SECOND AMENDED AND RESTATED FORBEARANCE AGREEMENT

Section 1.1                                Defined Terms.  Unless otherwise defined herein, capitalized terms used herein have the meanings assigned in the Credit Agreement, and the other Loan Documents, and the following terms shall have the following meanings:

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Section 2.1                              Forbearance.  (a)   Subject to the terms and conditions hereof, the Administrative Agent and the Lenders hereby agree to forbear, during the Forbearance Period, from the exercise of any and all rights or remedies they may have with respect to, and only with respect to, the Loan Parties under the Credit Agreement, the other Loan Documents and applicable law, solely in respect of the Specified Events of Default.

 

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Section 3.1   Upon the occurrence of any of the following events:

 

Section 4.1                                Reporting.  (a)  The Borrower shall furnish, or cause to be furnished, to the Administrative Agent on behalf of the Lenders, on Thursday of each week, a thirteen week rolling cash flow forecast which shall detail all sources and uses of cash on a weekly basis and shall report any variances from the prior report, and which, to the extent necessary, shall be reforecast in its entirety as of the end of each month (including a variance analysis with respect to such reforecast).  Each thirteen week rolling cash flow forecast shall be in form and substance satisfactory to the Administrative Agent and the Required Lenders in their sole and exclusive discretion (a "Cash Flow Forecast").

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Section 4.2                                Retention of Consultant.  (a)  The Borrower has retained the Consultant pursuant to an engagement letter that has been delivered to the Administrative Agent the Lenders and Borrower shall continue the retention of the Consultant at all times during the Forbearance Period.  The Borrower agrees that the Administrative Agent and the Lenders shall have continuous, direct access to the Consultant and shall promptly receive all non-privileged reports and other work product prepared by Consultant for the Borrower and/or its Subsidiaries from time to time.

 

Section 4.3                                Further Agreements.  (a)  Notwithstanding Section 6.01 of the Credit Agreement, during the Forbearance Period, the Loan Parties and their Subsidiaries shall not incur, or commit to incur, Indebtedness, other than Indebtedness permitted under Sections 6.01(a), (b), (c), (e) (to the extent that such Indebtedness under clause (e) does not exceed $25,000), (f), (g), (h), (k), (l), (m) and (p) of the Credit Agreement.

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Section 4.4                                Existing Financial Covenants.  The Agent and the Lenders agree that the Borrower shall not have to comply with the financial covenants set forth in Section 6.11 of the Credit Agreement for any quarter ending during the period beginning on the Effective Date and ending on the earlier of the Expiration Date or the Termination Date, and that any failure to do so shall not constitute a Default or Event of Default.

 

Section 4.5                                Minimum EBITDA.  The Borrower shall have, at the end of each fiscal quarter set forth below, EBITDA for such quarter of not less than the following:

Section 4.6                                Interest.  Notwithstanding anything to the contrary contained in any of the Loan Documents, all Loans shall, beginning November 1, 2014, bear interest at the CB Floating Rate plus 4.00%.  Following the occurrence and continuance of any Default or Event of Default (other than a Specified Event of Default), the Obligations shall, at the option of the Administrative Agent and the Required Lenders, bear interest at the rate of 2.00% plus the rate otherwise in effect.

 

Section 4.7                                Investment Banker; Related Activities.  (a)  The Borrower shall at all times during the Forbearance Period continue the retention of the Investment Bankers on terms reasonably acceptable to the Administrative Agent and the Lenders.  The Borrower agrees that the Administrative Agent and the Lenders shall have continuous, direct access to the Investment Banker and shall promptly receive all non-privileged reports and other work product prepared by the Investment Bankers for the Borrower and/or its Subsidiaries from time to time.  The Borrower shall, at the request of the Administrative Agent, cause the Investment Bankers to participate on regular update calls with the Administrative Agent and the Lenders.

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Section 4.8                                Payments and Prepayments.   (a)  The Agent and the Lenders agree that the Borrower shall not be obligated to pay the principal amounts set forth in Section 2.08(b) of the Credit Agreement for any date identified therein during the period beginning on the Effective Date and ending on the earlier of the Expiration Date or the Termination Date, and that any failure to do so shall not constitute a Default or Event of Default.

 

Section 4.9                                Forbearance Fee.  (a)  Subject to the provisions of this Section 4.8, the Borrower agrees to pay the Administrative Agent, for the pro rata account of the Lenders, a forbearance fee (the "Forbearance Fee") as follows:  (i) on the last  Business Day of each month of May and June 2015, an amount equal to $750,000, (ii) on the last Business Day of each month beginning July 2015 through September 2015, an amount equal to $1,000,000, (iii) on the last Business Day of each month beginning October 2015 through December 2015, an amount equal to $1,250,000, and (iv) on the last Business Day of each month beginning January 2016 through March 2016, an amount equal to $1,500,000, in each case, which shall be earned in full on the date due, but payable on the earlier of the Expiration Date or the Termination Date; provided, however, that in the event that the Borrower consummates a capital  transaction acceptable to the Administrative Agent and the Required Lenders in their sole and exclusive discretion, that (A) reduces the then-outstanding  principal amount of the Term Loan to an amount less than $10,000,000 and (B) repays all Forbearance Fees accrued and unpaid to date, then, from that date until the end of the Forbearance Period, the monthly Forbearance Fee shall be earned and accrue in an amount that is 50% of the amount set forth above for each such date.  For the avoidance of doubt, any Forbearance Fee that is earned shall be included in the Obligations.

 

Section 4.10                                Forbearance Agreements Deemed Agreements Under the Credit Agreement.  For purposes of the Credit Agreement, the agreements of the Loan Parties contained in this Forbearance shall be deemed to be, and shall be, agreements under the Credit Agreement.  Any breach on the part of the Loan Parties in respect of any agreement contained in this Forbearance shall constitute an Event of Default.

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Section 6.1                                Continuing Effect of the Credit Agreement.  The Loan Parties, the Administrative Agent and the Lenders hereby acknowledge and agree that the Credit Agreement shall continue to be and remain unchanged and in full force and effect in accordance with its terms, except as expressly provided herein.

 

Section 6.2                                No Limitation on Remedies after Forbearance Period.  The Loan Parties hereby acknowledge and agree that, at the end of the Forbearance Period, the provisions of Article II of the Forbearance shall be of no force and effect and the Administrative Agent and the Lenders shall be free, in accordance with the Credit Agreement and the other Loan Documents, to declare the Loans and all other amounts outstanding under the Credit Agreement to be due and payable and to exercise and enforce, or to take steps to exercise and enforce, all other rights, powers, privileges and remedies available to them under the Credit Agreement, any other Loan Document or applicable law on account of the Specified Events of Default (or any other Default or Event of Default that has occurred and is continuing) as if this Forbearance had not been entered into by the parties hereto.

 

Section 6.3                                No Waiver; Other Defaults or Events of Default.  (a)  Nothing contained in this Forbearance shall be construed or interpreted or is intended as a waiver of any rights, powers, privileges or remedies that the Administrative Agent or the Lenders have or may have under the Credit Agreement or any other Loan Document on account of the Specified Events of Default, except as expressly provided herein.

 

  (b)            Nothing contained in this Forbearance shall be construed or interpreted or is intended as a waiver of or limitation on any rights, powers, privileges or remedies that the Administrative Agent or the Lenders have or may have under the Credit Agreement or any other Loan Document on account of any Default or Event of Default other than the Specified Events of Default.

 

 

Section 7.1                                Representations and Warranties.  The Loan Parties hereby represent and warrant as of the date hereof that, after giving effect to this Forbearance, (a) no Default or Event of Default has occurred and is continuing, except the Specified Events of Default, (b) all representations and warranties of the Loan Parties contained in the Loan Documents (which shall be deemed to include this Forbearance) are true and correct in all material respects with the same effect as if made on and as of such date, except that Section 3.07 of the Credit Agreement shall be deemed to exclude any Specified Events of Default, and (c) as of the date hereof, such representations and warranties shall be deemed amended and modified as and to the extent necessary to reflect the pro forma effect of the sale of LCA-Vision Inc, a Delaware corporation, and all other transactions previously agreed to by the Lenders.

 

Section 7.2                                Payment of Fees and Expenses.  The Borrower agrees to pay or reimburse the Administrative Agent upon demand, but not less than fifteen business days after presentment, for all its

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Section 7.3                              reasonable and documented out-of-pocket costs and expenses incurred in connection with the Credit Agreement or the other Loan Documents (which shall be deemed to include this Forbearance), including, without limitation, the reasonable fees and disbursements of the Administrative Agent's counsel and advisors.

 

Section 7.4                                Confirmation of Indebtedness.  The Loan Parties hereby confirm and acknowledge that, as of the date hereof, (i) the Borrower is truly and justly indebted to the Lenders, without defense, counterclaim or offset of any kind, (ii) the Borrower is liable to the Lenders in respect of Loans made under the Credit Agreement in the aggregate principal amount of $$40,568,203.00 (the "Principal Indebtedness") and (iii) each Guarantor is contingently liable to the Lenders in respect of such amount.

 

Section 7.5                                Counterparts.  This Forbearance may be executed by the parties hereto in any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

 

Section 7.6                                GOVERNING LAW.  THIS FORBEARANCE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS FORBEARANCE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

Section 7.7                                Reservation of Rights.  Notwithstanding anything contained in this Forbearance to the contrary, the Loan Parties acknowledge that the Administrative Agent and the Lenders do not waive, and expressly reserve, the right to exercise, at any time during the Forbearance Period, any and all of their rights and remedies under (a) the Credit Agreement, any other Loan Document and applicable law in respect of the Specified Events of Default against any Person other than any Loan Party and (b) the Credit Agreement, any other Loan Document and applicable law in respect of any Default or Event of Default other than the Specified Events of Default.

 

Section 7.8                                Consent of Guarantors.  Each Guarantor hereby (a) consents to the transactions contemplated hereby and (b) acknowledges and agrees that the guarantees (and all security therefore) contained in the Credit Agreement and the other Loan Documents previously executed by it are, and shall remain, in full force and effect after giving effect to this Forbearance and all other prior modifications to the Credit Agreement.

 

Section 7.9                                Release.  The Loan Parties, on behalf of themselves and successors-in-title, legal representatives and assignees and, to the extent the same is claimed by right of, through or under any of the Loan Parties, for its past, present and future employees, agents, representatives, officers, directors, shareholders, and trustees (each, a "Releasing Party" and collectively, the "Releasing Parties") hereby release, waive, and forever relinquish all claims, demands, obligations, liabilities and causes of action of whatever kind or nature (including, without limitation, any so-called "lender liability" claims, interest or other carrying costs, penalties, legal, accounting and other professional fees and expenses and incidental, consequential and punitive damages payable to third parties, or any claims arising under 11 U.S.C. §§ 541-550 or any claims for avoidance or recovery under any other federal, state or foreign law equivalent), whether known or unknown, which any of the Releasing Parties have, may have, or might assert at the time of execution of this Forbearance against the Administrative Agent, the Lenders and/or their respective parents, affiliates, participants, officers, directors, employees, agents, attorneys, accountants, consultants, successors and assigns, directly or indirectly, which occurred, existed, was taken, permitted or begun prior to the execution of this Forbearance, arising out of, based upon, or in any manner connected with (i) any transaction, event, circumstance, action, failure to act or occurrence of any sort or type, whether known or unknown, with respect to the Credit Agreement, any other Loan Document and/or the administration thereof or the Obligations created thereby; (ii) any discussions, commitments,

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