EXHIBIT 4(n)
EXECUTION COPY
AMENDMENT No. 3 entered into as of July 29,
1999 (this "AMENDMENT"), to the Credit Agreement
dated as of February 12, 1998 (as amended,
supplemented or otherwise modified from time to time,
the "CREDIT AGREEMENT"), among Magellan Health
Services, Inc., a Delaware corporation (the "PARENT
BORROWER"); Charter Behavioral Health System of New
Mexico, Inc., a New Mexico corporation; Merit
Behavioral Care Corporation, a Delaware corporation;
each other wholly owned domestic subsidiary of the
Parent Borrower that becomes a "Subsidiary Borrower"
pursuant to Section 2.23 of the Credit Agreement
(each, a "SUBSIDIARY BORROWER" and, collectively, the
"SUBSIDIARY BORROWERS" (such term is used herein as
modified in Article I of the Credit Agreement); the
Parent Borrower and the Subsidiary Borrowers are
collectively referred to herein as the "BORROWERS");
the Lenders (as defined in Article I of the Credit
Agreement); The Chase Manhattan Bank, a New York
banking corporation, as administrative agent (in such
capacity, the "ADMINISTRATIVE AGENT") for the
Lenders, as collateral agent (in such capacity the
"COLLATERAL AGENT") for the Lenders and as an issuing
bank (in such capacity, an "ISSUING BANK"); First
Union National Bank, a national banking corporation,
as syndication agent (in such capacity, the
"SYNDICATION AGENT") for the Lenders and as an
issuing bank (in such capacity, an "ISSUING BANK");
and Credit Lyonnais New York Branch, a licensed
branch of a bank organized and existing under the
laws of the Republic of France, as documentation
agent (in such capacity, the "DOCUMENTATION AGENT")
for the Lenders and as an issuing bank (in such
capacity, an "ISSUING BANK" and, together with The
Chase Manhattan Bank and First Union National Bank,
each in its capacity as an issuing bank, the "ISSUING
BANKS").
A. The Lenders and the Issuing Banks have extended credit to
the Borrowers, and have agreed to extend credit to the Borrowers, in each case
pursuant to the terms and subject to the conditions set forth in the Credit
Agreement.
B. In relation to each CBHS Joint Venture (as defined in the
Credit Agreement, as amended by this Amendment), the Parent Borrower and the
subsidiary of the Parent Borrower that is a party to such CBHS Joint Venture
(the "JV Party") have entered into a Services Agreement (as defined in the
Credit Agreement, as amended by this Amendment) with CBHS or one of its
subsidiaries, under which CBHS or the relevant subsidiary has agreed to provide
certain services in respect of such CBHS Joint Venture. Under Section 3.1(b) of
each Services Agreement with respect to a CBHS Joint Venture, the Parent
Borrower and the JV Party have agreed to retain certain net proceeds from a CBHS
Joint Venture Sale (as defined in the Credit Agreement, as amended by this
Amendment) to be used for certain purposes specified in such Services Agreement.
C. The Parent Borrower intends to effect the GPA Sale (as
defined in the Credit Agreement, as amended by this Amendment) for aggregate
consideration at least
equal to the fair market value of the assets sold (as determined in good faith
by a Responsible Officer of the Parent Borrower), in accordance with the terms
of the purchase agreement in form and substance reasonably satisfactory to the
Administrative Agent to be entered into to effect the GPA Sale.
D. The Parent Borrower intends to effect the Specified Equity
Issuances (as defined in the Credit Agreement, as amended by this Amendment),
and has requested that it be able to pay dividends on the capital stock issued
pursuant to the Specified Equity Issuances, and redeem, repurchase or otherwise
make payments in respect of such capital stock, in certain circumstances.
E. The Borrowers have requested that the requisite Lenders
amend certain provisions of the Credit Agreement in connection with the
transactions described in the preceding paragraphs B, C and D, and the requisite
Lenders are willing so to amend such provisions of the Credit Agreement, on the
terms and subject to the conditions set forth in this Amendment.
F. Capitalized terms used but not defined herein have the
meanings assigned to them in the Credit Agreement.
Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO SECTION 1.01. (a) The definition of
the term "Change in Control" in Section 1.01 of the Credit Agreement is hereby
amended by adding the word "(A)" immediately after the words "defined in" in the
tenth line of such definition and by adding the following text at the end of
such definition before the ".":
", or (B) the terms of any capital stock issued pursuant to
any Specified Equity Issuance. Without limiting the foregoing,
a Change in Control shall be deemed to have occurred if a
majority of the persons holding seats on the board of
directors of the Parent Borrower were nominated, appointed or
elected (a) by, or at the direction of, the holders of the
capital stock issued pursuant to any Specified Equity Issuance
or (b) pursuant to the rights contained in the terms of any
Specified Equity Issuance or in any agreement entered into in
connection with, or relating to, any Specified Equity
Issuance."
(b) (i) The definition of the term "Permitted Stock
Repurchase" in Section 1.01 of the Credit Agreement is hereby deleted in its
entirety and replaced with the following new definition:
""PERMITTED STOCK REPURCHASES OR DIVIDENDS" shall mean (a) any
repurchase by the Parent Borrower of shares of its common
stock, (b) any repurchase by
the Parent Borrower of any stock option held by any director,
officer or employee, and any amount paid by the Parent
Borrower in respect of the cancelation or termination of any
stock option, (c) any repurchase or redemption by the Parent
Borrower of shares of non-voting capital stock issued by the
Parent Borrower as part of a Specified Equity Issuance, the
payment of accumulated and unpaid dividends and arrearages on
such shares of non-voting capital stock to the extent that
such dividends and arrearages become due and payable at the
time of a repurchase or redemption permitted by this clause
(c), or any payment made by the Parent Borrower in connection
with the sale by the holder(s) of non-voting capital stock
issued by the Parent Borrower as part of a Specified Equity
Issuance, in each case (i) after Xxxxx 0, 0000, (xx) only in
the circumstances and to the extent required by the terms and
conditions of the relevant Specified Equity Issuance and (iii)
solely in accordance with the terms and conditions of the
relevant Specified Equity Issuance, (d) any payment of a cash
dividend on any capital stock issued pursuant to any Specified
Equity Issuance or (e) any payment of dividends on any capital
stock issued pursuant to any Specified Equity Issuance (i) in
the form of (A) additional shares of such capital stock (or of
other capital stock of the Parent Borrower issued pursuant to
a Specified Equity Issuance or otherwise on terms that are not
less favorable to the Lenders than the terms of such capital
stock) or (B) shares of common stock of the Parent Borrower
(such common stock to have the same terms as the common stock
issued by the Parent Borrower as of the date hereof or terms
that are not less favorable to the Lenders than the terms of
such common stock) and (ii) in accordance with the terms of
such capital stock issued pursuant to such Specified Equity
Issuance, in each case, so long as (A) after giving effect to
such repurchase, redemption, cancelation, termination or
payment, (1) the Parent Borrower shall be in compliance, on a
PRO FORMA basis, with all covenants set forth in this
Agreement, including then effective covenants contained in
Sections 6.10, 6.11, 6.12, 6.13 and 6.14, which shall be
recomputed as at the last day of the most recently ended
fiscal quarter (for which financial information has been
delivered pursuant to Section 5.04) of the Parent Borrower as
if such repurchase, redemption, cancelation, termination or
payment had occurred on the first day of each relevant period
for testing such compliance, and (2) on the date of such
repurchase, redemption, cancelation, termination or payment
and immediately after giving effect thereto, no Default or
Event of Default shall exist, (B) the aggregate cash amount
expended by the Parent Borrower in connection with all
Permitted Stock Repurchases or Dividends shall not exceed
during the term of this Agreement (x) in the case of all
repurchases, redemptions and payments permitted by clause (c)
of this definition, the sum of (I) the lesser of $18,500,000
and the aggregate cash consideration received by the Parent
Borrower in respect of the issuance of non-voting capital
stock as part of a Specified Equity Issuance to Persons other
than the Preemptive Rights Holders, (II) the aggregate cash
consideration received by the Parent
Borrower in respect of the issuance of non-voting capital
stock as part of a Specified Equity Issuance to the Preemptive
Rights Holders solely pursuant to the exercise of their
preemptive rights under the Preemptive Rights Agreement in
respect of capital stock being issued to other Persons as a
Specified Equity Issuance, (III) the aggregate cash
consideration received by the Parent Borrower in respect of
any Equity Issuance described in the first proviso to Section
2.13(d) and (IV) $10,000,000 less the aggregate amount that
has been expended pursuant to clause (a), (b), (d) or (e)
above (any payment made pursuant to this clause (IV) being an
"additional payment") and (y) in the case of all other
Permitted Stock Repurchases or Dividends as described in
clauses (a), (b), (d) or (e) above, $10,000,000 less the
aggregate amount that has been expended on additional payments
and (C) after giving effect to any such repurchase,
redemption, cancelation, termination or payment, the aggregate
amount of cash and cash equivalents on the Parent Borrower's
consolidated balance sheet PLUS the remaining available
balance of the Total Revolving Credit Commitment shall be at
least equal to (x) in the case of Permitted Stock Repurchases
or Dividends as described in clauses (a), (b), (d) or (e)
above, $50,000,000 or (y) in the case of Permitted Stock
Repurchases or Dividends as described in clause (c) above,
$20,000,000. Notwithstanding anything to the contrary set
forth in this definition, the issuance by the Parent Borrower
of (a) common stock of the Parent Borrower (such common stock
to have the same terms as the common stock issued by the
Parent Borrower as of the date hereof or terms that are not
less favorable to the Lenders than the terms of such common
stock) or (b) non-redeemable participating preferred stock of
the Parent Borrower (such preferred stock to be issued
pursuant to the terms of a Specified Equity Issuance or on
terms that are not less favorable to the Lenders than those
provided in such Specified Equity Issuance), in each case in
respect of accumulated and unpaid dividends and arrearages on
capital stock issued pursuant to a Specified Equity Issuance
when such capital stock is being converted to common stock or
non-redeemable participating preferred stock of the Parent
Borrower in accordance with the terms and conditions of the
relevant Specified Equity Issuance, shall, to the extent that
such common stock or non-redeemable participating preferred
stock dividends are required under the terms and conditions of
the relevant Specified Equity Issuance, constitute Permitted
Stock Repurchases or Dividends."
(ii) Each reference to the term "Permitted Stock Repurchase"
in the Credit Agreement is hereby replaced with the term "Permitted Stock
Repurchases or Dividends".
(c) Section 1.01 of the Credit Agreement is hereby amended to
add the defined term "GPA Sale" in the appropriate alphabetical order, to read
in its entirety as
follows:
""GPA SALE" shall mean the sale by the Parent Borrower and/or
the relevant Subsidiaries, for aggregate consideration at
least equal to the fair market value of the assets sold (as
determined in good faith by a Responsible Officer of the
Parent Borrower, taking into account when such consideration
is payable), of (a) all the capital stock and/or all or
substantially all the assets of Group Practice Affiliates,
Inc., a Delaware corporation, and/or one or more of the
subsidiaries of Group Practice Affiliates, Inc. and (b) any
and all ancillary, similar or related assets to the businesses
being so sold, all in accordance with the terms of a purchase
agreement or agreements (in related transactions) in form and
substance reasonably satisfactory to the Administrative Agent,
PROVIDED that such GPA Sale shall be deemed to be an Asset
Sale with Net Cash Proceeds in an amount equal to the greater
of (a) $15,000,000 or (b) the Net Cash Proceeds received by
the Parent Borrower and/or such relevant Subsidiaries in
connection with such GPA Sale."
(d) Section 1.01 of the Credit Agreement is hereby amended to
add the defined term "CBHS Joint Ventures" in the appropriate alphabetical
order, to read in its entirety as follows:
""CBHS JOINT VENTURES" shall mean the partnerships and limited
liability companies constituted under the agreements referred
to in the following clauses (a) through (f), in each case as
the same may be amended, supplemented and restated from time
to time: (a) the Amended and Restated Limited Partnership
Agreement dated as of May 31, 1995, under which Charter
Behavioral Health System of New Mexico, Inc. and New Mexico
Psychiatric Company formed Charter Heights Behavioral Health
System Limited Partnership, (b) the Operating Agreement dated
as of September 30, 1995, under which Charter Behavioral
Health System of Lafayette, Inc. and Louisiana Psychiatric
Company, Inc. formed The Charter Cypress Behavioral Health
System, L.L.C., (c) the Operating Agreement dated as of June
30, 1995, under which Charter Northridge Behavioral Health
System, Inc. and Wake Psychiatric Hospital, Inc. formed Xxxxx
Hill/Charter Behavioral Health System, L.L.C., (d) the
Operating Agreement dated as of August 6, 1996, under which
Charter Behavioral Health Systems, Inc. (now Magellan CBHS
Holdings, Inc.) and Columbia North Alaska Healthcare, Inc.
formed Charter North Star Behavioral Health System, L.L.C.,
(e) the Joint Venture Agreement dated as of November 1, 1988,
under which Naperville Health Ventures (assignor of Xxxxxx
Hospital Ventures) and P.I.A. Naperville, Inc. (assignor of
Charter Linden Oaks Behavioral Health System, Inc.) formed
Naperville Psychiatric Ventures and (f) the Agreement of
Limited Partnership dated as of February 28, 1995, under which
Charter Behavioral Health System of Massachusetts, Inc.,
Westwood/Pembroke Corporation and
Psychiatric Associates of Norfolk County, Inc. formed
Westwood/Pembroke Health System Limited Partnership."
(e) Section 1.01 of the Credit Agreement is hereby amended to
add the defined term "CBHS Joint Venture Sale" in the appropriate alphabetical
order, to read in its entirety as follows:
""CBHS JOINT VENTURE SALE" shall mean, in respect of any CBHS
Joint Venture, the sale by the Parent Borrower or the
Subsidiary that holds an interest in such CBHS Joint Venture,
or owns a hospital property that is solely used by such CBHS
Joint Venture (the "hospital"), of (a) all of its interest in
such CBHS Joint Venture, (b) the hospital solely used by such
CBHS Joint Venture or (c) in the case of a Subsidiary the only
material asset of which is an ownership interest in such CBHS
Joint Venture or the hospital, all the capital stock of that
Subsidiary, for aggregate cash consideration at least equal to
the fair market value of the assets sold (as determined in
good faith by a Responsible Officer of the Parent Borrower,
taking into account when such consideration is payable)."
(f) Section 1.01 of the Credit Agreement is hereby amended to
add the defined term "Preemptive Rights Agreement" in the appropriate
alphabetical order, to read in its entirety as follows:
""Preemptive Rights Agreement" shall mean that certain Stock
and Warrant Purchase Agreement dated as of December 22, 1995,
between the Parent Borrower (formerly Charter Medical
Corporation) and Xxxxxxx X. Xxxxxxxxx, as assigned and
amended."
(g) Section 1.01 of the Credit Agreement is hereby amended to
add the defined term "Preemptive Rights Holders" in the appropriate alphabetical
order, to read in its entirety as follows:
""Preemptive Rights Holders" shall mean, collectively, the
holders of the preemptive rights to buy capital stock of the
Parent Borrower pursuant to the Preemptive Rights Agreement."
(h) Section 1.01 of the Credit Agreement is hereby amended to
add the defined term "Services Agreement" in the appropriate alphabetical order,
to read in its entirety as follows:
""SERVICES AGREEMENT" shall mean, in respect of each CBHS
Joint Venture, the services agreement dated as of June 16,
1997, entered into among the
Parent Borrower, the Subsidiary that holds an interest in such
CBHS Joint Venture and CBHS or one of its subsidiaries."
(i) Section 1.01 of the Credit Agreement is hereby amended to
add the defined term "Specified Equity Issuance" in the appropriate alphabetical
order, to read in its entirety as follows:
""SPECIFIED EQUITY ISSUANCE" shall mean (a) any Equity
Issuance by the Parent Borrower of capital stock on or before
March 31, 2000, PROVIDED that (i) the Parent Borrower
designates in writing to the Administrative Agent at the time
of such Equity Issuance that such Equity Issuance is a
"Specified Equity Issuance" for the purposes of this
Agreement, (ii) the material terms of such Equity Issuance
have been approved by the Required Lenders and (iii) the
aggregate stated value or liquidation preference of all such
capital stock so issued pursuant to this clause (a) shall not
exceed the sum of (i) $76,000,000 and (ii) the aggregate cash
consideration received by the Parent Borrower from the
issuance of capital stock of the Parent Borrower to the
Preemptive Rights Holders solely pursuant to the exercise of
their preemptive rights under the Preemptive Rights Agreement
in respect of capital stock being issued to other Persons as a
Specified Equity Issuance, and (b) any payment of dividends by
the Parent Borrower referred to in clause (e) of the
definition of the term "Permitted Stock Repurchases or
Dividends."
SECTION 2. AMENDMENT TO SECTION 2.13(a). The Lenders hereby
amend Section 2.13(a) of the Credit Agreement by adding the text "(i)" after the
text "shall be required" in the fifth line of that Section and by adding the
following text at the end of that Section:
"or (ii) in respect of any CBHS Joint Venture Sale to the
extent, but only to the extent, that the Parent Borrower or
any Subsidiary is required to make available for reinvestment
for the benefit of CBHS or any of its subsidiaries an amount
equal to all or a portion of the Net Cash Proceeds received
from such CBHS Joint Venture Sale (A) in respect of all of the
CBHS Joint Ventures, pursuant to Section 3.1(b) of the
Services Agreement relating to such CBHS Joint Venture or (B)
in respect of the CBHS Joint Ventures described in clauses (a)
and (d) of the definition of the term "CBHS Joint Venture", as
may be required or necessary (as reasonably determined by the
Parent Borrower and to the reasonable satisfaction of the
Administrative Agent) in order for the Parent Borrower or any
Subsidiary to satisfy or obtain a release of its obligations
pursuant to Section 6.11(b) of the Services Agreement or the
organizational documents of the CBHS Joint Venture (as in
effect on July 19, 1999) as a result of such CBHS Joint
Venture Sale."
SECTION 3. AMENDMENT TO SECTION 2.13(d). The Lenders hereby
amend
Section 2.13(d) of the Credit Agreement by deleting the existing text of Section
2.13(d) in its entirety and replacing it with the following new text:
(d) In the event that any Borrower or any Guarantor shall
receive Net Cash Proceeds from an Equity Issuance, the Borrowers shall,
substantially simultaneously with (and in any event not later than the
third Business Day next following) the receipt of such Net Cash
Proceeds, prepay outstanding Loans in accordance with Section 2.13(e)
by an amount equal to (i) 50% of such Net Cash Proceeds if such Equity
Issuance was a Specified Equity Issuance of non-voting capital stock
that has been approved by the shareholders of the Parent Borrower, (ii)
100% of such Net Cash Proceeds if such Equity Issuance was a Specified
Equity Issuance of non-voting capital stock that has not been approved
by the shareholders of the Parent Borrower, (iii) 50% of such Net Cash
Proceeds if such Equity Issuance was a Specified Equity Issuance other
than a Specified Equity Issuance described in paragraphs (i) and (ii)
of this Section 2.13(d), and (iv) 75% of the Net Cash Proceeds from any
other Equity Issuance; PROVIDED, HOWEVER, that no such prepayment shall
be required in connection with any Equity Issuance in respect of which
the Parent Borrower advises the Administrative Agent prior to date of
that Equity Issuance that the Net Cash Proceeds of such Equity Issuance
are intended to be used, and are used, by the Parent Borrower solely
for the purpose of effecting a repurchase or redemption, or making a
payment, permitted by clause (c) or (d) (but, in the case of clause
(d), only with respect to dividends on non-voting capital stock issued
pursuant to a Specified Equity Issuance) of the definition of the term
"Permitted Stock Repurchases or Dividends", and PROVIDED FURTHER, that
no such prepayment shall be required until the September 30 that is
immediately after such issuance if the applicable Net Cash Proceeds
plus all other Net Cash Proceeds that have yet to be applied in
accordance with this Section 2.13(d) are less than $5,000,000.
SECTION 4. AMENDMENT TO SECTION 6.05. The Lenders hereby amend
Section 6.05 of the Credit Agreement by adding the text "(other than the GPA
Sale and each CBHS Joint Venture Sale)" after the text "Asset Sale" in the third
line of that Section.
SECTION 5. AMENDMENT TO SECTION 6.08(a). The Lenders hereby
amend Section 6.08(a) of the Credit Agreement by adding the following proviso to
the end of that Section:
", PROVIDED, HOWEVER, that any amendment of the charter or
bylaws of the Parent Borrower reasonably determined by the
Parent Borrower, and accepted by the Administrative Agent in
its reasonable judgment, to be necessary to give effect to the
terms of the Specified Equity Issuances shall not be
prohibited by this Section 6.08."
SECTION 6. REPRESENTATIONS AND WARRANTIES. Each Borrower
represents and warrants to the Administrative Agent and to each of the Lenders
that:
(a) This Amendment has been duly authorized, executed and
delivered by it and constitutes a legal, valid and binding obligation of each
Loan Party party hereto, enforceable against such Loan Party in accordance with
its terms.
(b) After giving effect to this Amendment, the representations
and warranties set forth in Article III of the Credit Agreement are true and
correct in all material respects on and as of the date hereof with the same
effect as if made on and as of the date hereof, except to the extent such
representations and warranties expressly relate to an earlier date.
(c) On the date hereof and immediately after giving effect to
this Amendment, no Event of Default or Default has occurred and is continuing.
SECTION 7. AMENDMENT FEE. In consideration of the agreements
of the Lenders contained in this Amendment, the Parent Borrower agrees to pay to
the Administrative Agent, for the account of each Lender that delivers an
executed counterpart of this Amendment prior to 5:00 p.m., New York City time,
on July 29, 1999, an amendment fee (the "AMENDMENT FEE") in an amount equal to
0.10% of the sum of such Lender's outstanding Term Loans and Revolving Credit
Commitment as of such date.
SECTION 8. CONDITIONS TO EFFECTIVENESS. This Amendment shall
become effective as of the date first above written when (a) the Administrative
Agent shall have received (i) counterparts of this Amendment that, when taken
together, bear the signatures of the Borrowers and the Lenders required by the
Credit Agreement and (ii) the Amendment Fees and (b) all fees and expenses
required to be paid or reimbursed by the Borrowers pursuant hereto or to the
Credit Agreement shall have been paid or reimbursed, as applicable.
SECTION 9. CREDIT AGREEMENT. Except as specifically amended
hereby, the Credit Agreement shall continue in full force and effect in
accordance with the provisions thereof as in existence on the date hereof. After
the date hereof, any reference to the Credit Agreement shall mean the Credit
Agreement as amended hereby. This Amendment shall be a Loan Document for all
purposes.
SECTION 10. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 11. COUNTERPARTS. This Amendment 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 agreement. Delivery of an
executed signature page to this Amendment by facsimile transmission shall be
effective as delivery of a manually signed counterpart of this Amendment.
SECTION 12. EXPENSES. The Parent Borrower agrees to reimburse
the
Administrative Agent for its out-of-pocket expenses in connection with this
Amendment, including the reasonable fees, charges and disbursements of Cravath,
Swaine & Xxxxx, counsel for the Administrative Agent.
SECTION 13. APPROVAL OF TERMS OF SPECIFIED EQUITY ISSUANCE. By
its execution hereof, each Lender shall have given its approval to the Specified
Equity Issuances described in the letter from the Parent Borrower to the
Administrative Agent dated July 19, 1999.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective authorized officers as of the
day and year first written above.
MAGELLAN HEALTH SERVICES, INC.,
by
Name:
Title:
CHARTER BEHAVIORAL HEALTH SYSTEM
OF NEW MEXICO, INC.,
by
Name:
Title:
MERIT BEHAVIORAL CARE CORPORATION,
by
Name:
Title:
THE CHASE MANHATTAN BANK,
individually and as Administrative
Agent, Collateral Agent and
an Issuing Bank,
by
Name:
Title:
FIRST UNION NATIONAL BANK, individually
and as Syndication Agent and an Issuing
Bank,
by
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
individually and as Documentation Agent
and an Issuing Bank,
by
Name:
Title:
To Approve the Amendment:
by
Name:
Title:
