Third Amendment And Waiver Under Credit Agreement - LYRIS, INC. - 11-14-1995

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Third Amendment And Waiver Under Credit Agreement - LYRIS, INC. - 11-14-1995 Powered By Docstoc
					EXHIBIT 10(a) NOVACARE, INC. 1016 WEST NINTH AVENUE KING OF PRUSSIA, PA 19406 May 15, 1995 PNC Bank, National Association, as Agent One PNC Plaza Fifth Avenue and Wood Street Pittsburgh, PA 15265 Attn: Frank A. Taucher 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:

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.

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.

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.

Yours very truly, NOVACARE, INC. and each of the Borrowers and Guarantors under the Credit Agreement
By: /s/ TIMOTHY E. FOSTER -------------------------Timothy E. Foster, 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/ JOSEPH C. O'NEILL -------------------------Joseph C. O'Neill, President of each of the entities listed above his name on the signature lines to the Credit Agreement By: /s/ ANDREW J. BECK -------------------------Andrew J. Beck, Vice President of Mill River III, Inc., a Delaware corporation

NovaCare Management Business Trust
By: /s/ WILLIAM J. MCGINNIS -------------------------Name: William J. McGinnis Title: Secretary of NovaCare Management Services, Inc., a Delaware corporation and Trustee of NovaCare Management Business Trust

ACKNOWLEDGED AND AGREED TO AS OF THE 15th DAY OF May, 1995. PNC BANK, NATIONAL ASSOCIATION, as a Bank and as Agent
By: /s/ Frank Taucher ------------------------------Title: Vice President ----------------------------

CORESTATES BANK, N.A.
By: /s/ CRISTINA I. LOPEZ ONA ------------------------------Title: Commercial Officer ----------------------------

FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By: /s/ JAMES F. YOUNG ------------------------------Title: Vice President ----------------------------

MELLON BANK, N.A.
By: /s/ CAROL PAIGE ------------------------------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/ AMY E. MILLER - FREDERICKS ------------------------------Title: Vice President ----------------------------

EXHIBIT 10(b) NOVACARE, INC. 1016 WEST NINTH AVENUE KING OF PRUSSIA, PA 19406 May 19, 1995 PNC Bank, National Association, as Agent One PNC Plaza Fifth Avenue and Wood Street Pittsburgh, PA 15265 Attn: Frank A. Taucher RE: Amendment and Waiver and Consent Under Credit Agreement to Sale of Rehab Systems Company Stock (the "Waiver and Consent") Dear Frank: 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:

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

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 Buchanan Ingersoll 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.

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

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 Mercer 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

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.

Yours very truly, NOVACARE, INC. and each of the Borrowers and Guarantors under the Credit Agreement
By: /s/ TIMOTHY E. FOSTER -------------------------Timothy E. Foster, 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/ JOSEPH C. O'NEILL -------------------------Joseph C. O'Neill, President of each of the entities listed above his name on the signature lines to the Credit Agreement

By: /s/ ANDREW J. BECK -------------------------Andrew J. Beck, Vice President of Mill River III, Inc., a Delaware corporation

NovaCare Management Business Trust
By: /s/ WILLIAM J. MCGINNIS -------------------------Name: William J. McGinnis Title: Secretary of NovaCare Management Services, Inc., a Delaware corporation and Trustee of NovaCare Management Business Trust

ACKNOWLEDGED AND AGREED TO AS OF THE 19th DAY OF May, 1995. PNC BANK, NATIONAL ASSOCIATION, as a Bank and as Agent
By: /s/ Frank Taucher ------------------------------Title: Vice President ----------------------------

CORESTATES BANK, N.A.
By: /s/ JENNIFER W. LEIBOWITZ ------------------------------Title: COMMERCIAL OFFICER ----------------------------

FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By: /s/ JAMES F. YOUNG ------------------------------Title: AMP ----------------------------

MELLON BANK, N.A.
By: /s/ CAROL PAIGE ------------------------------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/ AMY E. MILLER - FREDERICKS ------------------------------Title: VICE PRESIDENT ----------------------------

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 & Moran 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).

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)

ARTICLE 5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1995 AND THE CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS IN FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995. MULTIPLIER: 1,000 CURRENCY: U.S. DOLLAR

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END EXCHANGE RATE CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS COMMON PREFERRED MANDATORY PREFERRED OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED
1 2

3 MOS JUN 30 1996 JUL 01 1995 SEP 30 1995 1 115,845 0 214,792 23,080 11,530 353,615 106,194 40,048 796,603 111,581 190,545 656 0 0 479,417 796,603 0 198,137 0 170,738 1 5,776 2 4,242 3,340 14,041 6,038 8,003 0 0 0 8,003 .12 .12

"Total Costs" Consist of Salaries, wages and benefits, rental expense, Supply costs and other. "Other Expenses" Consist of depreciation, amortization of excess cost of net assets acquired and minority interest net of investment income.