Exhibit 4.7
TEAM HEALTH, INC.
SERIES A AND SERIES B
12% SENIOR SUBORDINATED NOTES DUE 2009
SIXTH SUPPLEMENTAL INDENTURE
Dated as of March 12, 2004
Supplementing Indenture
Dated as of March 12, 1999
The Bank of New York
Trustee
SIXTH SUPPLEMENTAL INDENTURE, dated as of March 12, 2004 (this
"Supplemental Indenture"), among Team Health, Inc., a Tennessee corporation (the
"Company") and The Bank of New York (successor to United States Trust Company of
New York), as trustee (the "Trustee").
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an Indenture, dated as of March 12, 1999 (the "Indenture"), providing
for the creation and issuance by the Company of 12% Series A Senior Subordinated
Notes due 2009 (the "Series A Notes") and the 12% Series B Senior Subordinated
Notes due 2009 (the "Series B Notes" and, together with the Series A Notes, the
"Notes");
WHEREAS, Section 9.02 of the Indenture provides that the Company, when
authorized by a Board Resolution, and the Trustee may amend or supplement the
Indenture or the Notes without notice to any Noteholder but with the written
consent of the Holders of at least a majority in aggregate principal amount of
the outstanding Notes, subject to certain exceptions specified in Section 9.02
of the Indenture;
WHEREAS, the parties hereto are entering into this Supplemental
Indenture to, among other things, (i) amend certain restrictive covenants
contained in Articles Four and Five of the Indenture, and (ii) amend certain
Events of Default contained in Article Six of the Indenture (collectively, the
"Proposed Amendments");
WHEREAS, the Holders of a majority in aggregate principal amount of the
outstanding Notes have duly consented to the Proposed Amendments in the manner
provided in Section 9.02 of the Indenture;
WHEREAS, the execution and delivery of this Supplemental Indenture has
been duly authorized by a Board Resolution; and
WHEREAS, all conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument enforceable in
accordance with its terms have been performed and fulfilled by the parties
hereto and the execution and delivery of this Supplemental Indenture have been
in all respects duly authorized by the parties hereto.
NOW, THEREFORE, in consideration of the above premises, each party
hereto agrees, for the benefit of the other party and for the benefit of the
other party and for the equal and ratable benefit of the Holders of the Notes,
as follows:
Section 1. Amendments to the Indenture.
For all purposes of this Supplemental Indenture, except as otherwise
expressly provided or unless the context otherwise requires, each term used
herein shall have the meaning assigned to it in the Indenture.
The following sections of Articles Four, Five and Six of the Indenture are
hereby deleted in their entirety:
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SECTION 4.03. Reports.
(a) Whether or not required by the rules and regulations of the
SEC, so long as any Notes are outstanding, the Company shall furnish to the
Holders of Notes (i) all quarterly and annual financial information that would
be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
the Company were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by the Company's
certified independent accountants and (ii) all current reports that would be
required to be filed with the SEC on Form 8-K if the Company were required to
file such reports, in each case, within the time periods specified in the SEC's
rules and regulations. In addition, following consummation of the Exchange
Offer, whether or not required by the rules and regulations of the SEC, the
Company shall file a copy of all such information and reports with the SEC for
public availability within the time periods specified in the SEC's rules and
regulations (unless the SEC shall not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. The Company shall at all times comply with TIA Section 314(a).
(b) For so long as any Notes remain outstanding, the Company shall
furnish to the Holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
SECTION 4.05. Taxes. The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
SECTION 4.07. Restricted Payments. The Company shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly: (i)
declare or pay any dividend or make any other payment or distribution on account
of the Company's or any of its Restricted Subsidiaries' Equity Interests
(including, without limitation, any payment on such Equity Interests in
connection with any merger or consolidation involving the Company) or to the
direct or indirect holders of the Company's or any of its Restricted
Subsidiaries' Equity Interests in their capacity as such (other than dividends
or distributions payable in Equity Interests (other than Disqualified Stock) of
the Company); (ii) purchase, redeem or otherwise acquire or retire for value
(including without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company (other than any such Equity Interests owned by
the Company or any Restricted Subsidiary of the Company); (iii) make any payment
on or with respect to, or purchase, redeem, defease or otherwise acquire or
retire for value any Indebtedness that is subordinated to the Notes or the
Subsidiary Guarantees, except scheduled payments of interest or principal at
Stated Maturity thereof; or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
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(b) the Company would, after giving pro forma effect thereto as if
such Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.09; and
(c) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of this Indenture (excluding Restricted Payments
permitted by clauses (i), (ii), (iii), (iv), (viii) (other than those permitted
by clause (f) of the definition of "Permitted Investments"), (xi) and (xii) of
the next succeeding paragraph), is less than the sum, without duplication, of
(i) 50% of the Consolidated Net Income of the Company for the period (taken as
one accounting period) from the beginning of the first full fiscal quarter
commencing after the date of this Indenture to the end of the Company's most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of such deficit), plus (ii) 100%
of the aggregate net proceeds (including the fair-market value of property other
than cash, provided, that fair market value of property other than cash shall be
determined in good faith by the Board of Directors whose resolution with respect
thereto shall be delivered to the Trustee and such determination must be based
upon an opinion or appraisal issued by an accounting, appraisal or investment
banking firm of national standing if such fair market value exceeds $15.0
million) received by the Company as a contribution to the Company's capital or
received by the Company from the issue or sale since the date of this Indenture
of Equity Interests of the Company (other than Disqualified Stock) or of
Disqualified Stock or debt securities of the Company that have been converted
into such Equity Interests (other than Equity Interests (or Disqualified Stock
or debt securities) sold to a Restricted Subsidiary of the Company and other
than Disqualified Stock or convertible debt securities that have been converted
into Disqualified Stock), plus (iii) to the extent that any Restricted
Investment that was made after the date of this Indenture is sold for cash or
otherwise liquidated or repaid for cash, the lesser of (A) the cash return of
capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (B) the initial amount of such Restricted Investment,
plus (iv) if any Unrestricted Subsidiary (A) is redesignated as a Restricted
Subsidiary, the fair market value of such redesignated Subsidiary (as determined
in good faith by the Board of Directors) as of the date of its redesignation or
(B) pays any cash dividends or cash distributions to the Company or any of its
Restricted Subsidiaries, 100% of any such cash dividends or cash distributions
made after the date of this Indenture.
The preceding provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
or any Restricted Subsidiary in exchange for, or out of the net cash proceeds of
the substantially concurrent sale or issuance (other than to a Restricted
Subsidiary of the Company) of, other Equity Interests of the Company (other than
Disqualified Stock); provided that the amount of any such net cash proceeds that
are utilized for any such redemption, repurchase, retirement, defeasance or
other acquisition shall be excluded from clause (c)(ii) of the preceding
paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of the Company or any Restricted Subsidiary with the
net cash proceeds from an
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incurrence of Permitted Refinancing Indebtedness; (iv) the payment of any
dividend by a Restricted Subsidiary of the Company to the holders of its Equity
Interests on a pro rata basis; (v) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company held
by any member or former member of the Company's (or any of their Restricted
Subsidiaries') management or affiliated physician pursuant to any management
equity subscription agreement, stockholders agreement or stock option agreement
or other similar agreements in effect as of the date of this Indenture;
provided, however, the aggregate price paid shall not exceed (a) $2.5 million in
any calendar year (with unused amounts in any calendar year being carried over
to succeeding calendar years subject to a maximum (without giving effect to
clause (b)) of $5.0 million in any calendar year, plus (b) the aggregate cash
proceeds received by the Company from any issuance or reissuance of Equity
Interests to members of management or affiliated physicians of the Company and
its Restricted Subsidiaries and the proceeds to the Company of any "key man"
life insurance policies; provided that the cancellation of Indebtedness owing to
the Company from members of management or affiliated physicians of the Company
or any Restricted Subsidiary in connection with such repurchase of Equity
Interests will not be deemed to be a Restricted Payment; (vi) Investments in any
Person (other than the Company or a Restricted Subsidiary) engaged in a
Permitted Business in an amount not to exceed $7.5 million; (vii) other
Investments in Unrestricted Subsidiaries having an aggregate fair market value,
taken together with all other Investments made pursuant to this clause (vii)
that are at that time outstanding, not to exceed $6.0 million; (viii) Permitted
Investments; (ix) so long as no Default or Event of Default has occurred and is
continuing, the declaration and payment of dividends on Disqualified Stock, the
incurrence of which satisfied Section 4.09 hereof; (x) repurchases of Equity
Interests deemed to occur upon the exercise of stock options if such Equity
Interests represent a portion of the exercise price thereof; and (xi)
distributions to fund the Transactions.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined in good
faith by the Board of Directors whose resolution with respect thereto shall be
delivered to the Trustee. The Board of Directors' determination must be based
upon an opinion or appraisal issued by an accounting, appraisal or investment
banking firm of national standing if such fair market value exceeds $15.0
million. Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by Section 4.07 were computed, together with a copy of any
fairness opinion or appraisal required by this Indenture.
SECTION 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to (i)(a) pay dividends or make any other distributions to the
Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2)
with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company
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or any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries. However, the
preceding restrictions will not apply to encumbrances or restrictions existing
under or by reason of (a) Existing Indebtedness as in effect on the date of this
Indenture, (b) the Senior Credit Facilities as in effect as of the date of this
Indenture, and any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, provided that
such amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are no more restrictive taken as a
whole (as determined in the good faith judgment of the Company's Board of
Directors) with respect to such dividend and other payment restrictions than
those contained in the Senior Credit Facilities as in effect on the date of this
Indenture, (c) this Indenture and the Notes, (d) any applicable law, rule,
regulation or order, (e) any instrument of a Person acquired by the Company or
any of its Restricted Subsidiaries as in effect at the time of such acquisition
(except to the extent incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Indenture to
be incurred, (f) customary non-assignment provisions in leases entered into in
the ordinary course of business and consistent with past practices, (g) purchase
money obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (iii) above, (h) Permitted
Refinancing Indebtedness, provided that the material restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are no more
restrictive, in the good faith judgment of the Company's board of directors,
taken as a whole, to the Holders of Notes than those contained in the agreements
governing the Indebtedness being refinanced, (i) contracts for the sale of
assets, including without limitation customary restrictions with respect to a
Subsidiary pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary, (j) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business and
(k) other Indebtedness or Disqualified Stock of Restricted Subsidiaries
permitted to be incurred subsequent to the Issuance Date pursuant to the
provisions of Section 4.09.
SECTION 4.09. Incurrence of Indebtedness and Issuance of Preferred
Stock. The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock or preferred stock and the Company's Restricted Subsidiaries
may incur Indebtedness (including Acquired Debt) and issue Disqualified Stock or
preferred stock if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have been at
least 2.0 to 1, if such incurrence or issuance is on or prior to the second
anniversary of the Issue Date, or 2.25 to 1 if such incurrence or issuance is
after the second anniversary of the Issue Date but on or prior to the fourth
anniversary of the Issue Date, or 2.5 to 1 if such incurrence or issuance is
after the fourth
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anniversary of the Issue Date, in each case, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock or
preferred stock had been issued, as the case may be, at the beginning of such
four-quarter period.
The first paragraph of Section 4.09 shall not prohibit the incurrence
of any of the following items of Indebtedness (collectively, "Permitted Debt"):
(i) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness and letters of credit pursuant to the Senior Credit
Facilities; provided that the aggregate amount of all Indebtedness then
classified as having been incurred in reliance upon this clause (i) that remains
outstanding under the Senior Credit Facilities after giving effect to such
incurrence does not exceed an amount equal to $190 million;
(ii) the incurrence by the Company and its Restricted Subsidiaries
of Existing Indebtedness;
(iii) the incurrence by the Company and the Guarantors of
Indebtedness represented by the Notes originally issued on the Issue Date and
the Subsidiary Guarantees;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case incurred for the purpose
of financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of the Company
or such Restricted Subsidiary (whether through the direct purchase of assets or
the Capital Stock of any Person owning such Assets), in an aggregate principal
amount or accreted value, as applicable, not to exceed $15.0 million;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness in connection with the acquisition of assets or a
new Restricted Subsidiary; provided that such Indebtedness was incurred by the
prior owner of such assets or such Restricted Subsidiary prior to such
acquisition by the Company or one of its Subsidiaries and was not incurred in
connection with, or in contemplation of, such acquisition by the Company or one
of its Subsidiaries; provided further that the principal amount (or accreted
value, as applicable) of such Indebtedness, together with any other outstanding
Indebtedness incurred pursuant to this clause (v), does not exceed $20.0
million;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace Indebtedness that was
permitted by this Indenture to be incurred;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and any
of its Restricted Subsidiaries; provided, however, that (i) if the Company or
any Guarantor is the obligor on such Indebtedness, such Indebtedness must be
expressly subordinated to the prior payment in full in cash of all Obligations
with respect to the Notes, in the case of the Company, or the Subsidiary
Guarantee of such Guarantor, in the case of a Guarantor; and (ii)(A) any
subsequent issuance or
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transfer of Equity Interests that results in any such Indebtedness being held by
a Person other than the Company or a Restricted Subsidiary and (B) any sale or
other transfer of any such Indebtedness to a Person that is not either the
Company or a Restricted Subsidiary shall be deemed, in each case, to constitute
an incurrence of such Indebtedness by the Company or such Restricted Subsidiary,
as the case may be;
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing
or hedging: (i) interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be outstanding;
(ii) exchange rate risk with respect to any agreement or Indebtedness of such
Person payable in a currency other than U.S. dollars; or (iii) commodities risk
relating to commodities agreements, entered into in the ordinary course of
business, for the purchase of raw material used by the Company and its
Restricted Subsidiaries;
(ix) the Guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the
Company that was permitted to be incurred by another provision of Section 4.09;
(x) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt; provided, however, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Restricted Subsidiary of the
Company;
(xi) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters of
credit issued in the ordinary course of business, including without limitation
to letters of credit in respect to workers' compensation claims or self-
insurance, or other Indebtedness with respect to reimbursement type obligations
regarding workers' compensation claims; provided, however, that upon the drawing
of such letters of credit or the incurrence of such Indebtedness, such
obligations are reimbursed within 30 days following such drawing or incurrence;
(xii) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred or assumed in connection
with the disposition of any business, asset or Subsidiary, other than guarantees
of Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or Subsidiary for the purpose of financing such acquisition;
provided that (x) such Indebtedness is not reflected on the balance sheet of the
Company or any Restricted Subsidiary (contingent obligations referred to in a
footnote or footnotes to financial statements and not otherwise reflected on the
balance sheet shall not be deemed to be reflected on such balance sheet for
purposes of this clause (x)) and (y) the maximum assumable liability in respect
of such Indebtedness shall at no time exceed the gross proceeds including
non-cash proceeds (the fair market value of such non-cash proceeds being
measured at the time received and without giving effect to any such subsequent
changes in value) actually received by the Company and/or such Restricted
Subsidiary in connection with such disposition;
(xiii) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries which is subordinated to the Notes and the Guarantees; provided
that such Indebtedness matures after
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the date on which the Notes mature and that no cash interest is payable with
respect to such Indebtedness until after the date on which the Notes mature;
(xiv) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary in
the ordinary course of business;
(xv) guarantees incurred in the ordinary course of business in an
aggregate principal amount not to exceed $10.0 million at any time outstanding;
and
(xvi) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness, including Attributable Debt incurred
after the date of this Indenture, in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any other
Indebtedness incurred pursuant to this clause (xvi), not to exceed $25.0
million.
For purposes of determining compliance with this Section 4.09, in the
event that an item of proposed Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (i) through (xvi) above
or is entitled to be incurred pursuant to the first paragraph of this Section
4.09, the Company shall be permitted to classify such item of Indebtedness in
any manner that complies with this Section 4.09. In addition, the Company may,
at any time, change the classification of an item of Indebtedness (or any
portion thereof) to any other clause or to the first paragraph of this Section
4.09 hereof provided that the Company would be permitted to incur such item of
Indebtedness (or portion thereof) pursuant to such other clause or the first
paragraph of this Section 4.09 hereof, as the case may be, at such time of
reclassification. Accrual of interest, accretion or amortization of original
issue discount and the accretion of accreted value shall not be deemed to be an
incurrence of Indebtedness for purposes of this Section 4.09.
SECTION 4.10. Asset Sales. The Company shall not, and shall not permit
any of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets or Equity Interests issued or sold or otherwise disposed of;
(ii) such fair market value is determined by the Company's Board of Directors
and evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee provided that the Board of
Directors' determination must be based on an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if such
fair market value exceeds $25 million; and (iii) at least 80% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash or Cash Equivalents. For purposes of this Section 4.10, each
of the following shall be deemed to be cash:
(x) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet), of the Company or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by their
terms subordinated to the Notes or any Subsidiary Guarantee) that are assumed by
the transferee of any such assets pursuant to a customary novation agreement
that releases the Company or such Restricted Subsidiary from further liability;
and
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(y) any securities, notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee that are
converted by the Company or such Restricted Subsidiary into cash or Cash
Equivalents within 180 days (to the extent of the cash received in that
conversion).
The 80% limitation referred to in clause (iii) above will not apply to
any Asset Sale in which the cash or Cash Equivalents portion of the
consideration received therefrom, determined in accordance with the preceding
proviso, is equal to or greater than what the after-tax proceeds would have been
had such Asset Sale complied with the aforementioned 80% limitation.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company or any such Restricted Subsidiary may apply such Net Proceeds,
at its option: (a) to repay or repurchase Senior Debt of the Company or any
Restricted Subsidiary; (b) to acquire a controlling interest in another
Permitted Business; (c) to make a capital expenditure in a Permitted Business;
or (d) to acquire other assets in a Permitted Business.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce the revolving Indebtedness under the Senior Credit Facilities
or otherwise invest such Net Proceeds in any manner that is not prohibited by
this Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph shall constitute Excess Proceeds. When the
aggregate amount of Excess Proceeds exceeds $15.0 million, the Company will be
required to make an offer to all Holders of Notes (an "Asset Sale Offer") to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100%
of principal amount plus accrued and unpaid interest, if any, to the date of
purchase, and will be payable in cash. If any Excess Proceeds remain after
consummation of an Asset Sale Offer, the Company may use such Excess Proceeds
for general corporate purposes. If the aggregate principal amount of Notes
tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of each Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
To the extent that the provisions of any securities laws or regulations
conflict with the provisions of this Indenture relating to such Asset Sale
Offer, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations described
in this Indenture by virtue thereof.
SECTION 4.11. Transactions with Affiliates. The Company shall not, and
shall not permit any of its Restricted Subsidiaries to, make any payment to, or
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each, an "Affiliate Transaction"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the
Trustee: (a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $3.0
million, a resolution of the
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Board of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the disinterested members of the
Board of Directors and (b) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate consideration in excess of
$15.0 million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing.
The following items shall not be deemed to be Affiliate Transactions
and, therefore, shall not be subject to the provisions of the prior paragraph:
(a) customary directors' fees, indemnification or similar arrangements or any
employment agreement or other compensation plan or arrangement entered into by
the Company or any of its Restricted Subsidiaries in the ordinary course of
business and consistent with the past practice of the Company or such Restricted
Subsidiary; (b) transactions between or among the Company and/or its Restricted
Subsidiaries; (c) Permitted Investments and Restricted Payments that are
permitted by the provisions of Section 4.07 hereof; (d) customary loans,
advances, fees and compensation paid to, and indemnity provided on behalf of,
officers, directors, employees or consultants of the Company or any of its
Restricted Subsidiaries; (e) transactions pursuant to any contract or agreement
in effect on the date of this Indenture as the same may be amended, modified or
replaced from time to time so long as any such amendment, modification or
replacement is no less favorable to the Company and its Restricted Subsidiaries
than the contract or agreement as in effect on the Issue Date; (f) transactions
pursuant to management contracts with affiliated physicians entered into in the
ordinary course of business consistent with past practice (or as such practice
may be modified to comply with regulations governing the operations of the
Company); and (g) payments in connection with the Transactions (including the
payment of fees and expenses with respect thereto).
SECTION 4.12. Liens. The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, create, incur, assume or otherwise cause or
suffer to exist or become effective any Lien of any kind securing trade payables
or Indebtedness that does not constitute Senior Debt (other than Permitted
Liens) upon any of their property or assets, now owned or hereafter acquired
unless: (i) in the case of Liens securing Indebtedness that is expressly
subordinated or junior in right of payment to the Notes, the Notes are secured
on a senior basis to the obligations so secured until such time as such
obligations are no longer secured by a Lien and (ii) in all other cases, the
Notes are secured on an equal and ratable basis with the obligations so secured
until such time as such obligations are no longer secured by a Lien.
SECTION 4.14. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder of
Notes shall have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase (the "Change of Control Payment"). Within 60 days following any
Change of Control, the Company shall mail a notice to each Holder stating: (1)
that the Change of Control Offer is being made pursuant to this Section 4.14 and
that all Notes tendered will be accepted for payment; (2) the
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purchase price and the purchase date, which shall be no earlier than 30 days and
no later than 60 days from the date such notice is mailed (the "Change of
Control Payment Date"); (3) that any Note not tendered will continue to accrue
interest; (4) that, unless the Company defaults in the payment of the Change of
Control Payment, all Notes accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control Payment
Date; (5) that Holders electing to have any Notes purchased pursuant to a Change
of Control Offer will be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Notes delivered for purchase, and a statement that such Xxxxxx is
withdrawing his election to have the Notes purchased; and (7) that Holders whose
Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or an integral
multiple thereof. The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of this Indenture relating to such Change of Control Offer, the
Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations described in this Indenture
by virtue thereof.
(b) By 12:00 p.m. (noon) Eastern Time on the Change of Control
Payment Date, the Company shall, to the extent lawful, (1) accept for payment
all Notes or portions thereof properly tendered pursuant to the Change of
Control Offer, (2) deposit with the Paying Agent an amount equal to the Change
of Control Payment in respect of all Notes or portions thereof so tendered and
(3) deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers' Certificate stating the aggregate principal amount of
Notes or portions thereof being purchased by the Company. The Paying Agent shall
promptly mail to each Holder of Notes so tendered the Change of Control Payment
for such Notes, and the Trustee shall promptly authenticate and mail (or cause
to be transferred by book entry) to each Holder a new Note equal in principal
amount to any unpurchased portion of the Notes surrendered, if any; provided
that each such new Note shall be in a principal amount of $1,000 or an integral
multiple thereof. The Company shall publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
(c) Notwithstanding anything to the contrary in this Section 4.14,
the Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section 4.14 and Section 3.09 hereof and all other provisions of this
Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
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SECTION 4.15. Anti-Layering. The Company shall not incur, create,
issue, assume, guarantee or otherwise become liable for any Indebtedness that is
both (a) subordinate or junior in right of payment to any Senior Debt and (b)
senior in any respect in right of payment to the Notes.
No Guarantor shall incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is both (a) subordinate or junior in
right of payment to any Senior Debt of such Guarantor; and (b) senior in any
respect in right of payment to the Subsidiary Guarantees.
SECTION 4.16. Sale And Leaseback Transactions. The Company shall not,
and shall not permit any of its Restricted Subsidiaries to, enter into any sale
and leaseback transaction; provided that the Company or any Restricted
Subsidiary may enter into a sale and leaseback transaction if (i) the Company or
such Restricted Subsidiary could have (a) incurred Indebtedness in an amount
equal to the Attributable Debt relating to such sale and leaseback transaction
pursuant to Section 4.09 and (b) incurred a Lien to secure such Indebtedness
pursuant to Section 4.12, (ii) the gross cash proceeds of such sale and
leaseback transaction are at least equal to the fair market value (as determined
in good faith by the Board of Directors and set forth in an Officers'
Certificate delivered to the Trustee) of the property that is the subject of
such sale and leaseback transaction and (iii) the transfer of assets in such
sale and leaseback transaction is permitted by, and the Company applies the
proceeds of such transaction in compliance with Section 4.10.
SECTION 4.17. Limitation on Issuances of Guarantees of Indebtedness.
The Company shall not permit any Domestic Restricted Subsidiary, directly or
indirectly, to incur Indebtedness or Guarantee or pledge any assets to secure
the payment of any other Indebtedness of the Company or any Restricted
Subsidiary unless either such Restricted Subsidiary (x) is a Subsidiary
Guarantor or (y) simultaneously executes and delivers a supplemental indenture
in the form of Exhibit E hereto and becomes a Subsidiary Guarantor, which
Guarantee shall (x) with respect to any Guarantee of Senior Debt, be
subordinated in right of payment on the same terms as the Notes are subordinated
to such Senior Debt and (y) with respect to any Guarantee of any other
Indebtedness, be senior to or pari passu with such Restricted Subsidiary's other
Indebtedness or Guarantee of or pledge to secure such other Indebtedness.
Notwithstanding the preceding paragraph, any such Guarantee by a
Restricted Subsidiary of the Notes shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon any sale,
exchange or transfer, to any Person not an Affiliate of the Company, of all of
the Company's stock in, or all or substantially all the assets of, such
Restricted Subsidiary, which sale, exchange or transfer is made in compliance
with the applicable provisions of this Indenture.
SECTION 4.18. Additional Guarantees. If the Company shall acquire or
create a Domestic Restricted Subsidiary after the date of this Indenture, or if
any Subsidiary of the Company becomes a Domestic Restricted Subsidiary, then
such newly acquired or created Domestic Restricted Subsidiary shall become a
Guarantor and execute a supplemental indenture in the form of Exhibit E hereto
and deliver an opinion of counsel, in accordance with terms of this Indenture.
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SECTION 4.19. Business Activities. The Company shall not, and shall not
permit any Restricted Subsidiary to, engage in any business other than a
Permitted Business, except to such extent as would not be material to the
Company and its Restricted Subsidiaries taken as a whole.
SECTION 4.20. Designation of Restricted and Unrestricted Subsidiaries.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, all
outstanding Investments owned by the Company and its Restricted Subsidiaries
(except to the extent repaid in cash) in the Subsidiary so designated will be
deemed to be Restricted Payments at the time of such designation (to the extent
not designated a Permitted Investment) and will reduce the amount available for
Restricted Payments under the first paragraph of Section 4.07 hereof. All such
outstanding Investments will be valued at their fair market value at the time of
such designation, as determined in good faith by the Board of Directors. That
designation will only be permitted if such Restricted Payment would be permitted
at that time and if such Restricted Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary.
SECTION 5.01. Merger, Consolidation or Sale of Assets. The Company may
not: (1) consolidate or merge with or into another Person (whether or not the
Company is the surviving corporation); or (2) sell, assign, transfer, convey or
otherwise dispose of all or substantially all of its properties or assets in one
or more related transactions, to another Person unless: (A) either (i) the
Company is the surviving corporation, or (ii) the Person formed by or surviving
any such consolidation or merger (if other than the Company) or to which such
sale, assignment, transfer, conveyance or other disposition shall have been made
is a corporation organized or existing under the laws of the United States, any
state thereof or the District of Columbia; (B) the entity or Person formed by or
surviving any such consolidation or merger (if other than the Company) or the
entity or Person to which such sale, assignment, transfer, conveyance or other
disposition shall have been made assumes all the obligations of the Company
under the Notes and this Indenture pursuant to a supplemental indenture in a
form reasonably satisfactory to the Trustee; (C) immediately after such
transaction no Default or Event of Default exists; and (D) the Company or the
entity or Person formed by or surviving any such consolidation or merger (if
other than the Company), or to which such sale, assignment, transfer, conveyance
or other disposition shall have been made (a) shall, after giving pro forma
effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.09 or (b) would (together with its
Restricted Subsidiaries) have a higher Fixed Charge Coverage Ratio immediately
after such transaction (after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter period)
than the Fixed Charge Coverage Ratio of the Company and its subsidiaries
immediately prior to the transaction. The preceding clause (D) shall not
prohibit (a) a merger between the Company and a Wholly Owned Subsidiary or (b) a
merger between the Company and an Affiliate incorporated solely for the purpose
of reincorporating the Company in another state of the United States so long as,
in each case, the amount of Indebtedness of the Company and its Restricted
Subsidiaries is not increased thereby. In addition, the Company may not,
directly or indirectly, lease all or substantially all of its properties or
assets, in one or more related transactions, to any other Person. The provisions
of this Section 5.01 shall not be
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applicable to a sale, assignment, transfer, conveyance or other disposition of
assets between or among the Company and any of its Wholly Owned Restricted
Subsidiaries.
SECTION 6.01. Events of Default.
(f) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries) whether such Indebtedness or Guarantee now exists, or
is created after the date of this Indenture, if that default (i) is caused by a
failure to pay principal of or premium, if any, on such Indebtedness after
giving effect to the grace period provided in such Indebtedness on the date of
such default (a "Payment Default"); or (ii) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $10.0 million or more;
(g) failure by the Company or any of its Subsidiaries to pay final
judgments aggregating in excess of $10.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; and
(h) except as permitted by this Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee.
Section 2. Operation of Supplemental Indenture.
This Supplemental Indenture will become effective upon the
purchase by the Company, by accepting for payment, all Notes that are validly
tendered (and not withdrawn) pursuant to the Company's offer to purchase Notes
on the terms and conditions set forth in the Company's Offer to Purchase and
Consent Solicitation Statement, dated February 24, 2004, and the related Consent
and Letter of Transmittal.
Section 3. Concerning the Trustee.
The Trustee accepts the trusts of the Indenture, as
supplemented by this Supplemental Indenture, and agrees to perform the same, but
only upon the terms and conditions set forth in the Indenture, as supplemented
by this Supplemental Indenture, to which the parties hereto and the Holders from
time to time of the Notes agree and, except as expressly set forth in the
Indenture, shall incur no liability or responsibility in respect thereof.
Without limiting the generality of the foregoing, the Trustee assumes no
responsibility for the correctness of the recitals herein contained, which shall
be taken as the statements of the Company. The Trustee makes no representation
and shall have no responsibility as to the validity or sufficiency of this
Supplemental Indenture.
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Section 4. Miscellaneous.
(a) Except as hereby expressly amended, the Indenture is in all
respects ratified and confirmed and all the terms, provisions and conditions
thereof shall be and remain in full force and effect.
(b) All agreements of the Company in this Supplemental Indenture
shall bind the Company's successors. All agreements of the Trustee in this
Supplemental Indenture shall bind its successors.
(c) THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED WITH THE LAWS OF
THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
(d) If and to the extent that any provision of this Supplemental
Indenture limits, qualifies or conflicts with another provision that is required
to be included in this Supplemental Indenture or in the indenture by the TIA,
the required provision shall control.
(e) The titles and headings of the sections of this Supplemental
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the terms
or provisions hereof.
(f) This Supplemental Indenture may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall represent one and the same agreement.
(g) In case any provision of this Supplemental Indenture shall be
determined to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof or of the Indenture shall not
in any way be affected or impaired thereby.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed, all as of the date first written
above.
TEAM HEALTH, INC.
By: /s/ Xxxxxx Xxxxxxxxxx
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Name: Xxxxxx Xxxxxxxxxx
Title: Executive Vice President -
Finance and Administration
THE BANK OF NEW YORK, as Trustee
By: /s/ Xxxxxxxx Xxxxxxxxx
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Name: Xxxxxxxx Xxxxxxxxx
Title: Vice President
