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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
November 29, 1996
-----------------
Date of Report (Date of
Earliest Event Reported)
STERLING VISION, INC.
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(Exact name of Registrant as specified in its Charter)
New York 1-14128 11-3096941
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
1500 Hempstead Turnpike
East Meadow, New York 11554
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(Address of principal (Zip Code)
executive offices)
(516) 390-2100
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(Registrant's Telephone Number, Including Area Code)
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Item 5. Other Events
1. On November 29, 1996, Sterling Vision, Inc. (the
"Registrant" and, together with its subsidiaries, collectively referred to
herein as the "Company") borrowed from each of Drs. Robert Cohen, Alan Cohen
and Edward Cohen (collectively, the "Cohen Brothers") the sum of $666,666.66,
each of which loans is for a term of ninety (90) days and bears interest at a
rate equal to one (1%) percent above The Chase Manhattan Bank's (the "Bank")
prime rate of interest, in effect, from time to time during the term of said
loans.
As a condition to the Registrant borrowing such funds, the
Bank and the Registrant, on November 29, 1996, entered into a Ninth Amendment
and Waiver (the "Ninth Amendment") to the Credit Agreement, dated April 5,
1994, as amended, between the Registrant and the Bank, which Ninth Amendment,
among other things: (i) permitted the Registrant to borrow such funds from the
Cohen Brothers; (ii) placed additional restrictions on the Registrant's ability
to acquire other retail optical chains without the Bank's approval; (iii)
expanded the default provisions previously contained in the Credit Agreement to
include the provisions contained in Article III of the Ninth Amendment (a copy
of which is annexed hereto as on Exhibit); and (iv) placed additional
restrictions on the Company's ability to sell its excess franchisee promissory
notes.
As of the date hereof, the Company is exploring several
alternatives regarding the refinancing of the aforesaid loans, although there
can be no assurance that the Company will be successful in obtaining the
necessary funds therefor.
The foregoing is only a summary of certain of the provisions
of the Ninth Amendment and is qualified, in its entirety, by the provisions
thereof which has been filed as an Exhibit to this Report on Form 8-K.
2. Reference is made to "Note 7 - Subsequent Event" to the
Registrant's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1996, as filed with the Securities and Exchange Commission.
On November 30, 1996, the escrow agreement (referred to in
said Note) expired and terminated due to the inability of Dr. Norman Stahl,
prior to such date, to form a new professional corporation as required by the
terms of said escrow agreement.
As of the date hereof, the parties to the transactions
described in said Note 7 are attempting to negotiate the terms of a future
transaction, although there can be no assurance that the parties will be able
to agree upon the terms of any such transaction.
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INDEX TO EXHIBITS
Exhibit
Number Description
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1. Form of Ninth Amendment and Waiver, dated
November 29, 1996, to the Credit Agreement,
dated April 5, 1994, as amended, between the
Registrant and The Chase Manhattan Bank (f/k/a
Chemical Bank).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
STERLING VISION, INC.
By: /s/ Robert Greenberg
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Robert Greenberg, President
Dated: December 6, 1996
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NINTH AMENDMENT AND WAIVER TO CREDIT AGREEMENT
NINTH AMENDMENT and WAIVER dated as of November 29, 1996 (the "Ninth
Amendment and Waiver"), to the Credit Agreement dated as of April 5, 1994, by
and between STERLING VISION, INC. a New York corporation (the "Company") and
THE CHASE MANHATTAN BANK, a New York banking corporation (the "Bank"), (as
amended prior to the date hereof, the "Credit Agreement").
RECITALS
The Company has requested and the Bank has agreed, subject to the
terms and conditions of this Ninth Amendment and Waiver, to amend and waive
certain provisions of the Credit Agreement as herein set forth.
Accordingly, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
I. Amendments to Credit Agreement.
1. The Credit Agreement is hereby amended to add an (a)
Exhibit X entitled "Form of Insight Guaranty" which exhibit shall read in its
entirety as set forth on Schedule A attached hereto, (b) Exhibit Y entitled
"Form of Buy-Sell Agreement" which exhibit shall read in its entirety as set
forth on Schedule B attached hereto, (c) Exhibit W entitled "Leases", which
exhibit shall read in its entirety as set forth on Schedule D hereto, and (d)
Exhibit Z entitled "Form of Insight Operating Agreement" which exhibit shall
read in its entirety as set forth on Schedule C attached hereto.
2. The following defined terms are hereby added to
Section 1.01:
"Buy-Sell Agreement" shall mean that certain undated Buy-Sell
Agreement by and among Nassau Ophthalmic Services, P.C.,
d/b/a Stahl Eye Associates, Nassau Center for Ambulatory
Surgery, Inc., Eye Physicians and Surgeons of Hauppauge, P.C.
and the Company, a copy of which is attached hereto as
Exhibit Y.
"DKM Franchisee Notes" shall mean the promissory notes:(i)
issued to Sterling DKM by a Franchisee concurrently with the
establishment of a Franchise Store or the conversion of a
Company Store into a Franchise Store; and (ii) assigned to
Sterling DKM by the previous owner
EXHIBIT 1
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thereof prior to the date hereof, as the same may be amended,
modified and/or restated (prior to the date of any pledge
thereof to the Bank) by the maker thereof with the consent of
Sterling DKM but further provided the form of each such note
is reasonably acceptable to the Bank.
"Insight LLC" shall mean Insight Laser Centers, LLC, a New
York limited liability company.
"Insight Guaranty" shall mean the Guaranty in the form
attached hereto as Exhibit X to be executed and delivered by
the Company in favor of the Recipients identified on Schedule
A thereto.
"Insight Operating Agreement" shall mean the Operating
Agreement of Insight LLC, a copy of which is attached hereto
as Exhibit Z.
"Sterling DKM" shall mean Sterling Vision DKM, Inc., a
Delaware corporation.
3. The definition of "Eligible Franchisee Notes" in
Section 1.01 is hereby amended to read in its entirety as follows:
"Eligible Franchisee Notes" shall mean and include only those
Franchisee Notes which have no payments thereunder which are
more than forty-five (45) days past due and which at all
times are in compliance with the following additional
conditions: (i) not more than 50% of the royalties or fees
payable under the related Franchise Agreement by the
Franchisee thereof to the Company, Sterling BOS, Sterling
Vision California or Sterling DKM, as applicable, with
respect to the Franchise Store to which said Franchisee Note
relates are more than one Hundred and Twenty (120) days past
due, (ii) not more than 50% of the lease payments payable by
the Franchisee thereof with respect to its lease or sublease
of real property from the Company, Sterling BOS, Sterling
Vision California or Sterling DKM, as applicable, or any Real
Estate Affiliate of the Franchise Store to which said
Franchisee Note relates, are more than one hundred and twenty
(120) days past due, (iii) there exists no default or event
which, upon notice, lapse of time or both would constitute a
default under said Franchisee Note or the relevant Franchise
Agreement, other than defaults resulting from (x) a
Franchisee's failure to timely pay principal and/or interest
under said Franchisee Note or timely pay any royalties or
fees payable under the related Franchise Agreement or any
lease payments under a
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lease or sublease of a Store and (y) a default under the
terms of any agreement between the Franchisee and the
Company, Sterling BOS, Sterling Vision California or Sterling
DKM, as applicable, which pertains solely to a Store which is
not the Store with respect to which such Franchisee Note was
issued (provided, in each case, the Company, Sterling BOS,
Sterling Vision California or Sterling DKM, as applicable,
has neither exercised any of its rights or remedies as a
secured party with respect to any or all collateral pledged
by Franchisee to it to secure the Franchisee's Franchisee
Note nor has deemed such Franchisee Note uncollectible in
full for any reason), and (iv) with respect to which, the
Bank shall have received an opinion of counsel to the Company
(which may include in-house counsel) to the effect that each
said Franchisee Note and the related Debt Pledge Agreement
constitute the legal, valid and binding obligation of the
Franchisee and the Company, Sterling BOS, Sterling Vision
California or Sterling DKM, as applicable, respectively.
4. The definition of "Franchisee Notes" in Section 1.01 is hereby
amended to read in its entirety as follows:
"Franchisee Notes" shall mean, collectively, the Company
Franchisee Notes, the DKM Franchisee Notes, the BOS
Franchisee Notes and the California Franchisee Notes.
5. Section 3.10 is hereby amended and restated in its entirety to read
as follows:
SECTION 3.10 In the event that prior to payment in full of
the Obligations the Company or any Subsidiary of the Company
shall sell any Franchisee Note as permitted pursuant to
Section 7.05 hereof, the Company shall apply or cause to the
Subsidiary (which is the owner of said Franchise Note) to
apply the gross proceeds therefrom, less the sum of the
reasonable out-of-pocket fees and expenses incurred in
connection therewith, to prepay the Tranche A Term, the
Tranche B Term Loan and the Time Loan (as determined by the
Bank). Prepayments of the Tranche A Term, the Tranche B Term
Loan and the Time Loan shall be applied to the remaining
installments of principal thereof in the inverse order of
maturity. In the event such Loans are paid in full all
prepayments thereafter shall be used to pay
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the amount then outstanding on the Revolving
Credit Loans.
6. Section 3.12(a) is hereby amended to add the text "(other than
Insight Inc and Insight LLC)" after the text "Corporate Guarantors" therein.
7. Section 6.03 is hereby amended to add a new clause (q)
which shall read in its entirety as follows:
(q) (i) as soon as available, but in no event later than
December 9, 1996, a thirteen (13) week projected cash flow
(on a weekly basis) of the Company and its Subsidiaries on a
consolidated basis, and of Insight LLC, each in form and
detail reasonably satisfactory to the Bank, covering the
thirteen (13) week period commencing December 9, 1996,
prepared under the supervision of and certified by the Chief
Financial Officer of the Company and its Subsidiaries and of
Insight LLC, respectively, and (ii) as soon as available, but
in no event later than fifteen (15) days after the end of
each calendar month, commencing with the calendar month
ending December 31, 1996, a cash flow report of the Company
and its Subsidiaries and of Insight LLC, prepared under the
supervision of and certified by the Chief Financial Officer
of the Company and its Subsidiaries and of Insight LLC,
respectively, which shall include (x) a detailed analysis of
the actual weekly consolidated cash flow of the Company and
its Subsidiaries or the actual weekly cash flow of Insight
LLC, as applicable, for the calendar month just ended
compared to the projected weekly consolidated cash flow of
the Company and its Subsidiaries or the projected weekly cash
flow of Insight LLC, as applicable, for such period (which
such projection was previously provided to the Bank),
explaining the variances (if any) between the actual and the
projected weekly cash flows and (y) a "roll forward" of the
thirteen (13) week consolidated cash flow projection of the
Company and its Subsidiaries and of the thirteen (13) week
cash flow projection of Insight LLC provided to the Bank in
the preceding calendar month which "roll forward"
incorporates the next succeeding four (4) weeks subsequent to
the end of the period covered by the previous cash flow
report provided to the Bank.
8. Section 6.13 is hereby amended and restated in its entirety as
follows:
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SECTION 6.13 Franchisee Notes.
(a) The Company shall pledge or cause to be pledged Eligible
Franchisee Notes in an outstanding unpaid principal amount equal to
1.25 multiplied by the then outstanding principal balance of the Loans
(the "Minimum Secured Amount"). The Company shall first pledge Company
Franchisee Notes which constitute Eligible Franchisee Notes. To the
extent the aggregate unpaid principal balance of such Company
Franchisee Notes is less then the Minimum Secured Amount, Sterling
BOS, Sterling Vision California and/or Sterling DKM shall pledge BOS
Franchisee Notes, California Franchisee Notes and DKM Franchisee
Notes, respectively, to cover the shortfall. To the extent the
Company, Sterling BOS, Sterling Vision California or Sterling DKM,
collectively, do not have Eligible Franchisee Notes in an aggregate
unpaid principal amount equal to the Minimum Secured Amount, the
Company shall not be deemed to be in default under this Section 6.13,
if the Company, Sterling DKM, Sterling Vision California and/or
Sterling BOS, has pledged to the Bank Eligible Franchisee Notes in an
amount not less than the outstanding principal amount of the Loans and
the Company maintains Eligible Royalty Receivables and/or Eligible
Rent Receivables in an aggregate amount equal to (x) the sum of the
pledged Eligible Franchisee Notes less (y) the Minimum Secured Amount;
provided, however, the aggregate amount of Eligible Rent Receivables
pledged hereunder shall not exceed $250,000. Eligible Franchisee Notes
pledged pursuant to this Section 6.13 shall be held by the Bank
pursuant to the terms of the applicable Debt Pledge Agreement. The
Bank shall be granted a security interest in all Royalty Receivables
and Rent Receivables pursuant to the applicable Security Agreement.
(b) Provided no Event of Default or event which upon lapse of
time, notice or both would constitute an Event of Default shall have
occurred and be continuing and further provided the Bank shall have
received Eligible Franchisee Notes in an aggregate amount equal to the
then Minimum Secured Amount, the Bank shall release from time to time,
Company Franchisee Notes, DKM Franchisee Notes, California Franchisee
Notes and/or BOS Franchisee Notes in an aggregate principal amount
equal to the aggregate principal amount of all Eligible Franchisee
Notes pledged to the Bank pursuant to the applicable Debt Pledge
Agreements less the Minimum Secured Amount for the sole purpose of and
in connection with the sale of such notes in accordance with Section
7.05 hereof; provided, however, no Company Franchisee Notes shall be
released until all BOS Franchisee Notes,
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California Franchisee Notes and all DKM Franchisee Notes have been
released.
(c) In the event the Bank determines at any time that a
Company Franchisee Note, DKM Franchisee Note, California Franchisee
Note or BOS Franchisee Note is not an Eligible Franchisee Note or the
aggregate principal amount of Eligible Franchisee Notes pledged to the
Bank together with the aggregate principal amount of the Eligible
Royalty Receivables and Eligible Rent Receivables is less than the
Minimum Secured Amount, the Company shall promptly upon the Bank's
request provide to the Bank (i) additional Eligible Franchisee Notes
(ii) evidence of additional Eligible Royalty Receivables and/or
Eligible Rent Receivables to the extent permitted by clause (a) above,
and/or (iii) cash or Cash Equivalents properly margined and
satisfactory to the Bank in its sole and absolute discretion in an
aggregate amount which, when aggregated with all other Eligible
Franchisee Notes, cash and Cash Equivalents pledged to the Bank and
Eligible Rent Receivables and Eligible Royalty Receivables maintained
by the Company to the extent permitted by clause (a) above, shall be
equal to the Minimum Secured Amount. Payments received on the Eligible
Franchisee Notes pledged pursuant to the Debt Pledge Agreements shall
be subject to the terms of the Debt Pledge Agreement applicable
thereto.
(d) So long as the Obligations shall remain unpaid (i) the
Company shall deliver to the Bank within ten (10) days after the close
of each calendar month, an aging of the Franchisee Notes, Royalty
Receivables, Rent Receivables and advertising receivables under the
Franchise Agreements and (ii) the Company shall deliver to the Bank
(x) within thirty (30) days after the end of each calendar quarter, a
certificate executed by the Company's Chief Financial Officer and (y)
within thirty (30) days after then end of each fiscal year of the
Company a certificate executed by the Chief Financial Officer in each
case, stating that each Franchisee Note then held by the Bank
constitutes an Eligible Franchisee Note.
(e) Upon the occurrence and continuance of an Event of
Default, the Bank may, at its option, and at the Company's expense,
conduct (or cause its designated representative to conduct) updated
field audits of the Franchisee Notes, Rent Receivables and Royalty
Receivables and the supporting books, records and documentation
relating to each of the same for the purpose of determining whether
the Franchisee Notes, Rent Receivables and Royalty Receivables
constitute Eligible
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Franchisee Notes, Eligible Rent Receivables and Eligible
Royalty Receivables, respectively.
9. Section 7.01 is hereby amended to delete the text of clause (i)
thereof and to insert in place thereof "[intentionally omitted]."
10. Article VII is hereby amended to add the text "(other than Insight
LLC and Insight, Inc.)", after the text "(Subsidiary of the Company)" each time
it appears in (I) clause (g) of Section 7.02, (II) clause (c) of Section 7.03,
(III) Section 7.04 (other than the last line thereof), (IV) clause (iv) of
Section 7.06, and (V) clause (iv) of Section 7.12.
11. Section 7.03 is hereby amended to add a new clause (h) and a new
clause (i) which shall read in their entirety as follows:
(h) The Insight Guaranty (but excluding any
amendments, extensions, or any other modifications thereto)
with respect to those agreements identified on Schedule A
attached thereto (but excluding any amendments, waivers,
extensions or any other modifications to any thereof (other
than an amendment to the Purchase and Sale Agreement listed
as document No. 4 on Schedule A attached thereto extending
the payment terms of the purchase price set forth therein but
not the aggregate purchase price thereof) unless the Bank
shall have consented to the same); provided, however, the
aggregate obligations of the Company under the Insight
Guaranty shall not exceed $5,000,000 (the Bank hereby
acknowledging that no limitation on the liability of the
Company is set forth in the Insight Guaranty provided such
acknowledgment shall not constitute a waiver of a breach of
this covenant if the aggregate obligations guaranteed under
the Insight Guaranty exceed $5,000,000) and, further provided
the obligations under the Insight Guaranty are unsecured.
(i) Unsecured guarantees by the Company of the obligations of
Insight Inc. or Insight LLC under (x) the leases described on
Exhibit W attached hereto provided the rental payments shall
not exceed the amount of the rental payments as set forth on
Exhibit W, (y) equipment leases entered into in the ordinary
course of business financing equipment, the aggregate cost of
which shall not exceed $200,000, and (z) an equipment lease
covering the laser described in clause (xiv) of
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Section 7.06 hereof provided the proceeds from the sale of
the equipment to the lessor thereof shall be used to repay
any loan made by the Company to Insight LLC pursuant to
clause (xii) of Section 7.06
12. Clause (vii) of Section 7.06 is hereby amended and restated in its
entirety to read as follows:
(vii) Franchisee Notes issued to the Company, Sterling DKM,
Sterling BOS or Sterling Vision California concurrently with
the conversion of a Store to a Franchisee Store, provided the
form of such Note shall have been approved by the Bank.
13. Section 7.05 is hereby amended and restated in its entirety as
follows:
SECTION 7.05. Sale of Notes. Sell, transfer, discount or
otherwise dispose of notes, accounts receivable or other
obligations owing to the Company or any Subsidiary of the
Company, with or without recourse, except for collection in
the ordinary course of business; provided however, the
Company may sell for cash Franchisee Notes provided that (i)
such sale is non-recourse to the Company, (ii) the cash
proceeds received by the Company shall be in a minimum amount
equal to the principal amount outstanding of each Franchisee
Note sold, (iii) no Event of Default or event which upon
notice, lapse of time or both would constitute an Event of
Default shall have occurred (iv) the Company shall have
provided the Bank not less than ten days prior written notice
of the proposed sale of each Franchisee Note, and (v) the
Company shall apply the cash proceeds from such sale
immediately to the prepayment of the Obligations in
accordance with Section 3.10 hereof.
14. Section 7.06 is hereby amended to add a clause (xii), clause
(xiii) and clause (xiv) which shall read in their entirety as follows:
(xii) The Company may purchase a membership interest in
Insight LLC to the extent required under the Buy-Sell
Agreement but not pursuant to any discretionary right of the
Company provided in the Buy-Sell Agreement, the form of which
is attached hereto as Exhibit Y;
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(xiii) Insight Inc. may make additional capital contributions
to Insight LLC to the extent required pursuant to Section
6.2(b) of the Insight Operating Agreement, the form of which
is attached hereto as Exhibit Z; and
(xiv) The Company may make loans, directly or indirectly, to
Insight LLC not to exceed $400,000 in the aggregate; provided
in the event Insight LLC elects to purchase a laser owned by
Dr. Norman Stahl for a purchase price of $213,000 then such
aggregate amount shall be $613,000.
15. SECTION 7.15. Net Worth plus Subordinated Indebtedness. Permit
Consolidated Tangible Worth of the Company and its Subsidiaries plus
Consolidated Subordinated Indebtedness of the Company and its Subsidiaries at
any time to be less than:
(i) $22,600,000 from the date hereof through
December 30, 1997; and
(ii) for each fiscal year thereafter commencing December 31,
1997 and ending December 30th of the immediately following
fiscal year, $500,000 plus an amount equal to the required
level of the minimum required Consolidated Tangible Net Worth
plus Consolidated Subordinated Indebtedness of the Company
and its Subsidiaries for the prior fiscal year ended December
31.
16. Section 7.26 is hereby amended to add the following clause after
the word "Person" and before the period at the end thereof;
; provided, however, that (x) the Company may purchase a
membership interest in Insight LLC to the extent required
under the Buy-Sell Agreement but not pursuant to any
discretionary right of the Company provided in that
Agreement, and (y) any wholly-owned Subsidiary of the Company
may declare and pay a dividend to the Company.
17. Section 8.01 is hereby amended to add a new clause (o)
which shall read in its entirety as follows:
(o) The Company or any of its Subsidiaries shall make any
payments to Insight LLC, Dr. Norman Stahl or to any Recipient
(as that term is defined in the Insight Guaranty) in excess
of $50,000, individually or in the aggregate, whether
pursuant
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to the Insight Guaranty, the Buy-Sell Agreement (regardless
if such buy-out is required or discretionary on the part of
the Company or any of its Subsidiaries), the Insight
Operating Agreement or any other agreement or arrangement;
provided, however, there shall be excluded from the
calculation of such $50,000 (i) payment the proceeds of
insurance received by the Company pursuant to a policy
maintained with respect to the life of the Person whose
interest is required to be repurchased pursuant to the
Buy-Sell Agreement and (ii) loans permitted pursuant to
Section 7.06 (xiv).
II. Waivers. The Bank hereby grants the following waivers in respect
to the Credit Agreement:
(a) Compliance with Section 7.13 of the Credit Agreement is
hereby waived with respect to the requirement to provide a Corporate Guaranty
and Guarantor Security Agreement executed by Insight Laser Centers, LLC
("Insight LLC") provided that (i) immediately upon ownership by the Company
and/or its Subsidiaries of all (but not less than all) of the membership
interests of Insight LLC and regardless of whether or not such membership
interest is subject to a lien pursuant to the terms of the Buy-Sell Agreement
between the Company and the other members of Insight LLC ("Other Members") the
Company shall cause Insight LLC to execute and deliver to the Bank a Corporate
Guaranty and a Guarantor Security Agreement, (ii) the Bank is notified in
writing of the release from escrow of the documents between or among, as
applicable, Insight LLC, Insight Laser Centers, Inc. ("Insight Inc.") and Dr.
Norman Stahl and his affiliates and of the Buy-Sell Agreement and the Insight
Guaranty, and further provided on such date Insight Inc. shall immediately
assign to the Bank the Promissory Note in the principal amount of $1,936,000
from Insight LLC to Insight Inc. to secure the guaranty obligations of Insight,
Inc. to the Bank pursuant to Insight, Inc.'s existing Guaranty executed in
favor of the Bank, (iii) until payment in full of the Obligations, the Company
will not exercise any discretionary right to purchase the membership interest
of any Other Member in the Insight LLC; provided, however, the foregoing shall
not be deemed to prohibit any obligation on the part of the Company to buy-out
such membership interest pursuant to the terms of the Buy-Sell Agreement among
the Company, Nassau Ophthalmic Services, P.C. d/b/a Stahl Eye Associates,
Nassau Center for Ambulatory Surgery, Inc. and Eye Physicians and Surgeons of
Hauppauge, P.C. (the "Buy-Sell Agreement") (iv) the Company will provide to the
Bank, upon request, all documents and agreements to which Insight LLC, Insight
Inc. or the Company is a party with respect to the operations and ownership of
Insight LLC.
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(b) Compliance with Section 7.02 of the Credit Agreement is
hereby waived to permit the Company to borrow on the date hereof $666,666.66
from each of Dr. Robert Cohen, Dr. Edward Cohen and Dr. Alan Cohen for a term
of ninety (90) days, in each case to be repaid to each of such individuals
together with interest thereon, to be computed at a rate of interest equal to
one (1%) percent over the prime rate charged from time to time (during the term
of said loans) by The Chase Manhattan Bank.
(c) Compliance with Section 7.06 of the Credit Agreement is
hereby waived to permit a capital contribution from Insight Inc. to Insight LLC
of $1,500,000 by contribution of all of its Assets (as that term is defined in
and pursuant to that certain undated Contribution Agreement dated October 1,
1996 by and between Insight Inc. and Insight LLC, a true and correct copy of
which has been previously delivered to the Bank), all pursuant to and in
accordance with Section 5.1(a) of the Insight Operating Agreement in the form
attached hereto as Schedule C.
III. Additional Agreements.
The Company acknowledges that on the date hereof the Bank is
making a loan to Dr. Alan Cohen, Dr. Robert Cohen and Dr. Edward Cohen in the
aggregate principal amount of $1,999,999.98 (the "Shareholder Loans"), the
proceeds of which in turn will be loaned by such individuals, on the date
hereof, to the Company. In consideration of the foregoing and the amendments
and waivers provided for herein, the Company agrees that:
(a) In the event that prior to December 27, 1996, (the
"Commitment Date") the Company shall not have delivered to the Bank a
commitment letter from a reputable financial institution pursuant to which such
financial institution commits, subject to customary and usual terms, to provide
to the Company a loan or loans on or prior to the sixtieth day following the
date of such commitment letter or such earlier date as set forth in such
commitment letter (the "Take Out Closing Date") sufficient to pay in full all
Obligations of the Company and its Subsidiaries to the Bank and to Alan Cohen,
Edward Cohen and Robert Cohen with respect to the Shareholder Loans, then
effective on the Commitment Date the multiple for purposes of determining the
Minimum Secured Amount shall, without further action, be deemed amended from
1.25 to 1.50 and (y) an Event of Default shall be deemed to have occurred
pursuant to Article VIII and the Bank shall have all the rights and remedies in
respect thereof provided for in the Loan Documents, at law or otherwise.
(b) In the event the commitment letter described in paragraph
(1) above is issued on or prior to December 27, 1996, but for any reason the
Obligations to the Bank and to Alan Cohen, Edward Cohen and Robert Cohen with
respect to the Shareholder Loans are not paid in full on or prior to the Take
Out Closing Date then
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effective on the Take Out Closing Date (x) the multiple for purposes of
determining the Minimum Secured Amount shall, without further action, be deemed
amended from 1.25 to 1.50 and (y) an Event of Default shall be deemed to have
occurred pursuant to Article VIII and the Bank shall have all the rights and
remedies in respect thereof provided for in the Loan Documents, at law or
otherwise.
(c) During the period commencing the date hereof and ending
February 26, 1997, the Company shall not, without the prior written consent of
the Bank, acquire or establish directly or indirectly any Subsidiary (other
than a Real Estate Subsidiary, the sole purpose of which shall be to enter into
a lease for a Company Store or Franchisee Store, or, directly or indirectly,
acquire all or substantially all of the assets of, or all or substantially all
of the assets of a business of, any Person (other than as permitted by Section
7.06(xii)) notwithstanding any right to do so otherwise set forth in the Credit
Agreement.
The Company acknowledges that the foregoing additional
agreements are a material inducement to the extension of the Shareholder Loans
and to the making of the amendments and the waivers provided for herein.
IV. Miscellaneous.
This Ninth Amendment and Waiver shall be governed by and construed in
accordance with the laws of the State of New York.
All terms used herein shall have the same meaning as in the Credit
Agreement, as amended hereby, unless specifically defined herein.
This Ninth Amendment and Waiver shall constitute a Loan
Document.
Except as expressly amended hereby, the Credit Agreement shall remain
in full force and effect in accordance with the terms thereof. As amended
hereby, the Credit Agreement is ratified and confirmed in all respects. The
amendments and waivers herein are limited specifically to the matters set forth
above and for the specific instance and purpose for which given and do not
constitute directly or by implication an amendment or waiver of any other
provisions of the Credit Agreement or of any Event of Default or default which
may occur or may have occurred under the Credit Agreement.
The Company hereby represents and warrants that, after giving effect
to this Ninth Amendment and Waiver, no Event of Default or event upon which
notice, lapse of time or both would constitute an Event of Default, exists
under the Credit Agreement or any other Loan Document.
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This Ninth Amendment and Waiver may be executed in one or more
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one Ninth Amendment and Waiver.
IN WITNESS WHEREOF, the Company and the Bank have caused this Ninth
Amendment and Waiver to be duly executed by their duly authorized officers as
of the day and year first above written.
STERLING VISION, INC.
By: /s/ Robert Cohen
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Title: Chairman
THE CHASE MANHATTAN BANK
By:
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Title: Vice President
