Exhibit 10.12
THIS AMENDED AND RESTATED
TRANSACTION AND MONITORING FEE AGREEMENT is dated as of March 7,
2006 (this “ Agreement ”) and is between Team
Health Holdings, L.L.C., a Delaware limited liability company (the
“ Company ”) and successor-in-interest to
Ensemble Acquisition LLC (“ Acquisition ”), and
Blackstone Management Partners IV L.L.C., a Delaware limited
liability company (“ BMP ”).
BACKGROUND
1. In connection with the
consummation of the transactions contemplated by the Agreement and
Plan of Merger, dated as of October 11, 2005 (the “ Merger
Agreement ”), among the Company, Team Health, Inc., Team
Finance LLC, Team Health MergerSub, Inc., Parent and Acquisition,
BMP and Acquisition entered into the original Transaction and
Monitoring Fee Agreement, dated as of November 23, 2005 (the
“ Original Agreement ”).
2. The parties to the Original
Agreement desire to amend and restate the Original Agreement in its
entirety as set forth herein.
3. Ensemble Parent LLC, a Delaware
limited liability company (“ Parent ”), owns
approximately 91% of the membership interests of the Company and
certain affiliates of BMP (collectively the “ Sponsors
”) collectively own all of the membership interests in
Parent.
4. BMP has expertise in the areas of
finance, strategy, investment, acquisitions and other matters
relating to the Company and its business and has facilitated the
merger of Acquisition with and into the Company pursuant to the
Merger Agreement and certain other related transactions
(collectively, the “ Transactions ”) through its
provision of financial and structural analysis, due diligence
investigations, other advice and negotiation assistance with all
relevant parties to the Transactions. BMP has also provided advice
and negotiation assistance with relevant parties in connection with
the financing of certain of the Transactions as contemplated under
the Merger Agreement.
5. The Company desires to avail
itself, for the term of this Agreement, of BMP’s expertise in
providing financial and structural analysis, due diligence
investigations, corporate strategy, other advice and negotiation
assistance, which the Company believes will be beneficial to it,
and BMP wishes to provide the services to the Company as set forth
in this Agreement in consideration of the payment of the fees
described below.
In consideration of the premises and
agreements contained herein and of other good and valuable
consideration, the sufficiency of which are hereby acknowledged,
the parties agree as follows:
AGREEMENT
SECTION 1. Transaction and
Advisory Fee . In consideration of BMP performing financial and
structuring analysis, due diligence investigations, and other
advice and negotiation assistance necessary in order to enable the
Transactions to be consummated, the Company paid BMP, at the
Effective Time (as defined herein), a transaction and advisory fee
of $10,000,000.
SECTION 2. Appointment .
Subject to Section 4(d), the Company appoints BMP to provide the
services described in the first sentence of Section 3(a) (the
“ Services ”) for the term of this
Agreement.
SECTION 3. Services
.
(a) During the term of this
Agreement, BMP will render to the Company, by and through itself,
its affiliates and such respective officers, employees,
representatives as BMP in its sole discretion may designate from
time to time, such monitoring, advisory and consulting services in
relation to the affairs of the Company and its subsidiaries as the
Company may reasonably request, including, without limitation, (i)
advice regarding the structure, terms, conditions and other
provisions, distribution and timing of debt and equity offerings
and advice regarding relationships with the Company’s and its
subsidiaries’ lenders and bankers, (ii) advice regarding
dispositions and/or acquisitions and (iii) such other advice
directly related or ancillary to the above financial advisory
services as may be reasonably requested by the Company. However,
BMP will have no obligation to provide any other services to the
Company absent agreement between BMP and the Company over the scope
of such other services and the payment therefor.
(b) If the Company or any of its
subsidiaries determines that it is advisable for the Company or
such subsidiary to hire a financial advisor, consultant, investment
banker or any similar advisor in connection with any merger,
acquisition, disposition, recapitalization, issuance of securities,
financing or any similar transaction, it will notify BMP of such
determination in writing. Promptly thereafter, upon the request of
BMP, the parties will negotiate in good faith to agree upon
appropriate services, compensation and indemnification for the
Company or such subsidiary to hire BMP or one of its affiliates for
such services. The Company and its subsidiaries may not hire any
person, other than BMP or one of its affiliates, to perform any
such services unless all of the following conditions have been
satisfied: (i) the parties are unable to agree upon the terms of
the engagement of BMP or its affiliate to render such services
after 30 days following receipt by BMP of such written notice, (ii)
such other person has a reputation that is at least equal to the
reputation of BMP in respect of such services, (iii) ten business
days have elapsed after the Company or such subsidiary provides a
written notice to BMP of its intention to hire such other person,
which notice shall identify such other person and shall describe in
reasonable detail the nature of the services to be provided, the
compensation to be paid and the indemnification to be provided,
(iv) the compensation to be paid is not more than BMP or its
affiliate was willing to accept in the negotiations described above
and (v) the indemnification to be provided is not more favorable to
the Company or the applicable subsidiary than the indemnification
that BMP or its affiliate was willing to accept in the negotiations
described above.
SECTION 4. Fees .
(a) In consideration of the Services
being provided by BMP, (i) the Company paid to BMP a monitoring fee
in the amount of $370,923.91 for the period from the Effective Time
until
2
December 31, 2005, and (ii) the Company will pay
to BMP an annual monitoring fee of $3,500,000 in cash (the “
Monitoring Fee ”), payable quarterly in advance on the
first day of each quarter, by wire transfer in same-day funds to
the bank account designated by BMP, commencing as of January 1,
2006 and continuing through the Termination Date (as defined
below), or earlier termination pursuant to Section 4(d) below. Any
Monitoring Fee for the last calendar year of this Agreement will be
prorated for the period of such year ending on the Termination
Date.
(b) To the extent the Company cannot
pay the Monitoring Fee in cash for any reason, including by reason
of constraints imposed by any debt financing of the Company or its
subsidiaries, the payment by the Company to BMP of the accrued and
payable Monitoring Fee will be deferred until the earlier of (i)
the date payment in cash of such deferred Monitoring Fee is not
otherwise prohibited under any contract applicable to the Company
and is otherwise able to be made and (ii) total or partial
liquidation, dissolution or winding up of the Company. Any
installment of the Monitoring Fee not paid on the scheduled due
date will bear interest at the per annum rate of 10%, compounded
quarterly, from the date due until the date of payment.
(c) Notwithstanding anything to the
contrary contained in subparagraph (a) above, BMP may elect at any
time in connection with the consummation of a change of control or
sale of all or substantially all of the Company’s assets or
an initial public offering of common stock of the Company or its
successor (or at any time thereafter) (which election can be made
in its sole discretion by the delivery of written notice to the
Company) to receive, in lieu of payment of the Monitoring Fee, a
single lump sum cash payment equal to the then present value (using
a discount rate equal to the yield to maturity on the date of such
written notice of the class of outstanding U.S. government bonds
having a final maturity closest to the tenth anniversary of such
written notice) of all then current and future Monitoring Fees
payable under this Agreement, assuming the Termination Date to be
the tenth anniversary of the date of such election (the “
Lump Sum Fee ”). The Lump Sum Fee will be payable to
BMP by wire transfer in same-day funds to the bank account
designated by BM
