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EXHIBIT 10(a)
NOVACARE, INC.
0000 XXXX XXXXX XXXXXX
XXXX XX XXXXXXX, XX 00000
May 15, 1995
PNC Bank, National Association,
as Agent
One PNC Plaza
Xxxxx Xxxxxx xxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
RE: Third Amendment and Waiver Under Credit Agreement ("Third
Amendment and Waiver")
Gentlemen:
We refer to that certain Credit Agreement, dated as of May 27, 1994,
as amended (the "Credit Agreement"), by and among NovaCare, Inc. ("NovaCare")
and certain of its Subsidiaries, the Banks party thereto and PNC Bank, National
Association, as agent for the Banks ("Agent"). Defined terms used herein, not
otherwise defined herein, shall have the meanings given to them under the
Credit Agreement.
The Borrowers and Guarantors, the Banks and the Agent hereby desire to
waive compliance with certain sections of the Credit Agreement and amend the
Credit Agreement as hereinafter provided;
The parties hereto in consideration of their mutual covenants and
agreements hereinafter set forth, and intending to be legally bound hereby,
covenant and agree as follows:
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AGREEMENT
I. Waiver.
Minimum Fixed Charge Coverage Ratio. For the fiscal
quarter of the Loan Parties ended March 31, 1995, Section
8.02(o) of the Credit Agreement provides that the Loan Parties
shall not permit the ratio of Consolidated Earnings Available
For Fixed Charges to Consolidated Fixed Charges to be less
than 2.5 to 1.0, and as indicated in the Compliance
Certificate of the Loan Parties for such fiscal quarter, such
ratio is 2.4 to 1.0 for the fiscal quarter ended March 31,
1995. The Loan Parties have requested that compliance with
Section 8.02(o) of the Credit Agreement be waived as of March
31, 1995 for the fiscal quarter then ended. The Banks hereby
waive compliance with Section 8.02(o) of the Credit Agreement
only for the fiscal quarter ended March 31, 1995. The Banks'
waiver is subject to the terms and conditions set forth in
Section IV of this Third Amendment and Waiver.
II. Amendment to Credit Agreement
The definition of Permitted Investment in Category 2
Excluded Entities contained in Section 1.01 of the Credit
Agreement is hereby amended by the deletion of the number
"$600,000", and in lieu thereof, the insertion of the number
"$950,000".
II. Representations, Covenants, Events of Default
The Borrowers and Guarantors hereby represent to the
Agent and the Banks that: the representations and warranties
contained in Article VI of the Credit Agreement or elsewhere
in the Credit Agreement or anywhere in the Loan Documents
remain true and accurate on and as of the date hereof (except
for representations and warranties which relate solely to an
earlier date or time, which representations and warranties
were true and correct on and as of the specific dates or times
referred to therein); the Borrowers and Guarantors have
performed and are in compliance with all covenants contained
in Article VIII of the Credit Agreement or elsewhere in the
Credit Agreement or anywhere in the Loan Documents, all after
giving effect to this Third Amendment and Waiver; and no Event
of Default or Potential Default has occurred and is
continuing.
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IV. Conditions of Effectiveness; Third Amendment and Waiver
Effective Date
The effectiveness of this Third Amendment and Waiver
is expressly conditioned upon the occurrence and completion of
all of the following: (i) the Agent's receipt of counterparts
of this Third Amendment and Waiver duly executed by the
Borrowers and Guarantors and the Required Banks; (ii) the
Agent's receipt of a certificate signed by the Secretary or
Assistant Secretary of the Borrowers and Guarantors,
certifying as to all action taken by the Borrowers and
Guarantors to authorize the execution, delivery and
performance of this Third Amendment and Waiver; and (iii) the
accuracy of the factual matters described above and in the
Compliance Certificates relating to the fiscal quarters ended
December 31, 1994 and March 31, 1995.
This Third Amendment and Waiver shall be dated as of
and shall be effective as of the date and year first above
written subject to satisfaction of all conditions precedent to
effectiveness as set forth in this Section IV (the "Third
Amendment and Waiver Effective Date"). If the conditions
precedent to effectiveness have not been satisfied on or
before June 15, 1995, this Third Amendment and Waiver shall be
null and void.
V. Consent of Required Banks
Pursuant to Section 11.01(c) of the Credit Agreement,
this Third Amendment and Waiver will require the written
consent of the Required Banks.
VI. Full Force and Effect
No novation is intended by this Third Amendment and
Waiver and except as expressly modified and amended by this
Third Amendment and Waiver, the Credit Agreement and the other
Loan Documents are hereby ratified and confirmed and shall
remain in full force and effect without modification.
VII. Costs, Expenses, Disbursements
The Borrowers hereby agree to reimburse the Agent and
the Banks on demand for all costs, expenses and disbursements
relating to this Third Amendment and Waiver which are payable
by the Borrowers as provided in Section 10.05 of the Credit
Agreement.
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VIII. Counterparts
This Third Amendment and Waiver may be executed by
different parties hereto in any number of separate
counterparts, each of which, when so executed and delivered,
shall be an original, and all of such counterparts shall
together constitute one and the same instrument.
IX. Governing Law
This Third Amendment and Waiver shall be deemed to be
a contract under the laws of the Commonwealth of Pennsylvania
and for all purposes shall be governed by and construed and
enforced in accordance with the internal laws of the
Commonwealth of Pennsylvania without regard to its conflict of
laws principles.
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Yours very truly,
NOVACARE, INC. and each of the
Borrowers and Guarantors under the
Credit Agreement
By: /s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx, President of
NovaCare, Inc. and Vice President
of each of the entities listed on
Schedule 6.01(c) other than those
listed below
By: /s/ XXXXXX X. X'XXXXX
--------------------------
Xxxxxx X. X'Xxxxx, President of
each of the entities listed above
his name on the signature lines to
the Credit Agreement
By: /s/ XXXXXX X. XXXX
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Xxxxxx X. Xxxx, Vice President of
Mill River III, Inc., a Delaware
corporation
NovaCare Management Business Trust
By: /s/ XXXXXXX X. XXXXXXXX
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Name: Xxxxxxx X. XxXxxxxx
Title: Secretary of NovaCare
Management Services, Inc., a
Delaware corporation and Trustee
of NovaCare Management
Business Trust
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ACKNOWLEDGED AND AGREED TO AS
OF THE 15th DAY OF May, 1995.
PNC BANK, NATIONAL ASSOCIATION,
as a Bank and as Agent
By: /s/ Xxxxx Xxxxxxx
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Title: Vice President
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CORESTATES BANK, N.A.
By: /s/ XXXXXXXX X. XXXXX ONA
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Title: Commercial Officer
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FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/ XXXXX X. XXXXX
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Title: Vice President
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MELLON BANK, N.A.
By: /s/ XXXXX XXXXX
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Title: Vice President
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NATIONSBANK, N.A. (CAROLINAS)
By: /s/ ------
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Title: Vice President
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NATWEST BANK N.A.
By: /s/ ------
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Title: Vice President
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FLEET BANK OF MASSACHUSETTS, N.A.
By: /s/ XXX X. XXXXXX - XXXXXXXXXX
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Title: Vice President
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