EXHIBIT 10.1
LOAN AGREEMENT
THIS LOAN AGREEMENT dated as of April 10, 2000 (as the same may be amended,
supplemented or otherwise modified from time to time, the "Agreement"), by and
for Sierra Health Services , Inc., a Nevada corporation (the "Lender") and
Anthony M. Marlon (the "Borrower"). This Agreement establishes the terms and
conditions that will govern the Loan from the Lender.
RECITALS
All terms not otherwise defined above or in this Introductory Statement are
as defined in Article 1 hereof, or as defined elsewhere herein.
The Borrower has requested the Lender to provide a Loan in the amount of
$2,500,000.
The Loan will also be secured by an assignment of the Borrower's rights in
the Collateral (as hereinafter defined) pursuant to the Collateral Assignment of
Rights dated as of April 10, 2000 (the "Assignment") between the Lender as
assignee and the Borrower as assignor.
Subject to the terms and conditions set forth herein, the Lender is willing
to make the Loan to the Borrower.
Accordingly, the parties hereto hereby agree as follows:
1. DEFINITIONS
For the purposes hereof unless the context otherwise requires, the
following terms shall have the meanings indicated. Unless the context otherwise
requires, any of the following terms may be used in the singular or the plural,
depending on the reference:
"Business Day" means a day on which banks are open in Las Vegas.
"Collateral" shall mean the Assigned Rights, as such term is defined in the
Assignment.
"Default" has the meaning given to that term in Section 6.1 below.
"Dollars" means the lawful currency of the United States of America.
"Interest Rate" shall mean, with respect to the Loan, a rate per annum
during each Interest Period of 0.10% plus the interest rate at which the Lender
is able to borrow funds pursuant to the Sierra Credit Agreement at the time of
the making of the Loan in an amount and for the approximate period of the Loan,
it being understood and agreed that a written statement by the Lender of the
interest rate at which it is able to borrow shall be conclusive evidence of such
rate absent manifest error.
"Loan" means a loan or loans made by the Lender to the Borrower under this
Agreement or, as the case may be, the outstanding principal balance of any such
loan.
"Maximum Loan Amount" means two million five hundred thousand dollars
($2,500,000)plus accrued interest.
"Obligations" means the due and punctual payment of principal of and
interest on the Loan, all fees and other monetary obligations of the Borrower to
the Lender under this Agreement.
"Persons" includes any individual, company, corporation, firm, partnership,
joint venture, association,
organization, trust, state or agency of a state (in each case, whether or
not having separate legal personality).
"Sierra Credit Agreement" means the Credit Agreement dated as of October
30, 1998, as amended, among the Lender, as borrower, various lenders and Bank of
America National Trust and Savings Association as Agent.
"Sum Outstanding" means the total principal amount of any outstanding
Loans, together with all accrued but unpaid
interest, fees and other amounts payable hereunder.
"Termination Date" means June 30, 2002, unless extended or terminated
earlier pursuant to Section 2.4 of the Agreement.
2. THE LOAN
2.1. Making the Loan. The Lender agrees, upon the terms and subject to the
conditions set forth in this
Agreement, from and including the date hereof through and including the
Termination Date, to make the Loan to the Borrower in an
amount which will not exceed the Maximum Loan Amount. Subject to the terms
of this Agreement, the Borrower may borrow, repay and
reborrow Loans at any time prior to the Termination Date.
2.2. Borrowing Notice. The Borrower shall give the Lender irrevocable
notice not later than 12:00 noon (Las Vegas time) at least three Business Days
before the proposed borrowing date (the "Borrowing Date") of any Loan specifying
(i) the Borrowing Date of such Loan which shall be a Business Day and (ii) the
principal amount of such Loan.
2.3. Interest. Subject to the provisions of Section 2.8, the Loan shall
bear interest at a rate per annum (computed on the basis of the actual days
elapsed over a year of 360 days) equal to the Interest Rate. Interest shall be
payable [(subject to the next sentence)] quarterly on the last Business Day of
each March, June, September, and December, and at maturity. Interest shall
automatically be capitalized when due and payable until June 30, 2002, so long
as all other conditions of borrowing described herein are satisfied and there is
sufficient availability under the Maximum Loan Amount. Interest shall accrue
from and including the date of each Loan to but excluding the date on which such
Loan is paid.
2.4. Repayments. (a) The Borrower promises to pay to the Lender (or to the
Lender's order) the outstanding
amount of the Loan, interest and other charges permitted under and in
accordance with this Agreement on the Termination Date.
(b) In the event the Borrower sells any shares of stock of the Lender now
owned of record or beneficially by the Borrower or hereafter acquired by him in
excess of 50,000 shares, the Borrower promises to pay to the Lender, as a
prepayment of the Loan, 25% of the net proceeds of any such sale up to the
extent of the Sum Outstanding. Such payment shall be made to the Lender (or to
the Lender's order) not more than three Business Days after the receipt by the
Borrower of the proceeds of such sale.
(c) The Borrower shall have the right at his option on any Business Day to
prepay the Loan, in whole or in
part, upon at least three Business Days prior written notice to the Lender.
(d) Any prepayment of the Loan which is made on a day other than the last
day of an Interest Period shall be accompanied by any amount due under Section
7.2(b)(4) hereof in respect of such prepayment. Each notice of prepayment shall
specify the prepayment date, the principal amount of the Loan to be prepaid,
shall be irrevocable and shall commit the Borrower to prepay the Loan in the
amount and on the date stated therein.
2.5. Default Interest. So long as a Default shall have occurred and be
continuing (after as well as before judgment), the Borrower shall on demand from
time to time pay interest on the then unpaid amount of the Obligations then
outstanding at a rate per annum of 200 basis points (2%) in excess of the rate
then in effect, subject to the provisions of Section 2.8.
2.6. Manner of Payments. All payments by the Borrower hereunder shall be
made in Dollars in federal or other immediately available funds to the account
of the Lender in accordance with the wire transfer instructions provided by the
Lender from time to time. Any such payment received after 11:00 a.m. Las Vegas
time on the date when due shall be deemed received on the following Business
Day.
2.7. Purpose. The Borrower may use proceeds of the Loan for payment of
accrued interest, fees and expenses due
hereunder or incurred in connection herewith, or for any other lawful purposes.
2.8. Applicable Law. Anything in this Agreement to the contrary
notwithstanding, the interest rate on the Loan shall in no event be in excess of
the maximum interest rate permitted by applicable law.
3. REPRESENTATIONS AND WARRANTIES
On a continuing basis, the Borrower represents, warrants and covenants to
the Lender that:
3.1. No Consents. No order, consent, license, authorization, recording or
registration is required to authorize or is required in connection with the
execution, delivery and performance or the legality, validity, binding effect or
enforceability of this Agreement or the Assignment Agreement, any documents
executed in connection with this Agreement or the Assignment Agreement or any
transactions contemplated by this Agreement or the Assignment Agreement.
3.2. No Litigation. There are no actions, suits, litigation or
investigations, pending or threatened, against the Borrower that could (i) have
a material adverse effect on his financial condition or (ii) affect his ability
to enter into and perform his obligations under this Agreement or any of the
transactions contemplated by this Agreement.
3.3. No Material Adverse Change. Since the date of the most recent
financial statements of the Borrower delivered to the Lender, there has been no
material adverse change in the financial condition of the Borrower.
3.4. Disclosure. Neither this Agreement nor the Borrower's financial
statements furnished to the Lender by the Borrower, at the time it was furnished
or delivered, contained any untrue statement of a material fact or, omitted to
state a material fact necessary under the circumstances under which it was made
in order to make the statements contained herein or therein not misleading.
4. AFFIRMATIVE COVENANTS
Until this Agreement has terminated and all amounts and Obligations
outstanding hereunder or any other documents executed in connection therewith,
have been indefeasibly paid in full, the Borrower will:
4.1. Compliance with Laws. Comply in all material respects, with all
applicable laws, statutes, codes, ordinances, regulations, rules, orders,
awards, judgments, decrees, injunctions, approvals and permits applicable to
him.
4.2. Payment of Taxes. Pay all taxes, assessments and governmental charges
imposed upon him or upon his property and all claims (including, without
limitation, claims for labor, materials, supplies or services) which would, if
unpaid, become a lien upon his property, unless, in each case, the validity or
amount thereof is being contested in good faith by appropriate proceedings and
he has maintained adequate reserves with respect thereto.
4.3. Bankruptcy. Notify the Lender in writing before filing any petition
seeking the protection of any bankruptcy, insolvency or any similar statutes.
4.4. Financial and Credit Information. (a) Notify the Lender immediately,
in writing, of any change in his financial condition or prospects which would
materially and adversely affect his ability to repay any obligation(s) to the
Lender according to the terms of this Agreement. (b) Comply with any requests
from the Lender for additional documentation required to be filed or executed by
the Borrower from time to time by applicable law or otherwise reasonably
requested by the Lender.
5. CONDITIONS PRECEDENT TO LOANS
5.1. Conditions Precedent to Loan. It shall be a condition precedent to the
effectiveness of this Agreement and the making of the Loan hereunder that the
Lender shall have received the following, in form and substance satisfactory to
the Lender in its sole discretion: (a) this Agreement shall have been fully
executed;
(b) the Assignment Agreement shall have been fully executed;
(c) such other documents as the Lender may request.
6. DEFAULTS; REMEDIES
6.1. Defaults. A default ("Default") will occur under this Agreement if:
(a) the Borrower fails to make any payment of principal when it is due as
required by this Agreement or fails to make any payment of interest or fees
within 20 days after it is due as required by this Agreement;
(b) any representation or warranty contained in this Agreement or any
document delivered to the Lender in connection herewith shall prove to have been
false or misleading in any material respect at the time when made or deemed
made;
(c) the Borrower shall breach any other provision of this Agreement or the
Assignment Agreement which breach is not cured within 30 days after its
occurrence;
(d) the Borrower shall generally not pay his debts as they become due or
shall admit in writing his inability to pay his debts, or shall make a general
assignment for the benefit of creditors; or the Borrower shall commence any
case, proceeding or other action seeking to have an order for relief entered on
his behalf as debtor or to adjudicate him a bankrupt or insolvent, or seeking
arrangement, adjustment or composition of his debts under any law relating to
bankruptcy, insolvency or relief of debtors or seeking appointment of a trustee,
custodian or other similar official for his or for all or any substantial part
of his property or shall file an answer or other pleading in any such case,
proceeding or other action admitting the material allegations of any petition,
complaint or similar pleading filed against him or consenting to the relief
sought therein; or the Borrower shall take any action to authorize any of the
foregoing;
(e) any involuntary case, proceeding or other action against the Borrower
shall be commenced seeking to have an order for relief entered against him as
debtor or to adjudicate him a bankrupt or insolvent, or seeking arrangement,
adjustment or composition of his debts under any law relating to bankruptcy,
insolvency or relief of debtors, or seeking appointment of a trustee, custodian
or other similar official for him or for all or any substantial part of his
property, and such case, proceeding or other action (i) results in the entry of
any order for relief against him or (ii) shall remain undismissed for a period
of thirty (30) days;
(f) an attachment is levied against all or any portion of the Collateral;
or
(g) final judgment(s) for the payment of money in an aggregate amount in
excess of $5,000,000 shall be rendered against the Borrower and within thirty
(30) days from the entry of judgment shall not have been discharged or stayed
pending appeal or shall not have been discharged within thirty (30) days from
the entry of a final order of affirmance on appeal;
(h) the Lender determines that there is a material adverse change in the
Borrower's financial condition, as compared to his condition on the date hereof
after giving effect to the making of the Loans hereunder and the application of
the proceeds thereof in accordance with Section 2.7 hereof.
6.2. Remedies. Upon the occurrence of a Default, the Lender may, at its
option, declare all Loans together with all accrued interest and fees to be
immediately due and payable, and terminate the Lender's commitment to make Loans
hereunder.
7. INDEMNIFICATION
7.1. Indemnification of the Lender. The Borrower hereby agrees to hold
harmless the Lender, its affiliates, and its employees from any and all claims,
liabilities, and/or damages, in any way related to, or arising out of, or in
connection with, the Assignor's assigning of the Assigned Rights, the Lender's
exercise of rights under this Agreement or the Assignment Agreement, except to
the extent any such claim results from the Lender's gross negligence or willful
misconduct.
7.2. Miscellaneous Indemnities. The Borrower shall on demand indemnify the
Lender against:
(a) any cost or increased cost in maintaining the Lender's commitment to
make Loans hereunder, all or any part of any Loan, or any other amount
outstanding under this Agreement or any reduction in the effective return to the
Lender under this Agreement or in the rate of overall return on its capital
below that which it would have been able to achieve but for its entering into or
giving effect to this Agreement, in each case, which, in the Lender's
determination, is sustained or incurred directly or indirectly as a consequence
of, or of compliance with, any change in law or regulation or any directive or
the like (whether or not having the force of law) of any governmental or other
regulatory body or authority including any law, regulation, directive or the
like relating to reserve assets, liquidity or monetary control or affecting the
manner in which the Lender allocates capital resources to its obligations under
this Agreement;
(b) any funding and any other cost, expense or liability (including loss of
profit, legal fees and taxes) sustained or incurred by the Lender (1) to render
this Agreement and the Assignment Agreement enforceable and admissible in
evidence in any enforcement proceedings commenced by the Lender in connection
with this Agreement or the Assignment Agreement, (2) in connection with the
administration of, or in protecting or enforcing the Lender's rights under this
Agreement or the Assignment Agreement and/or any amendment thereto, (3) as a
result of the occurrence or continuance of any Default (whether in connection
with any act or thing done as set out in Article 9 or otherwise), or (4) as a
result of the receipt or recovery by the Lender of all or any part of a Loan or
an overdue sum otherwise than on the last day of an Interest Period applicable
to a Loan or, as the case may be, a period selected by the Lender and applicable
to that overdue sum; and
(c) any stamp, documentary, registration or similar tax payable in
connection with the entry into, registration, performance, enforcement or
admissibility in evidence of this Agreement and/or any such amendment,
supplement or waiver, promptly and in any event before any interest or penalty
becomes payable, together with any liability with respect to or resulting from
any delay in paying or omission to pay any such tax.
8. MISCELLANEOUS
8.1. Cost of Collection. If the Borrower fails to make any payment under
this Agreement as and when required, the Borrower must pay, to the extent
permitted by applicable law, the Lender's court and collection costs, including
legal fees actually incurred, any costs incurred in the disposition of the
Collateral, and, if the Borrower's Loan is referred for collection to any
attorney not employed by the Lender or one of its affiliates, the Lender's
reasonable attorney fees actually incurred.
8.2. Delay in Enforcement; No Waiver. The Lender can choose to delay or not
to enforce any of its rights under this Agreement without losing such rights. If
the Lender chooses not to exercise or enforce any of its rights, the Borrower
agrees that the Lender is not waiving the right to enforce such rights at a
later time or any of its other rights. Any waiver of the Lender's rights under
this Agreement must be in writing.
8.3. Waivers. To the extent permitted by applicable law, the Borrower
waives his rights to require the Lender, (a) to demand payments of amounts due
(known as "presentment"); (b) to give notice that amounts due have not been paid
(known as "notice of dishonor"); and (c) to obtain an official certification of
non-payment (known as "protest").
8.4. Successors and Assigns. (a) Subject to Section 8.5 hereof, this
Agreement shall be binding upon and inure to the benefit of the heirs,
executors, administrators, legal representatives, successors and assigns of all
the parties to this Agreement. So long as no Default shall have occurred and be
continuing the Lender will not make any assignment of all or part of its rights,
obligations and remedies under this Agreement or the Assignment Agreement
without the consent of the Borrower (such consent not to unreasonably be
withheld). Any such assignee of such rights and obligations shall be entitled to
the full benefit of this Agreement and the Assignment Agreement to the same
extent as if it were an original party in respect of the rights or obligations
assigned or transferred to it. The Borrower shall not assign any of his rights
or obligations under this Agreement.
(b) The Lender may at any time change the office through which it is acting
for the purpose of this Agreement and may at any time act for this purpose
through more than one office.
(c) The Lender may disclose to a potential assignee or transferee or any
other Person who has entered or proposes to enter into contractual arrangements
with the Lender in relation to or concerning this Agreement such information
about the Borrower, this Agreement and the Assignment Agreement as it may deem
appropriate.
8.5. GOVERNING LAW. THIS AGREEMENT IN ALL RESPECTS SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF NEVADA APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE WITHOUT REFERENCE TO ANY CONFLICTS
OF LAWS PRINCIPLES AND, IN THE CASE OF PROVISIONS RELATING TO INTEREST RATES,
ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
8.6. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW WHICH
CANNOT BE WAIVED, THE BORROWER HEREBY WAIVES AND COVENANTS THAT HE WILL NOT
ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY
JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR
TORT OR OTHERWISE. THE BORROWER ACKNOWLEDGES THAT HE HAS BEEN INFORMED BY THE
LENDER THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON
WHICH THE LENDER HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THIS
AGREEMENT AND ANY DOCUMENT RELATED THERETO. THE LENDER MAY FILE AN ORIGINAL
COUNTERPART OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE BORROWER TO THE WAIVER OF HIS RIGHTS TO TRIAL BY JURY.
8.7. Amendments. No modification, amendment or waiver of any provision of
this Agreement, and no consent to any departure herefrom or therefrom, shall in
any event be enforceable against any party unless the same shall be in writing
and signed or consented to in writing by such party.
8.8. Headings. The heading of each provision of this Agreement is for
descriptive purposes only and shall not be deemed to modify or qualify any of
the rights or obligations described in each such provision.
8.9. Severability. If any provision of this Agreement is held to be
invalid, illegal, void or unenforceable, by reason of any law, rule,
administrative order or judicial or arbitral decision, such determination shall
not affect the validity of the remaining provisions of this Agreement.
8.10. Entire Agreement. This Agreement, together with the Assignment
Agreement, constitutes the entire agreement between the Borrower and the Lender
regarding the matters contemplated by this Agreement, and supersedes any and all
prior agreements (whether written or oral).
8.11. Notices. All communications hereunder shall be in writing and
delivered or mailed by registered or certified mail or overnight carrier or by
telecopy. Statements, notices and all other communications to the Borrower will
be sent to the address set forth below or to such other address as may be
designated in a written notice delivered in the manner provided herein. The
Borrower agrees to send correspondence to the Lender at the address set forth
below or such other address for notices provided by the Lender from time to
time.
If to Borrower:
Anthony M. Marlon, M.D.
P.O. Box 15645
Las Vegas, Nevada 89114-5645
Telephone: 702-242-7180
Facsimile: 702-242-7195
If to the Lender:
Sierra Health Services, Inc.
2724 North Tenaya Way
Las Vegas, Nevada 89128
Attn: Chief Financial Officer
Telephone: (702) 242-7112
Facsimile: (702) 240-7148
[Signature Page Follows]
IN WITNESS WHEREOF, each of the parties hereto has duly executed or caused
this Agreement to be duly executed by its authorized officer effective as of the
day and year first written above.
BORROWER:
/s/ Anthony M. Marlon, M.D.
Anthony M. Marlon, M.D.
LENDER:
SIERRA HEALTH SERVICES, INC.
By: s/ Erin E. MacDonald
Title: President
Executed by the Lender at
Las Vegas, Nevada on
June 26 , 2000
