Exhibit 10.20
AMENDMENT NO. 2 TO CREDIT AGREEMENT
This AMENDMENT NO. 2 TO CREDIT AGREEMENT (this "Amendment"), dated as of
September __, 2003, is entered into among TEAM HEALTH, INC., a Tennessee
corporation (the "Borrower"), FLEET NATIONAL BANK, individually and as
administrative agent (the "Administrative Agent") and the other Lenders
signatory hereto.
R E C I T A L S:
A. The Borrower, the Lenders, Fleet National Bank, as an Issuing Bank,
as the Swing Line Bank, and as Administrative Agent, Bank of America, N.A., as
an Issuing Bank, Banc of America Securities LLC, as Syndication Agent, and
General Electric Capital Corporation, as Documentation Agent, are parties
to that certain $300,000,000 Credit Agreement, dated as of May 1, 2002 (as
amended by Amendment No. 1 on May 14, 2003, the "Agreement"). Each capitalized
term used but not otherwise defined herein shall have the meaning ascribed to
such term by the Agreement.
B. The Borrower, the Administrative Agent and the Lenders wish to amend
the Agreement on the terms and conditions set forth below.
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendment of the Agreement. Effective as of date hereof, the
Agreement shall be amended as follows:
1.1 Section 1.1 is amended by amending the definition of the term
"EBITDA" by replacing the word "and" immediately prior to clause (xiv) with a
"," and adding the following clause (xv) thereto and replacing in its entirety
the proviso immediately following thereafter, as follows:
"and (xv) an amount, not less than zero, equal to professional
liability insurance expense related to the Borrower's self-insurance
program, less (A) claims paid by the Borrower or the Insurance
Subsidiary, administrative expenses paid to the Insurance Subsidiary
and external professional liability insurance premiums, fronting fees,
related taxes, related broker commissions and related claims
management fees (net of physician contributions) and (B) the amount of
the increase incurred in such period of required cash collateral or
other security in favor of a fronting medical malpractice insurance
carrier; provided, that for purposes of determining the ratio of
Consolidated Funded Debt to EBITDA solely as such term is used in
determining the "Applicable Margin" and as such term is used in
Section 2.6(b), EBITDA shall be calculated without giving effect to
the foregoing clause (xv) but after adding, without duplication, the
$50.8 million non-cash charge taken in the first quarter of 2003 for
potential professional liability claims in excess of applicable
insurance
limits and after adding any other nonrecurring non-cash charges pertaining
to the Borrower's self-insurance program, provided, that with respect to
each of clauses (ii) through (xv) such amounts shall be added to Net Income
pursuant to this definition only to the extent such amounts are not
duplicative and, for each of such clauses other than clause (ix), were
deducted in determining Net Income,"
1.2 Section 1.1 is amended by amending the definition of the term
"Interest Expense" by adding the following parenthetical after the term "GAAP"
in the fourth line of such definition:
"(excluding any effects of the application of FASB 150)"
1.3 Section 1.1 is amended by amending the definition of the term "Debt"
by adding the following sentence to the end of such definition:
"For the purposes of the Agreement, the term "Debt" shall exclude any
effects of the application of FASB 150."
1.4 Section 1.1 is amended by amending the definition of the term "Working
Capital" by replacing the words "Consolidated Current Liabilities relating to
the reserves of any Insurance Subsidiary, if applicable" appearing at the end of
the second parenthetical therein in its entirety with the following:
"Consolidated Current Liabilities relating to reserves for professional
liability insurance coverage (including any reserves of the Insurance
Subsidiary)"
1.5 Section 5.4(a) is amended by adding the following proviso at the end
of such Section:
"; provided, however, that the Borrower may self-insure for professional
liability insurance claims using sound actuarial principles."
1.6 Section 5.4(b) is amended by adding the following proviso at the end
of the first sentence of such Section:
"; provided, however, that the Borrower may self-insure for professional
liability insurance claims using sound actuarial principles."
1.7 Section 6.1(m) is amended by renumbering such Section to Section
6.1(n) and adding a new Section 6.1(m) in its place as follows:
"(m) Liens incurred by the Insurance Subsidiary in favor of a fronting
professional liability insurance carrier to secure the Insurance
Subsidiary's obligations to pay professional liability insurance claims and
expenses on a "claims reported" basis; and"
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1.8 Section 6.4(f) is amended by adding the following words immediately
after the reference to "Section 6.5(a)" and before the semicolon, as follows:
"and the borrower may transfer shares of capital stock of Holdings to the
extent permitted by Section 6.6(i) and may cancel or retire any shares of
its capital stock acquired in connection with such transfer."
1.9 Section 6.5(q) is amended by adding the following words at the end of
such subsection and before the semicolon as follows:
"and Investments consisting of capital stock of Holdings acquired by the
Borrower in a transaction permitted by Section 6.6(d) hereof."
1.10 Section 6.6 is amended by (a) adding the words "or equity interests
of Holdings" immediately after the words "capital stock" in the second line
therein and (b) adding the words "and/or Holdings" immediately after the term
"Borrower" in the eighth line therein and the third line of subsection (d)
therein.
1.11 Section 6.6(i) is amended by renumbering such Section to Section
6.6(j) and adding a new Section 6.6(i) in its place as follows:
"(i) the Borrower may acquire its capital stock from Holdings in a
transaction where the sole consideration for such purchase or acquisition
consists of capital stock of Holdings held by the Borrower and transferred
to Holdings."
1.12 Section 6.18(k) is amended by renumbering such Section to Section
6.18(l) and adding a new Section 6.18(k) in its place as follows:
"(k) the Borrower may incur Guaranteed Obligations in respect of the
Insurance Subsidiary's obligations to pay professional liability insurance
claims and expenses on a "claims reported" basis; and"
1.13 Section 6.20(b) of the Agreement is amended in its entirety and
replaced with the following:
"(b) permit any Investment in the Insurance Subsidiary, except for
Investment not in excess of the amounts as may be required by applicable
law, regulatory determination or by any reputable insurer fronting coverage
on behalf of the Insurance Subsidiary."
2. Conditions Precedent to Amendments. This Amendment shall be effective as
of the date first set forth above; provided, however, that Section 1 hereof
shall not become operative and shall be of no force or effect unless each of
the conditions set forth in this Section 2 shall be satisfied and the delivery
of the following documents to the Administrative Agent, in form and substance
satisfactory to the Administrative Agent and its counsel, shall have occurred.
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2.1 Documentation.
(a) This Amendment shall have been duly executed and
delivered by the Administrative Agent, the Borrower and the
Required Lenders (without respect to whether it has been executed
and delivered by all the Lenders).
(b) The Borrower shall have delivered to the
Administrative Agent a Reaffirmation of Guaranty and Security
Agreement in the form of Exhibit A hereto executed by the Borrower
and each of the Guarantors.
2.2 Payment of Fees. The Borrower shall have paid to the
Administrative Agent all fees due and owing, including, without limitation,
for the account of each Lender approving this Amendment and delivering its
executed signature page (by facsimile or other means acceptable to the
Administrative Agent) on or prior to 12:00 P.M. (New York time) on
September 17, 2003 a fee of 7.5 basis points of each such Lender's
aggregate Revolving Credit Commitment and outstanding Term A Advance and
Term B Advance.
3. Representations and Warranties. The Borrower represents and warrants
to the Administrative Agent and each Lender that:
(a) The execution and delivery by the Borrower of this Amendment
and the performance by the Borrower of its obligations under this Amendment
are within the corporate powers of the Borrower, have been duly authorized
by all necessary corporate action on the part of the Borrower, have
received all necessary governmental approval (if any shall be required),
and do not and will not (i) violate any provision of law or any order,
decree or judgment of any court or other government agency which is binding
on the Borrower or any Subsidiary, (ii) contravene or conflict with, or
result in a breach of, any provision of any organizational documents of the
Borrower or any Guarantor or of any material agreement, indenture,
instrument or other document which is binding on the Borrower or any
Subsidiary or (iii) result in or require the creation or imposition of any
Lien on any property of the Borrower or any Subsidiary (other than Liens
arising under the Loan Documents).
(b) There have been no amendments, supplements or modifications
to any of the Articles of Incorporation, Bylaws, resolutions of the Board
of Directors or certificate of incumbency of the Borrower previously
delivered to the Administrative Agent on May 1, 2002.
(c) Each of the representations and warranties of the Borrower
and the Guarantors contained in the Loan Documents, as amended hereby, is
true and correct in all material respects on and as of the date hereof as
if made on the date hereof, other than any such representations or
warranties that, by their terms, refer to a specific date other than the
date hereof, in which case, as of such specific date.
(d) As of the date hereof, after giving effect to this Amendment,
no Default or Event of Default under the Agreement or any other Loan
Document has occurred and is continuing.
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4. Miscellaneous.
4.1 From and after the date hereof, each reference in the Agreement
to "this Agreement," "hereunder," "hereof," "herein," or words of like import,
and each reference to the Agreement in any of the other Loan Documents shall
mean and be a reference to the Agreement as amended hereby.
4.2 Except as specifically set forth above, the Agreement and the
Exhibits thereto shall remain unaltered and in full force and effect and the
respective terms, conditions or covenants thereof are hereby in all respects
ratified and confirmed.
4.3 This Amendment may be executed in any number of separate
counterparts, each of which, when so executed, shall be deemed an original, and
all of said counterparts taken together shall be deemed to constitute but one
and the same instrument.
4.4 THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS
RULES PERTAINING TO CONFLICTS OF LAWS OTHER THAN GENERAL OBLIGATIONS LAW SECTION
5-1401.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
TEAM HEALTH, INC.
By /s/ Xxxxxx Xxxxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxxxx
-----------------------------
Title: Executive Vice President
-----------------------------
SIGNATURE PAGE TO AMENDMENT NO. 2
TO CREDIT AGREEMENT FOR TEAM HEALTH, INC.
S-1
ACCESS NURSE PM, INC.
AFTER HOURS PEDIATRIC PRACTICES, INC.
CLINIC MANAGEMENT SERVICES, INC. (survivor of a
merger with Park Med of Florida, Inc.)
METROAMERICAN RADIOLOGY, INC.
XXXXXXXXX XXXXXXXXX XXXXXXXX
XXXXXXXXXX RADIOLOGY ASSOCIATES OF
HOLLYWOOD, INC.
TEAM ANESTHESIA, INC.
By: /s/ Xxxxx X Xxxxx
--------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
Address: 0000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
SIGNATURE PAGE TO REAFFIRMATION OF
GUARANTY AND SECURITY AGREEMENT
S-2
XXXXXXX X. XXXXXXXXXXX, INC.
XXXXXX & XXXXXX, INC.
DRS. SHEER, XXXXXX AND ASSOCIATES, INC.
EMERGENCY COVERAGE CORPORATION
EMERGENCY PHYSICIAN ASSOCIATES, INC.
EMERGENCY PROFESSIONAL SERVICES, INC.
INPHYNET CONTRACTING SERVICES, INC.
(survivor of mergers with Acute Care
Specialists Co., Alliance Corporation,
Emergency Management Specialists, Inc.,
Inphynet Anesthesia of West Virginia,
Inc., Inphynet Louisiana, Inc., Inphynet
Medical Management Institute, Inc.,
Neo-Med, Inc., Paragon Anesthesia, Inc.,
and Virginia Emergency Physicians, Inc.)
INPHYNET SOUTH BROWARD, INC.
INPHYNET JOLIET, INC.
XXXXXXXX XXXXXXX, INC.
INPHYNET HOSPITAL SERVICES, INC.
XXXX X. XXXXXXX, INC.
MED: ASSURE SYSTEMS, INC. (survivor of a
merger with THBS, Inc.)
NORTHWEST EMERGENCY PHYSICIANS INCORPORATED
PARAGON CONTRACTING SERVICES, INC. (survivor
of mergers with Sarasota Emergency Medical
Consultants, Inc. and Emergency Physicians
of Manatee, Inc.)
PARAGON IMAGING CONSULTANTS, INC.
QUANTUM PLUS, INC.
XXXXX, XXXXXXXXXX & XXXXXXX CO.
SOUTHEASTERN EMERGENCY PHYSICIANS OF
MEMPHIS, INC.
SOUTHEASTERN EMERGENCY PHYSICIANS, INC.
(survivor of a merger with Hospital Based
Physician Services, Inc.)
TEAM RADIOLOGY, INC.
THE EMERGENCY ASSOCIATES FOR MEDICINE, INC.
(survivor of a merger with Sentinel
Medical Services, Inc.)
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
Address: 0000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
SIGNATURE PAGE TO REAFFIRMATION OF
GUARANTY AND SECURITY AGREEMENT
S-3
TEAM HEALTH FINANCIAL SERVICES, INC.
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx Xxxxx
Title: President
Address: 000 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
IMBS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Address: 0000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
XXXXXXX XXXXXXX PARTNERSHIP, a California
General Partnership
By: Xxxxxxxx Xxxxxxx, Inc., its general partner
Xxxx X. Xxxxxxx, Inc., its general partner
By: /s/ Xxxxx X. Xxxxx
------------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
Address: 0000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
SIGNATURE PAGE TO REAFFIRMATION OF
GUARANTY AND SECURITY AGREEMENT
S-4
MT. DIABLO EMERGENCY PHYSICIANS, a California
General Partnership
By: Xxxxxxxx Xxxxxxx, Inc., its general partner
Xxxx X. Xxxxxxx, Inc., its general partner
By: /s/ Xxxxx X. Xxxxx
---------------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
Address: 0000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
PARAGON HEALTHCARE LIMITED PARTNERSHIP
By: InPhyNet Hospital Services, Inc., general
partner
By: /s/ Xxxxx X. Xxxxx
---------------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
Address: 0000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
TEAM HEALTH BILLING SERVICES, L.P.
By: Team Health, Inc., general partner
By: /s/ Xxxxx X. Xxxxx
---------------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
Address: 0000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
TEAM HEALTH SOUTHWEST L.P.
By: Team Radiology, Inc., general partner
By: /s/ Xxxxx X. Xxxxx
---------------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
Address: 0000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
SIGNATURE PAGE TO REAFFIRMATION OF
GUARANTY AND SECURITY AGREEMENT
S-5
TEAM HEALTH ANESTHESIA MANAGEMENT
SERVICES, INC. (f/k/a Integrated Specialists Management
Services, Inc.)
MEDICAL MANAGEMENT RESOURCES, INC.
PHYSICIAN INTEGRATION CONSULTING
SERVICES, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx Xxxxx
Title: Vice President
Address: 0000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
SPECTRUM HEALTHCARE SERVICES, INC.
SPECTRUM HEALTHCARE, INC.
SPECTRUM HEALTHCARE RESOURCES OF DELAWARE,
INC.
SPECTRUM HEALTHCARE RESOURCES, INC.
AMERICAN CLINICAL RESOURCES, INC. (f/k/a Spectrum
Healthcare Nationwide, Inc.)
SPECTRUM PRIMARY CARE OF DELAWARE, INC.
SPECTRUM PRIMARY CARE, INC.
SPECTRUM CRUISE CARE, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx Xxxxx
Title: Vice President
Address: 0000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
SIGNATURE PAGE TO REAFFIRMATION OF
GUARANTY AND SECURITY AGREEMENT
S-6
XXXXX MEDICAL SERVICES CORPORATION
HEALTH CARE ALLIANCE, INC.
MEDICAL SERVICES, INC.
CORRECTIONAL HEALTHCARE ADVANTAGE, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
Address: 0000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
SIGNATURE PAGE TO REAFFIRMATION OF
GUARANTY AND SECURITY AGREEMENT
S-7
EXHIBIT A
REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
Each of the undersigned acknowledges receipt of a copy of Amendment No. 2
to Credit Agreement (the "Amendment") dated as of September , 2003, consents
to such Amendment and hereby reaffirms its obligations under (i) the Holdings
Guaranty dated as of May 1, 2002 in favor of Fleet National Bank, as
administrative agent and the Secured Parties (as defined in the Credit
Agreement), (ii) the Subsidiary Guaranty dated as of May 1, 2002 in favor of
Fleet National Bank, as administrative agent and the Secured Parties, (iii) the
Holdings Pledge Agreement dated as of May 1, 2002 by and between Team Health
Holdings, L.L.C. and Fleet National Bank, as administrative agent for the
Secured Parties, (iv) the Security Agreement dated as of May 1, 2002 by and
among Team Health, Inc., the Subsidiary Guarantors (as defined in the Credit
Agreement) and Fleet National Bank, as administrative agent for the Secured
Parties, (v) The Pledge Agreement dated April 11, 2003 by and between Team
Health, Inc. and Fleet National Bank, as administrative agent for the Secured
Parties, and (vi) the Intellectual Property Security Agreement dated as of May
1, 2002 by and among Team Health, Inc., the Subsidiary Guarantors and Fleet
National Bank, as administrative agent for the Secured Parties.
Dated as of September , 2003
TEAM HEALTH, INC.
By: /s/ Xxxxxx Xxxxxxxxxx
---------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Executive Vice President
Address: 0000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
TEAM HEALTH HOLDINGS, L.L.C.
By: /s/ Xxxxxx Xxxxxxxxxx
---------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Executive Vice President
Address: c/o Madison Dearborn Partners
Three First Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
