Exhibit 10.44
SECOND AMENDED AND RESTATED
REVOLVING CREDIT, TERM LOAN
AND SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN
AND SECURITY AGREEMENT (the "AGREEMENT") dated as of March 29, 2004, is entered
into between OPTICARE HEALTH SYSTEMS, INC., a Delaware corporation ("PARENT"),
OPTICARE EYE HEALTH CENTERS, INC., a Connecticut corporation ("OPTICARE"),
PRIMEVISION HEALTH, INC., a Delaware corporation ("PVH"), and OPTICARE
ACQUISITION CORPORATION, a Delaware corporation ("OPTICARE ACQUISITION",
together with Parent, Opticare, and PVH, individually and collectively, the
"BORROWER"), and CAPITALSOURCE FINANCE LLC, a Delaware limited liability company
("LENDER").
WHEREAS, Opticare, PVH, Consolidated Eye Care, Inc., a North
Carolina corporation ("CEC"), and Parent, as borrowers, the financial
institutions from time to time party thereto (the "PRIOR LENDERS"), Bank
Austria, AG, as LC Issuer and Bank Austria Creditanstalt Corporate Finance,
Inc., as agent for the Prior Lenders, are parties to that certain Amended and
Restated Loan and Security Agreement, dated as of August 13, 1999 (the "ORIGINAL
LOAN AGREEMENT"), pursuant to which, among other things, the Prior Lenders made
available to Borrower term loans in an aggregate original principal amount of
Twenty One Million Five Hundred Thousand ($21,500,000) and a revolving credit
facility providing for revolving loans of up to Twelve Million Seven Hundred
Thousand Dollars ($12,700,000) (collectively, the "PRIOR LOANS"); and
WHEREAS, Prime Vision Health, Inc. d/b/a OptiCare Eye Health
Network was merged into its parent, OptiCare Health Systems, Inc. as of December
31, 2003;
WHEREAS, Prior Lenders sold and assigned to Lender the Prior
Loans and all of their rights and obligations under the Loan Agreement and all
other documents related to the Prior Loans, and in connection therewith,
Borrower and Lender amended and restated the Original Loan Agreement and
restructured the Prior Loans and make available to Borrower a revolving credit
facility and a term loan pursuant to that certain Amended and Restated Revolving
Credit, Term Loan and Security Agreement dated as of January 25, 2002, which was
amended by that certain First Amendment to Amended and Restated Revolving
Credit, Term Loan and Security Agreement dated as of February 7, 2003, as
amended further by that certain Waiver and Second Amendment to Amended and
Restated Revolving Credit, Term Loan and Security Agreement dated as of November
14, 2003 (collectively, the "LOAN AGREEMENT");
WHEREAS, Borrower paid off the Overadvance (as defined herein)
and requested that the Overadvance be terminated by February 29, 2004, and
Lender agreed to such request;
WHEREAS, Borrower and Lender have agreed to further amend and
restate the Loan Agreement and structure the loans for Lender to make available
to Borrower (i) a revolving credit facility (the "REVOLVING FACILITY") in a
maximum principal amount at any time outstanding of up to FIFTEEN MILLION
DOLLARS ($15,000,000) (the "FACILITY CAP") and (ii) a term loan (the "TERM
LOAN") in a maximum principal amount of THREE MILLION DOLLARS ($3,000,000) (the
"MAXIMUM TERM LOAN AMOUNT"), the proceeds of which shall be used by Borrower for
refinancing Borrower's existing obligations and indebtedness and for working
capital needs in connection with its businesses of medical practice services,
managed care services and the purchase and resale of optical products; and
WHEREAS, Lender is willing to restructure the loan facilities
under the Loan Agreement, and make the Revolving Facility and the Term Loan
available to Borrower upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and adequacy of which hereby
are acknowledged, Borrower and Lender hereby agree as follows:
I. DEFINITIONS
1.1 GENERAL TERMS
For purposes of this Agreement, in addition to the definitions
above and elsewhere in this Agreement, the terms listed in Appendix A hereto
shall have the meanings given such terms in Appendix A, which is incorporated
herein and made a part hereof. All capitalized terms used which are not
specifically defined shall have meanings provided in Article 9 of the UCC in
effect on the date hereof to the extent the same are used or defined therein.
Unless otherwise specified herein or in Appendix A, any agreement or contract
referred to herein or in Appendix A shall mean such agreement as modified,
amended or supplemented from time to time. Unless otherwise specified, as used
in the Loan Documents or in any certificate, report, instrument or other
document made or delivered pursuant to any of the Loan Documents, all accounting
terms not defined in Appendix A elsewhere in this Agreement shall have the
meanings given to such terms in and shall be interpreted in accordance with
GAAP.
II. ADVANCES, PAYMENT AND INTEREST
2.1 THE REVOLVING FACILITY; OVERADVANCE
(a) Subject to the provisions of this Agreement, Lender shall
make Advances to Borrower under the Revolving Facility from time to time during
the Term, provided that, notwithstanding any other provision of this Agreement,
the aggregate amount of all Advances at any one time outstanding under the
Revolving Facility shall not exceed the lesser of (a) the Facility Cap, and (b)
the Availability. The Revolving Facility is a revolving credit facility, which
may be drawn, repaid and redrawn, from time to time as permitted under this
Agreement. Any determination as to whether there is availability within the
Borrowing Base for Advances shall be made by Lender in its sole discretion and
is final and binding upon Borrower. Unless otherwise permitted by Lender, each
Advance shall be in an amount of at least $1,000. Subject to the provisions of
this Agreement, Borrower may request Advances under the Revolving Facility up to
and including the value, in Dollars, of (i) eighty-five percent (85%) of the
Borrowing Base for Accounts Receivables, plus (ii) fifty-five percent (55%) of
the Borrowing Base for Eligible Inventory Costs, provided however, that the
advance rate for the Wise Eligible Inventory Costs shall be fifty percent (50%)
of the Borrowing Base relating to the Wise Eligible Inventory Costs, minus, if
applicable, amounts reserved pursuant to this Agreement (such calculated amount
being referred to herein as the "AVAILABILITY"). Notwithstanding the foregoing,
from November 14, 2003 through and including March 31, 2004, Borrower may
request Advances under the Revolving Facility up to and including the value, in
Dollars, of (i) fifty-five percent (55%) of the Borrowing Base for Eligible
Inventory Costs, including without limitation, Wise Eligible Inventory Costs.
From and after April 1, 2004, the Borrowing Base for Eligible Inventory Costs
shall automatically revert back to the formula specified in the fifth sentence
of this Section 2.1(a). Advances under the Revolving Facility automatically
shall be made for the payment of interest on the Revolving Note and other
Obligations on the date when due to the extent available and as provided for
herein.
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(b) Lender has established the above-referenced advance rate
for Availability and, in its sole credit judgment, may further adjust the
Availability and such advance rate by applying percentages (known as "liquidity
factors") to Eligible Receivables by payor class based upon Borrower's actual
recent collection history for each such payor class (i.e., Medicare, Medicaid,
commercial insurance, etc.) in a manner consistent with Lender's underwriting
practices and procedures, including without limitation Lender's review and
analysis of, among other things, Borrower's historical returns, rebates,
discounts, credits and allowances (collectively, the "DILUTION ITEMS"). Such
liquidity factors and the advance rate for Availability may be adjusted by
Lender throughout the Term as warranted by Lender's underwriting practices and
procedures in its sole credit judgment. Also, Lender shall have the right to
establish from time to time in its sole credit judgment, reserves against the
Borrowing Base, which reserves shall have the effect of reducing the amounts
otherwise eligible to be disbursed to Borrower under the Revolving Facility
pursuant to this Agreement.
(c) Borrower shall be permitted to borrow, for the period of
time commencing on November 30, 2003 and expiring on February 29, 2004, in
addition to the Availability (the "OVERADVANCE") not to exceed, at any one time,
$700,000 (the "MAXIMUM OVERADVANCE AMOUNTS"). Each Overadvance shall be part of
the Revolving Facility, evidenced by the Revolving Note and, when aggregated
with all other Advances, subject at all times to the Facility Cap. The aggregate
balance of all Overadvances shall be due and payable in full in cash on February
29, 2004, and if the aggregate balance of all outstanding Overadvances exceeds
the Maximum Overadvance Amount, the Borrower shall immediately repay such
excess. No Overadvance shall be made at any time that a Default or Event of
Default shall have occurred and be continuing past any cure period. Any
mandatory prepayment of the Overadvances pursuant to Section 2.10 hereof shall
permanently reduce the Overadvance.
2.2 THE REVOLVING NOTE; MATURITY
(a) All Advances under the Revolving Facility shall be
evidenced by the Revolving Note, payable to the order of Lender, duly executed
and delivered by Borrower and dated the Closing Date, evidencing the aggregate
indebtedness of Borrower to Lender resulting from Advances under the Revolving
Facility, from time to time. Lender hereby is authorized, but is not obligated,
to enter the amount of each Advance under the Revolving Facility and the amount
of each payment or prepayment of principal or interest thereon in the
appropriate spaces on the reverse of or on an attachment to the Revolving Note.
Lender will account to Borrower monthly with a statement of Advances under the
Revolving Facility and charges and payments made pursuant to this Agreement, and
in the absence of manifest error, such accounting rendered by Lender shall be
deemed presumptive and conclusive unless Lender is notified by Borrower in
writing to the contrary within thirty (30) calendar days of Receipt of each
accounting, which notice shall be deemed an objection only to items specifically
objected to therein.
(b) All amounts outstanding under the Revolving Note and other
Obligations shall be due and payable in full, if not earlier in accordance with
this Agreement, on the earlier of (i) the occurrence of an Event of Default if
required pursuant hereto or Lender's demand upon an Event of Default, and (ii)
the last day of the Revolver Term (such earlier date being the "MATURITY DATE").
2.3 REVOLVING NOTE INTEREST
Interest on outstanding Advances under the Revolving Note
shall be payable monthly in
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arrears on the first day of each calendar month at an annual rate of Prime Rate
plus 1.5%, provided, however, that, notwithstanding, any provision of any Loan
Document, (i) the interest on all outstanding Overadvances under the Revolving
Note shall be payable monthly in arrears on the first day of each calendar month
at an annual rate of Prime Rate plus 5.5%, (ii) the interest on all outstanding
Advances (including all Overadvances) under the Revolving Note shall be not less
than 5.75%, and (iii) in each case shall be calculated on the basis of a 360-day
year and for the actual number of calendar days elapsed in each interest
calculation period. Interest accrued on each Advance under the Revolving Note
shall be due and payable on the first day of each calendar month, in accordance
with the procedures provided for in Section 2.5 and Section 2.9, commencing
February 1, 2002, and continuing until the later of the expiration of the Term
and the full performance and irrevocable payment in full in cash of the
Obligations and termination of this Agreement.
2.4 REVOLVING FACILITY DISBURSEMENTS; REQUIREMENT TO DELIVER
BORROWING CERTIFICATE
So long as no Default or Event of Default shall have occurred
and be continuing, Borrower may give Lender irrevocable written notice
requesting an Advance under the Revolving Facility by delivering to Lender not
later than 11:00 a.m. (New York City Time) at least one (1) (but not more than
four (4) Business Days before the proposed borrowing date of such requested
Advance (the "BORROWING DATE"), a completed Borrowing Certificate and relevant
supporting documentation satisfactory to Lender, which shall (i) specify the
proposed Borrowing Date of such Advance which shall be a Business Day, (ii)
specify the principal amount of such requested Advance, (iii) certify the
matters contained in Section 4.2, and (iv) specify the amount of any Medicare or
Medicaid recoupments and/or recoupments of any third-party payor being sought,
requested or claimed, or, to Borrower's knowledge, threatened against Borrower
or Borrower's affiliates. Each time a request for an Advance is made (and, in
any event and regardless of whether an Advance is being requested, once a month
as of the fifteenth (15th) day of each month for the month then ended during the
Term (and more frequently if Lender shall so request until the Obligations are
indefeasibly paid in cash in full and this Agreement is terminated), Borrower
shall deliver to Lender a Borrowing Certificate accompanied by a separate
detailed aging and categorizing of Borrower's accounts receivable and inventory
detail and such other supporting documentation with respect to the figures and
information in the Borrowing Certificate as Lender shall reasonably request from
a credit or security perspective or otherwise. On each Borrowing Date, Borrower
irrevocably authorizes Lender to disburse the proceeds of the requested Advance
to the appropriate Borrower's account(s) as set forth on Schedule 2.5, in all
cases for credit to the appropriate Borrower (or to such other account as to
which the appropriate Borrower shall instruct Lender) via Federal funds wire
transfer no later than 4:00 p.m. New York City Time.
2.5 REVOLVING FACILITY COLLECTIONS; REPAYMENT; BORROWING
AVAILABILITY AND LOCKBOX
Each Borrower shall maintain one or more lockbox accounts
(individually and collectively, the "LOCKBOX ACCOUNT") with one or more banks
acceptable to Lender and to Borrower (each, a "LOCKBOX BANK"), and shall execute
with each Lockbox Bank one or more agreements acceptable to Lender (individually
and collectively, the "LOCKBOX AGREEMENT"), and such other agreements related
thereto as Lender may require. Each Borrower shall ensure that all collections
of their respective Accounts and all other cash payments received by any
Borrower are paid and delivered directly from Account Debtors and other Persons
into the appropriate Lockbox Account. The Lockbox Agreements shall provide that
the Lockbox Banks immediately will transfer all funds paid into the Lockbox
Accounts into a depository account or accounts maintained by Lender or an
affiliate of Lender at such bank as Lender may communicate to Borrower from time
to time (the "CONCENTRATION
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ACCOUNT"), except, with respect only to Accounts payable by Medicaid/Medicare
Account Debtors, as instructed by the applicable Borrower to whom such Accounts
are payable as permitted pursuant to the applicable Lockbox Agreement.
Notwithstanding and without limiting any other provision of any Loan Document,
Lender shall apply, on a daily basis, all funds transferred into the
Concentration Account pursuant to the Lockbox Agreement and this Section 2.5 in
such order and manner as determined by Lender. To the extent that any Accounts
collections of any Borrower or any other cash payments received by any Borrower
are not sent directly to the appropriate Lockbox Account but are received by any
Borrower or any of such Borrower's affiliates, such collections and proceeds
shall be held in trust for the benefit of Lender and immediately remitted (and
in any event within two (2) Business Days), in the form received, to the
appropriate Lockbox Account for immediate transfer to the Concentration Account.
Borrower acknowledges and agrees that compliance with the terms of this Section
2.5 is an essential term of this Agreement, and that, in addition to and
notwithstanding any other rights Lender may have hereunder, under any other Loan
Document, under applicable law or at equity, upon each and every failure by any
Borrower or any of their affiliates to comply with any such terms Lender shall
be entitled to assess a non-compliance fee which shall operate to increase the
Applicable Rate by two percent (2.0%) per annum during any period of
non-compliance, whether or not a Default or an Event of Default occurs or is
declared, provided that nothing shall prevent Lender from considering any
failure to comply with the terms of this Section 2.5 to be a Default or an Event
of Default. All funds transferred to the Concentration Account for application
to the Obligations under the Revolving Facility shall be applied to reduce the
Obligations under the Revolving Facility, but, for purposes of calculating
interest hereunder, shall be subject to a five (5) Business Day clearance
period. If as the result of collections of Accounts and/or any other cash
payments received by any Borrower pursuant to this Section 2.5 a credit balance
exists with respect to the Concentration Account, such credit balance shall not
accrue interest in favor of a Borrower, but shall be available to the
appropriate Borrower in accordance with the terms of this Agreement. If
applicable, at any time prior to the execution of all or any of the Lockbox
Agreements and operation of all or any of the Lockbox Accounts, each Borrower
and their affiliates shall direct all collections or proceeds it receives on
Accounts or from other Collateral to the accounts(s) and in the manner specified
by Lender in its sole discretion. Notwithstanding the foregoing, following the
five (5) Business Day clearance period, if no Default or Event of Default has
occurred, all funds transferred to the Concentration Account shall be applied by
Lender first to the remaining Overadvances until no amounts are outstanding with
respect thereto and then to the remaining Obligations under the Revolving
Facility; otherwise all funds transferred to the Concentration Account shall be
applied by Lender in such order as Lender may determine.
2.6 REPAYMENT OF EXCESS ADVANCES
Any balance of Advances under the Revolving Facility
outstanding at any time in excess of the lesser of the Facility Cap or the
Availability shall be immediately due and payable by Borrower without the
necessity of any demand, at the Payment Office, whether or not a Default or
Event of Default has occurred or is continuing and shall be paid in the manner
specified in Section 2.9.
2.7 TERM LOAN; REQUEST FOR INCREASE
(a) Subject to the terms and conditions set forth in this
Agreement, Lender agrees to loan to Borrower on the Closing Date the Term Loan
to be constituted of a single draw of not more than the Maximum Term Loan
Amount, to be disbursed to the appropriate Borrower's account(s) as set forth on
Schedule 2.6 or as otherwise directed by Borrower in writing, provided that, the
amount drawn under
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the Term Loan shall not be greater than 40% of the value of Borrower's
Equipment, as determined by Lender in its sole discretion. The Term Loan is not
a revolving credit facility, and any repayments of principal shall be applied to
permanently reduce the Term Loan. The Term Loan shall be evidenced by the Term
Note.
(b) Lender acknowledges that Borrower may request an increase
in the Maximum Term Loan Amount based upon an increase in the volume of
Borrower's Equipment. Borrower acknowledges that any such increase is subject to
Lender's credit committee approval.
(c) Notwithstanding the foregoing, Lender agrees to advance to
Borrower on November 14, 2003, an amount equal to $315,286 to be constituted of
a single draw, which shall be evidenced by Term Note B and for all purposes of
this Agreement be considered a portion of the Term Loan."
2.8 TERM NOTE INTEREST
Interest on the outstanding balance of the Term Loan under the
Term Note shall be payable monthly in arrears on the first day of each calendar
month at an annual rate of the Prime Rate plus 3.5%, provided, however, that,
notwithstanding, any other provision of any Loan Document, the interest on the
outstanding principal balance of the Term Loan under the Term Note shall be not
less than 9%, in each case calculated on the basis of a 360-day year and for the
actual number of calendar days elapsed in each interest calculation period.
Interest accrued on the Term Loan shall be due and payable on the first day of
each calendar month commencing March 1, 2002, and continuing until the later of
the expiration of the Term Loan Term and the full performance and irrevocable
payment in full in cash of the Obligations and termination of this Agreement.
Advances under the Revolving Facility shall be made automatically for the
payment of interest on the Term Loan and other Obligations on the date when due
to the extent available and as provided for herein.
2.9 REPAYMENT OF TERM LOAN; MATURITY
Payment of principal and all other amounts outstanding under
the Term Loan and all other Obligations due hereunder shall be due and payable
monthly, on the basis of a 7-year amortization, with payment in full of the
balance due upon the earlier of termination or the Term Loan Maturity Date. The
Term Note shall mature, if not earlier in accordance with this Agreement, on the
Term Loan Maturity Date. The Term Loan shall be repaid, based upon a seven (7)
year amortization schedule until such time as Lender conducts an audit of the
Inventory relating to Wise, and to Lender's satisfaction, there is sufficient
value to support a fifteen (15) year amortization schedule as a basis for
repayment of the Term Loan, which such change may be affected by a writing
signed by Lender, without further formal amendment hereof.
2.10 OTHER MANDATORY PREPAYMENTS ON TERM LOAN
In addition to and without limiting any provision of any Loan
Document:
(a) if a Change of Control occurs, on or prior to the first
Business Day following the date of such Change of Control, Borrower shall prepay
the Term Loan, including, without limitation, all outstanding Advances and all
other Obligations, in full in cash together with accrued interest thereon to
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the date of prepayment and all other amounts owing to Lender under the Loan
Documents related to the Term Loan provided, however, that no prepayment
hereunder shall be required for any Change of Control caused by an equity
investment as long as Borrower is not otherwise in default under this Agreement;
and
(b) if Borrower sells or otherwise disposes any of its assets
or properties (other than in the ordinary course of Borrower's business),
receives any property damage insurance award which is not used to repair or
replace the property covered thereby, then it shall apply 100% of the proceeds
thereof first to the permanent repayment of any outstanding Overadvances,
together with accrued interest thereon and all other Obligations owing to Lender
under the Loan Documents related to such Overadvances, second to the prepayment
of the Term Loan, together with accrued interest thereon and all other
Obligations owing to Lender under the Loan Documents related to the Term Loan,
and third to all other Obligations owing to Lender under the Loan Documents,
such payment to be applied at such time and in such manner and order as Lender
shall decide in its sole discretion.
2.11 INTENTIONALLY OMITTED
2.12 INTENTIONALLY OMITTED
2.13 INTENTIONALLY OMITTED
2.14 PAYMENTS BY LENDER
Should any amount required to be paid under any Loan Document
be unpaid when due, such amount may be paid by Lender, which payment shall be
deemed a request for an Advance under the Revolving Facility as of the date such
payment is due, and Borrower irrevocably authorizes disbursement of any such
funds to Lender by way of direct payment of the relevant amount, interest or
Obligations. No payment or prepayment of any amount by Lender or any other
Person shall entitle any Person to be subrogated to the rights of Lender under
any Loan Document unless and until the Obligations have been fully performed and
paid irrevocably in cash and this Agreement has been terminated. Any sums
expended by Lender as a result of any Borrower's or any Guarantor's failure to
pay, perform or comply with any Loan Document or any of the Obligations may be
charged to Borrower's account as an Advance under the Revolving Facility and
added to the Obligations.
2.15 GRANT OF SECURITY INTEREST; COLLATERAL
(a) To secure the payment and performance of the Obligations,
each Borrower hereby grants to Lender a continuing security interest in and Lien
upon, and pledges to Lender, all of its right, title and interest in and to the
following (collectively and each individually, the "COLLATERAL"), which security
interest is intended to be a first priority security interest:
(i) all of such Borrower's tangible personal
property, including without limitation all present and future Inventory and
Equipment (including items of equipment which are or become Fixtures), now owned
or hereafter acquired;
(ii) all of such Borrower's intangible personal
property, including without limitation all present and future Accounts,
securities, contract rights, Permits, General Intangibles, Chattel Paper,
Documents, Instruments and Deposit Accounts, rights to the payment of money or
other
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forms of consideration of any kind, tax refunds, insurance proceeds, now owned
or hereafter acquired, and all intangible and tangible personal property
relating to or arising out of any of the foregoing;
(iii) all of such Borrower's present and future
Government Contracts and rights thereunder and the related Government Accounts
and proceeds thereof, now or hereafter owned or acquired by such Borrower;
provided, however, that Lender shall not have a security interest in any rights
under any Government Contract of such Borrower or in the related Government
Account where the taking of such security interest would be a violation of an
express prohibition contained in the Government Contract (for purposes of this
limitation, the fact that a Government Contract is subject to, or otherwise
refers to, Title 31, ss. 203 or Title 41, ss. 15 of the United States Code shall
not be deemed an express prohibition against assignment thereof) or is
prohibited by applicable law; and
(iv) any and all additions to any of the foregoing,
and any and all replacements, products and proceeds (including insurance
proceeds) of any of the foregoing.
(b) Notwithstanding the foregoing provisions of this Section
2.15, such grant of a security interest shall not extend to, and the term
"Collateral" shall not include, any General Intangibles of Borrower to the
extent that (i) such General Intangibles are not assignable or capable of being
encumbered as a matter of law or under the terms of any license or other
agreement applicable thereto (but solely to the extent that any such restriction
shall be enforceable under applicable law) without the consent of the licensor
thereof or other applicable party thereto, and (ii) such consent has not been
obtained; provided, however, that the foregoing grant of a security interest
shall extend to, and the term "Collateral" shall include, each of the following:
(a) any General Intangible which is in the nature of an Account or a right to
the payment of money or a proceed of, or otherwise related to the enforcement or
collection of, any Account or right to the payment of money, or goods which are
the subject of any Account or right to the payment of money, (b) any and all
proceeds of any General Intangible that is otherwise excluded to the extent that
the assignment, pledge or encumbrance of such proceeds is not so restricted, and
(c) upon obtaining the consent of any such licensor or other applicable party
with respect to any such otherwise excluded General Intangible, such General
Intangible as well as any and all proceeds thereof that might theretofore have
been excluded from such grant of a security interest and from the term
"Collateral."
(c) In addition to the foregoing, to secure the payment and
performance of the Obligations, (i) Parent shall pledge to Lender all of the
securities it owns in Opticare and PVH, and (ii) PVH will pledge to Lender all
of the securities it owns in connection with its subsidiaries who are listed on
Schedule 2.15 hereto, in each case pursuant to the Stock Pledge Agreement.
(d) Upon the execution and delivery of this Agreement, and
upon the proper filing of the necessary financing statements and proper delivery
of the necessary stock certificates, without any further action, Lender will
have a good, valid and perfected first priority Lien and security interest in
the Collateral, subject to no transfer or other restrictions or Liens of any
kind in favor of any other Person except for Permitted Liens. No financing
statement relating to any of the Collateral is on file in any public office
except those (i) on behalf of Lender, and/or (ii) in connection with Permitted
Liens.
2.16 COLLATERAL ADMINISTRATION
(a) All Collateral (except Deposit Accounts) will at all times
be kept by Borrower at the locations set forth on Schedule 5.18 hereto and shall
not, without thirty (30) calendar days prior written notice to Lender, be moved
therefrom, and in any case shall not be moved outside the continental United
States.
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(b) Borrower shall keep accurate and complete records of its
Accounts and all payments and collections thereon and shall submit such records
to Lender on such periodic bases as Lender may request. In addition, if Accounts
of Borrower in an aggregate face amount in excess of $250,000 become ineligible
because they fall within one of the specified categories of ineligibility set
forth in the definition of Eligible Receivables, Borrower shall notify Lender of
such occurrence on the report due on the fifteenth (15th) day of each month
unless an earlier Request for Advance is submitted following such occurrence and
the Borrowing Base shall thereupon be adjusted to reflect such occurrence. If
requested by Lender, Borrower shall execute and deliver to Lender formal written
assignments of all of its Accounts weekly or daily as Lender may request,
including all Accounts created since the date of the last assignment, together
with copies of claims, invoices and/or other information related thereto. To the
extent that collections from such assigned accounts exceed the amount of the
Obligations, such excess amount shall not accrue interest in favor of Borrower,
but shall be available to the Borrower upon Borrower's written request.
(c) Whether or not an Event of Default has occurred, any of
the Lender's officers, employees, representatives or agents shall have the
right, at any time during normal business hours, in the name of Lender, any
designee of Lender or Borrower, to verify the validity, amount or any other
matter relating to any Accounts of Borrower. Borrower shall cooperate fully with
Lender in an effort to facilitate and promptly conclude such verification
process.
(d) To expedite collection, Borrower shall endeavor in the
first instance to make collection of its Accounts for Lender. Lender shall have
the right at all times after the occurrence of an Event of Default to notify (i)
Account Debtors owing Accounts to Borrower other than Medicaid/Medicare Account
Debtors that their Accounts have been assigned to Lender and to collect such
Accounts directly in its own name and to charge collection costs and expenses,
including reasonable attorney's fees, to Borrower, and (ii) Medicaid/Medicare
Account Debtors that Borrower has waived any and all defenses and counterclaims
it may have or could interpose in any such action or procedure brought by Lender
to obtain a court order recognizing the assignment or security interest and lien
of Lender in and to any Account or other Collateral and that Lender is seeking
or may seek to obtain a court order recognizing the assignment or security
interest and lien of Lender in and to all Accounts and other Collateral payable
by Medicaid/Medicare Account Debtors.
(e) As and when determined by Lender in its reasonable
discretion, Lender will perform the searches described in clauses (i) and (ii)
below against Borrower and Guarantors (the results of which are to be consistent
with Borrower's representations and warranties under this Agreement), all at
Borrower's expense: (i) UCC searches with the Secretary of State of the
jurisdiction of organization of each Borrower and Guarantor and the Secretary of
State and local filing offices of each jurisdiction where Borrower and/or any
Guarantors maintains their respective executive offices, a place of business or
assets; and (ii) judgment, federal tax lien and corporate and partnership tax
lien searches, in each jurisdiction searched under clause (i) below.
(f) Borrower (i) shall provide prompt written notice to its
current bank to transfer all items, collections and remittances to the
Concentration Account, (ii) upon Lender's request after an Event of Default
shall have occurred and be continuing, shall provide prompt written notice to
each Account Debtor (other than Medicaid/Medicare Account Debtors) that Lender
has been granted a lien and security interest in, upon and to all Accounts
applicable to such Account Debtor and shall direct each Account Debtor to make
payments to the appropriate Lockbox Account, and Borrower hereby authorizes
Lender, upon any failure to send such notices and directions within ten (10)
calendar days (or ten (10) calendar days after the Person becomes an Account
Debtor), to send any and all similar notices and directions to such Account
Debtors as set forth on Schedule 2.16 hereto, and (iii) shall do anything
9
further that may be lawfully required by Lender to secure Lender and effectuate
the intentions of the Loan Documents. At Lender's request, Borrower shall
immediately deliver to Lender all items for which Lender must receive possession
to obtain a perfected security interest and all notes, certificates, and
documents of title, chattel paper, warehouse receipts, instruments, and any
other similar instruments constituting Collateral.
2.17 PROMISE TO PAY; MANNER OF PAYMENT
Borrower absolutely and unconditionally promises to pay
principal, interest and all other amounts payable hereunder, or under any other
Loan Document, without any right of rescission and without any deduction
whatsoever, including any deduction for any setoff, counterclaim or recoupment,
and notwithstanding any damage to, defects in or destruction of the Collateral
or any other event, including obsolescence of any property or improvements. Any
payments made by Borrower (other than payments automatically paid through
Advances under the Revolving Facility as provided herein), shall be made only by
wire transfer on the date when due, without offset or counterclaim, in Dollars,
in immediately available funds to such account as may be indicated in writing by
Lender to Borrower from time to time. Any such payment received after 3:00 p.m.
New York City Time on the date when due shall be deemed received on the
following Business Day. Whenever any payment hereunder shall be stated to be due
or shall become due and payable on a day other than a Business Day, the due date
thereof shall be extended to, and such payment shall be made on, the next
succeeding Business Day, and such extension of time in such case shall be
included in the computation of payment of any interest (at the interest rate
then in effect during such extension) and/or fees, as the case may be.
2.18 POWER OF ATTORNEY
Lender is hereby irrevocably made, constituted and appointed the true
and lawful attorney for Borrower (without requiring any of them to act as such)
with full power of substitution to do the following: (i) endorse the name of any
such Person upon any and all checks, drafts, money orders, and other instruments
for the payment of money that are payable to such Person and constitute
collections on its or their Accounts; (ii) execute in the name of such Person
any financing statements, schedules, assignments, instruments, documents, and
statements that it is or they or are obligated to give Lender under any of the
Loan Documents; and (iii) do such other and further acts and deeds in the name
of such Person that Lender may deem necessary or desirable to enforce any
Account or other Collateral or to perfect Lender's security interest or lien in
any Collateral. In addition, if any such Person breaches its obligation
hereunder to direct payments of Accounts or the proceeds of any other Collateral
to the appropriate Lockbox Account, Lender, as the irrevocably made, constituted
and appointed true and lawful attorney for such Person pursuant to this
paragraph, may, by the signature or other act of any of Lender's officers or
authorized signatories (without requiring any of them to do so), direct any
federal, state or private payor or fiscal intermediary to pay proceeds of
Accounts or any other Collateral to the appropriate Lockbox Account.
III. FEES AND OTHER CHARGES; ALLOCATION OF PURCHASE PRICE
3.1 COMMITMENT FEES; WARRANTS
On the Closing Date, Borrower paid to Lender (a) three
quarters of one percent (.75%) of the Facility Cap as a commitment fee for the
Revolver; (b) 1% of the Maximum Term Loan Amount as a commitment fee for the
Term Loan, and (c) shall grant to Lender the Warrants to purchase 250,000 shares
at $0.14 per share of Opticare Health Systems, Inc.'s common stock. On February
7, 2003,
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simultaneous with Opticare Acquisition becoming a Borrower hereunder pursuant to
the requirements of Section 7.6(b), Borrower paid to Lender an additional
nonrefundable commitment fee of $37,500 (equal to .75% of the $5,000,000
increase to the Facility Cap).
3.2 UNUSED LINE FEE
Borrower shall pay to Lender monthly an unused line fee (the
"UNUSED LINE FEE") in an amount equal to .50 % (per annum) of the difference
derived by subtracting (i) the daily average amount of the balances under the
Revolving Facility outstanding during the preceding month, from (ii) the
Facility Cap. The Unused Line Fee shall be payable monthly in arrears on the
first day of each successive calendar month (starting with the month in which
the Closing Date occurs).
3.3 COLLATERAL MANAGEMENT FEE
Borrower shall pay Lender as additional interest a monthly
collateral management fee (the "COLLATERAL MANAGEMENT Fee") equal to 0.083% of
the daily average amount of the balances under the Revolving Facility
outstanding during the preceding month. The Collateral Management Fee shall be
payable monthly in arrears on the first day of each successive calendar month
(starting with the month in which the Closing Date occurs).
3.4 REVOLVER TERMINATION FEE; TERM LOAN FINANCE FEE
(a) Revolver Early Termination Fee. If (i) Borrower terminates
the Revolving Facility under Section 11.1 hereof, (ii) Borrower is required to
make payment in full of the Revolving Facility and/or Obligations relating to
the Revolving Facility upon the occurrence of an Event of Default, (iii) a
voluntary or involuntary Change of Control or payment pursuant to Section 2.11
occurs, (iv) any other voluntary or involuntary prepayment of the Revolving
Facility and/or Obligations relating to the Revolving Facility by Borrower or
any other Person occurs (other than reductions to zero of the outstanding
balance of the Revolving Facility resulting from the ordinary course operation
of the provisions of Section 2.5), whether by virtue of Lender's exercising its
right of set-off or otherwise, (v) Lender accelerates the Revolving Note or
makes any demand on the Revolving Note, or (vi) any payment or reduction of the
outstanding balance of the Revolving Note and/or the Revolving Facility is made
during a bankruptcy, reorganization or other proceeding or is made pursuant to
any plan of reorganization or liquidation or any Debtor Relief Law, (each, a
"REVOLVER TERMINATION"), then, at the effective date of any such termination,
Borrower shall pay Lender (in addition to the then outstanding principal,
accrued interest and other Obligations relating to the Revolving Facility
pursuant to the terms of this Agreement and any other Loan Document), as yield
maintenance for the loss of bargain and not as a penalty, an amount equal to (x)
if the revolver termination occurs prior to December 31, 2004, 2% of the
Facility Cap, or (y) if the revolver termination occurs on or after December 31,
2004, but prior to expiration of the Revolving Facility Term, 1% of the Facility
Cap; provided, however, that in the event the revolver termination arises
pursuant to a voluntary prepayment of the Revolving Facility and Obligations
relating to the Revolving Facility by Borrower pursuant to a refinancing by a
third party commercial financial institution whose primary business is providing
senior secured financing the yield maintenance for the loss of bargain shall be
equal to an amount equal to (x) if the revolver termination occurs prior to
December 31, 2004, the greater of (1) 2% of the Facility Cap and (2) the Yield
Maintenance Amount, and (y) if the revolver termination occurs prior to
expiration of the Revolving Facility Term, the greater of (1) 1% of the Facility
Cap and (2) the Yield Maintenance Amount.
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(b) Term Loan Finance Fee. Upon (i) termination of the Term
Loan for any reason, (ii) acceleration of the Term Loan on account of any
bankruptcy proceeding, liquidation or Debtor Relief Law, or (iii) upon repayment
of the Term Loan in full (each, a "TERM LOAN TERMINATION"), then, at the
effective date of any such Term Loan Termination, Borrower shall pay Lender (in
addition to the then outstanding principal, accrued interest and other
Obligations relating to the Term Loan owing under the Term Loan pursuant to the
terms of this Agreement and any other Loan Document), as yield maintenance for
the loss of bargain and not as a penalty, an amount equal to two percent (2%) of
the Term Loan amount.
3.5 COMPUTATION OF FEES; LAWFUL LIMITS
All fees hereunder shall be computed on the basis of a year of
360 days and for the actual number of days elapsed in each calculation period,
as applicable. In no contingency or event whatsoever, whether by reason of
acceleration or otherwise, shall the interest and other charges paid or agreed
to be paid to Lender for the use, forbearance or detention of money hereunder
exceed the maximum rate permissible under applicable law which a court of
competent jurisdiction shall, in a final determination, deem applicable hereto.
If, due to any circumstance whatsoever, fulfillment of any provision hereof, at
the time performance of such provision shall be due, shall exceed any such
limit, then, the obligation to be so fulfilled shall be reduced to such lawful
limit, and, if Lender shall have received interest or any other charges of any
kind which might be deemed to be interest under applicable law in excess of the
maximum lawful rate, then such excess shall be applied first to any unpaid fees
and charges hereunder, then to unpaid principal balance owed by Borrower
hereunder, and if the then remaining excess interest is greater than the
previously unpaid principal balance, Lender shall promptly refund such excess
amount to Borrower and the provisions hereof shall be deemed amended to provide
for such permissible rate. The terms and provisions of this Section 3.5 shall
control to the extent any other provision of any Loan Document is inconsistent
herewith.
3.6 DEFAULT RATE OF INTEREST
Upon the occurrence and during the continuation of an Event of
Default, the Applicable Rate of interest in effect at such time with respect to
the Obligations shall be increased by 3.0% per annum (the "DEFAULT RATE").
3.7 ACKNOWLEDGEMENT OF JOINT AND SEVERAL LIABILITY
Each Borrower acknowledges that it is jointly and severally
liable for all of the Obligations under the Loan Documents. Each Borrower
expressly understands, agrees and acknowledges that (i) it is affiliated by
common ownership, (ii) each Borrower desires to have the availability of one
common credit facility instead of separate credit facilities, (iii) each
Borrower has requested that Lender extend such a common credit facility on the
terms herein provided, (iv) Lender will be lending against, and relying on a
lien upon, all of the Borrowers' assets even though the proceeds of any
particular loan made hereunder may not be advanced directly to a particular
Borrower, (v) each Borrower will nonetheless benefit by the making of all such
loans by Lender and the availability of a single credit facility of a size
greater than each could independently warrant, and (vi) all of the
representations, warranties, covenants, obligations, conditions, agreements and
other terms contained in the Loan Documents shall be applicable to and shall be
binding upon each Borrower.
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3.8 WARRANTS
As additional consideration for the extensions of credit
hereunder and as more fully described in the Warrant Agreement, Systems shall
issue and deliver to CapitalSource Holdings LLC on the Closing Date, the
Warrant. The Warrant and number of securities purchasable upon exercise of the
Warrant shall be subject to adjustment and shall be subject to various rights in
favor of Lender as set forth in the Warrant Agreement.
3.9 ALLOCATION OF PURCHASE PRICE
Under both GAAP consistently applied and the regulations of
the Internal Revenue Service, the issuance to Lender of the Term Note and the
Warrant for an aggregate purchase price equal to the aggregate principal amount
of the Term Note being so purchased results in the creation of "original issue
discount" on such Term Note (which original issue discount may also be deemed to
constitute the value of any Warrant issued in connection with the issuance of
such Term Note), and such regulations require the determination of the value of
any warrant so delivered. Pursuant to GAAP consistently applied and applicable
Treasury Regulations, Borrower and Lender agree to allocate $298,170 of the
purchase price to the Term Note and the remaining $18,300 of the purchase price
to the Warrant and that such allocation reflects the relative fair market values
of the Term Note and the Warrant as of their issue date. Borrower and Lender
agree to recognize and adhere to the determinations and allocations of original
issue discount and valuation of the Warrant set forth herein for all federal and
state income tax purposes. In the event of any proposed transfer of the Term
Note by Lender, Lender shall, prior to such transfer, ▇▇▇▇ the Term Note with a
legend pertaining to the original issue discount in the form required by
Treasury Regulation Section 1.1275-3(b)(1).
IV. CONDITIONS PRECEDENT
4.1 CONDITIONS TO INITIAL ADVANCE, FUNDING OF TERM LOAN AND
CLOSING
The obligations of Lender to consummate the transactions
contemplated herein and to make the initial Advance under the Revolving Facility
(the "INITIAL ADVANCE") and to fund the Term Loan are subject to the
satisfaction, in the sole judgment of Lender, of the following:
(a) (i) Borrower shall have delivered to Lender (A) the Loan
Documents to which it is a party, each duly executed by an authorized officer of
Borrower and the other parties thereto, (B) a Borrowing Certificate for the
Initial Advance under the Revolving Facility executed by an authorized officer
of Borrower, and (ii) each Guarantor shall have delivered to Lender the Loan
Documents to which such Guarantor is a party, each duly executed and delivered
by such Guarantor or an authorized officer of such Guarantor, as applicable, and
the other parties thereto;
(b) all in form and substance satisfactory to Lender in its
sole discretion, Lender shall have received (i) a report of Uniform Commercial
Code financing statement, tax and judgment lien searches performed with respect
to each Borrower and Guarantor in each jurisdiction determined by Lender in its
sole discretion, and such report shall show no Liens on the Collateral (other
than Permitted Liens), (ii) each document (including, without limitation, any
Uniform Commercial Code financing statement) required by any Loan Document or
under law or requested by Lender to be filed, registered or recorded to create
in favor of Lender, a perfected first priority security interest upon the
Collateral, and (iii) evidence of each such filing, registration or recordation
and of the payment by Borrower of any necessary fee, tax or expense relating
thereto;
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(c) Lender shall have received (i) the Charter and Good
Standing Documents, all in form and substance acceptable to Lender, (ii) a
certificate of the corporate secretary or assistant secretary of each Borrower
dated the Closing Date, as to the incumbency and signature of the Persons
executing the Loan Documents, in form and substance acceptable to Lender, (iii)
the written legal opinion of counsel for Borrower and Guarantors, in form and
substance satisfactory to Lender and its counsel; and (iv) a certificate
executed by an authorized officer of each Borrower, which shall constitute a
representation and warranty by such Borrower as of the Closing Date and the
applicable Borrowing Date and the date of funding of the Term Loan that the
conditions contained in this Agreement have been satisfied;
(d) Lender shall have received a certificate of the chief
financial officer (or, in the absence of a chief financial officer, the chief
executive officer) of Borrower, on a consolidated basis, in form and substance
satisfactory to Lender (each, a "SOLVENCY CERTIFICATE"), certifying (i) the
solvency of such Person after giving effect to the transactions and the
Indebtedness contemplated by the Loan Documents, and (ii) as to such Person's
financial resources and ability to meet its obligations and liabilities as they
become due, to the effect that as of the Closing Date and the Borrowing Date for
the Initial Advance and the date of funding of the Term Loan and after giving
effect to such transactions and Indebtedness: (A) the assets of such Person, at
a Fair Valuation, exceed the total liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) of such Person, and (B) no
unreasonably small capital base with which to engage in its anticipated business
exists with respect to such Person;
(e) Lender shall have completed examinations, the results of
which shall be satisfactory in form and substance to Lender, of the Collateral,
the financial statements and the books, records, business, obligations,
financial condition and operational state of each Borrower and Guarantor, and
each such Person shall have demonstrated to Lender's satisfaction that (i) its
operations comply, in all respects deemed material by Lender, in its sole
judgment, with all applicable federal, state, foreign and local laws, statutes
and regulations, (ii) its operations are not the subject of any governmental
investigation, evaluation or any remedial action which could result in any
expenditure or liability deemed material by Lender, in its sole judgment, and
(iii) it has no liability (whether contingent or otherwise) that is deemed
material by Lender, in its sole judgment;
(f) Lender shall have received all fees, charges and expenses
payable to Lender on or prior to the Closing Date pursuant to the Loan
Documents;
(g) all in form and substance satisfactory to Lender in its
sole discretion, Lender shall have received such consents, approvals and
agreements, including, without limitation, any applicable Landlord Waivers and
Consents with respect to any and all leases set forth on Schedule 5.4, from such
third parties as Lender and its counsel shall determine are necessary or
desirable with respect to (i) the Loan Documents and/or the transactions
contemplated thereby, and/or (ii) claims against any Borrower or Guarantor or
the Collateral;
(h) Borrower shall be in compliance with Section 7.13(b) and
Section 6.5, and Lender shall have received (i) certified copies of all such
insurance policies, and (ii) original certificates of such insurance policies
confirming that they are in effect and that the premiums due and owing with
respect thereto have been paid in full and naming Lender as loss payee and
additional insured, as appropriate;
14
(i) all corporate and other proceedings, documents,
instruments and other legal matters in connection with the transactions
contemplated by the Loan Documents (including, but not limited to, those
relating to corporate and capital structures of Borrower) shall be satisfactory
to Lender;
(j) Lender shall have received, in form and substance
satisfactory to Lender, (i) each of the Assigned Documents, the Assigned Stock
and all related documents, agreements and instruments, including assignments of
all Liens, security interests and Uniform Commercial Code financing statements
relating thereto, and (ii) release and termination of any and all Liens,
security interest and/or Uniform Commercial Code financing statements not
assigned to Lender in, on, against or with respect to any of the Collateral
(other than Permitted Liens);
(k) the Warrant shall have been delivered to Lender and the
Warrant and a Registration Rights Agreement in connection therewith shall have
been executed and delivered to Lender, all in form and substance satisfactory to
Lender; and
(l) Lender shall have received the stock certificates
representing the Assigned Stock.
4.2 CONDITIONS TO EACH ADVANCE AND FUNDING OF TERM LOAN
The obligations of Lender to make any Advance (including,
without limitation, the Initial Advance) and to fund the Term Loan are subject
to the satisfaction, in the sole judgment of Lender, of the following additional
conditions precedent:
(a) Borrower shall have delivered to Lender a Borrowing
Certificate for the Advance executed by an authorized officer of Borrower, which
shall constitute a representation and warranty by Borrower as of the Borrowing
Date of such Advance that the conditions contained in this Section 4.2 have been
satisfied; provided, however, that any determination as to whether to fund
Advances or extensions of credit shall be made by Lender in its sole discretion;
provided, however, that Lender acknowledges that it has received a satisfactory
Borrowing Certificate for the Initial Advance;
(b) each of the representation and warranties made by Borrower
in or pursuant to this Agreement shall be accurate, before and after giving
effect to such Advance and/or funding the Term Loan, and no Default or Event of
Default shall have occurred or be continuing or would exist after giving effect
to the Advance under the Revolving Facility or the funding of the Term Loan on
such date;
(c) immediately after giving effect to the requested Advance,
the aggregate outstanding principal amount of Advances under the Revolving
Facility shall not exceed the lesser of the Availability and the Facility Cap
and the aggregate outstanding principal amount of the Term Loan shall not exceed
the lesser of the Maximum Term Loan Amount and 40% of the value of the
Equipment, as determined by Lender;
(d) except as disclosed in the historical financial
statements, there shall be no liabilities or obligations with respect to
Borrower of any nature whatsoever which, either individually or in the
aggregate, would reasonably be likely to have a Material Adverse Effect;
(e) Borrower shall have on file with the appropriate office of
the Internal Revenue Service an IRS Form 8821 designating Lender to receive
copies of tax information relating to payroll and income taxes; and
15
(e) there shall not have occurred any Material Adverse Change
or Material Adverse Effect or Liability Event.
V. REPRESENTATIONS AND WARRANTIES
Each Borrower, jointly and severally, represents and warrants
as of the date hereof, the Closing Date, each Borrowing Date and, if applicable,
the date of funding of the Term Loan as follows:
5.1 ORGANIZATION AND AUTHORITY
Each Borrower is a corporation duly organized, validly
existing and in good standing under the laws of its state of formation. Each
Borrower (i) has all requisite corporate power and authority to own its
properties and assets and to carry on its business as now being conducted and as
contemplated in the Loan Documents, (ii) is duly qualified to do business in
every jurisdiction in which failure so to qualify could reasonably be expected
to have a Material Adverse Effect, and (iii) has all requisite power and
authority (A) to execute, deliver and perform the Loan Documents to which it is
a party, (B) to borrow hereunder, (C) to consummate the transactions
contemplated under the Loan Documents, and (D) to grant the Liens with regard to
the Collateral pursuant to the Security Documents to which it is a party. No
Borrower is an "investment company" registered or required to be registered
under the Investment Company Act of 1940, as amended, or is controlled by such
an "investment company."
5.2 LOAN DOCUMENTS
The execution, delivery and performance by Borrower of the
Loan Documents to which it is a party, and the consummation of the transactions
contemplated thereby, (i) have been duly authorized by all requisite action of
each such Person and have been duly executed and delivered by or on behalf of
each such Person; (ii) do not violate any provisions of (A) applicable law,
statute, rule, regulation, ordinance or tariff, (B) any order of any
Governmental Authority binding on any such Person or any of their respective
properties, or (C) the certificate of incorporation or bylaws (or any other
equivalent governing agreement or document) of any such Person, or any agreement
between any such Person and its respective shareholders, members, partners or
equity owners or among any such shareholders, members, partners or equity
owners; (iii) are not in conflict with, and do not result in a breach or default
of or constitute an event of default, or an event, fact, condition or
circumstance which, with notice or passage of time, or both, would constitute or
result in a conflict, material breach, material default or event of default
under, any indenture, agreement or other instrument to which any such Person is
a party, or by which the properties or assets of such Person are bound; (iv)
except as set forth therein, will not result in the creation or imposition of
any Lien of any nature upon any of the properties or assets of any such Person,
and (iv) except as set forth on Schedule 5.2, do not require the consent,
approval or authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person. When executed and delivered, each of
the Loan Documents to which Borrower is a party will constitute the legal, valid
and binding obligation of Borrower, enforceable against Borrower in accordance
with its terms, subject to the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general principles of equity
which may limit the availability of equitable remedies (whether in a proceeding
at law or in equity).
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5.3 SUBSIDIARIES, CAPITALIZATION AND OWNERSHIP INTERESTS
Borrower has no Subsidiaries other than those listed on
Schedule 5.3 hereto. Schedule 5.3 also states the authorized and issued
capitalization of each Borrower, the number and class of equity securities
and/or ownership, voting or partnership interests issued and outstanding of
Borrower and the record and beneficial owners thereof (including options,
warrants and other rights to acquire any of the foregoing). The outstanding
equity securities and/or ownership, voting or partnership interests of Borrower
have been duly authorized and validly issued and are fully paid and
nonassessable, and each Person listed on Schedule 5.3 owns beneficially and of
record all the equity securities and/or ownership, voting or partnership
interests it is listed as owning free and clear of any Liens other than Liens
created by the Security Documents. Schedule 5.3 also lists the directors,
members, managers and/or partners of Borrower. Except as listed on Schedule 5.3,
Borrower does not own an interest or participates or engages in any joint
venture, partnership or similar arrangements with any Person.
5.4 TITLE TO PROPERTIES; ACQUISITIONS
(a) Each Borrower (i) is the sole owner and has good, valid
and marketable title to, or a valid leasehold interest in, all of its properties
and assets, including the Collateral, whether personal or real, subject to no
transfer restrictions or Liens of any kind except for Permitted Liens, and (ii)
is in compliance in all material respects with each lease to which it is a party
or otherwise bound. Schedule 5.4 lists all real properties (and their locations)
owned or leased by or to, and all other assets or property that are leased or
licensed by, Borrower and all leases (including leases of leased real property)
covering or with respect to such properties and assets. Borrower enjoys peaceful
and undisturbed possession under all such leases and such leases are all the
leases necessary for the operation of such properties and assets, are valid and
subsisting and are in full force and effect.
(b) The Wise Asset Purchase Agreement has been executed and
delivered by each party thereto and the Wise Acquisition and other transactions
contemplated thereby have been consummated, and the terms and conditions of the
Wise Asset Purchase Agreement constitute the valid and binding obligations of
each party thereto, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting creditors' rights generally and to general principals of equity,
regardless of whether considered in a proceeding in law or in equity. Opticare
Acquisition owns the "Assets" (as defined in the Wise Asset Purchase Agreement)
free and clear of all Liens other than Permitted Liens.
5.5 OTHER AGREEMENTS
Borrower is not (i) a party to any judgment, order or decree
or any agreement, document or instrument, or subject to any restriction, which
would affect its ability to execute and deliver, or perform under, any Loan
Document or to pay the Obligations, (ii) in default in the performance,
observance or fulfillment of any obligation, covenant or condition contained in
any agreement, document or instrument to which it is a party or to which any of
its properties or assets are subject, which default, if not remedied within any
applicable grace or cure period could reasonably be likely to have a Material
Adverse Effect, nor is there any event, fact, condition or circumstance which,
with notice or passage of time or both, would constitute or result in a
conflict, breach, default or event of default under, any of the foregoing which,
if not remedied within any applicable grace or cure period could reasonably be
likely to have a Material Adverse Effect; or (iii) a party or subject to any
agreement, document or instrument with respect to, or obligation to pay any,
service or management fee with respect to, the ownership, operation, leasing or
performance of any of its business or any facility, nor is there any manager
with respect to any such facility.
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5.6 LITIGATION
Except as set forth on Schedule 5.6 hereto, there is no
action, suit, proceeding or investigation pending or, to their knowledge,
threatened against Borrower that (i) questions or could prevent the validity of
any of the Loan Documents or the right of Borrower to enter into any Loan
Document or to consummate the transactions contemplated thereby, (ii) could
reasonably be likely to be or have, either individually or in the aggregate, any
Material Adverse Change or Material Adverse Effect, or (iii) could reasonably be
expected to result in any Change of Control or other change in the current
ownership, control or management of Borrower. Borrower is not aware that there
is any basis for the foregoing. Borrower is not a party or subject to any order,
writ, injunction, judgment or decree of any Governmental Authority. There is no
action, suit, proceeding or investigation initiated by Borrower currently
pending. Borrower has not any existing accrued and/or unpaid Indebtedness to any
Governmental Authority or any other governmental payor.
5.7 HAZARDOUS MATERIALS
Borrower is in compliance in all material respects with all
applicable Environmental Laws. Borrower has not been notified of any action,
suit, proceeding or investigation (i) relating in any way to compliance by or
liability of Borrower under any Environmental Laws, (ii) which otherwise deals
with any Hazardous Substance or any Environmental Law, or (iii) which seeks to
suspend, revoke or terminate any license, permit or approval necessary for the
generation, handling, storage, treatment or disposal of any Hazardous Substance.
5.8 POTENTIAL TAX LIABILITY; TAX RETURNS; GOVERNMENTAL REPORTS
(a) Borrower (i) has not received any oral or written
communication from the Internal Revenue Service with respect to any
investigation or assessment relating to the Borrower directly, or relating to
any consolidated tax return which was filed on behalf of Borrower, (ii) is not
aware of any year which remains open pending tax examination or audit by the
IRS, and (iii) is not aware of any information that could give rise to an IRS
tax liability or assessment.
(b) Except as set forth on Schedule 5.8, Borrower (i) has
filed all federal, state, foreign (if applicable) and local tax returns and
other reports which are required by law to be filed by Borrower, and (ii) has
paid all taxes, assessments, fees and other governmental charges, including,
without limitation, payroll and other employment related taxes, in each case
that are due and payable, except only for items that Borrower is currently
contesting in good faith and that are described on Schedule 5.8.
5.9 FINANCIAL STATEMENTS AND REPORTS
All financial statements and financial information relating to
Borrower that have been or may hereafter be delivered to Lender by Borrower are
accurate and complete and have been prepared in accordance with GAAP
consistently applied with prior periods. Borrower has no material obligations or
liabilities of any kind not disclosed in such financial information or
statements, and since the date of the most recent financial statements submitted
to Lender, there has not occurred any Material Adverse Change, Material Adverse
Effect or Liability Event or, to Borrower's knowledge, any other event or
condition that could reasonably be expected to have a Material Adverse Effect or
Liability Event.
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5.10 COMPLIANCE WITH LAW
Except as set forth in Schedule 5.10, Borrower (i) is in
compliance with all material laws, statutes, rules, regulations, ordinances and
tariffs of any Governmental Authority applicable to Borrower and/or Borrower's
business, assets or operations, including, without limitation, ERISA and
Healthcare Laws, and (ii) is not in violation of any order of any Governmental
Authority or other board or tribunal. There is no event, fact, condition or
circumstance which, with notice or passage of time, or both, would constitute or
result in any noncompliance with, or any violation of, any of the foregoing, in
each case except where noncompliance or violation could not reasonably be
expected to have a Material Adverse Effect. Borrower has not received any notice
that Borrower is not in compliance in any respect with any of the requirements
of any of the foregoing. Borrower has (a) not engaged in any Prohibited
Transactions as defined in Section 406 of ERISA and Section 4975 of the Internal
Revenue Code of 1986, as amended, and the rules and regulations promulgated
thereunder, (b) not failed to meet any applicable minimum funding requirements
under Section 302 of ERISA in respect of its plans and no funding requirements
have been postponed or delayed, (c) no knowledge of any amounts due but unpaid
to the Pension Benefit Guaranty Corporation, or of any event or occurrence which
would cause the Pension Benefit Guaranty Corporation to institute proceedings
under Title IV of ERISA to terminate any of the employee benefit plans, (d) no
fiduciary responsibility under ERISA for investments with respect to any plan
existing for the benefit of Persons other than its employees or former
employees, or (e) not withdrawn, completely or partially, from any
multi-employer pension plans so as to incur liability under the MultiEmployer
Pension Plan Amendments of 1980. With respect to Borrower, there exists no event
described in Section 4043 of ERISA, excluding Subsections 4043(b)(2) and
4043(b)(3) thereof, for which the thirty (30) day notice period contained in 12
C.F.R. ss. 2615.3 has not been waived. Borrower has maintained in all material
respects all records required to be maintained by the Joint Commission on
Accreditation of Healthcare Organizations, the Food and Drug Administration,
Drug Enforcement Agency and State Boards of Pharmacy and the federal and state
Medicare and Medicaid programs as required by the Healthcare Laws and, to the
best knowledge of Borrower, there are no presently existing circumstances which
likely would result in material violations of the Healthcare Laws. There is no
Liability Event.
5.11 INTELLECTUAL PROPERTY
Except as set forth on Schedule 5.11, Borrower does not own,
license or utilize, and is not a party to, any patents, patent applications,
trademarks, trademark applications, service marks, registered copyrights,
copyright applications, copyrights, trade names, trade secrets, software or
licenses (collectively, the "INTELLECTUAL PROPERTY").
5.12 LICENSES AND PERMITS; LABOR
Borrower is in compliance with and has all Permits and
Intellectual Property necessary or required by applicable law or Governmental
Authority for the operation of its businesses. All of the foregoing are in full
force and effect and not in known conflict with the rights of others. Borrower
is not (i) in breach of or default under the provisions of any of the foregoing,
nor is there any event, fact, condition or circumstance which, with notice or
passage of time or both, would constitute or result in a conflict, material
breach, material default or event of default under, any of the foregoing, (ii) a
party to or subject to any agreement, instrument or restriction that is so
unusual or burdensome that it might have a Material Adverse Effect, and/or (ii)
and has not been, involved in any labor dispute, strike, walkout or union
organization which could reasonably be likely to have a Material Adverse Affect.
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5.13 NO DEFAULT
There does not exist any Default or Event of Default or any
event, fact, condition or circumstance which, with the giving of notice or
passage of time or both, would constitute or result in a Default or Event of
Default.
5.14 DISCLOSURE
No Loan Document nor any other agreement, document,
certificate, or statement furnished to Lender by or on behalf of Borrower in
connection with the transactions contemplated by the Loan Documents, nor any
representation or warranty made by Borrower in any Loan Document, contains any
untrue statement of material fact or omits to state any fact necessary to make
the statements therein not materially misleading. There is no fact known to
Borrower that has not been disclosed to Lender in writing that could reasonably
be likely to have a Material Adverse Effect.
5.15 EXISTING INDEBTEDNESS; INVESTMENTS, GUARANTEES AND CERTAIN
CONTRACTS
Except as contemplated by the Loan Document or as otherwise
set forth on Schedule 5.15, Borrower (i) has no outstanding Indebtedness, (ii)
is not subject or party to any mortgage, note, indenture, indemnity or guarantee
of, with respect to or evidencing any Indebtedness of any other Person, or (iii)
does not own or hold any equity or long-term debt investments in, and does not
have any outstanding advances to or any outstanding guarantees for the
obligations of, or any outstanding borrowings from, any Person. Borrower has
performed all material obligations required to be performed by Borrower pursuant
to or connection with any items listed on Schedule 5.15 and there has occurred
no breach, default or event of default under any document evidencing any such
items or any fact, circumstance, condition or event which, with the giving of
notice or passage of time or both, would constitute or result in a breach,
default or event of default thereunder.
5.16 OTHER AGREEMENTS
Except as set forth on Schedule 5.16, (i) there are no
existing or proposed agreements, arrangements, understandings or transactions
between Borrower and any of Borrower's officers, members, managers, directors,
stockholders, partners, other interest holders, employees or affiliates or any
members of their respective immediate families, and (ii) none of the foregoing
Persons are directly or indirectly, indebted to or have any direct or indirect
ownership, partnership or voting interest in, to Borrower's knowledge, any
affiliate of Borrower or any Person with which Borrower has a business
relationship or which competes with Borrower (except that any such Persons may
own stock in (but not exceeding two (2%) percent of the outstanding capital
stock of) any publicly traded company that may compete with Borrower.
5.17 INSURANCE
Borrower has in full force and effect such insurance policies
as are customary in its industry and as may be required pursuant to Section 6.5
hereof. All such insurance policies are listed and described on Schedule 5.17.
5.18 NAMES; LOCATION OF OFFICES, RECORDS AND COLLATERAL
During the preceding five years, Borrower has not conducted
business under or used any name (whether corporate, partnership or assumed)
other than as shown on Schedule 5.18A. Borrower
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is the sole owner of all of its names listed on Schedule 5.18A, and any and all
business done and invoices issued in such names are Borrower's sales, business
and invoices. Each trade name of Borrower represents a division or trading style
of Borrower. Borrower maintains its places of business and chief executive
offices only at the locations set forth on Schedule 5.18B, and all Accounts of
Borrower arise, originate and are located, and all of the Collateral and all
books and records in connection therewith or in any way relating thereto or
evidence the Collateral are located and shall be only, in and at such locations.
All of the Collateral is located only in the continental United States.
5.19 NON-SUBORDINATION
The Obligations are not subordinated in any way to any other
obligations of Borrower or to the rights of any other Person, except as
disclosed on Schedule 5.19.
5.20 ACCOUNTS
In determining which Accounts are Eligible Receivables, Lender
may rely on all statements and representations made by Borrower with respect to
any Account. Unless otherwise indicated in writing to Lender, each Account of
Borrower (i) is genuine and in all respects what is purports to be and is not
evidenced by a judgment, (ii) arises out of a completed, bona fide sale and
delivery of goods or rendering of Services by Borrower in the ordinary course of
business and in accordance with the terms and conditions of all purchase orders,
contracts, certifications, participations, certificates of need and other
documents relating thereto or forming a part of the contract between Borrower
and the Account Debtor, (iii) is for a liquidated amount maturing as stated in a
claim or invoice covering such sale of goods or rendering of Services, a copy of
which has been furnished or is available to Lender, (iv) together with Lender's
security interest therein, is not and will not be in the future (by voluntary
act or omission by Borrower), subject to any offset, lien, deduction, defense,
dispute, counterclaim or other adverse condition, is absolutely owing to
Borrower and is not contingent in any respect or for any reason (except Accounts
owed or owing by Medicaid/Medicare Account Debtors that may be subject to offset
or deduction under applicable law), (v) there are no facts, events or
occurrences which in any way impair the validity or enforceability thereof or
tend to reduce the amount payable thereunder from the face amount of the claim
or invoice and statements delivered to Lender with respect thereto, (vi) to the
best of Borrower's knowledge, (A) the Account Debtor thereunder had the capacity
to contract at the time any contract or other document giving rise thereto was
executed and (B) such Account Debtor is solvent, (vii) to the best of Borrower's
knowledge, subject to subsection (x) below, there are no proceedings or actions
which are threatened or pending against any Account Debtor thereunder which
might result in any material adverse change in such Account Debtor's financial
condition or the collectibility thereof, (viii) has been billed and forwarded to
the Account Debtor for payment in accordance with applicable laws and is in
compliance and conformance with any requisite procedures, requirements and
regulations governing payment by such Account Debtor with respect to such
Account, and, if due from a Medicaid/Medicare Account Debtor, is properly
payable directly to Borrower, (ix) Borrower has obtained and currently has all
Permits necessary in the generation thereof, and (x) Borrower has disclosed to
Lender on each Borrowing Certificate the amount of all Accounts of Borrower for
which Medicare is the Account Debtor and for which payment has been denied and
subsequently appealed pursuant to the procedure described in the definition of
Eligible Receivables hereof, and Borrower is pursuing all available appeals in
respect of such Accounts.
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5.21 HEALTHCARE
Without limiting or being limited by any other provision of
any Loan Document, Borrower has timely filed or caused to be filed all cost and
other reports of every kind required by law, agreement or otherwise. Subject to
subsection (x) of Section 5.21, there are no claims, actions or appeals pending
(and Borrower has not filed any claims or reports which could reasonably result
in any such claims, actions or appeals) before any commission, board or agency
or other Governmental Authority, including, without limitation, any intermediary
or carrier, the Provider Reimbursement Review Board or the Administrator of the
Center for Medicare and Medicaid Services, with respect to any state or federal
Medicare or Medicaid cost reports or claims filed by Borrower, or any
disallowance by any commission, board or agency or other Governmental Authority
in connection with any audit of such cost reports. No validation review or
program integrity review related to Borrower or the consummation of the
transactions contemplated herein or to the Collateral have been conducted by any
commission, board or agency or other Governmental Authority in connection with
the Medicare or Medicaid programs, and to the knowledge of Borrower, no such
reviews are scheduled, pending or threatened against or affecting any of the
providers, any of the Collateral or the consummation of the transactions
contemplated hereby.
5.22 SURVIVAL
Borrower makes the representations and warranties contained
herein with the knowledge and intention that Lender is relying and will rely
thereon. All such representations and warranties will survive the execution and
delivery of this Agreement, the making of the Advances under the Revolving
Facility and the funding of the Term Loan.
VI. AFFIRMATIVE COVENANTS
Each Borrower, jointly and severally, covenants and agrees
that, until full performance and satisfaction, and indefeasible payment in full
in cash, of all the Obligations and termination of this Agreement:
6.1 FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION
(a) Financial Reports. Borrower shall furnish to Lender (i) as
soon as available and in any event within ninety (90) calendar days after the
end of each fiscal year of Borrower, audited annual consolidated and
consolidating financial statements of Borrower, including the notes thereto,
consisting of a consolidated and consolidating balance sheet at the end of such
completed fiscal year and the related consolidated and consolidating statements
of income, retained earnings, cash flows and owners' equity for such completed
fiscal year, which financial statements shall be prepared and certified without
qualification by an independent certified public accounting firm satisfactory to
Lender and accompanied by related management letters, if available, and (ii) as
soon as available and in any event within forty-five (45) calendar days after
the end of each calendar month, unaudited consolidated and consolidating
financial statements of Borrower consisting of a balance sheet and statements of
income, retained earnings, cash flows and owners' equity as of the end of the
immediately preceding calendar month. With each such financial statement,
Borrower shall also deliver a certificate of its chief financial officer stating
that (A) all such financial statements shall be prepared in accordance with GAAP
consistently applied with prior periods, (B) such person has reviewed the
relevant terms of the Loan Documents and the condition of Borrower, (C) no
Default or Event of Default has occurred or is continuing, or, if any of the
foregoing has occurred or is continuing, specifying the nature and status and
period of existence thereof and the steps taken or proposed to be taken with
respect thereto, and (D) Borrower is in compliance with all financial covenants
attached as Annex I hereto. Such certificate shall
22
be accompanied by the calculations necessary to show compliance with the
financial covenants in a form satisfactory to the Lender.
(b) Other Materials. Borrower shall furnish to Lender upon
Lender's request and as soon as available, and in any event within fifteen (15)
calendar days after the preparation or issuance thereof or at such other time as
set forth below: (i) copies of such financial statements (other than those
required to be delivered pursuant to Section 6.1(a) prepared by, for or on
behalf of Borrower and any other notes, reports and other materials related
thereto, including, without limitation, any pro forma financial statements, (ii)
any reports, returns, information, notices and other materials that Borrower
shall send to its stockholders, members, partners or other equity owners at any
time, (iii) all Medicare and Medicaid information as required under sub-part
(iv) of this section; (iv) within fifteen (15) calendar days after the end of
each period for such period, (A) monthly sales and collection reports and
accounts receivable and accounts payable aging schedules, including a report of
sales, credits issued and collections received, all such reports showing a
reconciliation to the amounts reported in the monthly financial statements, and
(B) quarterly detail required to confirm contractual disallowances and other
adjustments under the borrowing base, (v) promptly upon receipt thereof, copies
of any reports submitted to Borrower by its independent accountants in
connection with any interim audit of the books of such Person or any of its
affiliates and copies of each management control letter provided by such
independent accountants, and (vi) such additional information, documents,
statements, reports and other materials as Lender may reasonably request from a
credit or security perspective or otherwise from time to time.
(c) Notices. Borrower shall promptly, and in any event within
ten (10) calendar days after Borrower or any authorized officer of Borrower
obtains knowledge thereof, notify Lender in writing of (i) any pending or
threatened litigation, suit, investigation, arbitration, dispute resolution
proceeding or administrative proceeding brought or initiated by Borrower or
otherwise affecting or involving or relating to Borrower or any of its property
or assets to the extent (A) the amount in controversy exceeds $250,000, or (B)
to the extent any of the foregoing seeks injunctive relief, (ii) any Default or
Event of Default, which notice shall specify the nature and status thereof, the
period of existence thereof and what action is proposed to be taken with respect
thereto, (iii) any other development, event, fact, circumstance or condition
that could reasonably be expected to have a Material Adverse Effect, in each
case describing the nature and status thereof and the action proposed to be
taken with respect thereto, (iv) any notice received by Borrower from any payor
of a claim, suit or other action such payor has, claims or has filed against
Borrower, (v) any matter(s) affecting the value, enforceability or
collectibility of any of the Collateral, including, without limitation, claims
or disputes in the amount of $250,000 or more, singly or in the aggregate, in
existence at any one time, (vi) any notice given by Borrower to any other lender
of Borrower and shall furnish to Lender a copy of such notice, (vii) if any
Eligible Receivable ceases to be an Eligible Receivable, (viii) receipt of any
notice or request from any Governmental Authority or governmental payor
regarding any liability or claim of liability, (ix) receipt of any notice by
Borrower regarding termination of any manager of any facility owed, operated or
leased by Borrower, and/or (x) if any Account becomes evidenced or secured by an
instrument or chattel paper. Borrower shall promptly provide Lender with copies
of any and all notices and other communications given by any party pursuant to,
under or with respect to the Wise Asset Purchase Agreement, or any transaction
contemplated thereby.
(d) Consents. Borrower shall obtain and deliver from time to
time all required consents, approvals and agreements from such third parties as
Lender shall determine are necessary or desirable in its reasonable discretion
and that are satisfactory to Lender with respect to (i) the Loan Documents and
the transactions contemplated thereby, (ii) claims against Borrower or the
Collateral, and/or (iii) any agreements, consents, documents or instruments to
which Borrower is a party or by which
23
any properties or assets of Borrower or any of the Collateral is or are bound or
subject, including, without limitation, Landlord Waivers and Consents with
respect to leases.
(e) Operating Budget. Borrower shall furnish to Lender on or
prior to the Closing Date and for each fiscal year of Borrower thereafter not
less than thirty (30) calendar days after the commencement of such fiscal year,
consolidated and consolidating month by month projected operating budgets,
annual projections, profit and loss statements, balance sheets and cash flow
reports of and for Borrower for such upcoming fiscal year (including an income
statement for each month and a balance sheet as at the end of the last month in
each fiscal quarter), in each case prepared in accordance with GAAP consistently
applied with prior periods.
6.2 PAYMENT OF OBLIGATIONS
Borrower shall make full and timely indefeasible payment in
cash of the principal of and interest on the Loans, Advances and all other
Obligations. Simultaneously upon any prepayment of the Revolving Loan and
termination of the Revolving Facility, Borrower shall make full indefeasible
payment in cash of the principal of and interest on the Term Loan and all other
Obligations relating to the Term Loan.
6.3 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS
Borrower shall (i) conduct its business in accordance with
good business practices customary to the industry, (ii) engage principally in
the same or similar lines of business substantially as heretofore conducted,
(iii) collect its Accounts in the ordinary course of business, (iv) maintain all
of its material properties, assets and equipment used or useful in its business
in good repair, working order and condition (normal wear and tear excepted and
except as may be disposed of in the ordinary course of business and in
accordance with the terms of the Loan Documents), (v) from time to time to make
all necessary or desirable repairs, renewals and replacements thereof, (vi)
maintain and keep in full force and effect its existence and all material
Permits and qualifications to do business and good standing in each jurisdiction
in which the ownership or lease of property or the nature of its business makes
such Permits or qualification necessary; and (vii) remain in good standing and
maintain operations in all jurisdictions in which currently located, and (viii)
provide Lender with thirty (30) days prior notice of any change in the state of
Borrower's incorporation or formation.
6.4 COMPLIANCE WITH LEGAL AND OTHER OBLIGATIONS
Borrower shall (i) comply with all laws, statutes, rules,
regulations, ordinances and tariffs of all Governmental Authorities applicable
to it or its business, assets or operations, (ii) pay all taxes, assessments,
fees, governmental charges, claims for labor, supplies, rent and all other
obligations or liabilities of any kind, except liabilities being contested in
good faith and against which adequate reserves have been established, (iii)
perform in accordance with its terms each contract, agreement or other
arrangement to which it is a party or by which it or any of the Collateral is
bound, except where the failure to comply, pay or perform could not reasonably
be likely to have a Material Adverse Effect, (iv) maintain and comply with all
Permits necessary to conduct its business and comply with any new or additional
requirements that may be imposed on it or its business, and (v) properly file
all Medicaid/Medicare cost reports.
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6.5 INSURANCE
Borrower shall (i) keep all of its insurable properties and
assets, including without limitation Inventory in transit (whether by vessel,
land or air) adequately insured in all material respects against losses, damages
and hazards as are customarily insured against by businesses engaging in similar
activities or owning similar assets or properties and at least the minimum
amount required by applicable law (and with respect to Inventory that is in
transit, maintain insurance covering the same for its full replacement cost
under all risk marine insurance policies endorsed to cover all risks required by
Lender and with such amounts of coverage and deductibles as Lender determines,
in its Permitted Discretion, issued by such insurance carriers as are acceptable
to Lender), including, without limitation, medical malpractice and professional
liability insurance, as applicable; and maintain general public liability
insurance at all times against liability on account of damage to persons and
property having such limits, deductibles, exclusions and co-insurance and other
provisions as are customary for a business engaged in activities similar to
those of Borrower; and (ii) maintain insurance under all applicable workers'
compensation laws; all of the foregoing insurance policies to (A) be reasonably
satisfactory in form and substance to Lender, (B) name Lender as loss payee and
additional insured, and (C) expressly provide that they cannot be altered,
amended, modified or canceled without thirty (30) Business Days prior written
notice to Lender and that they inure to the benefit of Lender notwithstanding
any action or omission or negligence of or by Borrower or any insured
thereunder.
6.6 TRUE BOOKS
Borrower shall (i) keep true, complete and accurate books of
record and account in accordance with commercially reasonable business practices
in which true and correct entries are made of all of its and their dealings and
transactions in all material respects; and (ii) set up and maintain on its books
such reserves as may be required by GAAP with respect to doubtful accounts and
all taxes, assessments, charges, levies and claims and with respect to its
business, and include such reserves in its quarterly as well as year end
financial statements.
6.7 INSPECTION; PERIODIC AUDITS
Borrower shall permit the representatives of Lender, at the
expense of Borrower, from time to time during normal business hours upon
reasonable notice, to (i) visit and inspect any of its offices or properties or
any other place where Collateral is located to inspect the Collateral and/or to
examine or audit all of its books of account, records, reports and other papers,
(ii) make copies and extracts therefrom, and (iii) discuss its business,
operations, prospects, properties, assets, liabilities, condition and/or
Accounts with its officers and independent public accountants (and by this
provision such officers and accountants are authorized to discuss the
foregoing).
6.8 FURTHER ASSURANCES; POST CLOSING
At Borrower's cost and expense, Borrower shall (i) within five
(5) Business Days after Lender's demand, take such further actions, obtain such
consents and approvals and duly execute and deliver such further agreements,
assignments, instructions or documents as Lender may request with respect to the
purposes, terms and conditions of the Loan Documents and the consummation of the
transactions contemplated thereby, whether before, at or after the performance
and/or consummation of the transactions contemplated hereby or the occurrence of
a Default or Event of Default, (ii) without limiting and notwithstanding any
other provision of any Loan Document, execute and deliver, or cause to be
executed and delivered, such agreements and documents, and take or cause to be
taken such actions, and otherwise perform, observe and comply with such
obligations, as are set forth on Schedule 6.8, and (iii) upon the exercise by
Lender or any of its affiliates of any power, right, privilege or remedy
pursuant
25
to any Loan Document or under applicable law or at equity which requires any
consent, approval, registration, qualification or authorization of any
Governmental Authority, execute and deliver, or cause the execution and delivery
of, all applications, certificates, instruments and other documents that may be
so required for such consent, approval, registration, qualification or
authorization. Without limiting the foregoing, upon the exercise by Lender or
any of its affiliates of any right or remedy under any Loan Document which
requires any consent, approval or registration with, consent, qualification or
authorization by, any Person, Borrower shall execute and deliver, or cause the
execution and delivery of, all applications, certificates, instruments and other
documents that Lender or its affiliate may be required to obtain for such
consent, approval, registration, qualification or authorization.
6.9 PAYMENT OF INDEBTEDNESS
Except as otherwise prescribed in the Loan Documents, Borrower
shall pay, discharge or otherwise satisfy at or before maturity (subject to
applicable grace periods and, in the case of trade payables, to ordinary course
payment practices) all of its material obligations and liabilities, except when
the amount or validity thereof is being contested in good faith by appropriate
proceedings and such reserves as Lender may deem proper and necessary in its
sole discretion shall have been made.
6.10 LIEN SEARCHES
If Liens other than Permitted Liens exist, Borrower
immediately shall take, execute and deliver all actions, documents and
instruments necessary to release and terminate such Liens.
6.11 USE OF PROCEEDS
Borrower shall use the proceeds from the Revolving Facility
and Term Loan only for the purposes set forth in the fifth "WHEREAS" clause at
the beginning of this Agreement.
6.12 COLLATERAL DOCUMENTS; SECURITY INTEREST IN COLLATERAL
Borrower shall (i) execute, obtain, deliver, file, register
and/or record any and all financing statements, continuation statements, stock
powers, instruments and other documents, or cause the execution, filing,
registration, recording or delivery of any and all of the foregoing, that are
necessary or required under law or otherwise or reasonably requested by Lender
to be executed, filed, registered, obtained, delivered or recorded to create,
maintain, perfect, preserve, validate or otherwise protect the pledge of the
Collateral to Lender and Lender's perfected first priority Lien on the
Collateral (and Borrower irrevocably grants Lender the right, at Lender's
option, to file any or all of the foregoing), (ii) immediately upon learning
thereof, report to Lender any reclamation, return or repossession of goods in
excess of $10,000 (individually or in the aggregate), and (iii) defend the
Collateral and Lender's perfected first priority Lien thereon against all claims
and demands of all Persons at any time claiming the same or any interest therein
adverse to Lender, and pay all reasonable costs and expenses (including, without
limitation, in-house documentation and diligence fees and legal expenses and
reasonable attorneys' fees and expenses) in connection with such defense, which
may at Lender's discretion be added to the Obligations.
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6.13 MAINTENANCE OF PROFESSIONAL SERVICES AND SUPPORT AGREEMENTS
OptiCare shall maintain the existing Professional Services and
Support Agreement, dated as of November 30, 1995 with OptiCare P.C. at all times
until the Obligations are indefeasibly repaid in full. PVH shall maintain the
existing Professional Services and Support Agreement, dated as of August 10,
1999 and its existing blocked account arrangements with Optometric Eye Care
Centers, P.A at all times until the Obligations are indefeasibly repaid in full.
6.14 TAXES AND OTHER CHARGES
(a) All payments and reimbursements to Lender made under any
Loan Document shall be free and clear of and without deduction for all taxes,
levies, imposts, deductions, assessments, charges or withholdings, and all
liabilities with respect thereto of any nature whatsoever, excluding taxes to
the extent imposed on Lender's net income. If Borrower shall be required by law
to deduct any such amounts from or in respect of any sum payable under any Loan
Document to Lender, then the sum payable to Lender shall be increased as may be
necessary so that, after making all required deductions, Lender receives an
amount equal to the sum it would have received had no such deductions been made.
Notwithstanding any other provision of any Loan Document, if at any time after
the Closing (i) any change in any existing law, regulation, treaty or directive
or in the interpretation or application thereof, (ii) any new law, regulation,
treaty or directive enacted or any interpretation or application thereof, or
(iii) compliance by Lender with any request or directive (whether or not having
the force of law) from any Governmental Authority: generally applicable to
lender similar to Lender (A) subjects Lender to any tax, levy, impost,
deduction, assessment, charge or withholding of any kind whatsoever with respect
to any Loan Document, or changes the basis of taxation of payments to Lender of
any amount payable thereunder (except for net income taxes, or franchise taxes
imposed in lieu of net income taxes, imposed generally by federal, state or
local taxing authorities with respect to interest or commitment fees or other
fees payable hereunder or changes in the rate of tax on the overall net income
of Lender), or (B) imposes on Lender any other condition or increased cost in
connection with the transactions contemplated thereby or participations therein;
and the result of any of the foregoing is to increase the cost to Lender of
making or continuing any Loan hereunder or to reduce any amount receivable
hereunder, then, in any such case, Borrower shall pay to Lender within thirty
(30) days of notice upon Lender any additional amounts necessary to compensate
Lender, on an after-tax basis, for such additional cost or reduced amount as
determined by Lender. If Lender becomes entitled to claim any additional amounts
pursuant to this Section 6.14 it shall promptly notify Borrower of the event by
reason of which Lender has become so entitled, and each such notice of
additional amounts payable pursuant to this Section 6.14 submitted by Lender to
Borrower shall, absent manifest error, be presumptive and conclusive for all
purposes. Without limiting or being limited by any other provision of any Loan
Document, Borrower at all times shall retain and use a Person acceptable to
Lender to process, manage and pay its payroll taxes and shall cause to be
delivered to Lender within fifteen (15) calendar days after the end of each
calendar quarter a report of its payroll taxes for the immediately preceding
calendar quarter and evidence of payment thereof by providing copies of the
reports of payroll taxes provided by ADP or other service provider.
(b) Borrower shall promptly, and in any event within ten (10)
Business Days after Borrower or any authorized officer of Borrower obtains
knowledge thereof, notify Lender in writing of any oral or written communication
from the Internal Revenue Service or otherwise with respect to any (i) tax
investigations relating to the Borrower directly, or relating to any
consolidated tax return which was filed on behalf of Borrower, (ii) notices of
tax assessment or possible tax assessment, (iii) years that are designated open
pending tax examination or audit, and (iv) information that could give rise to
an IRS tax liability or assessment.
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6.15 ACCOUNTS RECEIVABLE AGEING
Commencing in February 2002, Borrower shall provide to Lender
a monthly ageing of Accounts Receivable generated by each retail store located
in North Carolina.
6.16 INVENTORY COVENANTS
(a) Commencing in February 2002, Borrower shall provide to
Lender a monthly report of the results of a physical inventory conducted at
Borrower's Waterbury Connecticut distribution center and Yonkers, New York
distribution center.
(b) With respect to the Inventory, Borrower: (a) shall at all
times maintain inventory records reasonably satisfactory to Lender, keeping
correct and accurate records itemizing and describing the kind, type, quality
and quantity of Inventory, Borrower's cost therefor and daily withdrawals
therefrom and additions thereto; (b) shall not remove any Inventory from the
locations set forth or permitted herein, without the prior written consent of
Lender, which consent shall not be unreasonably denied or delayed, except for
sales of Inventory in the ordinary course of Borrower's business and except to
move Inventory directly from one location set forth or permitted herein to
another such location; (c) shall produce, use, store, ship and maintain the
Inventory with all reasonable care and caution and in accordance with applicable
standards of any insurance and in conformity with applicable laws (including the
requirements of the Federal Fair Labor Standards Act of 1938, as amended and all
rules, regulations and orders related thereto); (d) assumes all responsibility
and liability arising from or relating to the production, use, sale or other
disposition of the Inventory; (e) shall not sell Inventory to any customer on
approval, or any other basis which entitles the customer to return or may
obligate Borrower to repurchase such Inventory; (f) shall keep the Inventory in
good and marketable condition; and (g) shall not, without prior written notice
to Lender, acquire or accept any Inventory on consignment or approval.
VII. NEGATIVE COVENANTS
Each Borrower, jointly and severally, covenants and agrees
that, until full performance and satisfaction, and indefeasible payment in full
in cash, of all the Obligations and termination of this Agreement:
7.1 FINANCIAL COVENANTS
Borrower shall not violate the financial covenants set forth
in Annex I to this Agreement, which is incorporated herein and made a part
hereof.
7.2 INDEBTEDNESS
Borrower shall not create, incur, assume or suffer to exist
any Indebtedness, except the following (collectively, "PERMITTED INDEBTEDNESS"):
(i) Indebtedness under the Loan Documents, (ii) any Indebtedness set forth on
Schedule 7.2, (iii) Capitalized Lease Obligations incurred after the Closing
Date and Indebtedness incurred pursuant to purchase money Liens as along as the
effect of incurring the Capitalized Lease Obligations and/or Indebtedness does
not violate (or with the passage of time) the financial covenants set forth in
Annex I, (iv) Indebtedness in connection with advances made by a stockholder in
order to cure any default of the financial covenants set forth on Annex I;
provided, however, that such Indebtedness owed to a stockholder shall be on an
unsecured basis, subordinated in
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right of repayment and remedies to all of the Obligations and to all of Lender's
rights and in form and substance satisfactory to Lender; (v) accounts payable to
trade creditors and current operating expenses (other than for borrowed money)
which are not aged more than 150 calendar days from the billing date, in each
case incurred in the ordinary course of business and paid within such time
period, unless the same are being contested in good faith and by appropriate and
lawful proceedings and such reserves, if any, with respect thereto as are
required by GAAP and deemed adequate by Borrower's independent accountants shall
have been reserved; and (vi) borrowings incurred in the ordinary course of
business and not exceeding $250,000 individually or in the aggregate outstanding
at any one time; provided, however, that such Indebtedness shall be on an
unsecured basis, subordinated in right of repayment and remedies to all of the
Obligations and to all of Lender's rights and in form and substance satisfactory
to Lender. Borrower shall not make prepayments on any existing or future
Indebtedness to any Person other than to Lender or to the extent specifically
permitted by this Agreement or any subsequent agreement between Borrower and
Lender).
7.3 LIENS
Borrower shall not create, incur, assume or suffer to exist
any Lien upon, in or against, or pledge of, any of the Collateral or any of its
properties or assets or any of its shares, securities or other equity or
ownership or partnership interests, whether now owned or hereafter acquired,
except the following (collectively, "PERMITTED LIENS"): (i) Liens under the Loan
Documents or otherwise arising in favor of Lender, (ii) Liens imposed by law for
taxes, assessments or charges of any Governmental Authority for claims not yet
due or which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves or other appropriate provisions are
being maintained by such Person in accordance with GAAP to the satisfaction of
Lender in its sole discretion, (iii) (A) statutory Liens of landlords (provided
that any such landlord has executed a Landlord Waiver and Consent in form and
substance satisfactory to Lender) and of carriers, warehousemen, mechanics,
materialmen, and (B) other Liens imposed by law or that arise by operation of
law in the ordinary course of business from the date of creation thereof, in
each case only for amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained by such Person in accordance
with GAAP to the satisfaction of Lender in its sole discretion, (iv) Liens (A)
incurred or deposits made in the ordinary course of business (including, without
limitation, surety bonds and appeal bonds) in connection with workers'
compensation, unemployment insurance and other types of social security benefits
or to secure the performance of tenders, bids, leases, contracts (other than for
the repayment of Indebtedness), statutory obligations and other similar
obligations, or (B) arising as a result of progress payments under government
contracts, (v) purchase money Liens (A) securing Indebtedness permitted under
Section 7.2(iii), or (B) in connection with the purchase by such Person of
equipment in the normal course of business, provided that such payables shall
not exceed any limits on Indebtedness provided for herein and shall otherwise be
Permitted Indebtedness hereunder, (vi) Liens necessary and desirable for the
operation of such Person's business, provided Lender has consented to such Liens
in writing before their creation and existence and the priority of such Liens
and the debt secured thereby are both subject and subordinate in all respects to
the Liens securing the Collateral and to the Obligations and all of the rights
and remedies of Lender, all in form and substance satisfactory to Lender in its
sole discretion; and (vii) Liens disclosed on Schedule 7.3.
7.4 INVESTMENTS; NEW FACILITIES OR COLLATERAL
Borrower, directly or indirectly, shall not without Lender's
prior written consent which shall not be unreasonably withheld or delayed (i)
purchase, own, hold, invest in or otherwise acquire Obligations
29
or stock or securities of, or any other interest in, or all or substantially all
of the assets of, any Person or any joint venture, or (ii) make or permit to
exist any loans, advances or guarantees to or for the benefit of any Person or
assume, guarantee, endorse, contingently agree to purchase or otherwise become
liable for or upon or incur any obligation of any Person (other than those
created by the Loan Documents and Permitted Indebtedness set forth on Schedule
7.2 and other than (A) trade credit extended in the ordinary course of business,
(B) advances for business travel and similar temporary advances made in the
ordinary course of business to officers, directors and employees, and (C) the
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business. Borrower, directly or
indirectly, shall not purchase, own, operate, hold, invest in or otherwise
acquire any facility, property or assets or any Collateral that is not located
at the locations set forth on Schedule 5.18B unless Borrower shall provide to
Lender at least thirty (30) Business Days prior written notice.
7.5 DIVIDENDS; REDEMPTIONS
Borrower shall not (i) declare, pay or make any dividend or
distribution on any shares of capital stock or other securities or interests
(other than dividends or distributions payable in its stock, or split-ups or
reclassifications of its stock), (ii) apply any of its funds, property or assets
to the acquisition, redemption or other retirement of any capital stock or other
securities or interests or of any options to purchase or acquire any of the
foregoing (provided, however, that Borrower may redeem its capital stock from
terminated employees pursuant to, but only to the extent required under, the
terms of the related employment agreements as long as no Default or Event of
Default has occurred and is continuing or would be caused by or result
therefrom), (iii) otherwise make any payments or Distributions to any
stockholder, member, partner or other equity owner in such Person's capacity as
such, (iv) make any payment of any management, service or related or similar fee
to any affiliate or subsidiary of Borrower except in the manner and amount as
set forth on Schedule 7.5, provided, that notwithstanding any provision of any
Loan Document, Borrower shall not make or suffer to exist any Distribution or
payment under any Service or Management Agreement or under any document or
instrument executed or delivered in connection with the Restructure Agreement in
any amount if a Default of Event of Default has occurred and is continuing or
would result therefrom.
7.6 TRANSACTIONS WITH AFFILIATES; NO NEW SUBSIDIARIES
(a) Borrower shall not enter into or consummate any
transaction of any kind with any of its affiliates or any Guarantor or any of
their respective affiliates other than: (i) salary, bonus, employee stock option
and other compensation and employment arrangements with directors or officers in
the ordinary course of business, provided, that no payment of any bonus shall be
permitted if a Default or Event of Default has occurred and remains in effect or
would be caused by or result from such payment, (ii) distributions and dividends
permitted pursuant to Section 7.5, (iii) transactions on overall terms at least
as favorable to Borrower as would be the case in an arm's-length transaction
between unrelated parties of equal bargaining power, (iv) transactions with
Lender or any affiliate of Lender, (v) payments permitted under and pursuant to
written agreements entered into by and between Borrower and one or more of its
affiliates that both (A) reflect and constitute transactions on overall terms at
least as favorable to Borrower as would be the case in an arm's-length
transaction between unrelated parties of equal bargaining power, and (B) are
subject to such terms and conditions as determined by Lender in its sole
discretion; provided, that notwithstanding the foregoing, Borrower shall not (Y)
enter into or consummate any transaction or agreement pursuant to which it
becomes a party to any mortgage, note, indenture or guarantee evidencing any
Indebtedness of any of its affiliates or otherwise to become responsible or
liable, as a guarantor, surety or otherwise, pursuant to agreement for any
Indebtedness of any such affiliate, or (B) make any payment to any of its
affiliates not in the ordinary course of its
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business without the prior written consent of Lender; provided further, that
Borrower shall not enter into any transactions, agreements, contributions or
capitalization arrangements or other undertaking with any Dormant Subsidiary
without Lender's prior written consent which shall not be unreasonably withheld
and without causing any such Dormant Subsidiary to become a guarantor hereof.
(b) Borrower shall not create or acquire any new subsidiaries
unless (i) Lender is given prior written notice and (2) such new subsidiary
becomes a Borrower or Guarantor hereunder.
7.7 CHARTER DOCUMENTS; FISCAL YEAR; DISSOLUTION; USE OF PROCEEDS
Borrower shall not (i) amend, modify, restate or change its
certificate of incorporation or formation or bylaws or similar charter documents
in a manner that would be adverse to Lender, (ii) change its fiscal year unless
Borrower demonstrates to Lender's satisfaction compliance with the covenants
contained herein for both the fiscal year in effect prior to any change and the
new fiscal year period by delivery to Lender of appropriate interim and annual
pro forma, historical and current compliance certificates for such periods and
such other information as Lender may reasonably request, (iii) amend, alter or
suspend or terminate or make provisional in any material way, any Permit without
the prior written consent of Lender, which consent shall not be unreasonably
withheld, (iv) without at least twenty (20) days prior written notice to Lender,
change its name or its jurisdiction of organization or address of principal
place of business, (v) wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking or that would
result in any of the foregoing, or (vi) use any proceeds of any Advance for
"purchasing" or "carrying" "margin stock" as defined in Regulations U, T or X of
the Board of Governors of the Federal Reserve System.
7.8 TRUTH OF STATEMENTS
Borrower shall not furnish to Lender any certificate or other
document that contains any untrue statement of a material fact or that omits to
state a material fact necessary to make it not misleading in light of the
circumstances under which it was furnished.
7.9 IRS FORM 8821
Borrower shall not alter, amend, restate or otherwise modify,
or withdraw, terminate or re-file the IRS Form 8821 required to be filed in
accordance with the terms of this Agreement.
VIII. EVENTS OF DEFAULT
The occurrence of any one or more of the following shall constitute an
"Event of Default:"
(a) Borrower shall fail to pay any amount on the Obligations
or provided for in any Loan Document when due (whether on any payment date, at
maturity, by reason of acceleration, by notice of intention to prepay, by
required prepayment or otherwise);
(b) any representation, statement or warranty made or deemed
made by Borrower or any Guarantor in any Loan Document or in any other
certificate, document, report or opinion delivered in conjunction with any Loan
Document to which it is a party, shall not be true and correct in all material
respects or shall have been false or misleading in any material respect on the
date when made or deemed
31
to have been made (except to the extent already qualified by materiality, in
which case it shall be true and correct in all respects and shall not be false
or misleading in any respect);
(c) Borrower or any Guarantor or other party thereto other
than Lender shall be in violation, breach or default of, or shall fail to
perform, observe or comply with any covenant, obligation or agreement set forth
in, any Loan Document and such violation, breach, default or failure shall not
be cured within the applicable period set forth in the applicable Loan Document;
provided that, with respect to the affirmative covenants set forth in Article VI
(other than Sections 6.1(c), 6.2, 6.3, 6.5, 6.8 , 6.9 and 6.11 for which there
shall be no cure period), there shall be a fifteen (15) calendar day cure period
commencing from the earlier of (i) Receipt by such Person of written notice from
Lender of such breach, default, violation or failure, and (ii) the time at which
such Person or any authorized officer thereof knew or became aware, of such
failure, violation, breach or default;
(d) (i) any of the Loan Documents ceases to be in full force
and effect, or (ii) any Lien created thereunder ceases to constitute a valid
perfected first priority Lien on the Collateral in accordance with the terms
thereof, or Lender ceases to have a valid perfected first priority security
interest in any of the Collateral or any securities pledged to Lender pursuant
to the Security Documents;
(e) one or more tax assessments, judgments or decrees is
rendered against any Borrower or Guarantor in an amount in excess of $50,000 in
the aggregate, which is/are not appealed, satisfied, stayed, vacated or
discharged of record within thirty (30) calendar days of being rendered;
(f) (i) any default occurs, which is not cured or waived, (x)
in the payment of any amount with respect to any Indebtedness (other than the
Obligations) of any Borrower or Guarantor in excess of $50,000, (y) in the
performance, observance or fulfillment of any provision contained in any
agreement, contract, document or instrument to which any Borrower or Guarantor
is a party or to which any of their properties or assets are subject or bound
under or pursuant to which any Indebtedness was issued, created, assumed,
guaranteed or secured and such default continues for more than any applicable
grace period or permits the holder of any Indebtedness to accelerate the
maturity thereof, or (z) in the performance, observance or fulfillment of any
provision contained in any agreement, contract, document or instrument between
any Borrower or Guarantor and Lender or affiliate of Lender (other than the Loan
Documents), or (ii) any Indebtedness of any Borrower or Guarantor is declared to
be due and payable or is required to be prepaid (other than by a regularly
scheduled payment) prior to the stated maturity thereof, or any obligation of
such Person for the payment of Indebtedness (other than the Obligations) is not
paid when due or within any applicable grace period, or any such obligation
becomes or is declared to be due and payable before the expressed maturity
thereof, or there occurs an event which, with the giving of notice or lapse of
time, or both, would cause any such obligation to become, or allow any such
obligation to be declared to be, due and payable;
(g) any Borrower or Guarantor shall (i) be unable to pay its
debts generally as they become due, (ii) have total liabilities (including
contingent, subordinated, unmatured and unliquidated liabilities) that exceed
its assets, at a Fair Valuation, (iii) file a petition under any insolvency
statute, (iv) make a general assignment for the benefit of its creditors, (v)
commence a proceeding for the appointment of a receiver, trustee, liquidator or
conservator of itself or of the whole or any substantial part of its property,
or (vi) file a petition seeking reorganization or liquidation or similar relief
under any Debtor Relief Law or any other applicable law or statute;
(h) (i) a court of competent jurisdiction shall (A) enter an
order, judgment or decree appointing a custodian, receiver, trustee, liquidator
or conservator of any Borrower or Guarantor or the whole or any substantial part
of any such Person's properties, which shall continue unstayed and in effect
32
for a period of sixty (60) calendar days, (B) shall approve a petition filed
against any Borrower or Guarantor seeking reorganization, liquidation or similar
relief under the any Debtor Relief Law or any other applicable law or statute,
which is not dismissed within sixty (60) calendar days or, (C) under the
provisions of any Debtor Relief Law or other applicable law or statute, assume
custody or control of any Borrower or Guarantor or of the whole or any
substantial part of any such Person's properties, which is not irrevocably
relinquished within sixty (60) calendar days, or (ii) there is commenced against
any Borrower or Guarantor any proceeding or petition seeking reorganization,
liquidation or similar relief under any Debtor Relief Law or any other
applicable law or statute, which (A) is not unconditionally dismissed within
sixty (60) calendar days after the date of commencement, or (B) is with respect
to which such Borrower or Guarantor takes any action to indicate its approval of
or consent to;
(i) (i) any Change of Control occurs or any agreement or
commitment to cause or that may result in any such Change of Control is entered
into, (ii) any Material Adverse Effect, Material Adverse Change occurs, (iii)
any Liability Event occurs, or (iv) any Borrower or Guarantor ceases any
material portion of its business operations as currently conducted;
(j) Lender receives any indication or evidence that any
Borrower or Guarantor may have directly or indirectly been engaged in any type
of activity which, in Lender's judgment, might result in forfeiture of any
property to any Governmental Authority which shall have continued unremedied for
a period of ten (10) calendar days after written notice from Lender;
(k) an Event of Default occurs under any other Loan Document;
(l) uninsured damage to, or loss, theft or destruction of, any
portion of the Collateral occurs that exceeds $100,000 in the aggregate;
(m) any Borrower or Guarantor or any of their respective
directors or senior officers is criminally indicted or convicted under any law
that could lead to a forfeiture of any Collateral;
(n) the issuance of any process for levy, attachment or
garnishment or execution upon or prior to any judgment against any Borrower or
Guarantor or any of their property or assets; or
(o) any Borrower or Guarantor does, or enters into or becomes
a party to any agreement or commitment to do, or cause to be done, any of the
things described in this Article VIII or otherwise prohibited by any Loan
Document (subject to any cure periods set forth therein);
(p) any Default or Event of Default shall occur and be
continuing past any cure period under (i) that certain Restructure Agreement,
dated as of December 17, 2001, as amended by the First Amendment to Restructure
Agreement, dated as of January 3, 2002, and as amended by the Second Amendment
toe Restructure Agreement, dated as of January 22, 2002, by and among Opticare
Health Systems, Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and Palisade Concentrated Equity
Partnership, L.P. or under any document or instrument executed or delivered in
connection therewith (the "RESTRUCTURE DOCUMENTS"), or (ii) any Professional
Services and Support Agreement which impairs Lender's Collateral or its
position, all in Lender's sole judgment;
then, and in any such event, notwithstanding any other provision of any Loan
Document, Lender may, by written notice to Borrower (i) terminate its
obligations to make Loans hereunder, whereupon the same shall immediately
terminate, (ii) declare all or any of the Notes, all interest thereon and all
other Obligations to be due and payable immediately (except in the case of an
Event of Default under Section 8(d), (g), (h) or (i)(iii), in which event all of
the foregoing shall automatically and without further act by Lender be due and
payable, provided that, with respect to non-material breaches or violations that
33
constitute Events of Default under clause (ii) of Section 8(d), there shall be a
three (3) Business Day cure period commencing from the earlier of (A) Receipt by
the applicable Person of written notice from Lender of such breach or violation
or of any event, fact or circumstance constituting or resulting in any of the
foregoing, and (B) the time at which such Person or any authorized officer
thereof knew or became aware, of such breach or violation and resulting Event of
Default or of any event, fact or circumstance constituting or resulting in any
of the foregoing)), in each case without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by Borrower, and
(iii) prohibit any action permitted to be taken under Article VII hereof.
IX. RIGHTS AND REMEDIES AFTER DEFAULT
9.1 RIGHTS AND REMEDIES
(a) In addition to the acceleration provisions set forth in
Article VIII above, upon the occurrence and continuation of an Event of Default,
Lender shall have the right to exercise any and all rights, options and remedies
provided for in any Loan Document, under the UCC or at law or in equity,
including, without limitation, the right to (i) apply any property of any
Borrower held by Lender to reduce the Obligations, (ii) foreclose the Liens
created under the Security Documents, (iii) realize upon, take possession of
and/or sell any Collateral or securities pledged (other than Collateral
consisting of Accounts owed or owing by Medicaid/Medicare Account Debtors absent
a court order or compliance with applicable law) with or without judicial
process, (iv) exercise all rights and powers with respect to the Collateral as
any Borrower, as applicable, might exercise (other than with respect to
Collateral consisting of Accounts owed or owing by Medicaid/Medicare Account
Debtors absent a court order or compliance with applicable law), (v) collect and
send notices regarding the Collateral (other than with respect to Collateral
consisting of Accounts owed or owing by Medicaid/Medicare Account Debtors absent
a court order or compliance with applicable law), with or without judicial
process, (vi) by its own means or with judicial assistance, enter any premises
at which Collateral and/or pledged securities are located, or render any of the
foregoing unusable or dispose of the Collateral and/or pledged securities on
such premises without any liability for rent, storage, utilities, or other sums,
and no Borrower shall resist or interfere with such action, (vii) at Borrower's
expense, require that all or any part of the Collateral be assembled and made
available to Lender at any place designated by Lender, (viii) reduce or
otherwise change the Facility Cap and/or the Maximum Loan Amount, and/or (ix)
relinquish or abandon any Collateral or securities pledged or any Lien thereon.
Notwithstanding any provision of any Loan Document, Lender, in its sole
discretion, shall have the right, at any time that Borrower fails to do so, and
from time to time, with prior notice which need not be in writing, to: (i)
obtain insurance covering any of the Collateral to the extent required
hereunder; (ii) pay for the performance of any of Obligations; (iii) discharge
taxes or Liens on any of the Collateral that are in violation of any Loan
document unless the Borrower is in good faith with due diligence by appropriate
proceedings contesting those items; and (iv) pay for the maintenance and
preservation of the Collateral. Such expenses and advances shall be added to the
Obligations until reimbursed to Lender and shall be secured by the Collateral,
and such payments by Lender shall not be construed as a waiver by Lender of any
Event of Default or any other rights or remedies of Lender.
(b) Borrower agrees that notice received by it at least ten
(10) calendar days before the time of any intended public sale, or the time
after which any private sale or other disposition of Collateral is to be made,
shall be deemed to be reasonable notice of such sale or other disposition. If
permitted by applicable law, any perishable Collateral which threatens to
speedily decline in value or which is sold on a recognized market may be sold
immediately by Lender without prior notice to Borrower. At any sale or
disposition of Collateral or securities pledged, Lender may (to the extent
34
permitted by applicable law) purchase all or any part thereof free from any
right of redemption by any Borrower which right is hereby waived and released.
Debtor covenants and agrees not to, and not to permit or cause any of its
Subsidiaries to, interfere with or impose any obstacle to Secured Party's
exercise of its rights and remedies with respect to the Collateral. Secured
Party, in dealing with or disposing of the Collateral or any part thereof, shall
not be required to give priority or preference to any item of Collateral or
otherwise to marshal assets or to take possession or sell any Collateral with
judicial process.
9.2 RIGHTS AND REMEDIES NOT EXCLUSIVE
Lender shall have the right in its sole discretion to
determine which rights, Liens and/or remedies Lender may at any time pursue,
relinquish, subordinate or modify, and such determination will not in any way
modify or affect any of Lender's rights, Liens or remedies under any Loan
Document, applicable law or equity. The enumeration of any rights and remedies
in any Loan Document is not intended to be exhaustive, and all rights and
remedies of Lender described in any Loan Document are cumulative and are not
alternative to or exclusive of any other rights or remedies which Lender
otherwise may have. The partial or complete exercise of any right or remedy
shall not preclude any other further exercise of such or any other right or
remedy.
9.3 APPLICATION OF PROCEEDS
In addition to any other rights, options and remedies Lender
has under the Loan Documents, the UCC, at law or in equity, all dividends,
interest, rents, issues, profits, fees, revenues, income and other proceeds
collected or received from collecting, holding, managing, renting, selling, or
otherwise disposing of all or any part of the Collateral or any proceeds thereof
upon exercise of its remedies hereunder shall be applied in the following order
of priority: (i) first, to the payment of all reasonable costs and expenses of
such collection, storage, lease, holding, operation, management, sale,
disposition or delivery and of conducting Borrower's business and of
maintenance, repairs, replacements, alterations, additions and improvements of
or to the Collateral, and to the payment of all sums which Lender may be
required or may elect to pay, if any, for taxes, assessments, insurance and
other charges upon the Collateral or any part thereof, and all other payments
that Lender may be required or authorized to make under any provision of this
Agreement (including, without limitation, in each such case, in-house
documentation and diligence fees and legal expenses, search, audit, recording,
professional and filing fees and expenses and reasonable attorneys' fees and all
expenses, liabilities and advances made or incurred in connection therewith);
(ii) second, to the payment of all Obligations as provided herein; (iii) third,
to the satisfaction of Indebtedness secured by any subordinate security interest
of record in the Collateral if written notification of demand therefor is
received before distribution of the proceeds is completed, provided, that, if
requested by Lender, the holder of a subordinate security interest shall furnish
reasonable proof of its interest, and unless it does so, Lender need not address
its claims; and (iv) fourth, to the payment of any surplus then remaining to
Borrower, unless otherwise provided by law or directed by a court of competent
jurisdiction, provided that Borrower shall be liable for any deficiency if such
proceeds are insufficient to satisfy the Obligations or any of the other items
referred to in this section.
9.4 RIGHTS OF LENDER TO APPOINT RECEIVER
Without limiting and in addition to any other rights, options
and remedies Lender has under the Loan Documents, the UCC, at law or in equity,
upon the occurrence and continuation of an Event of Default, Lender shall have
the right to apply for and have a receiver appointed by a court of
35
competent jurisdiction in any action taken by Lender to enforce its rights and
remedies in order to manage, protect and preserve the Collateral and continue
the operation of the business of Borrower and to collect all revenues and
profits thereof and apply the same to the payment of all expenses and other
charges of such receivership including the compensation of the receiver and to
the payments as aforesaid until a sale or other disposition of such Collateral
shall be finally made and consummated.
X. WAIVERS AND JUDICIAL PROCEEDINGS
10.1 WAIVERS
Except as expressly provided for herein, Borrower hereby
waives demand, presentment, protest, all defenses with respect to any and all
instruments and all notices and demands of any description, and the pleading of
any statute of limitations as a defense to any demand under any Loan Document.
Borrower hereby waives any and all defenses and counterclaims it may have or
could interpose in any action or procedure brought by Lender to obtain an order
of court recognizing the assignment of, or Lien of Lender in and to, any
Collateral, whether or not payable by a Medicaid/Medicare Account Debtor. With
respect to any action hereunder, Lender conclusively may relay upon, and shall
incur no liability to Borrower in acting upon, any request or other
communication that Lender reasonably believes to have been given or made by a
Person authorized on Borrower's behalf, whether or not such Person is listed on
the incumbency certificate delivered pursuant to Section 4.1 hereof. In each
such case, Borrower hereby waives the right to dispute Lender's action based
upon such request or other communication, absent manifest error.
10.2 DELAY; NO WAIVER OF DEFAULTS
No course of action or dealing, renewal, release or extension
of any provision of any Loan Document, or single or partial exercise of any such
provision, or delay, failure or omission on Lender's part in enforcing any such
provision shall affect the liability of any Borrower or Guarantor or operate as
a waiver of such provision or affect the liability of any Borrower or Guarantor
or preclude any other or further exercise of such provision. No waiver by any
party to any Loan Document of any one or more defaults by any other party in the
performance of any of the provisions of any Loan Document shall operate or be
construed as a waiver of any future default, whether of a like or different
nature, and each such waiver shall be limited solely to the express terms and
provisions of such waiver. Notwithstanding any other provision of any Loan
Document, by completing the Closing under this Agreement and/or by making
Advances or funding the Term Loan, Lender does not waive any breach of any
representation or warranty of under any Loan Document, and all of Lender's
claims and rights resulting from any such breach or misrepresentation are
specifically reserved.
10.3 JURY WAIVER
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THE LOAN
DOCUMENTS OR IN ANY WAY CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES WITH RESPECT TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE. EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS
36
AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES TO THE WAIVER OF THEIR
RESPECTIVE RIGHTS TO TRIAL BY JURY.
10.4 COOPERATION IN DISCOVERY AND LITIGATION
In any litigation, arbitration or other dispute resolution
proceeding relating to any Loan Document, Borrower waives any and all defenses,
objections and counterclaims it may have or could interpose with respect to (i)
any of its directors, officers, employees or agents being deemed to be employees
or managing agents of Borrower for purposes of all applicable law or court rules
regarding the production of witnesses by notice for testimony (whether in a
deposition, at trial or otherwise), (ii) Lender's counsel examining any such
individuals as if under cross-examination and using any discovery deposition of
any of them as if it were an evidence deposition, and/or (iii) using all
commercially reasonable efforts to produce in any such dispute resolution
proceeding, at the time and in the manner requested by Lender, all Persons,
documents (whether in tangible, electronic or other form) and/or other things
under its control and relating to the dispute.
XI. EFFECTIVE DATE AND TERMINATION
11.1 EFFECTIVENESS AND TERMINATION
Subject to Lender's right to terminate and cease making Loans
upon or after any Event of Default, this Agreement shall continue in full force
and effect until the full performance and indefeasible payment in cash of all
Obligations, unless terminated sooner as provided in this Section 11.1. Borrower
may terminate this Agreement at any time upon not less than ten (10) calendar
days' prior written notice to Lender and upon full performance and indefeasible
payment in full in cash of all Obligations on or prior to such 10th calendar day
after Receipt by Lender of such written notice; provided, however, that,
notwithstanding any other provision of any Loan Document, Borrower shall have no
right to terminate the Revolving Loan, until after the first anniversary of the
Closing Date. All of the Obligations shall be immediately due and payable upon
any such termination on the termination date stated in any notice of termination
(the "TERMINATION DATE"); provided that, notwithstanding any other provision of
any Loan Document, the Termination Date shall be effective no earlier than the
first Business Day of the month following the expiration of the ten (10)
calendar days' prior written notice period. Notwithstanding any other provision
of any Loan Document, no termination of this Agreement shall affect Lender's
rights or any of the Obligations existing as of the effective date of such
termination, and the provisions of the Loan Documents shall continue to be fully
operative until the Obligations have been fully performed and indefeasibly paid
in cash in full. The Liens granted to Lender under the Security Documents and
the financing statements filed pursuant thereto and the rights and powers of
Lender shall continue in full force and effect notwithstanding the fact that
Borrower's borrowings hereunder may from time to time be in a zero or credit
position until all of the Obligations have been fully performed and indefeasibly
paid in full in cash.
11.2 SURVIVAL
All obligations, covenants, agreements, representations,
warranties, waivers and indemnities made by Borrower in any Loan Document shall
survive the execution and delivery of the Loan Documents, the Closing, the
making of the Loans and any termination of this Agreement until all Obligations
are fully performed and indefeasibly paid in full in cash. The obligations and
provisions of Sections 3.5, 3.6, 10.1, 10.3, 11.1, 11.2, 12.4, 12.7 and 12.9
shall survive termination of the Loan Documents and any payment, in full or in
part, of the Obligations.
37
XII. MISCELLANEOUS
12.1 GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS; VENUE
The Loan Documents shall be governed by and construed in
accordance with the internal laws of the State of New York without giving effect
to its choice of law provisions other than Section 5-1401 of the New York
General Obligation laws. Any judicial proceeding against Borrower with respect
to the Obligations, any Loan Document or any related agreement may be brought in
any federal or state court of competent jurisdiction located in the State of New
York. By execution and delivery of each Loan Document to which it is a party,
Borrower and Lenders (i) accept the non-exclusive jurisdiction of the aforesaid
courts and irrevocably agrees to be bound by any judgment rendered thereby, (ii)
waive personal service of process, (iii) agree that service of process may be
made by certified or registered mail, return receipt requested, pursuant to
Section 12.5 hereof, and (iv) waive any objection to jurisdiction, venue of any
action instituted hereunder and agrees not to assert any defense based on lack
of jurisdiction or venue convenience. Nothing shall affect the right of Lender
to serve process in any manner permitted by law or shall limit the right of
Lender to bring proceedings against Borrower in any other courts having
jurisdiction. Any judicial proceedings against Lender involving, directly or
indirectly, the Obligations, any Loan Document or any related agreement shall be
brought only in a federal or state court located in the State of New York. All
parties acknowledge that they participated in the negotiation and drafting of
this Agreement and that, accordingly, no party shall move or petition a court
construing this Agreement to construe it more stringently against one party than
against any other.
12.2 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS
The Loan Documents shall inure to the benefit of Lender,
Transferees and all future holders of any Note, the Obligations and/or any of
the Collateral, and each of their respective successors and assigns. Each Loan
Document shall be binding upon the Persons' other than Lender that are parties
thereto and their respective successors and assigns, and no such Person may
assign, delegate or transfer any Loan Document or any of its rights or
obligations thereunder without the prior written consent of Lender. No rights
are intended to be created under any Loan Document for the benefit of any third
party creditor or incidental beneficiary of any Borrower or Guarantor. Nothing
contained in any Loan Document shall be construed as a delegation to Lender of
any other Person's duty of performance. BORROWER ACKNOWLEDGES AND AGREES THAT
Lender at any time and from time to time may (I) DIVIDE AND RESTATE ANY NOTE,
AND/OR (II) sell, assign or GRANT PARTICIPATING INTERESTS IN OR transfer all or
any part of its rights or obligations under ANY LOAN DOCUMENT, Note, the
obligations AND/OR the collateral TO OTHER PERSONS (EACH SUCH TRANSFEREE,
ASSIGNEE OR PURCHASER, A "TRANSFEREE"). Each Transferee shall have all of the
rights and benefits with respect to the Obligations, Notes, Collateral and/or
Loan Documents held by it as fully as if the original holder thereof, and either
Lender or any Transferee may be designated as the sole agent to manage the
transactions and obligations contemplated therein; provided that,
notwithstanding anything to the contrary in any Loan Document, Borrower shall
not be obligated to pay under this Agreement to any Transferee any sum in excess
of the sum which Borrower would have been obligated to pay to Lender had such
participation not been effected. Notwithstanding any other provision of any Loan
Document, Lender may disclose to any Transferee all information, reports,
financial statements, certificates and documents obtained under any provision of
any Loan Document.
38
12.3 APPLICATION OF PAYMENTS
To the extent that any payment made or received with respect
to the Obligations is subsequently invalidated, determined to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver, custodian or any other Person under any Debtor Relief Law,
common law or equitable cause or any other law, then the Obligations intended to
be satisfied by such payment shall be revived and shall continue as if such
payment had not been received by Lender. Any payments with respect to the
Obligations received shall be credited and applied in such manner and order as
Lender shall decide in its sole discretion.
12.4 INDEMNITY
Each Borrower jointly and severally shall indemnify Lender,
its affiliates and its and their respective managers, members, officers,
employees, affiliates, agents, representatives, successors, assigns, accountants
and attorneys (collectively, the "INDEMNIFIED PERSONS") from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, reasonable fees and disbursements of counsel and
in-house documentation and diligence fees and legal expenses) which may be
imposed on, incurred by or asserted against any Indemnified Person with respect
to or arising out of, or in any litigation, proceeding or investigation
instituted or conducted by any Person with respect to any aspect of, or any
transaction contemplated by or referred to in, or any matter related to, any
Loan Document or any agreement, document or transaction contemplated thereby,
whether or not such Indemnified Person is a party thereto, except to the extent
that any of the foregoing arises out of the gross negligence or willful
misconduct of such Indemnified Person. If any Indemnified Person uses in-house
counsel for any purpose for which any Borrower is responsible to pay or
indemnify, each Borrower expressly agrees that its indemnification obligations
include reasonable charges for such work commensurate with the fees that would
otherwise be charged by outside legal counsel selected by such Indemnified
Person in its sole discretion for the work performed. Lender agrees to give
Borrower reasonable notice of any event of which Lender becomes aware for which
indemnification may be required under this Section 12.4, and Lender may elect
(but is not obligated) to direct the defense thereof, provided that the
selection of counsel shall be subject to Borrower's consent, which consent shall
not be unreasonably withheld or delayed. Any Indemnified Person may, in its
reasonable discretion and with Borrower's consent, take such actions as it deems
necessary and appropriate to investigate, defend or settle any event or take
other remedial or corrective actions with respect thereto as may be necessary
for the protection of such Indemnified Person or the Collateral. Notwithstanding
the foregoing, if any insurer agrees to undertake the defense of an event (an
"INSURED EVENT"), Lender agrees not to exercise its right to select counsel to
defend the event if that would cause any Borrower's insurer to deny coverage;
provided, however, that Lender reserves the right to retain counsel to represent
any Indemnified Person with respect to an Insured Event at its sole cost and
expense. To the extent that Lender obtains recovery from a third party other
than an Indemnified Person of any of the amounts that any Borrower has paid to
Lender pursuant to the indemnity set forth in this Section 12.4, then Lender
shall promptly pay to such Borrower the amount of such recovery.
12.5 NOTICE
Any notice or request under any Loan Document shall be given
to any party to this Agreement at such party's address set forth beneath its
signature on the signature page to this Agreement, or at such other address as
such party may hereafter specify in a notice given in the manner required under
this Section 12.5. Any notice or request hereunder shall be given only by, and
shall be deemed to have been received upon (each, a "RECEIPT"): (i) registered
or certified mail, return receipt requested, on the date on which such received
as indicated in such return receipt, (ii) delivery by a nationally
39
recognized overnight courier, one (1) Business Day after deposit with such
courier, or (iii) facsimile or electronic transmission on a Business Day, in
each case upon telephone or further electronic communication from the recipient
acknowledging receipt (whether automatic or manual from recipient), as
applicable.
12.6 SEVERABILITY; CAPTIONS; COUNTERPARTS; FACSIMILE SIGNATURES
If any provision of any Loan Document is adjudicated to be
invalid under applicable laws or regulations, such provision shall be
inapplicable to the extent of such invalidity without affecting the validity or
enforceability of the remainder of the Loan Documents which shall be given
effect so far as possible. The captions in the Loan Documents are intended for
convenience and reference only and shall not affect the meaning or
interpretation of the Loan Documents. The Loan Documents may be executed in one
or more counterparts (which taken together, as applicable, shall constitute one
and the same instrument) and by facsimile transmission, which facsimile
signatures shall be considered original executed counterparts. Each party to
this Agreement agrees that it will be bound by its own facsimile signature and
that it accepts the facsimile signature of each other party.
12.7 EXPENSES
Borrower shall pay, whether or not the Closing occurs, all
reasonable costs and expenses incurred by Lender and/or its affiliates,
including, without limitation, documentation and diligence fees and expenses,
all search, audit, appraisal, recording, professional and filing fees and
expenses and all other out-of-pocket charges and expenses (including, without
limitation, UCC and judgment and tax lien searches and UCC filings and fees for
post-Closing UCC and judgment and tax lien searches and wire transfer fees and
audit expenses), and reasonable attorneys' fees and expenses, (i) in any effort
to enforce, protect or collect payment of any Obligation or to enforce any Loan
Document or any related agreement, document or instrument, (ii) in connection
with entering into, negotiating, preparing, reviewing and executing the Loan
Documents and/or any related agreements, documents or instruments, (iii) in
connection with instituting, maintaining, preserving, enforcing and/or
foreclosing on Lender's Liens in any of the Collateral or securities pledged
under the Loan Documents, whether through judicial proceedings or otherwise,
(iv) in defending or prosecuting any actions, claims or proceedings arising out
of or relating to Lender's transactions with Borrower, (v) in seeking, obtaining
or receiving any advice with respect to its rights and obligations under any
Loan Document and any related agreement, document or instrument, and/or (vi) in
connection with any modification, restatement, supplement, amendment, waiver or
extension of any Loan Document and/or any related agreement, document or
instrument. All of the foregoing shall be charged to Borrower's account and
shall be part of the Obligations. If Lender or any of its affiliates uses
in-house counsel for any purpose under any Loan Document for which Borrower is
responsible to pay or indemnify, Borrower expressly agrees that its Obligations
include reasonable charges for such work commensurate with the fees that would
otherwise be charged by outside legal counsel selected by Lender or such
affiliate in its sole discretion for the work performed. Without limiting the
foregoing, Borrower shall pay all taxes (other than taxes based upon or measured
by Lender's income or revenues or any personal property tax), if any, in
connection with the issuance of any Note and the filing and/or recording of any
documents and/or financing statements.
12.8 ENTIRE AGREEMENT
This Agreement and the other Loan Documents to which Borrower
is a party constitute the entire agreement between Borrower and Lender with
respect to the subject matter hereof and thereof, and supersede all prior
agreements and understandings, if any, relating to the subject matter hereof or
40
thereof. Any promises, representations, warranties or guarantees not herein
contained and hereinafter made shall have no force and effect unless in writing
signed by Borrower and Lender. No provision of this Agreement may be changed,
modified, amended, restated, waived, supplemented, discharged, canceled or
terminated orally or by any course of dealing or in any other manner other than
by an agreement in writing signed by Lender and Borrower. Each party hereto
acknowledges that it has been advised by counsel in connection with the
negotiation and execution of this Agreement and is not relying upon oral
representations or statements inconsistent with the terms and provisions hereof.
12.9 LENDER APPROVALS
Unless expressly provided herein to the contrary, any
approval, consent, waiver or satisfaction of Lender with respect to any matter
that is subject of any Loan Document may be granted or withheld by Lender in its
sole and absolute discretion.
12.10 CONFIDENTIALITY AND PUBLICITY
Borrower agrees, and agrees to cause each of its affiliates,
(i) not to transmit or disclose provision of any Loan Document to any Person
(other than to Borrower's advisors and officers on a need-to-know basis) without
Lender's prior written consent, (ii) to inform all Persons of the confidential
nature of the Loan Documents and to direct them not to disclose the same to any
other Person and to require each of them to be bound by these provisions. Lender
reserves the right to review and approve all materials that Borrower or any of
its affiliates prepares that contain Lender's name or describe or refer to any
Loan Document, any of the terms thereof or any of the transactions contemplated
thereby. Borrower shall not, and shall not permit any of its affiliates to, use
Lender's name (or the name of any of Lender's affiliates) in connection with any
of its business operations. Nothing contained in any Loan Document is intended
to permit or authorize Borrower or any of its affiliates to contract on behalf
of Lender.
12.11 RELEASE OF LENDER
Notwithstanding any other provision of any Loan Document,
Borrower voluntarily, knowingly, unconditionally and irrevocably, with specific
and express intent, for and on behalf of itself, its managers, members,
directors, officers, employees, stockholders, Affiliates, agents,
representatives, accountants, attorneys, successors and assigns and their
respective Affiliates (collectively, the "RELEASING PARTIES"), hereby fully and
completely releases and forever discharges the Indemnified Parties and any other
Person or insurer which may be responsible or liable for the acts or omissions
of any of the Indemnified Parties, or who may be liable for the injury or damage
resulting therefrom (collectively, with the Indemnified Parties, the "RELEASED
PARTIES"), of and from any and all actions, causes of action, damages, claims,
obligations, liabilities, costs, expenses and demands of any kind whatsoever, at
law or in equity, matured or unmatured, vested or contingent, that any of the
Releasing Parties has against any of the Released Parties as of the date of the
Closing. Borrower acknowledges that the foregoing release is a material
inducement to Lender's decision to extend to Borrower the financial
accommodations hereunder and has been relied upon by Lender in agreeing to make
the Advances.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
41
IN WITNESS WHEREOF, each of the parties has duly executed this Amended
and Restated Revolving Credit, Term Loan and Security Agreement as of the date
first written above.
OPTICARE HEALTH SYSTEMS, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Its: CEO & Chairman
---------------------------------
OptiCare Health Systems, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, CFO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
OPTICARE ACQUISITION CORP.
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Its: President
----------------------------------
c/o OptiCare Health Systems, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, CFO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
42
OPTICARE EYE HEALTH CENTERS, INC.,
a Connecticut corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
Its: CEO & Chairman
---------------------------------
c/o OptiCare Health Systems, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, CFO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
CAPITALSOURCE FINANCE LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Chief Operating Officer
CapitalSource Finance LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Healthcare Finance Group,
Portfolio Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
43
EXECUTION COPY
EXHIBITS
--------
Exhibit A List of Assigned Documents
Exhibit B Form of Borrowing Certificate
SCHEDULES
---------
SCHEDULE 2.5 Borrower's wire instructions for Advances under Revolving
Facility
SCHEDULE 2.15 List of PVH Subsidiaries
SCHEDULE 2.16 List of Account Debtors regarding Lien and Lockbox after
Default
SCHEDULE 5.2 Required Consents, Authorizations and Approvals
SCHEDULE 5.3 Subsidiaries, Equity Holders, Directors and Officers,
Joint Ventures, partnerships
SCHEDULE 5.4 Real Property and Leases
SCHEDULE 5.6 Certain Pending or Threatened Litigation
SCHEDULE 5.8 Taxes and Tax Returns Outstanding and/or Contested
SCHEDULE 5.10 Compliance with Laws
SCHEDULE 5.11 Intellectual Property
SCHEDULE 5.15 Existing Indebtedness and Long Term Debt and Equity
Investments
SCHEDULE 5.16 Affiliate Agreements and equity ownership by related parties
SCHEDULE 5.17 Insurance Policies
SCHEDULE 5.18A Business Names Used by Borrower
SCHEDULE 5.18B Location of Executive Offices, Places of Business and location
of Collateral, Books and Records
SCHEDULE 5.19 Non-Subordination: Obligations or rights, if any, to which
the Loans may be subordinated in any manner
SCHEDULE 6.8 Post-Closing Items
SCHEDULE 7.2 Permitted Indebtedness
SCHEDULE 7.3 Existing Liens
SCHEDULE 7.5 Management Fees
ANNEX I
-------
FINANCIAL COVENANTS
-------------------
1) FIXED COVERAGE RATIO (EBITDA/FIXED CHARGES)
At Closing and the making of the Initial Advance and the
funding of the Term Loan and at the end of any calendar month during which any
of the Obligations are outstanding, the Fixed Charge Ratio shall be a minimum of
1.5 to 1 for the most recent Test Period then ended, except that from the Test
Period commencing with October 1, 2003 through and including February 29, 2004,
Borrower shall not be subject to a Fixed Charge Ratio covenant.
2) MINIMUM NET WORTH
Until full performance and satisfaction, and indefeasible
payment in full in cash, of all the Obligations, Borrower, individually and
collectively on a consolidated and consolidating basis, will maintain a minimum
Tangible Net Worth at all times (a) from the Closing Date through November 13,
2003, equal to (-$26,965,000) which is Borrower's ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) from November 14, 2003 through March 31, 2004, equal to
(-$10,000,000), and (c) from April 1, 2004 through the end of the Term, equal to
(-$2,000,000); provided however, that if Borrower's minimum Tangible Net Worth
at any time declines below the levels set forth in this covenant due to asset
sales, then such decline shall not constitute a default hereunder.
For purposes of the covenants set forth in this Annex I, the applicable
terms listed below shall have the following meanings:
"Capital Expenditures" shall mean, for any Test Period, the
sum (without duplication) of all expenditures (whether paid in cash or accrued
as liabilities) during the Test Period that are or should be treated as capital
expenditures under GAAP.
"Cash Equivalents" shall mean (a) securities issued, or
directly and fully guaranteed or insured, by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than six
months from the date of acquisition, (b) U.S. dollar denominated time deposits,
certificates of deposit and bankers' acceptances of (i) any domestic commercial
bank of recognized standing having capital and surplus in excess of
$500,000,000, or (ii) any bank (or the parent company of such bank) whose
short-term commercial paper rating from Standard & Poor's Ratings Services
("S&P") is at least A-2 or the equivalent thereof or from ▇▇▇▇▇'▇ Investors
Service, Inc. ("▇▇▇▇▇'▇") is at least P-2 or the equivalent thereof in each case
with maturities of not more than six months from the date of acquisition (any
bank meeting the qualifications specified in clauses (b)(i) or (ii), an
"APPROVED BANK"), (c) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (a), above,
entered into with any Approved Bank, (d) commercial paper issued by any Approved
Bank or by the parent company of any Approved Bank and commercial paper issued
by, or guaranteed by, any industrial or financial company with a short-term
commercial paper rating of at least A-2 or the equivalent thereof by S&P or at
least P-2 or the equivalent thereof by Moody's, or guaranteed by any industrial
company with a long term unsecured debt rating of at least A or A2, or the
equivalent of each thereof, from S&P or Moody's, as the case may be, and in each
case maturing within six months after the
date of acquisition and (e) investments in money market funds substantially all
of whose assets are comprised of securities of the type described in clauses (a)
through (d) above.
"Date of Determination" shall mean the last day of any
calendar month during which any of the Obligations are outstanding.
"EBITDA" shall mean, for any Test Period, the sum, without
duplication, of the following for Borrower, on a consolidated and consolidating
basis: Net Income determined in accordance with GAAP, plus, (a) Interest
Expense, (b) taxes on income, whether paid, payable or accrued, (c) depreciation
expense, (d) amortization expense, (e) all other non-cash, non-recurring charges
and expenses, excluding accruals for cash expenses made in the ordinary course
of business, and (f) loss from any sale of assets, other than sales in the
ordinary course of business, all of the foregoing determined in accordance with
GAAP.
"Fixed Charge Ratio" shall mean, at any date of determination,
for Borrower individually and collectively on a consolidated and consolidating
basis, the ratio of (a) EBITDA for the Test Period most recently ended before
such date, to (b) Fixed Charges for the Test Period most recently ended before
such date, in each case taken as one accounting period.
"Fixed Charges" shall mean, on any calculation date, for any
Test Period, the sum of the following for Borrower individually and collectively
on a consolidated and consolidating basis: (a) Total Debt Service, excluding
scheduled balloon payments, if any, for such period for the Revolving Facility
and Term Loan.
"Intangible Assets" means all intangible assets (determined in
conformity with GAAP) including, without limitation, goodwill, intellectual
property, licenses, organizational costs, deferred amounts, covenants not to
compete, unearned income, restricted funds, investments in Subsidiaries,
intercompany receivables and accumulated depreciation.
"Interest Expense" shall mean, for any Test Period, total
interest expense (including attributable to Capital Leases in accordance with
GAAP) of Borrower individually and collectively on a consolidated and
consolidating basis with respect to all outstanding Indebtedness including
capitalized interest but excluding commissions, discounts and other fees owed
with respect to letters of credit and bankers' acceptance financing and net
costs under Interest Rate Agreements.
"Interest Rate Agreement" shall mean any interest rate swap,
cap or collar agreement or other similar agreement or arrangement designed to
hedge the position with respect to interest rates.
"Net Income" shall mean, for any Test Period, the net income
(or loss) of Borrower individually and collectively on a consolidated and
consolidating basis for such period taken as a single accounting period
determined in conformity with GAAP, provided that there shall be excluded (i)
the income (or loss) of any Person in which any other Person (other than any
Borrower) has a joint interest, except to the extent of the amount of dividends
or other distributions actually paid to a Borrower by such Person during such
period, (ii) the income (or loss) of any Person accrued prior to the date it
becomes a Borrower or is merged into or consolidated with a Borrower or that
Person's assets are acquired by a Borrower, (iii) the income of any Subsidiary
of Borrower to the extent that the declaration or payment of dividends or
similar distributions of that income by that Subsidiary is not at the time
permitted by operation of the terms of the charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Subsidiary, (iv) compensation expense resulting from the issuance of
capital stock, stock options or stock appreciation rights issued to former or
current employees, including officers, of a Borrower, or the exercise of such
options or rights, in each case to the
2
extent the obligation (if any) associated therewith is not expected to be
settled by the payment of cash by a Borrower or any affiliate thereof, and (v)
compensation expense resulting from the repurchase of capital stock, options and
rights described in clause (iv) of this definition of Net Income.
"Net Leverage Ratio" shall mean, at any date of determination,
for Borrower individually and collectively on a consolidated and consolidating
basis, the ratio of (i) Total Debt on such date, to (ii) EBITDA for the Test
Period most recently ended before such date (taken as one accounting period).
"Tangible Net Worth" means assets (excluding Intangible
Assets) less liabilities (determined in conformity with GAAP).
"Test Period" shall mean the three (3) most recent calendar
months then ended (taken as one accounting period), or such other period as
specified in the Agreement or any Annex thereto.
"Total Debt" shall mean, at any date of determination, for
Borrower individually and collectively on a consolidated and consolidating
basis, the total Indebtedness on such date less cash and Cash Equivalents held
on such date.
"Total Debt Service" shall mean for any period, for Borrower
individually and collectively on a consolidated and consolidating basis, the sum
of (i) scheduled or other required payments of principal on the Revolving Loan
and Term Loan, and (ii) Interest Expense, in each case for such period for the
Revolving Loan and Term Loan.
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APPENDIX A
DEFINITIONS
"Accounts" shall mean all "accounts" (as defined in the UCC)
of Borrower (or, if referring to another Person, of such other Person),
including without limitation, accounts, accounts receivables, monies due or to
become due and obligations in any form (whether arising in connection with
contracts, contract rights, instruments, general intangibles or chattel paper),
in each case whether arising out of goods sold or services rendered or from any
other transaction and whether or not earned by performance, now or hereafter in
existence, and all documents of title or other documents representing any of the
foregoing, and all collateral security and guaranties of any kind, now or
hereafter in existence, given by any Person with respect to any of the
foregoing.
"Account Debtor" shall mean any Person who is obligated under
an Account.
"Advances" shall mean a borrowing under the Revolving
Facility. Any amounts paid by Lender on behalf of Borrower or any Guarantor
under any Loan Document shall be an Advance for purposes of the Agreement.
"Applicable Rate" shall mean the interest rates applicable
from time to time to Advances under the Agreement.
"Assigned Documents" shall mean those documents and
instruments being purchased by Lender from Bank Austria in connection herewith
and listed on Exhibit A hereto.
"Assigned Stock" shall mean all of the stock originally
pledged to Bank Austria and assigned by Bank Austria to Lender in connection
herewith.
"Bank of Austria" shall mean Bank Austria Creditanstalt
Corporate Finance, Inc.
"Borrowing Base" shall mean, as of any date of determination,
the net collectible Dollar value of Eligible Receivables, as determined with
reference to the most recent Borrowing Certificate and otherwise in accordance
with the Agreement; provided, however, that if as of such date the most recent
Borrowing Certificate is of a date more than four Business Days before or after
such date, the Borrowing Base shall be determined by Lender in its sole
discretion.
"Borrowing Certificate" shall mean a Borrowing Certificate
substantially in the form of Exhibit B.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which the Federal Reserve or the Lender is closed.
"Capital Lease" shall mean, as to any Person, a lease of any
interest in any kind of property or asset by that Person as lessee that is,
should be or should have been recorded as a "capital lease" in accordance with
GAAP.
"Capitalized Lease Obligations" shall mean all obligations of
any Person under Capital Leases, in each case, taken at the amount thereof
accounted for as a liability in accordance with GAAP.
"Change of Control" shall mean, with respect to any Borrower
or Guarantor, the occurrence of any of the following: (i) a merger,
consolidation, reorganization, recapitalization or share
or interest exchange, sale or transfer or any other transaction or series of
transactions in which its stockholders, managers, partners or interest holders
immediately prior to such transaction or series of transactions receive, in
exchange for the stock or interests owned by them, cash, property or securities
of the resulting or surviving entity or any affiliate thereof, if, as a result
thereof, any Person (or group of Persons acting in concert), other than the
Permitted Majority Holders, beneficially owns more than 50% of the voting power
of the resulting or surviving entity or such affiliate thereof, calculated on a
fully diluted basis, (ii) a direct or indirect sale, transfer or other
conveyance or disposition, in any single transaction or series of transactions,
of all or substantially all of its assets, (iii) a public offering of its
securities, if as a result thereof, any Person (or group of Persons acting in
concert), other than Permitted Majority Holders, beneficially owns more than 50%
of the voting power of Borrower or such Guarantor, or (iv) any "change in/of
control" or "sale" or "disposition" or similar event as defined in any document
governing indebtedness of such Person which gives the holder of such
indebtedness the right to accelerate or otherwise require payment of such
indebtedness prior to the maturity date thereof. As used herein, "Permitted
Majority Holders" means ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, his immediate family members, his
estate, trusts for the benefit of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and/or such family members,
Palisade Concentrated Equity Partnership, L.P. ("Palisade"), any affiliate of
Palisade or any limited partner of Palisade.
"Charter and Good Standing Documents" shall mean, for each
Borrower (i) a copy of the certificate of incorporation or formation (or other
charter document) certified as of a date not more than three (3) Business Days
before the Closing Date by the applicable Governmental Authority of the
jurisdiction of incorporation or organization of such Borrower, including, in
the case of Prime Vision Health, Inc., attachments to such certificate
evidencing the Merger, (ii) a copy of the bylaws or similar organizational
documents of certified as of a date not more than three (3) Business Days before
the Closing Date by the corporate secretary or assistant secretary of such
Borrower, (iii) an original certificate of good standing as of a date acceptable
to Lender issued by the applicable Governmental Authority of the jurisdiction of
incorporation or organization of such Borrower and of every other jurisdiction
in which such Borrower has an office or conducts business or is otherwise
required to be in good standing, and (iv) copies of the resolutions of the Board
of Directors or managers (or other applicable governing body) and, if required,
stockholders, members or other equity owners authorizing the execution, delivery
and performance of the Loan Documents to which such Borrower is a party,
certified by an authorized officer of such Person as of the Closing Date.
"Chattel Paper" shall mean chattel paper as defined in Section
9-102 of the UCC.
"Closing" shall mean the satisfaction, or written waiver by
Lender, of all of the conditions precedent set forth in the Agreement required
to be satisfied prior to the consummation of the transactions contemplated
hereby.
"Closing Date" shall mean the date the Closing occured, or
January 25, 2002.
"Collateral" shall mean, collectively and each individually,
all collateral and/or security granted to Lender by the Borrower and/or
Guarantors pursuant to the Loan Documents.
"Debtor Relief Law" shall mean, collectively, the Bankruptcy
Code of the United States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally, as amended from time to
time.
"Default" shall mean any event, fact, circumstance or
condition that, with the giving of applicable notice or passage of time or both,
would constitute or be or result in an Event of Default.
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"Deposit Account" shall mean, collectively, the Lockbox
Accounts and all bank or other depository accounts of any Borrower.
"Distribution" shall mean any fee, payment, bonus or other
remuneration of any kind, and any repayment of or debt service on loans or other
indebtedness.
"Document" shall mean a document as defined in Section 9-102
of the UCC.
"Dormant Subsidiary" shall mean PrimeVision East, Inc.,
PrimeVision Central, Inc., PrimeVision West Inc., Accountable Eye Care
Associates, Inc., PrimeVision of North Carolina, Inc. and OptiCare IPA of New
York, Inc.
"Eligible Inventory Costs" shall mean the value of Opticare
Eye Health Centers, Inc.'s, Primevision Health, Inc.'s saleable Inventory that
is a specific element or component purchased by such Borrower after taking into
account all discounts, and which inventory is maintained in the ordinary course
of such Borrower's business unless such Inventory is deemed ineligible by Lender
because:
(a) such Inventory is not subject to a valid perfected first
priority security interest in favor of Borrower, subject to no other lien of
equal or higher priority;
(b) any consent, license, approval or authorization required
to be obtained by the Borrower in connection with the granting of the security
interest under the Security Documents or in connection with manufacture or sale
of such Inventory has not been or was not duly obtained and is not in full force
and effect;
(c) any covenant, representation or warranty contained in this
Agreement or in any other Loan Document with respect to such Inventory has been
breached and remains uncured;
(d) such Inventory does not comply, or was not manufactured in
compliance, in all material respects with all applicable requirements of all
statutes, laws, rules, regulations, ordinances, codes, policies, rules of common
law, and the like, now or hereafter in effect, of any Governmental Authority,
including any judicial or administrative interpretations thereof, and any
judicial or administrative orders, consents, decrees or judgments;
(e) such Inventory does not, or at the time of its purchase
from the vendor did not, constitute "inventory" under Article 9 of the UCC as
then in effect in the jurisdiction whose law governs perfection of the security
interest;
(f) the Person for whose account such Inventory is being or
was produced has commenced a voluntary case under any federal bankruptcy or
state or federal insolvency laws or has made an assignment for the benefit of
creditors, or if a decree or order for relief has been entered by a court having
jurisdiction in respect of such Person in an involuntary case under any federal
bankruptcy or state or federal insolvency laws, or if any other petition or
application for relief under any federal bankruptcy or state or federal
insolvency laws has been filed against such Person, or if such Person has
failed, suspended business, ceased to be solvent, called a meeting of its
creditors, or has consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant portion of its
assets or affairs;
3
(g) the transfer of Inventory to Borrower by vendor, supplier
or other Person did not constitute a valid sale and transfer to Borrower of all
right, title and interest of such Person in the Inventory enforceable against
all creditors of and purchasers from the vendor;
(h) (A) such Borrower is not the sole owner of all right,
title and interest in and to such Inventory, (B) such Borrower does not have a
valid ownership interest therein free and clear of all Liens other than Liens
granted under the Loan Documents, or (C) any offsets, defenses or counterclaims
have been asserted or threatened in writing against such Inventory;
(i) such Inventory is not in good working order or is damaged;
(j) such Inventory is not located at one of such Borrower's
premises or warehouse;
(k) such Inventory is subject to a bona fide dispute or is or
has been classified as counterfeit or fraudulent;
(l) such Inventory has been sold, assigned, or otherwise
encumbered by any Borrower or Guarantor except pursuant to the Loan Documents;
(m) to the extent at Closing that such Inventory at Opticare
Eye Health Centers, Inc. exceeds the value existing as of December 31, 2001, of
$1,825,000.
(n) such Inventory consists of equipment that such Borrower
offers for rental or that is being rented from Borrower or equipment borrowed by
such Borrower or given to such Borrower to serve as demonstration equipment.
(o) such Inventory otherwise is not satisfactory to Lender.
"Eligible Receivables" shall mean each Account arising in the
ordinary course of Borrower's business from the sale of goods or rendering of
Services which Lender, in its sole discretion, deems an Eligible Receivable
unless:
(a) it is not subject to a valid perfected first priority
security interest in favor of Lender, subject to no other Lien of equal or
higher priority;
(b) it is not evidenced by an invoice, statement or other
documentary evidence satisfactory to Lender; provided, that Lender in its sole
discretion may from time to time include as Accounts that are not evidenced by
an invoice, statement or other documentary evidence satisfactory to Lender as
Eligible Receivables and determine the advance rate, liquidity factors and
reserves applicable to Advances made on any such Accounts;
(c) it or any portion thereof (in which case only such portion
shall not be an Eligible Receivable) is payable by a beneficiary, recipient or
subscriber individually and not directly by a Medicaid/Medicare Account Debtor
or commercial medical insurance carrier acceptable to Lender;
(d) it arises out of services rendered or a sale made to, or
out of any other transaction between with , one or more affiliates of any
Borrower Entity;
(e) it remains unpaid for longer than the lesser of (i) 120
calendar days after the earlier of the claim or invoice date, and (ii) 135
calendar days after the applicable Services were rendered;
4
(f) with respect to all Accounts owed by any particular
Account Debtor and/or its affiliates, if more than ten 10% of the aggregate
balance of all such Accounts owing from such Account Debtor and/or its
affiliates remain unpaid for longer than the lesser of (i) 120 calendar days
after the earlier of the claim or invoice dates, and (ii) 135 calendar days
after the applicable Services were rendered;
(g) with respect to all Accounts owed by any particular
Account Debtor and/or its affiliates, 25% or more of all such Accounts are not
deemed Eligible Receivables for any reason hereunder (which percentage may, in
Lender's sole discretion, be increased or decreased);
(h) with respect to all Accounts owed by any particular
Account Debtor and/or its affiliates (except Medicaid/Medicare Account Debtors),
if such Accounts exceed 20% of the net collectible dollar value of all Eligible
Receivables at any one time (including Accounts from Medicaid/Medicare Account
Debtors) (which percentage may, in Lender's sole discretion, be increased or
decreased);
(i) any covenant, agreement, representation or warranty
contained in any Loan Document with respect to such Account has been breached
and remains uncured;
(j) the Account Debtor for such Account has commenced a
voluntary case under any Debtor Relief Law or has made an assignment for the
benefit of creditors, or a decree or order for relief has been entered by a
court having jurisdiction in respect of such Account Debtor in an involuntary
case under any Debtor Relief Law, or any other petition or application for
relief under any Debtor Relief Law has been filed against such Account Debtor,
or such Account Debtor has failed, suspended business, ceased to be solvent,
called a meeting of its creditors, or has consented to or suffered a receiver,
trustee, liquidator or custodian to be appointed for it or for all or a
significant portion of its assets or affairs, or Borrower, in the ordinary
course of business, should have known of any of the foregoing;
(k) it arises from the sale of property or services rendered
to one or more Account Debtors outside the continental United States or that
have their principal place of business or chief executive offices outside the
continental United States, including the Canadian Accounts generated by the
▇▇▇▇▇ Systems division of Borrower;
(l) it represents the sale of goods or rendering of services
to an Account Debtor on a ▇▇▇▇-and-hold, guaranteed sale, sale-and-return, sale
on approval, consignment or any other repurchase or return basis or is evidenced
by chattel paper or an instrument of any kind or has been reduced to judgment;
(m) the applicable Account Debtor for such Account is any
Governmental Authority, unless rights to payment of such Account have been
assigned to Lender pursuant to the Assignment of Claims Act of 1940, as amended
(31 U.S.C. Section 3727, et seq. and 41 U.S.C. Section 15, et seq.), or
otherwise all with applicable statutes or regulations respecting the assignment
of government Accounts have been complied with (for example, with respect to all
Account payable directly by a Medicaid/Medicare Account Debtor);
(n) it is subject to any offset, credit (including any
resource or other income credit or offset) deduction, defense, discount,
chargeback, freight claim, allowance, adjustment, dispute or counterclaim, or is
contingent in any respect or for any reason;
(o) any Borrower or Guarantor has made any agreement with an
Account Debtor for any deduction from such Account, except for discounts or
allowances made in the ordinary course of
5
business for prompt payment, all of which discounts or allowances are reflected
in the calculation of the face value of each invoice related thereto, such that
only the discounted amount of such Account after giving effect to such discounts
and allowances shall be considered an Eligible Receivable;
(p) any return, rejection or repossession of goods or services
related to it has occurred;
(q) it is not payable to Borrower;
(r) any Borrower or Guarantor has agreed to accept or has
accepted any non-cash payment for such Account;
(s) with respect to any Account arising from the sale of
goods, the goods have not been shipped to the Account Debtor or its designee;
(t) with respect to any Account arising from the performance
of Services, the Services have not been actually performed or the Services were
undertaken in violation of any law; or
(u) it fails to meet such other specifications and
requirements which may from time to time be established by Lender or is not
otherwise satisfactory to Lender, as determined in Lender's sole discretion.
"Environmental Laws" shall mean, collectively and each
individually, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Superfund Amendment and Reauthorization Act of 1986,
the Resource Conservation and Recovery Act, the Toxic Substances Control Act,
the Clean Air Act, the Clean Water Act, any other "Superfund" or "Superlien" law
and all other federal, state and local and foreign environmental, land use,
zoning, health, chemical use, safety and sanitation laws, statutes, ordinances
and codes relating to the protection of the environment and/or governing the
use, storage, treatment, generation, transportation, processing, handling,
production or disposal of Hazardous Substances, in each case, as amended, and
the rules, regulations, policies, guidelines, interpretations, decisions, orders
and directives of Governmental Authorities with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the regulations thereunder.
"Equipment" shall mean equipment as defined in Section 9-102
of the UCC.
"Event of Default" shall mean the occurrence of any event set
forth in Article VIII.
"Fair Valuation" shall mean the determination of the value of
the consolidated assets of a Person on the basis of the amount which may be
realized by a willing seller within a reasonable time through collection or sale
of such assets at market value on a going concern basis to an interested buyer
who is willing to purchase under ordinary selling conditions in an arm's length
transaction.
"Fixtures" shall mean fixtures as defined in Section 9-102 of
the UCC.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time as applied by
nationally recognized accounting firms.
6
"General Intangibles" shall mean general intangibles as
defined in Section 9-102 of the UCC.
"Guarantor" shall mean, collectively and each individually,
all subsidiaries of any Borrower.
"Guaranty" shall mean, collectively and each individually, all
guarantees executed by any Guarantors, including such guarantees which are part
of the Assigned Document as well as those certain Reaffirmations of Guaranty and
Security Documents executed and delivered in connection herewith.
"Government Account" shall be defined to mean all Accounts and
Receivables arising out of or with respect to any Government Contract.
"Governmental Authority" shall mean any federal, state,
municipal, national, local or other governmental department, court, commission,
board, bureau, agency or instrumentality or political subdivision thereof, or
any entity or officer exercising executive, legislative or judicial, regulatory
or administrative functions of or pertaining to any government or any court, in
each case, whether of the United States or a state, territory or possession
thereof, a foreign sovereign entity or country or jurisdiction or the District
of Columbia.
"Government Contract" shall be defined to mean all contracts
with the United States Government or with any agency thereof, and all amendments
thereto.
"Hazardous Substances" shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials as defined in or subject to any applicable Environmental Law.
"Healthcare Laws" shall mean all applicable statutes, laws,
ordinances, rules and regulations of any Governmental Authority with respect to
regulatory matters primarily relating to patient healthcare, healthcare
providers and healthcare services (including without limitation Section 1128B(b)
of the Social Security Act, as amended, 42 U.S.C. Section 1320a-7(b) (Criminal
Penalties Involving Medicare or State Health Care Programs), commonly referred
to as the "Federal Anti-Kickback Statute," and the Social Security Act, as
amended, Section 1877, 42 U.S.C. Section 1395nn (Prohibition Against Certain
Referrals), commonly referred to as "▇▇▇▇▇ Statute").
"HSO Contracts" shall mean Borrower's health service
organization contracts.
"Indebtedness" of any Person shall mean, without duplication,
(a) all items which, in accordance with GAAP, would be included in determining
total liabilities as shown on the liability side of the balance sheet of such
Person as of the date as of which Indebtedness is to be determined, including
any lease which, in accordance with GAAP would constitute Indebtedness, (b) all
indebtedness secured by any mortgage, pledge, security, Lien or conditional sale
or other title retention agreement to which any property or asset owned or held
by such Person is subject, whether or not the indebtedness secured thereby shall
have been assumed, (c) all indebtedness of others which such Person has directly
or indirectly guaranteed, endorsed (otherwise than for collection or deposit in
the ordinary course of business), discounted or sold with recourse or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire, or
in respect of which such Person has agreed to supply or advance funds (whether
by way of loan, stock, equity or other ownership interest purchase, capital
contribution or otherwise) or otherwise to become directly or indirectly liable.
7
"Instrument" shall mean instrument as defined in Section 9-102
of the UCC.
"Insurer" shall mean a Person that insures another Person
against any costs incurred in the receipt by such other Person of Services, or
that has an agreement with any Borrower to compensate it for providing Services
to such Person.
"Inventory" shall mean all "inventory" (as defined in the UCC)
of Borrower (or, if referring to another Person, of such other Person), now
owned or hereafter acquired, and all documents of title or other documents
representing any of the foregoing, and all collateral security and guaranties of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing..
"Landlord Waiver and Consent" shall mean a waiver/consent in
form and substance satisfactory to Lender from the owner/lessor of any premises
not owned by Borrower at which any of the Collateral is now or hereafter located
for the purpose of providing Lender access to such Collateral, in each case as
such may be modified, amended or supplemented from time to time.
"Liability Event" shall mean any event, fact, condition or
circumstance or series thereof (i) in or for which any Borrower becomes liable
or otherwise responsible for any amount owed or owing in excess of $1 million to
any Medicaid or Medicare program by a provider under common ownership with such
Borrower or any provider owned by such Borrower pursuant to any applicable law,
ordinance, rule, decree, order or regulation of any Governmental Authority after
the failure of any such provider to pay any such amount when owed or owing, (ii)
in which Medicaid or Medicare payments to any Borrower are lawfully set-off
against payments to such or any other Borrower to satisfy any liability of or
for any amounts owed or owing in excess of $1,000,000 to any Medicaid or
Medicare program by a provider under common ownership with such Borrower or any
provider owned by such Borrower pursuant to any applicable law, ordinance, rule,
decree, order or regulation of any Governmental Authority, or (iii) any of the
foregoing under clauses (i) or (ii) in each case pursuant to statutory or
regulatory provisions that are similar to any applicable law, ordinance, rule,
decree, order or regulation of any Governmental Authority referenced in clauses
(i) and (ii) above or successor provisions thereto.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, restriction, lien or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement or any lease in the nature thereof), or any other arrangement pursuant
to which title to the property is retained by or vested in some other Person for
security purposes.
"Loan" or "Loans" shall mean, individually and collectively,
the Term Loan and all Advances under the Revolving Facility.
"Loan Documents" shall mean, collectively and each
individually, the Agreement, the Notes, the Security Documents, the Guarantees,
the Stock Pledge Agreements, the Lockbox Agreements, the Uniform Commercial Code
Financing Statements, the Subordination Agreement, the Landlord Waiver and
Consents, the Borrowing Certificates, the Warrant, the Registration Rights
Agreement and all other agreements, documents, instruments and certificates
heretofore or hereafter executed or delivered to Lender in connection with any
of the foregoing or the Loans, as the same may be amended, modified or
supplemented from time to time.
"Lockbox Accounts" shall mean the blocked accounts maintained
by or for Borrowers at the Lockbox Banks into which all collections or payments
on their Accounts and other Collateral are paid.
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"Material Adverse Effect" or "Material Adverse Change" shall
mean any event, condition or circumstance or set of events, conditions or
circumstances or any change(s) which (i) has any material adverse effect upon or
change in the validity or enforceability of any Loan Document in excess of
$500,000, (ii) has a material and adverse impact to the value of any of the
Collateral or to the business, operations, prospects, properties, assets,
liabilities or condition of Borrower and/or Guarantors, either individually or
taken as a whole, in each case, in excess of $500,000, or (iii) has materially
impaired the ability of any Borrower or Guarantor to perform the Obligations or
to consummate the transactions under the Loan Documents executed by such Person
that causes impairment in excess of $500,000. Notwithstanding the foregoing,
this definition shall not be applicable to good will adjustments and/or deferred
tax asset adjustments prior to December 31, 2003.
"Medicaid/Medicare Account Debtor" shall mean any Account
Debtor which is (i) the United States of America acting under the Medicaid or
Medicare program established pursuant to the Social Security Act or any other
federal healthcare program, including, without limitation, CHAMPUS, (ii) any
state or the District of Columbia acting pursuant to a health plan adopted
pursuant to Title XIX of the Social Security Act or any other state health care
program, or (iii) any agent, carrier, administrator or intermediary for any of
the foregoing.
"Merger" shall mean that certain merger of OHNI and ▇▇▇▇▇ into
PVHI, effective January 9, 2002.
"Note" or "Notes" shall mean, collectively and each
individually, the Revolving Note and the Term Note.
"Obligations" shall mean all shall mean all present and future
obligations, Indebtedness and liabilities of Borrower and/or Guarantors to
Lender at any time and from time to time of every kind, nature and description,
direct or indirect, secured or unsecured, joint and several, absolute or
contingent, due or to become due, matured or unmatured, now existing or
hereafter arising, contractual or tortious, liquidated or unliquidated, under
any of the Loan Documents or otherwise relating to Notes and/or Loans,
including, without limitation, all applicable fees, charges and expenses and/or
all amounts paid or advanced by Lender on behalf of or for the benefit of any
Borrower and/or Guarantor for any reason at any time, including in each case
obligations of performance as well as obligations of payment and interest that
accrue after the commencement of any proceeding under any Debtor Relief Law by
or against any such Person.
"P.A." shall mean Optometric Eye Care Centers, P.A., a North
Carolina professional association.
"P.C." shall mean Opticare, P.C., a Connecticut professional
corporation.
"Payment Office" shall mean initially the address set forth
beneath the Lender's name on the signature page of the Agreement, and
thereafter, such other office of Lender, if any, which it may designate by
notice to Borrower to be the Payment Office.
"Professional Services and Support Agreement" shall mean those
certain agreements for the provision of administrative and professional services
by and between (i) Consolidated Eye Care, Inc., a North Carolina corporation,
its successors and assigns and Optometric Eye Care Centers, PA, a North Carolina
professional association dated August 10, 1999, and (ii) Opticare Eye Health
Centers, Inc. a division of Borrower, and Opticare, P.C., a Connecticut
professional corporation, each as amended or restated, from time to time.
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"Permit" shall mean collectively all licenses, leases, powers,
permits, franchises, certificates, authorizations, approvals, certificates of
need, provider numbers and other rights.
"Person" shall mean an individual, a partnership, a
corporation, a limited liability company, a business trust, a joint stock
company, a trust, an unincorporated association, a joint venture, a Governmental
Authority or any other entity of whatever nature.
"Prime Rate" shall mean a fluctuating interest rate per annum
equal at all times to the rate of interest announced publicly from time to time
by Citibank, N.A. as its base rate; provided, that such rate is not necessarily
the best rate offered to its customers, and, should Lender be unable to
determine such rate, such other indication of the prevailing prime rate of
interest as may reasonably be chosen by Lender; provided, that each change in
the fluctuating interest rate shall take effect simultaneously with the
corresponding change in the Prime Rate.
"Revolving Facility Term" shall mean the period commencing on
the Closing Date and ending the date that is four (4) years after the Closing
Date.
"Revolving Note" shall mean the Amended and Restated Revolving
Note payable to the order of Lender executed by Borrower evidencing the
Revolving Facility, as the same may be modified, amended or supplemented from
time to time.
"Security Documents" shall mean the Assigned Documents,
together with any and all additional documents and instruments executed and
delivered in connection herewith necessary to create, continue or perfect the
Liens in the Collateral, as such may be modified, amended or supplemented from
time to time.
"Services" shall mean medical and health care services
provided to a Person, including, but not limited to, medical and health care
services which are covered by a policy of insurance issued by an Insurer,
physician services, nurse and therapist services, dental services, hospital
services, skilled nursing facility services, comprehensive outpatient
rehabilitation services, home health care services, residential and out-patient
behavioral healthcare services.
"Subordination Agreement" shall mean, collectively and each
individually, subordination agreements executed by Palisade Concentrated Equity
Partnership, L.P. and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ as Subordinated Creditors in favor of
Lender as senior lender delivered in connection herewith.
"Subsidiary" shall mean, (i) as to Borrower, any Person in
which more than 50% of all equity, membership, partnership or other ownership
interests is owned directly or indirectly by Borrower or one or more of its
Subsidiaries, and (ii) as to any other Person, any Person in which more than 50%
of all equity, membership, partnership or other ownership interests is owned
directly or indirectly by such Person or by one or more of such Person's
Subsidiaries.
"Term Loan Term" shall mean the period commencing on the
Closing Date and ending the date that is four (4) years after the Closing Date.
"Term Note" shall mean, collectively and each individually,
(a) the Term Note B payable to the order of Lender and executed by Borrower
dated as of November 14, 2003, and (b) that certain Amended and Restated Term
Note payable to the order of Lender executed by Borrower dated as of January 25,
2002, each evidencing the Term Loan, as the same may be modified, amended or
supplemented from time to time.
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"Term Note B" means that certain Term Note dated November ___,
2003 made by Borrower payable to the order of Lender in the original principal
amount of $315,286.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of Maryland from time to time.
"Warrant" shall have the meaning given such term in the
Warrant Agreement.
"Warrant Agreement" shall mean the Warrant dated as of the
Closing Date by and between Parent and CapitalSource Holdings LLC, as such may
be modified, restated, amended or supplemented from time to time.
"Wise" shall mean Wise Optical Vision Group, Inc., a New York
corporation.
"Wise Acquisition" shall mean the purchase by Opticare
Acquisition Corp. of all of the Acquired Assets (as defined in the Wise Asset
Purchase Agreement).
"Wise Asset Purchase Agreement" shall mean that certain Asset
Purchase Agreement dated as of February 7, 2003 by and between Wise and Opticare
Acquisition Corp. as amended.
"Wise Eligible Inventory Costs" shall mean the value of
Opticare Acquisition, Corp.'s saleable Inventory that is a specific element or
component purchased by such Borrower after taking into account all discounts,
and which inventory is maintained in the ordinary course of such Borrower's
business unless such Inventory is deemed ineligible by Lender because it fits
into one of the exclusions set forth in (a) through (o) in the definition of
Eligible Inventory Costs.
"Yield Maintenance Amount" shall mean an amount equal to the
difference between (x) the all-in effective yield (measured as a percentage per
annum), excluding the Commitment Fee, which could be earned on the Revolving
Balance from the Closing Date through and including January 25, 2006, and (y)
the total interest and fees, excluding the Commitment Fee, actually paid by
Borrower to Lender on the Revolving Facility prior to the later of the
Termination Date or the date of prepayment. As used herein, "Revolving Balance"
shall mean, on any date of determination, the average outstanding balance under
the Revolving Facility for the immediately preceding twelve (12) months ending
on such date.
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