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EXHIBIT 4.17
VISION TWENTY-ONE, INC.
THIRD AMENDMENT TO CREDIT AGREEMENT
This Third Amendment to Credit Agreement (herein, the "Amendment") is
entered into as of August 30, 1999, among Vision Twenty-One, Inc., a Florida
corporation (the "Borrower"), the Banks party hereto, and Bank of Montreal as
Agent for the Banks.
PRELIMINARY STATEMENTS
A. The Borrower, the Banks, and the Agent are parties to an
Amended and Restated Credit Agreement, dated as of July 1, 1998, as amended
(herein, the "Credit Agreement"). All capitalized terms used herein without
definition shall have the same meanings herein as such terms have in the Credit
Agreement.
B. The Borrower has requested that the Banks consent to the
Borrower's sale of certain of its assets commonly referred to as its Retail
Group, that the proceeds of such sale be applied to certain costs and expenses
directly relating to the sale as well as to certain of the Obligations owing to
the Banks, that certain financial covenants be amended, and that certain other
modifications be made to the Credit Agreement, and the Banks have agreed to do
so as provided for in this Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. CONSENT TO SALE OF THE RETAIL GROUP.
The Borrower has notified the Agent and the Banks that the Borrower
and its Subsidiary, The Complete Optical Laboratory, Ltd., intend to sell
certain of their assets which constitute their Retail Group to Eye Care Centers
of America, Inc. pursuant to an Asset Purchase Agreement dated as of July 7,
1999 (the "Retail Group Purchase Agreement"), as true and correct copy of which
having heretofore been delivered by the Borrower to the Agent (such sale being
referred to herein as the "Retail Group Sale"). The Borrower hereby requests
that the Banks waive Section 8.16 of the Credit Agreement to permit the Retail
Group Sale and, by signing below, the Banks hereby agree to waive compliance
with Section 8.16 of the Credit Agreement to permit the Retail Group Sale but
only so long as the following conditions are satisfied (a) the Retail Group
Sale is consummated on or before August 31, 1999, (b) the cash payable to the
Borrower and its Subsidiary for the Retail Group at the closing, representing
the purchase price net of write-downs in the purchase price due to EBITDA
adjustments and working capital adjustments and exclusive of post-closing
purchase price adjustments, shall not be less than $34,800,000, of which (i)
$1,250,000 shall be held in escrow pursuant to Section 2.02 of the Retail Group
Purchase Agreement, provided the rights of the Borrower and its Subsidiaries to
all or any part thereof shall be subject to the Lien of the Agent pursuant to
an escrow agreement in form and substance satisfactory to the Agent, (ii) not
more than $2,455,000 of such proceeds may be applied to transaction costs and
expenses relating to the Retail Group Sale established to the reasonable
satisfaction of the Agent, including special audit fees incurred solely in
connection with such
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sale, legal fees, fairness opinion fees, advisory fees, amounts payable to
prior owners, severance payments and fees payable to the Agent, (iii)
$2,800,000 of such proceeds shall be applied to reduce Revolving Loans then
outstanding (it being acknowledged that no reduction in the Revolving Credit
Commitments is being required), and (iv) the balance of such proceeds, which
amount shall in no event be less than $28,295,000 shall be applied to the
outstanding Term Loans as follows: 17.15% of such amount to be applied to the
Term A Loans then outstanding, 23.85% of such amount to be applied to the Term
B Loans then outstanding, and 59% of such amount to be applied to the Term C
Loans then outstanding, each such payment to be applied to the remaining
principal installments due thereon in the inverse order of maturity.
The Banks acknowledge and agree that upon the Agent's receipt of the
proceeds referred to in clauses (iii) and (iv) above, the Agent is hereby
authorized and directed to (and the Agent hereby agrees to) execute and deliver
UCC-3 partial release statements in the States of Florida, Minnesota, and New
Jersey to release the Agent's Lien upon the assets sold pursuant to the Retail
Group Sale in form reasonably satisfactory to the Agent.
The Borrower acknowledges that the Agent shall have and is hereby
granted a Lien upon all amounts held in the escrow account(s) for the benefit
of the Borrower and its Subsidiaries pursuant to the Retail Group Purchase
Agreement as collateral security for the Obligations owing to the Agent and the
Banks, and hereby agrees to irrevocably direct the holder of such escrow
amounts to pay any amounts otherwise payable to the Borrower or any of its
Subsidiaries thereunder directly to the Agent for application to the Term Loans
pro rata based upon the principal balances thereof then outstanding (provided,
however, that solely for purposes of determining amounts allocable to the
holders of the Term Loans, the outstanding principal balance of the Term A
Loans shall be deemed increased by the amount of the Revolving Credit
Commitments and, as a result, the holders of the Term A Loans shall receive an
increased allocable amount of such payments and, if as a result of such
prepayment the Term A Loans are paid in full any excess otherwise allocable to
the holders of the Term A Loans shall be paid over to the Banks then holding
Revolving Credit Commitments for application to such Banks' Term B Loans), each
such payment to be applied to the remaining principal installments due thereon
in the inverse order of maturity.
SECTION 2. AMENDMENTS.
Subject to the satisfaction of the conditions precedent set forth in
Section 4 below, the Credit Agreement shall be and hereby is amended as
follows:
1.1. Section 4.2 of the Credit Agreement shall be amended and
restated in its entirety to read as follows:
Section 4.2 Collections. The Borrower shall establish and
maintain such arrangements as shall be necessary or
appropriate to assure that all proceeds of the Collateral of
the Borrower and its Material Subsidiaries are deposited (in
the same form as received) in accounts maintained with, or
under the dominion and control of, the Agent, such accounts
to constitute special restricted accounts,
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the Borrower acknowledging that the Agent has (and is hereby
granted) a lien on such accounts and all funds contained
therein to secure the Obligations. If and to the extent that
proceeds are deposited and/or maintained in one or more
accounts maintained with financial institutions other than
the Agent, except as otherwise permitted under Section
4.1(iii) above, it shall be a condition to the Borrower's or
any Material Subsidiary's right to establish and maintain
such deposit accounts at any time after September 30, 1999,
that the financial institutions maintaining such accounts
shall have delivered to the Agent blocked account agreements
satisfactory to the Agent in form and substance pursuant to
which such financial institutions acknowledge the Agent's
Lien thereon, waive any right of offset or bankers' liens
thereon (other than with respect to account maintenance
charges and returned items) and agree that, upon notice from
the Agent, the collected balances in such accounts will only
be transferred to the Agent. The Banks agree with the
Borrower that if and so long as no Default or Event of
Default has occurred or is continuing, amounts on deposit in
the accounts maintained with the Agent will (subject to the
rules and regulations of the Agent as from time to time in
effect applicable to demand deposit accounts) be made
available to the Borrower and its Material Subsidiaries for
use in the conduct of their business. Upon the occurrence of
an Event of Default, the Agent may apply the funds on deposit
in such accounts to the Obligations.
In furtherance of the requirements set forth above, the
Borrower agrees to establish and implement a cash management
system acceptable to the Agent by no later than October 31,
1999 (September 30, 1999, with respect to the 15 largest
accounts), pursuant to which all available cash and cash
equivalents held or maintained by the Borrower and its
Subsidiaries (exclusive of reasonable account balances
maintained for the account of physician practice groups) are
swept (on a periodic basis which may be as frequently as
daily, as the Agent may require) into one or more deposit
accounts subject to the Lien of the Agent as set forth above.
1.2. Upon the consummation of the Retail Group Sale, the
definition of "Permitted Acquisition" appearing in Section 5.1 of the
Credit Agreement shall be amended by striking clause (g) thereof and
inserting in its place the following:
(g) the Total Consideration paid for the
Target, when taken together with the aggregate amount of
Capital Expenditures incurred during the current fiscal year
(including other Acquisitions made by the Borrower or any of
its Subsidiaries
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during the current fiscal year), does not exceed $5,000,000
in the aggregate.
1.3. Subsection (a) of Section 8.5 (Financial Reports) of
the Credit Agreement shall be amended and restated in its entirety to
read as follows:
(a) as soon as available, and in any event
within 30 days after the last day of each calendar month
(except with respect to month-end financial statements for
June 1999, July 1999, August 1999, September 1999, as well as
for month-end financial statements for January of each year,
in which case the financial statements required by this
subsection (a) shall be delivered within 45 days after the
last day of the relevant month), a copy of the consolidated
balance sheet of the Borrower and its Subsidiaries as of the
last day of such month and the consolidated statements of
income, retained earnings and cash flow of the Borrower and
its Subsidiaries for the month and for the fiscal
year-to-date period then ended, each in reasonable detail
shown in comparative form against the Borrower's business
plan for such year, prepared by the Borrower and certified to
by the Borrower's chief financial officer, or another officer
of the Borrower reasonably acceptable to the Agent;
1.4. Upon the consummation of the Retail Group Sale,
Section 8.8 (Total Funded Debt/Adjusted EBITDA Ratio) of the Credit
Agreement shall be amended and restated in its entirety to read as
follows:
Section 8.8. Total Funded Debt/Adjusted EBITDA
Ratio. As of the last day of each fiscal quarter of the
Borrower ending during the periods specified below, the
Borrower shall not permit the Total Funded Debt/Adjusted
EBITDA Ratio as of the last day of such fiscal quarter to be
greater than or equal to:
RATIO SHALL NOT BE
GREATER THAN OR EQUAL
FROM AND INCLUDING TO AND INCLUDING TO
July 1, 1999 September 30, 1999 4.50 to 1.0
October 1, 1999 March 31, 2000 4.00 to 1.0
April 1, 2000 September 30, 2000 3.50 to 1.0
October 1, 2000 December 31, 2000 3.00 to 1.0
January 1, 2001 and at all times thereafter 2.75 to 1.0
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1.5. Upon the consummation of the Retail Group Sale,
Sections 8.10 (Interest Coverage Ratio), 8.11 (Debt Service Coverage
Ratio), and 8.12 (Capital Expenditures) of the Credit Agreement shall
be amended and restated in their entirety to read as follows:
Section 8.10. Interest Coverage Ratio. As of the
last day of each fiscal quarter of the Borrower ending during
the periods specified below, the Borrower shall maintain a
ratio of EBITDA for the four fiscal quarters of the Borrower
then ended to Interest Expense for the same four fiscal
quarters then ended of not less than:
RATIO SHALL NOT
FROM AND INCLUDING TO AND INCLUDING BE LESS THAN
July 1, 1999 September 30, 1999 1.25 to 1.0
October 1, 1999 March 31, 2000 2.00 to 1.0
April 1, 2000 June 30, 2000 3.00 to 1.0
July 1, 2000 September 30, 2000 3.25 to 1.0
October 1, 2000 and at all times thereafter 4.00 to 1.0
Section 8.11. Debt Service Coverage Ratio. As of the
last day of each fiscal quarter of the Borrower ending during
the periods specified below, the Borrower shall maintain a
ratio of (a) EBITDA for the four fiscal quarters of the
Borrower then ended less the sum of (i) Capital Expenditures
incurred during such period and (ii) cash payments made
during such period with respect to federal, state, and local
income taxes to (b) the aggregate amount of payments required
to be made by the Borrower and its Subsidiaries during the
four fiscal quarters of the Borrower then ended in respect of
all principal on all Indebtedness for Borrowed Money (whether
at maturity, as a result of mandatory sinking fund
redemption, mandatory prepayment, acceleration or otherwise)
plus Interest Expense for the same four fiscal quarter period
then ended, of not less than:
RATIO SHALL NOT
FROM AND INCLUDING TO AND INCLUDING BE LESS THAN
July 1, 1999 September 30, 1999 .75 to 1.0
October 1, 1999 March 31, 2000 1.00 to 1.0
April 1, 2000 June 30, 2001 1.25 to 1.0
July 1, 2001 September 30, 2001 1.50 to 1.0
October 1, 2001 December 31, 2001 1.75 to 1.0
January 1, 2002 and at all time thereafter 2.00 to 1.0
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Section 8.12. Capital Expenditures. The Borrower
shall not, nor shall it permit any other Subsidiary to, incur
Capital Expenditures in an aggregate amount in excess of
$5,000,000 during any fiscal year.
1.6. Section 8.34 (Physician Advances) of the Credit
Agreement shall be amended by adding at thereof the following
additional paragraph:
The Borrower represents that as of the date of the
Third Amendment to Credit Agreement between the Borrower, the
Agent, and the Banks, the aggregate amount of advances due
from practice group physicians and related professionals and
payable to the Borrower and/or any one or more of its
Subsidiaries under management agreements between such
practice group and the Borrower and/or any one or more of its
Subsidiaries is not less than $4,000,000. The Borrower shall
on or before October 15, 1999, cause such practice groups to
repay to the Borrower not less than $2,000,000 of such
advances (such repayment of advances and application thereof
to the Revolving Loans to be established to the reasonable
satisfaction of the Agent), such amounts to be applied by the
Borrower as a prepayment of Revolving Loans then outstanding
(it being acknowledged that no reduction in the Revolving
Credit Commitments is being required). In the event the
Borrower fails to pay down the Revolving Loans out of the
proceeds of the repayment of advances due from physicians and
related professionals by at least $2,000,000 by October 15,
1999, then on October 16, 1999, there shall be due from the
Borrower a mandatory principal prepayment of the Term Loans
in the amount of $2,000,000, such amount to be applied first
to the Term A Loans until paid in full, with any excess then
to be applied to the Term B Loans until paid in full, and
then to the Term C Loans until paid in full (such prepayments
to be applied to the remaining principal installments of the
relevant Term Loans in the inverse order of maturity).
SECTION 3. WAIVERS.
The Borrower has advised the Banks that as of June 30, 1999, the
Borrower was not in compliance with 8.11 (Debt Service Coverage Ratio) of the
Credit Agreement; and that as of the
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date of this Amendment, the Borrower continues to be in default under Section
4.2 of the Credit Agreement regarding the execution and delivery of blocked
account agreements required to be in place by July 31, 1999, and under Section
8.5(a) of the Credit Agreement regarding the delivery of its June 1999
month-end financial statements (the defaults referenced above being referred to
herein as the "Existing Defaults"). The Borrower has requested that the Banks
waive the Borrower's non-compliance with the foregoing and, by signing below,
the Required Banks hereby agree to waive the Existing Defaults for, and only
for, the periods ending on or prior to the date of this Amendment, provided
that the waivers set forth herein shall not be effective unless and until the
conditions precedent set forth in Section 4 below have been satisfied.
SECTION 4. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of
all of the following conditions precedent:
4.1. The Borrower, the Agent, and the Banks shall have
executed and delivered this Amendment.
4.2. The Agent shall have received for each of the Banks
a copy of the Borrower's June 30, 1999, month-end financial statements
due under Section 8.5(a) of the Credit Agreement.
4.3. Each Material Subsidiary shall have executed its
acknowledgement and consent to this Amendment in the space provided
for that purpose below.
4.4. The Agent shall have received for each Bank the
favorable written opinion of counsel to the Borrower, in form and
substance reasonably satisfactory to the Agent.
4.5. Legal matters incident to the execution and delivery
of this Amendment shall be satisfactory to the Agent and its counsel.
SECTION 5. REPRESENTATIONS.
In order to induce the Banks to execute and deliver this Amendment,
the Borrower hereby represents to the Agent and the Banks that as of the date
hereof, and after giving effect to the amendments and waivers set forth above,
the representations and warranties set forth in Section 6 of the Credit
Agreement are and shall be and remain true and correct (except that the
representations contained in Section 6.5 shall be deemed to refer to the most
recent financial statements of the Borrower delivered to the Banks) and the
Borrower and its Subsidiaries are in compliance with all of the terms and
conditions of the Credit Agreement and the other Loan Documents and no Default
or Event of Default has occurred and is continuing or shall result after giving
effect to this Amendment.
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SECTION 6. RELEASE OF CLAIMS.
To induce the Banks and the Agent to enter into this Amendment, the
Borrower and, by signing the acknowledgement and consent referred to below,
each of its Subsidiaries hereby release, acquit, and forever discharge the
Banks and the Agent, and their officers, directors, agents, employees,
successors, and assigns, from all liabilities, claims, demands, actions, and
causes of action of any kind (if any there be), whether absolute or contingent,
due or to become due, disputed or undisputed, at law or in equity, that they
now have or ever had against the Banks and the Agent, or any one or more of
them individually, under or in connection with the Credit Agreement or any of
the other Loan Documents.
SECTION 7. MISCELLANEOUS.
7.1. The Borrower has heretofore executed and delivered to the
Agent and the Banks certain of the Collateral Documents. The Borrower hereby
acknowledges and agrees that, notwithstanding the execution and delivery of
this Amendment, the Collateral Documents remain in full force and effect and
the rights and remedies of the Agent and the Banks thereunder, the obligations
of the Borrower thereunder, and the liens and security interests created and
provided for thereunder remain in full force and effect and shall not be
affected, impaired, or discharged hereby. The Borrower hereby acknowledges and
agrees that the Loans as modified by this Amendment constitute Obligations
secured by each of the Collateral Documents. Nothing herein contained shall in
any manner affect or impair the priority of the liens and security interests
created and provided for by the Collateral Documents as to the indebtedness
which would be secured thereby prior to giving effect to this Amendment.
7.2. Except as specifically amended herein, the Credit Agreement
shall continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection
therewith, or in any certificate, letter or communication issued or made
pursuant to or with respect to the Credit Agreement, any reference in any of
such items to the Credit Agreement being sufficient to refer to the Credit
Agreement as amended hereby.
7.3. In consideration of the execution and delivery of this
Amendment, the Borrower hereby agrees to pay to the Agent for the benefit of
the Banks an amendment fee equal to $80,000 (such fee to be paid to the Banks
ratably based upon the outstanding principal balance of the Term Loans owed to,
or the Revolving Credit Commitments held by, such Bank on the date of this
Amendment prior to giving effect to any prepayments contemplated hereby), such
fee to be paid on the earlier of October 16, 1999, or the date the Borrower
satisfies the requirements of the second sentence of the second paragraph of
Section 8.34 of the Credit Agreement as amended hereby. In addition, the
Borrower agrees to pay on demand all costs and expenses of or incurred by the
Agent in connection with the negotiation, preparation, execution, and delivery
of this Amendment and the other instruments and documents to be executed and
delivered in connection herewith, including the fees and expenses of counsel
for the Agent.
7.4 This Amendment may be executed in any number of counterparts,
and by the different parties on different counterpart signature pages, all of
which taken together shall
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constitute one and the same agreement. Any of the parties hereto may execute
this Amendment by signing any such counterpart and each of such counterparts
shall for all purposes be deemed to be an original. This Amendment shall be
governed by the internal laws of the State of Illinois.
[SIGNATURE PAGES TO FOLLOW]
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This Third Amendment to Amended and Restated Credit Agreement is dated
as of the date and year first above written.
VISION TWENTY-ONE, INC.
By /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Chief Financial Officer
Accepted and agreed to as of the day and year last above written.
BANK OF MONTREAL, in its individual capacity
as a Bank and as Agent
By /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Managing Director
BANK ONE TEXAS, N.A.
By /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
PACIFICA PARTNERS I, L.P.
By: Imperial Credit Asset
Management, as its Investment
Manager
By /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Vice President
PILGRIM PRIME RATE TRUST
By: Pilgrim Investments, Inc., as its
Investment Manager
By /s/ Xxxxxxx X. XxXxxxx
Name: Xxxxxxx X. XxXxxxx
Title: Assistant Vice President and CFA
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XXXXXXX XXXXXXX HIGH INCOME INVESTMENTS LTD.
By: Pilgrim Investments, Inc., as its
Investment Manager
By /s/ Xxxxxxx X. XxXxxxx
Name: Xxxxxxx X. XxXxxxx
Title: Assistant Vice President and CFA
XXXXXXX XXXXX BUSINESS FINANCIAL SERVICES, INC.
By /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Assistant Vice President
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Acknowledgement and Consent
The undersigned, being all of the Material Subsidiaries of Vision
Twenty-One, Inc., have heretofore executed and delivered to the Agent and the
Banks one or more Guaranties and Collateral Documents. Each of the undersigned
hereby consents to the Third Amendment to Credit Agreement as set forth above
and confirms that its Guaranty and Collateral Documents, and all of its
obligations thereunder, remain in full force and effect and, without limiting
the foregoing, acknowledges and agrees that the Loans as modified therein
constitute Obligations guaranteed by, or otherwise secured by, the Loan
Documents executed by it. Each of the undersigned further agrees that the
consent of the undersigned to any further amendments to the Credit Agreement
shall not be required as a result of this consent having been obtained, except
to the extent, if any, required by the Loan Documents referred to above.
"GUARANTORS"
VISION 21 PHYSICIAN PRACTICE
MANAGEMENT COMPANY
VISION 21 OF SOUTHERN ARIZONA, INC.
VISION 21 OF SIERRA VISTA, INC.
VISION 21 MANAGEMENT SERVICES, INC.
VISION 21 MANAGED EYE CARE OF TAMPA
BAY, INC.
VISION TWENTY-ONE MANAGED EYE CARE
IPA, INC.
BBG-COA, INC.
BLOCK VISION, INC.
UVC INDEPENDENT PRACTICE ASSOCIATION,
INC.
MEC HEALTH CARE, INC.
LSI ACQUISITION, INC.
VISION TWENTY-ONE EYE SURGERY CENTERS, INC.
EYE SURGERY CENTER MANAGEMENT, INC.
VISION TWENTY-ONE REFRACTIVE CENTER,
INC.
VISION TWENTY-ONE OF WISCONSIN, INC.
By /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, an authorized signatory
for each of the above-referenced entities
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