EXHIBIT 10.6
SECOND AMENDMENT TO
CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT is made and dated as of
January 15, 1999 (the "Second Amendment") among SIERRA HEALTH SERVICES, INC.
(the "Company"), the Banks now party to the Credit Agreement referred to below,
DEUTSCHE BANK AG, New York and/or Cayman Island Branches (the "New Bank") and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, 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 (as further amended or modified from
time to time, 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;
WHEREAS, the New Bank wishes to be added to the Credit Agreement as a Bank,
and the Company, the Agent and the existing Banks are willing to permit the New
Bank to be so added;
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 Amendment to Section 8.10.
(a) Section 8.10 of the Credit Agreement is hereby amended by adding the
following clause immediately after the phrase "notwithstanding the foregoing,"
in the seventh line from the end of such Section:
"(i) any Wholly-Owned Subsidiaries may declare and pay dividends to the
Company and (ii) "
2.2 Amendment to Section 8.14.
(a) Clause (ii) of subsection (b) of Section 8.14 of the Credit Agreement
is hereby amended by replacing the phrase "for the period commencing on the
Closing Date and
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ending on the date of determination" and with the following phrase: "for
each Fiscal Quarter ending after the Closing Date and on or before the date of
determination,".
2.3 Amendment to Section 8.17.
(a) The proviso at the end of Section 8.17 of the Credit Agreement is
hereby amended by inserting the following clause immediately after the word
"foregoing": "the Company may consummate any of the transactions set forth on
Schedule 8.17 and".
2.4 Amendment to Section 9.02.
(a) The following sentence shall be added to the end of the first sentence
of Section 9.02: "Upon any acceleration of the Loans pursuant to the foregoing
provisions, the Company shall deposit with the Agent cash collateral in an
amount equal to the aggregate undrawn amount of all Letters of Credit then
outstanding (the "Maximum Available Amount"); provided that in the event of any
drawing under any Letter of Credit thereafter, the Agent shall use such cash
collateral to reimburse such drawing and provided further that, in the event of
any cancellation or expiration of any Letter of Credit, the Agent shall apply
the difference between the Maximum Available Amount immediately prior to such
cancellation or expiration and the Maximum Available Amount immediately after
such cancellation or reduction, first, to the payment in full of any outstanding
Obligations, and second, to the Company or to such other Person who may be
lawfully entitled to receive such funds or as a court of competent jurisdiction
may direct."
2.5 Amendment to Section 10.10. Section 10.10 of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:
10.10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or trust" within the
meaning of the Code and such Bank claims exemption from, or a reduction of, U.S.
withholding tax under Sections 1441 or 1442 of the Code, such Bank agrees with
and in favor of the Agent and the Company, to deliver to the Agent:
(i) if such Bank claims an exemption from, or a reduction of, withholding
tax under a United States tax treaty, two properly completed and executed copies
of IRS Form 1001 before the payment of any interest in the first calendar year
and before the payment of any interest in each third succeeding calendar year
during which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this Agreement is exempt
from United States withholding tax because it is effectively connected with a
United States trade or business of such Bank, two properly completed and
executed copies of IRS Form 4224 before the payment of any interest is due in
the first taxable year of
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such Bank and in each succeeding taxable year of such Bank during which
interest may be paid under this Agreement; and
(iii) to the extent it is legally able to do so, such other form or forms
as may be required under the Code or other laws of the United States as a
condition to exemption from, or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent and the Company of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of, withholding tax
under a United States tax treaty by providing IRS Form 1001 and such Bank sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of the Company to such Bank, such Bank agrees to notify the Agent of
the percentage amount in which it is no longer the beneficial owner of
Obligations of the Company to such Bank. To the extent of such percentage
amount, the Agent will treat such Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax by
filing IRS Form 4224 with the Agent grants a participation in all or part of the
Obligations of the Company to such originating Bank, such originating Bank
agrees to undertake sole responsibility for complying with the withholding tax
requirements imposed by Sections 1441 and 1442 of the Code with respect to its
participant.
(d) If any Bank is entitled to a reduction in the applicable withholding
tax, the Agent may withhold from any interest payment to such Bank an amount
equivalent to the applicable withholding tax after taking into account such
reduction. However, if the forms or other documentation required by subsection
(a) of this Section are not delivered to the Agent, then the Agent may withhold
from any interest payment to such Bank not providing such forms or other
documentation an amount equivalent to the applicable withholding tax imposed by
Sections 1441 and 1442 of the Code, without reduction.
(e) If the IRS or any other Governmental Authority of the United States or
other jurisdiction asserts a claim that the Agent or the Company did not
properly withhold tax from amounts paid to or for the account of any Bank
(because such Bank failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective) such
Bank shall indemnify the Agent and the Company fully for all amounts paid,
directly or indirectly, by the Agent or the Company as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent under this Section, together
with all costs and expenses (including Attorney Costs). The obligation of the
Banks under this subsection shall survive the payment of all Obligations and the
resignation or replacement of the Agent.
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2.6 Amendment of Schedules.
(a) Schedule 2.01 of the Credit Agreement is hereby amended and restated to
read in its entirety as set forth on Schedule 2.01 hereto.
(b) Schedule 11.02 of the Credit Agreement is hereby amended and restated
to read in its entirety as set forth on Schedule 11.02 hereto.
2.7 Addition of New Bank.
(a) Upon the date of effectiveness of this Second Amendment (the "Effective
Date"), the New Bank shall (i) be a party to the Credit Agreement; (ii) assume
all of the rights and obligations of a Bank under the Credit Agreement with a
Commitment in the amount set forth opposite such Bank's name in Schedule 2.01
attached hereto; and (iii) be secured by the Collateral. On the Effective Date,
the New Bank shall purchase and assume, and BofA and First Union shall each sell
to the New Bank, 25% of its Commitment under the Credit Agreement, including 25%
of each of the outstanding Loans of BofA and First Union (with such purchase,
assumption and sale being deemed to have been completed upon payment of the
purchase price in the manner referred to below). As of the date of this Second
Amendment, there are four outstanding Borrowings of LIBOR Rate Loans, the terms
of which are more particularly described on Exhibit A hereto. The interest rate
payable by the Company on its outstanding Loans shall not change; however, the
interest rate distributable to the New Bank on its portion of the Loans
purchased from BofA and First Union shall be equal to the LIBOR Rate for an
Interest Period of one or three months (as described on Exhibit A), determined
as of January 15, 1999, plus the Applicable Margin for LIBOR Rate Loans. On the
Effective Date, the New Bank shall assume the Commitment of, and pay to the
Agent (for delivery to BofA and First Union) the purchase price for the Loans
sold by, BofA and First Union. The obligation of the New Bank to so provide its
purchase price to the Agent shall be absolute and unconditional and shall not be
affected by the occurrence of a Default or Event of Default. Upon the delivery
by the New Bank to the Agent of the purchase price due for such Loans, the New
Bank shall thereupon hold an assignment, to the extent of such payment, in the
claim of BofA and First Union against the Company for principal and shall share,
in accordance with its Pro Rata Share, in any principal payment made by the
Company with respect to such claim.
(b) From and after the New Commitment Effective Date, the New Bank shall be
entitled to its Pro Rata Share of all interest and fees thereafter accruing
under this Credit Agreement (including, without limitation, interest on the New
Bank's Pro Rata Share of the Outstanding Loans). All Loans made after the New
Commitment Effective Date shall be made by the Banks pursuant to the Pro Rata
Shares set forth in Schedule 2.01 attached hereto.
(c) The New Bank hereby (i) warrants and represents that it is authorized
to become a party to the Credit Agreement; (ii) appoints and authorizes the
Agent to take such
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action, exercise such powers, and perform such duties under the Credit
Agreement as are specifically delegated to or required of the Agent by the terms
of the Credit Agreement, together with such other powers as are reasonably
incidental thereto; and (iii) agrees that it will abide and be bound by all of
the terms, covenants and agreements, and perform all of the obligations, which
by the terms of the Credit Agreement are required to be abided and performed by
it as a Bank and shall be entitled to all of the rights, benefits and privileges
available or accruing to Banks under the Loan Documents.
3. 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 Second Amendment:
3.1 Authorization. The execution, delivery and performance by the Company
of this Second Amendment has been duly authorized by all necessary corporate
action, and this Second Amendment has been duly executed and delivered by the
Company.
3.2 Binding Obligation. This Second 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.
3.3 No Legal Obstacle to Amendment. The execution, delivery and performance
of this Second 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 Second Amendment, or the transactions
contemplated hereby.
3.4 Incorporation of Certain Representations. After giving effect to the
terms of this Second 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.
3.5 Default. No Default or Event of Default under the Credit Agreement has
occurred and is continuing.
4. Conditions, Effectiveness. The effectiveness of this Second Amendment
shall be subject to the compliance by the Company with its agreements herein
contained, and to the
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delivery of the following to Agent in form and substance satisfactory to
Agent of the following on or before January 31, 1999:
4.1 Execution of Second 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.
4.2 Pledge Agreement Affirmations. The Agent shall have received
affirmation letters in respect of the Pledge Agreement, substantially in the
form of Exhibit A, from each Pledgor Subsidiary.
4.3 Notes. The Agent shall have received for each of BofA, First Union and
the New Bank, a duly executed Note in the amount of such Bank's Commitment.
4.4 Other Evidence. Such other evidence with respect to the Company or any
other person as the Agent, the New Bank or any Bank may reasonably request to
establish the consummation of the transactions contemplated hereby, the taking
of all corporate action in connection with this Second Amendment and the Credit
Agreement and the compliance with the conditions set forth herein.
5. Miscellaneous.
5.1 Effectiveness of the Credit Agreement and the Notes. Except as hereby
expressly amended, the Credit Agreement 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.
5.2 Waivers. This Second 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.
5.3 Counterparts. This Second 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.
5.4 Governing Law. This Second 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 Second Amendment to
be duly executed and delivered as of the date first written above.
SIERRA HEALTH SERVICES, INC.
By:
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative
Agent
By:
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By:
Name:
Title:
FIRST UNION NATIONAL BANK, as a Bank
By:
Name:
Title:
7
CREDIT LYONNAIS NEW YORK BRANCH, as
a Bank
By:
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
as a Bank
By:
Name:
Title:
NORWEST BANK NEVADA N.A., as a BANK
By: ___________________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A., as a
Bank
By:
Name:
Title:
8
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES, as a New
Bank
By:
Name: _________________________
Title:
By:
Name:
Title:
9
SCHEDULE 2.01
COMMITMENTS AND PRO RATA SHARES
Bank Commitment Pro Rata Share
Bank of America National
Trust and Savings
Association $ 50,000,000 25%
First Union National Bank $ 40,000,000 20%
Deutsche Bank AG, New York $ 30,000,000 15%
and/or Cayman Island Branches
Credit Lyonnais
New York Branch $ 20,000,000 10%
The First National Bank
of Chicago $ 20,000,000 10%
Norwest Bank Nevada N.A. $ 20,000,000 10%
Union Bank of California, N.A. $ 20,000,000 10%
TOTAL $200,000,000 100%
SCHEDULE 11.02
OFFSHORE AND DOMESTIC LENDING OFFICES,
ADDRESSES FOR NOTICES
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
Notices (other than Borrowing Notices and Notices of Conversion/Continuation):
Bank of America National Trust
and Savings Association
Agency Management Services #20529
000 Xxxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xx. Xxxx Xxxxxx
Vice President
Telephone: 213/000-0000
Facsimile: 213/228-2299
AGENT'S PAYMENT OFFICE:
Notices for Extensions of Credit and Conversion/Continuation:
Bank of America National Trust
and Savings Association
Agency Administrative Services #5596
0000 Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxx
Telephone: 925/000-0000
Facsimile: 925/675-8500
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Bank
Domestic and Offshore Lending Office:
GPO-Domestic Account Administration #0000
Xxx Xxxxxx Xxxxxxxx, 00xx Xxxxx
000 X. Xxxxxxx Xxx.
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxx
Telephone: 213/000-0000
Facsimile: 213/345-6550
Notices (other than Borrowing notices and Notices of Conversion/Continuation):
Bank of America National Trust
and Savings Association
Health Care Finance #9173
000 Xxxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: J. Xxxxxxx Xxxxxx
Vice President
Telephone: 213/000-0000
Facsimile: 213/228-2756
FIRST UNION NATIONAL BANK
Domestic and Offshore Lending Office:
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxx Xxxxxxxxx
Telephone: 704/000-0000
Facsimile: 704/374-6537
with a copy of all Notices (other
than Borrowing Notices or Notices
of Conversion/Continuation):
First Union National Bank
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Telephone: 704/000-0000
Facsimile: 704/383-9144
DEUTSCHE BANK AG,
New York and/or Cayman Islands Branches
Domestic Lending Office:
Operations:
Xxxxxxx Xxxxxxx
Deutsche Bank AG
New York Branch
00 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Business/Credit Matters
Xxx Xxxxxxx
Deutsche Bank AG
00 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Offshore Lending Office:
Deutsche Bank AG
Cayman Islands Branch
c/o New York Branch
Operations:
Xxxxxxx Xxxxxxx
Deutsche Bank AG
New York Branch
00 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Business/Credit Matters
Xxx Xxxxxxx
Deutsche Bank AG
00 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
CREDIT LYONNAIS NEW YORK BRANCH
Domestic and Offshore Lending Office:
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
Telephone: 212/000-0000
Facsimile: 212/261-3440
THE FIRST NATIONAL BANK OF CHICAGO
Domestic and Offshore Lending Office:
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxx
Telephone: 312/000-0000
Facsimile: 000-000-0000
NORWEST BANK NEVADA N.A.
Domestic and Offshore Lending Office:
0000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxx Xxxxxx
Telephone: 702/000-0000
Facsimile: 702/765-3888
UNION BANK OF CALIFORNIA, N.A.
Domestic and Offshore Lending Office:
Commercial Customer Service Unit
0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxx
Telephone: 323/000-0000
Facsimile: 323/724-6198
EXHIBIT A to
Second Amendment
to Credit Agreement
January 15, 1999
Sierra Health Services, Inc.
Sierra Medical Management, 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 (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 National Trust and Savings Association, as agent (herein, in
such capacity, called the "Agent") and (2) the Pledge Agreements dated
October 30, 1998 from each of the addressees in favor of the Lenders and the
Agent (the "Pledge Agreements"). Pursuant to an 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 your Pledge Agreement and (ii)
acknowledge and agree that your Pledge Agreement 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 NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By:______________________________
Title:
Acknowledged and Agreed to
as of January 15, 1999
SIERRA HEALTH SERVICES, INC.
SIERRA MEDICAL MANAGEMENT, INC.
By:____________________________
Its:___________________________
PRIME HOLDINGS, INC.
By:____________________________
Its:___________________________
EXHIBIT A
OUTSTANDING BORROWINGS OF
LIBOR RATE LOANS
(as of January 15, 1999)
LENGTH OF INTEREST
BORROWING PERIOD FOR DETERMINING
AMOUNT MATURITY PAYMENTS TO NEW BANK
$101,000,000 February 5, 1999 One Month
$ 18,000,000 February 9, 1999 One Month
8,000,000 February 10, 1999 One Month
$ 12,000,000 March 3, 1999 Three Months
