-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A+15RW9e8h6wKWoj85RncmHVmoI8YHinv2NWmHGVqME3hTL/TbZKwmkKeslxIKtb zuDrhcVHOR4dFdOKbSqY0Q== 0000912057-96-018425.txt : 19960928 0000912057-96-018425.hdr.sgml : 19960928 ACCESSION NUMBER: 0000912057-96-018425 CONFORMED SUBMISSION TYPE: SC 13E4/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19960821 SROS: AMEX SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MAGELLAN HEALTH SERVICES INC CENTRAL INDEX KEY: 0000019411 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOSPITALS [8060] IRS NUMBER: 581076937 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13E4/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-05938 FILM NUMBER: 96618452 BUSINESS ADDRESS: STREET 1: 3414 PEACHTREE RD N E STREET 2: STE 1400 CITY: ATLANTA STATE: GA ZIP: 30326 BUSINESS PHONE: 9127421161 FORMER COMPANY: FORMER CONFORMED NAME: CHARTER MEDICAL CORP DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MAGELLAN HEALTH SERVICES INC CENTRAL INDEX KEY: 0000019411 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOSPITALS [8060] IRS NUMBER: 581076937 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13E4/A BUSINESS ADDRESS: STREET 1: 3414 PEACHTREE RD N E STREET 2: STE 1400 CITY: ATLANTA STATE: GA ZIP: 30326 BUSINESS PHONE: 9127421161 FORMER COMPANY: FORMER CONFORMED NAME: CHARTER MEDICAL CORP DATE OF NAME CHANGE: 19920703 SC 13E4/A 1 SC 13E4/A - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 13E-4 ISSUER TENDER OFFER STATEMENT (PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934) (AMENDMENT NO. 1) ------------------------ MAGELLAN HEALTH SERVICES, INC. (Name of Issuer and Person Filing Statement) COMMON STOCK, PAR VALUE $0.25 PER SHARE (Title of Class of Securities) 559079 10 8 (CUSIP Number of Class of Securities) ------------------------ STEVE J. DAVIS EXECUTIVE VICE PRESIDENT -- ADMINISTRATIVE SERVICES AND GENERAL COUNSEL MAGELLAN HEALTH SERVICES, INC. SUITE 1400 3414 PEACHTREE ROAD, N.E. ATLANTA, GEORGIA 30326 (404) 841-9200 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Person Filing Statement) ------------------------ COPY TO: ROBERT W. MILLER KING & SPALDING 191 PEACHTREE STREET ATLANTA, GEORGIA 30303 (404) 572-4600 ------------------------ August 15, 1996 (Date Tender Offer First Published, Sent or Given to Security Holders) ------------------------ CALCULATION OF FILING FEE Transaction Valuation $34,999,984* Amount of Filing Fee $7,000
*Based upon purchase of 1,891,891 shares at the maximum tender offer price of $18.50 per share. / / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. Amount Previously Paid: $7,000 Filing Party: Magellan Health Services, Inc. Form Or Registration No.: Schedule 13E-4 Date Filed: August 15, 1996 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ITEM 1. SECURITY AND ISSUER. (a) The name of the Issuer is Magellan Health Services, Inc., a Delaware corporation (the "Company"), which has its principal executive offices at Suite 1400, 3414 Peachtree Road, N.E., Atlanta, Georgia 30326. (b) This Schedule 13E-4 relates to the offer by the Company to purchase 1,891,891 shares (or such lesser number of shares as are properly tendered and not withdrawn) of its Common Stock, par value of $0.25 per share (the "Shares" or the "Common Stock") (including the associated common stock purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as of July 21, 1992, between the Company and the Rights Agent named therein), at a price, not greater than $18.50 nor less than $16.50 per Share, net to the seller in cash (the "Purchase Price"), to be selected by the Company, taking into account the number of Shares so tendered and the prices specified by stockholders tendering Shares. The Company will select the lowest Purchase Price that will allow the Company to buy 1,891,891 Shares (or such lesser number as are properly tendered and not withdrawn) at a price not greater than $18.50 nor less than $16.50, upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 15, 1996 (the "Offer to Purchase"), and in the related Letter of Transmittal (which together constitute the "Offer"), copies of which are attached as Exhibits (a)(1) and (a)(2), respectively. No separate consideration will be paid for the Rights. The Offer is being made to all holders of Shares, including officers, directors, and affiliates of the Company. The information set forth in "Introduction," "Section 1. Number of Shares; Proration," "Section 10. Shares Outstanding and Significant Stockholders; Certain Effects of the Offer," "Section 12. Interest of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares" and "Section 15. Extension of the Offer; Termination; Amendments" of the Offer to Purchase is incorporated herein by reference. (c) The Shares are listed and principally traded on the American Stock Exchange (the "AMEX") under the symbol "MGL". The information set forth in the "Introduction" and "Section 7. Price Range of Shares; Dividends" of the Offer to Purchase is incorporated herein by reference. (d) This statement is being filed by the Issuer. ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) - (b) The information set forth in "Section 9. Source and Amount of Funds" of the Offer to Purchase is incorporated herein by reference. ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE. (a) - (j) The information set forth in the "Introduction," "Section 8. Purpose of the Offer," "Section 10. Shares Outstanding and Significant Stockholders; Certain Effects of the Offer," "Section 11. Certain Information Concerning the Company" and "Section 12. Interest of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares" of the Offer to Purchase is incorporated herein by reference. ITEM 4. INTEREST IN SECURITIES OF THE ISSUER. The information set forth in "Section 12. Interest of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares" of the Offer to Purchase is incorporated herein by reference. ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE ISSUER'S SECURITIES. The information set forth in the "Introduction," "Section 8. Purpose of the Offer," "Section 10. Shares Outstanding and Significant Stockholders; Certain Effects of the Offer" and "Section 12. Interest of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares" of the Offer to Purchase is incorporated herein by reference. 1 ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in "Section 16. Fees and Expenses" of the Offer to Purchase is incorporated herein by reference. ITEM 7. FINANCIAL INFORMATION. (a) - (b) The financial information set forth in "Section 11. Certain Information Concerning the Company" of the Offer to Purchase is incorporated herein by reference. ITEM 8. ADDITIONAL INFORMATION. Not applicable. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NO. DESCRIPTION - ------------- ---------------------------------------------------------------------------------------- *(a) (1) -- Form of Offer to Purchase dated August 15, 1996. *(a) (2) -- Form of Letter of Transmittal. *(a) (3) -- Form of Notice of Guaranteed Delivery. *(a) (4) -- Form of letter to brokers, dealers, commercial banks, trust companies and other nominees dated August 15, 1996. *(a) (5) -- Form of letter to clients who are common stockholders for use by brokers, dealers, commercial banks, trust companies and other nominees dated August 15, 1996. *(a) (6) -- Form of letter to stockholders from the Chairman and Chief Executive Officer of the Company dated August 15, 1996. **(a) (7) -- Form of letter to Participants for use by the Trustee of the Company's Employee Stock Ownership Plan dated August 22, 1996. *(a) (8) -- Form of Summary Advertisement dated August 15, 1996. *(a) (9) -- Form of Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. *(a)(10) -- Form of Press Release dated August 15, 1996. *(b) (1) -- Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, Bankers Trust Company, as Agent, First Union National Bank of North Carolina, as Co-Agent, and the financial institutions listed in such credit agreement, which was filed as Exhibit 4(e) to the Company's Registration Statement on Form S-4 (No. 33-53701), filed May 18, 1994, and is incorporated herein by reference. *(b) (2) -- Amendment No. 1, dated as of June 9, 1994, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, the financial institutions listed therein, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(w) to the Company's Amendment No. 1 to Registration Statement on Form S-4 (No. 33-53701) filed July 1, 1994, and is incorporated herein by reference. *(b) (3) -- Amendment No. 2, dated as of September 30, 1994, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, the financial institutions listed therein, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(s) to the Company's Annual Report on Form 10-K for the year ended September 30, 1994, and is incorporated herein by reference.
2
EXHIBIT NO. DESCRIPTION - ------------- ---------------------------------------------------------------------------------------- *(b) (4) -- Amendment No. 3, dated as of December 12, 1994, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, the financial institutions listed therein, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended December 31, 1994, and is incorporated herein by reference. *(b) (5) -- Amendment No. 4, dated as of January 11, 1995, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, the financial institutions listed therein, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(b) to the Company's Quarterly Report on 10-Q for the Quarterly Period ended December 31, 1994, and is incorporated herein by reference. *(b) (6) -- Amendment No. 5, dated as of March 17, 1995, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, the financial institutions listed therein, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended March 31, 1995, and is incorporated herein by reference. *(b) (7) -- Amendment No. 6, dated as of October 17, 1995, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended December 31, 1995, and is incorporated herein by reference. *(b) (8) -- Amendment No. 7, dated as of November 30, 1995, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(b) to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended December 31, 1995, and is incorporated herein by reference. *(b) (9) -- Amendment No. 8, dated as of January 24, 1996, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(c) to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended December 31, 1995, and is incorporated herein by reference.
3
EXHIBIT NO. DESCRIPTION - ------------- ---------------------------------------------------------------------------------------- *(b)(10) -- Amendment No. 9, dated as of June 30, 1996, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended June 30, 1996, and is incorporated herein by reference. *(b)(11) -- Amendment No. 10, dated as of July 31, 1996, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(b) to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended June 30, 1996, and is incorporated herein by reference. (c) -- Not applicable. (d) -- Not applicable. (e) -- Not applicable. (f) -- Not applicable.
- ------------------------ *Previously filed. **Filed with this amendment. 4 SIGNATURES After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. MAGELLAN HEALTH SERVICES, INC. By: /s/ STEVE J. DAVIS ----------------------------------- STEVE J. DAVIS EXECUTIVE VICE PRESIDENT -- ADMINISTRATIVE SERVICES AND GENERAL COUNSEL Dated: August 21, 1996 5 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE - ------------- -------------------------------------------------------------------------------- ----------- *(a) (1) -- Form of Offer to Purchase dated August 15, 1996. *(a) (2) -- Form of Letter of Transmittal. *(a) (3) -- Form of Notice of Guaranteed Delivery. *(a) (4) -- Form of letter to brokers, dealers, commercial banks, trust companies and other nominees dated August 15, 1996. *(a) (5) -- Form of letter to clients who are common stockholders for use by brokers, dealers, commercial banks, trust companies and other nominees dated August 15, 1996. *(a) (6) -- Form of letter to stockholders from the Chairman and Chief Executive Officer of the Company dated August 15, 1996. **(a) (7) -- Form of letter to Participants for use by the Trustee of the Company's Employee Stock Ownership Plan dated August 22, 1996. *(a) (8) -- Form of Summary Advertisement dated August 15, 1996. *(a) (9) -- Form of Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. *(a)(10) -- Form of Press Release dated August 15, 1996. *(b) (1) -- Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, Bankers Trust Company, as Agent, First Union National Bank of North Carolina, as Co-Agent, and the financial institutions listed in such credit agreement which was filed as Exhibit 4(e) to the Company's Registration Statement on Form S-4 (No. 33-53701), filed May 18, 1994, and is incorporated herein by reference. *(b) (2) -- Amendment No. 1, dated as of June 9, 1994, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, the financial institutions listed therein, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(w) to the Company's Amendment No. 1 to July 1, 1994, and is incorporated herein by reference. *(b) (3) -- Amendment No. 2, dated as of September 30, 1994, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, the financial institutions listed therein, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(s) to the Company's Annual Report on Form 10-K for the year ended September 30, 1994, and is incorporated herein by reference. *(b) (4) -- Amendment No. 3, dated as of December 12, 1994, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, the financial institutions listed therein, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended December 31, 1994, and is incorporated herein by reference.
EXHIBIT NO. DESCRIPTION PAGE - ------------- -------------------------------------------------------------------------------- ----------- *(b) (5) -- Amendment No. 4, dated as of January 11, 1995, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, the financial institutions listed therein, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(b) to the Company's Quarterly Report on 10-Q for the Quarterly Period ended December 31, 1994, and is incorporated herein by reference. *(b) (6) -- Amendment No. 5, dated as of March 17, 1995, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, the financial institutions listed therein, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended March 31, 1995, and is incorporated herein by reference. *(b) (7) -- Amendment No. 6, dated as of October 17, 1995, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended December 31, 1995, and is incorporated herein by reference. *(b) (8) -- Amendment No. 7, dated as of November 30, 1995, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(b) to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended December 31, 1995, and is incorporated herein by reference. *(b) (9) -- Amendment No. 8, dated as of January 24, 1996, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(c) to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended December 31, 1995, and is incorporated herein by reference. *(b)(10) -- Amendment No. 9, dated as of June 30, 1996, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended June 30, 1996, and is incorporated herein by reference.
EXHIBIT NO. DESCRIPTION PAGE - ------------- -------------------------------------------------------------------------------- ----------- *(b)(11) -- Amendment No. 10, dated as of July 31, 1996, to Second Amended and Restated Credit Agreement, dated as of May 2, 1994, among the Company, Bankers Trust Company, as Agent, and First Union National Bank of North Carolina, as Co-Agent, which was filed as Exhibit 4(b) to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended June 30, 1996, and is incorporated herein by reference. (c) -- Not applicable. (d) -- Not applicable. (e) -- Not applicable. (f) -- Not applicable.
- ------------------------ *Previously filed. **Filed with this amendment. EX-22 2 EX-22 IMMEDIATE ATTENTION REQUIRED AUGUST 22, 1996 TO: PARTICIPANTS IN THE CHARTER MEDICAL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN (THE "ESOP") FROM: WACHOVIA BANK OF SOUTH CAROLINA, N.A., TRUSTEE RE: DIRECTION CONCERNING TENDER OF SHARES ALLOCATED TO YOUR ESOP ACCOUNT
DEAR ESOP PARTICIPANT: Enclosed are materials that require your immediate attention. The materials describe matters directly affecting your interest in the ESOP. You are entitled to instruct Wachovia Bank of South Carolina, N.A. as Trustee (the "Trustee") of the ESOP whether to tender shares of Magellan Health Services, Inc., formerly known as Charter Medical Corporation (the "Company") allocated to your ESOP account pursuant to the Offer. Read all the materials carefully. You will need to complete the enclosed pink Direction Form and return it in the postage paid envelope provided. Your instructions to the Trustee will be confidential. IN ORDER FOR THE TRUSTEE OF THE ESOP TO MAKE A TIMELY TENDER OF YOUR SHARES, YOU MUST COMPLETE AND RETURN THE ENCLOSED PINK DIRECTION FORM IN THE RETURN ENVELOPE SO THAT IT IS RECEIVED BY THE TRUSTEE'S AGENT NOT LATER THAN 12:00 MIDNIGHT, NEW YORK CITY TIME ON MONDAY, SEPTEMBER 9, 1996, UNLESS EXTENDED. PLEASE COMPLETE AND RETURN THE PINK DIRECTION FORM EVEN IF YOU DECIDE NOT TO PARTICIPATE IN THE OFFER DESCRIBED BELOW. ONLY THE TRUSTEE MAY TENDER THE SHARES ALLOCATED TO YOUR ACCOUNT. DO NOT USE THE LETTER OF TRANSMITTAL TO TENDER SHARES. The remainder of this letter summarizes the transaction and your rights and options under the ESOP, but you also should review carefully the Offer to Purchase and the Letter of Transmittal included with this letter. BACKGROUND Magellan Health Services, Inc. has made a tender offer (the "Offer") to purchase up to 1,891,891 shares of its Common Stock, par value $0.25 per share (the "Shares" or the "Common Stock") (including the associated common stock purchase rights issued pursuant to the Rights Agreement, dated as of July 21, 1992, between the Company and the Rights Agent named therein), at prices not greater than $18.50 nor less than $16.50 per Share. The enclosed Offer to Purchase, dated August 15, 1996 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer") set forth the objectives, terms and conditions of the Offer and are being provided to all of the Company's stockholders. As a participant in the ESOP, you are directly affected because the Company's Offer to Purchase extends to the approximately 295,108 Shares currently held by the ESOP. Only the Trustee of the ESOP can actually tender these Shares for sale. However, as an ESOP participant, you have the right pursuant to the terms of the ESOP to direct the Trustee whether or not to tender the Shares that are allocated to your ESOP account. If you elect to have the Trustee tender these Shares, you also are entitled to specify the price or prices at which they should be tendered. The Trustee generally must act pursuant to your directions. The ESOP provides that the Trustee will not tender Shares that are allocated to accounts of participants who fail to complete properly and return timely Direction Forms. To assure the confidentiality of your decision, the Trustee has retained IBJ Schroder Bank & Trust Company ("IBJ Schroder") to tabulate the directions of ESOP participants set forth on the enclosed Direction Form. You will note from the included envelope that your Direction Form is to be returned to IBJ Schroder. The ESOP also provides in Section 5.3 that the "Trust Fund shall be invested exclusively in Shares..." of Magellan Health Services, Inc. The Company has informed the Trustee that it intends to amend the ESOP to allow proceeds from a tender of the Shares pursuant to the Offer to be invested other than in Shares of Magellan Health Services, Inc. It also may amend the plan to provide that participants may receive benefit payments in the form of cash or Shares. There can be no assurances that the Company will pursue such amendments or, that if amended, such amendments will occur prior to the Trustee receiving the proceeds from any Shares that are tendered. The investment of any proceeds received from a tender of Shares under the terms of the ESOP is subject to the Trustee's duty under the Employee Retirement Income Security Act of 1974 as amended ("ERISA"). See the "Trustee's Legal Responsibility" section below for more information. HOW YOU INSTRUCT THE TRUSTEE The details of the Offer are described in the enclosed materials, which you should review carefully. However, in broad outline, the transaction will work as follows with respect to ESOP participants. - The Company has offered to purchase up to 1,891,891 of its Shares, constituting approximately 5.73% of the Company's outstanding shares as of July 31, 1996. - If you want any of the Shares allocated to your ESOP account sold on the terms and subject to the conditions of the Offer, you need to instruct the Trustee by completing the enclosed Pink Direction Form and returning it to IBJ Schroder in the return envelope. - You need to specify on the Direction Form the per Share price (in multiples of $0.125), not greater than $18.50 nor less than $16.50, at which you wish to tender the Shares allocated to your ESOP account. - The Offer and the proration period will expire at 12:00 midnight, New York City time, on Thursday, September 12, 1996, unless the Company extends the Offer. ACCORDINGLY, IN ORDER FOR THE TRUSTEE TO MAKE A TIMELY TENDER OF YOUR SHARES, YOU MUST COMPLETE AND RETURN THE ENCLOSED DIRECTION FORM IN THE RETURN ENVELOPE SO THAT IT IS RECEIVED BY IBJ SCHRODER NOT LATER THAN 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, SEPTEMBER 9, 1996, UNLESS EXTENDED. PLEASE COMPLETE AND RETURN THE DIRECTION FORM EVEN IF YOU DECIDE NOT TO PARTICIPATE IN THE OFFER. - After the deadline above for returning the Direction Form to IBJ Schroder, IBJ Schroder will complete the tabulation of all directions and Wachovia Bank of South Carolina, N.A. as Trustee, will tender the appropriate number of Shares to the Company. - The Company will then determine the per Share purchase price, (not greater than $18.50 nor less than $16.50 Share) (the "Purchase Price"), at which the Company may purchase up to 1,891,891 Shares. - Unless the Offer is voided, amended or discontinued in accordance with its terms, the Company then will buy up to 1,891,891 Shares, that were tendered at or below the Purchase Price. However, all sellers will receive the same per Share Purchase Price, even if they tendered below the Purchase Price. - If you direct the tender of any Shares at a price in excess of the Purchase Price as finally determined, those Shares will not be purchased, and they will remain allocated to your ESOP account. - Finally, if there is an excess of Shares tendered over the exact number desired by the Company at the Purchase Price, Shares tendered pursuant to the Offer may be subject to proration as set forth in Section 1 of the Offer to Purchase; however, if you own fewer than 100 Shares (including both Shares held in your ESOP account and Shares you own otherwise) as of the close of business on August 12, 1996, and you tender or direct the tender of all of your Shares at or below the Purchase Price, the Company will purchase your Shares before any proration. This preference is available only if you complete the box captioned "Odd Lots" on the Direction Form. This form of transaction is commonly called a "Dutch Auction". If you do not want to sell, an option is provided for you to direct that Shares allocated to your ESOP account not be tendered into the Offer. PROCEDURE FOR DIRECTING TRUSTEE A Direction Form for making your direction is enclosed. You must complete and return the enclosed Direction Form in the return envelope so that it is received not later than 12:00 midnight, New York City time, on Monday, September 9, 1996, unless extended. PLEASE COMPLETE AND RETURN THE DIRECTION FORM EVEN IF YOU DECIDE NOT TO PARTICIPATE IN THE OFFER. If your Direction Form is not received by this deadline, or if it is not fully and properly completed, the Shares allocated to your ESOP account will not be tendered by the Trustee (except as explained under "Trustee's Legal Responsibility" below). To properly complete your Direction Form, you must do the following: (1) On the face of the Direction Form, check Box 1, 2 or 3. CHECK ONLY ONE BOX. Make your decision which box to check as follows: - CHECK BOX 1 if you do not want the Shares allocated to your ESOP account tendered for sale at any price and simply want the ESOP to continue holding Shares allocated to your account. - CHECK BOX 2 if you want to tender all the Shares allocated to your ESOP account at the Purchase Price as outlined by the Offer. - CHECK BOX 3 in all other cases and complete the table immediately below Box 3, unless you qualify for the Odd Lot preference, in which case you should disregard the remainder of this instruction (1) and refer to instruction (2) below. Specify the number of Shares that you want to tender at each price indicated. Typically, you would elect to tender Shares at a single price. However, the Direction Form gives you the option of splitting your Shares among several prices. You must state the number of Shares to be sold at each indicated price by filling in the number of Shares on the line immediately before the price. Leave a line blank if you want no Shares tendered at that price. The total number of Shares tendered may not exceed the number of Shares allocated to your account, but may be less. (2) If you own fewer than 100 Shares (including both Shares held in your ESOP account and Shares you own otherwise) as of the close of business on August 12, 1996 and you tender or direct the tender of all your Shares, you should complete the box captioned "Odd Lots" if you wish to receive the Odd Lot preference. In order to receive this preference, you must check the first box in the "Odd Lots" box to represent that you qualify for the Odd Lot preference and you also must either direct the Trustee to tender all Shares at one price (by marking the appropriate box with an "X" in the "Price" box) or check the second box in the "Odd Lots" box indicating that you do not wish to specify a purchase price, in which case all of your Shares will be tendered at the Purchase Price established by the Company. If you check this second box in the "Odd Lots" box, DO NOT SPECIFY A PURCHASE PRICE IN THE "PRICE" BOX. (3) Date and sign the Pink Direction Form in the space provided. (4) Finally, return the enclosed Direction Form in the return envelope so that it is received by IBJ Schroder not later than 12:00 midnight, New York City time, on Monday, September 9, 1996, unless extended. Please complete and return the Direction Form even if you decide not to participate in the Offer. Your direction will be deemed irrevocable unless withdrawn by 12:00 midnight New York City time, on Monday, September 9, 1996, unless extended. In order to make an effective withdrawal, you must submit a notice of withdrawal of your direction, which must be in writing, or submit a new Direction Form in accordance with the previous instructions for directing the tendering set forth in this letter, either of which must be received by IBJ Schroder at the following addresses: By Mail: By Hand: IBJ Schroder Bank & Trust Company IBJ Schroder Bank & Trust Company ATTN: Reorganization Operations Department One State Street P.O. Box 84 New York, NY 10004 Bowling Green Station Attn: Securities Processing Window, New York, NY 10274-0084 Subcellar One (SC-1) By Overnight Courier: IBJ Schroder Bank & Trust Company One State Street New York, NY 10004 Attn: Securities Processing Window, Subcellar One (SC-1)
Your notice must include your name, address, Social Security number, and the number of Shares allocated to your ESOP account as noted on the Direction Form. Upon receipt of your notice or new Direction Form by IBJ Schroder your previous direction will be deemed canceled. You may direct the re-tendering of any Shares in your account by repeating the previous instructions for directing the tendering set forth in this letter. INDIVIDUAL PARTICIPANTS IN THE ESOP WILL NOT RECEIVE ANY PORTION OF THE TENDER PROCEEDS FOR SHARES HELD IN THE ESOP. ALL SUCH PROCEEDS AND THE ASSETS WILL REMAIN IN THE ESOP AND MAY BE WITHDRAWN ONLY IN ACCORDANCE WITH THE TERMS OF THE ESOP. You should consult your tax advisor concerning any long term tax consequences that might occur as a result of tendering Shares held within the ESOP. If you tender Shares and the tender is accepted, you will not experience any immediate taxable gain or losss. CONFIDENTIALITY AS MENTIONED ABOVE, THE COMPANY, THE TRUSTEE AND IBJ SCHRODER WILL PROTECT THE CONFIDENTIALITY OF YOUR DECISION AS AN ESOP PARTICIPANT. UNDER NO CIRCUMSTANCES WILL YOUR DECISION BE DISCLOSED TO ANY DIRECTORS, OFFICERS, OR EMPLOYEES OF THE COMPANY EXCEPT TO A LIMITED NUMBER OF ADMINISTRATORS FOR THE SOLE PURPOSE OF ALLOCATING PROCEEDS TO YOUR ESOP ACCOUNT IN THE EVENT THAT ALL OR A PORTION OF YOUR SHARES ARE SOLD. TRUSTEE'S LEGAL RESPONSIBILITY If you affirmatively direct the Trustee concerning your decision to tender or not tender the Shares allocated to your ESOP account, the Trustee must generally follow your direction. If you fail to affirmatively direct the Trustee to tender or to not tender the Shares allocated to your ESOP account, the ESOP provides that your Shares will not be tendered and that the Trustee has no discretion with respect to those Shares. The Trustee must determine whether following this plan provision would violate ERISA. The Trustee must generally follow your directions and the ESOP provisions unless it has well founded reasons that to do so would violate ERISA. Should the Trustee determine that the implementation of a participant direction or adherence to any plan provision relative to tender offers would violate ERISA, it must ignore such direction or plan provision and exercise its discretion as Trustee in lieu of such direction or plan provision. FURTHER INFORMATION Although the Trustee has no recommendation and cannot advise you whether to direct the Trustee to tender or not tender ESOP Shares, its representative is prepared to answer any questions that you may have on the procedures involved in the Dutch Auction and on giving your direction to the Trustee. For additional information, or if you have questions: - Concerning the procedure to tender ESOP Shares or for assistance in completing the Direction Form - About the terms and conditions of the Offer Please contact the information agent for the Offer, MacKenzie Partners, Inc. (who is also assisting the Trustee with respect to the ESOP Shares), at 1-800-322-2885 Your ability to instruct the Trustee concerning whether or not to tender Shares allocated to your account is an important part of your rights as an ESOP participant. Please consider this letter and the enclosed materials carefully and then return your Direction Form promptly. Sincerely, Wachovia Bank of South Carolina, N.A. CHARTER MEDICAL CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN DIRECTION FORM BEFORE COMPLETING THIS FORM, PLEASE READ CAREFULLY THE ACCOMPANYING OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL AND ALL OTHER ENCLOSED MATERIALS I hereby direct Wachovia Bank of South Carolina, N.A., as Trustee of the Charter Medical Corporation Employee Stock Ownership Plan (the "ESOP") to tender to Magellan Health Services, Inc., formerly known as Charter Medical Corporation (the "Company"), in accordance with the terms and subject to the conditions set forth in the Offer to Purchase and the related Letter of Transmittal, dated August 15, 1996, a copy of which I have received and read, the indicated number of shares of the Company's Common Stock, par value $0.25 per share (the "Shares" or the "Common Stock") (including the associated common stock purchase rights issued pursuant to the Rights Agreement, dated as of July 21, 1992, between the Company and the Rights Agent named therein ), allocated to my ESOP account, or to hold such Shares for my account, in either case as provided below. (CHECK ONLY ONE BOX): / / 1. Please DO NOT tender. Continue to HOLD all Shares allocated to my ESOP account. / / 2. By checking this one box INSTEAD OF ONE OF THE PRICE BOXES BELOW, I direct you to tender all Shares allocated to my ESOP, and I will accept the Purchase Price resulting from the Dutch Auction tender process. This action could result in receiving a price per Share as low as $16.50 or as high as $18.50. OR / / 3. Please TENDER Shares allocated to my ESOP account as indicated below for each of the prices provided or as provided in the "Odd Lots" box below. (The total of the Shares may NOT exceed the number of Shares allocated to your account). A blank space before a given price will be taken to mean that no Shares are to be tendered at that price. FILL IN THE TABLE BELOW ONLY IF YOU HAVE CHECKED BOX NUMBER 3.
- ----------------------------------------------------------------------- PRICE - ----------------------------------------------------------------------- Number of Shares to be $16.500 $17.500 Tendered (The total of all $16.625 $17.625 Shares must be less than $16.750 $17.750 or equal to the number $16.875 $17.875 of Shares allocated to your $17.000 $18.000 account) $17.125 $19.125 $17.250 $18.250 $17.375 $18.375 $18.500 - -----------------------------------------------------------------------
Check the box or boxes below only if you qualify for and wish to receive the Odd Lot preference. ODD LOTS (SEE INSTRUCTION 8 TO LETTER OF TRANSMITTAL) / / By checking this box, I represent that I owned beneficially, as of the close of business on August 12, 1996, an aggregate of fewer than 100 Shares (including both Shares held in my ESOP Account and Shares that I own otherwise), and am tendering or instructing the applicable record holder(s) (in the case of Shares held in the ESOP, the Trustee) to tender all such Shares. INDICATE IN THE "PRICE" BOX ABOVE THE PRICE AT WHICH YOU WISH TO TENDER 100% OF THE SHARES IN YOUR ACCOUNT OR CHECK THE BOX BELOW TO TENDER AT THE PURCHASE PRICE ESTABLISHED BY THE COMPANY. / / INSTRUCTIONS Carefully complete the front side of this Direction Form. Then insert today's date and sign and print your name in the spaces provided immediately below. Enclose the Direction Form in the included postage prepaid envelope and mail it promptly. YOUR DIRECTION FORM MUST BE RECEIVED BY IBJ SCHRODER NOT LATER THAN 12:00 MIDNIGHT, NEW YORK CITY TIME, ON SEPTEMBER 9, 1996, UNLESS EXTENDED. PLEASE COMPLETE AND RETURN THE DIRECTION FORM EVEN IF YOU DECIDE NOT TO PARTICIPATE IN THE OFFER. Direction Forms that are not fully and properly completed, dated, and signed, or that are received after the deadline, will be ignored, and the Shares allocated to your account will not be tendered unless otherwise required by law. Note that the Trustee must also ignore any direction that it determines cannot be implemented without violation of the law. Date: _______________, 1996 ____________________________________________________ Your Signature (Please sign your name as it appears below) ________________________________________________________________________________ (Please print your name) -----END PRIVACY-ENHANCED MESSAGE-----