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EXHIBIT 10(b)
NOVACARE, INC.
0000 XXXX XXXXX XXXXXX
XXXX XX XXXXXXX, XX 00000
May 19, 1995
PNC Bank, National Association,
as Agent
One PNC Plaza
Xxxxx Xxxxxx xxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
RE: Amendment and Waiver and Consent Under Credit Agreement to Sale
of Rehab Systems Company Stock (the "Waiver and Consent")
Dear Xxxxx:
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
consent to certain actions by the Borrowers and Guarantors, 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. Waivers and Consents.
NC Resources, Inc. ("NC") is a newly-formed, wholly-owned
Subsidiary of NovaCare, and is the record and beneficial owner of
all of the issued and outstanding shares of capital stock of
Rehab Systems Company ("RSC") and the other Subsidiaries listed
on Schedule 1 attached hereto and made a part hereof (the "RSC
Subsidiaries"). Pursuant to that certain Stock Purchase
Agreement dated February 3, 1995 by and among NovaCare, NC and
HealthSouth Corporation ("HealthSouth") (the "Stock Purchase
Agreement"), HealthSouth desires to purchase from NC all of the
issued and outstanding shares of capital stock of RSC and the RSC
Subsidiaries, now currently pledged to the Banks as Pledged
Collateral, for a cash purchase price of approximately
$215,000,000, subject to certain adjustments (the "Stock Sale"),
on the closing date as determined under the Stock Purchase
Agreement (the "Stock Purchase Closing Date"). The Banks hereby
consent to such Stock Sale and waive compliance with Section
8.02(e)(iv) of the Credit Agreement and consent to the
accompanying release of pledged stock of RSC and the RSC
Subsidiaries. The Banks hereby agree that, effective as of the
Stock Purchase Closing Date, and upon satisfaction of all
conditions of effectiveness under this Waiver and Consent, RSC
and the RSC Subsidiaries shall cease to be Guarantors under the
Loan Documents. The Banks' consent and waiver are subject to the
following terms and conditions.
II. Amendment to Credit Agreement.
NationsBank of North Carolina, N.A. has undergone a name
change and is now know as Nationsbank, N.A. (Carolinas).
Therefore, the parties hereto do hereby modify and amend the
Credit Agreement by deleting all references in the Credit
Agreement to NATIONSBANK OF NORTH CAROLINA, N.A. and inserting in
lieu thereof NATIONSBANK, N.A. (CAROLINAS).
National Westminster Bank, N.A. has undergone a name
change and is now know as NatWest Bank, N.A. Therefore, the
parties hereto do hereby modify and amend the Credit Agreement by
deleting all references in the Credit Agreement to NATIONAL
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WESTMINSTER BANK, N.A. and inserting in lieu thereof NATWEST
BANK, N.A.
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 the Stock Sale
and this Waiver and Consent; and no Event of Default or Potential
Default has occurred and is continuing.
It is acknowledged and agreed that the parties are
entering into this Waiver and Consent to accommodate the time
constraints of the Borrowers and Guarantors under the Stock
Purchase Agreement. The Borrowers, Guarantors, the Agent and the
Banks have discussed the need for the amendment and restatement
of the Credit Agreement, and the other Loan Documents and,
therefore, in consideration of this Waiver and Consent, the
Borrowers and Guarantors hereby covenant and agree with the Agent
and the Banks that they will use their best efforts to, within
thirty (30) days from the Stock Purchase Closing Date, enter into
an amended and restated Credit Agreement, with the Agent and the
Banks, including the terms identified in that certain term sheet
dated March 21, 1995, and an amendment and restatement of certain
Schedules to the Credit Agreement and the other Loan Documents to
properly reflect the Stock Sale, which amendment and restatement
shall be in form and substance satisfactory to the Agent, the
Banks and Xxxxxxxx Xxxxxxxxx Professional Corporation, counsel to
the Agent.
The Borrowers and Guarantors hereby covenant to the Agent
and the Banks that the proceeds received by the Borrowers and
Guarantors pursuant to the Stock Sale shall be first used to
repay any and all outstanding obligations under the Credit
Agreement. Any excess proceeds shall be used by the Borrower and
the Guarantors, subject to any restrictions or limitations
contained in the Credit Agreement.
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IV. Conditions of Effectiveness; Waiver and Consent Effective Date
The effectiveness of this Waiver and Consent is expressly
conditioned upon the occurrence and completion of all of the
following: (i) the Agent's receipt of counterparts of this
Waiver and Consent duly executed by the Borrowers and Guarantors
and the 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 Waiver and Consent; (iii) with respect to NC
and each other new Guarantor or new Borrower (a "Joining
Subsidiary"), documentation as required under Section 11.18 of
the Credit Agreement, including without limitation the completion
of the following: (1) executing and delivering to the Agent (A)
in the case of a Joining Subsidiary which becomes a Borrower, a
Revolving Credit Note in the form of Exhibit 1.01(R) payable to
each Bank, (B) a joinder to the Credit Agreement in form
satisfactory to the Agent, (C) a counterpart signature page to
the Guaranty Agreement executed by certain Loan Parties which is
in the form of Exhibit 1.01 (G)(1), in the case of a Joining
Subsidiary which becomes a Borrower, and Exhibit 1.01(G)(2), in
the case of a Joining Subsidiary which becomes a Guarantor, (D)
if it owns stock or other ownership interests in any Qualifying
Subsidiary, a joinder to the Pledge Agreement executed by certain
Loan Parties which is in the form of Exhibit 1.01(P)(4),
1.01(P)(5) or 1.01(P)(6), as applicable, and delivering, as
applicable, the original certificates evidencing such stock or
other ownership interest if it is certificated with appropriate
stock powers or other assignments signed in blank and UCC-1
financing statements necessary to perfect the security interests
of the Agent for the benefit of the Banks therein, (E) a joinder
to the Subordination Agreement (Intercompany) executed by certain
Loan Parties which is in the form of Exhibit 1.01(S) and (F) a
joinder to the Agency Agreement executed by certain Loan Parties
appointing NovaCare as agent; (2) delivering to the Agent an
opinion of counsel reasonably satisfactory to the Agent regarding
such Joining Subsidiary and such joinder; (3) delivering to the
Agent certified copies of its organizational documents and other
documents as requested by the Agent; and (4) the Loan Party which
owns the stock or other ownership interest of the Joining
Subsidiary shall execute and deliver to the Agent for the benefit
of the Banks a Pledge Agreement in the form of Exhibit
1.01(P)(4), 1.01(P)(5) or 1.01(P)(6), as applicable, and the
original certificates evidencing such stock or other ownership
interest if it is certificated with appropriate stock powers or
other assignments signed in blank and UCC-1 financing statements
necessary to perfect the security interests of the Agent for the
benefit
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of the Banks therein; (iv) the Agent's receipt of evidence
satisfactory to Agent that NovaCare has been released as a
guarantor, that NovaCare is not directly or indirectly obligated
in any way and that there is no recourse against any assets of
NovaCare or any subsidiary of NovaCare with respect to the
outstanding indebtedness of (1) West Virginia Rehabilitation
Services, Inc. in connection with bonds issued by Wood County,
West Virginia in the original principal amount of $9,220,000 and
(2) American Health Enterprises, Ltd. in connection with bonds
issued by Xxxxxx County, West Virginia, in the original principal
amount of $9,400,000 on or before June 30, 1995; and (v) the
Stock Purchase Closing Date occurring on or before May 19, 1995.
This Waiver and Consent 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 III (the "Waiver and Consent Effective
Date"). If the conditions precedent to effectiveness have not
been satisfied on or before May 19, 1995, this Waiver and Consent
shall be null and void.
V. Consent of All Banks
Pursuant to Section 11.01(c) of the Credit Agreement, this
Waiver and Consent will require the written consent of all of the
Banks.
VI. Full Force and Effect
No novation is intended by this Waiver and Consent and
except as expressly modified and amended by this Waiver and
Consent, 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 Waiver and Consent which are payable by the
Borrowers as provided in Section 10.05 of the Credit Agreement.
VIII. Counterparts
This Waiver and Consent may be executed by different
parties hereto in any number of separate counterparts, each of
which, when
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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 Waiver and Consent 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
--------------------------
Xxxxxx X. Xxxx, Vice President of
Mill River III, Inc., a Delaware
corporation
NovaCare Management Business Trust
By: /s/ XXXXXXX X. XXXXXXXX
--------------------------
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 19th DAY OF May, 1995.
PNC BANK, NATIONAL ASSOCIATION,
as a Bank and as Agent
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Title: Vice President
----------------------------
CORESTATES BANK, N.A.
By: /s/ XXXXXXXX X. XXXXXXXXX
-------------------------------
Title: COMMERCIAL OFFICER
----------------------------
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/ XXXXX X. XXXXX
-------------------------------
Title: AMP
----------------------------
MELLON BANK, N.A.
By: /s/ XXXXX XXXXX
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Title: VICE PRESIDENT
----------------------------
NATIONSBANK, N.A. (CAROLINAS)
By: /s/ ------
-------------------------------
Title: VICE PRESIDENT
----------------------------
NATWEST BANK N.A.
By: /s/ ------
-------------------------------
Title: VICE PRESIDENT
----------------------------
FLEET BANK OF MASSACHUSETTS, N.A.
By: /s/ XXX X. XXXXXX - XXXXXXXXXX
-------------------------------
Title: VICE PRESIDENT
----------------------------
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SCHEDULE 1
1. American Health Enterprises, Ltd. (incorporated in Pennsylvania),
qualified in West Virginia (Southern Hills).
2. Arizona Rehabilitation Hospital, Inc. (incorporated in Delaware),
qualified in Arizona (Valley of the Sun).
3. NovaCare Bakersfield Regional Rehabilitation Hospital, Inc.
(incorporated in Delaware), qualified in California (Bakersfield).
4. CRH, Inc. (incorporated in Maryland)(corporate shell).
5. NovaCare Easton & Xxxxx Physical Therapy, Inc. (incorporated in
California)(outpatient clinics).
6. Medical Rehabilitation Corporation of Maryland (incorporated in
Maryland)(Chesapeake).
7. NovaCare Meridian Point Rehabilitation Hospital, Inc. (incorporated in
Arizona)(Meridian Point).
8. NovaCare Rehabilitation Hospital of North Texas, Inc. (incorporated in
Delaware), qualified in Texas (N. Texas).
9. NovaCare SMC, Inc. (incorporated in Maryland)(outpatient clinic).
10. Rehab Systems Company (incorporated in Delaware), qualified in Arizona,
California, Indiana, Maryland, New Jersey, Nevada, Pennsylvania, Texas,
Virginia and West Virginia.
11. Rehab Systems Financial Corporation (incorporated in Delaware)(shell
corporation).
12. Rehab World of West Virginia, Inc. (incorporated in West
Virginia)(outpatient clinic).
13. Rehabilitation Corporation of Virginia (incorporated in
Virginia)(Richmond).
14. Rehabilitation Hospital Corporation of America (incorporated in
Delaware), qualified in Pennsylvania.
15. NovaCare Tri-State Regional Rehabilitation Hospital, Inc. (incorporated
in Indiana)(Tri-State).
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16. Tucson Regional Rehabilitation Hospital, Inc. (incorporated in
Delaware), qualified in Arizona (Rehab Institute of Tucson).
17. West Virginia Rehabilitation Hospital, Inc. (incorporated in West
Virginia) (Mountain View).
18. West Virginia Rehabilitation Services, Inc. (incorporated in
Pennsylvania), qualified in West Virginia (Western Hills).
19. East Capital Rehabilitation Corporation (incorporated in Maryland)
(Bowie, MD CON)
