Exhibit 10.10
EXECUTION COPY
FIRST AMENDMENT
FIRST AMENDMENT, dated as of February 24, 2000 (this
"AMENDMENT"), to (a) the AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
March 26, 1999 (as the same may be further amended, supplemented or otherwise
modified from time to time, the "CREDIT AGREEMENT"), among COMMUNITY HEALTH
SYSTEMS, INC., a Delaware corporation (the "BORROWER"), COMMUNITY HEALTH SYSTEMS
HOLDINGS CORP., a Delaware corporation ("HOLDCO"), the several lenders from time
to time parties thereto (the LENDERS"), THE CHASE MANHATTAN BANK, as
administrative agent for the Lenders (in such capacity, the "ADMINISTRATIVE
AGENT") and NATIONSBANK, N.A. and THE BANK OF NOVA SCOTIA, as the co-agents for
the Lenders (collectively, the "CO-AGENTS") and (b) the HOLDCO GUARANTEE, dated
as of July 22, 1996 (as the same may be further amended, supplemented or
otherwise modified from time to time, the "HOLDCO GUARANTEE"), among HoldCo and
the Administrative Agent.
W I T N E S S E T H:
WHEREAS, the Borrower, HoldCo, the Administrative Agent, the
Co-Agents and the Lenders are parties to the Credit Agreement;
WHEREAS, HoldCo and the Administrative Agent are parties to
the HoldCo Guarantee;
WHEREAS, the Borrower and HoldCo, respectively, have requested
that the Administrative Agent and the Required Lenders agree to amend certain
provisions of the Credit Agreement and HoldCo Guarantee; and
WHEREAS, the Administrative Agent and the Lenders parties
hereto are willing to agree to the requested amendments, but only upon the terms
and conditions set forth herein;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the
premises contained herein, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT.
1.1 DEFINED TERMS. Unless otherwise defined herein,
capitalized terms which are defined in the Credit Agreement are used herein as
defined therein.
1.2 AMENDMENTS TO SUBSECTION 1.1. (a) Subsection 1.1 of the
Credit Agreement is hereby amended by deleting the definition "Asset Sale"
therein in its entirety and substituting, in lieu thereof, the following:
"Asset Sale": any sale, sale-leaseback, assignment,
conveyance, transfer or other disposition by the Company or
any Subsidiary thereof of any of its property or assets,
including the stock of any Subsidiary of the Company (except
sales, sale-leasebacks, assignments, conveyances, transfers
and other dispositions occurring on or after the First
Amendment Effective Date permitted by clauses (a), (b), (c),
(d) and (h) of subsection 13.6 and by subsection 13.13 only to
the extent of the first $30,000,000 thereunder).
(b) Subsection 1.1 of the Credit Agreement is hereby amended
by adding the following definition "Compliance Settlement Payment" to such
subsection:
"COMPLIANCE SETTLEMENT PAYMENT": a payment to be made by the
Company on or prior to March 31, 2000 in an amount not to
exceed $35,000,000 pursuant to a settlement agreement with the
United States Government requiring the Company to repay
previously-claimed DRG's, in exchange for a release of future
operating claims, and to pay related fees and expenses.
(c) Subsection 1.1 of the Credit Agreement is hereby amended
by adding the following "Defined IPO" to such subsection:
"DEFINED IPO": an IPO for the issuance of shares of HoldCo's
common stock representing up to approximately 25% of the
enterprise value of HoldCo and the Borrower and its
Subsidiaries.
(d) Subsection 1.1 of the Credit Agreement is hereby amended
by adding the following definition "First Amendment Effective Date" to such
subsection:
"FIRST AMENDMENT EFFECTIVE DATE": the date of effectiveness of
certain amendments in the First Amendment to this Agreement,
as provided by subsection 3.3(b) of the First Amendment.
(e) Subsection 1.1 of the Credit Agreement is hereby amended
by adding the following definition "IPO" to such subsection:
"IPO": the issuance by HoldCo in an initial registered public
offering of shares of its common stock.
1.3 AMENDMENT TO SUBSECTION 7.1. Subsection 7.1 of the Credit
Agreement is hereby amended by adding paragraph (c) thereto as follows:
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(c) (i) From time to time the Company may, with the consent of
the Administrative Agent and one or more of the Lenders,
increase the aggregate Acquisition Loan Commitments of all
Lenders to an amount of not more than $400,000,000. Any such
increase in the Acquisition Loan Commitment of any Lender
shall be evidenced by the execution and delivery by the
Company, the Administrative Agent and such Lender of a
commitment increase supplement, and shall be effective as of
the date specified for effectiveness in such commitment
increase supplement. Upon such effectiveness, such Lender
shall be bound by and entitled to the benefits of this
Agreement with respect to the full amount of its Acquisition
Loan Commitment as so increased, and Schedule 1 shall be
deemed to be amended to so increase the Acquisition Loan
Commitment of such Lender.
(ii) If, on the date upon which the Acquisition
Loan Commitment of any Lender is increased pursuant to
subsection 7.l(c)(i), there is an unpaid principal amount of
Acquisition Loans, the Company shall prepay such outstanding
Acquisition Loans and immediately thereafter reborrow under
the Acquisition Loan Commitments then in effect an amount
equal to the amount of Acquisition Loans so prepaid or such
other amount as such Company deems appropriate in order to
make the Acquisition Loans of the Lenders ratable in
accordance with their respective Acquisition Loan Commitments
(it being understood that such prepayment and reborrowing
shall not require compliance with subsection 8.5).
(iii) Notwithstanding anything to the contrary in
this subsection 7.1(c), (1) in no event shall any transaction
effected pursuant to this subsection 7.1(c) cause the
aggregate Acquisition Loan Commitments to exceed $400,000,000
and (2) no Lender shall have any obligation to increase its
Acquisition Loan Commitment unless it agrees to do so in its
sole discretion. Each commitment increase supplement shall be
deemed to be a supplement to this Agreement.
1.4 AMENDMENT TO SUBSECTION 7.3. Subsection 7.3 of the Credit
Agreement is hereby amended by deleting such subsection in its entirety and
substituting, in lieu thereof, the following:
7.3 PROCEEDS OF ACQUISITION LOANS. The Company
acknowledges and confirms its agreement to use the proceeds of
any Acquisition Loans solely (a) for purposes of financing
Permitted Acquisitions and Permitted Joint Ventures, including
to finance the purchase price thereof, to refinance any
Indebtedness assumed or being repaid or repurchased in
connection therewith, including the upfront payment and any
buy-out or termination payments associated with any lease by
the Company or a Subsidiary of a
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Hospital, or any investment in working capital following a
Permitted Acquisition or Permitted Joint Venture, and to pay
related fees and expenses or (b) to make the Compliance
Settlement Payment.
1.5 AMENDMENT TO SUBSECTION 11.2. Subsection 11.2 of the
Credit Agreement is hereby amended by deleting the first paragraph of such
subsection in its entirety and substituting, in lieu thereof, the following:
11.2 CONDITIONS TO ACQUISITION LOANS. The
obligation of each Lender with an Acquisition Loan Commitment
to make any Acquisition Loan (other than an Acquisition Loan
the proceeds of which are used to make the Compliance
Settlement Payment as contemplated by subsection 7.3) on any
Borrowing Date (other than the Original Closing Date) is
subject to the satisfaction of the following conditions
precedent on the relevant Borrowing Date:
1.6 AMENDMENT TO SUBSECTION 13.2. Subsection 13.2 of the
Credit Agreement is hereby amended by deleting paragraph (k) of such subsection
in its entirety and substituting, in lieu thereof, the following:
(k) Indebtedness of the Company or any of its Subsidiaries
assumed or issued in connection with a Permitted Acquisition
(or, in the case of any Permitted Acquisition involving the
purchase of capital stock or other equity interests in any
Person, Indebtedness of such Person remaining outstanding
after such Permitted Acquisition) and any extension or renewal
thereof, PROVIDED that the aggregate principal amount of such
Indebtedness incurred on or after the First Amendment
Effective Date, together with the aggregate amount of net
investments made in Permitted Acquisitions pursuant to
subsection 13.7(1) (and calculated as at such date as provided
herein), shall not exceed $500,000,000.
1.7 AMENDMENT TO SUBSECTION 13.7. Subsection 13.7 of the
Credit Agreement is hereby amended by deleting paragraph (l) in its entirety and
substituting, in lieu thereof, the following:
(l) the Company and its Subsidiaries may make Permitted
Acquisitions and may make loans or advances to, or
acquisitions or investments in, other Persons in connection
with or pursuant to the terms of Permitted Acquisitions,
PROVIDED that the consideration paid by the Company or any of
its Subsidiaries in all such transactions on or after the
First Amendment Effective Date (net, in the case of loans,
advances, investments and other transfers of any repayments or
return of capital in respect thereof actually received in cash
by the Company or its Subsidiaries (net of applicable taxes)
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on or after the First Amendment Effective Date and excluding
consideration delivered by the Company or its Subsidiaries in
any Asset Exchange permitted under Section 13.6(h)) does not
exceed in the aggregate, when added to thc principal amount of
Indebtedness incurred on or after the First Amendment
Effective Date and outstanding as permitted pursuant to
subsection 13.2(1), $500,000,000;
1.8 AMENDMENT TO SUBSECTION 13.8. Subsection 13.8 of the
Credit Agreement is amended by deleting such subsection in its entirety and
substituting, in lieu thereof, the following:
13.8 CAPITAL EXPENDITURES. Make or commit to make
Capital Expenditures in any fiscal year exceeding (i)
$75,000,000 during fiscal year 2000 of the Company, (ii)
$85,000,000 during fiscal year 2001 of the Company and (iii)
$100,000,000 during each of the fiscal years of the Company
from and including 2002 to and including 2005, PROVIDED that,
in addition to the foregoing, the Company and its Subsidiaries
may during any fiscal year make additional Capital
Expenditures in an aggregate amount not to exceed 4% of the
revenues generated during the immediately preceding fiscal
year by any business or assets acquired after the Closing Date
pursuant to any Permitted Acquisition. Up to $3,000,000 of
Capital Expenditures permitted to be made during a fiscal year
pursuant to the terms hereof, if not expended in the year for
which it is permitted, may be carried over for expenditure in
the next following year and any amounts so carried over shall
be deemed to be the last amounts expended in such following
year.
1.9 AMENDMENT TO SUBSECTION 13.9. Subsection 13.9 of the
Credit Agreement is hereby amended by deleting paragraph (b) of such subsection
in its entirety and substituting, in lieu thereof, the following:
(b) the Company may pay dividends to HoldCo in an amount equal
to the amount required for HoldCo to pay franchise taxes, fees
and expenses necessary to maintain its status as a corporation
and to conduct its activities as permitted under Section 10 of
the HoldCo Guarantee.
1.10 AMENDMENT TO SUBSECTION 13.12. Subsection 13.12 of the
Credit Agreement is hereby amended by deleting such subsection in its entirety
and substituting, in lieu thereof, the following:
13.12 SUBORDINATED NOTE: SUBORDINATED HOLDCO
DEBENTURES. (a)(i) Make any payment in violation of any of the
subordination provisions of the Subordinated Note; or (ii)
waive or otherwise relinquish any of its
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rights or causes of action arising under or arising out of the
terms of the Subordinated Note or consent to any amendment,
modification or supplement to the terms of the Subordinated
Note in each case under this clause (ii) in any material
respect or in any respect adverse to the Lenders, except (x)
with the consent of the Required Lenders and (y) HoldCo may
contribute all or any portion of the principal amount of the
Subordinated Note to the capital of the Company; PROVIDED that
promptly following any contribution of all or any portion of
the principal amount of the Subordinated Note, all or such
portion, as the case may be, of the Subordinated Note is
canceled; or (iii) make any optional payment or prepayment on
or redeem or otherwise acquire, purchase or defease the
Subordinated Note; PROVIDED that the Company may optionally
prepay, redeem or acquire the Subordinated Note with the
proceeds of issuances in registered public offerings of shares
of common stock of HoldCo, so long as (x) the aggregate amount
of such proceeds used to make all such prepayments,
redemptions and acquisitions shall not at any time exceed the
sum of (l) 100% of the portion of the proceeds of the Defined
IPO in excess of $300,000,000 (but not more than $150,000,000)
and (2) 100% of the proceeds of all such issuances subsequent
to the Defined IPO and (y) after giving effect to any such
prepayment, redemption or acquisition (other than any such
prepayment, redemption or acquisition with the proceeds of the
Defined IPO), the ratio on a PRO FORMA basis (giving effect to
such prepayment, redemption or acquisition) of Consolidated
Total Indebtedness as at the end of the most recently
completed fiscal quarter for which financial statements are
available to Annualized Consolidated EBITDA for the period
then ended shall not be greater than 4.00 to 1.
(b)(i) Make any payment in violation of any of the
subordination provisions of the Subordinated HoldCo
Debentures; or waive or otherwise relinquish any of its rights
or causes of action arising under or arising out of the terms
of the Subordinated HoldCo Debentures or consent to any
amendment, modification or supplement to the terms of the
Subordinated HoldCo Debentures except with the consent of the
Required Lenders; or make any optional payment or prepayment
on or redeem or otherwise acquire, purchase or defease the
Subordinated HoldCo Debentures; PROVIDED that HoldCo may
optionally prepay, redeem or acquire the Subordinated HoldCo
Debentures with the proceeds of any and all prepayments,
redemptions and acquisitions of the Subordinated Note by the
Company pursuant to clause (a)(iii) above.
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SECTION II. AMENDMENTS TO THE HOLDCO GUARANTEE.
2.1 Unless otherwise defined herein, capitalized terms which
are defined in the HoldCo Guarantee are used herein as defined therein.
2.2 AMENDMENTS TO SECTION 10. Section 10 of the HoldCo
Guarantee is hereby amended by deleting such section in its entirety and
substituting, in lieu thereof, the following:
10. COVENANT. The Guarantor agrees that it will not engage in
or conduct, transact or otherwise engage in any business or
operations, or incur, create, assume or suffer to exist any
Indebtedness, Contingent Obligations or other liabilities or
obligations or Liens, or own, lease, manage or otherwise
operate any properties or assets, other than (i) incident to
the ownership of the capital stock of the Company and the
Subordinated Note, (ii) as permitted by the Credit Agreement,
(iii) incident to the ownership of capital stock or other
equity interests in any Person to the extent (x) the
acquisition thereof by the Company would constitute a
Permitted Acquisition and (y) such capital stock or equity
interests are contributed to the Company promptly following
the Guarantor's acquisition thereof, (iv) the making of the
Subordinated Loan and the issuance of the Subordinated HoldCo
Debentures and (v) to the extent necessary to effect, or
permit the Guarantor to effect, the IPO and other transactions
customarily incident thereto.
SECTION III. MISCELLANEOUS.
3.1 AGREEMENT TO MAKE PREPAYMENTS. The Borrower agrees,
promptly following the consummation of an IPO, to apply (1) 100% of the first
$300,000,000 of the proceeds (net of expenses and underwriting commissions) of
such IPO and (2) 100% of the portion of the proceeds of such IPO in excess of
$450,000,000, if any, to prepay, FIRST, Acquisition Loans and Revolving Credit
Loans and, SECOND, Term Loans then outstanding, in accordance with the
provisions of subsection 8.5 of the Credit Agreement. A failure by the Borrower
to comply with this subsection 3.1 shall constitute an Event of Default under
subsection 14(a) of the Credit Agreement.
3.2 REPRESENTATIONS AND WARRANTIES. On and as of the date
hereof and after giving effect to this Amendment, the Borrower hereby confirms,
reaffirms and restates the representations and warranties set forth in Section
10 of the Credit Agreement MUTATIS MUTANDIS, except to the extent that such
representations and warranties expressly relate to a specific earlier date in
which case the Borrower hereby confirms, reaffirms and restates such
representations and warranties as of such earlier date, PROVIDED that the
references to
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the Credit Agreement in such representations and warranties shall be deemed to
refer to the Credit Agreement as amended pursuant to this Amendment.
3.3 CONDITIONS TO EFFECTIVENESS. (a) The amendments described
in subsections 1.2(b)-(e), 1.4 and 1.5 of this Amendment shall become effective
as of the date hereof upon the conditions that (i) receipt by the Administrative
Agent of counterparts of this Amendment duly executed and delivered by each of
the Borrower, the Administrative Agent and the Required Lenders and (ii) receipt
by the Administrative Agent, for the account of each Lender which executes and
delivers this Amendment on or prior to February 24, 2000, an amendment fee for
such Lender.
(b) All amendments described in subsections 1.2(a), 1.3, 1.6,
1.7, 1.8, 1.9,1.10 and 2.2 of this Amendment shall become effective upon (i) the
satisfaction of the conditions described in paragraph (a) above and (ii) the
consummation of the Defined IPO.
3.4 CONTINUING EFFECT; NO OTHER AMENDMENTS. Except as
expressly set forth in this Amendment, all of the terms and provisions of die
Credit Agreement are and shall remain in full force and effect and the Borrower
shall continue to be bound by all of such terms and provisions. The amendments
provided for herein are limited to the specific subsections of the Credit
Agreement specified herein and shall not constitute an amendment of, or an
indication of the Administrative Agent's or the Lenders' willingness to amend or
waive, any other provisions of the Credit Agreement or the same subsections for
any other date or purpose.
3.5 EXPENSES. The Borrower agrees to pay and reimburse the
Administrative Agent for all its reasonable costs and expenses incurred in
connection with the preparation and delivery of this Amendment, including,
without limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent.
3.6 COUNTERPARTS. This Amendment may be executed by one or
more of the parties to this Amendment on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Amendment signed by the parties hereto shall be delivered to the Borrower and
the Administrative Agent.
3.7 GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed and delivered by their respective duly authorized
officers as of the date first above written.
COMMUNITY HEALTH SYSTEMS, INC.
BY:
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Name:
Title:
COMMUNITY HEALTH SYSTEMS HOLDINGS CORP.
BY:
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Name:
Title:
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