EXHIBIT 4(am)
AMENDMENT NO. 2 dated as of October 9, 1997 (this
"Amendment"), to (a) the Amended and Restated Credit Agreement
dated as of June 16, 1997 (the "Amended and Restated 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
(collectively with the Parent Borrower, the "Borrowers"); the
Lenders (as defined in Article I of the Amended and Restated
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 for
the Lenders (the "Collateral Agent") and as an issuing bank (in
such capacity, an "Issuing Bank"); and First Union National Bank
(formerly known as First Union National Bank of North Carolina),
a national banking corporation, as syndication agent for the
Lenders and as an issuing bank (in such capacity, together with
The Chase Manhattan Bank in its capacity as an Issuing Bank, the
"Issuing Banks"), and (b) the Amended and Restated Pledge
Agreement dated as of June 16, 1997 (the "Amended and Restated
Pledge Agreement"), among the Parent Borrower, each subsidiary of
the Parent Borrower listed on Schedule I thereto (each such
subsidiary, individually, a "Subsidiary Pledgor", and,
collectively, the "Subsidiary Pledgors") and the Collateral
Agent.
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 Amended and
Restated Credit Agreement.
B. The Parent Borrower has requested that the Amended and Restated
Credit Agreement and the Amended and Restated Pledge Agreement be amended as set
forth herein.
C. The Required Lenders are willing so to amend the Amended and
Restated Credit Agreement and the Amended and Restated Pledge Agreement pursuant
to the terms and subject to the conditions set forth herein.
D. Capitalized terms used but not defined herein have the meanings
assigned to them in the Amended and Restated 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. Amendment to Section 1.01 of the Amended and Restated
Credit Agreement. (a) The definition of the term "Acquired Entity EBITDA" set
forth in Section 1.01 of the Amended and Restated Credit Agreement is hereby
amended by deleting the words "for purposes of clause (c) of the definition of
Consolidated EBITDA, the net income of any Acquired Entity for any period" from
the first and second lines of such definition and inserting in lieu thereof the
following phrase: "with respect to any Acquired Entity for any period, the net
income of such Acquired Entity for such period".
(b) The definition of the term "Consolidated EBITDA" set forth in
Section 1.01 of the Amended and Restated Credit Agreement is hereby amended by
inserting, at the end of such definition, the following sentence:
"Notwithstanding anything to the contrary set forth in this definition, for
purposes of calculating Consolidated EBITDA for any period, there shall be
excluded from Acquired Entity EBITDA with respect to such period the net income
(or loss) attributable to each Specified Acquired Entity to the extent that cash
has not been distributed by such Specified Acquired Entity to the Parent
Borrower or any of the Subsidiaries (other than any other Specified Acquired
Entity) during such period."
(c) The definition of the term "Consolidated Net Income" set forth in
Section 1.01 of the Amended and Restated Credit Agreement is hereby amended by
deleting the words "all extraordinary gains or losses and (iii)" from the eight
and ninth lines of such definition and inserting in lieu thereof the following
phrase:
the net income (or loss) attributable to any Specified Entity to the
extent that cash has not been distributed by such Specified Entity to
the Parent Borrower or any of the Subsidiaries (other than any other
Specified Entity) during such period, (iii) all extraordinary gains or
losses and (iv).
(d) The definition of the term "Permitted Acquisition" set forth in
Section 1.01 of
the Amended and Restated Credit Agreement is hereby amended by inserting the
words "(except as provided in the proviso to Section 6.05(e)) " (i) after the
word "shall" in the twenty-fifth line of such Section and (ii) after the word
"shall" in the twenty-seventh line of such Section.
(e) The definition of the term "Permitted Non-Control Investment" set
forth in Section 1.01 of the Amended and Restated Credit Agreement is hereby
amended by inserting the words "except in the case of the capital stock of a
Specified Joint Venture or a Specified Newly Formed Subsidiary," after the
phrase "(c)" in the sixteenth line of such Section.
(f) Section 1.01 of the Amended and Restated Credit Agreement is
hereby amended by inserting, in appropriate alphabetical order, the following
definitions:
"Specified Acquired Entity" shall mean any Subsidiary that is an
Acquired Entity with respect to which the Borrowers have not complied
with any of the provisions of Section 5.11 because of the proviso to
Section 6.05(e).
"Specified Entity" shall mean any Specified Acquired Entity, any
Specified Joint Venture or any Specified Newly Formed Subsidiary.
"Specified Joint Venture" shall mean any joint venture that is
formed or entered into by the Borrowers or any Guarantor after the
Closing Date if the granting by the Borrowers or any Guarantor of a
security interest in the capital stock owned by the Borrowers or such
Guarantor in such joint venture would violate applicable law or any
regulation, rule, order, approval, license or other restriction issued
or imposed by any Governmental Authority.
"Specified Newly Formed Subsidiary" shall mean any Subsidiary
that (a) is formed by the Borrowers or any Guarantor after the Closing
Date and (b) with respect to which compliance with Section 5.11 would
violate applicable law or any regulation, rule, order, approval,
license or other restriction issued or imposed by any Governmental
Authority.
SECTION 2. Amendment to Section 5.04 of the Amended and Restated
Credit Agreement. Section 5.04(e) of the Amended and Restated Credit Agreement
is hereby amended by (a) deleting the word "and " appearing after the phrase
"security;" in the eleventh line of such Section and (b) by inserting the
following sentence at the end of such Section:
; and (v) all Specified Entities, which shall include (A) the total
assets of each of the Specified Entities, (B) the Acquired Entity
EBITDA of each Specified Acquired Entity and (C) the aggregate amount
of cash distributed by each Specified Entity to the Parent Borrower or
any of the Subsidiaries, in each case, calculated as of the last day
of the most recent month for which financial statements have been
delivered pursuant to Section 5.04(c).
SECTION 3. Amendment to Section 5.11 of the Amended and Restated
Credit Agreement. (a) Section 5.11 of the Amended and Restated Credit Agreement
is hereby amended
by inserting the words "(except in the case of a Specified Newly Formed
Subsidiary and except as provided in the proviso to Section 6.05(e))" after the
word "will" in the seventh line of such Section.
(b) Section 5.11 of the Amended and Restated Credit Agreement is
hereby amended by inserting the words "(except as provided in the proviso to
Section 6.05(e))" after the word "will" in the thirteenth line of such Section.
(c) Section 5.11 of the Amended and Restated Credit Agreement is
hereby amended by inserting the following sentence after the word "Document" in
the fifteenth line of such Section:
; provided, however, that the Borrowers and the Guarantors will not be
required to comply with the provisions of this sentence with respect
to the capital stock of
any Specified Joint Venture or any Specified Newly Formed Subsidiary
if compliance with the provisions of this sentence with respect to
such capital stock would violate applicable law, regulation, rule,
order, approval, license or other restriction issued or imposed by any
Governmental Authority.
SECTION 4. Amendment to Section 6.04 of the Amended and Restated
Credit Agreement. Section 6.04 of the Amended and Restated Credit Agreement is
hereby amended by (a) deleting the word "and" appearing at the end of clause
(p) of such Section, (b) deleting the period at the end of clause (q) of such
Section and substituting therefor the phrase "; and" and (c) adding, following
paragraph (q) of such Section, the following paragraph:
(r) investments by the Parent Borrower or any Subsidiary in shares of
the capital stock of any Specified Entity so long as, after giving effect
to any such investment, the total assets of all Specified Entities taken as
a whole, calculated on a consolidated basis as of the last day of the most
recent month for which financial statements have been delivered pursuant to
Section 5.04(c), do not exceed 10% of the total assets of the Parent
Borrower and its Subsidiaries on a consolidated basis as of such date.
SECTION 5. Amendment to Section 6.05 of the Amended and Restated
Credit Agreement. Section 6.05 of the Amended and Restated Credit Agreement is
hereby amended by inserting, before the semicolon in clause (e) of such Section,
the following:
; provided, however, that the Borrowers will not be required to comply
with the provisions of Section 5.11 with respect to any Subsidiary
that is an Acquired Entity (and the acquisition of such Acquired
Entity shall constitute a Permitted Acquisition notwithstanding the
failure of such acquisition to satisfy the criteria set forth in
clauses (c)(ii) and (c)(iii) of the definition of the term "Permitted
Acquisition") if (i) compliance with Section 5.11 with respect to such
Acquired Entity would violate applicable law or any regulation, rule,
order, approval, license or other restriction issued or imposed by any
Governmental Authority and (ii) after giving effect to the
acquisition of such Acquired Entity, no Default or Event of Default
under Section 6.04(r) shall have occurred and be continuing.
SECTION 6. Amendment to Section 6.06 of the Amended and Restated
Credit Agreement. (a) Section 6.06(a) of the Amended and Restated Credit
Agreement is hereby amended by (i) deleting the word "and" appearing at the end
of clause (a)(vi) of such Section, (ii) deleting the period at the end of clause
(vii) of such Section and substituting therefor the phrase "; and" and (iii)
adding, following paragraph (vii) of such Section, the following paragraph:
(viii) to the extent that any Subsidiary is a Specified Entity,
such Subsidiary may declare and pay dividends if and to the extent
that the restriction contained in this Section 6.06 on such
declaration or payment would violate
applicable law or any regulation, rule, order, approval, license or
other restriction issued or imposed by any Governmental Authority,
provided that any such declaration and payment is pro rata to the
shareholders, partners or other equity holders, as the case may be, of
such Specified Entity.
(b) Section 6.06(b)(B) of the Amended and Restated Credit Agreement
is hereby amended by inserting the words "or any regulation, rule, order,
approval, license or other restriction issued by any Governmental Authority"
after the word "law" in such Section.
SECTION 7. Amendment to Section 1 of the Amended and Restated Pledge
Agreement. Section 1 of the Amended and Restated Pledge Agreement is hereby
amended by (a) inserting the phrase "(a)" after the word "excluding" in the
seventh line of such Section and (b) inserting the words ", (b) any Specified
Joint Venture or (c) any Specified Newly Formed Subsidiary" after the word
"Agreement" in the ninth line of such Section.
SECTION 8. 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 its legal, valid and binding obligation of each Loan
Party party hereto, enforceable against such Loan Party in accordance with
its terms.
(b) Before and after giving effect to this Amendment, the
representations and warranties set forth in Article III of the Amended and
Restated Credit Agreement are true and correct in all material respects
with the same effect as if made on the date hereof, except to the extent
such representations and warranties expressly relate to an earlier date.
(c) Before and after giving effect to this Amendment, no Event of
Default or Default has occurred and is continuing.
SECTION 9. Conditions to Effectiveness. This Amendment shall become
effective as of the date first above written when the Administrative Agent shall
have received counterparts of this Amendment that, when taken together, bear the
signatures of the Borrowers, the Subsidiary Pledgors and the Required Lenders.
SECTION 10. Amended and Restated Credit Agreement and Amended and
Restated Pledge Agreement. Except as specifically amended hereby, each of the
Amended and Restated Credit Agreement and the Amended and Restated Pledge
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 (a) the Amended and Restated Credit Agreement shall mean the
Amended and Restated Credit Agreement as amended hereby and (b) the Amended and
Restated Pledge Agreement shall mean the Amended and Restated Pledge Agreement
as amended hereby.
SECTION 11. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 12. 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.
SECTION 13. Expenses. The Parent Borrower agrees to reimburse the
Agent for its out-of-pocket expenses in connection with this Amendment,
including the reasonable fees, charges and disbursements of Cravath, Swaine &
Moore, counsel for the Administrative Agent.
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
/s/ James R. Bedenbaugh
--------------------------------
Name: James R. Bedenbaugh
Title: Vice President and Treasurer
CHARTER BEHAVIORAL HEALTH SYSTEM OF
NEW MEXICO, INC. ,
by
/s/ Charlotte A. Sanford
-----------------------------
Name: Charlotte A. Sanford
Title: Treasurer
THE SUBSIDIARY PLEDGORS LISTED ON
SCHEDULE I-A HERETO,
by
/s/ Charlotte A. Sanford
---------------------------------
Name: Charlotte A. Sanford
Title: Treasurer
THE SUBSIDIARY PLEDGORS LISTED ON
SCHEDULE I-B HERETO,
by
/s/ James R. Bedenbaugh
------------------------------------
Name: James R. Bedenbaugh
Title: Vice President and Treasurer
THE CHASE MANHATTAN BANK, individually
and as Administrative Agent, Collateral Agent and an
Issuing Bank,
by
/s/ Dawn Lee Lum
------------------------
Name: Dawn Lee Lum
Title: Vice President
FIRST UNION NATIONAL BANK,
individually and as Syndication Agent and an
Issuing Bank,
by
/s/ Joseph H. Towell
------------------------------
Name: Joseph H. Towell
Title: Senior Vice President
BANK POLSKA KASA OPIEKI S.A.
PEKAO S.A. GROUP,
NEW YORK BRANCH,
by
/s/ William A. Shea
-----------------------------
Name: William A. Shea
Title: Senior Lending Officer
CREDIT LYONNAIS NEW YORK BRANCH,
as Co-Agent,
by
/s/ Farboud Tavangar
-----------------------------
Name: Farboud Tavanger
Title: First Vice President
FIRST AMERICAN NATIONAL BANK,
by
/s/ Sandy Hamrich
-------------------------------
Name: Sandy Hamrich
Title: Vice President
GENERAL ELECTRIC CAPITAL CORPORATION,
as Co-Agent,
by
/s/ Holly Kaczmarcyk
--------------------------------
Name: Holly Kaczmarcyk
Title: Duly Authorized Signatory
THE BANK OF NEW YORK,
as Co-Agent,
by
/s/ Alan F. Lyster, Jr.
--------------------------
Name: Alan F. Lyster, Jr.
Title: Vice President
THE BANK OF NOVA SCOTIA,
as Co-Agent,
by
/s/ W. J. Brown
----------------------
Name: W. J. Brown
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST COMPANY,
by
-------------------------
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL RATE
INCOME TRUST,
by
/s/ Jeffrey W. Maillet
----------------------------------------
Name: Jeffrey W. Maillet
Title: Senior Vice President & Director