SECOND AMENDMENT TO AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT (as heretofore amended and as may be further amended,
restated, modified and supplemented from time to time) (the "Second Amendment"),
is effective as of October 10, 2000, by and among OPTICARE EYE HEALTH NETWORK,
INC., formerly known as CONSOLIDATED EYE CARE, INC., a North Carolina
corporation ("CEC"), OPTICARE EYE HEALTH CENTERS, INC., a Connecticut
corporation ("OptiCare"), PRIMEVISION HEALTH, INC., a Delaware corporation
("PVC" and together with CEC and OptiCare, the "Borrowers"), OPTICARE HEALTH
SYSTEMS, INC., a Delaware corporation (the "Parent"; and together with the
Borrowers, the "Obligors"), the financial institutions from time to time party
hereto (collectively, the "Lenders") and BANK AUSTRIA CREDITANSTALT CORPORATE
FINANCE, INC., in its capacity as agent for the Lenders (in such capacity, the
"Agent"). Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Loan Agreement.
WHEREAS, the Obligors, the Lenders, and the Agent are parties
to a certain Amended and Restated Loan and Security Agreement dated as of August
13, 1999 (as the same shall have been amended, restated, modified and
supplemented from time to time, including a certain First Amendment dated June
30, 2000, the "Loan Agreement");
WHEREAS, without limiting the rights or remedies of the Agent
or the Lenders, as a result of the failure to make past due interest payments
for September, 2000, the Obligors are in default of their obligations contained
in the Loan Agreement (the "Interest Defaults");
WHEREAS, Alexander Enterprise Holdings Corp. ("Alexander
Enterprise") has agreed to loan and advance to the Parent, in immediate
available funds, up to $2,250,000 pursuant to a certain subordinated note (the
"Subordinated Note") dated of even date herewith;
WHEREAS, the Obligors, the Lenders and the Agent have agreed,
on the terms and conditions set forth herein, to certain modifications of the
Loan Agreement in order to facilitate the transaction hereby contemplated; and
WHEREAS, from and after the Effective Date (as hereinafter
defined) of this Second Amendment, the Loan Agreement shall be amended, subject
to and upon the terms and conditions set forth herein;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the fulfillment of
the conditions set forth below, the parties hereto agree as follows:
SECTION 1. Amendment to Loan Agreement. The Loan Agreement is hereby amended as
follows:
(a) Section 1.1 of the Loan Agreement is hereby amended by
adding the following new definitions in appropriate alphabetical order:
"Alexander Enterprise" shall have the meaning given to such
term in the recitals to this Second Amendment.
"Alexander Enterprise Common Stock" shall have the meaning
ascribed to the term "Common Stock" in the Investor Warrant Agreement.
"Alexander Enterprise Documents" shall have the meaning given
to such term in the Subordination Agreement.
"Alexander Enterprise Security Agreement" means that certain
security agreement and that certain pledge and security agreement dated of even
date hereof executed by the Obligors and Alexander Enterprise, together with all
related documents thereto, pursuant to which the Obligors grant a junior and
subordinated lien, security interest or mortgage on any of the Collateral to
secure the Subordinated Note.
"Alexander Enterprise Warrant Agreement" means that certain
warrant agreement between Alexander Enterprise and the Parent dated of even date
herewith.
"Alexander Enterprise Warrants" shall have the meaning
ascribed to such term in the Alexander Enterprise Warrant Agreement.
"Maximum Junior Debt Lien" means the junior and subordinated
liens, mortgages and security interests to be granted by the Obligors upon the
Collateral in the maximum aggregate amount of (i) $2,250,000 of principal
obligations plus interest and the reasonable fees, expenses or other costs owed
by the Obligors to Alexander Enterprise not to exceed $17,500; less (ii) the
amount of any Net Cash Proceeds paid by the Obligors to the Investor pursuant to
and in accordance with the terms of the Subordination Agreement.
"Qualified Sale" means a sale or other disposition of the
Collateral pursuant to (i) a purchase and sale agreement in form and substance
satisfactory to the Agent and the Lenders or (ii) the sale or liquidation of the
Collateral pursuant to an exercise of remedies by the Agent or pursuant to any
insolvency, bankruptcy,
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receivership, reorganization, assignment for the benefit of creditors or other
similar proceeding (whether or not pursuant to bankruptcy laws).
"Second Amendment" means this Second Amendment to the Loan
Agreement dated as of October 5, 2000.
"Subordination Agreement" means that certain Intercreditor,
Subordination and Partial Sales Proceeds Allocation Agreement between Alexander
Enterprise, the Agent and the Lenders, with the consent of the Obligors,
substantially in the form annexed hereto as Exhibit "A."
"Subordinated Note" shall have the meaning given to such term
in the recitals to this Second Amendment, which shall be in form and substance
satisfactory to the Agent.
(b) Section 2.13(b) of the Loan Agreement is amended by
deleting in its entirety all of Section 2.13(b) of the Loan Agreement and
substituting in its place and stead the following new Section 2.13(b):
Section 2.13(b) Obligators shall make a mandatory prepayment
of the Loans owing by them immediately following the sale,
transfer or other disposition of any assets by the Obligors or
any of their respective Subsidiaries (other than the sale of
inventory in the normal course of such Person's business) of
all of the Net Cash Proceeds of such sale, transfer or other
disposition of assets. Any mandatory prepayment made under
this Section 2.13(b) may be applied by the Agent and the
Lenders in such manner and to such amount of the Obligations
as the Agent and the Lenders shall deem appropriate in their
sole and absolute discretion; provided further that (i) the
first $5,000,000 of the Net Cash Proceeds received by the
Obligors will be remitted by the Obligors to the Agent for
application toward the Obligations; (ii) an amount equal to
$2,250,000 in principal obligations outstanding and all owed
and unpaid interest due under the Subordinated Note, together
with up to $17,500.00 in reasonable fees and expenses, if any
incurred, in connection with the exercise of Alexander
Enterprise's rights under the Subordinated Note of any
remaining Net Cash Proceeds shall be paid by the Obligors to
the Investor, in satisfaction of the Maximum Junior Debt Lien;
and (iii) any further Net Cash Proceeds thereafter received by
the Obligors shall be remitted to the Agent to be applied
against the Obligations. Any mandatory prepayments of
Revolving Loans under this Section 2.13(b) will also result in
a reduction of the Aggregate Commitments in an amount equal to
such mandatory prepayment. Each mandatory prepayment shall be
accompanied by any amount required to be prepaid pursuant to
Section 4.9 hereof.
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(c) Section 4.1 of the Loan Agreement is amended to add the
following new subsection (c) at the end thereof:
(c) The Lenders agree to defer the interest payments
due November 3, 2000 and the interest payment due November 10,
2000 to December 1, 2000, at which time such interest payments
shall be immediately due and payable in full.
(d) Section 6.22 of the Loan Agreement is amended to add the
following sentence at the end thereof:
Schedule 6.22 shall incorporate by reference the Subordinated
Note and the Alexander Enterprise Security Agreement, as the
same are modified by the Subordination Agreement.
(e) Section 6.23 of the Loan Agreement is amended to add the
following sentence to the end thereof:
Schedule 6.23 shall incorporate by reference the Maximum
Junior Debt Lien granted in favor of Alexander Enterprise
pursuant to the Subordinated Note and the Alexander Enterprise
Security Agreement, as the same are modified by the
Subordination Agreement.
(f) Section 8.1 of the Loan Agreement is amended to add the
following sentence to the end thereof:
The Obligors shall be permitted to grant the Maximum Junior
Debt Lien in favor of Alexander Enterprise pursuant to the
Subordinated Note and the Alexander Enterprise Security
Agreement, as the same are modified by the Subordination
Agreement.
(g) Section 8.2 of the Loan Agreement is amended to add the
following provision:
and (g) $2,250,000 of junior and subordinated
indebtedness incurred from Alexander Enterprise pursuant to
terms of the Subordinated Note and the Subordination
Agreement.
(h) Section 8.3 of the Loan Agreement is amended to add the
following provision:
and (c) the sale of the Collateral pursuant to a
Qualified Sales, the Net Cash Proceeds of which are paid to
the Lenders and Alexander Enterprise, as the case may be, as
provided in Section 2.13(b) (but in all events subject to the
terms of the Subordination Agreement).
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(i) Section 8.7 of the Loan Agreement is amended to add the
following provision:
and (d) the issuance of the Alexander Enterprise Warrants to
Alexander Enterprise for the purchase of 2.25 million shares
of Alexander Enterprise Common Stock at an exercise price of
$1.00 per share with a term of 5 years.
(j) Schedule 6.27 to the Loan Agreement is hereby amended to
include the Alexander Enterprise Warrants.
SECTION 2. Waiver of Certain Events of Default. Upon the occurrence of the
Effective Date (i) the Agent and the Lenders shall permanently waive the
Interest Defaults; and (ii) the Agent and the Lenders agree not to assert as an
Event of Default the provisions of Sections 2.13(c) and 2.13(d) of the Loan
Agreement as it relates solely to the allocation of Net Cash Proceeds to the
extent the same is allocated as expressly contemplated by the Subordinated Note,
this Second Amendment and the Subordination Agreement.
SECTION 3. Representations and Warranties. Each Obligor hereby represents and
warrants (which representations and warranties shall survive the execution and
delivery hereof) to the Lenders and the Agent that all of such Obligor's
representations and warranties contained in the Loan Agreement and the other
Loan Documents are true and correct in all material respects on and as of the
date hereof as fully as though such representations and warranties had been made
on the date hereof and with specific reference to this Second Amendment and any
and all documents executed in connection herewith. To induce the Lenders and the
Agent to enter into this Second Amendment, each Obligor hereby represents and
warrants that, on and as of the date of this Second Amendment and after giving
effect to the waivers contained herein, no Event of Default, nor any event or
condition which, with notice, lapse of time or both, would constitute an Event
of Default has occurred and is continuing under the Loan Agreement, except with
respect to the Interest Default. As further inducement of the Lenders and the
Agent to enter into this Second Amendment the Obligors represent and warrant to
the Agent and the Lenders as follows:
(a) It has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Second Amendment and the
transactions contemplated hereby and has taken or caused to be taken all
necessary corporate action to authorize the execution, delivery and performance
of this Second Amendment and the transactions contemplated hereby;
(b) No consent of any person (including, without limitation,
shareholders or creditors of the Obligors), and no action of, or filing with any
governmental or public body or authority is required to authorize, or is
otherwise required in connection with the execution, delivery and performance of
this Second Amendment
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and the other instruments and documents contemplated hereby which has not been
obtained;
(c) This Second Amendment and the other instruments and
documents contemplated hereby have been duly executed and delivered by a duly
authorized officer on behalf of such party, and constitutes a legal, valid and
binding obligation of such party enforceable against such party in accordance
with its terms, subject to bankruptcy, reorganization, insolvency, moratorium
and other similar laws affecting the enforcement of creditors' rights generally
and the exercise of judicial discretion in accordance with general principles of
equity; and
(d) The execution, delivery and performance of this Second
Amendment and the other instruments and documents contemplated hereby will not
violate any law, statute or regulation, or any order or decree of any court or
governmental instrumentality, or conflict with, or result in the breach of, or
constitute a default under any contractual obligation of such party.
SECTION 4. Expenses. The Obligors, jointly and severally, agree to pay,
immediately upon demand by the Lenders and the Agent, all attorneys' fees, and
other out-of-pocket charges and expenses incurred by the Lenders and the Agent
in connection with the negotiation, preparation, execution, and delivery of this
Second Amendment and other instrument, document, agreement or amendment executed
in connection with this Second Amendment
SECTION 5. Defaults Hereunder. The breach of any representation, warranty or
covenant contained herein or in any document executed in connection herewith, or
failure to observe or comply with any term or agreement contained herein or in
any document executed in conjunction herewith, shall constitute an Event of
Default under the Loan Documents and the Lenders and the Agent shall be entitled
to exercise all rights and remedies they may have under the Loan Agreement, any
of the other Loan Documents, and applicable law.
SECTION 6. Conditions to Effectiveness.
(a) This Second Amendment shall become effective on the date
(the "Effective Date") upon which the following conditions have been satisfied
in full or waived by the Agent in writing:
(i) The Agent shall have received in form and substance
satisfactory to the Agent and its counsel, counterparts of this Second Amendment
executed by each of the Obligors and the Required Lenders and such other
approvals or documents as the Agent may reasonably request;
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(ii) All representations and warranties contained in this
Second Amendment or otherwise made in writing to the Agent in connection
herewith shall be true and correct in all material respects;
(iii) No Default or Event of Default shall have occurred and
be continuing under the Loan Agreement (other than those Default(s) or Event(s)
of Default to be cured and satisfied after giving effect to this Second
Amendment);
(iv) The Agent shall have received payment in full of all
reasonable costs and expenses owing to the Agent and the Lenders in accordance
with Section 4 hereof, including, without limitation, the reasonable fees and
expenses of counsel to the Agent and counsel to the individual Lenders; and
(v) The Agent and Lenders shall have received the following
documents, each duly executed and delivered to the Lenders and the Agent, and
each to be satisfactory in form and substance to the Agent and its counsel:
(1) a certificate of the Secretary of each
Obligor certifying (a) that attached thereto is a
true and complete copy of the Articles or Certificate
of Incorporation of such Obligor as in effect in the
date of such certification, or that such Certificate
of Incorporation has not been amended, restated,
supplemented or otherwise modified since August 13,
1999; (b) that attached thereto is a true and
complete copy of the bylaws of such Obligor, as in
effect on the date of such certification, or that the
bylaws in effect on such date of certification have
not been amended, restated, supplemented or otherwise
modified since August 13, 1999; (c) that attached
thereto is a true and complete copy of resolutions
adopted by the Board of Directors of such Obligor,
authorizing the execution, delivery, and performance
of this Second Amendment and/or other instruments,
documents or agreements delivered pursuant hereto;
and (d) as to the incumbency and genuineness of the
signatures of the officers of each Obligor executing
this Second Amendment or any of the other
instruments, documents, or agreements executed
pursuant hereto;
(2) Certificates as to No Default and
Related Matters from the Obligors, executed by an
officer of each of the Obligors;
(3) An opinion of counsel to the Obligors as
to the enforceability of this Second Amendment and
the Subordination Agreement and as to such other
matters as the Agent may require;
(4) such acknowledgements, reaffirmations
and consents as the Agent may require in respect of
any guarantors of
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the Secured Obligations or any obligations under the
Subordinated Note; and
(5) such other documents as the Agent or the
Lenders may reasonably request.
(vi) The terms and conditions of the Subordinated Note shall
be satisfactory to the Agent, and Alexander Enterprise and the Lenders shall
have fully executed and delivered the Subordination Agreement, which shall be in
terms satisfactory to the Agent and which shall be substantially in the form of
Exhibit "A" hereto.
(vii) Receipt by the Agent of all past due interest which gave
rise to the Interest Defaults.
(viii) The Agent shall have received a payment of $1,200,000
from the Borrower which shall be applied as follows: (a) $350,000 shall be
applied to past due interest; (b) $375,000 shall be applied as payment in
reduction of the principal amount of the Obligations due on October 1, 2000; and
(c) $475,000 shall be applied as a prepayment of interest due in the order of
maturity. Such payments shall not constitute Net Cash Proceeds.
(b) Once all the conditions precedent set forth above have
been fulfilled, this Second Amendment will be deemed effective as of the date of
such fulfillment.
SECTION 7. Agreement Regarding Qualified Sale and Engagement of Consultant.
(a) The Obligors hereby agree that they shall: be in contract
to conduct a Qualified Sale(s) (i) by January 1, 2001; (ii) with the closing to
take place no later then February 15, 2001; (iii) the aggregate Net Cash
Proceeds of which Qualified Sale or Sales shall not be less than $10,000,000;
and (iv) which Qualified Sale or Sales shall be consummated (including the
payment of all applicable Net Cash Proceeds) by February 15, 2001; and
(b) The Obligors confirm and agree that the Obligors are
obligated to reimburse the Agent for its reasonable costs and expenses as
provided in Section 14.5 of the Loan Agreement, and that the reimbursement of
the Agent for expenses incurred through the retention of a financial advisor is
an expense properly included within the terms of Section 14.5 of the Loan
Agreement. The Agent has advised the Obligors that it is the Agent's present
intention to cause the Agent's financial advisor to review the Obligors' books
and records for approximately 2-3 days beginning the week of October 9, 2000 at
a cost of $2,500 per day. The Obligors hereby acknowledge their obligation to
pay such expenses within five (5) days of being invoiced by the financial
advisor.
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SECTION 8. Ratification; Waiver of Defenses.
(a) The Loan Agreement and the Loan Documents remain in full
force and effect and are hereby ratified and affirmed. Each Obligor hereby (i)
confirms and agrees that such Obligor is truly and justly indebted to the Agent
and the Lenders in the aggregate amount of the Obligations without defense,
counterclaim or offset of any kind whatsoever; and (ii) reaffirms and admits the
validity and enforceability of the Loan Agreement and the Loan Documents and the
Liens in the Collateral which were granted pursuant to the Loan Documents and
otherwise.
(b) This Second Amendment shall be limited precisely as
written and shall not be deemed (i) to be a consent granted pursuant to, or a
waiver or modification of, any other term or condition of the Loan Agreement or
any of the instruments or agreements referred to therein or a waiver of any
Default or Event of Default under the Loan Agreement, whether or not known to
the Agent or the Lenders or (ii) to prejudice any other right or rights which
the Agent or the Lenders may now have or have in the future under or in
connection with the Loan Agreement or any of the instruments or agreements
referred to therein.
(c) Other than expressly provided for in this Second
Amendment, nothing contained in this Second Amendment shall constitute a
modification or waiver of any term or provision of the Loan Agreement.
SECTION 9. References. All references to the Loan Agreement in the Loan
Agreement or any other Loan Document and the other documents and instruments
delivered pursuant to or in connection therewith shall mean such Loan Agreement
as modified hereby and as each may in the future be amended, restated,
supplemented or modified from time to time. This Second Amendment shall
constitute a Loan Document.
SECTION 10. Counterparts. This Second Amendment may be executed by the parties
hereto individually or in combination, in one or more counterparts, each of
which shall be an original and all of which, taken together, shall constitute
one and the same agreement. Delivery of an executed counterpart of a signature
page by telecopier shall be effective as delivery of a manually executed
counterpart.
SECTION 11. Governing Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW
PRINCIPLES.
SECTION 12. Miscellaneous. The parties hereto shall, at any time and from time
to time following the execution of this Second Amendment, execute and deliver
all such further instruments and take all such further action as may be
reasonably necessary or appropriate in order to carry out the provisions of this
Second Amendment.
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SECTION 13. Headings. Section headings in this Second Amendment are included
herein for convenience of reference only and are not to affect the construction
of, or to be taken into consideration in interpreting, this Second Amendment.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Obligors, the Lenders and the Agent
have caused this Amendment to be duly executed by their respective officers of
the day and year first above written.
OPTICARE HEALTH SYSTEMS, INC.
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Executive Vice President and CFO
OPTICARE EYE HEALTH CENTERS, INC.
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
PRIMEVISION HEALTH, INC.
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
OPTICARE EYE HEALTH NETWORK, INC.
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
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BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC., AS AGENT
By: /s/ X.X. Xxxxxx
----------------------------------------
Name: X.X. Xxxxxx
Title: Senior Vice President
By: /s/ Xxxxx Xxxxxx
----------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC., AS LENDER
By: /s/ X.X. Xxxxxx
----------------------------------------
Name: X.X. Xxxxxx
Title: Senior Vice President
By: /s/ Xxxxx Xxxxxx
----------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
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