EXHIBIT 10.23
AMENDMENT NO. 3 TO
RECEIVABLES PURCHASE AND TRANSFER AGREEMENT
This AMENDMENT NO. 3 TO RECEIVABLES PURCHASE AND TRANSFER AGREEMENT, dated
as of October 30, 2003 (this "Amendment"), among National Medical Health Card
Systems, Inc., a Delaware corporation (together with its corporate successors
and assigns, "NMHC"), NMHC Funding, LLC, a Delaware limited liability company
(together with its corporate successors and assigns, the "Purchaser"), and each
of the other entities identified in the signature pages hereto (collectively,
the "Providers"), amends the Receivables Purchase and Transfer Agreement, dated
as of January 29, 2002, among NMHC, the Purchaser and the other parties
identified therein (as amended from time to time, the "RPTA"). Capitalized terms
used and not otherwise defined herein shall have the meanings set forth in the
RPTA.
WHEREAS, the Purchaser and HFG Healthco-4 LLC (the "Lender") have entered
into a Loan and Security Agreement, dated as of January 29, 2002 (as amended
from time to time, the "Loan Agreement");
WHEREAS, NMHC intends to enter into a Preferred Stock Purchase Agreement
with New Mountain Partners, L.P. ("NMP"), dated as of the date hereof (the
"Purchase Agreement"), pursuant to which NMHC intends to issue and sell to NMP
an aggregate of 6,956,522 shares of NMHC's series A 7% convertible preferred
stock, par value $0.10 per share (the "Preferred Stock") (subject to adjustment
as set forth in the Purchase Agreement), for an aggregate purchase price of
$80,000,003 (subject to adjustment as set forth in the Purchase Agreement, but
not to exceed $83,000,000);
WHEREAS, the Preferred Stock will be issued pursuant to and in accordance
with a Certificate of Designations setting forth the designations, powers and
preferences of the Preferred Stock (the "Certificate of Designations");
WHEREAS, certain terms of the RPTA restrict or prohibit certain of the
transactions contemplated by the Purchase Agreement and the Certificate of
Designations;
WHEREAS, the Purchaser has collaterally assigned the RPTA to the Lender;
WHEREAS, pursuant to a Consent, dated as of the date hereof, the Lender is
consenting to the consummation of the transactions contemplated by the Purchase
Agreement and the Certificate of Designations;
WHEREAS, the parties hereto desire to amend the RPTA as set forth herein in
order to permit the consummation of the transactions contemplated by the
Purchase Agreement and the Certificate of Designations.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Amendments. Subject to the conditions set forth herein, the parties
hereto hereby agree that the RPTA is hereby amended as follows:
(a) Exhibit I of the RPTA is hereby amended as follows:
(i) The definition of "Consolidated Interest Coverage Ratio" is hereby
amended and restated to read in its entirety as follows:
"`Consolidated Interest Coverage Ratio' means, for
any period, the quotient obtained by dividing (x)
Consolidated EBITDA minus Consolidated Capital
Expenditures by (y) Consolidated Interest Expense
plus the amount of any permitted dividend to be paid
to holders of the Preferred Stock in accordance with
GAAP. For the purposes of this calculation, any
accretion related to the initial beneficial
conversion feature of the Preferred Stock and any
accretion related to the Preferred Stock issuance
costs shall not be considered a dividend."
(ii) The definition of "Debt Service Coverage Ratio" is hereby amended and
restated to read in its entirety as follows:
"`Debt Service Coverage Ratio' means, for any
period, the quotient obtained by dividing (x)
Consolidated EBITDA for the twelve most recently
ended Months by (y) Consolidated Capital Expenditures
plus contingent payments required in connection with
the Centrus Acquisition, the acquisitions of Portland
Professional Pharmacy and Portland Professional
Pharmacy Associates or any other acquisition made or
to be made, at the time payable plus Consolidated
Interest Expense for the twelve most recently ended
Months plus the current portion of long term debt as
of the date of determination (provided however that
for purposes of calculating the current portion of
long term debt, the current portion of Revolving
Loans under the Loan Agreement shall not be included)
plus the amount of any permitted dividend to be paid
to holders of the Preferred Stock in accordance with
GAAP. For the purposes of this calculation, any
accretion related to the initial beneficial
conversion feature of the Preferred Stock and any
accretion related to the Preferred Stock issuance
costs shall not be considered a dividend."
(iii) The definition of "EBITDA" is hereby amended and restated to read in
its entirety as follows:
"`EBITDA' means, with respect to any Person for any
period, the sum (determined without duplication on a
consolidated basis) for such Person of (a) net income
(or net loss) of such Person (calculated before
non-recurring items) plus (b) Interest Expense of
such Person for such period deducted in the
determination of such net income (or net loss) plus
(c) depreciation, amortization and other non-cash
items for such period to the extent included in the
determination of net income (or net loss) plus or
minus (d) all taxes accrued for such period on or
measured by income to the extent deducted or credited
in determining such net income (or net loss) minus or
plus (e) gains (or losses) from asset dispositions
outside of the normal course of business to the
extent included in determining such net income (or
net loss) plus (f) losses due to asset impairment;
provided, however, that the severance payments or
bonuses payable to management in connection with the
transactions contemplated by the Purchase Agreement
shall not be considered non-recurring items for
purposes of this definition, but shall only be
charged against EBITDA when paid (and not when
accrued or expensed).
(iv) The following definitions are added in appropriate alphabetical order:
"`Certificate of Designations' means the Certificate
of Designations setting forth the designations,
powers and preferences of the Preferred Stock."
"`Preferred Stock' means the series A convertible
preferred stock, par value $0.10 per share, of NMHC.
Notwithstanding NMHC's GAAP balance sheet
classification, for purposes hereof, the Preferred
Stock shall be considered Equity."
"`Purchase Agreement' means the Preferred Stock
Purchase Agreement, dated as of October __, 2003, by
and between NMHC and New Mountain Partners, L.P."
(b) Exhibit IV, Section (r) of the RPTA is hereby amended and restated to
read in its entirety as follows:
"(r) Limitations on Dividends and Distributions. NMHC shall
not make any distributions or pay any dividends to its
shareholders; provided, however, that subject to the proviso
below, NMHC shall be permitted to pay dividends to holders of
its Preferred Stock in accordance with the terms of (a) the
Purchase Agreement and (b) the Certificate of Designations;
provided, further, that NMHC shall not be permitted to pay any
dividends on the Preferred Stock (i) during the period that a
Default or Event of Default (as defined under the Loan
Agreement) shall have occurred and be continuing under the
Loan Agreement, (ii) if the payment of any such dividend would
result in an Event of Termination, (iii) if the payment of any
such dividend would result in a Group-Wide Event of
Termination or (iv) if the payment of any such dividend would
result in a Servicer Termination Event."
(c) Exhibit V, Section (x) of the RPTA is hereby amended and restated to read in
its entirety as follows:
"(x) Consolidated Net Worth, calculated at the end of any
fiscal quarter of the Providers, is less than the amount set
forth below as of the end of the corresponding fiscal quarter
indicated below:
Fiscal Quarter Ending Amount
--------------------- ------
September 30, 2003 $20,000,000
December 31, 2003 $20,000,000
March 31, 2004 and all Fiscal $20,000,000
Quarters thereafter
provided, however, that if the transactions contemplated by
the Purchase Agreement are consummated by March 31, 2004, the
amount for the Fiscal Quarter ended March 31, 2004 and all
Fiscal Quarters thereafter shall be $45,000,000."
(d) Exhibit V, Section (y) of the RPTA is hereby amended and restated to read in
its entirety as follows:
"(y) Consolidated EBITDA, calculated as of the end of each
fiscal quarter of the Providers (a) for the fiscal quarter of
the Providers ended September 30, 2003, is less than
$3,000,000; (b) for the fiscal quarter of the Providers ended
December 31, 2003, is less than $4,000,000; (c) for the fiscal
quarter of the Providers ended March 31, 2004, is less than
$4,000,000; and (d) for any fiscal quarter thereafter, is less
than $5,000,000."
(e) Exhibit V, Section (dd) of the RPTA is hereby amended and restated to read
in its entirety as follows:
"(dd) Consolidated Capital Expenditures, exclusive of any sale
and leaseback transactions, calculated as of the end of each
four fiscal quarter period of the Providers, (a) for the four
fiscal quarters of the Providers ended December 31, 2003, is
more than $8,000,000; (b) for the four fiscal quarters of the
Providers ended March 31, 2004, is more than $10,000,000; (c)
for the four fiscal quarters of the Providers ended June 30,
2004, is more than $10,000,000; (d) for the four fiscal
quarters of the Providers ended September 30, 2004, is more
than $10,000,000; and (e) for the four fiscal quarters of the
Providers ended December 31, 2004, is more than $10,000,000."
(f) Exhibit V, Section (ff) of the RPTA is hereby amended and restated to read
in its entirety as follows:
"(ff) The Consolidated Tangible Net Worth of NMHC and its
Subsidiaries calculated at the end of any fiscal quarter of
the Providers, is less than the amount indicated opposite each
such fiscal quarter ended as follows:
Fiscal Quarter Ending Amount
--------------------- ------
September 30, 2003 -$31,000,000
December 31, 2003 -$29,500,000
March 31, 2004 -$7,500,000
June 30, 2004 -$6,500,000
September 30, 2004 -$5,500,000
December 31, 2004 and all Fiscal $-4,000,000
Quarters thereafter
provided, however, that if the transactions contemplated by
the Purchase Agreement are not consummated by March 31, 2004,
the amount for the Fiscal Quarter ended March 31, 2004 shall
be ($28,000,000), the amount for the Fiscal Quarter ended June
30, 2004 shall be ($28,500,000), the amount for the Fiscal
Quarter ended September 30, 2004 shall be ($27,500,000) and
the amount for the Fiscal Quarter ended December 31, 2004 and
all Fiscal Quarters thereafter shall be ($26,000,000)."
(g) Exhibit IV of the RPTA is hereby amended by adding a new Section (x), which
shall read in its entirety as follows:
"(x) The amount of gross proceeds received by NMHC pursuant to
the Purchase Agreement shall not exceed, in the aggregate,
$83,000,000."
2. Purchase Agreement. Attached hereto as Exhibit A is a copy of the
Purchase Agreement, together with the Exhibits thereto, and a copy of the
Support Agreement (as defined in the Purchase Agreement), each of which is in
final form and is in the form in which each such document will be executed by
the parties thereto, if necessary.
3. Representations and Warranties. Each Provider and the Primary Servicer
represents and warrants as follows:
(a) Each of the representations and warranties set forth in Exhibit III of
the RPTA is true and correct on and as of the date hereof as if made on and as
of the date hereof, except any representation or warranty that expressly
indicates that it is being made as of a specific date, in which case such
representation or warranty was true and correct on and as of such date.
(b) After giving effect to this Amendment and the Consent, dated as of the
date hereof, among NMHC, the Purchaser and the Lender, no Default or Event of
Default (as defined under the Loan Agreement) will have occurred and be
continuing under the Loan Agreement immediately following the consummation of
the transactions contemplated by the Purchase Agreement and the Certificate of
Designations, and no Event of Termination or Group-Wide Event of Termination
will have occurred and be continuing under the RPTA immediately following the
consummation of the transactions contemplated by the Purchase Agreement and the
Certificate of Designations.
4. Fee. An amendment fee of $50,000 shall be payable by NMHC to the Lender
in connection with this Amendment. The Lender shall charge such amount to the
loan balance under the Loan Agreement.
5. Miscellaneous.
(a) The RPTA is ratified and confirmed in all respects and shall remain in
full force and effect in accordance with its terms.
(b) Except for the specific amendments set forth in Section 1 above,
nothing herein shall be deemed to be an amendment or waiver of any covenant or
agreement contained in the RPTA, and the parties hereto hereby agree that all of
the covenants and agreements contained in the RPTA are hereby ratified and
confirmed in all respects.
(c) This Amendment may be executed by the parties hereto individually or in
combination, in two or more counterparts, each of which shall be an original and
all of which shall constitute one and the same agreement.
(d) Delivery of an executed counterpart of a signature page by telecopier
shall be effective as delivery of a manually executed counterpart.
(e) THIS AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO ANY CONFLICTS OF LAWS PRINCIPLES THEREOF THAT WOULD CALL FOR
THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.
* * * * *
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
PROVIDERS: NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC., a
Delaware corporation
By: /s/Xxxxx X. Xxxx
-------------------------------------------
Name: Xxxxx X. Xxxx
Title: President and CEO
Address:
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Facsimile Number: 000 000-0000
PHARMACY ASSOCIATES, INC.
By:/s/ Xxxxx X. Xxxx
---------------------------------------
Name: Xxxxx X. Xxxx
Title: President
Address:
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Facsimile Number: 000 000-0000
INTERCHANGE PMP, INC.
By: /s/Xxxxx X. Xxxx
---------------------------------------
Name: Xxxxx X. Xxxx
Title: President
Address:
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Facsimile Number: 000 000-0000
SPECIALTY PHARMACY CARE, INC.
By: /s/ Xxxxx X. Xxxx
---------------------------------------
Name:Xxxxx X. Xxxx
Title: President
Address:
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Facsimile Number: 000 000-0000
CENTRUS CORPORATION
(f/k/a HSL ACQUISITION CORP.)
By: /s/ Xxxxx X. Xxxx
-------------------------------------
Name:Xxxxx X. Xxxx
Title: President
Address:
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Facsimile Number: 000 000-0000
NATIONAL MEDICAL HEALTH CARD IPA, INC.
(f/k/a PSCNY IPA, INC.)
By: /s/ Xxxxx X. Xxxx
---------------------------------------
Name: Xxxxx X. Xxxx
Title: President
Address:
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Facsimile Number: 000 000-0000
NMHC RX CONTRACTS, INC.
By: /s/Xxxxx X. Xxxx
--------------------------------------
Name:Xxxxx X. Xxxx
Title: President
Address:
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Facsimile Number: 000 000-0000
PURCHASER: NMHC FUNDING, LLC
By: National Medical Health Card
Systems, Inc., a corporation
organized under the laws of the
State of Delaware
By: /s/ Xxxxx X. Xxxx
----------------------------
Name: Xxxxx X. Xxxx
Title: President and CEO
Address:
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Facsimile Number: 000 000-0000
PRIMARY SERVICER: NATIONAL MEDICAL HEALTH CARD
SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Name: Xxxxx X. Xxxx
Title: President and CEO
Address:
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Facsimile Number: 000 000-0000
CONSENTED TO:
HFG HEALTHCO-4 LLC
By: HFG HEALTHCO-4, INC.
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------
Name:Xxxxxxx Xxxxxxxx
Title:Vice President
