FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT
Exhibit 10.3
FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT (this “Amendment”), is made and
entered into as of April 6, 2011, by and among AMSURG CORP., a Tennessee corporation (the
“Company”), the other Credit Parties signatory hereto, THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
and the other holders of Notes (as defined in the Note Agreement defined below) that are
signatories hereto (together with their successors and assigns, the “Noteholders”).
W I T N E S S E T H:
WHEREAS, the Company and the Noteholders are parties to a certain Note Purchase Agreement,
dated as of May 28, 2010 (as amended, restated, supplemented or otherwise modified from time to
time, the “Note Agreement”; capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Note Agreement), pursuant to which the Noteholders have
purchased Notes from the Company;
WHEREAS, the Company has requested that the Noteholders amend certain provisions of the Note
Agreement, and subject to the terms and conditions hereof, the Noteholders are willing to do so;
NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt of all of
which are acknowledged, the Company and the Noteholders agree as follows:
1. Amendments.
(a) Paragraph 2B of the Note Agreement is hereby amended by replacing such Paragraph in its
entirety with the following:
Increase in Interest Rate after a Major Acquisition. Commencing with
the first day of the first fiscal quarter immediately following any Major
Acquisition, the per annum stated interest rate on the outstanding Notes shall
automatically be increased by 0.75% per annum until the later of (i) the first day
of the fifth fiscal quarter immediately following such Major Acquisition and (ii)
the date on which Company has delivered to the holders of the Notes an Officer’s
Certificate (x) demonstrating that the Leverage Ratio on the last day of any Fiscal
Quarter ending after such Major Acquisition does not exceed 3.25:1.0 and (y)
certifying that no Default or Event of Default has occurred, at which time the per
annum stated interest rate on the outstanding Notes shall automatically decrease to
the original stated interest rate.
(b) Paragraph 5A of the Note Agreement is hereby amended by replacing subsection (iii) of such
Paragraph in its entirety with the following:
(iii) concurrently with the delivery of the financial statements referred to in
clauses (i) and (ii) above, a Compliance Certificate signed by a Responsible Officer
in the form of Schedule 5C, (1) certifying as to whether there exists a Default or
Event of Default on the date of such certificate, and if a Default or an
Event of Default then exists, specifying the details thereof and the action which
the Company has taken or proposes to take with respect thereto, (2) setting forth in
reasonable detail calculations demonstrating compliance with paragraph 6A, paragraph
6B(vii), paragraph 6E(viii), paragraph 6F (showing the amount of any dividends and
any purchases of treasury stock) and paragraph 6G (showing compliance with paragraph
6G(iii)), (3) providing a reconciliation of all calculations and determinations made
therein both before and after giving effect to the last sentence of paragraph 10C in
such detail as may be requested by any holder of the Notes and (4) stating whether
any change in GAAP or the application thereof has occurred since the date of the
Company’s audited financial statements referred to in paragraph 8D and, if any
change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate;
(c) Paragraph 6A(1) of the Note Agreement is hereby amended by replacing such Paragraph in its
entirety with the following:
6A(1) Leverage Ratio. The Company shall maintain, on a consolidated basis and
as calculated at the end of each Fiscal Quarter, a Leverage Ratio of not greater
than 3.25 to 1.00; provided however, that if the Company closes any Major
Acquisition, then with respect to the calendar quarter in which such Major
Acquisition is closed and each of the three immediately following calendar quarters,
the Company shall maintain a Leverage Ratio of not greater than 3.75 to 1.00 instead
of 3.25 to 1.00, and for each calendar quarter thereafter, the Company shall
maintain a Leverage Ratio of not greater than 3.25 to 1.00.
(d) Paragraph 6B of the Note Agreement is hereby amended by replacing subsection (vi) such
Paragraph in its entirety with the following:
(vi) Indebtedness under the Credit Agreement, including refundings, refinancings and
replacements thereof, and amendments or modifications to the Note Documents;
provided, however, that the aggregate principal amount of such Indebtedness shall
not at any time exceed $600,000,000, and all Guarantees thereof by Subsidiaries of
the Company that have also guaranteed the Notes; and
(e) Paragraph 10B of the Note Agreement is hereby amended by adding the following new
definitions in the appropriate alphabetical order:
“First Amendment” means that certain First Amendment to Note Purchase Agreement
dated as of April 6, 2011 by and among the Company, the other Credit Parties party
thereto and the holders of the Notes party thereto.
“NSC Acquisition” means the consummation of the acquisition pursuant to the NSC
Acquisition Agreement.
“NSC Acquisition Agreement” that certain Merger Agreement, dated on or about April
7, 2011, by and among, among others, the Company, AmSurg Merger Corporation and
National Surgical Care, Inc.
(f) Paragraph 10B of the Note Agreement is hereby amended by replacing the definitions of
“EBITDA” and “Noteholder Share of Net Disposition Proceeds” in their entirety with the following
definitions:
“EBITDA” shall mean, for the Company and its Subsidiaries on a consolidated basis
for any period, an amount equal to the sum of Consolidated Net Income for such
period plus, without duplication, and to the extent deducted in computing
Consolidated Net Income for such period, the sum of (a) income taxes, (b)
Consolidated Interest Expense, (c) depreciation and amortization expense, in each
case determined on a consolidated basis in accordance with GAAP; (d) to the extent
applicable, stock option compensation costs applicable under (and calculated in
accordance with) FASB ASC 718; (e) all non-cash charges for such period taken for
the impairment of goodwill in accordance with FASB ASC 350, but excluding any
non-cash charge that will result in a cash charge in a future period; and (f) all
documented fees and expenses actually paid in connection with the First Amendment
and the NSC Acquisition in an aggregate amount not to exceed $10,000,000;
provided, however, that, to the extent included in Consolidated Net
Income, there shall be excluded the effect of any change in valuation based on the
exercise of any rights granted pursuant to the “Series 1 Contingent Value Rights
Agreement” and “Series 2 Contingent Value Rights Agreement”, as such terms are
defined in the NCS Acquisition Agreement; provided, further, with
respect to any Person that became a Subsidiary of, or was merged with or
consolidated into, the Company or any Wholly Owned Subsidiary during such period,
“EBITDA” shall also include the EBITDA of such Person during such period and prior
to the date of such acquisition, merger or consolidation; and provided, further,
with respect to any Person that ceased to be a Subsidiary, or was the subject of a
Disposition during any measurement period, “EBITDA” shall not include the EBITDA of
such Person for such measurement period, such calculations under this proviso to be
detailed with supporting documentation and measured to the Required Holders’
reasonable satisfaction.
“Noteholder Share of the Net Disposition Proceeds” shall mean, with respect to
any offer to prepay pursuant to paragraph 4G, as determined on the date of the
relevant Disposition, an amount equal to the Net Disposition Proceeds resulting from
such Disposition multiplied by (a) the aggregate outstanding principal amount of the
Notes, divided by (b) the sum of (i) the aggregate outstanding principal amount of
the Notes, plus (ii) (A) the committed amount of the Revolving Commitments (as
defined in the Credit Agreement, provided that such amount shall not exceed
$600,000,000), until the termination of the Revolving Commitments (to the extent
that the Company has not entered into a replacement Credit Agreement with Revolving
Commitments that have not yet been terminated) and (B) thereafter, the aggregate
amount of Revolving Credit
Exposure (as defined in the Credit Agreement, provided that such amount shall not
exceed $600,000,000).
(g) Paragraph 10C of the Note Agreement is hereby amended by inserting the following at the
end thereof:
Notwithstanding anything herein or under GAAP to the contrary, all real property
leases of the Company and/or its Subsidiaries, whether now existing or hereafter
entered into, acquired or assumed by the Company or such Subsidiary, shall be deemed
for all purposes under this Agreement (including for accounting purposes, for the
defined terms used herein and for purposes of determining compliance with the
financial and other covenants herein) to be operating leases and shall not be
accounted for as Capital Lease Obligations.
2. Conditions to Effectiveness of this Amendment. Notwithstanding any other provision
of this Amendment and without affecting in any manner the rights of the holders of the Notes
hereunder, it is understood and agreed that this Amendment shall not become effective, and the
Company shall have no rights under this Amendment, until the Noteholders shall have received (i) an
amendment fee in the amount of $75,000, to be allocated pro rata among the Noteholders, (ii) such
other fees as the Company has previously agreed to pay the Noteholders or any of its affiliates in
connection with this Amendment, (iii) reimbursement or payment of its costs and expenses incurred
in connection with this Amendment or the Note Agreement (including reasonable fees, charges and
disbursements of King & Spalding LLP, counsel to the Noteholders), and (iv) each of the following
documents:
(a) Executed counterparts to this Amendment from the Company, each of the Guarantors and the
Noteholders;
(b) Certified copies of resolutions of the board of directors (or equivalent thereof) of the
Company and each other Credit Party, approving the execution, delivery and performance of this
Amendment and the other documents to be executed in connection herewith;
(c) A favorable opinion of Xxxx Xxxxx & Xxxx PLC, counsel to the Company and the other Credit
Parties, addressed to the Noteholders and covering such matters relating to this Amendment and the
transactions contemplated hereby in form and substance satisfactory to Noteholders and their
counsel;
(d) A duly executed copy of an amendment to the Credit Agreement, in form and substance
satisfactory to the Noteholders and their counsel;
(e) Such other documents, instruments, agreements, certifications and opinions as any
Noteholder may reasonably request; and
(f) A certificate of the chief financial officer of the Company demonstrating compliance on a
Pro Forma Basis with the financial covenants contained in Paragraph 6A of the Note Agreement after
the NSC Acquisition is completed, in form and substance satisfactory to the Required Holders.
3. NSC Acquisition. In connection with the NSC Acquisition, the Noteholders
acknowledge that the conditions and information required to be delivered pursuant to Paragraph
6N(iv) of the Note Agreement with respect to the NSC Acquisition have been satisfied by the Company
(except for the delivery of certain pro forma calculations required to be delivered pursuant to
Section 2(f) of this Amendment).
4. Representations and Warranties. To induce the Noteholders to enter into this
Amendment, each Credit Party hereby represents and warrants to the Noteholders that:
(a) The execution, delivery and performance by such Credit Party of this Amendment (i) are
within such Credit Party’s power and authority; (ii) have been duly authorized by all necessary
corporate and shareholder action; (iii) are not in contravention of any provision of such Credit
Party’s certificate of incorporation or bylaws or other organizational documents; (iv) do not
violate any law or regulation, or any order or decree of any Governmental Authority; (v) do not
conflict with or result in the breach or termination of, constitute a default under or accelerate
any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which such Credit Party or any of its Subsidiaries is a party or by which such Credit
Party or any such Subsidiary or any of their respective property is bound; (vi) do not result in
the creation or imposition of any Lien upon any of the property of such Credit Party or any of its
Subsidiaries; and (vii) do not require the consent or approval of any Governmental Authority or any
other person;
(b) This Amendment has been duly executed and delivered for the benefit of or on behalf of
each Credit Party and constitutes a legal, valid and binding obligation of each Credit Party,
enforceable against such Credit Party in accordance with its terms;
(c) After giving effect to this Amendment, the representations and warranties contained in the
Note Agreement and the other Note Documents are true and correct in all material respects, and no
Default or Event of Default has occurred and is continuing as of the date hereof;
(d) The execution, delivery, performance and effectiveness of this Amendment will not: (a)
impair the validity, effectiveness or priority of the Liens granted pursuant to any Note Document,
and such Liens continue unimpaired with the same priority to secure repayment of all of the
applicable Obligations, whether heretofore or hereafter incurred, and (b) require that any new
filings be made or other action taken to perfect or to maintain the perfection of such Liens;
(e) As of the date hereof and immediately after giving effect to this Amendment, the Company
is in compliance on a Pro Forma Basis with the financial covenants set forth in paragraph 6A of the
Note Agreement recomputed as of the last day of the most recently ended Fiscal Quarter for which
financial statements are available;
(f) Since the date of the most recent financial statements of the Company described in
paragraph 5A(i) of the Note Agreement, there has been no change which has had or could reasonably
be expected to have a Material Adverse Effect; and
(g) As of the date hereof, the parties listed as signatories to this Amendment represent a
true, correct and complete list of the all the Credit Parties.
5. Reaffirmations and Acknowledgments.
(a) Reaffirmation of Guaranty. Each Guarantor consents to the execution and delivery
by the Company of this Amendment and jointly and severally ratifies and confirms the terms of the
Guaranty Agreement with respect to the indebtedness now or hereafter outstanding under the Note
Agreement as amended hereby and all promissory notes issued thereunder. Each Guarantor acknowledges
that, notwithstanding anything to the contrary contained herein or in any other document evidencing
any indebtedness of the Company to the Noteholders or any other obligation of the Company, or any
actions now or hereafter taken by the Noteholders with respect to any obligation of the Company,
the Guaranty Agreement (i) is and shall continue to be a primary obligation of the Guarantors, (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 Guarantors under the Guaranty Agreement.
(b) Acknowledgment of Perfection of Security Interest. Each Credit Party hereby
acknowledges that, as of the date hereof, the security interests and liens granted to the
Collateral Agent under the Security Documents for the benefit of the Noteholders and other secured
parties are in full force and effect, are properly perfected and are enforceable in accordance with
the terms of the Note Agreement, the Security Documents and the other Note Documents.
6. Release. In consideration of the amendments contained herein, each Credit Party
hereby waives and releases each of the Noteholders from any and all claims and defenses, known or
unknown as of the date hereof, with respect to the Note Agreement and the other Note Documents and
the transactions contemplated thereby.
7. Effect of Amendment. Except as set forth expressly herein, all terms of the Note
Agreement, as amended hereby, and the other Note Documents shall be and remain in full force and
effect and shall constitute the legal, valid, binding and enforceable obligations of the Company
and the other Credit Parties party thereto to all holders of the Notes. 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 holders of the Notes under the Note Agreement, nor
constitute a waiver of any provision of the Note Agreement. From and after the date hereof, all
references to the Note Agreement shall mean the Note Agreement as modified by this Amendment. This
Amendment shall constitute a Note Document for all purposes of the Note Agreement.
8. 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.
9. No Novation. This Amendment is not intended by the parties to be, and shall not be
construed to be, a novation of the Note Agreement or an accord and satisfaction in regard thereto.
10. Costs and Expenses. The Company agrees to pay on demand all costs and expenses of
the Noteholders 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 Noteholders with respect thereto.
11. 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.
12. Binding Nature. This Amendment shall be binding upon and inure to the benefit of
the parties hereto, any other holders of Notes from time to time and their respective successors,
successors-in-titles, and assigns.
13. 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.
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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 Company and the Guarantors, by their respective authorized officers as of
the day and year first above written.
| COMPANY: AMSURG CORP. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
GUARANTORS:
AmSurg Holdings, Inc.
AmSurg Anesthesia Management Services, LLC
AmSurg EC Topeka, Inc.
AmSurg EC St. Xxxxxx, Inc.
AmSurg XX Xxxxxxxx, Inc.
AmSurg KEC, Inc.
AmSurg EC Santa Fe, Inc.
AmSurg XX Xxxxxxxxxx, Inc.
AmSurg Torrance, Inc.
AmSurg Abilene, Inc.
AmSurg Suncoast, Inc.
AmSurg Lorain, Inc.
AmSurg La Jolla, Inc.
AmSurg Hillmont, Inc.
AmSurg Palmetto, Inc.
AmSurg Northwest Florida, Inc.
AmSurg Ocala, Inc.
AmSurg Maryville, Inc.
AmSurg Miami, Inc.
AmSurg Burbank, Inc.
AmSurg Melbourne, Inc.
AmSurg El Paso, Inc.
AmSurg Crystal River, Inc.
AmSurg Abilene Eye, Inc.
AmSurg Inglewood, Inc.
AmSurg Glendale, Inc.
AmSurg San Antonio TX, Inc.
AmSurg San Luis Obispo CA, Inc.
AmSurg Temecula CA, Inc.
AmSurg Escondido CA, Inc.
AmSurg Scranton PA, Inc.
AmSurg Arcadia CA Inc.
AmSurg Main Line PA, Inc.
AmSurg Oakland CA, Inc.
AmSurg Lancaster PA, Inc.
AmSurg Pottsville PA, Inc.
AmSurg Glendora CA, Inc.
AmSurg Kissimmee FL, Inc.
AmSurg Altamonte Springs FL., Inc.
AmSurg New Port Xxxxxx FL, Inc.
AmSurg EC Centennial, Inc.
AmSurg Naples, Inc.
AmSurg Anesthesia Management Services, LLC
AmSurg EC Topeka, Inc.
AmSurg EC St. Xxxxxx, Inc.
AmSurg XX Xxxxxxxx, Inc.
AmSurg KEC, Inc.
AmSurg EC Santa Fe, Inc.
AmSurg XX Xxxxxxxxxx, Inc.
AmSurg Torrance, Inc.
AmSurg Abilene, Inc.
AmSurg Suncoast, Inc.
AmSurg Lorain, Inc.
AmSurg La Jolla, Inc.
AmSurg Hillmont, Inc.
AmSurg Palmetto, Inc.
AmSurg Northwest Florida, Inc.
AmSurg Ocala, Inc.
AmSurg Maryville, Inc.
AmSurg Miami, Inc.
AmSurg Burbank, Inc.
AmSurg Melbourne, Inc.
AmSurg El Paso, Inc.
AmSurg Crystal River, Inc.
AmSurg Abilene Eye, Inc.
AmSurg Inglewood, Inc.
AmSurg Glendale, Inc.
AmSurg San Antonio TX, Inc.
AmSurg San Luis Obispo CA, Inc.
AmSurg Temecula CA, Inc.
AmSurg Escondido CA, Inc.
AmSurg Scranton PA, Inc.
AmSurg Arcadia CA Inc.
AmSurg Main Line PA, Inc.
AmSurg Oakland CA, Inc.
AmSurg Lancaster PA, Inc.
AmSurg Pottsville PA, Inc.
AmSurg Glendora CA, Inc.
AmSurg Kissimmee FL, Inc.
AmSurg Altamonte Springs FL., Inc.
AmSurg New Port Xxxxxx FL, Inc.
AmSurg EC Centennial, Inc.
AmSurg Naples, Inc.
| By: | ||||
| Name: | ||||
| Title: | ||||
| NOTEHOLDERS: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA |
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| By: | ||||
| Vice President | ||||
| PRUCO LIFE INSURANCE COMPANY |
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| By: | ||||
| Assistant Vice President | ||||
| PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY COMPANY By: Prudential Investment Management, Inc., as investment manager |
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| By: | ||||
| Vice President | ||||
| FORETHOUGHT LIFE INSURANCE COMPANY By: Prudential Private Placement Investors, L.P. (as Investment Advisor) By: Prudential Private Placement Investors, Inc. (as its General Partner) |
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| By: | ||||
| Vice President | ||||
