As filed with the Securities and Exchange Commission on May 22, 1995
Registration No. 33-57817
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
CHARTER MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 58-1076937
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3414 Peachtree Road, N.E.
Suite 1400
Atlanta, Georgia 30326
(404) 841-9200
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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ROBERT W. MILLER, ESQ.
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
(404) 572-4600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-----------------------
Copy to:
LAWRENCE W. DRINKARD, EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
Charter Medical Corporation
3414 Peachtree Road, N.E.
Suite 1400
Atlanta, Georgia 30326
(404) 841-9200
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Approximate date of commencement of proposed sale to public:
From time to time after the effective date of the Registration Statement, as
determined by market conditions.
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If any of the securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
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If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
-----------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
Title of each Proposed Proposed
class of maximum maximum
Securities Amount offering aggregate Amount of
to be to be price offering registration
registered registered per Unit(1) price (1) fee
------------- ---------- ----------- --------- ------------
Common Stock,
$.25 par value
per share....... 1,452,094 $17.4375 $25,320,889.13 $8,731.34
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
In accordance with Rule 457(c) under the Securities Act of 1933, as
amended, such amounts are based on the average of the high and low
prices per share of Common Stock of Charter Medical Corporation on
February 21, 1995 as reported on the American Stock Exchange.
______________________
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
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PROSPECTUS
1,452,094 SHARES
CHARTER MEDICAL CORPORATION
COMMON STOCK
($.25 Par Value)
_________________________
The 1,452,094 shares (the "Shares") of common stock, $.25 par value
("Common Stock"), of Charter Medical Corporation ("Charter" or the "Company")
may be offered for sale from time to time by and for the account of certain
stockholders of Charter (the "Selling Stockholders"). See "Selling
Stockholders." The Selling Stockholders acquired the Shares on January 27,
1995, in connection with the acquisition of Magellan Health Services, Inc.
("Magellan") by Charter. Charter is registering the Shares as required by an
Investment and Registration Rights Agreement dated January 27, 1995, among
Charter and each of the Selling Stockholders (the "Investment and Registration
Rights Agreement"), to provide the Selling Stockholders with freely tradeable
securities. Charter will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholders, but has agreed to bear certain expenses of
registration of the Shares. See "Plan of Distribution."
The Common Stock is listed on the American Stock Exchange under the
symbol "CMD." On May 18, 1995, the last reported sale price of the
Common Stock on the American Stock Exchange was $18.75 per share.
The Selling Stockholders from time to time may offer and sell the Shares
directly or through agents or broker-dealers on terms to be determined at the
time of sale. To the extent required, the names of any agent or broker-dealer
and applicable commissions or discounts and any other required information
with respect to any particular offer will be set forth in an accompanying
Prospectus Supplement. See "Plan of Distribution." Each of the Selling
Stockholders reserves the sole right to accept or reject, in whole or in part,
any proposed purchase of the Shares to be made directly or through agents.
The Selling Stockholders and any agents or broker-dealers that
participate with the Selling Stockholders in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act of
1933, as amended (the "1933 Act"), and any commissions received by them and
any profit on the resale of the Shares may be deemed to be underwriting
commissions or discounts under the 1933 Act. See "Plan of Distribution"
herein for indemnification arrangements among Charter and the Selling
Stockholders.
There are certain risks associated with an investment in Charter Common
Stock. For a discussion of such risks, see "Risk Factors."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Date of this Prospectus is May 22, 1995.
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AVAILABLE INFORMATION
Charter is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, accordingly, files
reports, proxy statements and other information with the Securities and
Exchange Commission ("Commission"). Such reports, proxy statements and other
information filed with the Commission by Charter can be inspected and copied
at the office of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, or at its Regional Offices located at 7 World Trade
Center, Suite 1300, New York, New York 10048, and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and copies of such materials can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, the
Common Stock of Charter is listed on the American Stock Exchange, and such
reports, proxy statements and other information concerning Charter can be
inspected at the offices of the American Stock Exchange, 86 Trinity Place, New
York, New York 10006.
Charter has filed with the Commission a registration statement on Form
S-3 (together with any amendments, the "Registration Statement") under the
1933 Act, covering the shares of Charter Common Stock being offered by this
Prospectus. This Prospectus, which is part of the Registration Statement,
does not contain all of the information and undertakings set forth in the
Registration Statement and reference is made to such Registration Statement,
including exhibits, which may be inspected and copied in the manner and at the
locations specified above, for further information with respect to Charter and
the Charter Common Stock. Statements contained in this Prospectus concerning
the provisions of any documents are not necessarily complete and, in each
instance, reference is made to the copy of such documents filed as an exhibit
to the Registration Statement or otherwise filed with the Commission. Each
such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by Charter
(Commission File No. 1-6639) are incorporated by reference into this
Prospectus:
(i) Charter's Annual Report on Form 10-K for the fiscal year ended
September 30, 1994;
(ii) Charter's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1994;
(iii) Charter's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995;
(iv) Charter's Current Report on Form 8-K dated December 15, 1994; and
(v) The description of the Charter Common Stock in Charter's
registration statement on Form 8-A dated July 6, 1992.
In addition, all documents filed by Charter pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering made pursuant to the
Registration Statement shall be deemed to be incorporated by reference into
and to be a part of this Prospectus from the date of filing of such
documents. Any statement contained in a document so incorporated by reference
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shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that a statement contained in this Prospectus, or in any other
subsequently filed document which is also incorporated by reference, modifies
or supersedes such statement. Any such statement so modified or superseded
shall not be deemed to constitute a part of this Prospectus except as so
modified or superseded.
Charter will provide, without charge, to each person to whom this
Prospectus is delivered, upon the written or oral request of any such person,
a copy of any or all of the documents incorporated by reference (not including
exhibits to such documents unless such exhibits are specifically incorporated
by reference in such documents). Requests for copies of such documents should
be directed to Mr. Lawrence W. Drinkard, Executive Vice President and Chief
Financial Officer, Charter Medical Corporation, 3414 Peachtree Road, N.E.,
Suite 1400, Atlanta, Georgia 30326 , telephone (404) 841-9200.
THE COMPANY
Charter is a behavioral healthcare company. As of December 31, 1994,
Charter operated 111 acute care psychiatric hospitals and two residential
treatment centers with an aggregate capacity of 9,737 licensed beds.
Additionally, all of Charter's hospitals operate partial hospitalization
programs, and Charter operates 98 outpatient centers, staffed by mental health
professionals.
Charter's business strategy is to develop and operate integrated
behavioral healthcare delivery systems in certain markets in which it
presently operates one or more hospitals and in selected other markets in
which Charter does not presently operate a hospital. The integrated delivery
systems that Charter is developing offer a comprehensive range of behavioral
healthcare services including inpatient treatment, day and partial
hospitalization services, group and individual outpatient treatment, and
residential and other less intensive services. Charter is establishing such
systems by using its hospitals as a base and by arranging for other services
through acquisitions, contracts or affiliations with physicians, psychologists
and other mental health professionals and, in some markets, with general acute
care hospitals and other institutional healthcare providers. Charter also is
developing information systems that will assist in integration of the
financing and delivery of behavioral healthcare services.
Charter was incorporated in 1969 under the laws of the State of
Delaware. Charter Common Stock is traded on the American Stock Exchange under
the symbol "CMD." Unless the context otherwise requires, references to
Charter include Charter Medical Corporation and its subsidiaries. Charter's
principal executive offices are located at 3414 Peachtree Road, N.E., Suite
1400, Atlanta, Georgia 30326, and its telephone number is (404) 841-9200.
RECENT DEVELOPMENTS
As of March 29, 1994, Charter entered into two agreements with National
Medical Enterprises, Inc. ("NME"), providing for the purchase by Charter of
substantially all of the assets of 36 psychiatric hospitals, eight
chemical-dependency treatment facilities, two residential treatment centers
and one physician outpatient practice, including related outpatient facilities
and other associated assets. Under a consent order approved by the Federal
Trade Commission, Charter agreed not to acquire six of such facilities;
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Charter and NME subsequently agreed that Charter would not acquire one
facility. The remaining 40 facilities (the "Acquired Hospitals") have, as of
November 30, 1994, been acquired by subsidiaries of Charter. The purchase
price for the Acquired Hospitals was approximately $120.4 million in cash plus
an additional cash amount of approximately $51 million, subject to adjustment,
for the net working capital of the Acquired Hospitals. Charter purchased 27,
three and ten of the Acquired Hospitals on June 30, October 31 and November
30, 1994, respectively.
In December, 1994, Charter entered into an Agreement of Merger (the
"Merger Agreement") with Charter Acquisition Subsidiary, Inc., a wholly owned
subsidiary of Charter ("Newco"), and Magellan. Pursuant to the Merger
Agreement, Charter agreed to issue shares of Charter Common Stock to
stockholders of Magellan and to holders of certain options to acquire shares
of Magellan capital stock (collectively, "Magellan Stockholders") in
connection with the merger (the "Merger") of Newco with and into Magellan. On
January 27, 1995, the Merger was consummated; and Charter issued an aggregate
of 1,452,094 shares of Charter Common Stock to the Magellan Stockholders. As
a result of the Merger, the separate corporate existence of Newco ceased and
Magellan became a wholly owned subsidiary of Charter.
Magellan owns National Mentor, Inc. ("Mentor"), which is a provider of
specialty home-based behavioral healthcare services. Mentor's patients
consist of individuals suffering from behavioral health disorders, mentally
retarded and developmentally disabled individuals, cognitively impaired
individuals, medically fragile children and frail elderly adults. Mentor's
core treatment model is based on the one-to-one placement of a patient in the
home of a trained paraprofessional called a mentor. The mentor works with a
multi-disciplinary team of clinical specialists (which may consist of a
psychiatrist, psychologist, general practitioner, clinical social worker and
nurse) to design and implement a patient-specific treatment plan.
Charter believes that its acquisition of Magellan will assist Charter in
implementing its strategy by extending the continuum of care provided by
Charter and by enhancing Charter's ability to assume at-risk contracts in
connection with managed-care arrangements.
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
Charter Common Stock.
Acquisitions. Charter's expansion strategy involves both acquisitions
and internal growth. Although Charter has successfully acquired businesses and
effectively integrated their operations in the past, there can be no assurance
that Charter will be able to continue to make successful acquisitions in the
future or that any such acquisitions, including the acquisition of Magellan,
will be successfully integrated into Charter's operations. In addition, the
acquisition of Magellan and future acquisitions could have an adverse effect
upon Charter's operating results, particularly in the fiscal quarters
immediately following the consummation of such transaction while the acquired
operations are being integrated into Charter's operations.
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Previous Bankruptcy Reorganization. Charter was reorganized pursuant to
Chapter 11 of the United States Bankruptcy Code, effective on July 21, 1992
(the "Reorganization"). Prior to the Reorganization, Charter's total
indebtedness was approximately $1.8 billion; and from February 1991 until July
1992, Charter was in default in the payment of interest and principal, or
both, on substantially all such indebtedness. The indebtedness was incurred
by Charter in connection with a management buy-out of Charter in 1988 and a
hospital-construction program. As a result of the Reorganization, Charter's
long-term debt was reduced by approximately $700 million and its redeemable
preferred stock of $233 million was eliminated. The holders of such debt and
preferred stock received approximately 97% of Charter's Common Stock
outstanding on July 21, 1992.
Historical Operating Losses. Charter experienced losses from continuing
operations before reorganization items, extraordinary items and the cumulative
effect of a change in accounting principle of approximately $65.6 million,
$322.3 million and $167.1 million for the fiscal years ended September 30,
1989, 1990 and 1991, respectively. Such losses amounted to approximately
$81.7 million and $8.1 million for the ten-month period ended July 31, 1992
and the two-month period ended September 30, 1992, respectively. For the
fiscal years ended September 30, 1993 and September 30, 1994, such losses
amounted to approximately $39.6 million and $47.0 million, respectively.
There is no assurance that such losses will not continue. Charter's history
of such losses could have an adverse effect on its operations.
Reimbursement by Third-Party Payors. For the fiscal year ended
September 30, 1994, Charter derived approximately 49% of its gross psychiatric
patient service revenue from private-pay sources (including HMOs, PPOs and
Blue Cross), 27% from Medicare, 16% from Medicaid, 5% from the Civilian Health
and Medical Program for the Uniformed Services ("CHAMPUS") and 3% from other
government programs. Changes in the mix of Charter's patients among the
private-pay, Medicare and Medicaid categories, and among different types of
private-pay sources, can significantly affect the profitability of Charter's
operations. Various cost-containment mechanisms by both governmental and
private third-party payors have limited the scope and amount of reimbursable
healthcare expenses. Therefore, there can be no assurance that payments under
governmental and private third-party payor programs will remain at levels
comparable to present levels or will, in the future, be sufficient to cover
the costs of providing care to patients covered by such programs. In
addition, there can be no assurance that Charter's hospitals will continue to
meet the requirements for participation in such programs.
Healthcare Reform. Between October 1993 and the early fall of 1994,
President Clinton and various U.S. Senators and Representatives introduced in
Congress a number of healthcare reform proposals. The proposals ranged from
the Clinton Administration's comprehensive healthcare reform proposal that
would have restructured the financing and delivery of healthcare services
through a combination of managed competition and mandated employer coverage of
employees to less comprehensive proposals that would have required private
health insurance to be "portable" and eliminated coverage limitations for pre-
existing health conditions. The numerous proposals varied in their proposed
coverage of behavioral healthcare services and in their potential effect on
Charter. No proposal was adopted by either house of Congress.
Charter anticipates that numerous healthcare reform proposals will be
introduced in the current session of Congress. Particularly in light of the
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change in control of both houses of Congress as the result of the November
1994 elections, Charter is unable to predict whether any such proposal will be
adopted or the effect on Charter of any proposal that does become law.
A number of states in which Charter has operations have either adopted
or are considering the adoption of healthcare reform proposals at the state
level. Various reform measures have been adopted in Florida, Minnesota and
Tennessee, among others. These state reform laws have, in many cases, not
been fully implemented. Charter cannot predict the effect of these state
healthcare reform laws on its operations.
Competition. Competition among hospitals and other healthcare providers
for patients has intensified in recent years. During this period, hospital
occupancy rates for behavioral care patients in the United States have
declined as a result of cost containment pressures, changing technology,
changes in regulations and reimbursement, changes in practice patterns from
inpatient to outpatient treatment and other factors. In areas in which
Charter operates, there are other hospitals or facilities that provide
inpatient or outpatient services comparable to those offered by Charter's
hospitals. The competitive position of Charter's hospitals also has been, and
in all likelihood will continue to be, affected by the increased initiatives
undertaken during the past several years by federal and state governments and
other major purchasers of healthcare services, including insurance companies
and employers, to revise payment methodologies and monitor healthcare
expenditures in order to contain healthcare costs. In addition, hospitals
owned by governmental agencies or other tax exempt entities benefit from
endowments, charitable contributions and tax-exemptions, the advantages of
which are not enjoyed by Charter's hospitals.
Limitations Imposed by the Credit Agreement and Senior Note Indenture.
In May 1994, Charter entered into a Second Amended and Restated Credit
Agreement (the "Credit Agreement") with certain financial institutions and
issued $375 million of Senior Subordinated Notes (the "Senior Notes") to
institutional investors. The Credit Agreement and the indenture for the
Senior Notes contain a number of restrictive covenants which, among other
things, limit the ability of Charter and certain of its subsidiaries to incur
other indebtedness, engage in transactions with affiliates, incur liens, make
certain restricted payments, enter into certain business combination and asset
sale transactions and make capital expenditures. These restrictions could
adversely affect Charter's ability to conduct its operations or finance its
capital needs or impair Charter's ability to pursue attractive business and
investment opportunities if such opportunities arise. Under the Credit
Agreement, Charter also is required to maintain certain specified financial
ratios. Failure by Charter to maintain such financial ratios or to comply
with the restrictions contained in the Credit Agreement and the indenture for
the Senior Notes could cause such indebtedness (and by reason of
cross-acceleration provisions, other indebtedness) to become immediately due
and payable and/or could cause the cessation of funding under the Credit
Agreement.
Regulation. The federal government and all states in which Charter
operates regulate various aspects of Charter's business. Healthcare
facilities are subject to periodic inspection by governmental and other
authorities to ensure continued compliance with various standards, their
continued licensing under state law and certification under the Medicare and
Medicaid programs. Although Charter has not failed to obtain necessary
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approvals or licenses in the past, the failure to obtain or renew any required
regulatory approvals or licenses in the future could adversely affect the
operations of Charter.
Dependence on Healthcare Professionals. Physicians traditionally have
been the source of a majority of Charter's hospital admissions. Therefore,
the success of Charter's hospitals is dependent in part on the number and
quality of the physicians on the medical staffs of Charter's hospitals and
their admission practices. A small number of physicians account for a
significant portion of patient admissions at some of Charter's hospitals.
There can be no assurance that Charter can retain its current physicians on
staff or that additional physician relationships will be developed in the
future. Furthermore, hospital physicians generally are not employees of
Charter and in general Charter does not have contractual arrangements with
hospital physicians restricting the ability of such physicians to practice
elsewhere.
Liability Insurance. In prior years, Charter self-insured against a
substantial portion of its general and professional liability risk, including
a self-insured deductible of $2 million per occurrence for the policy years
ended May 31, 1992 and 1993, of $2.5 million per occurrence for the policy
years ended May 31, 1990 and 1991, and of $3 million for the policy year ended
May 31, 1989. Effective for the policy year beginning on June 1, 1993,
Charter eliminated its self-insured deductible for psychiatric hospitals and
reduced its self-insured deductible to $1.5 million per occurrence for its
general hospitals, which were sold on September 30, 1993. The amount of
expense relating to Charter's malpractice insurance may materially increase or
decrease from year to year depending, among other things, on the nature and
number of new reported claims against Charter and amounts of settlements of
previously reported claims. To date, Charter has not experienced a loss in
excess of policy limits. Charter believes that its coverage limits are
adequate.
Possible Volatility of Stock Price. Charter believes factors such as
announcements with respect to healthcare reform measures, acquisitions and
quarter-to-quarter and year-to-year variations in financial results could
cause the market price of Charter Common Stock to fluctuate substantially.
Any adverse announcement with respect to healthcare reform measures,
acquisitions or any shortfall in revenue or earnings from levels expected by
securities analysts could have an immediate and significant adverse effect on
the trading price of Charter Common Stock in any given period. As a result,
the market for Charter Common Stock may experience price and volume
fluctuations unrelated to the operating performance of Charter.
USE OF PROCEEDS
Charter will not receive any of the proceeds from the sale of the
Shares. All of the proceeds from the sale of the Shares will be received by
the Selling Stockholders.
SELLING STOCKHOLDERS
The Selling Stockholders are former Magellan Stockholders. The Shares
were acquired by the Selling Stockholders in connection with the Merger and
related transactions. The following table provides the names and the number
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of shares of Charter Common Stock owned by each Selling Stockholder. Since
the Selling Stockholders may sell all, some or none of their Shares, no
estimate can be made of the aggregate number of Shares that are to be offered
hereby or that will be owned by each Selling Stockholder upon completion of
the offering to which this Prospectus relates.
The Shares offered by this Prospectus may be offered from time to time
by the Selling Stockholders named below:
<TABLE>
<S> <C> <C> <C>
Shares of Shares of
Selling Stockholder Common Stock Selling Stockholder Common Stock
E. Byron Hensley, Jr.(1) 400,642 John G. Gleacher 7,997
Eric J. Gleacher 180,578 Sarah E. Gleacher 7,997
Olsten Service Corp. 127,534 Jeffrey H. Tepper 5,577
Thomas P. Riley(1)(2) 141,397 Susan MacKenzie Riley
Charles G. Phillips 111,875 and Mark Morin, Trustees 5,572
Harris & Harris Group, Robert A. Engel 4,808
Inc.(2). 108,736 Leonard O. Henry 4,598
James Goodwin 75,571 Alan L. Hollis 3,831
Gregory T. Torres 43,140 Donald R. Monack 3,831
Richard A. Derbes 23,970 Janice L. Quiram 3,831
H. Conrad Meyer 27,640 Andrew Gilman 3,199
Elizabeth J. Hopper 22,012 Lois Simon 3,065
Peter W. Mair 19,266 Lana Hensley Hoffman 2,476
Emil W. Henry, Jr 16,309 Martha Faye Koysh 2,476
Robert W. Kitts 11,995 Ruth Ann Roberts 2,476
Gleacher 7 Investors L.P. 11,029 Frank N. Liguori(3) 5,520
Gerald M. Bereika 10,969 William F. Murdy(2) 2,148
Peter P. Polloni(2) 10,031 Marie A. Gentile 1,921
Eric J. Gleacher, as Christina Hensley Bair 1,857
custodian for Jay S. Dianne Hensley Ramponi
Gleacher 7,997 and Thomas P.
Eric J. Gleacher, as Riley, Trustees 1,857
custodian for Patricia Christina Hensley
G. Gleacher 7,997 Bair and Thomas
Eric J. Gleacher, as P. Riley, Trustees 1,609
custodian for William Wayne J. Stelk 766
R. Gleacher 7,997
James E. Gleacher 7,997
___________________
(1) As a condition to Charter's obligation to consummate the Merger, each of
Messrs. Riley and Hensley entered into a Noncompete and Confidentiality
Agreement with Charter. In accordance with the terms of such agreements,
Messrs. Riley and Hensley agreed, among other things: (i) to maintain in
confidence trade secrets of Charter and Mentor at all times during such
individuals' respective affiliation with Charter and at all times
thereafter, and to maintain any confidential information for periods of
two years and five years, respectively, after the date of such
agreements; and (ii) not to enter into certain arrangements competitive
with Charter for periods of one year and five years, respectively, after
the date of such agreements. In consideration for the covenants set
forth in the Noncompete and Confidentiality Agreements, Charter agreed to
pay Messrs. Riley and Hensley $350,339 and $230,839, respectively. Such
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amounts will be paid by the issuance of shares of Charter Common Stock to
Messrs. Riley and Hensley in July, 1995. The number of shares set forth
in the table above includes 23,355 and 15,389 shares of Charter Common
Stock to be issued to Messrs. Riley and Hensley, respectively, pursuant
to the Noncompete and Confidentiality Agreements (assuming a $15 per
share issuance price and payment of cash in lieu of fractional shares).
(2) Harris & Harris Group, Inc. and Messrs. Riley, Polloni and Murdy own
50,000, 5,000, 500 and 500 shares of Charter Common Stock, respectively,
that were not acquired in connection with the Merger and which are
excluded from the above table.
(3) Pursuant to the Merger Agreement, Charter agreed to pay Mr. Ligouri
$50,585 for consulting services, which amount will be paid by the
issuance of shares of Charter Common Stock to Mr. Ligouri in July, 1995.
The number of shares set forth in the table above includes 3,372 shares
of Charter Common Stock to be issued to Mr. Ligouri in payment of such
amount (assuming a $15 per share issuance price and payment of cash in
lieu of fractional shares).
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Stockholders on
the American Stock Exchange or any national securities exchange or automated
interdealer quotation system on which shares of Charter Common Stock are then
listed, through negotiated transactions or otherwise. The Shares will be sold
at prices and on terms then prevailing, at prices related to the then current
market price or at negotiated prices. The Selling Stockholders may effect
sales of the Shares directly or by or through agents, brokers, dealers or
underwriters and the Shares may be sold by one or more of the following
methods: (a) underwritten public offerings, (b) ordinary brokerage
transactions, (c) purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this Prospectus, and (d) in
"block" sales. At the time a particular offer is made, a Prospectus
Supplement, if required, will be distributed that sets forth the name or names
of agents, broker-dealers or underwriters, any commissions and other terms
constituting compensation and any other required information. In effecting
sales, broker-dealers engaged by any Selling Stockholder and/or the purchasers
of the Shares may arrange for other broker-dealers to participate.
Broker-dealers will receive commissions, concessions or discounts from the
Selling Stockholder and/or the purchasers of the Shares in amounts to be
negotiated prior to the sale. Sales will be made only through broker-dealers
registered as such in a subject jurisdiction or in transactions exempt from
such registration. As of the date of this Prospectus, there are no selling
arrangements between the Selling Stockholders and any broker or dealer.
In offering the Shares covered by this Prospectus, the Selling
Stockholders and any brokers, dealers or agents who participate in a sale of
the Shares by the Selling Stockholders may be considered "underwriters" within
the meaning of Section 2(11) of the 1933 Act, and any profits realized by the
Selling Stockholders and the compensation of any broker/dealers may be deemed
to be underwriting discounts and commissions.
As required by the Investment and Registration Rights Agreement, Charter
has filed the Registration Statement, of which this Prospectus forms a part,
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with respect to the sale of the Shares. Charter has agreed to use its best
efforts to keep the Registration Statement current and effective through
January 28, 1997, with certain exceptions.
Charter will not receive any of the proceeds from the sale of the Shares
by the Selling Stockholders. Charter will bear the costs of registering the
Shares under the 1933 Act, including the registration fee under the 1933 Act,
legal and accounting fees and any printing fees. In addition, Charter will
pay the reasonable fees and disbursements of one firm of counsel designated by
the holders of a majority of the Shares to act as counsel for all holders of
Shares in connection with the registration of such Shares. The Selling
Stockholders will bear all other expenses in connection with this offering,
including underwriting commissions and/or discounts, if any, and brokerage
commissions.
Pursuant to the terms of the Investment and Registration Rights
Agreement and certain related agreements, Charter and the Selling Stockholders
have agreed to indemnify each other and certain other parties for certain
liabilities, including liabilities under the 1933 Act, in connection with the
registration of the Shares.
LEGAL MATTERS
The legality of the Shares will be passed upon for the Selling
Stockholders by King & Spalding, 191 Peachtree Street, Atlanta, Georgia
30303-1763.
EXPERTS
The audited, consolidated financial statements of Charter Medical
Corporation and its subsidiaries and related schedules included in the Charter
Annual Report on Form 10-K for the year ended September 30, 1994 have been
incorporated by reference in this Prospectus and have been audited by Arthur
Andersen LLP, independent auditors, as stated in their report appearing
therein and are incorporated by reference in reliance upon the report of such
firm and upon their authority as experts in accounting and auditing.
<PAGE>
<PAGE>
</TABLE>
<TABLE>
<S> <C>
No dealer, salesperson or other
individual has been authorized to
give any information or to make any
representation not contained in this
Prospectus and, if given or made,
such information or representation
must not be relied upon as having
been authorized by Charter or any
Selling Stockholder. This Prospectus
does not constitute an offer to
sell or a solicitation of an 1,452,094 SHARES
offer to buy the securities offered
hereby in any jurisdiction or to any
person to whom it is unlawful to make
such offer or solicitation. Neither Charter Medical
the delivery of this Prospectus Corporation
nor any sale made hereunder shall,
under any circumstances, create any
implication that the information
contained herein is correct as of any
date subsequent to the date hereof.
</TABLE>
_____________
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
Page
Available Information . . . . . . . . . 2 COMMON STOCK
Incorporation of Certain Documents ($.25 Par Value)
By Reference. . . . . . . . . . . . . 2
The Company . . . . . . . . . . . . . . 3
Recent Developments . . . . . . . . . . 3
Risk Factors. . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . 6
Selling Stockholders. . . . . . . . . . 7
Plan of Distribution. . . . . . . . . . 9
Legal Matters . . . . . . . . . . . . . 9
Experts . . . . . . . . . . . . . . . . 9
PROSPECTUS
____________________
February 24, 1995
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
<S> <C> <C> <C>
Item 14. Other Expenses of Issuance and Distribution
Securities and Exchange Commission Registration Fee $ 8,731.34
Legal Fees and Expenses $ 10,000.00
Accounting Fees and Expenses $ 4,000.00
Blue Sky Fees and Expenses (including
legal fees and expenses) $ 10,000.00
Printing $ 5,000.00
Miscellaneous $ 2,233.68
---------
TOTAL $ 40,000.00
</TABLE>
All of the above items, except for the registration fee, are estimates.
The Selling Stockholders will not bear any of the expenses set forth above.
Item 15. Indemnification of Directors and Officers
The Company is a Delaware corporation. Section 145 of the Delaware
General Corporation Law (the "DGCL") provides that a Delaware corporation has
the power to indemnify its officers and directors in certain circumstances.
Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of his service as director, officer, employee or agent of the
corporation, or his service, at the corporation's request, as a director,
officer, employee or agent of another corporation or enterprise, against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such action,
suit or proceeding provided that such director or officer acted in good faith
and in a manner reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, provided that such director or officer had no reasonable cause to
believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
director or officer, or former director or officer, who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement
of such action or suit provided that such director or officer acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be made
in respect of any claim, issue or matter as to which such director or officer
shall have been adjudged to be liable to the corporation unless and only to
the extent that the Court of Chancery or the court in which such action or
suit was brought shall determine upon application that, despite the
<PAGE>
<PAGE>
adjudication of liability but in view of all the circumstances of the case,
such director or officer is fairly and reasonably entitled to indemnity for
such expenses which the court shall deem proper.
Section 145 further provides that to the extent a director or officer of
a corporation has been successful in the defense of any action, suit or
proceeding referred to in subsections (a) or (b) or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith; provided that indemnification provided for by Section
145 or granted pursuant thereto shall not be deemed exclusive of any other
rights to which the indemnified party may be entitled. Section 145 also
empowers the corporation to purchase and maintain insurance on behalf of a
director or officer of the corporation against any liability asserted against
him or incurred by him in any such capacity or arising out of his status as
such whether or not the corporation would have the power to indemnify him
against such liabilities under Section 145.
Article VII of the Bylaws of Charter provide, in substance, that Charter
shall indemnify directors and officers against all liability and related
expenses incurred in connection with the affairs of Charter if: (a) in the
case of actions not by or in the right of Charter, the director or officer
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of Charter, and (with respect to a criminal
proceeding) had no reasonable cause to believe his conduct was unlawful; and
(b) in the case of actions by or in the right of Charter, the director or
officer acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of Charter; provided that no indemnification
shall be made for a claim as to which the director or officer is adjudged
liable to Charter unless (and only to the extent that) an appropriate court
determines that, in view of all the circumstances, such person is fairly and
reasonably entitled to indemnity.
In addition, Section 102(b)(7) of the DGCL permits Delaware corporations
to include a provision in their certificates of incorporation eliminating or
limiting the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that such provisions shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or that involve intentional misconduct or a knowing violation of law, (iii)
for unlawful payment of dividends or other unlawful distributions, or (iv) for
any transactions from which the director derived an improper personal
benefit. Article Twelfth of Charter's Certificate of Incorporation sets forth
such a provision.
Charter maintains directors' and officers' liability insurance with
various providers in the aggregate amount of $50 million.
For the undertaking with respect to indemnification, see Item 17.
Item 16. Exhibits
2.1 Asset Sale Agreement (First Facilities), dated March 29, 1994,
between National Medical Enterprises, Inc., as Seller, and the Company, as
Buyer, incorporated by reference to Exhibit 2(d) of the Company's Amendment
No. 1 to Registration Statement on Form S-4 (No. 33-53701) filed July 1, 1994.
<PAGE>
<PAGE>
2.2 Asset Sale Agreement (Subsequent Facilities), dated March 29,
1994, between National Medical Enterprises, Inc., as Seller, and the Company,
as Buyer, incorporated by reference to Exhibit 2(e) of the Company's Amendment
No. 1 to Registration Statement on Form S-4 (No. 33-53701) filed July 1, 1994.
Exhibits 2.1 and 2.2 do not contain copies of the exhibits and
schedules to such agreements. Such agreement describe such exhibits and
schedules. The Company agrees to furnish supplementally to the Commission,
upon request, a copy of any omitted exhibit
or schedule to such agreements.
2.3 Amendment No. 1, dated September 12, 1994, to Asset Sale Agreement
(First Facilities), dated March 29, 1994, between National Medical
Enterprises, Inc., as Seller and the Company, as Buyer, incorporated by
reference to Exhibit 2(c) of the Company's Annual Report on Form 10-K dated as
of September 30, 1994.
2.4 Amendment No. 1, dated September 12, 1994, to Asset Sale Agreement
(Subsequent Facilities), dated March 29, 1994, between National Medical
Enterprises, Inc., as Seller and the Company, as Buyer, incorporated by
reference to Exhibit 2(d) of the Company's Annual Report on Form 10-K dated as
of September 30, 1994.
2.5 Amendment No. 2, dated September 29, 1994, to Asset Sale Agreement
(Subsequent Facilities), dated March 29, 1994, between National Medical
Enterprises, Inc., as Seller and the Company, as Buyer, incorporated by
reference to Exhibit 2(e) of the Company's Annual Report on Form 10-K dated
as of September 30, 1994.
2.6 Amendment No. 3, dated November 15, 1994, to Asset Sale Agreement
(Subsequent Facilities), dated March 29, 1994, between National Medical
Enterprises, Inc., as Seller and the Company, as Buyer, incorporated by
reference to Exhibit 2(f) of the Company's Annual Report on Form 10-K dated as
of September 30, 1994.
4.1 Restated Certificate of Incorporation of the Company, incorporated
by reference to Exhibit 3(a) of the Company's Annual Report on Form 10-K dated
as of September 30, 1992.
4.2 Bylaws of the Company, as amended, incorporated by reference to
Exhibit 3(b) of the Company's Annual Report on Form 10-K dated as of September
30, 1994.
*5.1 Opinion of King & Spalding as to the legality of the Common Stock
to be registered.
*23.1 Consent of King & Spalding (included in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
*24.1 Powers of Attorney.
---------------------
*Previously filed
<PAGE>
<PAGE>
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of securities registered hereby, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the 1933 Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement;
provided, however, that the undertakings set forth in paragraphs
(i) and (ii) above do not apply if the information required to be included in
a post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as
amended ("Exchange Act"), that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
1933 Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that for purposes of
determining any liability under the 1933 Act, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers and controlling persons of the
registrant, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
<PAGE>
<PAGE>
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in
the 1933 Act and will be governed by the final adjudication of such issue.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Atlanta, State of
Georgia, on the 22nd day of May, 1995.
CHARTER MEDICAL CORPORATION
By:/s/ John R. Day
---------------------------
John R. Day
Vice President -- Controller
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed by the following
persons on May 22, 1995 in the capacities indicated.
*
-----------------------------------------
E. Mac Crawford,
President and Chairman of the Board
(Principal Executive Officer)
*
-----------------------------------------
Lawrence W. Drinkard
Executive Vice President, Chief Financial
Officer and Director
(Principal Financial Officer)
<PAGE>
<PAGE>
/s/ John R. Day
-----------------------------------------
John R. Day
Vice President -- Controller
(Principal Accounting Officer)
*
-----------------------------------------
Edwin M. Banks
Director
*
-----------------------------------------
Andre C. Dimitriadis
Director
*
-----------------------------------------
Raymond H. Kiefer
Director
*
-----------------------------------------
Gerald L. McManis
Director
*By: /s/ John R. Day
-----------------------------------------
John R. Day as Attorney-in-Fact
Pursuant to Powers of Attorney
Filed with Registration Statement
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
<S> <C> <C>
Sequentially
Numbered
Exhibit Page
2.1 Asset Sale Agreement (First Facilities), dated March
29, 1994, between National Medical Enterprises, Inc.,
as Seller, and the Company, as Buyer, incorporated by
reference to Exhibit 2(d) of the Company's Amendment
No. 1 to Registration Statement on Form S-4 (No.
33-53701) filed July 1, 1994.
2.2 Asset Sale Agreement (Subsequent Facilities), dated
March 29, 1994, between National Medical Enterprises,
Inc., as Seller, and the Company, as Buyer,
incorporated by reference to Exhibit 2(e) of the
Company's Amendment No. 1 to Registration Statement on
Form S-4 (No. 33-53701) filed July 1, 1994.
Exhibits 2.1 and 2.2 do not contain copies of the
exhibits and schedules to such agreements. Such
agreement describe such exhibits and schedules. The
Company agrees to furnish supplementally to the
Commission, upon request, a copy of any omitted
exhibit or schedule to such agreements.
2.3 Amendment No. 1, dated September 12, 1994, to Asset
Sale Agreement (First Facilities), dated March 29,
1994, between National Medical Enterprises, Inc., as
Seller and the Company, as Buyer, incorporated by
reference to Exhibit 2(c) of the Company's Annual
Report on Form 10-K dated as of September 30, 1994.
2.4 Amendment No. 1, dated September 12, 1994, to Asset
Sale Agreement (Subsequent Facilities), dated March
29, 1994, between National Medical Enterprises, Inc.,
as Seller and the Company, as Buyer, incorporated by
reference to Exhibit 2(d) of the Company's Annual
Report on Form 10-K dated as of September 30, 1994.
2.5 Amendment No. 2, dated September 29, 1994, to Asset
Sale Agreement (Subsequent Facilities), dated March 29,
1994, between National Medical Enterprises, Inc., as
Seller and the Company, as Buyer, incorporated by
referenced to Exhibit 2(e) of the Company's Annual
Report on Form 10-K dated as of September 30, 1994.
2.6 Amendment No. 3, dated November 15, 1994, to Asset
Sale Agreement (Subsequent Facilities), dated March 29,
1994, between National Medical Enterprises, Inc., as
Seller and the Company, as Buyer, incorporated by
referenced to Exhibit 2(f) of the Company's Annual
Report on Form 10-K dated as of September 30, 1994.
<PAGE>
<PAGE>
Sequentially
Numbered
Exhibit Page
4.1 Restated Certificate of Incorporation of the Company,
incorporated by reference to Exhibit 3(a) of the
Company's Annual Report on Form 10-K dated as of
September 30, 1992.
4.2 Bylaws of the Company, as amended, incorporated by
reference to Exhibit 3(b) of the Company's Annual
Report on Form 10-K dated as of September 30, 1994.
*5.1 Opinion of King & Spalding as to the legality of the
Common Stock to be registered.
*23.1 Consent of King & Spalding (included in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
*24.1 Powers of Attorney.
---------------------
* Previously filed
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement of our report dated December 2, 1994
included in Charter Medical Corporation's Form 10-K for the year ended September
30, 1994 and to all references to our firm included in this Registration
Statement.
/s/ Arthur Andersen LLP
---------------------------------------
Atlanta, Georgia
May 22, 1995
