasers of shares pursuant to the Offering
Memorandum (the "OTHER PURCHASERS"), no registration of the shares under the
Securities Act is required in connection with the sale of the shares to the
Purchaser and the Other Purchasers as contemplated by this Agreement and the
similar agreements with the Other Purchasers.
4.15 SUBSIDIARIES. All of the issued and outstanding securities of each of
the Company's subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable, have been issued in compliance with Federal, state
and other applicable laws and were issued without violation of any preemptive,
co-sale or other right.
4.16 MATERIAL ADVERSE EFFECT. There has not been, since the date of the
Offering Memorandum, any change or any development involving or which may
reasonably be expected to involve a change in the condition (financial or
other), business, operations, prospects, properties, or results of operations of
the Company or its subsidiaries that could reasonably be expected to have a
Material Adverse Effect.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
5.1 The Purchaser represents and warrants to and covenants with the Company
that:
(A) Purchaser is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to investments in
shares presenting an investment decision like that involved in the purchase of
the Shares, including investments in securities issued by the Company. Purchaser
has had the opportunity to meet with representatives of the Company in order to
ask questions regarding the Company and the terms of this Agreement, and
Purchaser has requested, received, reviewed and considered all information
Purchaser deems
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relevant (including the Offering Memorandum) in making an informed decision to
purchase the Shares.
(B) Purchaser is purchasing the Shares in the ordinary course of its
business for its own account for investment only and with no present intention
of distributing the Shares or any arrangement or understanding with any other
persons regarding the distribution of the Shares.
(C) Purchaser shall not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the securities purchased hereunder
except in compliance with the Securities Act, applicable blue sky laws, and the
rules and regulations promulgated thereunder.
(D) Purchaser has completed or caused to be completed the Stock
Certificate Questionnaire and the Registration Questionnaire, attached hereto as
APPENDIXES I and II, respectively, in connection with the transactions
contemplated by this Agreement as well as for use in preparation of the
Registration Statement to be filed by the Company, and the answers thereto are
true and correct as of the date hereof and will be true and correct as of the
Closing Date and the effective date of the applicable Registration Statement
(provided that Purchaser shall be entitled to update such information by
providing notice thereof to the Company prior to the effective date of such
Registration Statement).
(E) Purchaser has, in connection with its decision to purchase the
Shares, relied with respect to the Company and its affairs solely upon the
Offering Memorandum, the Additional Disclosure Documents and the representations
and warranties of the Company contained herein.
(F) Purchaser is an "accredited investor" within the meaning of Rule
501 (a) (1), (2) or (3) of Regulation D promulgated under the Securities Act or
a "Qualified Institutional Buyer" within the meaning of Rule144A promulgated
under the Securities Act.
(G) Purchaser has full right, power, authority and capacity to enter
into this Agreement and to consummate the transactions contemplated hereby and
has taken all necessary action to authorize the execution, delivery and
performance of this Agreement. Upon the execution and delivery of this Agreement
by Purchaser, this Agreement shall constitute a valid and binding obligation of
Purchaser, enforceable in accordance with its terms.
(H) Purchaser is not, as of the date hereof, beneficially holding 5%
or more of the Company's outstanding Common Stock (which for the purpose of this
paragraph shall mean 40, 650, 365 shares) and its investment pursuant to this
Agreement will not increase the Purchaser's beneficial ownership of the
Company's Common Stock (which for the purpose of this paragraph shall mean 40,
650, 365 shares) to 5% or more. Purchaser is aware that the
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Company's Certificate of Incorporation contains certain prohibitions regarding
Purchaser's acquisition or ownership of more than 5% of the Company's Common
Stock.
5.2 Purchaser is able to bear the economic risk of holding the Shares for
an indefinite period, including the loss of Purchaser's entire investment. The
Shares were not offered or sold to Purchaser by any form of general solicitation
or advertising.
5.3 Purchaser represents and warrants to and covenants with the Company
that Purchaser has not engaged prior to the Effective Date and, prior to the
effectiveness of the Registration Statement, shall neither engage in any short
sales of Common Stock nor sell, offer to sell, solicit offers to buy, dispose
of, loan, pledge or grant any right with respect to the Common Stock of the
Company (collectively, a "Disposition") in violation of the Securities Act; nor
will the Purchaser engage in any Disposition in violation of the Securities Act
as long as any shares included in the Registration Statement remain unsold.
5.4 Purchaser understands that nothing in the Offering Memorandum, this
Agreement or any other materials presented to Purchaser in connection with the
purchase and sale of the Shares constitutes legal, tax or investment advice.
Purchaser has consulted such legal, tax and investment advisors as it, in its
sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Shares.
5.5 Purchaser understands that each of the representations and warranties
of Purchaser may be relied upon by the Company in connection with the
preparation and filing of the Registration Statement (as defined in Section 8.1
below).
5.6 Purchaser understands that: (a) the Shares shall not be transferable in
the absence of a registration under the Securities Act or an exemption therefrom
or in the absence of compliance with any term of this Agreement; (b) the Company
shall provide stop transfer instructions to its transfer agent with respect to
the Shares in order to enforce the restrictions contained in this Section 5.5
and to confirm that Purchaser has complied with its obligations contained in
Section 8.2 hereof, and (c) to the extent not covered by an effective
registration statement under the Securities Act, each certificate representing
Shares shall be in the name of Purchaser and shall bear substantially the
following legends (in addition to any legends required under applicable
securities laws):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR QUALIFIED UNDER THE CALIFORNIA CORPORATE
SECURITIES LAW OF 1968, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER
THE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND MAY ONLY BE SOLD,
PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF BY AN INVESTOR IF
SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT AND
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REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES
LAWS, UNLESS THE COMPANY DETERMINES THAT EXEMPTIONS FROM SUCH
REGISTRATION AND QUALIFICATION REQUIREMENTS ARE AVAILABLE."
SECTION 6. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING. The
Company's obligations to complete the sale and issuance of the Shares and to
deliver Shares to the Purchaser shall be subject to the following conditions (to
the extent not waived by the Company):
6.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Purchaser in Section 5 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date and the obligations
of the Purchaser which are to be performed or complied with on or prior to the
Closing Date, have been so performed or complied with.
6.2 NO GENERAL SOLICITATION; BLUE SKY. The Company shall have received such
assurances as it may reasonably request from Imperial Capital, LLC (the
"PLACEMENT AGENT") that the Shares were not offered or sold by any form of
general solicitation or advertising and a list from the Placement Agent of
states where Shares are being sold.
This Agreement may be terminated by the Company if the Closing has not
transpired by the 75th day after the Effective Date for reasons other than a
breach of this Agreement by the Company.
SECTION 7. CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING. The
Purchaser's obligation to accept delivery of the Shares and to pay for the
Shares shall be subject to the following conditions (to the extent not waived by
the Purchaser):
7.1 REGISTRATION STATEMENT EFFECTIVE. The Registration Statement required
pursuant to Section 8 hereof shall have become effective within 60 days after
the Effective Date and no stop order suspending the effectiveness thereof shall
have been issued and no proceedings therefor shall be pending or threatened by
the SEC.
7.2 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct
when made and as of the Closing Date and the obligations of the Company which
are to be performed or complied with on or prior to the Closing Date have been
so performed or complied with, and the Purchaser shall have received a
certificate signed by the chief executive officer and chief financial officer of
the Company, or such other officers of the Company, as agreed upon by the
parties hereto, that each of such representations and warranties, as
appropriate, is true and correct in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made or given on and as of the Closing Date, and that the Company has
performed and
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complied with all of its obligations under this Agreement which are to be
performed or complied with on or prior to the Closing Date.
7.3 LEGAL OPINIONS. The Purchaser shall have received an opinion letter
from each of (i) Jeffer, Mangels, Xxxxxx & Xxxxxxx LLP, counsel to the Company,
addressed to the Purchaser, dated as of the Closing Date, covering the matters
set forth in EXHIBIT B attached hereto, subject to customary assumptions and
qualifications and (ii) Xxxx Xxxxx, general counsel to the Company, addressed to
the Purchaser, dated as of the Closing Date, covering the matters set forth in
EXHIBIT C attached hereto, subject to customary assumptions and qualifications.
7.4 MATERIAL ADVERSE EFFECT. There shall not have been, since the date of
the Offering Memorandum, a change in the business, properties, operations,
condition (financial or other) or results of operations of the Company or its
subsidiaries, that could reasonably be expected to have a Material Adverse
Effect.
7.5 EQUITY FINANCINGS. Including the proceeds from the sale of Shares
pursuant to this Agreement, the Company shall have received a minimum of
$24,000,000 in equity financing since September 30, 2000.
This Agreement may be terminated by the Purchaser if the Closing has not
transpired by the 75th day after the Effective Date for reasons other than a
breach of this Agreement by the Purchaser.
SECTION 8. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.
8.1 REGISTRATION PROCEDURES AND EXPENSES. The Company is obligated to do
the following:
(A) As soon as practicable following the Effective Date and in any
event no later than five (5) business days following the Effective Date, the
Company shall prepare and file with the SEC one or more registration statements
on Form S-3 pursuant to Rule 415 of the Securities Act in order to register with
the SEC the continuous resale by the Purchaser, from time to time, of the Shares
through the National Market or the facilities of any national securities
exchange on which Common Stock is then traded, or in privately-negotiated
transactions (a "REGISTRATION STATEMENT"). The Company shall use its reasonable
best efforts to cause such Registration Statement to be declared effective as
soon thereafter as reasonably possible.
(B) The Company shall prepare and file with the SEC (i) such
amendments and supplements to the Registration Statement and the prospectus used
in connection therewith, and (ii) such other filings required by the SEC, in
each case as may be necessary to keep the
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Registration Statement continuously effective and not misleading until the
earlier of (A) the second anniversary date of the Closing, or (B) such date as
all of the Shares have been resold.
(C) In order to facilitate the public sale or other disposition of all
or any of the Shares by the Purchaser, the Company shall furnish to the
Purchaser with respect to the Shares registered under the Registration Statement
such number of copies of prospectuses, prospectus supplements and preliminary
prospectuses as such Purchaser reasonably requests in conformity with the
requirements of the Securities Act.
(D) The Company shall file any documents reasonably required of the
Company for normal blue sky clearance in states specified in writing by the
Purchaser; provided, however, that the Company shall not be required to qualify
to do business or consent to service of process in any jurisdiction in which it
is not now so qualified or has not so consented.
(E) The Company shall bear all expenses (exclusive of any brokerage
fees, underwriting discounts and commissions) in connection with the procedures
in paragraphs (a) through (d) of this Section 8.1.
(F) With a view to making available to the Purchaser the benefits of
Rule 144 promulgated under the Securities Act ("RULE 144") and any other rule or
regulation of the SEC that may at any time permit the Purchaser to sell Shares
to the public without registration or pursuant to registration, the Company
covenants and agrees to: (i) make and keep public information available, as
those terms are understood and defined in Rule 144, until the earlier of (A) the
second anniversary of the Closing Date or (B) such date as all of the Shares
shall have been resold; (ii) file with the SEC in a timely manner all reports
and other documents required of the Company under the Exchange Act; and (iii)
furnish to the Purchaser upon request, as long as the Purchaser owns any Shares,
(A) a written statement by the Company that it has complied with the reporting
requirements of the Exchange Act, and (B) such other information as may be
reasonably requested in order to avail the Purchaser of any rule or regulation
of the SEC that permits the selling of any such Shares without registration
under the Securities Act.
(G) The Purchaser acknowledges that there may occasionally be times
when the Company determines the use of the prospectus forming a part of the
Registration Statement (the "PROSPECTUS") should be suspended until such time as
an amendment or supplement to the Registration statement or the Prospectus has
been filed by the Company and any such amendment to the Registration Statement
is declared effective by the SEC, or until such time as the Company has filed an
appropriate report with the SEC pursuant to the Exchange Act. The Purchaser
hereby covenants that it will not sell any Shares pursuant to the Prospectus
during the period commencing at the time at which the Company gives the
Purchaser written notice of the suspension of the use of the Prospectus and
ending at the time the Company gives the Purchaser written notice that the
Purchaser may thereafter effect sales pursuant to the Prospectus. The Company
may, upon written notice to the Purchaser, suspend the use of the Prospectus for
two 30-day periods in any 365-day period based on the reasonable determination
of the Company's
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Board of Directors that there is a significant business purpose for such
determination, such as pending corporate developments, public filings with the
SEC or similar events. The Company shall in no event be required to disclose the
business purpose for which it has suspended the use of the Prospectus if the
Company determines in its good faith judgment that the business purpose should
remain confidential. The Company shall use its reasonable best efforts to
minimize the length of the suspension period.
8.2 TRANSFER OF SHARES. Purchaser agrees not to effect any disposition of
the Shares that would constitute a sale within the meaning of the Securities
Act, except:
(A) pursuant to the Registration Statement, in which case the
Purchaser shall submit the certificates evidencing the Shares to the Company's
transfer agent [together with a representation that it delivered a copy of the
Prospectus (comprising part of the Registration Statement) to the buyer or the
buyer's representative]; or
(B) in a transaction exempt from registration under the Securities
Act, in which case the Purchaser shall, prior to effecting such disposition,
submit to the Company an opinion of counsel in form and substance reasonably
satisfactory to the Company to the effect that the proposed transaction is in
compliance with the Securities Act.
8.3 INDEMNIFICATION. As used in this Section 8.3 the following terms shall
have the following respective meanings:
(A) "REGISTRATION STATEMENT" shall mean the Registration Statement
referred to in Section 8.1 hereof, including any exhibit and amendment thereto,
and any preliminary or final prospectus, and any supplement thereto; and
(B) "UNTRUE STATEMENT" shall include any untrue statement or alleged
untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
The Company agrees to indemnify and hold harmless the Purchaser (i) in
respect of the Shares purchased pursuant to this Agreement, from and against any
losses, claims, damages or liabilities to which such Purchaser may become
subject (under the Securities Act or otherwise) insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of, or are based upon any Untrue Statement, or arise out of any failure by the
Company to fulfill any undertaking included in the Registration Statement and
(ii) in respect to any legal, administrative or other proceedings brought by any
third party arising out of the transactions contemplated by this Agreement, and
based upon any actual or alleged wrongdoing or violation of or attributable to
the Company, in each case, the Company shall reimburse as incurred such
Purchaser for any reasonable legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim; provided, however, that
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the Company shall not be liable to such Purchaser in any such case to the extent
that such loss, claim, damage or liability arises out of, or is based upon, an
Untrue Statement made in such Registration Statement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Purchaser specifically for use in preparation of the Registration
Statement.
The Purchaser agrees to indemnify and hold harmless the Company (and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act, each officer of the Company who signs the Registration Statement
and each director of the Company) from and against any losses, claims, damages
or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any Untrue
Statement contained in the Registration Statement if such Untrue Statement was
made in reliance upon and in conformity with written information furnished by or
on behalf of such Purchaser specifically for use in preparation of the
Registration Statement, and such Purchaser shall reimburse as incurred the
Company (or such officer, director or controlling person), as the case may be,
for any legal or other expenses reasonably incurred in investigating, defending
or preparing to defend any such action, proceeding or claim; provided, however,
that in no event shall any indemnity by a Purchaser under this Section 8.3
exceed the gross proceeds received by such Purchaser from the sale of Shares
covered by such Registration Statement.
Promptly after receipt by any indemnified person of a notice of a claim or
the beginning of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 8.3, such indemnified
person shall notify the indemnifying person in writing of such claim or of the
commencement of such action, and, subject to the provisions hereinafter stated,
in case any such action shall be brought against an indemnified person and such
indemnifying person shall have been notified thereof, such indemnifying person
shall be entitled to participate therein, and, to the extent it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person. After notice from the indemnifying person to such
indemnified person of its election to assume the defense thereof, such
indemnifying person shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in connection with the
defense thereof-, provided, however, that if there exists or shall exist a
conflict of interest that would make it inappropriate, in the opinion of counsel
to the indemnified person, for the same counsel to represent both the
indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel at
the expense of such indemnifying person; provided, however, that no indemnifying
person shall be responsible for the fees and expenses of more than one separate
counsel for each indemnified party, it being understood that the Company shall
not be responsible for the fees and expenses of more than one counsel for the
Purchaser and the Other Purchasers as a group, unless the Purchaser and any
Other Purchasers can not be represented by the same counsel because of a
conflict of interest.
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8.4 TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions precedent
imposed by Section 5.5 hereof or this Section 8 upon the transferability of the
Shares shall cease and terminate as to any particular number of the Shares when
such Shares shall have been sold or otherwise disposed of in accordance with the
intended method of disposition set forth in the Registration Statement covering
such Shares or at such time as an opinion of counsel satisfactory to the Company
shall have been rendered to the effect that such conditions are not necessary in
order to comply with the Securities Act.
8.5 CHANGES IN PURCHASER INFORMATION. Purchaser agrees to promptly notify
the Company of any changes in the information set forth in the Registration
Statement regarding Purchaser or such Purchaser's plan of distribution set forth
in such Registration Statement.
SECTION 9. MISCELLANEOUS.
9.1 WAIVERS AND AMENDMENTS. Neither this Agreement nor any provision hereof
may be changed, waived, discharged, terminated, modified or amended except upon
the written consent of the Company and Purchaser.
9.2 HEADINGS. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
9.3 BROKER'S FEE. The Company and Purchaser hereby represent that, except
for amounts to be paid to the Placement Agent by the Company as described in
Section 9.11 hereof, there are no brokers or finders entitled to compensation in
connection with the sale of the Shares, and shall indemnify each other for any
such fees for which they are responsible.
9.4 SEVERABILITY. In case any provision contained in this Agreement should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
9.5 NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing, shall be sent by confirmed facsimile or mailed by
first-class registered or certified airmail, or nationally recognized overnight
express courier, postage prepaid, and shall be deemed given when so sent in the
case of facsimile transmission, or when so received in the case of mail or
courier, and addressed as follows:
(A) if to the Company, to:
Maxicare Health Plans, Inc.
0000 Xxxxx Xxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (213) 000- 0000
Telecopier: (000) 000-0000
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Attention: Xxxx X. Xxxxx, Chairman and CEO
with a copy so mailed to:
Jeffer, Mangels, Xxxxxx & Marmaro LLP
2121 Avenue of the Stars, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and
(B) if to the Purchaser, at the address as set forth at the end of
this Agreement, or at such other address or addresses as may have been furnished
to the Company in writing.
9.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to contracts
entered into and performed entirely in California by California residents,
without regard to conflicts of law principles.
9.7 NO JOINT LIABILITY. The obligations of the Purchaser hereunder is
several and are not joint with any Other Purchasers.
9.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
9.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS, DEFINITION OF
"KNOWLEDGE". Notwithstanding any investigation made by any party to this
Agreement, all covenants, agreements, representations and warranties made by the
Company and the Purchaser herein and in the certificates for the securities
delivered pursuant hereto shall survive the execution of this Agreement, the
delivery to the Purchaser of the Shares and the payment therefor; provided,
however, that (x) the representations and warranties of the Company contained in
Section 4.4 (b) and (c), 4.5, 4.7 - 4.13, 4.15 and 4.16 shall not survive the
Closing Date and (y) all other representations and warranties of the Company
shall survive for a period of two years after the Closing Date. Any claim of a
breach of representation or warranty made prior to the end of the applicable
survival period which has not been finally resolved before the expiration of
such period shall survive and remain a basis for such claim until finally
resolved. References in this Agreement to the Company's knowledge shall mean the
knowledge, including the constructive knowledge, of Xxxx X. Xxxxx, Chief
Executive Officer; Xxxxx X. Xxxxx,
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Executive Vice President; Xxxxxxx X. Link, Chief Operating and Chief Financial
Officer, and Xxxx X. Xxxxx, General Counsel. Nothing herein shall limit or
adversely affect Purchaser's rights under applicable law.
9.10 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
Neither the terms "successors" nor "assigns" as used herein shall include any
entity or person who purchases Shares from the Purchaser after the Closing Date.
9.11 ENTIRE AGREEMENT. This Agreement and other documents delivered
pursuant hereto, including the exhibits and appendices, constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.
9.12 PAYMENT OF FEES AND EXPENSES. Each of the Company and the Purchaser
shall bear its own expenses and legal fees incurred on its behalf with respect
to this Agreement and the transactions contemplated hereby (the "OFFERING");
provided, however, that the Company shall bear the costs described in Section
8.1 (e) and shall reimburse the Placement Agent for certain fees and expenses
incurred by the Placement Agent in connection with the Offering, as set forth in
the Offering Memorandum with the Placement Agent. Purchaser acknowledges that
the Placement Agent will receive a commission in the amount described in the
engagement letter and hereby authorizes the Placement Agent to deduct the amount
of such commission from the gross proceeds payable to the Company from the sale
of the Shares hereunder. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
9.13 CONFIDENTIALITY. Purchaser acknowledges and agrees that any
information or data it has acquired from the Company, not otherwise properly in
the public domain, was received in confidence. Purchaser agrees not to divulge,
communicate or disclose, except as may be required by law or for the performance
of this Agreement, or use to the detriment of the Company or for the benefit of
any other person or persons, or misuse in any way, any confidential information
of the Company.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
The "COMPANY"
MAXICARE HEALTH PLANS, INC.
By:
Name:
----------------------------------
Title:
----------------------------------
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00
"XXXXXXXXX"
Xxxxxxxx Name:________________________
By: __________________________________
Name:_________________________________
Title:________________________________
Address: _________________________
_________________________
_________________________
Facsimile:____________________________
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SUMMARY INSTRUCTION SHEET FOR PURCHASER
(TO BE READ IN CONJUNCTION WITH THE ENTIRE
COMMON STOCK PURCHASE AGREEMENT)
1. Complete the following items on the Common Stock Purchase Agreement
(the "Purchase Agreement"), copies of which are attached hereto for
your convenience:
A. Signature Page.
B. APPENDIX I - Stock Certificate Questionnaire:
Provide the information requested by the Stock Certificate
Questionnaire.
C. APPENDIX II - Registration Statement Questionnaire:
Provide the information requested by the Registration
Statement Questionnaire.
D. Return the properly completed and signed Agreement including
the properly completed and signed Appendixes I and II to:
Imperial Capital, LLC
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx
PLEASE RETURN THE COMPLETED AND SIGNED PURCHASE AGREEMENT BY
FACSIMILE WITH ALL OF THE ORIGINAL DOCUMENTS FOLLOWING BY
OVERNIGHT COURIER OR MAIL.
2. Instructions regarding the transfer of funds for the purchase of Shares
will be sent separately.
3. Upon the resale of the Shares by the Purchaser after the Registration
Statement covering the Shares is effective as described in the Purchase
Agreement, the Purchaser must deliver a current prospectus to the
buyer.
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APPENDIX I
MAXICARE HEALTH PLANS, INC.
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Purchase Agreement, please provide us with
the following information:
a. The exact name that your Shares are to be registered in
(this is the name that will appear on your stock
certificate(s)). You may use a nominee name if
appropriate:
_______________________
b. The relationship between the Purchaser of the Shares
and the Registered Holder listed in response to item a
above:
________________________
c. The mailing address and facsimile number of the
Registered Holder listed in response to item a above:
_______________________
_______________________
_______________________
_______________________
Facsimile:_____________
d. The Social Security Number or Tax Identification
Number of the Registered Holder listed in the
response to item a above:
_______________________
Signature: _______________________
Print Name:_______________________
Title: _______________________
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APPENDIX II
MAXICARE HEALTH PLANS, INC.
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement,
please provide us with the following information:
a. Please state your or your organization's name exactly as it
should appear in the Registration Statement:
--------------------------------------------------
b. Please provide the following information, as of
October ____, 2000:
Number of Shares that you are Number of shares of Common Stock that
purchasing and seek to include in the you already beneficially own or that
Registration Statement: you are purchasing and do NOT seek to
include in the Registration Statement:
c. Have you or your organization had any position, office or other
material relationship within the past three years with the Company or its
affiliates other than as disclosed in the Proxy Statement in connection with the
Company's 2000 Annual Meeting of Shareholders?
Yes _____ No _____
If yes, please indicate the nature of any such
relationships:
---------------------------------------------------------------
------------------------------------------------------------------------------
d. Please indicate by checking the appropriate box if you
are either:
(i) ____ an "accredited investor" within the meaning of
Rule 501 (a) (1), (2) or (3) of Regulation D
promulgated under the Securities Act or
(ii) ____ a "Qualified Institutional Buyer" within the
meaning of Rule 144A promulgated under the
Securities Act.
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Signature: ________________________
Print Name: ________________________
Title:
The information provided in paragraphs (a) - (c) constitutes the only
information furnished to the Company for the purpose of Section 8.3(c) of the
Purchase Agreement.
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