EX-2
4
opticare-ex2_020602.htm
FIRST AMENDMENT TO RESTRUCTURE
AGREEMENT
THIS FIRST AMENDMENT is made as of the 5th day of January, 2002 by and between
PALISADE CONCENTRATED EQUITY PARTNERSHIP, L.P. ("Palisade"), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
("▇▇. ▇▇▇▇▇▇▇▇▇") and OPTICARE HEALTH SYSTEMS, INC. ("OptiCare").
W I T N E S
S E T H
WHEREAS, OptiCare, Palisade and ▇▇. ▇▇▇▇▇▇▇▇▇ entered into a certain Restructure Agreement dated the
17th day of December 2001 (the "Restructure Agreement"), which Restructure
Agreement is subject to, among other things, further negotiation between
Palisade and Bank Austria Creditanstalt Corporate Finance, Inc. as agent for the
lenders ("Bank Austria") with regard to the nature and amount of credit support
that was to be supplied by Palisade to Bank Austria in connection with a
promissory note of OptiCare to be issued to Bank Austria pursuant to the
Restructure Agreement, and Palisade and Bank Austria have determined that a
satisfactory agreement regarding such credit support cannot be reached,
and
WHEREAS,
OptiCare and Palisade now desire to modify the Restructure Agreement to provide
for Palisade and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M. D. (“▇▇. ▇▇▇▇▇▇▇▇▇”) to make a
loan to OptiCare in the amount of $14MM and an equity investment of $4MM in
OptiCare’s participating preferred stock as described herein in order to
enable OptiCare to settle in full the obligations of OptiCare to Bank Austria,
thereby eliminating the need for such promissory note and such credit support,
and
WHEREAS, Palisade, OptiCare, and ▇▇. ▇▇▇▇▇▇▇▇▇ are desirous of amending the
Restructure Agreement to reflect such terms.
NOW, THEREFORE, the parties hereto agree as follows:
1. Paragraph D of the Section entitled "Background" is amended in its entirety
to read as follows:
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“Palisade
has agreed, and ▇▇. ▇▇▇▇▇▇▇▇▇, at Palisade’s insistence, and as a condition
to Palisade’s investment in OptiCare, has agreed, on the terms and subject
to the conditions set forth in this Agreement, to make preferred stock
investments in, and to provide loans to, OptiCare and certain of its
subsidiaries, as provided below, to permit OptiCare and certain of its
subsidiaries to repay Bank Austria its debt at a substantial discount and to
repay the advance by Alexander Enterprise under the Amended Bridge Loan. In
exchange for such preferred stock investments and such loans, Palisade and ▇▇.
▇▇▇▇▇▇▇▇▇ shall receive new participating preferred stock and warrants in
OptiCare (collectively, the “Warrants”) and subordinated notes of
OptiCare, all as further described herein. All references in this Agreement to
“▇▇. ▇▇▇▇▇▇▇▇▇” with respect to such investment and the purchase of
such securities shall mean ▇▇. ▇▇▇▇▇▇▇▇▇ or his spouse, family members, or a
trust for the benefit of any of his family members.” |
2. Paragraph E. of the Section entitled
"Background" is amended by deleting "in reliance in part on credit support to be
provided by Palisade." and by inserting in its place the words "contingent upon
the cash investments and loans to be provided by Palisade and ▇▇.
▇▇▇▇▇▇▇▇▇."
3. Paragraph F of the Section entitled "Background" is amended in its entirety
to read as follows:
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“Palisade
proposes to provide the investment and loan described herein in order to allow
OptiCare to make the cash payment to Bank Austria described in Paragraph 2.12 in
order to induce Bank Austria to accept payment from OptiCare of significantly
less than the debt due to it in full settlement.” |
4. The first full sentence of Section 1. is amended by replacing the word
"Warrant " with the word "Warrants", and by inserting the words "shares of"
immediately following the words "the authorized number of."
5. The third and fourth sentences of Section 1. are amended and replaced in
their entirety by the following:
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"This Agreement is contingent upon OptiCare and Bank Austria entering into a
definitive written agreement acceptable to Palisade in its sole discretion
regarding the nature and amount of cash to be paid by OptiCare to Bank Austria
in consideration for extinguishing all claims of Bank Austria against OptiCare
(the "Bank Austria Contingency"). At any time from and after the date hereof,
if either OpticAre or Palisade, in its sole judgment, determines that a
definitive agreement satisfactory to it in all respects resolving the Bank
Austria Contingency has not been entered into, OptiCare or Palisade may, upon
notice to the other, terminate this Agreement.:
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6. Section 2 is amended and replaced in its entirety by the
following:
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"2. RESTRUCTURE DOCUMENTS. Subject to the conditions in this Agreement,
OptiCare, Palisade, and ▇▇. ▇▇▇▇▇▇▇▇▇ agree to the following terms and to
execute and deliver the following documents (collectively, the "Restructure
Documents"):
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2.1.
OptiCare is authorizing the issuance of 3,500,000 shares of Series B 12.5%
voting convertible participating preferred stock having terms substantially as
set forth in the Certificate of Designation attached as Schedule 2.1 (the
“New Preferred Stock”) with an aggregate initial redemption value of
$1.40 per preferred share, for each share of New Preferred Stock convertible
into OptiCare Common Stock initially on a ten-for-one basis (subject to
adjustment as provided therein), with voting rights on an as converted basis
with OptiCare’s Common Stock, as provided therein, at any time and having
the other terms described therein, and will recommend that OptiCare’s
shareholders approve an increase in the amount of authorized shares of Common
Stock to provide for the possible future exercise of warrants being granted to
Palisade and ▇▇. ▇▇▇▇▇▇▇▇▇ and conversion of the New Preferred Stock along with
the other Shareholder Proposals.
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2.2.
On the Effective Date, OptiCare will deliver (in addition to shares of New
Preferred Stock delivered pursuant to Paragraphs 2.9 and 2.10) a certificate
representing 2,571,429 shares of the New Preferred Stock to Palisade and a
certificate representing 285,714 shares of New Preferred Stock to ▇▇. ▇▇▇▇▇▇▇▇▇. |
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2.3.
In connection with Palisade providing a loan to OptiCare totaling $13,900,000 as
set forth in Paragraph 2.6, on the Effective Date, OptiCare will issue a warrant
(the “Palisade Warrant”) to Palisade, permitting a purchase of
17,375,000 shares of OptiCare Common Stock, a copy of which Palisade Warrant is
annexed as “Schedule 2.3". |
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In connection with ▇▇. ▇▇▇▇▇▇▇▇▇ providing a loan as set forth in Paragraph 2.6,
on the Effective Date, OptiCare will issue a warrant (the “Yimoyines
Warrant”) to ▇▇. ▇▇▇▇▇▇▇▇▇, permitting a purchase of 125,000 shares of
OptiCare Common Stock, which Yimoyines Warrant will be substantially identical
to the Palisade Warrant. |
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2.4.
In payment of the New Preferred Stock, Palisade shall, on the Effective Date,
pay OptiCare a total of $3,600,000 and ▇▇. ▇▇▇▇▇▇▇▇▇ shall, on the Effective
Date, pay OptiCare, in immediately available funds, a total of $400,000, each
pursuant to the wire transfer instructions set forth in “Schedule
2.4". |
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2.5.
OptiCare is borrowing from CapitalSource on the Effective Date approximately
$7,000,000 on an asset-based line and an additional $3,000,000 under an
equipment term loan, all pursuant to the CapitalSource loan documents. |
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2.6.
Palisade shall, on the Effective Date, loan to OptiCare $13,900,000 pursuant to
the subordinated secured note from OptiCare and its subsidiaries to Palisade
(the “Palisade Note”) annexed as “Schedule 2.6". |
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▇▇. ▇▇▇▇▇▇▇▇▇ shall, on the Effective Date, loan to OptiCare $100,000 pursuant to a
subordinated secured note from OptiCare and its subsidiaries to ▇▇. ▇▇▇▇▇▇▇▇▇
(the “Yimoyines Note”), which Yimoyines Note will be substantially
identical to the Palisade Note. |
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The Palisade Note and the Yimoyines Note shall each bear interest at 11.5% per
annum and shall have a maturity date of ten (10) years from the Effective
Date. |
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2.7.
To secure the Palisade Note and the Yimoyines Note, OptiCare and its
subsidiaries shall grant a security interest in all of their assets, second and
subordinate in all respects to the security interest of CapitalSource. Palisade
and ▇▇. ▇▇▇▇▇▇▇▇▇ agree to execute a subordination agreement reasonably
acceptable to CapitalSource. |
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2.8.
OptiCare will use a portion of the proceeds of the loans from CapitalSource,
Palisade and ▇▇. ▇▇▇▇▇▇▇▇▇ and the stock investments by Palisade and ▇▇.
▇▇▇▇▇▇▇▇▇ to settle the claims of Bank Austria in full and to acquire certain
assets of Bank Austria pursuant to a Bank Austria Restructure Agreement to be
entered into by OptiCare and Bank Austria (which shall be acceptable to Palisade
in its sole discretion). |
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2.9.
OptiCare will use a portion of the proceeds of the stock investments by Palisade
and ▇▇. ▇▇▇▇▇▇▇▇▇ to repay $2,300,000 of principal plus interest of the Amended
Bridge Loan to Alexander Enterprise pursuant to the payoff agreement and
instructions attached as “Schedule 2.9". |
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2.10.
As of the Effective Date, Palisade, as a participant in the Amended Bridge Loan
pursuant to the Participation Agreement relating thereto, executed in connection
therewith and dated as of January 5, 2001 (the “Bridge Loan Participation
Agreement”), shall be issued, in lieu of cash payment on account of its
participation in the principal amount of $400,000 in the Amended Bridge Loan,
285,714 shares of OptiCare New Preferred Stock, plus additional shares of New
Preferred Stock for accumulated interest. |
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2.11.
As of the Effective Date, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, as a participant in the
Amended Bridge Loan pursuant to the Bridge Loan Participation Agreement relating
thereto, shall be issued, in lieu of cash payment on account of her
participation in the principal amount of $50,000 in the Amended Bridge Loan,
35,714 shares of OptiCare New Preferred Stock, plus additional shares of New
Preferred Stock for accumulated interest. |
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2.12.
OptiCare agrees to submit to its shareholders at the next shareholders’
meeting, if not already approved as part of the Shareholder Proposals, an
Amendment to the Performance Stock Program to provide 10% of the fully diluted
shares of Common Stock, Preferred Stock and Warrants outstanding to be issued to
OptiCare’s key employees and directors and to extend the date thereof to
December 31, 2006. Palisade agrees to vote its stock and the proxies entitling
it to vote for approval of such amendment. |
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2.13.
Palisade and ▇▇. ▇▇▇▇▇▇▇▇▇ on the one hand, and OptiCare on the other, shall, as
of the Effective Date, enter into a Registration Rights Agreement regarding the
Common Stock of OptiCare currently held by Palisade, the Common Stock issuable
pursuant to warrants currently held by Palisade and ▇▇. ▇▇▇▇▇▇▇▇▇, and the
Common Stock of OptiCare issuable as a result of any conversion of the New
Preferred Stock or on the exercise of any of the Warrants issued to Palisade and
to ▇▇. ▇▇▇▇▇▇▇▇▇ pursuant to this Agreement. |
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2.14
OptiCare shall, on the Effective Date, obtain and deliver the resignations of
three (3) directors of its Board of Directors. |
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2.15
OptiCare shall, as of the Effective Date, amend its Bylaws to include the
provisions set forth in “Schedule 2.15". |
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2.16 On
the Effective Date, OptiCare shall pay to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee of the
OptiCare D&O Tail Policy Trust (the “Tail Policy Trust”), the sum
of $225,000 to be held under and for the purposes of the Tail Policy Trust. A
copy of the Trust Agreement of the Tail Policy Trust is annexed as
“Schedule 2.16". OptiCare agrees to execute such Trust Agreement on
the Effective Date.” |
7. The first sentence of
Section 4.A.2 is amended to add “and the Palisade Note and the Yimoyines
Note” immediately following “the Warrants”, and to add the words
“and to ▇▇. ▇▇▇▇▇▇▇▇▇” immediately following “to Palisade.”
8.
The second sentence of
Section 4.A.2 is amended to add “and the Palisade Note and the Yimoyines
Note” immediately following “the Warrants” [other than in clause
(iii)], to add the words “and to ▇▇. ▇▇▇▇▇▇▇▇▇” immediately following
“to Palisade,” to add the words “(as defined therein)”
immediately following the words “Warrant Shares described therein,”
and to add a new clause (iv) reading: “(iv) the Palisade Note and the
Yimoyines Note will have been validly issued and will represent legal, valid and
binding obligations of OptiCare enforceable in accordance with their
terms.”
9. Section 4.A.4 is amended and replaced in its
entirety with the following:
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“4.A.4.
Delaware GCL Section 203. The Board of Directors of OptiCare duly adopted
resolutions approving the transactions by which Palisade acquired its 2,000,000
shares of OptiCare Common Stock and became an “interested stockholder”
prior to such transactions. Such resolutions have not been repealed or modified
as of the date hereof.” |
10.
Section 4.A.7 is
amended by adding the words “and the Palisade Note and the Yimoyines
Note” immediately following “the Warrants” and by adding the
words, “▇▇. ▇▇▇▇▇▇▇▇▇” immediately following “in favor of
Palisade.”
11. Section 4.A.24 is amended by replacing the
reference to "Sections 1.01 to 1.23" by reference to "Sections 4.A.1 to 4.A.23"
and by adding the following new sentence:
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“Palisade
shall be entitled to receive at the time of the Closing such officers’
certificates, legal opinions or other documents as Palisade may reasonably
request to confirm such representations.” |
12. Subsection 4.B.1(f) is amended and replaced in
its entirety with the following:
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“(f)
Conversion Stock. OptiCare will at all times, so long as the New
Preferred Stock or Warrants are outstanding, reserve such authorized shares of
Common Stock as are necessary for the full conversion or exercise of the New
Preferred Stock and Warrants. The issuance of shares of such Common Stock upon
conversion of the New Preferred Stock or exercise of the Warrants will be duly
authorized by all necessary corporate action on the part of OptiCare and, when
issued upon conversion of the New Preferred Stock or exercise of the Warrants in
accordance with the terms thereof, such Common Stock will have been validly
issued and will be fully paid and non-assessable.” |
13. The definition of "Permitted Liens" in Section
4.D is amended by adding the words "and G. E. Capital Corporation" immediately
after the words "▇▇. ▇▇▇▇▇▇."
14. Section 6.1 is amended and replaced in its
entirety by the following:
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“6.1
OptiCare agrees that for so long as Palisade holds more than 50% of the voting
power of OptiCare, (i) OptiCare’s Board of Directors will consist of not
more than five members (or such greater number as Palisade may reasonably
request), and (ii) OptiCare shall cause such number of persons designated by
Palisade from time to time to be nominated for, and elected to, the Board of
Directors of OptiCare so that if desired by Palisade a number of directors equal
to the minimum number necessary to constitute a majority of the Board of
Directors of OptiCare will be persons so designated by Palisade. |
15. Section 6.2 is amended and replaced in its
entirety by the following:
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“6.2
For so long as Palisade holds more than 50% of the voting power of OptiCare,
OptiCare shall not take any of the following actions without the approval of a
majority of its Independent Directors (as defined below): |
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Issuance to Palisade or any affiliate of Palisade (other than pursuant to the
terms of securities then held by Palisade) of (A) any new class or series of
preferred stock out of the “blank check” preferred stock authorized by
OptiCare’s certificate of incorporation, as amended from time to time, (B)
any new class or series of preferred stock authorized or to be authorized
hereafter under an amendment of the certificate of incorporation of the
OptiCare, or (C) any security convertible into or exchangeable for (with or
without payment of any additional consideration) any of the securities described
in clauses A or B hereof.
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| | (b)
For purposes of this Section 6, “Independent
Director” means a director who qualifies as an “independent
director” under Rule 121 of the American Stock Exchange.
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No amendment of this Section 6.2 shall be made
without the approval of the Independent Directors.
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16. Section 7 is amended and replaced in its
entirety by the following:
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“7.
TERMINATION. Palisade shall have the right, in its sole discretion, to
terminate this Agreement at any time, by notice to OptiCare (in which case this
Agreement shall cease to be of any further force and effect), in the event that
(i) the Bank Austria Contingency is not satisfied in Palisade’s sole
discretion, (ii) the Bank Austria Restructure Agreement referred to in
Paragraph 2.8 terminates in accordance with its terms without the transactions
contemplated thereby having been consummated, (iii) Capital Source advises
Palisade or OptiCare that Capital Source is not prepared to proceed to
consummate the financing described in Paragraph 2.5, or (iv) any of the
Shareholder Proposals is disapproved by OptiCare’s shareholders. OptiCare
shall have the right, in its sole discretion, to terminate this Agreement at any
time, by notice to Palisade (in which case this Agreement shall cease to be of
any further force and effect), in the event that the Bank Austria Contingency is
not satisfied in OptiCare’s sole discretion.” |
17. Section 8 is amended by deleting the last full
sentence thereof.
18. Section 9.3 is amended by replacing the words
"▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C." with "▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP," and by
renumbering subsection (B) as subsection (C), and by inserting a new subsection
(B) as follows:
| (B) |
If to ▇▇. ▇▇▇▇▇▇▇▇▇:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, MD
OptiCare Eye Health Centers, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, MD
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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19. Subsection 9.6 is amended and replaced in its entirety by the
following:
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“9.6.
Jurisdiction. OptiCare, Palisade and ▇▇. ▇▇▇▇▇▇▇▇▇ each agree to submit
to the jurisdiction of the United States District Court for the Southern
District of New York, as well as the jurisdiction of all courts to which an
appeal may be taken from the aforesaid court for the purpose of any suit, action
or proceeding arising out of or with respect to this Agreement or any of the
Restructure Documents and each waives any objections they each may have as to
venue in such courts.”
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20. A new Section 9.7 is added as follows:
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"9.7. Attorney Fees and Expenses. OptiCare
shall reimburse Palisade for all reasonable out-of-pocket expenses including
fees and disbursements of its counsel in connection with this Restructure
Agreement and the closing of the transactions contemplated hereby."
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21.
The rights, privileges, duties and obligations of the parties under the
Restructure Agreement shall, except as modified above, remain unchanged and in
full force and effect.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first written above.
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Signed, Sealed and Delivered
in the Presence of:
_______________________________________
_______________________________________
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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PALISADE CONCENTRATED EQUITY PARTNERSHIP, L.P.
By: Palisade Concentrated Holdings LLC,
its General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Member
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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OPTICARE HEALTH SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: CFO/VP
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LIST OF SCHEDULES TO RESTRUCTURE AGREEMENT AS AMENDED
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SCHEDULE NUMBER
Schedule 2.1
Schedule 2.2
Schedule 2.3
Schedule 2.4
Schedule 2.6
Schedule 2.9
Schedule 2.15
Schedule 2.16 |
SCHEDULE NAME
Certificate of Designation
Copies of Stock Certificates issued to Palisade
and ▇▇. ▇▇▇▇▇▇▇▇▇
Palisade Warrant
Wire Transfer Instructions
Palisade Note
Alexander Enterprise Payoff Agreement
Additions to OptiCare's Bylaws
D&O Tail Policy Agreement
Disclosure Schedule to Section 4A
Annex A |
STATUS
Attached
Attached
Attached
Attached
Attached
Attached
Attached
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