Maxicare Health Plans, Inc.

Exhibit 10.87


MAXICARE HEALTH PLANS, INC.


Supplemental Executive Retirement Plan


TABLE OF CONTENTS


Page


SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . .1


SECTION 2. PARTICIPATION . . . . . . . . . . . . . . . . . .4
2.01 Appointment by Board of Directors . . . . . . .4


SECTION 3. FUNDING OF BENEFITS . . . . . . . . . . . . . . .5
3.01. Unfunded Plan . . . . . . . . . . . . . . . . .5


SECTION 4. CLAIMS PROCEDURE. . . . . . . . . . . . . .5
4.01. Benefit Claims Procedure. . . . . . . . . . . .5
4.02. Appeals Procedure . . . . . . . . . . . . . . .5


SECTION 5. RETIREMENT INCOME BENEFITS. . . . . . . . . . . .6
5.01. Normal Retirement Benefit . . . . . . . . . . .6
5.02. Early Retirement Benefit. . . . . . . . . . . .6
5.03. Change of Control . . . . . . . . . . . . . . .7
5.04. Standard Form of Benefit. . . . . . . . . . . .7
5.05. Optional Forms of Benefit . . . . . . . . . . .7
5.06. Disability. . . . . . . . . . . . . . . . . . .7
5.07. Leave . . . . . . . . . . . . . . . . . . . . .7
5.08. Vesting . . . . . . . . . . . . . . . . . . . .8
5.09. Comparable Plan Offset. . . . . . . . . . . . .8
5.10. No Duplication of Benefits. . . . . . . . . . .8


SECTION 6. PRE-RETIREMENT DEATH BENEFITS . . . . . . . . . .8
6.01. Designation of Beneficiary. . . . . . . . . . .8
6.02. Pre-Retirement Death Benefit. . . . . . . . . .9


SECTION 7. ADMINISTRATION OF THE PLAN. . . . . . . . . . . .9
7.01. Appointment of Committee. . . . . . . . . . . .9
7.02. Duties and Powers. . . . . . . . . . . . . . . 10
7.03. Conduct of Its Affairs . . . . . . . . . . . . 10
7.04. Allocation of Responsibilities . . . . . . . . 10
7.05. Expenses of the Committee. . . . . . . . . . . 10
7.06. Information to be Submitted to the Committee . 10
7.07. Notices, Statements and Reports. . . . . . . . 10
7.08. Service of Process . . . . . . . . . . . . . . 11
7.09. Insurance. . . . . . . . . . . . . . . . . . . 11
7.10. Indemnity. . . . . . . . . . . . . . . . . . . 11


SECTION 8. AMENDMENT, SUSPENSION, AND TERMINATION . . . . . 11
8.01. Right to Amend or Terminate. . . . . . . . . . 11
8.02. Right to Suspend . . . . . . . . . . . . . . . 11
8.03. Right to Accelerate. . . . . . . . . . . . . . 11


Page


SECTION 9. MISCELLANEOUS. . . . . . . . . . . . . . . . . . 12
9.01. No Right to Continued Employment . . . . . . . . 12
9.02. Prohibition Against Alienation . . . . . . . . . 12
9.03. Savings Clause . . . . . . . . . . . . . . . . . 12
9.04. Payment of Benefit of Incompetent. . . . . . . . 12
9.05. Withholding. . . . . . . . . . . . . . . . . . . 12
9.06. Beneficiary's Interest . . . . . . . . . . . . . 12
9.07. Successors . . . . . . . . . . . . . . . . . . . 13
9.08. Gender, Tense and Headings . . . . . . . . . . . 13


SECTION 10. CONSTRUCTION . . . . . . . . . . . . . . . . . . 13
10.01. Choice of Law. . . . . . . . . . . . . . . . . 13


APPENDIX A - ACTUARIAL ASSUMPTIONS


MAXICARE HEALTH PLANS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN


MAXICARE HEALTH PLANS, INC. (hereinafter referred to as the"Company"), hereby adopts the Maxicare Health Plans, Inc. Supplemental Executive Retirement Plan (hereinafter referred to as the "Plan") effective as of January 1, 1997. The purpose of the Plan is to provide supplemental retirement benefits for certain executives of the Company and certain of its subsidiaries and to provide a measure of security for such executives through the payment of death benefits for their beneficiaries.


It is intended that this Plan provide benefits solely for "a select group of management or highly compensated employees" within the meaning of Sections 201, 301 and 401 of the "Act" (as hereinafter defined), and therefore to be exempt from the provisions of Parts 2, 3 and 4 of Subtitle B of Title I of the Act.


SECTION 1. DEFINITIONS


The following words and terms as used herein shall, unless the context clearly requires a different meaning, have the respective meanings hereinafter set forth. Except as otherwise expressly provided, the masculine gender includes the feminine and the singular includes the plural.


1.01. "Act" means the Employee Retirement Income Security Act of 1974, as amended from time to time.


1.02. "Average Compensation" means the mathematical average of a Participant's Compensation, for his final three (3) Years of Service, not counting any Years of Service that commences after the Plan Year in which the Participant's designation as an Executive for purposes of this Plan is revoked by the Board of Directors; provided, however, that for any Participant that has fewer than three (3) Years of Service counted under this Plan, Average Compensation means the mathematical average of his Compensation over the number of his Years of Service counted under the Plan.


1.03. "Beneficiary" means a person or persons entitled under the provisions of Section 6.01 to receive benefits in the event of the death of a Participant.


1.04. "Board of Directors" means the Board of Directors of the Company.


1.05. "Change of Control" means, after the Effective Date, any transaction or occurrence as the result of which:


(a) the Company shall cease to be a publicly owned corporation having at least 300 stockholders; or


(b) any person or group of persons (as defined in Rule 13d-5 promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), together with its affiliates, is or becomes the beneficial owner (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company (including securities convertible into or exercisable for securities of the Company) ordinarily having the right to vote in the election of directors which together represent, after giving effect to any conversion or exercise, in excess of forty percent (40%) of the combined voting power of the Company's outstanding securities ordinarily having the right to vote in the election of directors; or


(c) "Continuing Directors" (as defined below) shall cease for any reason to constitute at least a majority of the Board of Directors; or


(d) the Company shall merge or consolidate with any other person or entity other than a subsidiary, and upon the consummation of such transaction, holders of the common stock of the Company immediately prior to such transaction own less than sixty percent (60%) of the equity securities of the surviving or consolidated entity; or


(e) all or substantially all of the assets of the Company are sold or transferred to another person or entity in a single transaction or a series of related transactions.


Notwithstanding the foregoing, a Change of Control shall not include the filing by or on behalf of, or entering against, the Company or its subsidiaries of (i) a petition, decree or order of bankruptcy or reorganization, or (ii) a petition, decree or order for the appointment of a trustee, receiver, liquidator, supervisor, conservator or other officer or agency having similar powers over the Company or its subsidiaries, including any such petitions, orders or decrees filed or entered by federal or state regulatory authorities.


For purposes of this definition, a "Continuing Director" is any individual who is a member of the Board of Directors as of the Effective Date and any subsequent director nominated by the Board of Directors for election by the stockholders or appointed to the Board of Directors, which nomination or appointment is made with the affirmative vote of a majority of Continuing Directors then serving on the Board of Directors.


1.06. "Code" means the Internal Revenue Code of 1986, as amended from time to time.


1.07. "Committee" means the Committee of the Board of Directors appointed and acting, from time to time, to administer the Plan pursuant to Section 7.01.


1.08. "Company" means Maxicare Health Plans, Inc., its successors and assigns.


1.09. "Compensation" means the base salary and annual bonus paid to an Executive during a Year of Service, excluding commissions, overtime, reimbursements, updates, corporate provided fringe benefits, gain on exercise of stock options, or any contributions or benefits under any pension, profit-sharing, deferred compensation, accident or health plan adopted by the Employer. If an Executive dies or suffers Disability during a Year of Service, his Compensation for that year shall be the greater of


(a) the actual Compensation he received during that year prior to his death or Disability; or


(b) his Compensation for the immediately prior Year of Service.


1.10. "Disability" means the inability, caused by disease or bodily injury and originating after his designation as a Participant, of an Executive to do substantially all the material duties of his regular job, except that


(a) after such inability has continued for two years, such Executive shall be considered to be suffering Disability only if he cannot work for pay or profit at another job for which he is reasonably fitted by education, training or experience; and


(b) such Executive shall be considered to be suffering Disability only for those periods during which he is not working for pay or profit.


1.11. "Early Retirement Date" means the first day of the month coinciding with, or next following, a Participant's attainment of age 55.


1.12. "Effective Date" means January 1, 1997.


1.13. "Employer" means the Company, and each of its subsidiaries and other corporations it controls that has adopted the Plan with the approval of the Board of Directors.


1.14. "Executive" means a management or highly compensated employee of the Employer who has been specifically designated by the Board of Directors or the Committee as eligible to become a Plan Participant, such designation not having been revoked. Upon such revocation, the former Executive shall be entitled to receive only those benefits determined as of the date of revocation, and only to the extent the former Executive becomes vested therein.


1.15. "Leave" means any period during which an Executive who is employed by the Employer immediately prior to the commencement thereof is absent from service with the Employer pursuant to a leave of absence granted by the Employer.


1.16. "Normal Retirement Date" means the first day of the month coinciding with, or next following, a Participant's attainment of age 65.


1.17. "Participant" means an individual who has been, or who was at any time, designated as an Executive by the Board of Directors for purposes of the Plan. An individual shall remain a Participant until either he terminates employment with the Employer without being vested in his benefits under this Plan pursuant to Section 5.08, or his entire Retirement Income Benefit has been paid out.


1.18. "Plan" means the Maxicare Health Plans, Inc. Supplemental Executive Retirement Plan, as set forth herein and as hereafter amended.


1.19. "Plan Year" means the calendar year.


1.20. "Pre-Retirement Death Benefit" means the benefit payable to the Beneficiary of a vested Participant who dies prior to the commencement of payment of his Retirement Income Benefit, as described in Section 6.


1.21. "Retirement Income Benefit" means the benefit described in Section 5.


1.22. "Year of Service" means


(a) for purposes of determining Compensation, a payroll calendar year during which the Participant is, and receives salary as, a full-time employee of the Employer; and


(b) for all other Plan purposes, a 12-consecutive month period commen ...