EXHIBIT 10.1
FIRST AMENDMENT TO
CREDIT AGREEMENT AND WAIVER
THIS FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER (this
"AMENDMENT")is made and dated as of May 31, 1997 among SIERRA HEALTH SERVICES,
INC., a Nevada corporation (the "COMPANY"), the Banks party to the Credit
Agreement referred to below, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a national banking association, as Agent (the "AGENT"), and amends
that certain Credit Agreement dated as of April 11, 1996 (the "CREDIT
AGREEMENT").
RECITALS
WHEREAS, the Company has requested the Agent and the Banks to amend
certain 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. AMENDMENT. The Credit Agreement is hereby amended as follows:
2.1 AMENDED AND RESTATED DEFINITIONS.
(a) The definitions of the terms "Commitment", "L/C
Borrowing", "L/C Commitment" and "Revolving Loan" in Section
1.1 of the Credit Agreement are hereby amended and restated to
read in their entirety as follows:
"Commitment", as to each Bank, means the Tranche A
Commitment and the Tranche B Commitment.
"L/C Borrowing" means an extension of credit
resulting from a drawing under any Letter of Credit which
shall not have been reimbursed on the date when made nor
converted into a Borrowing of Tranche A Revolving Loans under
subsection 3.03(b).
"L/C Commitment" means the commitment of the Issuing
Bank to Issue, and the commitment of the Banks severally to
participate in, Letters of Credit from time to time Issued or
outstanding under Article III, in an aggregate amount not to
exceed on any date the amount of $40,000,000, as the same
shall be reduced as a result of a reduction in the L/C
Commitment pursuant to Section 2.06; PROVIDED that the L/C
Commitment is a part of the combined Tranche A Commitments,
rather than a separate, independent commitment.
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"Revolving Loans" means the Tranche A Revolving Loans
and the Tranche B Revolving Loans.
(b) Clause (iii) of the definition of Interest Period is hereby amended and
restated to read in its entirety as follows:
(iii) no Interest Period for any Tranche A Revolving
Loan shall extend beyond the Tranche A Revolving Termination
Date and no Interest Period for any Tranche B Revolving Loan
shall extend beyond the Tranche B Revolving Termination Date.
2.2 ADDITION OF NEW DEFINITIONS. Section 1.1 of the Credit Agreement is
further amended by adding the following definitions thereto in appropriate
alphabetic order:
"Tranche A Commitment", as to each Bank, has the meaning specified in
Section 2.01(a).
"Tranche A Revolving Loan" has the meaning specified in Section 2.01(a),
and may be a Base Rate Loan or a LIBOR Rate Loan (each, a "TYPE" of Revolving
Loan).
"Tranche A Revolving Termination Date" means the earlier to occur of:
(a) the fifth (5th) anniversary of the Closing Date (as such date may be
extended pursuant to Section 2.16); and
(b) the date on which the Tranche A Commitments
terminate in accordance with the provisions of this Agreement.
"Tranche B Commitment", as to each Bank, has the meaning specified in
Section 2.01(b).
"Tranche B Revolving Loan" has the meaning specified in
Section 2.01, and may be a Base Rate Loan or a LIBOR Rate Loan (each, a
"TYPE" of Revolving Loan).
"Tranche B Revolving Termination Date" means the earlier to occur of:
(a) May 30, 1998; and
(b) the date on which the Tranche B Commitments
terminate in accordance with the provisions of this Agreement.
2.3 DELETION OF DEFINITION. Section 1.1 of the Credit
Agreement is further amended by deleting the definition of Revolving Termination
Date. "Tranche A Revolving Termination Date" shall be substituted for "Revolving
Termination Date" in each place in which the latter term appears in the Loan
Documents.
2.4 AMENDMENT AND RESTATEMENT OF SECTION 2.01. Section 2.01 of the Credit
Agreement is hereby amended and restated to read in its entirety as follows:
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2.01 AMOUNTS AND TERMS OF COMMITMENTS.
(a) Each Bank severally agrees, on the terms and
conditions set forth herein, to make loans to the Company
(each such loan, a "TRANCHE A REVOLVING LOAN") from time to
time on any Business Day during the period from the Closing
Date to the Tranche A Revolving Termination Date, in an
aggregate amount not to exceed at any time outstanding the
amount set forth on SCHEDULE 2.01 (such amount as the same may
be reduced under Section 2.05 or as a result of one or more
assignments under Section 11.08, the Bank's "TRANCHE A
COMMITMENT"); PROVIDED, HOWEVER that after giving effect to
any Borrowing of Tranche A Revolving Loans, (i) the Effective
Amount of all outstanding Tranche A Revolving Loans and the
Effective Amount of all L/C Obligations shall not at any time
exceed the combined Tranche A Commitments and (ii) the
Effective Amount of all outstanding Tranche A Revolving Loans
of any Bank plus the participation of such Bank in the
Effective Amount of all L/C Obligations shall not at any time
exceed such Bank's Tranche A Commitments. Within the limits of
each Bank's Tranche A Commitment, and subject to the other
terms and conditions hereof, the Company may borrow under this
Section 2.01, prepay under Section 2.06 and reborrow under
this Section 2.01.
(b) Each Bank severally agrees, on the terms and
conditions set forth herein, to make loans to the Company
(each such loan, a "TRANCHE B REVOLVING LOAN") from time to
time on any Business Day during the period from April 30, 1997
to the Tranche A Revolving Termination Date, in an aggregate
amount not to exceed at any time outstanding the amount set
forth on SCHEDULE 2.01 (such amount as the same may be reduced
under Section 2.05 or as a result of one or more assignments
under Section 10.08, the Bank's "TRANCHE B COMMITMENT");
PROVIDED, HOWEVER, that after giving effect to any Borrowing
of Tranche B Revolving Loans, (i) the Effective Amount of all
outstanding Tranche B Revolving Loans shall not at any time
exceed the combined Tranche B Commitments and (ii) the
Effective Amount of the Tranche B Revolving Loans of any Bank
shall not at any time exceed such Bank's Tranche B Commitment.
Within the limits of each Bank's Tranche B Commitment, and
subject to the other terms and conditions hereof, the Company
may borrow under this Section 2.01, prepay under Section 2.06
and reborrow under this Section 2.01.
2.5 AMENDMENT AND RESTATEMENT OF SECTION 3.01(A). Section 3.01(a) of the
Credit Agreement is hereby amended and restated to read in its entirety as
follows:
(a) On the terms and conditions set forth herein (i)
the Issuing Bank agrees, (A) from time to time on any Business
Day during the period from the Closing Date to the Tranche A
Revolving Termination Date to issue Letters of Credit for the
account of the Company, and to amend or renew Letters of
Credit previously issued by it, in accordance with subsections
3.02(c) and 3.02(d), and (B) to honor drafts under the Letters
of Credit; and (ii) the Banks severally agree to participate
in Letters of Credit Issued for the account of the Company;
PROVIDED, that the Issuing Bank shall not be obligated to
Issue, and no Bank shall be obligated to participate in, any
Letter of Credit if as of the date of Issuance of such Letter
of Credit (the "ISSUANCE DATE") (1) the Effective Amount of
all L/C Obligations plus the Effective Amount of all Tranche A
Revolving Loans exceeds the combined Tranche A Commitments,
(2) the participation of any Bank in the Effective Amount of
all L/C Obligations plus the Effective Amount of the Tranche A
Revolving Loans of such Bank exceeds such Bank's Tranche A
Commitment, or (3) the Effective Amount of L/C Obligations
exceeds the L/C
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Commitment. Within the foregoing limits, and subject to the
other terms and conditions hereof, the Company's ability to
obtain Letters of Credit shall be fully revolving, and,
accordingly, the Company may, during the foregoing period,
obtain Letters of Credit to replace Letters of Credit which
have expired or which have been drawn upon and reimbursed. All
Letters of Credit shall be issued under the Tranche A
Commitment.
2.6 AMENDMENT OF ARTICLE III. In Article III (The Letters of
Credit), each reference to "Revolving Loans" shall be deleted and the term
"Tranche A Revolving Loans" substituted therefor.
2.7 AMENDMENT AND RESTATEMENT OF SECTION 2.08. Section 2.08 of the Credit
Agreement is hereby amended and restated to read in its entirety as follows:
2.08 REPAYMENT.
(a) The Company shall repay to the Banks on the
Tranche A Revolving Termination Date the aggregate principal
amount of Tranche A Loans outstanding on such date.
(b) The Company shall repay to the Banks on the
Tranche B Revolving Termination Date the aggregate principal
amount of Tranche B Loans outstanding on such date.
2.8 AMENDMENT AND RESTATEMENT OF SECTION 6.12(B). Section 6.12(b) of the
Credit Agreement is hereby amended and restated to read in its entirety as
follows:
(b) Since December 31, 1996, (i) there has been no
Material Adverse Effect and (ii) there has been no development
in any of the matters disclosed in Schedule 6.05 which would
reasonably be expected to have a Material Adverse Effect.
2.9 AMENDMENT AND RESTATEMENT OF SECTION 8.10(A)(II). Section 8.10(a)(ii)
of the Credit Agreement is hereby amended and restated in its entirety as
follows:
(ii) either (A) after giving effect to such
Restricted Payment, the aggregate amount of all Restricted
Payments made from the Closing Date to the date of such
Restricted Payment shall not exceed the sum of (x) 25% of net
income (or minus 100% of consolidated net income in the case
of a loss) of the Company and its Subsidiaries arising after
the Closing Date and computed on a cumulative consolidated
basis plus (y) 50% of the net cash proceeds of any issuance of
capital stock of the Company subsequent to the Closing Date,
exclusive of any such issuance made in connection with a
merger or Acquisition; or (B) with respect to any purchase,
redemption or other acquisition of any shares of the Company's
capital stock by the Company ("STOCK BUYBACK"), after giving
effect to such Stock Buyback, the aggregate amount of all
Stock Buybacks made from the Closing Date to the date of such
Stock Buyback shall not exceed $25,000,000.
2.10 AMENDMENT AND RESTATEMENT OF SCHEDULE 2.01 AND SCHEDULE
6.05. Schedule 2.01 of the Credit Agreement is hereby amended and restated to
read in its entirety as set forth in Schedule 2.01 attached hereto. Schedule
6.05 of the Credit Agreement is hereby amended and restated to read in its
entirety as set forth in Schedule 6.05 attached hereto.
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3. WAIVER. The Agent and the Banks hereby waive compliance with Section
8.14(c) of the Credit Agreement for the fiscal quarter ended March 31, 1997,
provided that the Fixed Charges Coverage Ratio is at least 2.225 to 1.00 as of
such date.
4. RELEASE OF COLLATERAL AND COVENANT TO REPLEDGE. The parties hereto
acknowledge that due to changes to California Insurance Code Section 1215.5, it
may be necessary to obtain the consent of the Insurance Commissioner of the
State of California (the "COMMISSIONER") in order for California Indemnity
Insurance Company ("CIIC") to maintain the pledge of 10,000 shares of the common
stock of Commercial Casualty Insurance Company pursuant to the Pledge Agreement
dated as of April 11, 1996 by CIIC in favor of the Agent (the "PLEDGE
AGREEMENT"). Accordingly, the Agent hereby releases the Collateral (as defined
in the Pledge Agreement) to the Company and the Company hereby agrees to use its
best efforts to obtain the consent of the Commissioner to the pledge of the
Collateral by not later than 90 days after the date of this Amendment. Promptly
upon obtaining any such consent, the Company shall cause CIIC to deliver the
Collateral to the Agent to be pledged pursuant to the Pledge Agreement. For
avoidance of doubt, the parties hereto acknowledge that the shares described
above remain subject to the negative pledge of Section 8.01 of the Credit
Agreement
5. 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 Amendment:
5.1 AUTHORIZATION. The execution, delivery and performance by
the Company of this Amendment has been duly authorized by all necessary
corporate action, and this Amendment has been duly executed and delivered by the
Company.
5.2 BINDING OBLIGATION. This Amendment constitutes the legal,
valid and binding obligations 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.
5.3 NO LEGAL OBSTACLE TO AMENDMENT. The execution, delivery
and performance of this 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; or (c)
result in, or require the creation or imposition of, any Lien on any of the
Company's properties. Except as set forth on Schedule 6.03 of the Credit
Agreement, no approval or authorization of any governmental authority is
required to permit the execution, delivery or performance by the Company of this
Amendment, or the transactions contemplated hereby.
5.4 INCORPORATION OF CERTAIN REPRESENTATIONS. 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 as to such
representations made as of an earlier specified date.
5.5 DEFAULT. After giving effect to this Amendment, no Default or Event of
Default under the Credit Agreement has occurred and is continuing.
6. CONDITIONS TO EFFECTIVENESS. This Amendment shall become
effective as of the date first written above, provided that the Agent shall have
received all of the following by such date and dated as of such date, in form
and substance satisfactory to the Agent and the Banks:
6.1 A counterpart hereof executed by a duly authorized officer of the
Company;
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6.2 an acknowledgement from each Pledgor Subsidiary that it
consents to this Amendment and that its respective Pledge Agreement is in full
force and effect and that the Secured Obligations as defined therein includes
all Obligations after giving effect to this Amendment;
6.3 Certified copies of the charter and bylaws of the Company
or, in lieu thereof, a certificate from the Secretary or an Assistant Secretary
of the Company certifying that such documents previously delivered to the Agent
are true, correct and complete as of the date hereof;
6.4 A certificate from the Secretary or an Assistant Secretary
of the Company in respect of all corporation action taken by the Company in
approving the execution, delivery and performance of this Amendment and stating
that the resolutions previously adopted which authorized and approved the
execution, delivery and performance of the Loan Documents are in full force and
effect and have not been amended, rescinded or otherwise modified;
6.5 A certificate of the Secretary or an Assistant Secretary
of the Company which shall certify the names and offices of the officers of the
Company who are authorized to sign this Amendment, together with the true
signatures of such officers;
6.6 A good standing certificate with respect to the Company,
as of a recent date prior to the effective date of this Amendment, from the
Secretary of State of Nevada; and
6.7 An opinion of counsel to the Company substantially in the form of
Exhibit A hereto.
7. MISCELLANEOUS.
7.1 EFFECT OF AMENDMENT. It is hereby agreed that all terms
and conditions of the Loan Documents are to remain in full force and effect
unless otherwise specifically amended, waived or changed pursuant to the terms
of this Amendment and are hereby ratified and confirmed in all respects on and
as of the date hereof. The Loan Documents shall, where the context so requires,
be read and construed throughout so as to incorporate this Amendment.
7.2 WAIVERS. This 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 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.
7.3 COUNTERPARTS. This 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.
7.4 GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of California.
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7.5 CONSENT AND INSTRUCTIONS. Each of the Banks by signing
this Amendment hereby (i) consents to the execution and delivery of this
Amendment and (ii) instructs the Agent to execute and deliver this Amendment.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the date first written above.
SIERRA HEALTH SERVICES, INC.
By: /S/ XXXXX X. XXXXX
Name: XXXXX X. XXXXX
Title: VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND
TREASURER
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Agent
By: /S/ XXXXXX X. XXX
Name: XXXXXX X. XXX
Title: VICE PRESIDENT
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Issuing Bank
By: /S/ XXXXXX X. XXX
Name: XXXXXX X. XXX
Title: VICE PRESIDENT
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as a Bank
By: /S/ XXXXXX X. XXX
Name: XXXXXX X. XXX
Title: VICE PRESIDENT
SCHEDULE 2.01
COMMITMENTS AND PRO RATA SHARES
Tranche A Commitments
BANK COMMITMENT PRO RATA SHARE
Bank of America National Trust
and Savings Association $50,000,000 100%
TOTAL $50,000,000 100%
Tranche B Commitments
BANK COMMITMENT PRO RATA SHARE
Bank of America National Trust
and Savings Association $50,000,000 100%
TOTAL $50,000,000 100%
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SCHEDULE 6.05
LITIGATION
As disclosed in the Company's Report on Form 10-K for the year ended 12/31/96
and Report on Form 8-K, each filed with the SEC on March 28, 1997.