SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 29, 1998
LCA-VISION INC.
(Exact name of Registrant as specified in its Charter)
Delaware 0-27610 11-2882328
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification Number)
incorporation)
7840 Montgomery Road, Cincinnati, Ohio 45236
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (513)
792-9292
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
LCA-Vision Inc. (NASDAQ:LCAV) terminated its existing revolving
credit facility with The Fifth Third Bank and obtained a new
revolving credit facility from The Provident Bank. The facility,
effective June 29, 1998, consists of $8 million of working
capital, including up to $2.5 million for equipment leases and up
to $2 million for letters of credit.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description
99.1 Loan documents dated June 29, 1998 by and
between LCA-Vision Inc. and The Provident
Bank
99.2 LCA-Vision Inc. Press Release dated June 29,
1998
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.
LCA-VISION INC.
Date: July 1, 1998 By: /s/ Larry P. Rapp
Larry P. Rapp
Chief Financial Officer
<PAGE>
EXHIBIT 99.1
LOAN AGREEMENT
LCA-VISION INC. and REFRACTIVE CENTERS INTERNATIONAL, INC.,
jointly and severally (individually and collectively, "Borrower"),
and THE PROVIDENT BANK ("Lender"), hereby agree as follows:
1. Definitions. Capitalized terms used herein and not
otherwise defined herein will have the meanings given those terms
in the second to last section of this Agreement.
2. Credit Facilities.
2.1 Revolving Credit Loan.
2.1.1 Total Facility. Lender will make available to
Borrower a line of credit of up to $8,000,000 ("Total Facility"),
subject to the terms and conditions and made upon the
representations and warranties of Borrower set forth in this
Agreement. The availability of the Total Facility will be reduced
in an amount equal to the capital costs financed under the lease
facility provided by Information Leasing Corporation (the "Lease
Facility"). Amounts outstanding under the line of credit from
time to time will be referred to as the "Revolving Credit Loan".
The Revolving Credit Loan will be represented by the promissory
note of Borrower of even date herewith and all amendments,
extensions and renewals thereto and restatements and replacements
thereof ("Promissory Note"). The Revolving Credit Loan will bear
interest and will be payable in the manner set forth in the
Promissory Note, the terms of which are incorporated herein by
reference.
2.1.2 Advances. Advances will be made as specified
in the Promissory Note and Section 2.2 hereof.
2.1.3 Extensions. After the initial term of the
Promissory Note, Lender in its sole discretion may extend or renew
the Total Facility and the Promissory Note by accepting from
Borrower one or more new notes, each of which will be deemed to be
the Promissory Note under this Agreement. In no event will Lender
be under any obligation to extend or renew the Total Facility or
the Promissory Note beyond the initial term thereof.
2.1.4 Unused Fee. Borrower will pay to Lender a
Unused Fee from and including the Closing Date, computed at the
rate of one-quarter of one percent (0.25%) per annum, on the
average daily difference between: (i) the outstanding amount of
the Note and (ii) the Total Facility minus amounts advanced under
the Lease Facility or reserved pursuant to any Letters of Credit
(as defined below), such Unused Fee to be payable on the date one
year after the date of the Note and on the same date each and
every year thereafter, and upon the maturity date of the Note
and/or the date this Agreement is terminated.
2.1.5 Conversion. Subject to the terms and
conditions set forth in the Promissory Note, Borrower may convert
up to $3,500,000 of the Revolving Credit Loan to a Term Loan which
will bear interest and will be payable in the manner set forth in
the Promissory Note (the "Term Loan").
2.2 Issuance of Letters of Credit.
2.2.1 Letters of Credit. In consideration of the
terms and conditions of this Agreement, Lender from time to time
at the request and on the instructions of Borrower, will issue
advances under the Promissory Note, in the form of Lender's
acceptance and/or letters of credit and renewals, extensions and
amendments thereto (collectively, "Letters of Credit"). The
specific terms with respect to each Letter of Credit will be as
agreed upon by Borrower and Lender; provided that (i) the
requested Letter of Credit satisfies the requirements of Section
2.2.2 below, and (ii) the maximum stated amount of the Letters of
Credit outstanding at any time may not exceed $2,000,000.
Borrower acknowledges that as to each Letter of Credit, Borrower:
(a) will independently determine that it is in its best interest
to enter into the transaction to which the Letter of Credit
relates and to cause the Letter of Credit to be issued to the
beneficiary, and (b) is not relying on Lender in any manner with
respect to the items described in clause (a) above, and has sought
independent legal or other advice with respect thereto to the
extent it deemed necessary.
2.2.2 Terms of Letters of Credit. All Letters of
Credit shall be issued on Lender's standard forms therefor (or in
such other form as Lender and Borrower may agree) for the account
of Borrower and shall be, unless otherwise agreed by Lender in its
discretion, denominated in United States Dollars. Unless Lender
agrees otherwise, no Letter of Credit shall be issued or renewed
with a maturity date beyond June 30, 2000.
2.2.3 Procedure for Letters of Credit. Borrower
shall give Lender written notice (or telephone advice thereof
promptly confirmed in writing but in no event later than 11:00
a.m. Cincinnati time on the day on which such telephonic notice is
given) of its request for a Letter of Credit at least five (5)
Business Days prior to the date on which a Letter of Credit is
requested to be issued. Such notice shall be accompanied by all
Letter of Credit Documents reasonably required by Lender, duly
executed, and shall specify: (a) the name and address of the
beneficiary of the Letter of Credit, (b) the type and amount of
the Letter of Credit, (c) whether the Letter of Credit is
revocable or irrevocable, (d) the Business Day on which the Letter
of Credit is to be issued and the date on which the Letter of
Credit is to expire, (e) the terms of payment of any draft or
drafts which may be drawn under the Letter of Credit, and (f) any
other terms or provisions Borrower desires to be contained in the
Letter of Credit. In the event of any conflict between the
provisions of this Agreement and the provisions of any applicable
Letter of Credit Documents, the provisions of this Agreement shall
prevail and control unless otherwise expressly provided in the
Letter of Credit Documents. If the requested form of such Letter
of Credit is acceptable to Lender in its sole discretion, Lender
will, subject to the terms and conditions of this Agreement, make
such Letter of Credit available to Borrower at Lender's office.
2.2.4 Letter of Credit Fees and Expenses. In
consideration of the issuance by Lender of each of the Letters of
Credit, Borrower will pay to Lender (a) commissions with respect
to each Letter of Credit so long as Lender is obligated under the
applicable Letter of Credit, computed on such amounts and at the
rate of one and one-eighth of one percent (1.125%) per annum of
the stated amount of each Letter of Credit, calculated on the
basis of a year of 360 days and the actual number of days elapsed,
with a $25,000 minimum per Letter of Credit and an additional
issuance fee of $100 per Letter of Credit, such minimum fees and
issuance fees to be adjusted from time to time to Lender's
standard rates, and (b) all expenses that Lender reasonably incurs
in connection with any Letter of Credit (including but not limited
to attorney's fees, wire transfer charges, fees of correspondent
and confirming banks, foreign exchange fees, etc.). Lender will
credit Borrower on a pro-rata basis for Letters of Credit
commissions with respect to Letters of Credit paid or terminated
prior to its stated maturity date.
2.2.5 Reimbursement for Drawings. Borrower will
reimburse Lender for any drawing under a Letter of Credit on the
day on which payment of such drawing is made by Lender. All
payments hereunder will be made in accordance with Section 2.2.6
in United States Dollars and as to any drafts or acceptances
payable in currency other than United States Dollars, Borrower
will pay Lender the equivalent of the amount paid by Lender in
United States Dollars. Equivalent United States Dollar amounts
will be determined at the selling rate of exchange then offered at
the time of payment by Lender for cable transfers to the place of
payment in the currency in which the acceptance or draft is
payable, plus any payments made by Lender to comply with any
governmental exchange regulations applicable to the purchase of
such foreign currency. All delinquent reimbursement payments will
bear interest at the Default Rate.
2.2.6 Method and Place of Payment. All payments by
Borrower to Lender under this Agreement in connection with Letters
of Credit will be made to Lender in lawful currency of the United
States and in immediately available funds at its office at The
Provident Bank, One East Fourth Street, Suite 211A, Cincinnati,
Ohio 45202, Attn: Commercial Banking, until otherwise notified in
writing by Lender. In the event the date specified for any such
payment is not a Business Day, such payment will be made on the
next following Business Day and interest after such Business Day
(and after the expiration of any applicable grace period, if any)
will accrue at a rate equal to the Default Rate until paid.
Borrower agrees that, so long as sufficient funds are available
under the Total Facility, Lender will make an advance under the
Promissory Note and apply the proceeds thereof to such payment.
In addition, Lender may, at its option and in its sole discretion
(but shall not be obligated to), in addition to and not in lieu of
any right or remedy, draw any other Note in such amount and apply
the proceeds of such Loan to such payment.
2.2.7 Liability and Indemnification of Lender.
2.2.7.1 Any action taken or omitted by Lender,
any correspondent bank or confirming bank, under or in connection
with the Letters of Credit or drafts or documents relating
thereto, if taken or omitted without negligence or willful
misconduct, will be binding upon Borrower and will not result in
Lender or any correspondent bank or confirming bank being under
any liability to Borrower. Lender, any correspondent bank or
confirming bank or any of their officers, directors or employees
will not be liable or responsible for: (a) the use which may be
made of the Letters of Credit or for any acts or omissions of any
beneficiaries or any transferees in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any
endorsement(s) thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) if through the actions of shippers or
any other party, any documents fail to reach their destination in
due time; (d) the kind, quality, quantity, delivery or existence
of property represented by any documents; (e) the sufficiency,
coverage or validity of any insurance, the financial standing or
responsibility of any insurer, or any other risk connected with
insurance on any property; (f) delay in giving or the failure to
give notice of arrival or any other notice; (g) failure of any
draft to bear any reference or adequate reference to any of the
Letters of Credit; (h) any delay or deviation from instructions in
regard to shipment or any delay or deviation from instructions in
regard to payment other than on a Letter of Credit; (i) any
variation between invoices and insurance documents or between
invoices and bills of lading, warehouse receipts or other
documents; (j) any negligence or fraud of any shipper, inspector,
forwarding agent or other party; (k) errors, omissions,
interruptions or delays in transmission or delivery of any
messages or documents by mail, telex or other means; or (l) any
other circumstances whatsoever in making or failing tomake payment
under any of the Letters of Credit, except only damages which
Borrower proves were caused by Lender, any correspondent bank or
confirming bank or any of their officers, directors or employees
under either of the following circumstances and in those cases
Borrower will have a claim only against the entity or its
officers, directors or employees that actually committed the acts
giving rise to such claim: (i) negligence or willful misconduct
in determining whether a draft or other documents presented under
any Letter of Credit complies with the terms of the Letter of
Credit or (ii) the willful or negligent failure to pay under a
Letter of Credit after the presentation to it by any beneficiary
or transferee of a draft and documents strictly complying with the
terms and conditions of the Letter of Credit. In furtherance of
and not in limitation of the foregoing, Lender, its correspondent
banks and confirming banks may accept documents that appear on
their face to be in order, without responsibility for further
investigation, and any action taken or omitted in good faith in
connection with any of the Letters of Credit or any documents or
property related to any of the Letters of Credit will be binding
on Borrower and will not result in any liability of Lender, its
correspondent banks and confirming banks. In addition, Lender,
its correspondent and confirming banks will not be liable for any
failure or inability to perform in accordance with the terms of
any of the Letters of Credit by reason of any censorship, law,
control or restriction rightfully or wrongfully exercised by any
de facto or de jure government or group exercising or exerting
governmental powers, or for any other act or omission for which
banks are relieved of responsibility under applicable law and/or
the Uniform Customs.
2.2.8 The provisions of Section 2.2 will survive the
termination of this Agreement.
2.2.9 Documentation. Lender may accept or honor as
complying with any Letter of Credit any draft or other document
otherwise in order which has been signed or issued by or to the
administrator, executor or trustee in bankruptcy of or any
receiver for any of the property of any party designated in any of
the Letters of Credit or in Borrower's instructions, in the place
of the name, signature or act of such party.
2.3 Additional Costs.
2.3.1 Reserve Requirements. In the event that any
applicable law, treaty, rule or regulation (whether domestic or
foreign) now or hereafter in effect and whether or not presently
applicable to Lender, or any interpretation or administration
thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by Lender
with any guideline, request or directive of any such authority
(whether or not having the force of law), will impose, modify or
deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account
of, or credit extended by, Lender, and the result of any of the
foregoing is to increase the cost of making, funding or
maintaining any Note or to reduce the amount of any sum receivable
by Lender thereon, then Borrower will pay to Lender from time to
time, upon request by Lender, additional amounts sufficient to
compensate Lender for such increased cost or reduced sum
receivable.
2.3.2 Certificate of Lender. A certificate of
Lender setting forth such amount or amounts as will be necessary
to compensate Lender as specified above will be delivered to
Borrower and will be conclusive absent manifest error. Borrower
will pay Lender the amount shown as due on any such certificate
within 10 days after its receipt of the same. Failure on the part
of Lender to deliver any such certificate will not constitute a
waiver of Lender's rights to demand compensation for any
particular period or any future period. The protection of this
Section will be available to Lender regardless of any possible
contention of invalidity or inapplicability of the law,
regulation, etc., that results in the claim for compensation under
this Section.
3. Collateral. The Collateral for the repayment of the
Obligations will be that granted pursuant to the Security
Documents.
4. Representations and Warranties. To induce Lender to enter
into this Agreement and to make the advances herein contemplated,
Borrower hereby represents and warrants as follows as to itself
and each Subsidiary:
4.1 Organization. Borrower and its Subsidiaries are
corporations duly organized and in good standing under the laws of
the states of their incorporations, are duly qualified in all
jurisdictions where required by the conduct of its business or
ownership of their assets except where the failure to so qualify
would not have a material adverse effect on its condition,
financial or otherwise, and has the power and authority to own and
operate its assets and to conduct their business as is now done.
4.2 Latest Financials. Its Current Financial Statements
as delivered to Lender are true, complete and accurate in all
material respects and fairly present its financial condition,
assets and liabilities, whether accrued, absolute, contingent or
otherwise and the results of its operations for the periods
specified therein. The annual financial statements of all
business entities included in the Current Financial Statements
have been prepared in accordance with generally accepted
accounting principles applied consistently with preceding periods
subject to any comments and notes contained therein.
4.3 Recent Adverse Changes. Except as specifically
disclosed in the Disclosure Schedule, since the dates of its
Current Financial Statements, Borrower has not suffered any
damage, destruction or loss which has materially and adversely
affected its business or assets and no event or condition of any
character has occurred which has materially and adversely affected
its assets, liabilities, business or financial condition, and
Borrower has no knowledge of any event or condition which may
materially and adversely affect its assets, liabilities, business
or financial condition.
4.4 Recent Actions. Except as disclosed in the
Disclosure Schedule, since the dates of its Current Financial
Statements, its business has been conducted in the ordinary course
and Borrower has not: (a) incurred any obligations or
liabilities, whether accrued, absolute, contingent or otherwise,
other than liabilities incurred and obligations under contracts
entered into in the ordinary course of business and other than
liabilities to Lender; (b) except for payment of obligations to
The Fifth Third Bank, discharged or satisfied any lien or
encumbrance or paid any obligations, absolute or contingent, other
than current liabilities, in the ordinary course of business; (c)
mortgaged, pledged or subjected to lien or any other encumbrance
any of its assets, tangible or intangible, or cancelled any debts
or claims except in the ordinary course of business; or (d) made
any loans or otherwise conducted its business other than in the
ordinary course.
4.5 Title. Borrower has good and marketable title to the
assets reflected on its Current Financial Statements, free and
clear from all liens and encumbrances except for: (a) current
taxes and assessments not yet due and payable, (b) liens and
encumbrances, if any, reflected or noted on said balance sheet or
notes, (c) any security interests, pledges or mortgages to Lender
in connection with the closing of this Agreement, (d) assets
disposed of in the ordinary course of business, and (e) Permitted
Liens.
4.6 Litigation, etc. Except as disclosed on the
Disclosure Schedule, as of the date hereof, there are no actions,
suits, proceedings or governmental investigations pending or, to
its knowledge, threatened against Borrower which, if adversely
determined, could result in a material and adverse change in its
financial condition, business or assets; and there is no basis
known to Borrower for any such actions, suits, proceedings or
investigations.
4.7 Taxes. Except as to taxes not yet due and payable,
Borrower has filed all returns and reports that are now required
to be filed by Borrower in connection with any federal, state or
local tax, duty or charge levied, assessed or imposed upon
Borrower or its property, including unemployment, social security
and similar taxes; and all of such taxes have been either paid or
adequate reserve or other provision has been made therefor.
Borrower has timely filed the payments of every tax and tax return
with the appropriate governmental authorities. If Borrower has
currently filed an extension for the payment of taxes, Borrower
has accrued sufficient funds for the payment of such tax in
accordance with generally accepted accounting principles.
4.8 Authority. Borrower has full power and authority to
enter into the transactions provided for in this Agreement. The
documents to be executed by Borrower in connection with this
Agreement, when executed and delivered by Borrower will constitute
the legal, valid and binding obligations of Borrower enforceable
in accordance with their respective terms except as such
enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws in effect
from time to time affecting the rights of creditors generally and
except as such enforceability may be subject to general principles
of equity (regardless of whether such enforceability is considered
in a proceeding in law or in equity).
4.9 Other Defaults. Except as would not have a material
adverse effect on the business or assets of Borrower, there does
not now exist any default or violation by Borrower of or under any
of the terms, conditions or obligations of: (a) its Articles or
Certificate of Incorporation and Regulations or Bylaws, as
applicable; (b) any indenture, mortgage, deed of trust, franchise,
permit, contract, agreement, or other instrument to which Borrower
is a party or by which Borrower is bound; or (c) any law,
regulation, ruling, order, injunction, decree, condition or other
requirement applicable to or imposed upon Borrower by any law or
by any governmental authority, court or agency; and the
transactions contemplated by this Agreement and the Security
Documents will not result in any such default or violation.
4.10 Stock. Except as listed on the Disclosure Schedule,
Borrower does not own more than one percent (1%) of the issued and
outstanding capital stock or other ownership interests of any
corporation, firm or entity.
4.11 Subsidiaries, Partnerships and Joint
Ventures. Except as listed on the Disclosure Schedule, Borrower
has no Subsidiaries and is not a party to any partnership
agreement or joint venture agreement.
4.12 Licenses, etc. Borrower has obtained any and all
licenses, permits, franchises or other governmental authorizations
necessary for the ownership of its properties and the conduct of
its business, except those which would not have a material adverse
effect on the business or assets of Borrower. To its knowledge,
Borrower possesses adequate licenses, patents, patent
applications, copyrights, trademarks, trademark applications, and
trade names to continue to conduct its business as heretofore
conducted by it, without any conflict with the rights of any other
person or entity.
4.13 Sufficient Capital. Borrower now has capital
sufficient to carry on its business, all business and transactions
in which Borrower is about to engage, and is now solvent and able
to pay its debts as they mature. Borrower now owns property
having a value, both at fair valuation and at present fair
saleable value, greater than the amount required to pay its debts.
4.14 Name, Places of Business and Location of
Collateral. The address of its principal place of business and
every other place from which Borrower conducts business is as
specified in the Disclosure Schedule. The Collateral and all
books and records pertaining to the Collateral are and will be
located at the addresses indicated on the Disclosure Schedule. In
the five years preceding the date hereof, Borrower has not
conducted business under any name other than its current name nor
maintained any place of business or any assets in any jurisdiction
other than those disclosed on the Disclosure Schedule.
4.15 ERISA. Borrower has no Plan except for a 401(k)
Plan.
4.16 Regulation U. No part of the proceeds of any Loans
will be used to purchase or carry any margin stock (as such term
is defined in Regulation U of the Board of Governors of the
Federal Reserve System).
4.17 Closing Memo. The information contained in each of
the documents prepared by Borrower, executed by Borrower or
provided by a third party at the request of Borrower listed on the
Closing Memo to be executed or delivered by Borrower or relating
to Borrower is complete and correct in all material respects.
4.18 Environmental Matters. Qualified, however, as to
Section 4.19.3, below, by those matters, if any, set forth in the
Environmental Report:
4.18.1 To the best of Borrower's knowledge, Borrower
and the activities or operations on any of the real estate that
Borrower owns or occupies (the "Property") are in compliance in
all material respects with all applicable federal, state and
local, statutes, laws, regulations, ordinances, policies and
orders relating to regulation of the environment, health or
safety, or contamination or cleanup of the environment
(collectively "Environmental Laws").
4.18.2 Borrower has obtained all approvals, permits,
licenses, certificates, or satisfactory clearances from all
governmental authorities required under Environmental Laws with
respect to the Property and any activities or operations at the
Property.
4.18.3 To the best of Borrower's knowledge, there
have not been and are not now any solid waste, hazardous waste,
hazardous or toxic substances, pollutants, contaminants, or
petroleum in, on, under or about the Property. The use which
Borrower makes and intends to make of the Property will not result
in the deposit or other release of any hazardous or toxic
substances, solid waste, pollutants, contaminants or petroleum on,
to or from the Property.
4.18.4 To the best of Borrower's knowledge, there
have been no complaints, citations, claims, notices, information
requests, orders or directives on environmental grounds or under
Environmental Laws (collectively "Environmental Claims") made or
delivered to, pending or served on, or anticipated by Borrower or
its agents, or of which Borrower or its agents, are aware (i)
issued by any governmental department or agency having
jurisdiction over the Property or the activities or operations at
the Property, or (ii) issued or claimed by any third party
relating to the Property or the activities or operations at the
Property.
4.18.5 Except as disclosed to Lender prior to the
date hereof, to the best of Borrower's knowledge, no asbestos-containing
materials are installed, used
or incorporated into the
Property, and no asbestos-containing materials have been disposed
of on the Property.
4.18.6 To the best of Borrower's knowledge, no
polychlorinated biphenyls ("PCBs") are located at, on or in the
Property in the form of electrical equipment or devices,
including, but not limited to, transformers, capacitors,
fluorescent light fixtures with ballasts, cooling oils or any
other device or form.
4.18.7 To the best of Borrower's knowledge, there
have not been and are not now any underground storage tanks
located within or about the Property.
4.18.8 The Property does not contain any wetlands as
that term is definedby relevant governmental agencies under
Environmental Laws and, to the best of Borrower's knowledge, there
has been no filling of wetlands on the Property in violation of
Environmental Laws.
4.18.9 Borrower has provided Lender with copies of
all environmental reports, audits and studies known to Borrower
and accessible to Borrower, whether in Borrower's possession or
otherwise, regarding the Property.
4.19 Labor Matters. There are no material strikes or
other material labor disputes against Borrower pending or, to its
knowledge, threatened. The hours worked and payment made to its
employees in all material respects have not been in violation of
the Fair Labor Standards Act or any other applicable law dealing
with such matters. All payments due from it, or for which any
claim may be made against it, on account of wages and employee
health and welfare insurance and other benefits, have been paid or
accrued as a liability on its books. The consummation of the
transactions contemplated herein will not give rise to a right of
termination or right of renegotiation on the part of any union
under any collective bargaining agreement to which Borrower is a
party or by which Borrower is bound.
4.20 Year 2000. Borrower and each of its Subsidiaries,
if any, have reviewed the areas within each of its businesses and
operations that could be adversely affected by, and have developed
or are developing a detailed plan and timeline to address in a
timely manner the risk that certain computer applications used by
Borrower or any of its Subsidiaries (or any of their respective
material suppliers, customers or vendors) may be unable to
recognize and perform properly date sensitive functions involving
dates prior to and after December 31, 1999 (the "Year 2000
Problem"). To the best of Borrower's knowledge, the Year 2000
Problem will not result in any material adverse change to Borrower
or any of its Subsidiaries.
4.21 Inactive Subsidiaries. The following Subsidiaries
of Borrower are inactive, do not own or lease material assets and
do not have a material amount of capital: LCA-Vision (Ohio),
Inc.; University Vision Centers LLC; RCII, Inc.; New Image Laser
Center Holdings BV; New Image Laser Centers S.L.; and New Image
Laser Centers Limited.
5. Affirmative Covenants. From the date of execution of this
Agreement until all Obligations to Lender have been fully paid and
this Agreement terminated, Borrower will and will cause each
Subsidiary to:
5.1 Books, Records and Access to the Collateral.
Maintain proper books of account and other records and enter
therein complete and accurate entries and records of all of its
transactions and give representatives of Lender access thereto at
all reasonable times, including permission to examine, copy and
make abstracts from any of such books and records and such other
information as Borrower may from time to time reasonably request.
Borrower will give Lender reasonable access to the Collateral for
the purposes of examining the Collateral and verifying its
existence. Borrower will make available to Lender for examination
copies of any reports, statements or returns which Borrower may
make to or file with any governmental department, bureau or
agency, federal or state, and will furnish to Lender copies of any
reports, statements or returns and exhibits thereto that Borrower
may make to or file with the Securities Exchange Commission. In
addition, Borrower will be available to Lender, or cause its
officers or general partners, as applicable, to be available from
time to time upon reasonable notice to discuss the status of the
Loans, its business and any statements, records or documents
furnished or made available to Lender in connection with this
Agreement.
5.2 Quarterly Statements. Furnish Lender within 45 days
after the end of each calendar quarter internally prepared
financial statements of Borrower with respect to such calendar
quarter, which financial statements will: (a) include the Form
10-Q or Form 10-QSB filed by Borrower with the Securities and
Exchange Commission; (b) be in reasonable detail and in form
reasonably satisfactory to Lender; (c) be accompanied by a
Compliance Certificate; (d) include a balance sheet as of the end
of such period, profit and loss and surplus statements for such
period and a statement of cash flows for such period; (e) include
prior year comparisons which will be internally prepared; and (f)
be on a consolidated basis for Borrower and its Subsidiaries and
for any entity in which Borrower's financial information is
consolidated in accordance with generally accepted accounting
principles.
5.3 Annual Statements. Furnish Lender within 90 days
after the end of each fiscal year of Borrower annual audited
financial statements which will: (a) include the Form 10-K or
Form 10-KSB filed by Borrower with the Securities and Exchange
Commission; (b) include a balance sheet as of the end of such
year, profit and loss and surplus statements and a statement of
cash flows for such year; (c) be on a consolidated basis with
Borrower, its Subsidiaries, if any, and any entity into which
Borrower's financial information is consolidated in accordance
with generally accepted accounting principles; (d) be accompanied
by a Compliance Certificate, and (e) contain the unqualified
opinion of an independent certified public accountant acceptable
to Lender and its examination will have been made in accordance
with generally accepted auditing standards and such opinion will
contain a report reasonably satisfactory to Lender of any
inconsistency in the application of generally accepted accounting
principles with the preceding years' statements, if any. In
addition, Borrower will provide to Lender with the foregoing
audited statements, internally prepared consolidating statements.
5.4 Auditor's Letters, Etc. Furnish any letter, other
than routine correspondence, directed to Borrower by its auditors
or independent accountants, relating to its financial statements,
accounting procedures, financial condition, tax returns or the
like since the date of the Current Financial Statements to Lender.
5.5 Taxes. Pay and discharge when due all indebtedness
and all taxes, assessments, charges, levies and other liabilities
imposed upon it, its income, profits, property or business, except
those which currently are being contested in good faith by
appropriate proceedings and for which Borrower has set aside
adequate reserves or made other adequate provision with respect
thereto, but any such disputed item will be paid forthwith upon
the commencement of any proceeding for the foreclosure of any lien
which may have attached with respect thereto, unless Lender has
received an opinion in form and substance and from legal counsel
acceptable to Borrower that such proceeding is without merit.
5.6 Operations. Continue its business operations in
substantially the same manner as at present, except where such
operations are rendered impossible by a fire, strike or other
events beyond its control; keep its real and personal properties
in good operating condition and repair; make all necessary and
proper repairs, renewals, replacements, additions and improvements
thereto and comply with the provisions of all leases to which
Borrower is party or under which Borrower occupies or holds real
or personal property so as to prevent any loss or forfeiture
thereof or thereunder.
5.7 Insurance. Comply with the insurance requirements of
the Security Documents. In addition to the foregoing, keep its
insurable real and personal property insured with responsible
insurance companies against loss or damage by fire, windstorm and
other hazards which are commonly insured against in an extended
coverage endorsement in an amount equal to not less than 90% of
the insurable value thereof on a replacement cost basis and also
maintain public liability insurance in a reasonable amount. In
addition, the parties delivering to Lender insurance certificates
as listed on the Closing Memo will maintain extended liability
insurance and property insurance of at least the amounts and
coverages listed on such certificates delivered in connection with
the Closing and in a form and with companies reasonably
satisfactory to Lender. Notwithstanding the foregoing, such
property insurance will at all times be in an amount so that such
party will not be deemed a "co-insurer" under any co-insurance
provisions of such policies. All such insurance policies will
name Lender as an additional insured and, where applicable, as
lender's loss payee under a loss payable endorsement satisfactory
to Lender. All such policies will provide that ten (10) days
prior written notice must be given to Lender before such policy is
altered or cancelled. Schedules of all insurance will be
submitted to Lender upon request. Such schedules will contain a
description of the risks covered, the amounts of insurance carried
on each risk, the name of the insurer and the cost of such
insurance. Borrower will provide new schedules to Lender promptly
to reflect any change in insurance coverage.
5.8 Compliance with Laws. Except as would not result in
a material adverse effect on the business or assets of Borrower,
comply with all laws and regulations applicable to Borrower and to
the operation of its business, including without limitation those
relating to environmental and health matters, and do all things
necessary to maintain, renew and keep in full force and effect all
rights, permits, licenses, certificates, satisfactory clearances
and franchises necessary to enable Borrower to continue its
business.
5.9 Environmental Violations.
5.9.1 In the event that any hazardous or toxic
substances, pollutants, contaminants, solid waste or hazardous
waste, or petroleum are released (as that term is defined under
Environmental Laws) at or from the Property, or are otherwise
found to be in, on, under, about or migrating to or from the
Property in violation of Environmental Laws or in excess of
cleanup levels established under Environmental Laws, immediately
will notify Lender in writing and will promptly commence such
action as may be appropriate or required with respect to such
conditions, including, but not limited to, investigation, removal
and cleanup thereof, and deposit with Lender cash collateral,
letter of credit, bond or other assurance of performance in form,
substance and amount reasonably acceptable to Lender to cover the
cost of such action. Upon request, Borrower will provide Lender
with updates on the status of Borrower's actions to resolve or
otherwise address such conditions, until such time as such
conditions are fully resolved to the satisfaction of Lender, as
determined by Lender in the exercise of its reasonable discretion.
5.9.2 In the event Borrower receives notice of an
Environmental Claim from any governmental agency or other third
party alleging a violation of or liability under Environmental
Laws with respect to the Property or Borrower's activities or
operations at the Property, immediately notify Lender in writing
and will commence such action as may be appropriate or required
with respect to such Environmental Claim. Upon request, Borrower
will provide Lender with updates on the status of Borrower's
actions to resolve or otherwise address such Environmental Claim,
until such claim has been fully resolved to the satisfaction of
Lender, as determined by Lender in the exercise of its reasonable
discretion.
5.10 Environmental Audit and Other Environmental
Information. Provide copies of all environmental reports, audits,
and studies obtained by Borrower from work conducted by Borrower
or any other person or entity on the Property or property adjacent
thereto as soon as such reports, audits and studies become
available to it. If the submissions are considered inadequate or
insufficient in order for Lender to adequately consider the
environmental condition of the Property or the status of
Borrower's environmental compliance or if the submissions are in
error, then Lender may require Borrower, at Borrower's sole
expense, to engage an independent engineering or consulting firm
acceptable to Lender to conduct a complete environmental report,
study, or audit in as timely a fashion as is reasonably possible.
In addition, Borrower will provide Lender with information related
to remedial action at its Property or adjacent to its Property as
soon as such information becomes available to it.
5.11 Business Names and Locations. Immediately notify
Lender of any change in the name under which Borrower conducts its
business and, unless Lender otherwise consents in writing, keep
and maintain all of the Collateral supplied by Borrower only at
its addresses listed in the Disclosure Schedule, keep its
principal place of business at the address specified in the
Disclosure Schedule and notify Lender immediately upon the opening
or closing of any place from which Borrower conducts business.
5.12 Acquisition of Assets. Not acquire any assets, real
or personal, unless such assets are automatically covered by the
existing Security Documents or within 10 days of such acquisition,
Borrower delivers to Lender a mortgage, pledge or security
agreement to encumber such asset in favor of Lender.
5.13 Accounts. So long as any of the Loans are in
effect, maintain Lender as Borrower's primary bank of account and
Borrower will maintain all operating accounts at Lender,
including, without limitation, Borrower's credit card vendor
program and procedural funding programs. Borrower will also enter
into a Controlled Disbursement Agreement and Automated Line of
Credit Agreement with Lender.
5.14 ERISA Compliance. Comply in all material respects
with the applicable provisions of ERISA and furnish to Lender:
(i) as soon as possible, and in any event within 30 days after any
officer of Borrower or any ERISA Affiliate knows or has reason to
know that any Reportable Event has occurred that alone or together
with any other Reportable Event could reasonably be expected to
result in liability of Borrower to the PBGC in an aggregate amount
exceeding $25,000, a statement of a financial officer setting
forth details as to such Reportable Event and the action that
Borrower proposes to take with respect thereto, together with a
copy of the notice of such Reportable Event, if any, given to the
PBGC, (ii) promptly after receipt thereof, a copy of any notice
Borrower or any ERISA Affiliate may receive from the PBGC relating
to the intention of the PBGC to terminate any Plan or Plans (other
than a Plan maintained by an ERISA Affiliate which is considered
an ERISA Affiliate only pursuant to subsection (m) or (o) of Code
Section 414) or to appoint a trustee to administer any such Plan,
(iii) within 10 days after the due date for filing with the PBGC
pursuant to Section 412(n) of the Code of a notice of failure to
make a required installment or other payment with respect to a
Plan, a statement of its financial officer setting forth details
as to such failure and the action that Borrower proposes to take
with respect thereto together with a copy of any such notice given
to the PBGC and (iv) promptly and in any event within 30 days
after receipt thereof by Borrower or any ERISA Affiliate from the
sponsor of a Multiemployer Plan, a copy of each notice received by
Borrower or any ERISA Affiliate concerning (A) the imposition of
Withdrawal Liability in an amount exceeding $25,000, or (B) a
determination that a Multiemployer Plan is, or is expected to be,
terminated or in reorganization, both within the meaning of Title
IV of ERISA, and which, in each case, is expected to result in an
increase in annual contributions of Borrower or an ERISA Affiliate
to such Multiemployer Plan in an amount exceeding $25,000.
5.15 Notice of Default. Notify Lender within five days
after Borrower knows of the occurrence of an Event of Default.
5.16 Sale and Leaseback. Except for transactions with
Information Leasing Corporation, not directly or indirectly enter
into any arrangement to sell or transfer all or any part of its
assets then owned by Borrower and thereupon or within one year
thereafter rent or lease any of the assets so sold or transferred.
5.17 Line of Business. Not enter into any lines or areas
of business substantially different from the business or
activities in which Borrower is presently engaged without prior
approval of Lender, not to be unreasonably withheld.
5.18 Business Opportunities. Not divert (or permit
anyone to divert) any of its business or opportunities to any
other corporate or business entity in which Borrower or its
Affiliates may hold a direct or indirect interest.
5.19 Waivers. Not waive any right or rights of
substantial value which, singly or in the aggregate, is or are
material to its condition (financial or other), properties or
business.
5.20 Use of Proceeds. Use the proceeds of the Revolving
Credit Loan for general corporate purposes.
5.21 Use of Lease Facility. To the extent that Borrower
desires to lease assets on a capitalized basis or operating lease
basis, offer Information Leasing Corporation the first right to
bid on all such leases.
5.22 Yield Maintenance. Enter into a yield maintenance
agreement with Information Leasing Corporation upon terms and
pursuant to such documentation as Lender deems necessary.
5.23 Places of Business. Notify Lender in writing of the
intended opening or closingof any places of business of Borrower
and the location thereof within 30 days prior to the date of such
opening or closing, and execute, as to new places of business,
financing statements as required by Lender to perfect liens in the
Collateral located therein.
6. Negative Covenants. From the date of execution of this
Agreement until all of the Obligations have been fully paid,
Borrower will not without Lender's prior written consent, and
Borrower will cause each Subsidiary to not without Lender's prior
written consent:
6.1 Debt. Incur any Indebtedness other than: (a) the
Loans and any subsequent Indebtedness to Lender; (b) open account
obligations incurred in the ordinary course of business having
maturities of less than 90 days; (c) Subordinated Debt; and (d)
rental and lease payments for real and personal property.
6.2 Liens. Incur, create, assume, become or be liable in
any way, or suffer to exist any mortgage, pledge, lien, charge or
other encumbrance of any nature whatsoever on any of its assets,
now or hereafter owned, other than Permitted Liens.
6.3 Guarantees. Guarantee, endorse or become
contingently liable for the obligations of any person, firm or
corporation, except in connection with the endorsement and deposit
of checks in the ordinary course of business for collection.
6.4 Payment to Subordinated Creditors. Make any payment
on any Subordinated Debt that is in violation of the applicable
Subordination Agreement.
6.5 EBITDA to Debt Service. Permit the ratio of EBITDA
to the sum of: (i) current maturities of Senior Debt and
capitalized lease payments plus (ii) interest expense, each to be
calculated for the same period, to be less than 1.25 for the
following periods:
6.5.1 For the quarters ending on 9/30/98, 12/31/98
and 3/31/99, calculated at the end of each fiscal quarter based on
an annualization of accumulated EBITDA from the quarters ending
9/30/98, 12/31/98 and 3/31/99 as applicable.
6.5.2 For the fiscal quarters ending on 6/30/99 and
thereafter, calculated at the end of each fiscal quarter on an
historical trailing four quarter basis.
6.5.3 Both Lender and Borrower will negotiate in
good faith any appropriate changes to this covenant as a result of
the impact of non-cash charges to the income of Borrower.
6.6 Total Liabilities to Tangible Net Worth. Permit the
ratio of its consolidated total liabilities less Subordinated Debt
to its consolidated Tangible Net Worth plus Subordinated Debt at
any time to be greater than .75 to 1.
6.7 Tangible Net Worth. Maintain at all times a minimum
consolidated Tangible Net Worth plus Subordinated Debt of not less
than $18,000,000.
6.8 Additional Securities. Except in connection with (i)
any stock option plans or similar benefits plans for employees and
directors of Borrower, (ii) any existing outstanding convertible
securities of Borrower, or (iii) any obligation to issue
additional shares of preferred stock of Borrower, issue any
additional securities of any description or issue warrants,
options or rights to purchase its securities, without consent of
Lender which will not be unreasonably withheld.
6.9 Redemptions. Purchase, retire, redeem or otherwise
acquire for value, directly or indirectly, any shares of its
capital stock now or hereafter outstanding.
6.10 Investments. Except for the stock of existing
Subsidiaries, purchase or hold beneficially any stock, other
securities or evidences of indebtedness of, or make any investment
or acquire any interest whatsoever in, any other person, firm or
corporation other than short term investments of excess working
capital invested in one or more of the following: (a) investments
(of one year or less) in direct or guaranteed obligations of the
United States, or any agencies thereof; (b) investments (of one
year or less) in certificates of deposit of banks or trust
companies organized under the laws of the United States or any
jurisdiction thereof, provided that such banks or trust companies
are insured by the Federal Deposit Insurance Corporation and have
capital in excess of $25,000,000; and (c) money market mutual
funds with average maturities of less than 90 days.
6.11 Merger, Acquisition or Sale of Assets. Merge or
consolidate with or into any other entity or acquire all or
substantially all the assets of any person, firm, partnership,
joint venture or corporation, or sell, lease or otherwise dispose
of any of its assets except for dispositions in the ordinary
course of business without the prior written approval of Lender,
not to be unreasonably withheld.
6.12 Advances and Loans. Except in connection with
presently outstanding or future advances to The LCA Center for
Surgery, Ltd. not to exceed $600,000 in the aggregate, lend money,
give credit or make advances (other than advances not to exceed
$5000 for any one employee and other reasonable and ordinary
advances to cover reasonable expenses of employees, such as travel
expenses) to any person, firm, joint venture or corporation,
including, without limitation, Affiliates.
6.13 Subsidiaries. Acquire any Subsidiaries, create any
Subsidiaries or enter into any partnership or joint venture
agreements without the prior written approval of Lender, not to be
unreasonably withheld.
6.14 Inactive Subsidiaries. Permit any of the following
Subsidiaries of Borrower to actively conduct any business, own or
lease any material assets or obtain a material amount of capital:
LCA-Vision (Ohio), Inc.; University Vision Centers LLC; RCII,
Inc.; New Image Laser Center Holdings BV; New Image Laser Centers
S.L.; and New Image Laser Centers Limited.
6.15 Transactions with Affiliates. Except for inter-company
loans of working capital, enter
into any transaction,
including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any
Affiliate unless such transaction is otherwise permitted under
this Agreement, is in the ordinary course of its business, and is
on fair and reasonable terms no less favorable to Borrower than
Borrower would obtain in a comparable arm's length transaction
with a non-Affiliate.
6.16 Post-Closing Matters. Fail to deliver to Lender in
form and substance satisfactory to Lender the documents, if any,
noted as post-closing items on the Closing Memo on or before the
date specified in the Closing Memo. If all of such documents have
not been delivered by July 31, 1998 and Lender has made no advance
hereunder, this Agreement will terminate, Lender will have no
obligation to ever fund the Loan, and Lender may retain the
Closing Fee to cover fees and expenses of Lender through the date
hereof. In the event that Lender has elected to fund a portion of
the Loan prior to receiving all of the documents specified in the
Closing Memo, and all of such documents have not been delivered by
July 31, 1998, then this Agreement will be in default, and Lender
will have no obligation to make any further advance hereunder at
any time, as well as the other rights and remedies available to
Lender under this Agreement, and Lender may retain the Closing Fee
to cover fees and expenses of Lender through the date hereof.
7. Events of Default. Upon the occurrence of any of the
following events with respect to Borrower, or any Guarantor, or
any Subsidiary:
7.1 Non-Payment. The non-payment of any principal amount
of any Note when due, whether by acceleration or otherwise, or the
nonpayment of any interest upon any Note or any other amount due
Lender pursuant to this Agreement within 5 days of when the same
is due;
7.2 Covenants. The default in the due observance of any
affirmative covenant or agreement to be kept or performed by it
under the terms of this Agreement or any of the Security Documents
and the failure or inability of it to cure such default within 30
days of the occurrence thereof; provided that such 30 day grace
period will not apply to: (a) any default which is incapable of
cure, (b) any default that has previously occurred, or (c) any
default in any negative covenants.
7.3 Representations and Warranties. Any representation
or warranty made by it in this Agreement, in any of the Security
Documents or in any report, certificate, opinion, financial
statement or other document furnished in connection with the
Obligations is false or erroneous in any material respect or any
material breach thereof has been committed;
7.4 Obligations. Except as provided in Sections 7.1, 7.2
and 7.3 above, the default by it in the due observance of any
covenant, negative covenant or agreement to be kept or performed
by it under the terms of this Agreement, the Security Documents or
any document now or in the future executed in connection with any
of the Obligations and the lapse of any applicable cure period
provided therein with respect to such default, or, if so defined
therein, the occurrence of any Event of Default or Default (as
such terms are defined therein);
7.5 Bankruptcy, etc. It: (a) dissolves or is the
subject of any dissolution, a winding up or liquidation; (b) makes
a general assignment for the benefit of creditors; or (c) files or
has filed against it a petition in bankruptcy, for a
reorganization or an arrangement, or for a receiver, trustee or
similar creditors' representative for its property or assets or
any part thereof, or any other proceeding under any federal or
state insolvency law, and if filed against it, the same has not
been dismissed or discharged within 90 days thereof;
7.6 Execution, Attachment, Etc. The commencement of any
foreclosure proceedings, proceedings in aid of execution,
attachment actions, levies against, or the filing by any taxing
authority of a lien against it or against any of the Collateral,
except those liens being diligently contested in good faith which
in the aggregate do not exceed $500,000;
7.7 Loss, Theft or Substantial Damage to the
Collateral. In addition to the rights of Lender to deal with
proceeds of insurance as provided in the Security Documents, the
loss, theft or substantial damage to the Collateral if the result
of such occurrence (singly or in the aggregate) is the failure or
inability to resume substantially normal operation of its business
within 60 days of the date of such occurrence;
7.8 Judgments. Unless in the opinion of Lender
adequately insured or bonded, the entry of a final judgment for
the payment of money involving more than $500,000 against it and
the failure by it to discharge the same, or cause it to be
discharged, within 60 days from the date of the order, decree or
process under which or pursuant to which such judgment was
entered, or to secure a stay of execution pending appeal of such
judgment; the entry of one or more final monetary or non-monetary
judgments or order which, singly or in the aggregate, does or
could reasonably be expected to: (a) cause a material adverse
change in the value of the Collateral or its condition (financial
or otherwise), operations, properties or prospects, (b) have a
material adverse effect on its ability to perform its obligations
under this Agreement or the Security Documents, or (c) have a
material adverse effect on the rights and remedies of Lender under
this Agreement, any Note or any Security Document;
7.9 Impairment of Security. (a) The validity or
effectiveness of any Security Document or its transfer, grant,
pledge, mortgage or assignment by the party executing it in favor
of Lender is materially impaired; (b) any party, other than
Lender, to a Security Document asserts that any Security Document
is not a legal, valid and binding obligation of it enforceable in
accordance with its terms which assertion could have a material
adverse effect on Lender's ability to enforce any remedy under the
Security Documents; (c) the security interest or lien purporting
to be created by any of the Security Documents ceases to be or is
asserted by any party to any Security Document (other than Lender)
not to be a valid, perfected lien subject to no liens other than
liens not prohibited by this Agreement or any Security Document
which assertion could have a material adverse effect on Lender's
ability to enforce any remedy under the Security Documents; or (d)
any Security Document is amended, subordinated, terminated or
discharged, or any person is released from any of its covenants or
obligations except to the extent that Lender expressly consents in
writing thereto;
7.10 Other Indebtedness to Lender's Affiliates. A
default with respect to any evidence of Indebtedness by it (other
than to Lender pursuant to this Agreement) to any of Lender's
Affiliates, including, but not limited to, any default under the
Lease Facility or the documents executed in connection therewith,
if the effect of such default is to accelerate the maturity of
such Indebtedness or to permit the holder thereof to cause such
Indebtedness to become due prior to the stated maturity thereof,
or if any Indebtedness of it for borrowed money (other than to
Lender pursuant to this Loan Agreement) to any of Lender's
Affiliates is not paid when due and payable, whether at the due
date thereof or a date fixed for prepayment or otherwise (after
the expiration of any applicable grace period;
7.11 Other Indebtedness. A default with respect to any
evidence of Indebtedness in excess of $500,000 by it (other than
to Lender or Lender's Affiliate pursuant to this Agreement), if
the effect of such default is to accelerate the maturity of such
Indebtedness or to permit the holder thereof to cause such
Indebtedness to become due prior to the stated maturity thereof,
or if any Indebtedness of it in excess of $500,000 for borrowed
money (other than to Lender or Lender's Affiliate pursuant to this
Loan Agreement) is not paid when due and payable, whether at the
due date thereof or a date fixed for prepayment or otherwise
(after the expiration of any applicable grace period); then
immediately upon the occurrence of any of the events described in
Section 7.5 and at the option of the Lender upon the occurrence of
any other Event of Default, the Loans, all Notes and all other
Obligations immediately will mature and become due and payable
without presentment, demand, protest or notice of any kind which
are hereby expressly waived. After the occurrence of any Event of
Default, Lender is authorized without notice to anyone to offset
and apply to all or any part of the Obligations all moneys,
credits and other property of any nature whatsoever of Borrower
now or at any time hereafter in the possession of, in transit to
or from, under the control or custody of, or on deposit with
(whether held by Borrower individually or jointly with another
party), Lender or any of Lender's Affiliates. The rights and
remedies of Lender upon the occurrence of any Event of Default
will include but not be limited to all rights and remedies
provided in the Security Documents and all rights and remedies
provided under applicable law. In furtherance but not in
limitation of the foregoing, upon the occurrence of an Event of
Default, Lender may refuse to make any further Advances under any
Note included in the Obligations. Borrower waives any requirement
of marshalling of the assets covered by the Security Documents
upon the occurrence of any Event of Default.
8. Conditions Precedent.
8.1 At Closing. Lender's obligation to make any of the
Loans is conditioned upon the receipt by Lender of all documents
in form and substance acceptable to Lender listed on the Closing
Memo, except for those specifically listed thereon as post-closing
items.
8.2 Additional Advances. Lender's obligations to make
any Loan and/or any advance under any Note on any date in the
future (to the extent that there are funds remaining to be
disbursed hereunder or under any Note) are subject to the
conditions precedent that:
8.2.1 No Defaults. There does not exist any Event
of Default, nor any event which upon notice or lapse of time or
both would constitute an Event of Default.
8.2.2 Accuracy. The representations and warranties
contained in this Agreement, the Security Documents, and in each
document listed on the Closing Memo prepared by Borrower, executed
by Borrower or provided by a third party at the request of
Borrower, and in any document delivered in connection therewith
will be true and accurate on and as of such date, except as such
warranties and representations may be affected by: (a) this
Agreement or transactions contemplated thereby, and (b) events
occurring after the Closing Date as to those representations and
warranties relating to the Current Financial Statements.
8.2.3 Other Documents. Lender will have received
such other documents, instruments, opinions, certificates or items
of information which it may have reasonably required in connection
with the transactions provided for in this Agreement.
8.3 Borrowing Representations. Each borrowing by
Borrower hereunder will constitute a representation and warranty
by Borrower as of the date of such borrowing that the conditions
set forth in Section 8.2 have been satisfied.
9. Closing Expenses. Borrower will pay Lender on the Closing
Date the sum of $8,000 for attorney's fees, plus any reasonable
expenses incurred by Lender, in connection with the preparation,
execution and delivery of this Agreement and the attendant
documents and the consummation of the transactions contemplated
hereby together with all: (a) recording fees and taxes; (b)
survey, appraisal and environmental report charges; and (c) title
search and title insurance charges, including any stamp or
documentary taxes, charges or similar levies which arise from the
payment made hereunder or from the execution, delivery or
registration or any Security Document or this Agreement. If
Borrower fails to pay such fees and expenses, Lender is entitled
to disburse such sums as an Advance under any Note.
10. Post-Closing Expenses. To the extent that Lender incurs
any costs or expenses in protecting or enforcing its rights in the
Collateral or observing or performing any of the conditions or
obligations of Borrower or any Guarantor thereunder, including but
not limited to reasonable Attorneys' Fees in connection with
litigation, preparation of amendments or waivers, present or
future stamp or documentary taxes, charges or similar levies which
arise from any payment made hereunder or from the execution,
delivery or registration of any Security Document or this
Agreement, such costs and expenses will be due on demand, will be
included in the Obligations and will bear interest from the
incurring or payment thereof at the Default Rate.
11. Representations and Warranties to Survive. All
representations, warranties, covenants, indemnities and agreements
made by Borrower herein and in the Security Documents will survive
the execution and delivery of this Agreement, the Security
Documents and the issuance of any Notes until all obligations are
satisfied and paid in full.
12. Environmental Indemnification. Lender will not be deemed
to assume any liability or obligation for loss, damage, fines,
penalties, claims or duties to clean-up or dispose of wastes or
materials on or relating to the Property merely by conducting any
inspections of the Property or by obtaining title to the Property
by foreclosure, deed in lieu of foreclosure or otherwise.
Borrower, including its successors and assigns, agrees to remain
fully liable and will indemnify, defend and hold harmless Lender,
its directors, officers, employees, agents, contractors,
subcontractors, licensees, invitees, successors and assigns, from
and against any claims, demands, judgments, damages, actions,
causes of action, injuries, administrative orders, liabilities,
costs, expenses, clean-up costs, waste disposal costs, litigation
costs, fines, penalties, damages and other related liabilities
arising from (i) the failure of Borrower to perform any obligation
relating to environmental matters herein required to be performed
by Borrower, (ii) the removal or other remediation of hazardous or
toxic substances, hazardous wastes, pollutants or contaminants,
solid waste or petroleum at or from the Property, (iii) any act or
omission, event or circumstance existing or occurring resulting
from or in connection with the ownership, construction, occupancy,
operation, use and/or maintenance of the Property, (iv) any and
all claims or proceedings (whether brought by private party or
governmental agency) for bodily injury, property damage, abatement
or remediation, environmental damage or impairment and any other
injury or damage resulting from or relating to any hazardous or
toxic substances, hazardous waste, pollutants, contaminants, solid
waste, or petroleum located upon or migrating into, from or
through the Property (whether or not any or all of the foregoing
was caused by the Borrower or its tenant or subtenant, or a prior
owner of the Property or its tenant or subtenant, or any third
party and whether or not the alleged liability is attributable to
the handling, storage, generation, transportation or disposal of
such material or the mere presence of such material on the
Property), and (v) Borrower's breach of any representation or
warranty contained in this Agreement. Without limitation, the
foregoing indemnities will apply to Lender with respect to claims,
demands, losses, damages (including consequential damages),
liabilities, causes of action, judgements, penalties, costs and
expenses (including reasonable attorneys' fees and court costs)
which in whole or in part are caused by or arise out of the
negligence of Lender. Such indemnity, however, will not apply to
Lender to the extent the subject of the indemnification is caused
by or arises out of the negligence or willful misconduct of
Lender. All evironmental representations, warranties, covenants,
and indemnities will continue indefinitely and may not be
cancelled or terminated except by a writing signed by Lender
specifically referring to this Section. Notwithstanding anything
contained to the contrary in the Note, Loan Agreement, or other
loan Documents evidencing or securing the Obligations, the
provisions of this Section will survive the termination or
expiration of the Obligations, the full repayment of the
Obligations, or the acquiring of title by Lender or its successors
and assigns by foreclosure, deed in lieu of foreclosure or
otherwise, and will be fully enforceable against Borrower and its
successors and assigns. The provisions of this Section will
constitute a separate undertaking by Borrower and will be an
inducement to Lender in extending the Loan evidencing the
Obligations to Borrower. The provisions of this Section will not
be subject to any anti-deficiency or similar laws.
13. Definitions. For purposes hereof:
13.1 Each accounting term not defined or modified herein
will have the meaning given to it under generally accepted
accounting principles in effect on the Closing Date.
13.2 "Affiliate" will mean any person, partnership, joint
venture, company or business entity under common control or having
similar equity holders owning at least ten percent (10%) thereof,
whether such common control is direct or indirect. All of
Person's direct or indirect parent corporations, partners,
Subsidiaries, and the officers, members, directors and partners of
any of the foregoing and persons related by blood or marriage to
any of the foregoing will be deemed to be a Person's Affiliates
for purposes of this Agreement.
13.3 "Attorneys Fees" will mean the reasonable value of
the services (and all costs and expenses related thereto) of the
attorneys (and all paralegals and other staff employed by such
attorneys) employed by Lender from time to time to: (i) take any
action in or with respect to any suit or proceedings (bankruptcy
or otherwise) relating to the Collateral or this Agreement; (ii)
protect, collect, lease or sell, any of the Collateral; (iii)
attempt to enforce any lien on any of the Collateral or to give
any advice with respect to such enforcement; (iv) enforce any of
Lender's rights to collect any of the Obligations; (v) give Lender
advice with respect to this Agreement, including but not limited
to advice in connection with any default, workout or bankruptcy;
or (vi) prepare any restatements, amendments or waivers to this
Agreement or any of the documents executed in connection with any
of the Obligations.
13.4 "Business Day" will mean any day excluding Saturday,
Sunday and any other day on which banks are required or authorized
to close in Ohio.
13.5 "Closing" will mean the execution and delivery of
the documents listed on the Closing Memo.
13.6 "Closing Date" will mean the date on which this
Agreement is executed.
13.7 "Closing Fee" will mean the additional sum of
$25,000 payable to Lender by Borrower upon execution of this
Agreement.
13.8 "Closing Memo" will mean the Closing Memorandum
between Borrower and Lender in connection with the transactions
represented by this Agreement.
13.9 "Code" will mean the Internal Revenue Code of 1986,
as amended from time to time.
13.10 "Collateral" will mean any property, real or
personal, tangible or intangible, now or in the future securing
the Obligations, including but not limited to the property covered
by the Security Documents.
13.11 "Compliance Certificate" will mean the Compliance
Certificate in the form delivered to Borrower by Lender in
connection with the Closing.
13.12 "Current Financial Statements" will mean the
Borrower's most recent annual and quarterly financial statements
filed with the Securities and Exchange Commission. For the
purposes of any future date on which the representations and
warranties contained in Section 4 hereof are deemed to be remade,
the most current financial statements, tax returns or other
documents with respect to Borrower or any Guarantor documents with
respect to such Borrower or such Guarantor delivered to Lender
pursuant to Section 5 above will be referred therein.
13.13 "Default Rate" will mean 4% per annum plus the
highest rate of interest that would otherwise be in effect under
any Note but not more than the highest rate permitted by
applicable law.
13.14 "Default" will mean any event or condition which
with the passage of time or giving of notice, or both, would
constitute an Event of Default.
13.15 "Disclosure Schedule" will mean the Disclosure
Schedule delivered by the Borrower to the Lender in connection
with the Closing.
13.16 "EBITDA" will mean the sum of: (i) net income as
determined in accordance with generally accepted accounting
principles; (ii) depreciation and amortization; (iii) interest
income; (iv) interest expense; plus (v) other items which would be
classified as non-cash charges, and excluding: (i) management
fees, and (ii) extraordinary items including but not limited to
gain or loss from the sale or disposition of capital assets.
EBITDA will be determined in accordance with generally accepted
accounting principles applied on a consistent basis and calculated
each quarter for the preceding four fiscal quarters on a rolling
four quarter basis.
13.17 "Environmental Report" will mean the environmental
site assessment of the Property delivered to Lender in connection
with the Closing.
13.18 "ERISA" will mean the Employee Retirement Income
Security Act of 1974, or any successor statute, as amended from
time to time.
13.19 "Event of Default" will mean any of the events
listed in Section 7.
13.20 "Guarantees" will mean the guarantees of all or any
part of the Obligations, now existing or hereafter arising,
including but not limited to those listed on the Closing Memo,
whether on a full, limited or non-recourse basis and such term
will include any person or entity that hypothecates or otherwise
pledges any property to Lender in connection with any of the
Obligations and will include any amendments thereto and
restatements thereof.
13.21 "Guarantor(s)" will mean any persons or entities
that now or in the future that deliver one or more Guarantees to
Lender.
13.22 "Hazardous wastes", "hazardous substances" and
"pollutants or contaminants" will mean any substances, waste,
pollutant or contaminant now or hereafter included with any
respective terms under any now existing or hereinafter enacted or
amended federal, state or local statute, ordinance, code or
regulation, including but not limited to the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 et seq. ("CERCLA").
13.23 "Indebtedness" will mean, without duplication:
(i) all obligations (including capitalized lease obligations)
which in accordance with generally accepted accounting principles
would be shown on a balance sheet as a liability; (ii) all
obligations for borrowed money or for the deferred purchase price
of property or services; and (iii) all guarantees, reimbursement,
payment or similar obligations, absolute, contingent or otherwise,
under acceptance, letter of credit or similar facilities.
13.24 "Lender's Affiliate" will mean any person,
partnership, joint venture, company or business entity under
common control or having similar equity holders owning at least
ten percent (10%) thereof with Lender, whether such common control
is direct or indirect, including without limitation, Information
Leasing Corporation. All of Lender's direct or indirect parent
corporations, sister corporations, and subsidiaries will be deemed
to be a Lender's Affiliate for purposes of this Agreement.
13.25 "Letter of Credit Documents" will mean the
respective applications and agreements with respect to Letters of
Credit on Lender's standard forms thereof (or such other form as
Lender and Borrower may agree) signed at the time of issuance or
renewal of such Letters of Credit.
13.26 "Loan(s)" will mean any and all advances of funds
under this Agreement or any of the Notes.
13.27 "Loan Documents" will mean this Agreement, the
Notes, the Security Documents, any Guarantees, and any other
documents executed in connection with the Indebtedness.
13.28 "Note(s)" will mean any note, now or in the future,
between Borrower and Lender pursuant to this Agreement, and will
include any amendments made thereto and restatements thereof,
extensions and replacements.
13.29 "Obligations" will mean and include all loans,
advances, debts, liabilities, obligations, covenants and duties
owing to Lender or any of Lender's Affiliates from Borrower of any
kind or nature, present or future, whether or not evidenced by any
note, guaranty or other instrument, whether arising under this
Agreement or under any other agreement, instrument or document,
whether or not for the payment of money, whether arising by reason
of an extension of credit, opening of a letter of credit, loan,
guaranty, indemnification or in any other manner, whether direct
or indirect (including those acquired by assignment,
participation, purchase, negotiation, discount or otherwise),
absolute or contingent, joint or several, due or to become due,
now existing or hereafter arising and whether or not contemplated
by Borrower or Lender or Lender's Affiliates on the Closing Date.
13.30 "PBGC" will mean the Pension Benefit Guaranty
Corporation referred to and defined in ERISA.
13.31 "Permitted Liens" will mean:
13.31.1 liens securing the payment of taxes, either
not yet due or the validity of which is being contested in good
faith by appropriate proceedings, and as to which Borrower has set
aside on its books adequate reserves to the extent required by
generally accepted accounting principles;
13.31.2 deposits under workers' compensation,
unemployment insurance and social security laws, or to secure the
performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, or to secure statutory
obligations or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of
business;
13.31.3 liens imposed by law, such as carrier's,
warehousemen's or mechanics' liens, incurred by Borrower in good
faith in the ordinary course of business, and liens arising out of
a judgment or award against Borrower with respect to which
Borrower will currently be prosecuting an appeal, a stay of
execution pending such appeal having been secured;
13.31.4 liens in favor of Lender;
13.31.5 reservations, exceptions, encroachments and
other similar title exceptions or encumbrances affecting real
properties, provided such do not materially detract from the use
or value thereof as used by the owner thereof;
13.31.6 attachment, judgment and similar liens
provided that execution is effectively stayed pending a good faith
contest.
13.31.7 liens related to the leasing of equipment
through Information Leasing Corporation.
13.31.8 liens created by purchase money security
interests or related the leasing of equipment limited to the
capital assets financed.
13.32 "Person" will include an individual, a corporation,
a limited liability company, an association, a partnership, a
trust or estate, a joint stock company, an unincorporated
organization, a joint venture, a government (foreign or domestic),
any agency or political subdivisions thereof, or any other entity.
13.33 "Plan" will mean any pension plan subject to the
provisions of Title IV of ERISA or Section 412 of the Code and
which is maintained for employees of Borrower or any ERISA
Affiliate.
13.34 "Prime Rate" will mean the rate per annum
established by Lender from time to time based on its consideration
of various factors, including money market, business and
competitive factors, and it is not necessarily Lender's most
favored interest rate. Subject to any maximum or minimum interest
rate limitations specified herein or by applicable law, if and
when such Prime Rate changes, then in each such event, the rate of
interest payable under this Agreement, any Note, the Security
Documents or any other document evidencing the Obligations that is
tied to the Prime Rate will change automatically without notice
effective the date of such changes.
13.35 "Reportable Event" will mean any reportable event
as defined in Section 4043(b) of ERISA or the regulations issued
thereunder with respect to a Plan (other than a Plan maintained by
an ERISA Affiliate which is considered an ERISA Affiliate only
pursuant to subsection (m) or (o) of Code Section 414).
13.36 "Security Documents" will mean the agreements,
pledges, mortgages, guarantees, or other documents delivered by
Borrower, any Guarantor or any other person or entity to Lender or
Lender's Affiliate previously, now or in the future to encumber
the Collateral in favor of Lender or Lender's Affiliate, including
but not limited to those listed on the Closing Memo, and all
amendments thereto and restatements thereof.
13.37 "Senior Debt" will mean all debt other than
Subordinated Debt and accounts payable that arise in the ordinary
course of Borrower's business and are payable within 90 days of
receipt of the goods or service giving rise thereto.
13.38 "Subsidiaries" means a corporation of which shares
of stock having ordinary voting power (other than stock having
such power only by reason of the happening of a contingency) to
elect a majority of the Board of Directors or other managers of
such corporation are at the time owned, or the management of which
is otherwise controlled, directly or indirectly through one or
more intermediaries, or both, by Borrower.
13.39 "Subordinated Debt" means any other debt: (i) which
is subordinated to Lender, pursuant to Subordination Agreement(s)
in form and substance acceptable to Lender and (ii) that Lender
has consented in writing to being incurred by Borrower in
accordance with the terms of this Agreement.
13.40 "Subordination Agreement(s)" means agreements
between Lender and Stephen N. Joffe and Sandra F.W. Joffe
subordinating Borrower's debt to each of them to Borrower's
Indebtedness to Lender.
13.41 "Tangible Net Worth," at any particular time, will
mean: (i) the sum of the amounts appearing on the balance sheet
of such entity as (a) the stated value of all outstanding stock
and (b) capital, paid-in and earned surplus; less (ii) the sum of
(a) the deficit in any surplus or capital account, including
treasury stock, (b) any amounts by which patents, trademarks,
trade names, organizational expenses and other intangible items of
similar nature and good will appear on the asset side of such
balance sheet, (c) any amounts at which shares of the capital
stock of Borrower appear on the asset side of such balance sheet,
all as of the last day of the month previous to such particular
time, and (d) any amounts for advances to shareholders, directors,
officers, employees or affiliates of Borrower which appear on the
asset side of the balance sheet, except those made in the ordinary
course of business.
13.42 "Uniform Customs" will mean Uniform Customs and
Practices for Documentary Credits published by the International
Chamber of Commerce. The version of the Uniform Customs
applicable to any particular Letter of Credit will be the most
current revision in effect on the date of the issuance of such
Letter of Credit.
13.43 "Withdrawal Liability" will mean liability to a
Multiemployer Plan as a result of a complete or partial withdrawal
from such Multiemployer Plan, as such terms are defined in Part I
of Subtitle E of Title IV of ERISA. All other terms contained in
this Agreement and not otherwise defined herein will, unless the
context indicates otherwise, have the meanings provided for by the
Uniform Commercial Code of the State of Ohio to the extent the
same are defined therein.
14. General.
14.1 Indemnity. Borrower will indemnify, defend and hold
harmless Lender, its directors, officers, counsel and employees,
from and against all claims, demands, liabilities, judgments,
losses, damages, costs and expenses, joint or several (including
all accounting fees and Attorneys' Fees reasonably incurred), that
Lender or any such indemnified party may incur arising under or by
reason of this Agreement or any act hereunder or with respect
hereto or thereto including but not limited to any of the
foregoing relating to any act, mistake or failure to act in
perfecting, maintaining, protecting or realizing on any collateral
or lien thereon except the willful misconduct or negligence of
such indemnified party. Without limiting the generality of the
foregoing, Borrower agrees that if, after receipt by Lender of any
payment of all or any part of the Obligations, demand is made at
any time upon Lender for the repayment or recovery of any amount
or amounts received by Borrower in payment or on account of the
Obligations and Lender repays all or any part of such amount or
amounts by reason of any judgment, decree or order of any court or
administrative body, or by reason of any settlement or compromise
of any such demand, this Agreement will continue in full force and
effect and Borrower will be liable, and will indemnify, defend and
hold harmless Lender for the amount or amounts so repaid. The
provisions of this Section will be and remain effective
notwithstanding any contrary action which may have been taken by
Borrower in reliance upon such payment, and any such contrary
action so taken will be without prejudice to Lender's rights under
this Agreement and will be deemed to have been conditioned upon
such payment having become final and irrevocable. The provisions
of this Section will survive the expiration or termination of this
Agreement.
14.2 Continuing Agreement. This Agreement is and is
intended to be a continuing Agreement and will remain in full
force and effect until each Loan is finally and irrevocably paid
in full and this Agreement is terminated by a writing signed by
Lender specifically terminating this Agreement.
14.3 No Third Party Beneficiaries. Nothing express or
implied herein is intended or will be construed to confer upon or
give any person, firm or corporation, other than the parties
hereto, any right or remedy hereunder or by reason hereof.
14.4 No Partnership or Joint Venture. Nothing contained
herein or in any of the agreements or transactions contemplated
hereby is intended or will be construed to create any relationship
other than as expressly stated herein or therein and will not
create any joint venture, partnership or other relationship.
14.5 Waiver. No delay or omission on the part of Lender
to exercise any right or power arising from any Event of Default
will impair any such right or power or be considered a waiver of
any such right or power or a waiver of any such Event of Default
or any acquiescence therein nor will the action or nonaction of
Lender in case of such Event of Default impair any right or power
arising as a result thereof or affect any subsequent default or
any other default of the same or a different nature. No
disbursement of the Loans hereunder will constitute a waiver of
any of the conditions to Lender's obligation to make further
disbursements; nor, in the event that Borrower is unable to
satisfy any such condition, will any such disbursement have the
effect of precluding Lender from thereafter declaring such
inability to be an Event of Default.
14.6 Notices. All notices, demands, requests, consents,
approvals and other communications required or permitted hereunder
will be in writing and will be conclusively deemed to have been
received by a party hereto and to be effective if delivered
personally to such party, or sent by telex, telecopy (followed by
written confirmation) or other telegraphic means, or by overnight
courier service, or by certified or registered mail, return
receipt requested, postage prepaid, addressed to such party at the
address set forth below or to such other address as any party may
give to the other in writing for such purpose:
To Lender:
THE PROVIDENT BANK
One East Fourth Street, Suite 211A
Cincinnati, Ohio 45202
Attn: Commercial Banking
To Borrower:
LCA-VISION INC.
7840 Montgomery Road
Cincinnati, Ohio 45236
Attention: Stephen N. Joffe
To Borrower:
REFRACTIVE CENTERS
INTERNATIONAL, INC.
7840 Montgomery Road
Cincinnati, Ohio 45236
Attention: Stephen N. Joffe
All such communications, if personally delivered, will be
conclusively deemed to have been received by a party hereto and to
be effective when so delivered, or if sent by telex, telecopy or
telegraphic means, on the day on which transmitted, or if sent by
overnight courier service, on the day after deposit thereof with
such service, or if sent by certified or registered mail, on the
third business day after the day on which deposited in the mail.
14.7 Successors and Assigns. This Agreement
will be binding upon and inure to the benefit of Borrower and
Lender and their respective successors and assigns, provided,
however, that Borrower may not assign this Agreement in whole or
in part without the prior written consent of Lender and Lender at
any time may assign this Agreement in whole or in part to any
Lender's Affiliate, or purchaser of a majority of stock or
substantially all assets of Lender.
14.8 Modifications. This Agreement, any Notes and the
Security Documents, and the documents listed on the Closing Memo,
constitute the entire agreement of the parties and supersede all
prior agreements and understandings regarding the subject matter
of this Agreement, including but not limited to any proposal or
commitment letters. No modification or waiver of any provision of
this Agreement, any Note, any of the Security Documents or any of
the documents listed on the Closing Memo, nor consent to any
departure by Borrower therefrom, will be established by conduct,
custom or course of dealing; and no modification, waiver or
consent will in any event be effective unless the same is in
writing and specifically refers to this Agreement, and then such
waiver or consent will be effective only in the specific instance
and for the purpose for which given. No notice to or demand on
Borrower in any case will entitle Borrower to any other or further
notice or demand in the same, similar or other circumstance.
14.9 Remedies Cumulative. No single or partial exercise
of any right or remedy by Lender will preclude any other or
further exercise thereof or the exercise of any other right or
remedy. All remedies hereunder and in any instrument or document
evidencing, securing, guaranteeing or relating to any Loan or now
or hereafter existing at law or in equity or by statute are
cumulative and none of them will be exclusive of the others or any
other remedy. All such rights and remedies may be exercised
separately, successively, concurrently, independently or
cumulatively from time to time and as often and in such order as
Lender may deem appropriate.
14.10 Illegality. If fulfillment of any provision hereof
or any transaction related hereto or of any provision of the Notes
or the Security Documents, at the time performance of such
provision is due, involves transcending the limit of validity
prescribed by law, then ipso facto, the obligation to be fulfilled
will be reduced to the limit of such validity; and if any clause
or provisions herein contained other than the provisions hereof
pertaining to repayment of the Obligations operates or would
prospectively operate to invalidate this Agreement in whole or in
part, then such clause or provision only will be void, as though
not herein contained, and the remainder of this Agreement will
remain operative and in full force and effect.
14.11 Gender, etc. Whenever used herein, the singular
number will include the plural, the plural the singular and the
use of the masculine, feminine or neuter gender will include all
genders.
14.12 Headings. The headings in this Agreement are for
convenience only and will not limit or otherwise affect any of the
terms hereof.
14.13 Time. Time is of the essence in the performance of
this Agreement.
14.14 Governing Law and Jurisdiction; No Jury
Trial. THIS AGREEMENT WILL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF OHIO, WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES, AND BORROWER HEREBY AGREES TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED WITHIN HAMILTON COUNTY, OHIO AND
CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL
DIRECTED TO BORROWER AT BORROWER'S ADDRESS SET FORTH HEREIN FOR
NOTICES; PROVIDED THAT NOTHING CONTAINED HEREIN WILL PREVENT
LENDER FROM BRINGING ANY ACTION OR EXERCISING ANY RIGHTS AGAINST
ANY SECURITY OR AGAINST BORROWER INDIVIDUALLY, OR AGAINST ANY
PROPERTY OF BORROWER, WITHIN ANY OTHER STATE OR NATION. BORROWER
WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER. BORROWER
AND LENDER EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, ANY DOCUMENTS EVIDENCING
ANY OF THE OBLIGATIONS, OR ANY TRANSACTION CONTEMPLATED IN ANY OF
SUCH AGREEMENTS.
<PAGE>
Dated as of June 29, 1998
BORROWER:
LCA-VISION INC.
By:/s/ Larry P. Rapp
Print Name:Larry P. Rapp
Title: Chief Financial Officer
BORROWER:
REFRACTIVE CENTERS INTERNATIONAL, INC.
By:/s/ Larry P. Rapp
Print Name: Larry P. Rapp
Title: Vice President
LENDER:
THE PROVIDENT BANK
By: Richard E. Wirthlin
Print Name: Richard E. Wirthlin
Title: Vice President
<PAGE>
PROMISSORY NOTE
NOTE NO. ____________
$8,000,000 Cincinnati, Ohio Dated as of June 29, 1998
The undersigned, jointly and severally (individually and
collectively, the "Borrower"), for value received, promise to
pay to the order of THE PROVIDENT BANK, (the "Lender") at any of
its offices, the sum of EIGHT MILLION DOLLARS ($8,000,000), (the
"Total Facility") or so much thereof as is loaned by Lender pursuant
to the provisions hereof, together with interest until maturity at
the rate of one-half of one percent (0.5%) per annum plus the Prime
Rate (the "Prime Plus Rate") computed on the basis of a year of 360
days for the actual number of days elapsed, and after default
hereunder or maturity, whether at stated maturity or by
acceleration, at a rate four percent (4%) greater than the otherwise
applicable rate (the "Default Rate"). Accrued interest will be due
and payable monthly, commencing on July 31, 1998 and on the last day
of each month thereafter until June 30, 2000 (the "Maturity Date")
on which date the entire outstanding principal balance hereunder and
all accrued and unpaid interest will be due and payable.
Borrower will have the option (which may be exercised only
once) to convert up to $3,500,000 of the outstanding balance of this
Note to a term loan (the "Term Loan") to bear interest at a fixed
rate of interest equal to two and three-quarters of one percent
(2.75%) per annum plus the Treasury Rate (the "Treasury Plus Rate")
on and after the Conversion Date. Borrower may elect this option
only if (i) no Event of Default exists hereunder; and (ii) Borrower
notifies Lender in writing at least 30 days prior to the Maturity
Date that Borrower wishes to exercise this option. The Treasury
Plus Rate will remain in effect on the Term Loan until the Total
Facility is fully paid, subject to applicability of the Default
Rate. On the Conversion Date and on the first day of each and every
month thereafter until the Maturity Date, Borrower will make monthly
payments equal to: (i) the actual amount of interest accrued
hereunder at the Treasury Plus Rate and (ii) a fixed payment of
principal in an amount calculated by Lender (which calculation,
absent manifest error will be conclusive) as follows: 1/12th of the
aggregate annual payment of principal which would be made by
Borrower if the balance of the Term Loan on the Conversion Date,
including principal, interest, late charges, and all other sums due
under the Term Loan were to accrue interest until the Maturity Date
at the Treasury Plus Rate that is in effect on the Conversion Date
and such balance were amortized over an assumed 15-year period
beginning on the Conversion Date. Borrower acknowledges that the
principal payment calculation is based on an assumed 15-year
repayment schedule and thus the Term Loan is not fully amortizing.
Borrower hereby states that the purpose of the Loan evidenced
by this Note is general corporate purposes.
As used herein, "Treasury Rate" will mean the weekly average
rate to the nearest one-eighth of one percent (0.125%) established
for United States Treasuries with maturities most closely matching
the then remaining term of this Note on the Conversion Date (as
determined by Lender in its sole discretion and computed on a
constant maturity basis), as published in the most recent version of
the Federal Reserve Board Publication H.15 published prior to the
Conversion Date, or if such publication is no longer published or
available, a comparable index selected by Lender.
As used herein, "Conversion Date" will mean the next Business
Day following the date on which Borrower delivers to Lender a
request in writing for a conversion of up to $3,500,000 of the
Revolving Credit Loan to a Term Loan under the terms and conditions
specified herein and certifying that no Default or Event of Default
exists hereunder. If the foregoing conditions are not fully and
timely satisfied, then no Conversion Date or related adjustment to
the Treasury Plus Rate will occur.
This Note is a revolving credit subject to the terms of this
paragraph. Subject to the conditions hereof and of the Loan
Documents, Borrower may borrow and reborrow from Lender and Lender
may, in its sole discretion, lend and relend to Borrower such
amounts not to exceed the limits set forth in the Loan Agreement (as
defined below) as Borrower may at any time and from time to time
request from Lender (the "Advances"). Subject to the terms and
conditions of the Loan Documents, Lender will make Advances as set
forth in: (i) Section 2.2 of the Loan Agreement; (ii) the Automated
Line of Credit Agreement; and (iii) the Controlled Disbursement
Agreement between Borrower and Lender of even date herewith.
This Note is issued in connection with the Loan Agreement
between Borrower and Lender of even date herewith (the "Loan
Agreement"). The Loan Agreement, the Note, the Security Documents,
and all other documents executed in connection therewith are
collectively referred to herein as the "Loan Documents". As
collateral security for the payment of the amounts from time to time
owing hereunder and under the Loan Documents, Borrower hereby grants
to Lender a security interest in (i) all property in which Lender
now or hereafter holds a security interest pursuant to the Loan
Documents and (ii) all accounts, securities and properties now or
hereafter in the possession of Lender and in which Borrower has any
interest. All references to the Loan Documents will include all
modifications and amendments thereto, and extensions, replacements,
or renewals thereof, as made from time to time. The terms,
covenants, conditions, stipulations and agreements contained in the
Loan Documents are incorporated herein by reference. Capitalized
terms used in this Note and not otherwise defined herein will have
the meanings given such terms in the Loan Agreement.
Immediately and automatically upon the filing by or against
Borrower or any Guarantor of a petition in bankruptcy, for a
reorganization, arrangement or debt adjustment, or for a receiver,
trustee, or similar creditors' representative for its, his or her
property or any part thereof, or of any other proceeding under any
federal or state insolvency or similar law (and if such petition or
proceeding is an involuntary petition or proceeding filed against
Borrower or such Guarantor without his, her or its acquiescence
therein or thereto at any time, the same is not promptly contested
and, within 60 days of the filing of such involuntary petition or
proceeding, dismissed or discharged), or the making of any general
assignment by Borrower or any Guarantor for the benefit of
creditors, or Borrower or any Guarantor dissolves or is the subject
of any dissolution, winding up or liquidation or, at the option of
Lender, immediately upon the occurrence of any other Event of
Default, in any case without demand or notice of any kind (which are
hereby expressly waived): (i) the outstanding principal balance
hereunder, together with all accrued and unpaid interest thereon,
and, at Lender's option, any additional amounts secured by the Loan
Documents, may be accelerated and become immediately due and
payable, (ii) Borrower will pay to Lender all reasonable costs and
expenses (including but not limited to Attorneys' Fees) incurred by
Lender in connection with Lender's efforts to collect the
indebtedness evidenced hereby, and (iii) Lender may exercise from
time to time any of the rights and remedies available to Lender
under the Loan Documents or applicable law. Upon and after the
occurrence of any Event of Default or the maturity of this Note (by
acceleration or otherwise), the principal balance under this Note,
together with any arrearage of interest, will bear interest at the
Default Rate until paid in full, whether before or after judgment.
Borrower also waives all defenses based on suretyship or impairment
of collateral. Upon this Note becoming due under any of its terms
and provisions, and not being fully paid and satisfied, the total
sum then due hereunder may, at any time and from time to time, be
charged against any account or accounts maintained with Lender
hereof by Borrower, without notice to or further consent from
Borrower and Borrower agrees to be and remain liable for all
remaining indebtedness represented by this Note in excess of the
amount or amounts so applied.
Borrower and Lender intend that this indebtedness shall be
secured by the property covered by the Loan Documents as that term
is defined in the Loan Agreement including, without limitation, any
and all mortgages heretofore or hereafter granted by Borrower in
favor of Lender. Payments received will be applied in the following
order: (i) to repayment of any amounts owed to Lender for charges,
fees and expenses (including Attorneys' Fees), (ii) to accrued
interest, and (iii) to principal.
There will be a minimum finance charge of $50.00 for each
billing period. If any payment of principal or interest is not paid
when due or if Borrower shall otherwise default in the performance
of its obligations hereunder or under any of the Loan Documents,
Lender at its option, may charge and collect, or add to the unpaid
balance hereof, a late charge up to the greater of $250 or one-tenth
of one percent (0.1%) of the unpaid balance of this Note at the time
of such delinquency for each such delinquency to cover the extra
expense incident to handling delinquent accounts, and/or increase
the interest rate on the unpaid balance to the Default Rate. Lender
may charge interest at the rate provided herein on all interest and
other amounts owing hereunder which are not paid when due.
Borrower and any Guarantor hereof (collectively "Obligors") each
(i) waive(s) presentment, demand, notice of demand, protest, notice
of protest and notice of dishonor and any other notice required to
be given by law in connection with the delivery, acceptance,
performance, default or enforcement of this Note, of any indorsement
or guaranty of this Note or the Loan Documents; and (ii) consent(s)
to any and all delays, extensions, renewals or other modifications
of this Note or waivers of any term hereof or release or discharge
by Lender of any of Obligors or release, substitution or exchange of
any security for the payment hereof or the failure to act on the
part of Lender or any indulgence shown by Lender, from time to time
and in one or more instances, (without notice to or further assent
from any of Obligors) and agree(s) that no such action, failure to
act or failure to exercise any right or remedy, on the part of
Lender shall in any way affect or impair the obligations of any
Obligors or be construed as a waiver by Lender of, or otherwise
affect, any of Lender's rights under this Note, under any
indorsement or guaranty of this Note or under the Loan Documents.
Borrower further agrees to reimburse Lender for all advances,
charges, costs and expenses, including Attorneys' Fees, incurred or
paid in exercising any right, power or remedy conferred by this
Note, or in the enforcement thereof.
Time is of the essence in the performance of this Note. No
single or partial exercise of any right or remedy by Lender will
preclude any other or further exercise thereof or the exercise of
any other right or remedy. All remedies hereunder, under any of the
other Loan Documents, or now or hereafter existing at law or in
equity are cumulative and none of them will be exclusive of the
others or of any other right or remedy. All such rights and
remedies may be exercised separately, successively, concurrently,
independently or cumulatively from time to time and as often and in
such order as Lender may deem appropriate.
If at any time all or any part of any payment or transfer of
any kind received by Lender with respect to all or any part of this
Note is repaid, set aside or invalidated by reason of any judgment,
decree or order of any court or administrative body, or by reason of
any agreement, settlement or compromise of any claim made at any
time with respect to the repayment, recovery, setting aside or
invalidation of all or any part of such payment or transfer,
Borrower's obligations under this Note will continue (and/or be
reinstated) and Borrower will be and remain liable, and will
indemnify, defend and hold harmless Lender for, the amount or
amounts so repaid, recovered, set aside or invalidated and all other
claims, demands, liabilities, judgments, losses, damages, costs and
expenses incurred in connection therewith. The provisions of this
paragraph will be and remain effective notwithstanding any contrary
action which may have been taken by Borrower in reliance upon such
payment or transfer, and any such contrary action so taken will be
without prejudice to Lender's rights hereunder and will be deemed to
have been conditioned upon such payment or transfer having become
final and irrevocable. The provisions of this paragraph will
survive any termination, cancellation or discharge of this Note.
This Note will bind Borrower and the successors and assigns of
Borrower, and the benefits hereof will inure to the benefit of
Lender and its successors and assigns. All references herein to the
"Borrower" and "Lender" will include the respective successors and
assigns thereof; provided, however, that Borrower may not assign
this Note in whole or in part without the prior written consent of
Lender and Lender at any time may assign this Note in whole or in
part to any affiliate or purchaser of a majority of stock or
substantially all of the assets of Lender (but no assignment by
Lender of less than all of this Note will operate to relieve
Borrower from any duty to Lender with respect to the unassigned
portion of this Note).
Borrower authorizes any attorney at law, including an attorney
engaged by Lender, to appear in any court of record in the State of
Ohio or any other State or Territory of the United States, after the
indebtedness evidenced hereby, or any part thereof, becomes due and
waive the issuance and service of process and confess judgment
against Borrower in favor of Lender, for the amount then appearing
due, together with costs of suit and, thereupon, to release all
errors and waive all rights of appeal and stay of execution. The
foregoing warrant of attorney shall survive any judgment; and if any
judgment be vacated for any reason, Lender hereof nevertheless may
hereafter use the foregoing warrant of attorney to obtain an
additional judgment or judgments against Borrower. Borrower hereby
expressly waives any conflict of interest that Lender's attorney may
have in confessing such judgment against Borrower and expressly
consents to the confessing attorney receiving a legal fee from
Lender for confessing such judgment against it.
THE PROVISIONS OF THIS NOTE SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF OHIO. AS A SPECIFICALLY BARGAINED
INDUCEMENT FOR LENDER TO EXTEND CREDIT TO BORROWER, AND AFTER HAVING
THE OPPORTUNITY TO CONSULT COUNSEL, BORROWER HEREBY EXPRESSLY
WAIVES
THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATED TO
THIS NOTE OR ARISING IN ANY WAY FROM ANY INDEBTEDNESS OR OTHER
TRANSACTIONS INVOLVING LENDER AND BORROWER. BORROWER HEREBY
DESIGNATES ALL COURTS OF RECORD SITTING IN CINCINNATI, OHIO AND
HAVING JURISDICTION OVER THE SUBJECT MATTER, STATE AND FEDERAL, AS
FORUMS WHERE ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING
FROM OR OUT OF THIS NOTE, ITS MAKING, VALIDITY OR PERFORMANCE, MAY
BE PROSECUTED AS TO ALL PARTIES, THEIR SUCCESSORS AND ASSIGNS, AND
BY THE FOREGOING DESIGNATION BORROWER CONSENTS TO THE JURISDICTION
AND VENUE OF SUCH COURTS.
"WARNING BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE
TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A
COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU
MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY
GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY
OTHER CAUSE."
BORROWER: BORROWER:
LCA-VISION INC. REFRACTIVE CENTERS
INTERNATIONAL, INC.
By:/s/Larry P. Rapp By: /s/Larry P. Rapp
Print Name: Larry P. Rapp Print Name: Larry P. Rapp
Title: Chief Financial Officer Title: Vice President
Address: 7840 Montgomery Road Address: 7840 Montgomery Road
Cincinnati, Ohio 45236 Cincinnati, Ohio 45236
<PAGE>
EXHIBIT 99.2
FOR IMMEDIATE RELEASE
Contacts: Stephen N. Joffe, M.D., FACS Joel Pomerantz
LCA-Vision Inc. The Dilenschneider
Group, Inc.
(513) 792-9292 (212) 922-0900
LCA-VISION SECURES NEW $8 MILLION LINE OF CREDIT
Replacement Line Offers More Favorable Rate and Covenants
CINCINNATI, June 29, 1998 -- LCA-Vision Inc. (NASDAQ:LCAV), the
largest U.S.-based provider of laser vision correction services,
today announced that it has secured an $8 million line of credit
with Provident Bank of Cincinnati.
Dr. Stephen Joffe, CEO of LCA-Vision, said: "This new credit
line further bolsters LCA's financial strength and our ability to
take advantage of attractive growth opportunities. As we announced
last month, a $10 million private placement of convertible
securities enabled us to pre-pay our outstanding term loan and
renegotiate our former line of credit with another lender."
"This new credit line offers more cost-effective covenants and
carries a more favorable interest rate. Our enhanced financial
position, together with the accelerating pace of the laser vision
correction market, will ensure that we reach our goal of becoming
cash flow positive in the third quarter of this year."
"The rapid improvement in our financial position parallels the
growing public acceptance of laser vision correction surgery," Dr.
Joffe noted. "In the same manner that many early soft contact lens
wearers persuaded their eyeglass-wearing friends to try contacts,
the enthusiastic endorsement of laser vision correction patients is
beginning to positively influence the decisions of friends,
relatives and co-workers. It is this kind of positive word-of-mouth
that will fuel a geometric increase in the number of potential
patients seriously considering the procedure."
LCA-Vision currently operates 27 laser vision correction
centers in the U.S., two in Canada and one in Helsinki, Finland. A
total of more than 25,000 successful procedures have been performed
at all of the company's sites. The professional network serving the
company's sites includes more than 600 practicing ophthalmologists
and 800 referring optometrists.
# # # #
Safe Harbor statement under the Private Securities Litigation Reform
Act of 1995: This release contains forward-looking statements that
are subject to risks and uncertainties, including, but not limited
to, the impact of competitive products and pricing, product demand
and market acceptance, reliance on key strategic alliances,
fluctuations in operating results and other risks detailed from time
to time in the company filings with the Securities and Exchange
Commission.
