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Exhibit 4.38
October 27, 2000
Vision Twenty-One, Inc.
7360 Bryan Dairy Road, Suite 200
Largo, FL 33777
Attention: Bruce Maller, Chairman of the Board
Gentlemen:
We refer to the Amended and Restated Credit Agreement dated as of July
1, 1998, as amended, between you and us (the "Credit Agreement"). All
capitalized terms used herein without definition shall have the same meaning
herein as such terms are defined in the Credit Agreement.
The Borrower has advised the Banks that the Borrower is currently
working on a revised business plan which will include, among other things, a
request to restructure the Obligations owing to the Banks on terms and
conditions mutually agreed upon by the Borrower and the Banks. While the
Borrower and the Banks have initiated discussions concerning the proposed
restructuring of the Obligations, the Borrower acknowledges that the Banks have
not agreed to any terms and conditions relating to any restructuring of the
Obligations. In the meantime, however, the Borrower intends to use a portion of
the proceeds from the recent sales of various physician practice management and
related businesses (the "PPM businesses") to meet its reasonable and necessary
operating expenses.
To afford the Borrower an opportunity to proceed with the transactions
described above, the Borrower has requested that (i) the Banks extend the
temporary waiver period provided for in Sections 2.1 and 2.2 of that certain
Seventh Amendment and Waiver to Credit Agreement dated as of December 10, 1999,
among the Borrower, the Banks, and the Agent (the "Seventh Amendment") (as
further amended, in part, by a December 30, 1999, letter agreement, a February
29, 2000, letter agreement, a March 24, 2000, letter agreement, an April 14,
2000, letter agreement, a May 5, 2000, letter agreement, a May 19, 2000, letter
agreement, a June 1, 2000, letter agreement, a June 9, 2000, letter agreement,
a June 16, 2000, letter agreement, a June 29, 2000, letter agreement, a July
21, 2000, letter agreement, an August 11, 2000, letter agreement, a September
8, 2000, letter agreement, a September 29, 2000, letter agreement, and an
October 13, 2000, letter agreement, in each case between the Borrower, the
Banks and the Agent) and, in addition, that the Banks temporarily waive any
non-compliance by the Borrower as of December 31, 1999, as of March 31, 2000,
as of June 30, 2000, and as of September 30, 2000, with Sections 8.8 (Total
Funded Debt/Adjusted EBITDA Ratio), 8.10 (Interest Coverage Ratio), and 8.11
(Debt Service Coverage Ratio) of the Credit Agreement and the Borrower's
non-compliance with Section 8.5(b) of the Credit Agreement with respect to the
timely delivery
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Vision Twenty-One, Inc.
October 27, 2000
Page 2
of the Borrower's March 31, 2000, financial statements, in each case to
November 10, 2000 (the "Waiver Termination Date"), (ii) Bank of Montreal extend
the Bridge Loan Period from October 27, 2000, to the Waiver Termination Date,
and (iii) amend the due date for the payment of principal, interest and unused
commitment fees otherwise due on or before September 30, 2000, with respect to
the Revolving Credit and the Term Loans (including such payments described in
Sections 2.1 and 2.2 of the Seventh Amendment) to the Waiver Termination Date.
By signing below, the Banks (including Bank of Montreal with respect to the
Bridge Loan Commitment) hereby agree to extend the waiver period provided in
Sections 2.1 and 2.2 of the Seventh Amendment to the Waiver Termination Date,
temporarily waive any non-compliance by the Borrower as of December 31, 1999,
as of March 31, 2000, as of June 30, 2000, and as of September 30, 2000, with
Sections 8.8 (Total Funded Debt/Adjusted EBITDA Ratio), 8.10 (Interest Coverage
Ratio), and 8.11 (Debt Service Coverage Ratio) of the Credit Agreement and the
Borrower's non-compliance with Section 8.5(b) of the Credit Agreement with
respect to the timely delivery of the Borrower's March 31, 2000, financial
statements through the period ending on the Waiver Termination Date, agree to
extend the Bridge Loan Period to the Waiver Termination Date, and agree to
amend the due date for the payment of principal, interest, and unused
commitment fees otherwise due on or before September 30, 2000, with respect to
the Revolving Credit and the Term Loans (including such payments described in
Sections 2.1 and 2.2 of the Seventh Amendment) to the Waiver Termination Date,
provided that:
(a) until the Obligations are paid in full, the Borrower
shall provide to the Banks a weekly Budget pursuant to Section 1.14(f)
of the Credit Agreement and such Budget shall be subject to the
Approved Budget and reconciliation procedures set forth therein,
regardless of whether or not then being accompanied by a request for a
Borrowing of Bridge Loans;
(b) at all times on and after the date hereof (i) all
proceeds from the sale of any assets of the Borrower and its
Subsidiaries (including, without limitation, proceeds from the sale of
the PPM Businesses or any part thereof), and (ii) cash receipts
arising from the operation of the business of the Borrower and its
Subsidiaries not applied pursuant to an Approved Budget, shall in each
case be remitted promptly upon receipt to the Agent; and
(c) except to the extent applied to payments pursuant to
an Approved Budget or applied to the Obligations owing to the Banks,
proceeds received pursuant to clause (c) above shall be held by the
Agent as collateral for the remaining Obligations owing to the Banks
(the Agent hereby being granted a Lien on and right of set-off for the
benefit of the Banks against all such amounts so held).
The Borrower hereby acknowledges and agrees to the foregoing conditions. The
Borrower also hereby acknowledges and agrees that (i) any restructuring of the
terms and conditions relating to
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Vision Twenty-One, Inc.
October 27, 2000
Page 3
the Obligations shall be subject to the Banks' consent, which may be given or
withheld in their discretion and (ii) any sale of the Borrower's or its
Subsidiaries' assets or businesses shall be subject to the prior written
consent of the Banks, and all proceeds from any such sale represent proceeds of
the Banks' Collateral, to be held by the Agent or applied to the Obligations
pursuant to the terms of the Credit Agreement as modified hereby.
Except as specifically modified hereby, all of the terms and
conditions of the Credit Agreement and the other Loan Documents shall stand and
remain unchanged and in full force and effect. This waiver shall become
effective upon the execution and delivery hereof by each of the Banks and the
Borrower as set forth below. This waiver may be executed in counterparts and by
different parties on separate counterpart signature pages, each of which shall
be an original and all of which taken together shall constitute one and the
same instrument. This waiver shall be governed by, and construed in accordance
with, the laws of the State of Illinois.
[SIGNATURE PAGES TO FOLLOW]
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Vision Twenty-One, Inc.
October 27, 2000
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This waiver letter is entered into by and among the parties hereto as
of the date first above written.
BANK OF MONTREAL, in its individual BANK ONE TEXAS, N.A.
capacity as a Bank and as Agent
By: /s/ Jack J. Kane By: /s/ Ronnie Kaplan
------------------------------- --------------------------------
Name: Jack J. Kane Name: Ronnie Kaplan
---------------------------- -----------------------------
Title: Director Title: Vice President
---------------------------- ----------------------------
PACIFICA PARTNERS I, L.P. PILGRIM PRIME RATE TRUST
By: Imperial Credit Asset Management, By: Pilgrim Investments, Inc.,
as its Investment Manager as its Investment Manager
By: /s/ Dean K. Kawai By: /s/ Charles E. LeMieux
------------------------------- -------------------------------
Name: Dean K. Kawai Name: Charles E. LeMieux, CFA
---------------------------- ----------------------------
Title: Vice President Title: Vice President
---------------------------- ----------------------------
PILGRIM AMERICA HIGH INCOME MERRILL LYNCH BUSINESS
INVESTMENTS LTD. FINANCIAL SERVICES, INC.
By: Pilgrim Investments, Inc., By: /s/ Gary L. Stewart
as its Investment Manager -------------------------------
Name: Gary L. Stewart
By: /s/ Charles E. LeMieux -----------------------------
------------------------------- Title: Vice President
Name: Charles E. LeMieux, CFA ----------------------------
----------------------------
Title: Vice President
----------------------------
Acknowledged and agreed to as of the date first above written.
VISION TWENTY-ONE, INC.
By: /s/ Bruce Maller
------------------------------
Name: Bruce Maller
----------------------------
Title: Chairman
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