Exhibit 10.3m
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement"), is entered
into this 16 day of April, 1999 (the "Execution Date"), by and between
Xxxxx X. Xxxxxxx ("Consultant") located at 0000 Xxxxxxx Xxxx,
Xxxxxxxx, XX 00000 and Maxicare Health Plans, Inc., a Delaware
corporation, located at 0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxxxx, XX 00000 (the "Company").
WHEREAS, Consultant has been employed as Chairman of the
Board ("Chairman"), President and Chief Executive Officer ("CEO") of
the Company 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, Amendment No. 3 thereto, dated
May 8, 1998 and Amendment No. 4 thereto of even date herewith by and
between the Company and Consultant (collectively, the "Employment
Agreement");
WHEREAS, the Consultant has agreed to terminate the
Employment Agreement on June 30, 1999 (the "Termination Date") and
enter into a Settlement and Release Agreement with the Company of even
date herewith (the "Settlement Agreement") along with certain other
agreements ("Related Agreements");
WHEREAS, subject to the effectiveness of this Agreement,
the Settlement Agreement and the Related Agreements the Company and
the Consultant have agreed that Consultant shall render consulting
services on behalf of the Company after the Termination Date pursuant
to the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the terms and
conditions hereinafter set forth, the Company and Consultant agree as
follows:
1. Definitions. As used in this Agreement, the
following capitalized terms shall have the following meanings, unless
otherwise expressly provided or unless the context otherwise requires.
"Board of Directors" means the Board of Directors of the Company or
the Executive Committee of the Board of Directors.
"Cause" means, except as otherwise contemplated by
Sections 7(a) or 7(b) below, the involuntary termination of the
Agreement by the Company by reason of:
(i) the willful or habitual failure by Consultant
to perform requested duties commensurate with his engagement pursuant
to the terms of this Agreement without good cause (the "Breach"),
after a demand for substantial performance is delivered to Consultant
by the Board of Directors, which notice specifically identifies the
manner in which Consultant has not performed his duties (other than as
a result of the death orIncapacity of Consultant) and Consultant is
given the opportunity to cure the Breach ;
(ii) the willful engaging by Consultant in
misconduct materially injurious to the Company, provided, however,
that an act shall be considered "willful," only if done or omitted in
bad faith and without reasonable belief on Consultant's part that his
action was in the best interest of the Company; or
(iii) the conviction by final judgment and after all
appeals of Consultant for a felony or of a crime involving moral
turpitude, dishonesty, fraud or theft with respect to the performance
of Consultant's services to the Company (collectively referred to as
"Crime"); provided, however, this provision shall not apply in the
event that such Crime was committed by Consultant on behalf of or for
the benefit of the Company and not for Consultant's personal gain.
Notwithstanding the foregoing, for purposes of Sections 1(i) and
1(ii), above, such events shall be deemed to have occurred only upon
(a) the due adoption by the Board of Directors at a meeting called and
held for such purpose (after reasonable notice to Consultant and his
counsel and after affording Consultant and his counsel an opportunity
to be heard before the Board of Directors), of a resolution finding
that, in the good faith opinion of the Board of Directors, Consultant
was guilty of the conduct set forth in such Sections, and (b) in the
event that such resolution is duly adopted by the Board of Directors,
the receipt by Consultant of five (5) days written notice prior to the
effectiveness thereof.
"Incapacity" means the absence of the Consultant from
his engagement or the inability of Consultant to perform his duties
pursuant to this Agreement by reason of mental or physical illness,
disability or incapacity for a period of four (4) months or more
during any twelve (12) month period during the term hereof, and either
the Company or Consultant elects to declare such illness, disability
or incapacity to be of a permanent nature.
2. Consulting Services. Subject to the restrictions
and limitations set forth below, during the "Term" as hereinafter
defined, of this Agreement, Consultant and the Company hereby agree:
(a) for the purposes hereof the consulting
services rendered by the Consultant shall be limited to advice and
strategic planning for the Company, or discussions, negotiations with
third parties of a nature consistent with those services previously
performed by the Consultant as Chief Executive Officer and President
of the Company;
(b) Consultant shall render only those consulting
services requested by the Chairman of the Board of the Company, or its
Chief Executive Officer, or the Board of Directors (collectively, the
"Supervisors"). Unless expressly requested by the Supervisors in a
manner consistent with the terms hereof, Consultant shall not be
required to render any consulting services during the Term hereof and
the failure of the Supervisors to request and the Consultant to render
consulting services during the Term hereof shall not be grounds for
termination or modification of this Agreement;
(c) unless expressly agreed to by the Consultant
all consulting services rendered by the Consultant hereunder shall be
rendered during normal business hours; and
(d) any consulting services rendered by the
Consultant pursuant to this Agreement shall be in the Los Angeles
metropolitan area or such other place as the Company may in the future
relocate its principal executive offices to. The consulting services
rendered by the Consultant during the Term of this Agreement as set
forth in Sections 2(a) through 2(d) above shall hereinafter be defined
as the "Consulting Services".
3. Non-Exclusive Services. Notwithstanding anything to
the contrary contained elsewhere herein:
(a) the Consulting Services to the Company during
the Term of this Agreement shall be non-exclusive. In addition, the
performance of such Consulting Services shall not interfere with any
other business or position which Consultant wishes to engage in or
undertakes during the Term hereof. Notwithstanding the foregoing,
Consultant agrees that for a period of one (1) year from the
Termination Date, Consultant shall not serve as an employee, officer,
director, advisor, consultant or purchase an amount in excess of five
percent (5%) of any corporation, partnership, joint venture, limited
liability company or other enterprise which competes directly or
indirectly with the Company in the States of California, Indiana or
Louisiana, including but not limited to any health care provider,
health maintenance organization ("HMO"), preferred provider
organization ("PPO"), life, health or disability insurance company, or
any other business which arranges for, provides or finances health
care in such states (hereinafter, collectively "Competitors"). Except
as expressly set forth in the preceding sentence, nothing contained in
this Agreement shall prohibit Consultant from serving as an officer,
director or employee, or being a shareholder, partner, joint-venturer
or member of any Competitor or any other business or other enterprise
including any business, enterprise, position, or ownership interest
which may be competitive with the Company or any of its subsidiaries
or affiliates. Consultant shall be able to take reasonable vacations
during the Term (as hereinafter defined) of this Agreement, including,
but not limited to, out of town vacations, and the rendering of
Consulting Services shall not interfere with such vacations; and
(b) Subject to the requirements of Section 3(a)
above, Consultant shall be entitled to earn and receive from entities
other than the Company any compensation, salary, profit
participations, bonuses, wages, consulting fees or other earnings for
services rendered by Consultant during the Term hereof without offset
or deduction with respect to any Consulting Fees due hereunder
whatsoever. In addition, Consultant shall have no duty of any kind
pursuant to this Agreement to seek any other employment or engage in
any other business activity during the term hereof.
4. Compensation.
(a) As compensation for Consultant's agreement to
be available to render the Consulting Services during the Term of this
Agreement, the Company agrees to compensate the Consultant at a rate
of Five Hundred Thousand Dollars ($500,000) per annum (the
"Consulting Fee"). Said Consulting Fee shall be payable in equal
monthly installments beginning on July 1, 1999 and continuing on the
first business day of each month thereafter (the "Required
Compensation Payment Date") or in such other installments as may be
agreed upon between the parties.
(b) If Consultant does not receive the applicable
portion of the Consulting Fee ("Required Compensation Payment") within
five (5) days after the Required Compensation Payment Date in
accordance with the provisions of this Agreement, Consultant shall be
entitled to liquidated damages on such payment at a rate of five (5)
percent thereof and Consultant may provide the Company with written
notification delivered in accordance with Section 15(g) below that
such payment has not been received (the "Default Notice"). If
Consultant does not receive the Required Compensation Payment within
thirty (30) days after the date the Default Notice is deemed given by
Consultant to the Company pursuant to Section 15(g) below (the "Breach
Date") and there is a final, nonappealable judgment by a court with
appropriate jurisdiction pursuant to Section 15(f) below ruling that
the Company's failure to pay such Required Compensation Payment is a
breach of its obligations to Consultant under the Consulting Agreement
which breach has not been estopped, excused, waived, subject to
offset, recoupment or subject to any other affirmative defenses
available to the Company under law or equity as a result of
Consultant's breach of the Consulting Agreement or otherwise (a
"Company Default"), then such Company Default shall be deemed
retroactive to the Breach Date. Upon the occurrence of a Company
Default, Consultant may elect (hereinafter referred to as the "Company
Default Election") to do the following:
(i) receive the present value (determined
using an interest rate of five (5) percent) of the Consulting Fees
remaining due through June 30, 2003 (the "Remaining Amounts Due");
(ii) in the event of the foregoing,
Consultant shall agree to execute such documents as may be mutually
acceptable to counsel for Consultant and the Company or its designees
assigning to the Company as a substitute for Collateral under the
Pledge Agreement entered into on February 18, 1997 between the Company
and Consultant an amount not to exceed $800,000 of all of Consultant's
or Consultant's assignee's rights, title and interests in the
Remaining Amounts Due ("Assigned Remaining Amounts Due"). Such amount
shall accrue interest at a rate of five (5) percent per annum from the
assignment date through June 30, 2003. If the event Consultant timely
pays to the Company the difference between the Withholding Amount, as
such term is defined in the Amended and Restated Secured Promissory
Note of even date herewith entered into between Consultant and the
Company (hereinafter referred to as the "Withholding Amount"), and the
Remaining Amount Due and the Company fails to pay the Withholding
Amount to the applicable governmental entities in a timely manner:
(i) the entire Withholding Amount shall earn interest at the legal
rate from and after the date of receipt by the Company of Consultant's
payment and (ii) the Consultant shall be entitled to recovery of any
penalties incurred as a result of such failure to pay the Withholding
Amount;
(iii) withdraw Collateral (as such term is
defined in the Pledge Agreement entered into on February 18, 1997 by
and between the Company and Consultant) of Consultant's choice to the
extent that the total amount of the Collateral exceeds $800,000. In
the event the Assigned Remaining Amounts Due equals or exceeds
$800,000, Consultant shall be entitled to withdraw the entire amount
of the remaining Collateral;
(iv) the foregoing remedies shall be in
addition to such other remedies as may be available to Consultant in
law and in equity;
(v) the foregoing provisions shall not
prejudice Consultant's rights to seek provisional remedies and
prejudgment interest upon the occurrence of a Breach Date; and
(vi) upon the occurrence of the Breach Date, the Company shall no
longer be entitled to cure any breach of this Agreement.
5. Benefits. In addition to the Consulting Fee
provided for in Section 3 of this Agreement during the term of this
Agreement:
(a) Consultant shall have the right to continue to
participate in any life, health and accident insurance, or other
employee benefit plans as expressly set forth in Schedule 1 attached
hereto (the "Benefits") or such other comparable plans with respect to
such Benefits which may be in effect from time to time during the Term
of this Agreement for senior executives of the Company under terms no
less favorable to those currently available to the Consultant pursuant
to the terms of the Employment Agreement, as though Consultant was a
full time employee of the Company;
(b) the Company shall provide Consultant with a
monthly automobile allowance of One Thousand One Hundred Dollars
($1,100) and a car-phone, which car-phone shall be maintained at the
Company's expense; and
(c) the Company shall pay on behalf of or
reimburse Consultant for up to $10,000 for each year during the term
of this Agreement thereafter for the fees and expenses incurred by
Consultant in connection with financial and tax counseling, estate
planning and income tax preparation.
6. Expenses. The Company shall promptly reimburse
Consultant for all out of pocket expenses incurred by Consultant in
the discharge of Consultant's duties hereunder, upon receipt from
Consultant of vouchers, receipts or other reasonable substantiation of
such expenses. Upon the prior request of the Company and at the
election of the Consultant, in the event the Consultant travels on the
Company's behalf to perform any Consulting Services, Consultant shall
be entitled to travel first class, to stay at luxury hotels and eat at
first class restaurants.
7. Term of Agreement. The term of this Agreement shall
commence on July 1, 1999 and shall continue for a period of four (4)
years from such date until June 30, 2003, unless earlier terminated as
herein provided. This Agreement shall be terminated prior to the
expiration of the term as set forth above only in the event of the
occurrence of any one of the following circumstances:
(a) The death of Consultant;
(b) The Incapacity ofConsultant;
(c) The Company terminates this Agreement for
Cause; or
(d) Consultant voluntarily elects to terminate this
Agreement by written notice to the Company. For the purposes of this
Agreement, the "Term" hereof shall be July 1, 1999 through June 30,
2003 or such other shorter period in the event the Agreement is
terminated sooner pursuant to Sections 7(a) through 7(d) above.
8. Compensation Upon Termination. Subject to
Section 8(d) below, in the event this Agreement is terminated pursuant
to Sections 7(a) through 7(d) hereof, the Company shall be obligated
to pay or provide to Consultant (or his legal representatives, as the
case may be) under this Agreement the following and only the
following:
(a) In the event of a termination pursuant to
Section 7(a): (x) the remaining Consulting Fees due Consultant under
Section 4 hereof through June 30, 2003 as though such termination had
not occurred, when such Consulting Fees would have otherwise been due;
(y) benefits due under Section 5 (to the extent available) for sixty
(60) days after such termination and (z) payment for any unreimbursed
expenses through the end of the Term;
(b) In the event of a termination pursuant to
Section 7(b): (x) the remaining Consulting Fees due Consultant under
Section 4 hereof through June 30, 2003 as though such termination had
not occurred, when such Consulting Fees would have otherwise been due;
(y) benefits due under Section 5 (to the extent available) through
June 30, 2003 as though such termination had not occurred, when such
Consulting Fees would have otherwise been due and (z) payment for any
unreimbursed expenses through the end of the Term;
(c) In the event of a termination pursuant to
Sections 7(c) or 7(d): (x) payment of any unpaid Consulting Fees due
Consultant under Section 4 hereof through the end of the Term; (y)
benefits due under Section 5 through the end of the Term; and (z)
payment for any unreimbursed expenses through the end of the Term;
and
(d) Consultant agrees to cooperate with the
Company, including being available for such medical exams as may be
necessary, to enable the Company to obtain declining principal
balance term life insurance on the Consultant in an amount equal to
the outstanding amounts due pursuant to Section 8(a)(x) above in the
event of Consultant's death.
9. Indemnification.
(a) The Company shall indemnify Consultant, during
and after the Term of this Agreement, to the fullest extent provided
for in the Company's Articles of Incorporation or Bylaws, as in
effect, or as may thereafter be amended, modified or revised from time
to time (collectively, "Company's Articles"), or permitted under the
law of Delaware or such other state in which the Company may hereafter
be domiciled, against any and all costs, claims, judgments, fines,
settlements, liabilities, and fees or expenses (including, without
limitation, reasonable attorneys' fees) incurred in connection with
any proceedings (including, without limitation, threatened actions,
suits or investigations) brought by party or parties other than
Consultant or Consultant's heirs, successors or assignees arising out
of, or relating to, Consultant's actions or inactions as Consultant or
the Consultant Services performed by Consultant at any time during the
Term of this Agreement or any counterclaims brought in defense of an
otherwise indemnifiable action. The indemnification contemplated
under this Section 9(a) shall be provided to Consultant unless, at the
time indemnification is sought, such indemnification would be
prohibited under the law of Delaware or of the state in which the
Company may then be domiciled; the Company may rely on the advice of
its counsel in determining whether indemnification is so prohibited.
(b) In the event of any actual or threatened
investigation, administrative proceeding or litigation by any federal,
state or local governmental authority (including agencies thereof)
against the Company or any director, officer or employee of the
Company arising from actions taken or events occurring at any point
during the Term hereof, in which proceedings Consultant is not a party
or threatened to be made a party but which require Consultant's
attendance and if, under applicable law, or the rules or regulations
of the particular governmental authority, counsel for the Company
cannot additionally represent Consultant upon the provision of proper
substantiation, or such simultaneous representation would not be
permitted under the applicable canons of ethics governing attorneys-
at-law, then: (i) Consultant shall have the right to retain such
personal legal counsel, accounting advisors and experts as may be
reasonably necessary in connection with such attendance, and (ii) the
Company shall promptly reimburse Consultant, whether or not then in
office, for all reasonable expenses incurred by him in retaining the
above counselors, advisors and experts. If Consultant's attendance is
required at proceeding contemplated by this Section 9(b) after the
Term hereof, then, in all events, and in addition to the reimbursement
described in (ii) above, the Company shall pay to Consultant a stipend
in the amount of One Thousand Dollars ($1,000) per day for each day or
any portion thereof during which Consultant is in attendance and shall
reimburse Consultant for all reasonable travel, hotel and living
expenses incurred by him in connection with such attendance.
(c) Any reimbursement or indemnification required
under this Section 9 shall be made no later than ten (10) business
days after receipt by the Company of the written request of
Consultant, together with, with respect to expenses incurred,
vouchers, receipts or other reasonable substantiation.
(d) If Consultant is entitled under any provision
of this Section 9 to indemnification by the Company for some or a
portion of the expenses, judgments, fines, or penalties actually and
reasonably incurred by him in the investigation, defense, appeal or
settlement of any action, suit or other proceeding, but not, however,
for the total amount thereof, the Company shall nevertheless indemnify
Consultant for the portion of such expenses, judgments, fines or
penalties to which Consultant is entitled.
(e) The indemnification provided under this
Section 9 shall not be deemed exclusive of any other rights to which
Consultant may be entitled under the Company's Articles, any
resolution of the Board of Directors, any agreement, any vote of
shareholders or disinterested directors, insurance contracts, the law
of Delaware or any other state in which the Company may hereafter be
domiciled, or otherwise, both as to actions or inactions by Consultant
in connection with his performing Consulting Services during the Term
hereof, even though complaint may have been asserted after the Term
hereof. Amounts payable as indemnification under this Section 9 shall
be reduced by the amount of any other sums received by Consultant for
the same purpose pursuant to any of such other provisions.
(f) In the event of any change, after the date of
this Agreement, in any applicable law, statute, or rule which expands
the right of a corporation domiciled in Delaware or the state in which
the Company may hereafter be domiciled to indemnify a consultant, such
change (to the extent permitted by applicable law) shall be
automatically incorporated herein, without further action of the
parties, to the extent that such change affects Consultant's rights
and the Company's obligations under this Section 9.
(g) In the event of any change, after the date of
this Agreement, in any applicable law, statute, or rule which narrows
or restricts the right of a corporation domiciled in Delaware or the
state in which the Company may hereafter be domiciled to indemnify a
consultant such change (to the extent permitted by applicable law)
shall have no effect on the provisions of, or the parties' respective
rights and obligations under this Section 9.
(h) In the event of an amendment or other
revision, after the date of this Agreement, to the Company's Articles
which expands the right of the Company to indemnify Consultant for the
consulting services rendered by Consultant during the Term hereof,
such change shall be automatically incorporated into this Agreement,
without further action of the parties, to the extent that such change
relates to Consultant's rights and the Company's obligations under
this Section 9.
(i) In the event of an amendment or other
revision, after the date of this Agreement, to the Company's Articles
which narrows or restricts the right of the Company to indemnify
Consultant for the consulting services rendered by Consultant during
the Term hereof, such change shall have no effect on the provisions
of, or the parties' respective rights and obligations under, this
Section 9.
(j) The Company agrees to give Consultant prompt
notice of any amendment to or modification of the Company's Articles
which relate to its ability to provide the indemnification
contemplated under this Section 9.
(k) Notwithstanding any other provision herein,
the Company shall not be obligated pursuant to the terms of this
Section 9:
(i) to indemnify or advance expenses to
Consultant with respect to proceedings or claims (except counterclaims
or cross claims) initiated or brought voluntarily by Consultant and
not by way of defense, but such indemnification or advancement of
expenses may be provided by the Company in specific cases if the Board
of Directors finds it to be appropriate; or
(ii) to advance expenses or indemnify
Consultant for any such expenses incurred by him with respect to any
claim, issue or matter, raised in connection with a proceeding
instituted by Consultant to enforce or interpret the provisions of
this Section 9, if a court of competent jurisdiction renders a final
judgment ruling against the Consultant with respect to the material
assertions made by Consultant with respect to such claim, issue or
matter, but such indemnification or advancement of expenses may be
provided by the Company in specific cases if the Board of Directors
finds it to be appropriate; or
(iii) to indemnify Consultant for expenses
or liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties, and amounts paid in
settlement) which have been paid directly to Consultant by an
insurance carrier under a policy of directors' and officers' liability
insurance maintained by the Company; or
(iv) to indemnify Consultant for expenses
or liabilities arising from the purchase and sale by Consultant of
securities of the Company in violation of federal or state securities
laws; or
(v) to indemnify Consultant for
liabilities or with respect to proceedings or claims relating to
actions not taken in his capacity as a Consultant rendering Consulting
services on behalf of the Company, including, without limitation,
actions taken in his individual capacity as a shareholder.
10. Confidentiality. Consultant covenants and agrees
that he will not at any time during or after the Term of this
Agreement reveal, divulge or make known to any person, firm or
corporation any information, knowledge or data of a proprietary nature
relating to the business of the Company or any of its affiliates which
is not or has not become generally known or public. Consultant shall
hold, in a fiduciary capacity, for the benefit of the Company, all
information, knowledge or data of a proprietary nature, relating to or
concerned with, the operations, customers, developments, sales,
business and affairs of the Company and its affiliates which is not
generally known to the public and which is or was obtained by the
Consultant during the Term of this Agreement. Consultant recognizes
and acknowledges that all such information, knowledge or data is a
valuable and unique asset of the Company and accordingly he will not
discuss or divulge any such information, knowledge or data to any
person, firm, partnership, corporation or organization other than to
the Company, its affiliates, designees, assignees or successors or
except as may otherwise be required by the law, as ordered by a court
or other governmental body of competent jurisdiction, or in connection
with the business and affairs of the Company.
11. Equitable Remedies. In the event of a breach or
threatened breach by Consultant of any of his obligations under
Section 10 hereof, Consultant acknowledges that the Company may not
have an adequate remedy at law and therefore it is mutually agreed
between Consultant and the Company that in addition to any other
remedies at law or in equity which the Company may have, the Company
shall be entitled to seek in a court of law and/or equity a temporary
and/or permanent injunction restraining Consultant from any continuing
violation or breach of this Agreement.
12. Advance of Fees and Expenses. The Company shall
promptly advance to Consultant:
(a) to the maximum extent provided for in the
Company's Articles or permitted by the law of Delaware or such other
state in which the Company may hereafter be domiciled, any fees or
expenses which are included as indemnifiable fees or expenses pursuant
to Section 9 hereof (including, without limitation, expenses of
investigations, judicial or administrative proceedings or appeals,
amounts paid in settlement by or on behalf of Consultant, and legal,
accounting or other professional fees and disbursements) which may be
incurred by Consultant and in the event of any other dispute arising
under this Agreement involving an effort by Consultant to protect,
enforce or secure rights or benefits claimed by him hereunder, all
reasonable expenses, including attorneys' fees, incurred by Consultant
in connection with such dispute (collectively, "Reimbursed Expenses");
(b) Reimbursed Expenses shall be made by the
Company upon the written request of Consultant, which request shall be
accompanied by an undertaking executed by Consultant acceptable in
form and substance to counsel for the Company, by which Consultant
undertakes to repay any amounts advanced to the extent that it is
ultimately determined, by compromise, settlement, arbitration or final
non-appealable court ruling, that Consultant is not entitled to
indemnification or payment, as appropriate, for all or any portion of
such fees and expenses;
(c) No later than ten (10) business days after
receipt by the Company of the written request and undertaking of
Consultant, together with receipts, invoices or other written
documentation evidencing the Reimbursed Expenses to be covered by the
advance, the Company shall make the advance requested, in one or more
payments, to Consultant or according to his written instructions; and
(d) Any advances contemplated under Section 12(a)
above, shall be made to Consultant unless, at the time the advance is
requested, such advance would be prohibited under the law of Delaware
or the state in which the Company may then be domiciled; the Company
may rely on the written advice of its counsel in determining whether
an advance is so prohibited.
13. Effective Date. The effectiveness of this Agreement
shall be conditioned upon (i) the occurrence of the "Effective Date"
as such term is defined in the Settlement Agreement; (ii) delivery of
the fully executed Settlement Agreement and Related Agreements; (iii)
the Effective Date of the Consulting Agreement between the Company and
Xxxxxx X. Xxxxxxx, Xx. ("Xxxxxxx") pursuant to which Xxxxxxx agrees to
function as the Company's Chief Operating Officer ("COO"); and (iv)
unanimous approval of this Agreement by the Board provided, however,
that if such approval is not unanimous, Consultant may elect to
declare the Settlement Agreement and the Related Agreements null and
void.
14. Representation by Counsel. Consultant acknowledges
that the Company has advised Consultant to seek the advice of counsel
in connection with Consultant's rights with respect to this Agreement,
the Settlement Agreement and the Related Agreements. In connection
therewith, Consultant has been represented by and has consulted with
counsel of his own choice throughout the negotiation, drafting and
execution of this Agreement, Valensi, Rose & Magaram PLC. In
connection with the foregoing, Consultant and the Company acknowledge
that the Company has been represented by its general outside counsel,
the firm of Jeffer, Mangels, Xxxxxx & Xxxxxxx LLP ("JMBM") in
connection with the negotiation, documentation and execution of this
Agreement. Consultant and the Company further acknowledge that JMBM
has in the past represented Diane's Designs, a corporation owned by
Consultant and Consultant's spouse and that JMBM does not now
currently represent Diane's Designs. In connection with all matters
relating to this Consultants, JMBM has represented solely the interest
of the Company.
15. Miscellaneous.
(a) This Agreement shall be binding upon and inure
to the benefit of the Company and any successor of the Company. This
Agreement shall not be terminated by the voluntary or involuntary
dissolution of the Company or by any merger, reorganization or other
transaction in which the Company is not the surviving or resulting
corporation or upon any transfer of all or substantially all of the
assets of Company in the event of any such merger, or transfer of
assets. The provisions of this Agreement shall be binding upon and
shall inure to the benefit of the surviving business entity or the
business entity to which such assets shall be transferred in the same
manner and to the same extent that the Company would be required to
perform it if no such transaction had taken place.
This Agreement shall inure to the benefit of and be
enforceable by Consultant's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees
and legatees.
(b) Except as otherwise provided by law or
elsewhere herein, Consultant shall be entitled to all benefits as set
forth herein notwithstanding the occurrence of the following events:
(i) any act of force majeure which
materially and adversely affects the Company's business and
operations, including but not limited to, the Company having sustained
a material loss, whether or not insured, by reason of fire,
earthquake, flood, epidemic, explosion, accident, calamity or other
act of God; or
(ii) any strike or labor dispute or court
or government action, order or decree; or
(iii) a banking moratorium having been
declared by federal or state authorities; or
(iv) an outbreak of major armed conflict,
blockade, embargo, or other international hostilities or restraints or
orders of civic, civil defense, or military authorities, or other
national or international calamity having occurred; or
(v) any act of public enemy, riot or civil disturbance or threat
thereof; or
(vi) a pending or threatened legal or
governmental proceeding or action relating generally to the Company's
business, or a notification having been received by the Company of the
threat of any such proceeding or action, which could materially
adversely affect the Company.
(c) This Agreement may not be modified, altered or
amended except by an instrument in writing signed by the parties
hereto.
(d) This Agreement shall be construed in
accordance with the laws of the State of California except to the
extent that any provision of Sections 9 or 12 hereof may relate to an
interpretation of the corporation laws of Delaware, the state in which
the Company is domiciled, in which case such provision shall be
construed in accordance with the corporation laws of that state.
(e) Nothing in the Agreement is intended to
require or shall be construed as requiring the Company to do or fail
to do any act in violation of applicable law; provided, however, that
the foregoing shall not be utilized as a defense by the Company to any
claim by Consultant that the Company has breached any terms of this
Agreement. If any provision of this Agreement is invalid or
unenforceable, the remainder of this Agreement shall nevertheless
remain in full force and effect. If any provision is held invalid or
unenforceable with respect to particular circumstances, it shall,
nevertheless, remain in full force and effect in all other
circumstances.
(f) The parties hereto agree that any and all
disputes hereunder 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 a court
based upon such court's determination of the merits of their
respective positions. The burden of proving that indemnification or
any advance under Sections 9 or 12 is not appropriate shall be on the
Company.
(g) Any notice to the Company required or
permitted hereunder shall be given in writing to the Company, either
by personal service, telex, telecopier or, if by mail, by registered
or certified mail return receipt requested, postage prepaid, duly
addressed to the Secretary of the Company at its then principal place
of business with a copy to Xxxxx X. Xxxxxx, Esq., Jeffer, Mangels,
Xxxxxx & Xxxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxx, 00xx Xxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000. Any such notice to Consultant shall be
given in a like manner, and if mailed shall be addressed to Consultant
at Consultant's home address then shown in the files of the Company
with a copy to Xxxxxx Xxxxxxx, Esq., Valensi Rose & Magaram PLC, 0000
Xxxxxx xx xxx Xxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000. 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.
(h) A waiver by either party of any term or
condition of this Agreement or any breach thereof, in any one
instance, shall not be deemed or construed to be a waiver of such term
or condition or of any subsequent breach thereof.
(i) The section and subsection headings contained
in this Agreement are solely for convenience and shall not be
considered in its interpretation.
(j) This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
(k) Consultant represents and agrees that
Consultant has carefully read and fully understands all of the
provisions of this Agreement and is voluntarily entering into this
Agreement.
(l) The Company hereby acknowledges that it has
reviewed and approved all of Consultant's expense reimbursement
requests through the Effective Date as such term is defined in the
Settlement Agreement.
16. Survival. The rights and/or obligations of the
Company and Consultant under Sections 10, 11, 12, 15(g) and 15(f) of
this Agreement shall not be affected by the termination of this
Agreement which rights and obligations or provisions shall survive.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first written above.
COMPANY:
MAXICARE HEALTH PLANS, INC.
a Delaware corporation
By: /s/ Xxxxxxx X. Link
Its: Executive Vice President and
Chief Financial Officer
By: /s/ Xxxx Xxxxx
Its: Secretary
CONSULTANT:
/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
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.
