EXHIBIT 10.4
WAIVER AND FIFTH AMENDMENT TO
CREDIT AGREEMENT
THIS WAIVER AND FIFTH AMENDMENT TO CREDIT AGREEMENT is made and dated
as of September 15, 2000 (the "Fifth Amendment") among SIERRA HEALTH SERVICES,
INC. (the "Company"), the Banks party to the Credit Agreement referred to below,
and BANK OF AMERICA, N.A., a national banking association, as Administrative
Agent (the "Agent"), and amends that certain Credit Agreement dated as of
October 30, 1998, as amended by that certain First Amendment dated as of
November 23, 1998, that certain Second Amendment to Credit Agreement dated as of
January 15, 1999, that certain Third Amendment to Credit Agreement dated as of
December 14, 1999 and that certain Waiver and Fourth Amendment to Credit
Agreement dated as of August 14, 2000 (as further amended or modified from time
to time, the "Credit Agreement").
RECITALS
WHEREAS, the Company has requested that the Agent and the Banks waive
certain financial covenants and amend certain other provisions of the Credit
Agreement, and the Agent and the Banks are willing to do so, on the terms and
conditions specified herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
1. Terms. All terms used herein shall have the same meanings as in the
Credit Agreement unless otherwise defined herein.
2. Waiver. By their execution hereof, the Banks hereby waive compliance by the
Company with Section 8.14(a) to (c) inclusive of the Credit Agreement for the
period from June 30, 2000 through 5:00 p.m., Eastern Time, October 11, 2000.
This waiver shall be limited precisely as provided for herein and shall not be
deemed to be a waiver or modification of any other term or provision of the
Credit Agreement or to be a consent to any other transaction or further action
on the part of the Company or any of its Subsidiaries which would require the
consent of the Banks under the Credit Agreement.
3. Amendments. The Credit Agreement is hereby amended as follows:
3.1 Amendment to Section 1.01.-
(a) The definition of the term "Applicable Margin" in Section 1.01 of the Credit
Agreement is hereby amended by deleting the following clause therefrom: "and
from August 15, 2000 until September 15, 2000 or such later date as may be
determined by Majority Banks, the Applicable LIBOR Rate Margin shall be 3.25%
and the Applicable Base Rate Margin shall be 2.25%" and replacing it with the
following: "; from August 15, 2000 until otherwise determined by Majority
Lenders, the Applicable LIBOR Rate Margin shall be 3.25% and the Applicable Base
Rate Margin shall be 2.25%."
3.2 Amendment to Section 2.04.
-------------------------
(a) Section 2.04 of the Credit Agreement shall be amended by adding the
following sentence immediately prior to the end thereof:
"Notwithstanding the foregoing, unless otherwise agreed by Majority Banks, from
and after September 15, 2000 no new LIBOR Rate Loan shall have an Interest
Period longer than one month."
3.3 Amendment to Section 2.07(c).
(a) Section 2.07(c) is hereby amended by adding the following sentence
immediately prior to the end thereof:
"Notwithstanding the foregoing, unless otherwise agreed by the Company and the
Majority Banks, from and after September 15, 2000 all Net Cash Proceeds shall be
delivered to the Agent to the extent provided in Section 8.02 hereof."
3.4 Amendment to Section 2.10.
-------------------------
(a) Section 2.10 is hereby amended by adding the following subsection
immediately prior to the end thereof:
"(c) Utilization Fee. The Company shall pay to the Agent for the
account of each Bank a fee in an amount equal to 2.00% per annum on the
aggregate amount of the utilization under this Agreement, computed on a
daily basis in arrears. For purposes of calculating utilization under
this subsection, the Commitments shall be deemed used to the extent of
the Effective Amount of Revolving Loans then outstanding plus the
Effective Amount of L/C Obligations then outstanding. The utilization
fee shall accrue from September 15, 2000 until otherwise determined by
the Majority Banks and shall be due and payable monthly in arrears on
the last day of each calendar month, commencing September 30, 2000."
3.5 Amendment to Section 7.18.
-------------------------
(a) There shall be added to Section 7.18 a new clause (c) reading in its
entirety as follows:
"(c) On or before October 11, 2000, the Company and Agent shall have
prepared final versions of the mortgages and deeds of trust, in form
and substance reasonably acceptable to Agent, with all legal
descriptions attached thereto, for all parcels of real estate owned by
the Company and each Non-Restricted Subsidiary."
3.6 Amendment to Section 7.19.
-------------------------
(a) There shall be added to the Credit Agreement a new Section 7.19 reading
in its entirety as
follows:
"7.19 Additional Undertakings.
-----------------------
(a) The Company shall make a presentation to the Banks concerning the
financial performance of the Company and its Subsidiaries and setting forth a
proposed financial restructuring of the Company and its Subsidiaries and the
Obligations at a meeting arranged by Company on or before October 5, 2000. On or
before October 3, 2000, the Company and its financial advisor shall deliver to
the Banks a written summary of the Company's proposed financial restructuring
and the restructuring of the Obligations.
(b) Without the prior approval of Majority Banks, the Company shall not
sell its corporate jet unless the Net Cash Proceeds from such sale will be at
least $9,000,000 minus the amount of any Indebtedness secured by Liens permitted
pursuant to Section 8.01(n).
3.7 Amendment to Section 8.01.
-------------------------
(a) Section 8.01 of the Credit Agreement is hereby amended by deleting
the period at the end thereof and replacing it with "; and" and by adding the
following clause immediately prior to the end thereof:
"(n) Liens on the Company's jet and replacement parts therefore;
provided that (i) such Lien attaches solely to the Company's jet and
such replacement parts, (ii) the principal amount of the Indebtedness
secured thereby does not exceed $5,000,000 and (iii) the Indebtedness
secured thereby is nonrecourse to the Company and its Subsidiaries and
their assets, except as expressly provided herein."
3.8 Amendments to Section 8.02.
--------------------------
(a) Section 8.02 of the Credit Agreement is hereby amended by adding the
following sentences
immediately prior to the end thereof:
"Notwithstanding the foregoing, if the Company or any Non-Restricted
Subsidiary shall complete any transaction permitted by clauses (b), (d)
or (e) above (other than a sale of its corporate jet permitted by the
following sentence and other than sales of up to $250,000 of equipment
from and after September 15, 2000 otherwise permitted pursuant to
subsection (b) above), all Net Cash Proceeds therefrom shall
immediately be delivered to the Agent and held as collateral security
until a mutually acceptable sharing arrangement between the Company and
the Majority Banks has been arranged; provided, that upon the
occurrence of an Event of Default any distribution of such proceeds may
be made at the discretion of Majority Banks. To the extent that no
Event of Default then exists and the sale of the Company's jet is
otherwise permitted pursuant to Section 7.19(b), then the Company may
retain the Net Cash Proceeds from such sale notwithstanding the
foregoing."
3.9 Amendment to Section 8.04.
-------------------------
(a) Subsection (f) of Section 8.04 of the Credit Agreement is hereby
amended and restated to read in its entirety as follows:
"(f) loans or advances to officers and employees in an
aggregate amount not to exceed $2,500,000; provided, however that
unless otherwise agreed by Majority Banks, no additional loans or
advances shall be made after September 15, 2000; and"
3.10 Amendment to Section 8.05.
-------------------------
(a) Subsection (d) of Section 8.05 of the Credit Agreement is hereby
amended and restated to read in its entirety as follows:
"(d) Indebtedness secured by Liens permitted by subsections 8.01(g), (h),
(i) and (n);"
4. Representations and Warranties. The Company represents and warrants to
the Agent and the Banks that, on and as of the date hereof, and after giving
effect to this Fifth Amendment:
4.1 Authorization. The execution, delivery and performance by the
Company of this Fifth Amendment has been duly authorized by all necessary
corporate action, and this Fifth Amendment has been duly executed and delivered
by the Company.
4.2 Binding Obligation. This Fifth Amendment constitutes the legal,
valid and binding obligation of the Company, enforceable against it in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
4.3 No Legal Obstacle to Amendment. The execution, delivery and
performance of this Fifth Amendment will not (a) contravene the Organization
Documents of the Company; (b) constitute a breach or default under any
contractual restriction or violate or contravene any law or governmental
regulation or court decree or order binding on or affecting the Company which
individually or in the aggregate does or could reasonably be expected to have a
Material Adverse Effect; or (c) result in, or require the creation or imposition
of, any Lien on any of the Company's properties. No approval or authorization of
any governmental authority is required to permit the execution, delivery or
performance by the Company of this Fifth Amendment or the transactions
contemplated hereby or thereby.
4.4 Incorporation of Certain Representations. After giving effect to
the terms of this Fifth Amendment, the representations and warranties of the
Company set forth in Article VI of the Credit Agreement are true and correct in
all respects on and as of the date hereof as though made on and as of the date
hereof, except to the extent such representations relate solely to an earlier
specified date.
4.5 Default. After giving effect to the terms of this Fifth Amendment,
no Default or Event of Default under the Credit Agreement has occurred and is
continuing.
5. Conditions, Effectiveness. The effectiveness of this Fifth Amendment
shall be subject to the compliance by the Company with its agreements herein
contained, and to the delivery of the following to Agent in form and substance
satisfactory to Agent on or before September 15, 2000:
5.1 Execution of Fifth Amendment. The Company, the Agent and the Majority
Banks shall have signed a copy hereof and the same shall have been delivered to
the Agent.
5.2 Financial Advisor. The Company shall have engaged a financial advisor
reasonably acceptable to the Majority Banks.
5.3 Security Agreement and Guaranty Affirmations. The Agent shall have
received affirmation letters in respect of the Security Agreement and Guaranty,
substantially in the form of Exhibit A, from each party thereto.
5.4 Fees and Expenses. All invoiced fees and expenses of E&Y
Restructuring LLC and all Attorney Costs of Xxxxx, Xxxxx & Xxxxx shall have been
paid or provided for and, after giving effect thereto, E&Y Restructuring LLC
shall hold a retainer in the amount of $100,000 and Xxxxx, Xxxxx & Xxxxx shall
hold a retainer in the amount of $100,000 for the payment of future fees and
expenses.
6. Miscellaneous.
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6.1 Effectiveness of the Credit Agreement and the Notes. Except as
hereby expressly amended, the Credit Agreement, the Loan Documents and the Notes
shall each remain in full force and effect, and are hereby ratified and
confirmed in all respects on and as of the date hereof.
6.2 Waivers. This Fifth Amendment is limited solely to the matters
expressly set forth herein and is specific in time and in intent and does not
constitute, nor should it be construed as, a waiver or amendment of any other
term or condition, right, power or privilege under the Credit Agreement or under
any agreement, contract, indenture, document or instrument mentioned therein;
nor does it preclude or prejudice any rights of the Agent or the Banks
thereunder, or any exercise thereof or the exercise of any other right, power or
privilege, nor shall it require the Majority Banks to agree to an amendment,
waiver or consent for a similar transaction or on a future occasion, nor shall
any future waiver of any right, power, privilege or default hereunder, or under
any agreement, contract, indenture, document or instrument mentioned in the
Credit Agreement, constitute a waiver of any other right, power, privilege or
default of the same or of any other term or provision.
6.3 Counterparts. This Fifth Amendment may be executed in any number of
counterparts, and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
6.4 Governing Law. This Fifth Amendment shall be governed by and construed
in accordance with the laws of the State of California.
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IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment
to be duly executed and delivered as of the date first written above.
SIERRA HEALTH SERVICES, INC.
By: /s/ Xxxx XxxXxxxxx
Name: Xxxx XxxXxxxxx
Title: President
BANK OF AMERICA, N.A., as Administrative Agent
By: /s/ Xxxxx Xxxx Strand
Name: Xxxxx Xxxx Strand
Title: Managing Director
BANK OF AMERICA, N.A., as a Bank
By: /s/ Xxxxx Xxxx Strand
Name: Xxxxx Xxxx Strand
Title: Managing Director
FIRST UNION NATIONAL BANK, as a Bank
By: /s/ J. Xxxx Xxxxxxx, Xx.
Name: J. Xxxx Xxxxxxx, Xx.
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH, as
a Bank
By: /s/ Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxx
Title: Sr. Vice President
BANK ONE, NA, as a Bank
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: First Vice President
XXXXX FARGO BANK, N.A., as a Bank
By:
Name:
Title:
UNION BANK OF CALIFORNIA, N.A., as a Bank
By:
Name:
Title:
DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN
ISLANDS BRANCHES, as a Bank
By: /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: Managing Director
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Vice President
EXHIBIT A to
Fifth Amendment
to Credit Agreement
September 15, 2000
Sierra Health-Care Options, Inc.
Nevada Administrators, Inc.
Behavioral Healthcare Options, Inc.
Sierra Home Medical Products, Inc.
Family Healthcare Services
Family Home Hospice, Inc.
Sierra Medical Management, Inc.
Sierra Health Holdings, Inc.
Southwest Medical Associates, Inc.
Northern Nevada Health Network, Inc.
Intermed, Inc.
Mohave Valley Hospital, Inc.
Tolemac, Inc.
M.E.G.A., Inc.
CII Financial, Inc.
Southwest Realty, Inc.
Prime Holdings, Inc.
c/o Sierra Health Services, Inc.
0000 Xxxxx Xxxxxx Xxx
Xxx Xxxxx, Xxxxxx 00000
Re: Sierra Health Services, Inc.
Gentlemen:
Please refer to (1) the Credit Agreement, dated as of October 30, 1998,
as amended by that certain First Amendment dated as of November 23, 1998, that
certain Second Amendment dated as of January 15, 1999, that certain Third
Amendment to Credit Agreement dated as of December 14, 1999 and that certain
Waiver and Fourth Amendment to Credit Agreement dated as of August 14, 2000 (as
so amended, the "Credit Agreement"), by and among Sierra Health Services, Inc.,
as the borrower, the commercial lending institutions party thereto
(collectively, the "Lenders") and Bank of America, N.A., as agent (herein, in
such capacity, called the "Agent"), (2) the Security Agreement dated August 23,
2000 from each of the addressees in favor of the Lenders and the Agent (the
"Security Agreement") and (3) the Guaranty dated August 23, 2000 from each of
the addressees in favor of the Lenders and the Agent (the "Guaranty"). Pursuant
to a waiver and amendment dated of even date herewith, a copy of which is
attached hereto, certain terms of the Credit Agreement were amended. We hereby
request that you (i) acknowledge and reaffirm all of your obligations and
undertakings under the Security Agreement and Guaranty and (ii) acknowledge and
agree that the Security Agreement and Guaranty is and shall remain in full force
and effect in accordance with the terms thereof.
Please indicate your agreement to the foregoing by signing in the space
provided below, and returning the executed copy to the undersigned.
BANK OF AMERICA, N.A., as Agent
By: /s/ Xxxxx Xxxx Strand
Title: Managing Director
Acknowledged and Agreed to
as of the date hereof
SIERRA HEALTH-CARE OPTIONS, INC.
By: /s/ Xxxxx X. Xxxxx
Its: Secretary
NEVADA ADMINISTRATORS, INC.
By: /s/ X. Xxxxxxxxxx
Its: Secretary
BEHAVIORAL HEALTHCARE OPTIONS, INC.
By: /s/ Xxxxx Xxxxx
Its: Secretary
SIERRA HOME MEDICAL PRODUCTS, INC.
By: /s/ Xxxx Xxxxxxxxx
Its: Secretary
FAMILY HEALTHCARE SERVICES
By: /s/ X. Xxxxxxxxx
Its: Secretary
FAMILY HOME HOSPICE, INC.
By: /s/ X. Xxxxxxxxx
Its: Secretary
SIERRA MEDICAL MANAGEMENT, INC.
By: /s/ Xxxx X. Xxxxxx
Its: Secretary
SIERRA HEALTH HOLDINGS, INC.
By: /s/ Xxxx XxxXxxxxx
Its: Secretary
SOUTHWEST MEDICAL ASSOCIATES, INC.
By: /s/ Xxxxx Xxxxxxxx
Its: Treasurer
NORTHERN NEVADA HEALTH NETWORK, INC.
By: /s/ Xxxxx X. Xxxxxx
Its: Secretary
INTERMED, INC.
By: /s/ X. Xxxxxxxxx
Its: Secretary
MOHAVE VALLEY HOSPITAL, INC.
By: /s/ Xxxxx X. Xxxxxx
Its: Secretary
TOLEMAC, INC.
By: /s/ Xxxxx X. Xxxxxx
Its: Secretary
M.E.G.A., INC.
By: /s/ Xxxxx Xxxxxxx
Its: Secretary
CII FINANCIAL, INC.
By: /s/ X. Xxxxxxxxxx
Its: Secretary
SOUTHWEST REALTY, INC.
By: /s/ Xxxxx Xxxxxxx
Its: Secretary
PRIME HOLDINGS, INC.
By: /s/ Xxxxx Xxxxxxx
Its: Secretary
