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EXHIBIT 5.1A
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
MAXICARE HEALTH PLANS, INC.
Maxicare Health Plans, Inc. (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware (the "Delaware Law"), does hereby certify as follows:
FIRST: That, Article FOURTH of the Corporation's Restated
Certificate of Incorporation is amended as follows:
(a) by deleting the second sentence of Section A thereof
and replacing such sentence with the following:
"The Corporation is authorized to issue 80,000,000 shares of
Common Stock, par value $0.01, and 5,000,000 shares of Preferred Stock, par
value $0.01, which shall be issued from time to time in series, of which
2,500,000 Shares shall be designated as Series A Cumulative Convertible
Preferred Stock (the "Series A Stock") and 500,000 Shares shall be designated as
Series B Preferred Stock (the "Series B Stock") ; and"
(b) by adding a new Section K thereto as follows:
"K. (1) Certain Restrictions on the Transfer of Stock. In order
to preserve the net operating loss carryovers, capital loss carryovers, and
business credit carryovers (the "Tax Benefits") to which the Corporation is
entitled pursuant to the Internal Revenue Code of 1986, as amended, or any
successor statute (collectively, the "Code") and the regulations thereunder, the
following restrictions shall apply:
(a) Ownership Percentage. From and after the date of the
adoption of this Section K, unless approved by the Board of Directors, no person
other than the Corporation shall transfer any shares of stock of the Corporation
(other than stock described in Section 1504(a)(4) of the Code or any successor
statute, or stock that is not so described solely because it is entitled to vote
as a result of dividend arrearages) to any person to the extent that such
transfer, if effective, would cause (x) the Ownership Interest Percentage of the
transferee or any other person to equal five percent (5%)or more, or (y) any
increase in the Ownership Interest Percentage of the transferee or any other
person if the Ownership Interest Percentage of such transferee or of such other
person equalled five percent (5%) or more before such transfer. For purposes of
this Section K:
(i) "person" shall mean any individual, corporation,
estate, trust, association, company, partnership, joint venture, or similar
organization and shall include an aggregation of similarly-situated persons;
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(ii) a person's "Ownership Interest Percentage" shall
be the sum of such person's direct ownership interest in the Corporation as
determined under Treasury Regulation Section 1.382-2T(f)(8) or any successor
regulation and such person's indirect ownership interest in the Corporation as
determined under Treasury Regulation Section 1.382-2T(f)(15) or any successor
regulation, except that, for purposes of determining a person's direct ownership
interest in the Corporation, any ownership interest held by such person in the
Corporation described in Treasury Regulation Section 1.382-2T(f)(18)(iii)(A) or
any successor regulation shall be treated as stock of the Corporation, and for
purposes of determining a person's indirect ownership interest in the
Corporation, Treasury Regulations Sections 1.382-2T(g)(2), 1.382-2T(g)(3),
1.3822T(h)(2)(iii) and 1.382-2T(h)(6)(iii) or any successor regulations shall
not apply and any stock that would be attributed to such person pursuant to the
option attribution rule of Treasury Regulation Section 1.382-2T(h)(4) or any
successor regulation, if to do so would result in an ownership change, shall be
attributed to such person without regard to whether such attribution results in
an ownership change;
(iii) "stock of the Corporation" shall mean shares of
stock of the Corporation (other than stock described in Section 1504(a)(4) of
the Code or any successor statute or stock that is not so described solely
because it is entitled to vote as a result of dividend arrearages); and
(iv) "transfer" shall mean any means of conveying
legal or beneficial ownership of shares of stock of the Corporation, whether
such means is direct or indirect, voluntary or involuntary, including, without
limitation, the granting of options with respect to shares of stock or the
transfer of ownership of any entity that owns shares of stock of the
Corporation, and "transferee" shall mean any person to whom stock of the
Corporation is transferred.
(b) Any transfer of shares of stock of the Corporation
that would otherwise be prohibited pursuant to the preceding subparagraph shall
nonetheless be permitted if information relating to a specific proposed
transaction is presented to the Board of Directors of the Corporation and the
Board determines that such transaction will not jeopardize the Tax Benefits,
based upon an opinion to that effect of legal counsel or the Corporation's
outside tax advisors selected by the Board of Directors of the Corporation.
Nothing in this subparagraph shall be construed to limit or restrict the Board
of Directors in the exercise of its fiduciary duties under applicable law.
(2) Attempted Transfer in Violation of Transfer Restrictions.
(a) Unless approval of the Board of Directors is obtained,
any attempted or purported transfer of shares of stock of the Corporation in
excess of the shares that could be transferred to the transferee without
restriction under Section K(1) hereof is not and shall not be effective to
transfer ownership of such excess shares (the "Prohibited Shares") to the
purported acquiror thereof (the "Purported Acquiror"), who shall
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not be entitled to any rights as a shareholder of the Corporation with respect
to the Prohibited Shares (including, without limitation, the right to vote or to
receive dividends with respect thereto). All rights with respect to the
Prohibited Shares shall remain the property of the person who initially
purported to transfer the Prohibited Shares (the "Initial Transferor") to the
Purported Acquiror until such time as the Prohibited Shares are resold as set
forth in Sections K(2)(b) or (c). The Purported Acquiror, by acquiring ownership
of any shares of stock of the Corporation, following adoption of this Section K,
whether or not they are Prohibited Shares, shall be deemed to have consented to
all the provisions of this Section K, and to have agreed to act as provided in
the following Section K(2)(b).
(b) Upon demand by the Corporation, the Purported Acquiror
shall transfer any certificate or other evidence of purported ownership of the
Prohibited Shares within the Purported Acquiror's possession or control, along
with any dividends or other distributions paid by the Corporation with respect
to the Prohibited Shares that were received by the Purported Acquiror (the
"Prohibited Distributions"), to an agent designated by the Corporation (the
"Agent"). If the Purported Acquiror has sold the Prohibited Shares to a
protected purchaser (as such term is defined in Section 8-303 of the Uniform
Commercial Code as adopted by the State of Delaware) in an arm's length
transaction after purportedly acquiring them, the Purported Acquiror shall be
deemed to have sold the Prohibited Shares as agent for the Initial Transferor,
and in lieu of transferring the Prohibited Shares and Prohibited Distributions
to the Agent shall transfer to the Agent the Prohibited Distributions and the
proceeds of such sale (the "Resale Proceeds") except to the extent that the
Agent grants written permission to the Purported Acquiror to retain a portion of
the Resale Proceeds not exceeding the amount that would have been payable by the
Agent to the Purported Acquiror pursuant to the following Section K(2)(c) if the
Prohibited Shares had been sold by the Agent rather than by the Purported
Acquiror. Any purported transfer of the Prohibited Shares by the Purported
Acquiror other than a transfer described in one of the two proceeding sentences
shall not be effective to transfer any ownership of the Prohibited Shares.
(c) The Agent shall sell in an arm's length transaction
(to the extent possible, on the principal national securities exchange, if any,
on which the Corporation's stock is listed) any Prohibited Shares transferred to
the Agent by the Purported Acquiror, and the proceeds of such sale (the "Sales
Proceeds"), or the Resale Proceeds, if applicable, shall be allocated to the
Purported Acquiror up to the following amount: (a) where applicable, the
purported purchase price paid or value of consideration surrendered by the
Purported Acquiror for the Prohibited Shares, or (b) where the purported
transfer of the Prohibited Shares to the Purported Acquiror was by gift,
inheritance, or any similar purported transfer, the fair market value of the
Prohibited Shares at the time of such purported transfer. Subject to the
succeeding provisions of this subparagraph, any Resale Proceeds or Sales
Proceeds in excess of the amount allocable to the Purported Acquiror pursuant to
the preceding sentence, together with any Prohibited Distributions, shall be the
property of the Initial Transferor. If the identity of the Initial Transferor
cannot be determined by the Agent through inquiry made to the Purported
Acquiror, the Agent shall publish appropriate notice (in the Wall Street
Journal, if possible) for seven (7) consecutive business days in an attempt to
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identify the Initial Transferor in order to transmit any Resale Proceeds or
Sales Proceeds or Prohibited Distributions due to the Initial Transferor
pursuant to this subparagraph. The Agent may also take, but is not required to
take, other reasonable actions to attempt to identify the Initial Transferor. If
after ninety (90) days following the final publication of such notice the
initial Transferor has not been identified, any amounts due to the Initial
Transferor pursuant to this subparagraph may be paid over to a court or
government agency, if applicable law permits, or otherwise shall be transferred
to any entity designated by the Corporation that is described in Section
501(c)(3) of the Code. In no event shall any such amounts due to the Initial
Transferor inure to the benefit of the Corporation or the Agent, but such
amounts may be used to cover expenses (including but not limited to the expenses
of publication) incurred by the Agent in attempting to identify the Initial
Transferor.
(3) Prompt Enforcement Against Purported Acquiror. Within
forty-five (45) days of learning of a purported transfer of Prohibited Shares to
a Purported Acquiror, the Corporation through its Secretary shall demand that
the Purported Acquiror surrender to the Agent the certificates representing the
Prohibited Shares, or any Resale Proceeds, and any Prohibited Distributions, and
if such surrender is not made by the Purported Acquiror within forty-five (45)
days from the date of such demand the Corporation shall (unless otherwise
directed by the Board of Directors) institute legal proceedings to compel such
transfer; provided, however, that nothing in this Section K(3) shall preclude
the Corporation in its discretion from immediately bringing legal proceedings
without a prior demand, and also provided that failure of the Corporation to act
within the time periods set out in this Section K(3) shall not constitute a
waiver of any right of the Corporation to compel any transfer required by
Section K(2)(a) hereof.
(4) Additional Actions to Prevent Violation or Attempted
Violation. Upon a determination by the Board of Directors that there has been or
is threatened a purported transfer of Prohibited Shares to a Purported Acquiror,
the Board of Directors may take such action in addition to any action required
or permitted by the preceding Section as it deems advisable to give effect to
the provisions of this Section K, including without limitation, refusing to give
effect on the books of this Corporation to such purported transfer or
instituting proceedings to enjoin such purported transfer.
(5) Obligation to Provide Information. The Corporation may
require as a condition to the registration of the transfer of any share of its
stock that the proposed transferee furnish to the Corporation all information
reasonably requested by the Corporation with respect to all the proposed
transferee's direct or indirect ownership interests in, or options to acquire,
stock of the Corporation.
(6) Further Actions.
(a) Nothing contained in this Section K shall limit the
authority of the Board of Directors to take such action to the extent permitted
by law as it deems necessary or advisable to protect the Corporation and the
interests of the holders of its
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securities in preserving the Tax Benefits. The Board of Directors may, to the
extent permitted by law, from time to time establish, modify, amend or rescind,
by Bylaw, resolution or otherwise, regulations and procedures not inconsistent
with the provisions of this Section K for determining whether any acquisition of
the Corporation's stock would jeopardize the Corporation's ability to preserve
and use the Tax Benefits, and for the orderly application, administration and
implementation of the provisions of this Section K. Such procedures and
regulations shall be kept on file with the Secretary of the Corporation and,
upon request, shall be made available for inspection and mailed to any holder of
the Corporation's stock.
(b) Without limiting the generality of the foregoing, the
Board of Directors may (a) modify the Ownership Interest Percentage in the
Corporation specified in the first sentence of Section K(1)(a) hereof, or (b)
modify the definitions of any terms set forth in this Section K; provided that
the Board of Directors shall determine in writing that such acceleration,
extension, change or modification is in the best interests of the Corporation
and its stockholders and, based upon an opinion of counsel of the Corporation,
that such acceleration, extension, change or modification is reasonably
necessary or desirable to preserve the Tax Benefits under the Code and the
regulations thereunder or that the continuation of these restrictions is no
longer reasonably necessary for the preservation of the Tax Benefits, which
determination shall be filed with the Secretary of the Corporation and mailed by
the Secretary to all stockholders of this Corporation within ten (10) days after
the date of any such determination.
(7) Severability. Any provision in this Section K which is
prohibited or unenforceable under Delaware law shall be ineffective to the
extent of such prohibition or un-enforceability without invalidating the
remaining provisions of this Section K and of this Certificate of Incorporation.
(8) Stock Certificates. As soon as practicable, the Corporation
shall legend all share certificates representing outstanding shares of stock of
the Corporation in order to conspicuously note the restrictions on transfers set
forth in this Section K."
SECOND: That the foregoing amendments to the Corporation's Restated
Certificate of Incorporation were duly approved by the Board of Directors of the
Corporation on May 22, 2000.
THIRD: That the foregoing amendments were duly approved by the
shareholders of the Corporation at the Corporation's 2000 Annual Meeting of
Shareholders, at which a majority of the outstanding shares entitled to vote
thereon voted in favor of the aforementioned amendments as required by the
Delaware Law.
FOURTH: That said amendments were duly adopted in accordance with the
provisions of Section 242 of the Delaware Law.
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IN WITNESS WHEREOF, the Corporation has caused this certificate
to be signed by Paul R. Dupee, Jr., its Chief Executive Officer, and Alan D.
Bloom, its Secretary, this 14th day of September, 2000.
By: /s/ PAUL R. DUPEE, JR.
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Paul R. Dupee, Jr., Chief Executive Officer
Attest:
/s/ ALAN D. BLOOM
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Alan D. Bloom, Secretary
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