Exhibit 10.5

 

FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED

REVOLVING CREDIT AND TERM LOAN AGREEMENT

 

THIS FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED REVOLVING CREDIT AND TERM
LOAN AGREEMENT (this “Amendment”), is made and entered into as of August 15,
2008, by and among HEALTHWAYS, INC., a Delaware corporation (the “Borrower”),
the several banks and other financial institutions from time to time party
hereto (collectively, the “Lenders”) and SUNTRUST BANK, in its capacity as
Administrative Agent for the Lenders (the “Administrative Agent”), and as the
Issuing Bank and the Swingline Lender.

 

W I T N E S S E T H:

 

WHEREAS, the Borrower, the Lenders and the Administrative Agent are parties to a
certain Third Amended and Restated Revolving Credit and Term Loan Agreement,
dated as of December 1, 2006, as amended by that First Amendment to Third
Amended and Restated Revolving Credit and Term Loan Agreement, dated as of
February 20, 2007, as amended by that Second Amendment to Third Amended and
Restated Revolving Credit and Term Loan Agreement, dated as of April 11, 2007,
as amended by that Third Amendment to Third Amended and Restated Revolving
Credit and Term Loan Agreement, dated as of July 16, 2007 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”;
capitalized terms used herein and not otherwise defined shall have the meanings
assigned to such terms in the Credit Agreement), pursuant to which the Lenders
have made certain financial accommodations available to the Borrower;

WHEREAS, the Borrower has requested that the Lenders and the Administrative
Agent amend certain provisions of the Credit Agreement and subject to the terms
and conditions hereof, the Lenders are willing to do so;

NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt
of all of which are acknowledged, the Borrower, the Lenders, the Issuing Bank
and the Administrative Agent agree as follows:

 

1.         Amendment. Section 1.1 of the Credit Agreement is hereby amended by
replacing the definition of “Consolidated Fixed Charges” with the following:

“Consolidated Fixed Charges” shall mean, for the Borrower and its Subsidiaries
for any period, the sum (without duplication) of (a) Consolidated Interest
Expense paid in cash for such period, (b) scheduled principal payments made on
Consolidated Total Debt during such period and (c) Restricted Payments paid in
cash during such period other than Restricted Payments paid in cash pursuant to
Section 7.5(iii) in an aggregate amount not to exceed $100,000,000.

 

 

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2.         Noncompliance with Section 6.2. The Lenders hereby waive any Events
of Default that may have occurred under Section 6.2 of the Credit Agreement for
the Fiscal Quarter ending May 31, 2008 as a result of the inclusion in
Consolidated Fixed Charges of $99,994,000 of Restricted Payments paid in cash
pursuant to Section 7.5(iii) of the Credit Agreement.

3.   Conditions to Effectiveness of this Amendment. Notwithstanding any other
provision of this Amendment and without affecting in any manner the rights of
the Lenders hereunder, it is understood and agreed that this Amendment shall not
become effective, and the Borrower shall have no rights under this Amendment,
until the Administrative Agent shall have received executed counterparts of this
Amendment from the Borrower and each of the Guarantors.

 

4.         Representations and Warranties. To induce the Lenders and the
Administrative Agent to enter into this Amendment, each Loan Party hereby
represents and warrants to the Lenders and the Administrative Agent:

 

(a)       The Borrower and each of its Subsidiaries (i) is duly organized,
validly existing and in good standing as a corporation, partnership or limited
liability company, as applicable, under the laws of the jurisdiction of its
organization, (ii) has all requisite power and authority to carry on its
business as now conducted, and (iii) is duly qualified to do business, and is in
good standing, in each jurisdiction where such qualification is required, except
where a failure to be so qualified would not reasonably be expected to result in
a Material Adverse Effect;

 

(b) The execution, delivery and performance of this Amendment by each Loan Party
are within such Loan Party’s organizational powers and have been duly authorized
by all necessary organizational, and if required, shareholder, partner or
member, action;

 

(c)       The execution, delivery and performance of this Amendment by each Loan
Party (i) do not require any consent or approval of, registration or filing
with, or any action by, any Governmental Authority, except those as have been
obtained or made and are in full force and effect or where a failure to do so,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect, (ii) will not violate any applicable law or regulation
or the charter, by-laws or other organizational documents of the Borrower or any
of its Subsidiaries or any order of any Governmental Authority, (iii) will not
violate or result in a default under any indenture, material agreement or other
material instrument binding on the Borrower or any of its Subsidiaries or any of
its material assets or give rise to a right thereunder to require any payment to
be made by the Borrower or any of its Subsidiaries and (iv) will not result in
the creation or imposition of any Lien on any material asset of the Borrower or
any of its Subsidiaries, except Liens (if any) created under the Loan Documents;

 

(d)       This Amendment has been duly executed and delivered by or on behalf of
each Loan Party and constitutes a legal, valid and binding obligation of each
Loan Party, enforceable against such Loan Party in accordance with its terms
except as the enforceability hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors’ rights
and remedies in general and by general principles of equity; and

 

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(e)       After giving effect to this Amendment and any changes in facts and
circumstances that are not prohibited by the terms of the Credit Agreement, the
representations and warranties contained in the Credit Agreement and the other
Loan Documents are true and correct in all material respects (subject to the
limitation that representations and warranties effective as of a specified date
are true and correct as of such specified date), and no Default or Event of
Default exists as of the date hereof.

 

 

5.

Reaffirmations and Acknowledgments.

 

(a)       Reaffirmation of Guaranty. Each Subsidiary Loan Party consents to the
execution and delivery by the Borrower of this Amendment and jointly and
severally ratifies and confirms the terms of the Subsidiary Guarantee Agreement
with respect to the indebtedness now or hereafter outstanding under the Credit
Agreement as amended hereby and all promissory notes issued thereunder. Each
Subsidiary Loan Party acknowledges that, notwithstanding anything to the
contrary contained herein or in any other document evidencing any indebtedness
of the Borrower to the Lenders or any other obligation of the Borrower, or any
actions now or hereafter taken by the Lenders with respect to any obligation of
the Borrower, the Subsidiary Guarantee Agreement (i) is and shall continue to be
a primary obligation of the Subsidiary Loan Parties, (ii) is and shall continue
to be an absolute, unconditional, joint and several, continuing and irrevocable
guaranty of payment, and (iii) is and shall continue to be in full force and
effect in accordance with its terms. Nothing contained herein to the contrary
shall release, discharge, modify, change or affect the original liability of the
Subsidiary Loan Parties under the Subsidiary Guarantee Agreement.

 

(b)       Acknowledgment of Perfection of Security Interest. Each Loan Party
hereby acknowledges that, as of the date hereof, the security interests and
liens granted to the Administrative Agent and the Lenders under the Credit
Agreement and the other Loan Documents are in full force and effect, are
properly perfected and are enforceable in accordance with the terms of the
Credit Agreement and the other Loan Documents.

 

6.   Effect of Amendment. Except as set forth expressly herein, all terms of the
Credit Agreement, as amended hereby, and the other Loan Documents shall be and
remain in full force and effect and shall constitute the legal, valid, binding
and enforceable obligations of the Borrower to the Lenders and the
Administrative Agent. The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of the Lenders under the Credit Agreement, nor
constitute a waiver of any provision of the Credit Agreement. This Amendment
shall constitute a Loan Document for all purposes of the Credit Agreement.

 

7.   Governing Law. This Amendment shall be governed by, and construed in
accordance with, the internal laws of the State of New York and all applicable
federal laws of the United States of America.

 

8.   No Novation. This Amendment is not intended by the parties to be, and shall
not be construed to be, a novation of the Credit Agreement or an accord and
satisfaction in regard thereto.

 

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9.   Costs and Expenses. The Borrower agrees to pay on demand all reasonable
out-of-pocket costs and expenses of the Administrative Agent in connection with
the preparation, execution and delivery of this Amendment, including, without
limitation, the reasonable fees and out-of-pocket expenses of outside counsel
for the Administrative Agent with respect thereto.

 

10. Counterparts. This Amendment may be executed by one or more of the parties
hereto in any number of separate counterparts, each of which shall be deemed an
original and all of which, taken together, shall be deemed to constitute one and
the same instrument. Delivery of an executed counterpart of this Amendment by
facsimile transmission or by electronic mail in pdf form shall be as effective
as delivery of a manually executed counterpart hereof.

 

11. Binding Nature. This Amendment shall be binding upon and inure to the
benefit of the parties hereto, their respective successors,
successors-in-titles, and assigns.

 

12. Entire Understanding. This Amendment sets forth the entire understanding of
the parties with respect to the matters set forth herein, and shall supersede
any prior negotiations or agreements, whether written or oral, with respect
thereto.

 

[Signature Pages To Follow]

 

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            IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed, under seal in the case of the Borrower and the Guarantors, by
their respective authorized officers as of the day and year first above written.

 

 

BORROWER:

 

 

HEALTHWAYS, INC.

                                          
                                                     

 

 

 

By: /s/ Mary A. Chaput

 

Name: Mary A. Chaput

 

Title: Executive Vice President and CFO

 

 

ADMINISTRATIVE AGENT:

 

SUNTRUST BANK, as Administrative Agent

                

 

 

 

By: /s/ Kap Yarbrough

 

Name: Kap Yarbrough

 

Title: Vice President

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED REVOLVING
CREDIT AND TERM LOAN AGREEMENT]