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

 

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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.

 

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     “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

 

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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 Bass Berry & Sims 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.

 

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     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.

 

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     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.

 

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     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:        

 

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GUARANTORS:
AmSurg Holdings, Inc.
AmSurg Anesthesia Management Services, LLC
AmSurg EC Topeka, Inc.
AmSurg EC St. Thomas, Inc.
AmSurg EC Beaumont, Inc.
AmSurg KEC, Inc.
AmSurg EC Santa Fe, Inc.
AmSurg EC Washington, 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 Richey FL, Inc.
AmSurg EC Centennial, Inc.
AmSurg Naples, Inc.

                  By:           Name:           Title:        

 

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            NOTEHOLDERS:

THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
      By:           Vice President             

            PRUCO LIFE INSURANCE COMPANY
      By:           Assistant Vice President             

            PRUDENTIAL RETIREMENT INSURANCE
AND ANNUITY COMPANY

By:     Prudential Investment Management, Inc.,
           as investment manager
      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)
      By:           Vice President