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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 13, 1999
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OptiCare Health Systems, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-15223 76-0453392
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
87 Grandview Avenue, Waterbury, Connecticut 06708
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 203-596-2236
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Saratoga Resources, Inc., 301 Congress Avenue - Suite 1550, Austin, Texas 78701
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(Former name or former address, if changed since last report)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
As a result of the mergers described in Item 2 below, OptiCare Health
Systems, Inc. (formerly known as Saratoga Resources, Inc.) (the "Company" or the
"Registrant") is no longer controlled by Mr. Thomas F. Cooke. The Board of
Directors of the Registrant now consists of the following persons:
Ian G.H. Ashken Steven L. Ditman
Allan L.M. Barker David A. Durfee
John F. Croweak Martin E. Franklin
Dean J. Yimoyines
The holders of more than 5% of the Registrant's common stock, $0.001 par
value (the "Common Stock"), and the executive officers and directors of the
Registrant, are identified in the section headed "Management of the Combined
Company Following Closing of the Mergers," at pages 95 through 97 of the
registration statement on Form S-4, as amended, registration no. 333- 78501,
which was declared effective on July 30, 1999 (the "Registration Statement").
Persons who were holders of the Registrant's Common Stock immediately prior to
the effective time of the Mergers (as defined below), held approximately 2.5% of
the outstanding Common Stock immediately after the Mergers. Former holders of
common stock of PrimeVision Health, Inc., a Delaware corporation ("Prime")
immediately after the Mergers held, on a primary basis, approximately 48.755% of
the outstanding Common Stock of the Registrant (excluding the voting rights
relating to the "Cooke Shares" as more fully described in the following
paragraph hereof), and former holders of securities of OptiCare Eye Health
Centers, Inc., a Connecticut corporation ("OptiCare") immediately after the
Mergers held approximately 48.745% of the outstanding Common Stock of the
Registrant.
Mr. Cooke and Prime entered into a voting agreement effective as of
July 14, 1999 (the "Voting Agreement"), pursuant to which Mr. Cooke has granted
an irrevocable proxy over all his 137,085 shares (the "Cooke Shares," which
amount gives effect to the Reverse Split described in Item 2 below) of Common
Stock to Messrs. Ian G.H. Ashken and Martin E. Franklin. The Voting Agreement
does not restrict Mr. Cooke's authority to sell or otherwise dispose of the
Cooke Shares, and the irrevocable proxy expires if and when Mr. Cooke sells or
otherwise terminates his beneficial ownership of the Cooke Shares. The Voting
Agreement expires on July 14, 2000. Except for (i) the Voting Agreement, and
(ii) the election of the current board of directors prior to the effective time
of the Mergers as more fully described in Item 2, there are no arrangements or
understandings with respect to the election of directors or other matters.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(A) ACQUISITION OF PRIMEVISION HEALTH, INC., AND OPTICARE EYE HEALTH
CENTERS, INC.
As previously reported, on April 12, 1999, the Registrant and two of its
wholly owned subsidiaries, PrimeVision Shellco Merger Corporation ("PrimeVision
Shellco") and OptiCare Shellco Merger Corporation ("OptiCare Shellco"), each a
Delaware corporation, entered into an agreement and plan of Merger (the "Merger
Agreement") with PrimeVision Health, Inc., a Delaware corporation ("Prime"), and
OptiCare Eye Health Centers, Inc., a Connecticut corporation ("OptiCare").
The transactions contemplated by the Merger Agreement were closed on
August 13, 1999. Pursuant to the terms of the Merger Agreement, Prime Shellco
was merged with and into Prime (the "Prime Merger"), and Prime is the surviving
corporation, and shortly thereafter, OptiCare Shellco was merged with and into
OptiCare (the "OptiCare Merger"), and OptiCare is the surviving corporation.
(The Prime Merger and the OptiCare Merger are hereinafter referred to,
collectively, as the "Mergers"). As a result of the Mergers, Prime and OptiCare
are now wholly owned subsidiaries of the Registrant.
Upon consummation of the Prime Merger, each share of common stock, par value
$.01 per share, of Prime, outstanding immediately prior to the opening of
business on August 16, 1999, was converted into the right to receive 0.3138
shares of Common Stock of the Registrant. In lieu of fractional shares, each
holder of shares of common stock of Prime who would otherwise be entitled to a
fraction of a share of Common Stock will be paid cash (without interest) in an
amount equal to the fraction of a share amount multiplied by $23.10.
Upon consummation of the OptiCare Merger, each share of capital stock of
OptiCare, outstanding immediately prior to the opening of business on
August 16, 1999, was converted into the right to receive 11.7364 shares of
Common Stock of the Registrant. In lieu of fractional shares, each holder of
shares of common stock of OptiCare who would otherwise be entitled to a fraction
of a share of Common Stock will be paid cash (without interest) in an amount
equal to the fraction of a share amount multiplied by $23.10.
The amount of merger consideration paid by the Company to each of the
shareholders of Prime and OptiCare was determined through negotiation of the
parties to the Merger Agreement. The assets of OptiCare and Prime consist
primarily of cash, accounts receivable, inventory and property, equipment,
intangibles and intellectual property. The Company intends to use OptiCare's
assets in substantially the same manner as previously used, except that the
ophthalmology segment of Prime has been disposed of as a condition of the
Mergers.
The Company will have its headquarters in Waterbury, Connecticut, and will
offer a broad range of services to eye care professionals, health plans and
consumers. The services include managed care services for health plans, an eye
care products Buying Group and an integrated eye
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care services unit for consumers, including ambulatory and laser surgery
services as well as optometry and retail optical services.
The Merger Agreement required the Registrant to file the Registration
Statement. The Registration Statement contains a more complete description of
the Merger Agreement, the terms of the Mergers, and financial statements and pro
forma financial information about the Registrant, Prime and OptiCare.
(B) SPINOFF OF OTHER SUBSIDIARIES OF THE REGISTRANT.
Effective immediately prior to the closing of the Mergers, the Registrant:
(i) distributed 3,465,292 shares of the outstanding common stock of
Saratoga Holdings 1, Inc., a Texas corporation ("SHI") to the
stockholders of the Registrant on a one-for-one basis, pursuant to
a registration statement on form SB-2, no. 333-68213 (the "SHI
Registration Statement"); and
(ii) (1) transferred to Saratoga Resources, Inc., a Texas corporation
("Saratoga-Texas"):
(A) all the outstanding capital stock of Lobo Energy, Inc.,
a Texas corporation,
(B) all the outstanding capital stock of Lobo Operating,
Inc., a Texas corporation, and
(C) the balance of the common stock of SHI not distributed
directly to the stockholders of the Registrant; and
(2) reclassified the common stock of Saratoga-Texas so that the
number of outstanding shares of Saratoga-Texas equalled the
number of shares of Common Stock of the Registrant then
outstanding, i.e., 3,465,292 shares; and
(3) distributed to the holders of the Registrant's Common Stock
all the outstanding capital stock of Saratoga-Texas.
Because the foregoing transactions were effected prior to the effective
time of the Mergers, the holders of the capital stock of Prime and OptiCare did
not receive any of the capital stock of SHI or Saratoga-Texas.
The foregoing information is a summary only and is qualified by
reference to the SHI Registration Statement.
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ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
(a) Previous independent accountants.
(i) On August 30, 1999, the Board of Directors of the Registrant determined
not to engage Ernst & Young LLP ("EY") to audit the Registrant's consolidated
financial statements as of and for the year ending December 31, 1999.
(ii) The reports of EY on the consolidated financial statements of the
Registrant as of and for the year ended December 31, 1998, contained no adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principle.
(iii) The management of the Registrant has requested that EY furnish it with
a letter addressed to the Securities and Exchange Commission stating whether or
not it agrees with the above statements. When received, such letter will be
filed by amendment to this Report as Exhibit 16.
(b) New independent accountants.
On August 30, 1999, the Board of Directors of the Registrant formally
approved the appointment of Deloitte & Touche LLP as its independent accountant
to audit the Registrant's consolidated financial statements as of and for the
year ending December 31, 1999. The decision to change independent accountants
was approved by the Board of Directors of the Registrant.
ITEM 5. OTHER EVENTS.
(A) NEW CREDIT FACILITY.
In connection with the closing of the transactions contemplated by the
Merger Agreement, on August 13, 1999, the Company, Prime, OptiCare and
Consolidated Eye Care, Inc., a wholly owned subsidiary of Prime, entered into an
Amended and Restated Loan and Security Agreement (the "Loan Agreement") and
certain other agreements relating to the Loan Agreement (collectively, the "New
Credit Facility") with the lenders named therein (the "Lenders"), Bank Austria,
AG, as the LC Issuer (the "LC Issuer"), and Bank Austria Creditanstalt Corporate
Finance, Inc., as the agent (the "Agent"). The New Credit Facility supersedes
the credit facility between Bank Austria and Prime that was originally made in
1996 (the "Old Facility"). The outstanding principal balance under the Old
Facility as of August 6, 1999, was approximately $37,955,300. The outstanding
balance under the New Credit Facility as of August 13, 1999, was approximately
$27,703,649.
Pursuant to the terms of the Loan Agreement, the Lenders made available to
the Company a credit facility in the maximum aggregate principal amount at
anytime outstanding of $34.2 million, which includes a term loan facility in the
aggregate principal amount of $21.5 million and a revolving credit facility in
the maximum aggregate principal amount at anytime outstanding of $12.7
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million, including, a letter of credit sub facility of up to $1.5 million. The
New Credit Facility has been and will be used by the Company (i) to provide
financing to facilitate the Mergers (ii) for general working capital needs of
the Company and its subsidiaries and (iii) to pay indebtedness of Prime's
subsidiaries to certain creditors and the indebtedness of OptiCare to Fleet
National Bank.
The New Credit Facility terminates and all amounts outstanding thereunder
are due and payable on June 1, 2004. Pursuant to the terms of the Loan
Agreement, the Company may borrow and repay under the revolving credit facility
until June 1, 2004, subject to the terms and conditions of the Loan Agreement.
The term loan facility is repayable in fifteen (15) quarterly principal
installments, with the first fourteen (14) installments repayable in accordance
with the amortization schedule set forth in the Loan Agreement, and the final
payment of all principal amounts outstanding, due and payable on June 1, 2004.
The Loan Agreement also requires the Company to make certain mandatory
prepayments and allows the Company the ability to make optional prepayments.
The interest rate applicable to the New Credit Facility will equal the base
rate or the eurodollar rate (each, as defined in the Loan Agreement), as the
Company may from time to time elect, in accordance with the provisions of the
Loan Agreement. The base rate will generally be the higher of (a) the prime rate
of Bank Austria for domestic commercial loans in effect on such applicable day
or (b) the federal funds rate in effect on such applicable day plus one-half of
one percent (1/2 of 1%). The eurodollar rate will generally equal the quotient
of the offered rate quoted by Bank Austria in the interbank eurodollar market
for U.S. dollar deposits of an aggregate amount comparable to the principal
amount of the eurodollar loan to which the quoted rate is to be applicable (as
more fully described in the Loan Agreement).
Each of OptiCare Health Systems, Inc., OptiCare Eye Health Centers, Inc.,
PrimeVision Health, Inc., Consolidated Eye Care, Inc., PrimeVision East, Inc.,
PrimeVision Central, Inc., PrimeVision West, Inc., Prime Vision of North
Carolina, Inc., Association of Eye Care Centers Total Vision Health Plan, Inc.,
Accountable Eye Care Associates, Inc., AECC Total Vision Health Plan of Texas,
Inc., and Optometric Eye Care Center, P.A. (collectively, the Guarantors") have
executed a Guaranty in favor of the Lenders, the LC Issuer, and the Agent for
the benefit of the Lenders and LC Issuer, guaranteeing the payment of the
obligations (the "Obligations") of the Company to the Lenders under the Loan
Agreement. Pursuant to the terms of the Security Agreement, dated as of
August 13, 1999, among the Guarantors and the Agent, for the benefit of the
Lenders and the LC Issuer, the Guarantors granted to the Agent, for the benefit
of the Lenders, a security interest in, among other things, their accounts,
chattel paper, contracts, equipment, general intangibles, inventory, investment
property and all products and proceeds therefrom, as security for the
Obligations. Pursuant to the terms of the Conditional Assignment and Trademark
Security Agreement, dated as of August 13, 1999, among other things, OptiCare
also granted to the Agent, for the benefit of the Lenders and the LC Issuer, a
security interest in certain trademarks of OptiCare. In addition, pursuant to
the terms of a Pledge and Security Agreement, dated as of August 13, 1999, among
the Guarantors and the Agent, for the benefit of the Lenders and the LC Issuer,
the Company pledged with the Agent, 100% of the capital stock of certain of
their subsidiaries.
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In connection with the Mergers, PrimeVision Health, Inc. ("PVH") agreed to
terminate certain administrative service agreements with physician practices and
in connection therewith, the applicable practice either entered into a
transition agreement and services agreement or agreed to repurchase its
receivables, inventory, equipment and other assets owned by PVH or its
subsidiaries. Further, in connection with such entry into a transition agreement
and services agreement, or such repurchase of assets, the applicable practice
executed and delivered to PVH a promissory note and a security agreement.
Pursuant to the terms of the Assignment of Notes and Security Agreement dated as
of August 13, 1999 between PVH and Bank Austria Creditanstalt Corporate Finance,
Inc., (i) PVH assigned to Bank Austria Creditanstalt Corporate Finance, Inc.,
without recourse or warranty, except as provided in said agreement, all of PVH's
right, title and interest in and to certain notes and security agreements (as
described above) and all of its rights and remedies thereunder, and (ii) a
portion of the indebtedness owing by PVH under the Old Facility was reduced by
approximately $3.9 million. In connection with the Assignment of Notes and
Security Agreement, Marlin Capital, L.P., an affiliate of the Company, has
guaranteed Bank Austria's receipt of approximately $1.3 million of payments due
under one of the notes assigned to Bank Austria Creditanstalt Corporate Finance,
Inc.
The Loan Agreement contains certain restrictions on the conduct of business
of the Company and its subsidiaries, including, but not limited to, restrictions
on (i) incurring debt, (ii) declaring or paying any cash dividends or making any
other payment or distribution on account of its capital stock, and (iii)
creating liens on the Company or its subsidiaries properties or assets. The
Company is required to maintain certain financial covenants, including, among
other things, a minimum fixed charge coverage ratio, a leverage ratio, a senior
leverage ratio and an interest coverage ratio in accordance with the provisions
of the Loan Agreement. The Company is also restricted from incurring capital
expenditures in excess of a certain specified amount and required to maintain
minimum cash flows pursuant to the terms of the Loan Agreement.
The occurrence of certain events or conditions described in the Loan
Agreement shall constitute an "event of default" under the Loan Agreement, which
include, among other things, a failure to make payment of principal or interest
under the Loan Agreement, a failure to observe or perform certain affirmative
covenants and other covenants contained in the Loan Agreement or other ancillary
agreements entered into in connection with the New Credit Facility, or a vacancy
occurring in the chief executive officer and chief financial officer positions
of the Company not being filled by persons reasonably acceptable to the Agent
and the Lenders.
In connection with the New Credit Facility, the Bank (i) purchased 500,000
shares of Prime common stock for an aggregate purchase price of $5,000, (ii)
converted $2,450,000 of debt to equity by the issuance of 418,803 shares of the
Company's newly authorized Series A Convertible Preferred Stock, and (iii)
received as a financing fee 100,000 warrants (the "Warrants") to purchase, at an
exercise price of $5.85 per Warrant, 100,000 shares of (A) Common Stock or (B)
Series A Convertible Preferred Stock, or (C) a combination of Common Stock and
Series A Convertible Preferred Stock aggregating 100,000 shares. The
Warrantholder is restricted in the amount of Common Stock it may acquire under
the Series A Convertible Preferred Stock and the Warrant if the holder is
subject to the Bank Holding Company Act of 1956. The Warrant expires on August
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12, 2009. The proceeds of the purchase of the Prime common stock and the Series
A Convertible Preferred Stock were applied to permanently reduce the outstanding
balance under the Old Facility.
(B) AUTHORIZATION OF SERIES A CONVERTIBLE PREFERRED STOCK.
As noted above, in connection with the Registrant's entering into the New
Credit Facility, effective August 13, 1999, the Registrant sold 418,803 shares
of the Series A Convertible Preferred Stock. The Registrant's certificate of
incorporation authorizes the Board of Directors to issue up to 5,000,000 shares
of preferred stock on such terms, in such number of series, and with such
relative rights and preferences as the Board of Directors determines from time
to time ("Blank Check Preferred Stock"). Prior to the issuance of the Series A
Convertible Preferred Stock, no Blank Check Preferred Stock was issued and
outstanding. The principal terms of the Series A Convertible Preferred Stock,
generally, are as follows:
Dividends: Dividends and other distributions, payable in cash or other
property, shall be paid on the Series A Preferred Stock
equally, ratably and on parity with dividends and other
distributions paid on the Common Stock
Liquidation: The Series A Preferred Stock shall be preferred upon
liquidation over the Common Stock
Conversion: Each share of Series A Preferred Stock is convertible at any
time at the option of the holder thereof into one fully paid
non-assessable share of Common Stock of the Issuer with
certain limitations. In addition, the Issuer may cause the
conversion of all, but not less than all, the outstanding
shares of Series A Preferred Stock into shares of Common
Stock provided that the Common Stock to be received upon such
conversion when aggregated with all other shares of Common
Stock currently or previously held by or currently issuable
without restrictions to each holder, would be equal to or
less than 3% of the then outstanding Common Stock of the
Issuer.
The foregoing is a summary only and is qualified by reference to the
Certificate of Designation setting forth all the terms and conditions of the
Series A Convertible Preferred Stock, a copy of which is filed an Exhibit to
this Current Report.
(C) CHANGE OF NAME, REVERSE STOCK SPLIT, INDEMNIFICATION, ETC.
At a special meeting of stockholders held on August 10, 1999, the
stockholders of the Registrant approved of the following matters:
(i) the election of each of Ian G.H. Ashken, Allan L.M. Barker, John F.
Croweak, Steven L. Ditman, David A. Durfee, Martin E. Franklin and
Dean J. Yimoyines as members of the Board of Directors of the
Registrant;
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(ii) a reverse split in which each share of common stock has been converted
into 0.06493 shares of Common stock;
(iii) the change of the name of the Registrant to "OptiCare Health Systems,
Inc.";
(iv) the amendment of the certificate of incorporation with respect to
indemnification of officers and directors of the Registrant;
(v) the adoption of a performance stock program; and
(vi) the adoption of an employee stock purchase program.
The certificate of amendment of the certificate of incorporation effecting
the reverse split, change of name and amendment of the certificate of
incorporation with respect to the indemnification of directors and officers was
filed with the Delaware Secretary of State on August 13, 1999.
A true copy of the Certificate of Amendment of the Certificate of
Incorporation as filed in the Delaware Department of State is included as an
Exhibit to this Current Report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired:
All the following financial statements are incorporated herein by reference
to the financial statements included in the Registration Statement,
beginning at page F-1 thereof.
PRIMEVISION HEALTH, INC.
Interim Financial Statements (unaudited)
Consolidated Balance Sheets as of March 31, 1999 and
December 31, 1998
Consolidated Statements of Operations for the quarters ended
March 31, 1999 and 1998
Consolidated Statements of Cash Flows for the quarters ended
March 31, 1999 and 1998
Notes to Consolidated Financial Statements
Annual Financial Statements
Report of Independent Auditors
Consolidated Balance Sheets as of December 31, 1998 and 1997
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Consolidated Statements of Operations for the years ended
December 31, 1998, 1997 and 1996
Consolidated Statements of Shareholders' (Deficit) Equity for
the years ended December 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996
Notes to Consolidated Financial Statements
OPTICARE EYE HEALTH CENTERS, INC., AND AFFILIATE
Interim Financial Statements (unaudited)
Combined Balance Sheets as of March 31, 1999 and
December 31, 1998
Combined Statements of Operations for the quarters ended
March 31, 1999 and 1998
Combined Statements of Cash Flows for the quarters ended
March 31, 1999 and 1998
Notes to Combined Financial Statements
Annual Financial Statements
Report of Independent Auditors
Combined Balance Sheets as of December 31, 1998 and 1997
Combined Statements of Operations for the years ended
December 31, 1998, 1997 and 1996
Combined Statements of Shareholders' Equity for the years ended
December 31, 1998, 1997 and 1996
Combined Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996
Notes to Combined Financial Statements
(b) Pro forma financial information:
All the following pro forma combined financial statements of the Registrant,
Prime and OptiCare are incorporated herein by reference to the financial
statements included in the Registration Statement, beginning at page F-1
thereof.
Introduction
Pro Forma Combined Balance Sheet as of March 31, 1999
Pro Forma Combined Statement of Operations for the quarter ended
March 31, 1999
Pro Forma Combined Statement of Operations for the year ended
December 31, 1998
Notes to Pro Forma Combined Financial Statements
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It is impracticable at this time for the Registrant to provide all of the
financial statements that may be required to be included herein. The Registrant
hereby undertakes to file such required financial statements and information as
soon as practicable, but in no event later than sixty (60) days following the
date on which this report on Form 8-K is required to be filed.
(c) Exhibits:
2. Agreement and Plan of Merger, dated as of April 12, 1999, among the
Registrant, OptiCare Shellco Merger Corporation, Prime Shellco Merger
Corporation, OptiCare Eye Health Centers, Inc., and PrimeVision Health,
Inc., incorporated herein by reference to the Registrant's Registration
Statement on Form S-4, Registration No. 333-78501, as amended (the
"Registration Statement"), first filed on May 14, 1999, Exhibit 2 and
Annex A to the Proxy Statement/Prospectus included in Part I of the
Registration Statement.
3.1 Certificate of Amendment of the Certificate of Incorporation, dated as
of August 13, 1999, as filed on that day with the Delaware Department
of State.
3.2 Certificate of Designation with respect to the Registrant's Series A
Convertible Preferred Stock, as filed with the Delaware Department of
State on August 13, 1999.
3.3 Warrant dated as of August 13, 1999 between the Company and Bank
Austria Creditanstalt Corporate Finance, Inc.
4.1 Form of Performance Stock Program, incorporated by reference to Exhibit
4.1 of the Registration Statement, and Annex C thereof.
4.2 Form of Employee Stock Purchase Plan, incorporated by reference to
Exhibit 4.2 of the Registration Statement, and Annex D thereof.
10.1 Amended and Restated Loan and Security Agreement, dated as of August
13, 1999, among Consolidated Eye Care, Inc., OptiCare Eye Health
Centers, Inc., and PrimeVision Health, Inc., as Borrowers, OptiCare
Health Systems, Inc., as the Parent, the lenders named therein (the
"Lenders"), Bank Austria, AG, as the LC Issuer (the "LC Issuer"), and
Bank Austria Creditanstalt Corporate Finance, Inc., as the agent (the
"Agent") (excluding schedules and other attachments thereto).
10.2 Guaranty, dated as of August 13, 1999, among OptiCare Health Systems,
Inc., OptiCare Eye Health Centers, Inc., PrimeVision Health, Inc.,
Consolidated Eye Care, Inc. and each of the other subsidiaries and
affiliates of the Company parties listed on the signature pages
thereto, in favor of the Lenders, the LC Issuer and the Agent for the
Lenders and the LC Issuer.
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10.3 Security Agreement, dated as of August 13, 1999, among the Company and
the other parties listed on the signature page thereto in favor of the
Agent for the benefit of the Lenders and the LC Issuer.
10.4 Conditional Assignment and Trademark Security Agreement dated as of
August 13,1999, between OptiCare Eye Health Centers, Inc. and the Agent
for the benefit of the Lenders and the LC Issuer.
10.5 Pledge and Security Agreement, dated as of August 13, 1999, among each
of OptiCare Health Systems, Inc., OptiCare Eye Health Centers, Inc.,
PrimeVision Health, Inc., Consolidated Eye Care, Inc. and each of the
other subsidiaries and affiliates of the Company listed on the
signature pages thereto, in favor of the Agent for the benefit of the
Lenders and the LC Issuer.
10.6 Assignment of Notes and Security Agreement, dated as of August 13,
1999, between PrimeVision Health, Inc. and Bank Austria Creditanstalt
Corporate Finance, Inc.
16 Letter regarding change of certifying accountants -- [to be filed by
amendment.]
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 30, 1999 OPTICARE HEALTH SYSTEMS, INC.
By: /s/ Steven L. Ditman
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Name: Steven L. Ditman
Title: Executive Vice President
and Chief Financial Officer
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CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
SARATOGA RESOURCES, INC.
(Under Section 242 of the Delaware General Corporation Law)
SARATOGA RESOURCES, INC., a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is SARATOGA RESOURCES, INC. (the
"Corporation").
2. The certificate of incorporation is hereby amended by striking out
Article FIRST thereof and substituting in lieu thereof the following new Article
FIRST:
"FIRST: The name of the corporation is "OPTICARE HEALTH SYSTEMS,
INC." (the "Corporation")."
3. The certificate of incorporation is hereby amended by striking out
Article FOURTH thereof and substituting in lieu thereof the following new
Article FOURTH:
"FOURTH: (i) The total number of shares of stock which the
Corporation shall have authority to issue is fifty-five million
(55,000,000), of which stock five million (5,000,000) shares of the par
value of $0.001 each, amounting in the aggregate to $5,000, shall be
designated Preferred Stock (hereinafter referred to as "Preferred
Stock"), and of which stock fifty million (50,000,000) shares of the par
value of $0.001 each, amounting in the aggregate to $50,000, shall be
designated Common Stock (hereinafter referred to as "Common Stock").
(ii) The Preferred Stock may be issued from time to time in one or
more series, each such series to have distinctive serial designations.
The Board of Directors is hereby authorized to issue the shares of
Preferred Stock in such series and to fix from time to time before
issuance the number of shares to be included in any series and the
designation, relative powers, preferences and rights and qualifications,
limitations or restrictions of all shares of such series. The authority
of the Board of Directors with respect to each series shall include,
without limiting the generality of the foregoing, the determination of
any or all of the following:
(1) The number of shares of any series and the designation to
distinguish the shares of such series from the shares of all
other series;
(2) The voting powers, if any, and whether such voting powers
are full or limited in such series;
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(3) The redemption provisions, if any, applicable to such
series, including the redemption price or prices to be paid;
(4) Whether dividends, if any, shall be cumulative or
noncumulative, the dividend rate of such series, and the
dates and preferences of dividends on such series;
(5) The rights of such series upon the voluntary or involuntary
dissolution of, or upon any distribution of the assets of,
the Corporation;
(6) The provisions, if any, pursuant to which the shares of such
series are convertible into, or exchangeable for, shares of
any other class or classes of any other series of the same
or any other class or classes of stock, or any other
security, of the Corporation or any other corporation, and
price or prices or the rates of exchange applicable thereto;
(7) The right, if any, to subscribe for or to purchase any
securities of the Corporation or any other corporation;
(8) The provisions, if any, of a sinking fund applicable to
such series; and
(9) Any other relative, participating, optional or other special
powers, preferences, rights, qualifications, limitations or
restrictions thereof;
all as shall be stated in such resolution or resolutions of the Board of
Directors of the Corporation providing for the issue of such Preferred
Stock (a "Preferred Stock Designation").
(iii) Except where otherwise set forth in the resolution or
resolutions adopted by the Board of Directors of the Corporation
providing for the issue of any series of Preferred Stock created thereby,
the number of shares comprising such series may be increased or decreased
(but not below the number of shares then outstanding) from time to time
by like action of the Board of Directors of the Corporation.
(iv) Shares of any series of Preferred Stock which have been
redeemed (whether through the operation of a sinking fund or otherwise),
purchased or otherwise acquired by the Corporation, or which, if
convertible or exchangeable, have been converted into or exchanged for
shares of stock of any other class or classes, shall have the status of
authorized and unissued shares of Preferred Stock and may be reissued as
a part of the series of which they were originally a part or may be
reclassified or reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors or as part
of any other series of Preferred Stock, all subject to the conditions or
restrictions adopted by the Board of Directors of the Corporation
providing for the issue of any series of Preferred Stock and to any
filing required by law.
(v) Each share of Common Stock shall entitle the holder thereof to
one vote, in person or by proxy, at any and all meetings of the
stockholders of the Corporation on all propositions before such meetings.
No holder of Common Stock shall have the right to cumulate such
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<PAGE>
holder's votes for the election of directors, but each holder of Common
Stock shall be entitled to one vote for each share held thereof in the
election of each director of the Corporation.
(vi) Except as may be provided in this Certificate of
Incorporation or by the Board of Directors in a Preferred Stock
Designation, the Common Stock shall have the exclusive right to vote for
the election of directors of the Corporation and for all other purposes,
and holders of Preferred Stock shall not be entitled to receive notice of
any meeting of stockholders at which they are not entitled to vote or
consent.
(vii) Subject to all of the rights of the Preferred Stock or any
series thereof, the holders of the Common Stock shall be entitled to
receive, when, as and if declared by the Board of Directors of the
Corporation, out of funds legally available therefor, dividends payable
in cash, stock or otherwise.
(viii)Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, and after the holders of
the Preferred Stock of each series shall have been paid in full the
amounts to which they respectively shall be entitled, or a sum sufficient
for such payments in full shall have been set aside, the remaining net
assets of the Corporation shall be distributed pro rata to the holders of
the Common Stock in accordance with their respective rights and
interests, to the exclusion of the holders of the Preferred Stock
provided, however, a Preferred Stock Designation may provide that a
series of preferred Stock shall be entitled to share in the residual
value of the Corporation, in addition to any preferences it shall be
entitled to upon any liquidation, dissolution or winding up of the
Corporation.
(ix) At the Effective Time (as hereinafter defined) of this
Certificate of Amendment, each share of common stock, par value $0.001
per share issued and outstanding immediately prior to the Effective Time
("Old Common Stock"), shall automatically be reclassified and continued
(the "Reverse Split"), without any action on the part of the holder
thereof, as 0.06493 of one share of common stock, par value $0.001 per
share of the Corporation. The Corporation shall not issue fractional
shares on account of this Reverse Split. Holders of common stock who
would otherwise be entitled to a fraction of a share on account of the
Reverse Split shall receive, upon surrender of the stock certificates
formerly representing shares of the Old Common Stock in lieu of such
fractional share, an amount in cash (the "Cash-in-Lieu Amount") equal to
the product of (i) the fractional share which a holder would otherwise be
entitled to, multiplied by (ii) $1.50 divided by (iii) 0.06493. No
interest shall be payable on the Cash-in-Lieu Amount.
4. The certificate of incorporation is hereby amended by adding after
Article ELEVENTH thereof a new Article TWELFTH, which reads in its entirety as
follows:
"TWELFTH: (i) The Corporation shall indemnify any person who was
or is a party or witness, or is threatened to be made a party or witness,
to any threatened, pending or completed action, suit or proceeding by or
in the right of the Corporation, whether civil, criminal, administrative
or investigative (including a grand jury proceeding) by reason of the
fact that he or she is or was a director or officer of the Corporation,
is or was serving at the request of the Corporation as a director,
officer, employee, agent, partner or trustee (or in any
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<PAGE>
similar position) of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, to the fullest extent
authorized or permitted by the General Corporation Law of the State of
Delaware and any other applicable law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide
prior to such amendment), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or
proceeding, or in connection with any appeal thereof. Such right to
indemnification shall include the right to payment by the Corporation of
expenses incurred in connection with any such action, suit or proceeding
in advance of its final disposition; provided, however, that the payment
of such expenses incurred by a director or officer in advance of the
final disposition of such action, suit or proceeding shall be made only
upon delivery to the Corporation of an undertaking, by or on behalf of
such director or officer, to repay all amounts so advanced if it should
be determined ultimately that such director or officer is not entitled to
be indemnified under this Article or otherwise.
(ii) Any indemnification or advancement of expenses required under
this Article shall be made promptly, and in any event within sixty (60)
days, upon the written request of the person entitled thereto. If the
Corporation determines that the person is entitled to indemnification
pursuant to this Article, and the Corporation fails to respond within
sixty (60) days to a written request for indemnification or advancement
of expenses, in whole or in part, or if payment in full pursuant to such
request is not made within sixty (60) days, the rights to indemnification
and advancement of expenses shall be enforceable by such person in any
court of competent jurisdiction. Such person's costs and expenses
incurred in connection with successfully establishing his or her right to
indemnification, in whole or in part, in any such action or proceeding
shall also be indemnified by the Corporation. It shall be a defense to
any such action (other than an action brought to enforce a claim for
advancement of expenses pursuant to this Article where the required
undertaking has been received by the Corporation) that the claimant has
not met the standard of conduct set forth in the General Corporation Law
of the State of Delaware, but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including the
Board of Directors, independent legal counsel or the stockholders) to
have made a determination that the claim is proper in the circumstances
because the claimant has not met the applicable standard of conduct set
forth in the General Corporation Law of the State of Delaware, nor the
fact that there has been an actual determination by the Corporation
(including the Board of Directors, independent legal counsel or the
stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that
the claimant has not met the applicable standard of conduct. The
termination of any action, suit or pro ceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that the person
seeking indemnification did not act in good faith and in a manner which
he or she reasonably believed to be in, or not opposed to, the best
interests of the Corporation, and, respect to any criminal action or
proceeding, had reasonable cause to believe that his or her conduct was
unlawful.
-4-
<PAGE>
(iii) The indemnification and advancement of expenses provided by,
or granted pursuant to, this Article TWELFTH shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any by-law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to acts
or omissions to act in his or her official capacity and as to acts or
omissions to act in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer,
employee or agent, and shall inure to the benefit of the heirs, executors
and administrators of such a person. Any repeal or modification of the
provisions of this Article TWELFTH shall not affect any obligations of
the Corporation or any rights regarding indemnification and advancement
of expenses of a director, officer, employee or agent with respect to any
threatened, pending or completed action, suit or proceeding for which
indemnification or the advancement of expenses is requested, in which the
alleged cause of action accrued at any time prior to such repeal or
modification.
(iv) The Corporation may purchase and maintain insurance, at its
expense, to protect itself and any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise against liability asserted against him
or her in any such capacity, or arising out of his or her status as such,
whether or not the Corporation would have the power to indemnify him or
her against such liability under the provisions of this Article TWELFTH,
the General Corporation Law of the State of Delaware or otherwise.
(v) If this Article TWELFTH or any portion thereof shall be
invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify each director and officer of
the Corporation as to expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement with respect to any action, suit or
proceeding, whether civil, criminal, administrative or investigative,
including, without limitation, a grand jury proceeding and an action,
suit or proceeding by or in the right of the Corporation, to the fullest
extent permitted by any applicable portion of this Article TWELFTH that
shall not have been invalidated, by the General Corporation Law of the
State of Delaware or by any other applicable law."
5. The amendments set forth herein were duly adopted in accordance with
Section 242 of the Delaware General Corporation Law.
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<PAGE>
IN WITNESS WHEREOF, this Certificate has been signed by the President of
the Corporation on the date set forth below.
Date: August 10, 1999
/s/Thomas F. Cooke
-------------------------------------
Thomas F. Cooke, President
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<PAGE>
CERTIFICATE OF DESIGNATION
of the
SERIES A CONVERTIBLE PREFERRED STOCK
of
OPTICARE HEALTH SYSTEMS, INC.
(f/k/a SARATOGA RESOURCES, INC.)
Pursuant to Section 151 of the
Delaware General Corporation Law
OptiCare Health Systems, Inc., f/k/a Saratoga Resources, Inc., a
Delaware corporation (the "Corporation"), hereby certifies that the following
resolution was adopted by the Board of Directors of the Corporation pursuant to
the authority of the Board of Directors as required by Section 151 of the
Delaware General Corporation Law:
RESOLVED: That pursuant to the provisions of Section 151(g) of the
General Corporation Law of Delaware, and in exercise of the powers vested in the
Board of Directors pursuant to the Certificate of Incorporation of the
Corporation, the Corporation hereby establishes a series of the Corporation's
Preferred Stock, par value $0.001 per share, to be known and designated as
Series A Convertible Preferred Stock (the "Series A Preferred Stock"), such
series of stock to consist of 550,000 shares and to have the powers, preferences
and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions set forth in Exhibit A attached
hereto; and that a Certificate of Designation reflecting the foregoing
designation be filed with the Secretary of State of Delaware.
IN WITNESS WHEREOF, the Corporation has executed this Certificate of
Designation as of the 13th day of August, 1999.
OPTICARE HEALTH SYSTEMS, INC.
By: /s/ Steven L. Ditman
------------------------------
Name: Steven L. Ditman
Title: Chief Financial Officer
<PAGE>
EXHIBIT A
---------
DESIGNATION OF TERMS OF
SERIES A CONVERTIBLE PREFERRED STOCK
------------------------------------
Section 1. Designation and Rank. The number of shares which shall
constitute the Series A Convertible Preferred Stock (the "Series A Preferred
Stock") shall be 550,000 shares, par value $0.001 per share. All shares of
Series A Preferred Stock shall rank equally and be identical in all respects.
The Corporation shall not be restricted from issuing additional securities of
any kind, including shares of preferred stock of any class, series or
designation (including, without limitation, preferred stock ranking in parity or
superior as to rights and preferences with the Series A Preferred Stock now or
hereafter authorized), provided that issuances of the Series A Preferred Stock
shall be limited to issuances to a Regulated Holder (as hereinafter defined) or
an Affiliate of a Regulated Holder. For purposes of this provision, "Regulated
Holder" shall mean any holder subject to the provisions of (i) the Bank Holding
Company Act of 1956, as amended, (ii) Regulation Y of the Board of Governors of
the Federal Reserve System (12 C.F.R. Part 225), or (iii) any law, rule
regulation that is successor to either of the foregoing.
Section 2. Dividends. Dividends and other distributions, payable in cash
or other property shall be paid on the Series A Preferred Stock equally, ratably
and on a parity with such dividends and other distributions paid on the Common
Stock, as and when such dividends and other distributions are declared by the
Board of Directors of the Corporation, as though the Common Stock and Series A
Preferred Stock were one and the same class; provided that in determining the
number of shares of Series A Preferred Stock outstanding and entitled to receipt
of any such dividend or other distribution, each share of Series A Preferred
Stock outstanding shall be deemed to be equal to the number of shares of Common
Stock into which one share of Series A Preferred Stock could have been converted
on the date on which the holders of Common Stock and Series A Preferred Stock
were determined to receive payment of such dividend or other distribution, after
giving effect to any adjustments.
Section 3. Voting Rights. Except as otherwise specifically provided by
applicable law, the holders of Series A Preferred Stock shall not be entitled to
vote or give a consent to or on any matters required or permitted to be
submitted to the shareholders of the Corporation for their approval.
Section 4. Liquidation. The Series A Preferred Stock shall be preferred
upon liquidation over the Common Stock and any other class or classes of stock
of the Corporation which by its terms expressly provides that it ranks junior in
rights and preferences to the Series A Preferred Stock upon liquidation, so that
holders of shares of Series A Preferred Stock shall be entitled to be paid,
after full payment is made on any stock ranking prior to the Series A Preferred
Stock as to rights and preferences, but before any distribution is made to the
holders of the Common Stock and such junior stock upon the voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, an amount
equal to $0.01 per share of Series A Preferred Stock. If, upon any such
liquidation, dissolution or winding up of the Corporation, its net assets are
insufficient to permit the payment in full of the amounts to which the holders
of all outstanding shares of Series A Preferred Stock are entitled as above
provided, the entire net assets of the Corporation remaining (after full payment
is
<PAGE>
made on any classes or series of stock ranking prior to the Series A Preferred
Stock) shall be distributed among the holders of shares of Series A Preferred
Stock in amounts proportionate to the full preferential amounts to which they
and holders of shares of preferred shares ranking in parity with the Series A
Preferred Stock are entitled. After such payment shall have been made in full to
the holders of the Series A Preferred Stock, the remaining assets of the
Corporation shall be divided and distributed among the holders of the
outstanding Series A Preferred Stock and the holders of the other classes of
stock then outstanding according to their respective rights and shares, with the
holders of the Series A Preferred Stock being entitled in such distribution to
participate with the holders of the Common Stock ratably in proportion to the
number of shares of Common Stock into which the Series A Preferred Stock is then
convertible. For the purpose of this Section 4, the voluntary sale, lease,
exchange or transfer, for cash, shares of stock, securities or other
consideration, of all or substantially all the Corporation's property or assets
to, or its consolidation or merger with, one or more corporations shall not be
deemed to be a liquidation, dissolution or winding up of the Corporation,
voluntary or involuntary. Notwithstanding the foregoing, in the event that any
holder of Series A Preferred Stock converts its Series A Preferred Stock to
Common Stock pursuant to Section 5 hereof, the right to preferential liquidation
rights with respect to such converted stock pursuant to this Section 4 shall be
immediately terminated.
Section 5. Conversion Provisions.
(a) Optional Conversion by a Holder. Subject to the provisions for
adjustment hereinafter set forth, each share of Series A Preferred Stock shall
be convertible at any time at the option of the holder thereof, upon surrender
to the transfer agent for the Series A Preferred Stock of the Corporation of the
certificate or certificates evidencing the shares so to be converted, into one
fully paid and non-assessable share of Common Stock of the Corporation.
Notwithstanding the foregoing provisions of this Section 5, a holder of Series A
Preferred Stock shall not have the right to convert the Series A Preferred Stock
held by it if the Common Stock to be received upon conversion would, when
aggregated with all other shares of Common Stock (other than shares of
Non-Attributable Stock) currently or previously held by or currently issuable
without restriction to such holder, exceed 4.99% of the then outstanding Common
Stock, unless the holder certifies to the Corporation that the Common Stock to
be issued upon such conversion will constitute Non-Attributable Stock, as
hereinafter defined. For purposes of this provision, "Non-Attributable Stock"
shall mean, with respect to any holder of Series A Preferred Stock, shares of
Common Stock which have been previously sold, or were issued pursuant to the
exercise of warrants, options or other rights to acquire Common Stock or Series
A Preferred Stock ("Stock Rights") or upon conversion of shares of Series A
Preferred Stock which were previously sold, either (i) in a widely dispersed
public offering; (ii) in a private placement in which no purchaser, individually
or in concert with others, acquired Common Stock, Series A Preferred Stock,
Stock Rights or any combination thereof, representing (upon conversion, in the
case of the Series A Preferred Stock, and upon exercise for Common Stock, in the
case of the Stock Rights) more than 2.0% of the outstanding Common Stock; (iii)
in compliance with Rule 144 (or any rule which is a successor thereto) of the
Securities Act of 1933, as amended; or (iv) in the secondary market in a market
transaction executed through a registered broker-dealer in blocks of no more
than 2.0% of the shares outstanding of the Corporation in any six month period.
For purposes of this provision, "Affiliate" of any individual, corporation,
trust, partnership or other entity shall mean any other individual, corporation,
trust, partnership or other entity directly or indirectly controlling,
controlled by or under direct or indirect common control
<PAGE>
with such individual, corporation, trust, partnership or other entity. For
purposes of this definition, as to a Regulated Holder, Affiliate shall include
any partnership a majority of the partners of which are officers, directors,
employees or Affiliates of such Regulated Holder, and as to the Corporation,
Affiliate shall not include such Regulated Holder.
(b) Optional Conversion by the Corporation. The Corporation may, upon
written notice by the Corporation to each holder of Series A Preferred Stock,
cause the conversion of all, but not less than all, of the outstanding shares of
Series A Preferred Stock into shares of Common Stock, provided that the Common
Stock to be received upon such conversion when aggregated with all other shares
of Common Stock (other than shares of Non-Attributable Stock) currently or
previously held by or currently issuable without restriction to each holder,
would be equal to or less than 3.00% of the then outstanding Common Stock of the
Corporation. Subject to the provisions for adjustment hereinafter set forth,
each share of Series A Preferred Stock converted by the Corporation pursuant to
the preceding sentence shall be converted into one fully paid and non-assessable
share of Common Stock of the Corporation.
(c) The number of shares of Common Stock into which an issued and
outstanding share of Series A Preferred Stock is convertible shall be subject to
adjustment from time to time as follows:
(i) If the Corporation shall (x) declare a dividend on the Common
Stock in shares of its capital stock (whether shares of Common Stock, Series A
Preferred Stock or of capital stock of any other class), (y) split or subdivide
the outstanding Common Stock or (z) combine the outstanding Common Stock into a
smaller number of shares, each share of Series A Preferred Stock outstanding at
the time of the record date for such dividend or of the effective date of such
split, subdivision or combination shall thereafter entitle the holder of such
share of Series A Preferred Stock to receive the aggregate number and kind of
shares which, if such share of Series A Preferred Stock had been converted
immediately prior to such time, such holder would have owned or have become
entitled to receive by virtue of such dividend, subdivision or combination. Such
adjustment shall be made successively whenever any event listed above shall
occur and, if a dividend which is declared is not paid, each share of Series A
Preferred Stock outstanding shall again entitle the holder thereof to receive
the number of shares of Common Stock as would have been the case had such
dividend not been declared. If at any time, as a result of an adjustment made
pursuant to this subsection 5(c)(i), the holder of any share of Series A
Preferred Stock thereafter converted shall become entitled to receive any shares
of capital stock of the Corporation other than shares of Common Stock,
thereafter the number of such other shares so receivable upon conversion of any
share of Series A Preferred Stock shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in this subsection 5(c).
(ii) In the event of any capital reorganization of the
Corporation, or of any reclassification of the Common Stock (other than a
subdivision or combination of outstanding shares of Common Stock), or in case of
the consolidation of the Corporation with or the merger of the Corporation with
or into any other corporation or of the sale of the properties and assets of the
Corporation as, or substantially as, an entirety to any other corporation, each
share of Series A Preferred Stock shall after such capital reorganization,
reclassification of Common Stock,
<PAGE>
consolidation, merger or sale be convertible upon the terms and conditions
specified herein, for the number of shares of stock or other securities or
assets to which a holder of the number of shares of Common Stock into which such
share of Series A Preferred Stock shall be convertible (at the time of such
capital reorganization, reclassification of Common Stock, consolidation, merger
or sale) would have been entitled upon such capital reorganization,
reclassification of Common Stock, consolidation, merger or sale; and in any such
case, if necessary, the provisions set forth in this subsection 5(c) with
respect to the rights thereafter of the holders of the shares of Series A
Preferred Stock shall be appropriately adjusted so as to be applicable, as
nearly as may reasonably be, to any shares of stock or other securities or
assets thereafter deliverable upon the conversion of the shares of Series A
Preferred Stock.
(iii) If any event occurs, as to which, in the good faith opinion
of the Board of Directors of the Corporation, the other provisions of this
subsection 5(c) are not strictly applicable or (if strictly applicable) would
not fairly protect the conversion rights of the shares of Series A Preferred
Stock in accordance with the essential intent and principles of such provisions,
then the Board of Directors shall make an adjustment in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such purchase rights as aforesaid, but, except as contemplated in
subsections 5(c)(i) and (ii), in no event shall any such adjustment have the
effect of decreasing the number of shares of Common Stock obtainable upon the
conversion of each share of Series A Preferred Stock from that which would
otherwise be determined pursuant to this subsection 5(c).
(iv) No adjustment in the number of shares of Common Stock into
which a share of Series A Preferred Stock shall be convertible shall be required
unless such adjustment would require an increase or decrease in the aggregate
number of such shares of Common Stock obtainable of at least 1%, provided that
any adjustments which by reason of this subsection 5(c)(iv) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this subsection 5(c) shall be made to the
nearest cent or to the nearest hundredth of a share, as the case may be.
(v) Irrespective of any adjustments in the number or kind of
shares obtainable upon the conversion of a share of Series A Preferred Stock,
certificates theretofore or thereafter issued may continue to express the same
number and kind of shares as are stated on the certificates initially issuable
therefor.
(vi) If any question shall at any time arise with respect to the
number of shares of Common Stock into which a share of Series A Preferred Stock
is then convertible following any adjustment pursuant to this subsection 5(c),
such question shall be determined by agreement between the holders of a majority
of the shares of Series A Preferred Stock and the Corporation or, in the absence
of such an agreement, by an independent investment banking firm or an
independent appraiser engaged by the Corporation (in either case the cost of
which engagement will be borne by the Corporation) and reasonably acceptable to
the Corporation and the holders of a majority of shares of Series A Preferred
Stock and such determination shall be binding upon the Corporation and the
holders of the shares of Series A Preferred Stock.
<PAGE>
(vii) Anything in this subsection 5(c) to the contrary
notwithstanding, the Corporation shall be entitled to make such increases in the
number of shares of Common Stock into which a share of Series A Preferred Stock
shall be convertible, in addition to those adjustments required by this
subsection 5(c), as it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Common Stock, or any issuance
wholly for cash or any shares of Common Stock at less than the Current Market
Price Per Share, or any issuance wholly for cash or shares of Common Stock or
securities which by their terms are convertible into or exchangeable for shares
of Common Stock or any stock dividend, or any issuance of rights, options or
warrants referred to hereinabove in this subsection 5(c), hereinafter made by
the Corporation to the holders of its Common Stock shall not be taxable to them.
(viii) For purposes of this subsection 5(c), the following terms
shall have the following meanings:
"Current Market Price Per Share" shall mean, with respect to any
shares of the Common Stock, as of any particular date of determination:
(A) if the Common Stock is then reported on the Composite
Transactions Tape, the average of the daily closing prices for
the 30 consecutive trading days immediately prior to such date as
reported on the Composite Transactions Tape (as adjusted for any
stock dividend, split, combination or reclassification that
occurred during such 30-day period); or
(B) if the Common Stock is not then reported on the
Composite Transaction Tape but is then listed or admitted to
trading on a national securities exchange, the average of the
daily last sale prices regular way of the Common Stock, for the
30 consecutive trading days immediately prior to such date (as
adjusted for any stock dividend, split, combination or
reclassification that occurred during such 30-day period), on the
principal national securities exchange on which the Common Stock
is traded or, in case no such sale takes place on any such day,
the average of the closing bid and asked prices regular way, in
either case on such national securities exchange; or
(C) if the Common Stock is not then reported on the
Composite Transaction Tape but is then traded in the
over-the-counter market, the average of the daily closing sales
prices, or, if there is no closing sales price, the average of
the closing bid and asked prices, in the over-the-counter market,
for the 30 consecutive trading days immediately prior to such
date (as adjusted for any stock dividend, split, combination or
reclassification that occurred during such 30-day period), as
reported by the National Association of Securities Dealers'
Automated Quotation System, or, if not so reported, as reported
by the National Quotation Bureau, Incorporated or any successor
thereof, or, if not so reported the average of the closing bid
and asked prices as furnished by any member of the National
Association of Securities Dealers, Inc. selected from time to
time by the Board of Directors of the Corporation for that
purpose; or
<PAGE>
(D) if no such prices are then furnished, the fair market
value of a share of Common Stock as determined by agreement
between the holders of a majority of the shares of Series A
Preferred Stock and the Corporation or, in the absence of such an
agreement, by an independent investment banking firm or an
independent appraiser engaged by the Corporation (in either case
the cost of which engagement will be borne by the Corporation)
and reasonably acceptable to the holders of a majority of the
shares of Series A Preferred Stock.
(d) Upon any adjustment of the number of the shares of Common Stock
issuable upon conversion of shares of Series A Preferred Stock pursuant to this
Section 5, the Corporation shall promptly but in any event within 20 days
thereafter, cause to be given to each of the registered holders of the Series A
Preferred Stock, at its address appearing on the Register for the Series A
Preferred Stock by registered mail, postage prepaid, return receipt requested a
certificate signed by its chairman, president or chief financial officer setting
forth the number of shares of Common Stock issuable upon conversion of shares of
Common Stock as so adjusted and describing in reasonable detail the facts
accounting for such adjustment and the method of calculation used. Where
appropriate, such certificate may be given in advance and included as a part of
the notice required to be mailed under the other provisions of this resolution.
(e) The Corporation will at all times have authorized, and reserve and
keep available, free from preemptive rights, for the purpose of enabling it to
satisfy any obligation to issue shares of Common Stock upon the conversion of
the Series A Preferred Stock, the number of shares of Common Stock deliverable
upon conversion of the Series A Preferred Stock.
(f) The Corporation shall not be required to issue fractional shares of
Common Stock upon conversion of the Series A Preferred Stock but shall pay for
any such fraction of a share an amount in cash equal to the Current Market Price
Per Share of Common Stock of such share (determined in accordance with the
provisions of subsection 5(c)(viii) hereof) multiplied by such fraction.
(g) The Corporation will pay all taxes attributable to the issuance of
shares of Common Stock upon conversion of shares of Series A Preferred Stock,
provided that the Corporation shall not be required to pay any income tax
incurred by the holder upon conversion of the Series A Preferred Stock or any
tax which may be payable in respect of any transfer involved in the issue of any
shares of Common Stock in a name other than that of the registered holder of the
Series A Preferred Stock surrendered for conversion, and the Corporation shall
not be required to issue or deliver such certificate unless or until the person
or persons requesting the issuance thereof shall have paid to the Corporation
the amount of such tax or shall have established to the satisfaction of the
Corporation that such tax has been paid.
Section 6. Status of Shares. All of the shares of Series A Preferred
Stock that are at any time converted pursuant to Section 5 and all of the shares
of the Series A Preferred Stock that are otherwise reacquired by the Corporation
and subsequently canceled by the Board of Directors of the Corporation shall
have the status of authorized but unissued shares of Series A Preferred Stock,
subject to reissuance by the Board of Directors.
<PAGE>
Section 7. Notices to Holders of Series A Preferred Stock. In the event:
(a) that the Corporation shall authorize the issuance to all
holders of Common Stock of rights or warrants to subscribe for or
purchase capital stock of the Corporation or of any other subscription
rights or warrants; or
(b) that the Corporation shall authorize the distribution to all
holders of Common Stock of evidences of its indebtedness or assets
(including, without limitation cash dividends or cash distributions
payable out of consolidated earnings or earned surplus or dividends
payable in Common Stock); or
(c) of any consolidation or merger to which the Corporation is a
party and for which approval of any stockholders of the Corporation is
required, or of the conveyance or transfer of the properties and assets
of the Corporation substantially as an entirety, or of any capital
reorganization or reclassification or change of the Common Stock (other
than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination); or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation; or
(e) that the Corporation proposes to take any other action which
would require an adjustment in the number of shares of Common Stock or
other securities or assets issuable upon conversion of shares of Series
A Preferred Stock pursuant to Section 5;
then the Corporation shall cause to be given to each of the registered holders
of the Series A Preferred Stock at its address appearing on the Register for the
Series A Preferred Stock, at least 10 calendar days prior to the applicable
record date, if any, hereinafter specified, or, if no such record date if
specified, 10 calendar days prior to the taking of any action referred to in
clause (a) through (e) above, by registered mail, postage prepaid, return
receipt requested, a written notice stating (i) the date as of which the holders
of record of Common Stock to be entitled to receive any such rights, warrants or
distribution are to be determined, or (ii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or (iii) the date on which such other action
is to be effected, and the date as of which it is expected that holders of
record of Common Stock shall be entitled to exchange their shares for securities
or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up or other action. The failure to give the notice required by this Section 6 or
any defect therein shall not affect the legality or validity of any
distribution, right, warrant, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up or other action referred to above, or the
vote upon any such action.
BOST01-50169933-3
68374-00000
August 12, 1999 11:21 pm
<PAGE>
WARRANT AGREEMENT
THIS WARRANT AGREEMENT dated as of August 13, 1999 (amended,
supplemented or modified from time to time, the "Warrant Agreement") by and
between OPTICARE HEALTH SYSTEMS, INC. f/k/a SARATOGA RESOURCES, INC., a Delaware
corporation (the "Issuer"), and BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE,
INC., a Delaware corporation ("BACCFI").
W I T N E S S E T H:
WHEREAS, pursuant to the Amended and Restated Loan and Security
Agreement dated as of the date hereof (as the same may be amended, supplemented
or otherwise modified from time to time, the "Loan Agreement") between
Consolidated Eye Care, Inc., OptiCare Eye Health Centers, Inc., and PrimeVision
Health, Inc., as Borrowers, and the Issuer, as Parent, the lenders named
therein, Bank Austria AG as the LC Issuer and BACCFI as the Agent, agreed to
make certain loans (the "Loans") to the Borrowers upon the terms, and subject to
the conditions, set forth in the Loan Agreement; and
WHEREAS, in order to induce the Lenders and BACCFI to enter into the
Loan Agreement, the Issuer has agreed to execute and deliver to BACCFI or an
Affiliate (as hereinafter defined) thereof the Warrants hereinafter described;
NOW, THEREFORE, in consideration of the premises the parties hereto
agree as follows:
Section 1. Definitions.
(a) As used in this Warrant Agreement, unless otherwise defined herein,
terms defined in the Loan Agreement (as in effect on the date hereof, whether or
not the Loan Agreement is thereafter terminated or expires according to its
terms) shall have such defined meanings when used herein and the following terms
shall have the following meanings, unless the context otherwise requires:
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such Person. For purposes of this definition, a Person shall be deemed to
control another Person if such first Person possesses directly or indirectly the
power to (i) vote 10% or more of the securities having ordinary voting power for
the selection of directors of such Person or (ii) direct, or cause the direction
of, the management and policies of the second Person, whether through the
ownership of voting securities, by contract or otherwise. In addition, as to
BACCFI, "Affiliate" shall include any partnership a majority of the partners of
which are officers, directors, employees or Affiliates of BACCFI, and as to the
Issuer, "Affiliate" shall not include BACCFI or any Affiliate of BACCFI which is
a holder of any Warrants.
"Capital Stock" shall mean, as to any Person, any and all shares,
interests, warrants, participants or other equivalents (however designated) of
corporate stock of such Person.
"Closing Date" shall mean August 13, 1999, the date of the closing of
the Loan Agreement.
<PAGE>
"Commission" shall mean the Securities and Exchange Commission or any
entity succeeding to any or all of its functions under the Securities Act and
the Exchange Act.
"Common Stock" shall mean the Common Stock, par value $0.001 per share,
of the Issuer, and shall include any stock into which such Common Stock shall
have been changed or any stock resulting from any reclassification of such
Common Stock and all other stock of any class or classes (however designated) of
the Issuer the registered holders of which have the right, without limitation as
to amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference.
"Composite Transactions Tape" shall mean a security price reporting
service that includes all transactions in a security on each of the exchanges
and in the over-the-counter market.
"Convertible Preferred Stock" shall mean the Series A Convertible
Preferred Stock, par value $0.001 per share, of the Issuer which is convertible
into Common Stock of the Issuer, and shall include any stock into which such
Convertible Preferred Stock shall have been changed or any stock resulting from
any reclassification of such Convertible Preferred Stock.
"Current Market Price Per Share" shall mean, with respect to any share
of the Common Stock, as of any particular date of determination:
(i) if the Common Stock is then reported on the Composite
Transactions Tape, the average of the daily closing prices for the 30
consecutive trading days immediately prior to such date as reported on
the Composite Transactions Tape (as adjusted for any stock dividend,
split, combination or reclassification that occurred during such 30-day
period); or
(ii) if the Common Stock is not then reported on the Composite
Transaction Tape but is then listed or admitted to trading on a
national securities exchange, the average of the daily last sale prices
regular way of the Common Stock, for the 30 consecutive trading days
immediately prior to such date (as adjusted for any stock dividend,
split, combination or reclassification that occurred during such 30-day
period), on the principal national securities exchange on which the
Common Stock is traded or, in case no such sale takes place on any such
day, the average of the closing bid and asked prices regular way, in
either case on such national securities exchange; or
(iii) if the Common Stock is not then reported on the
Composite Transaction Tape but is then traded in the over-the-counter
market, the average of the daily closing sales prices, or, if there is
no closing sales price, the average of the closing bid and asked
prices, in the over-the-counter market, for the 30 consecutive trading
days immediately prior to such date (as adjusted for any stock
dividend, split, combination or reclassification that occurred during
such 30-day period), as reported by the National Association of
Securities Dealers' Automated Quotation System, or, if not so reported,
as reported by the National Quotation Bureau, Incorporated or any
successor thereof, or, if not so reported the average of the closing
bid and asked prices as furnished by any member of the National
Association of Securities Dealers, Inc. selected from time to time by
the Board of Directors of the Issuer for that purpose; or
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<PAGE>
(iv) if no such prices are then furnished, the higher of (x)
the Exercise Price and (y) the fair market value of a share of Common
Stock as determined by agreement between the holders of a majority of
the Warrants and the Issuer or, in the absence of such an agreement, by
an independent investment banking firm or an independent appraiser
engaged by the Issuer (in either case the cost of which engagement will
be borne by the Issuer) and reasonably acceptable to the holders of a
majority of the Warrants.
"Equity of the Issuer" shall mean the total shareholders' equity of the
Issuer, determined in accordance with generally accepted accounting principles.
The amount of Equity of the Issuer represented by any Warrant Shares shall be
determined by subtracting from total Equity of the Issuer the aggregate amount
distributable as a preference upon dissolution of the Issuer to the holders of
any then outstanding shares of any class or series of preferred stock (other
than the Convertible Preferred Stock), dividing the balance obtained by the
number of shares of Common Stock then outstanding or issuable upon conversion of
any Convertible Preferred Stock then outstanding, and multiplying that per share
amount by the aggregate number of Warrant Shares.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute.
"Exchange Right" shall have the meaning given to such term in
subsection 16(d).
"Exempted Securities" shall mean (A) Warrant Shares, (B) shares of the
Issuer's capital stock issued as a stock dividend described in subsection 12(b),
(C) up to an aggregate of 450,000 shares of Common Stock issued to Issuer's
employees under the Issuer's 1999 Employee Stock Purchase Plan, (D) up to an
aggregate of 3,000,000 options, shares of restricted stock, performance share
units and performance cash units issued under the Issuer's Performance Stock
Program and shares of Common Stock issuable upon exercise of options and
performance share units issued thereunder and (E) warrant to purchase up to an
aggregate of ____ shares of common stock which result from Issuer's assumption
of, or re-issuance of substitute warrants for, warrants of OptiCare Eye Health
Centers, Inc. pursuant to the Merger Agreement and shares of Common Stock
issuable upon exercise of such warrants.. The limits in clauses (C), (D) and (E)
shall be proportionately adjusted for dividends and other distributions payable
in and for subdivisions and combinations of shares of Common Stock.
"Exercise Price" shall mean the exercise price of a Warrant, which
shall be $5.85 per Warrant.
"Expiration Date" shall mean 5 years after the Closing Date.
"Merger Agreement" shall mean the Agreement and Plan of Merger, dated
as of April 12, 1999, by and among the Issuer, OptiCare Shellco Merger
Corporation, Primevision Shellco Merger Corporation, OptiCare Eye Health
Centers, Inc. and Primevision Health, Inc.
"Mergers" shall mean the mergers contemplated under the Merger
Agreement.
"Non-Attributable Stock" shall mean shares of Common Stock or
Convertible Preferred Stock which have been previously sold, or were issued
pursuant to the exercise of Warrants which were
3
<PAGE>
previously sold, either (a) in a widely dispersed public offering; (b) in a
private placement in which no purchaser, individually or in concert with others,
acquired Warrants, Common Stock, Convertible Preferred Stock or any combination
thereof, representing (upon conversion, in the case of the Convertible Preferred
Stock, and upon exercise for Common Stock, in the case of the Warrants) more
than 2% of the outstanding Common Stock; (c) in compliance with Rule 144 (or any
rule which is a successor thereto) of the Securities Act or (d) into the
secondary market in a market transaction executed through a registered
broker-dealer in blocks of no more than 2.0% of the shares outstanding of the
Issuer in any six-month period.
"Non-Public Warrant Shares" shall mean Warrant Shares that have not
been sold to the public and bear the legend set forth in subsection 14(b).
"Non-Surviving Combination" shall mean any merger, consolidation or
other business combination by the Issuer with one or more Persons in which the
Issuer is not the survivor, or a sale of all or substantially all of the assets
of the Issuer to one or more such other Persons.
"Person" shall mean and include any individual, sole proprietorship,
partnership, joint venture, limited liability company, trust, unincorporated
organization, association, corporation, institution, entity, party or government
(whether national, federal, state, county, city, municipal, or otherwise,
including, without limitation, any instrumentalities, division, agency, body or
department thereof).
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute and the rules and regulations of the Commission
thereunder, all as the same may be in effect from time to time.
"Subsidiary" shall mean, as to any Person, a corporation of which
shares of stock having ordinary voting power (other than stock having such power
only by reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation are at the time owned,
or the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Warrant
Agreement shall refer to a Subsidiary or Subsidiaries of the Issuer.
"Warrant Certificate" shall mean a certificate(s) evidencing one or
more Warrants, substantially in the form of Exhibit A-1 attached hereto, with
such changes therein as may be required to reflect any adjustments made pursuant
to Section 12.
"Warrant Holders" shall mean BACCFI or an Affiliate thereof and such
other Persons to whom BACCFI or an Affiliate thereof transfers Warrants in
compliance with the terms of this Warrant Agreement, and for purposes of Section
15 shall include holders of Non-Public Warrant Shares, provided, however, that
no Warrant Holder may transfer Warrants to any competitor of Issuer unless and
until there exists an Event of Default under the Loan Agreement.
"Warrant Office" shall mean the office or agency of the Issuer at which
the Warrant Register shall be maintained and where the Warrants may be presented
for exercise, exchange, substitution and transfer, which office or agency will
be the office of the Issuer at 87 Grandview Avenue, Waterbury,
4
<PAGE>
CT 06708, which office or agency may be changed by the Issuer pursuant to notice
in writing to the Persons named in the Warrant Register as the holders of the
Warrants.
"Warrant Register" shall mean the register, substantially in the form
of Exhibit B attached hereto, maintained by the Issuer at the Warrant Office.
"Warrant Shares" shall mean the shares of Common Stock or Convertible
Preferred Stock issued or issuable upon exercise of the Warrants, or Common
Stock issued or issuable upon conversion of the Convertible Preferred Stock, in
each case as the number of such shares may be adjusted from time to time
pursuant to Section 12.
"Warrants" shall mean the stock purchase warrants issued pursuant to
this Warrant Agreement entitling the record holder thereof to purchase from the
Issuer at the Warrant Office an aggregate of 100,000 shares of Common Stock or
Convertible Preferred Stock (in the percentages to the extent provided in
subsections 6(e) and 6(f) hereof and subject in each case to adjustment as
provided in Section 12) at the Exercise Price at any time after the issuance of
such Warrant and before 5:00 p.m., New York time, on the Warrant Expiration
Date.
(b) For all purposes of this Warrant Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(i) "Herein," "hereof" and "hereunder" and other words of
similar import refer to this Warrant Agreement as a whole and not to
any particular Section or other subdivision;
(ii) Any uses of the masculine, feminine or neuter gender
shall also be deemed to include any other gender as appropriate;
(iii) The exhibits and schedules to this Warrant Agreement
shall be deemed an integral part of this Warrant Agreement;
(iv) Except as specifically set forth in such representation,
each of the representations and warranties of the Issuer in Section 3
hereof is separate and is not limited, qualified or modified by the
existence, wording or satisfaction of any other representation of the
Issuer in Section 3 or otherwise;
(v) All references herein (in covenants or otherwise) to any
action(s) which are to be taken (or which are prohibited from being
taken) by any Person, the Issuer or any Subsidiary shall apply to such
Person, the Issuer or such Subsidiary, as the case may be, whether such
action is taken directly or indirectly; and
(vi) All references herein to actions by the Issuer or any
Subsidiary (including, without limitation, actions denoted by terms
such as "create," "sell," "transfer" or "dispose of") mean such action
whether voluntary or involuntary, by operation of law or otherwise.
Section 2. Issuance of Warrants. The Issuer hereby agrees to issue and
deliver to BACCFI or, at the option of BACCFI, an Affiliate thereof, on the
Closing Date, the Warrants and Warrant
5
<PAGE>
Certificates evidencing the Warrants. No payment shall be required from BACCFI
or its Affiliate in consideration of its receipt of the Warrants.
Section 3. Representations and Warranties. The Issuer hereby represents
and warrants to BACCFI, for the benefit of BACCFI and any other Warrant Holder,
as follows:
(a) The Issuer is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, has the corporate
power and authority to conduct its business as presently conducted and as
intended to be conducted, has the corporate power and authority to execute and
deliver this Warrant Agreement and the Warrant Certificates, to issue the
Warrants and to perform its obligations under this Warrant Agreement and the
Warrant Certificates, has the corporate power and authority and legal right to
own and lease its properties and is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which it owns or leases real
property or in which the conduct of its business requires such qualification,
except where failure to be so qualified could not be reasonably expected to have
a material adverse effect on the business, properties, financial condition or
results of operations of the Issuer and its Subsidiaries taken as a whole.
(b) The execution, delivery and performance by the Issuer of this
Warrant Agreement and the Warrant Certificates, the issuance of the Warrants and
the issuance of the Warrant Shares upon the exercise of the Warrants and the
issuance of Common Stock upon conversion of the Convertible Preferred Stock have
been duly authorized by all necessary corporate action and do not and will not
violate, or result in a breach of, or constitute a default under, or require any
consent under, or result in the creation of any lien, charge or encumbrance upon
the assets of the Issuer pursuant to, any law, statute, ordinance, rule,
regulation, order or decree of any court, governmental body or regulatory
authority or administrative agency having jurisdiction over the Issuer or its
Subsidiaries or the Issuer's Certificate of Incorporation or any contract,
mortgage, loan agreement, note, lease or other instrument binding upon the
Issuer or its Subsidiaries or by which their properties are bound.
(c) This Warrant Agreement has been duly executed and delivered by the
Issuer and constitutes a legal, valid, binding and enforceable obligation of the
Issuer. When the Warrants represented by the Warrant Certificates have been
issued as contemplated hereby, (i) the Warrants represented by the Warrant
Certificates will constitute legal, valid, binding and enforceable obligations
of the Issuer and (ii) the Warrant Shares, when issued upon exercise of the
Warrants in accordance with the terms hereof, and the Common Stock, when issued
upon conversion of the Convertible Preferred Stock in accordance with the terms
of the Certificate of Designation relating to the Convertible Preferred Stock,
will be duly authorized, validly issued, fully paid and nonassessable shares of
the Common Stock and Convertible Preferred Stock, as applicable, with no
personal liability attaching to the ownership thereof.
(d) The Issuer has authorized capital stock consisting of 50,000,000
shares of Common Stock, par value $0.001 per share, immediately following the
effectiveness of the mergers, there will be 9,000,000 shares are issued and
outstanding and 5,000,000 shares of preferred stock, par value $0.001 per share,
550,000 of which have been designated Convertible Preferred Stock and none of
which are issued and outstanding. Except as set forth on SCHEDULE I hereto,
there are no outstanding options, warrants, subscriptions, rights, convertible
or exchangeable securities or other agreements or plans under which the Issuer
may be or become obligated to issue, sell or transfer shares of its capital
6
<PAGE>
stock or other securities. The Convertible Preferred Stock has no voting rights,
except as required by law, and is convertible on a share-for-share basis into
Common Stock of the Issuer. To the Issuer's best knowledge, there are no voting
agreements, voting trusts, proxies or other agreements or understandings with
respect to the voting of any capital stock of the Issuer or any Subsidiary.
(e) Except as set forth on SCHEDULE II hereto, no holder of securities
of the Issuer has any right to the registration of such securities under the
Securities Act and any applicable state securities law.
(f) The Issuer has filed all proxy statements, reports and other
documents required to be filed by it under the Exchange Act. The Issuer has
furnished Lender with copies of Form 10-K for the year ended December 31, 1998,
Form 10-Q for the quarter ended March 31, 1999, and Amendment No. 3 to its
Registration Statement on Form S-4, as filed with the SEC on July 29, 1999
(collectively, the "SEC Reports"). Each SEC Report was in substantial compliance
with the requirements of its respective form and none of the SEC Reports, as of
their respective dates, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements (and notes thereto) included in
the SEC Reports fairly present the financial condition of the Issuer as of the
dates thereof and have been prepared in accordance with generally accepted
accounting principles consistently applied.
(g) Each of the Subsidiaries of the Issuer is listed on SCHEDULE III to
this Warrant Agreement. All outstanding shares of capital stock of such
Subsidiaries have been duly authorized and validly issued and are fully paid and
nonassessable and are owned beneficially and of record by the Issuer free and
clear of all Liens, options or claims of any kind. There are no outstanding
options, warrants, subscriptions, rights, convertible securities or other
agreements or plans under which Subsidiary of the Issuer may become obligated to
issue, sell or transfer shares of its capital stock or other securities.
Section 4. Registration, Transfer and Exchange of Certificates.
(a) The Issuer shall maintain, at the Warrant Office, the Warrant
Register for registration of the Warrants represented by the Warrant
Certificates and transfers thereof. On the Closing Date, the Issuer shall
register the Warrants represented by Warrant Certificates in the Warrant
Register in the name of BACCFI or an Affiliate thereof, as the case may be. The
Issuer may deem and treat the registered holders of the Warrant Certificates as
the absolute owners thereof and the Warrants represented thereby
(notwithstanding any notation of ownership or other writing on the Warrant
Certificates made by any person) for the purpose of any exercise thereof or any
distribution to the holders thereof, and for all other purposes, and the Issuer
shall not be affected by any notice to the contrary.
(b) Subject to Section 14, the Issuer shall register the transfer of
any outstanding Warrants in the Warrant Register upon surrender of the Warrant
Certificates evidencing such Warrants to the Issuer at the Warrant Office,
accompanied (if so required by it) by a written instrument or instruments of
transfer in form satisfactory to it, duly executed by the registered holder or
holders thereof or by the duly appointed legal representative thereof. Upon any
such registration of transfer, new Warrant
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<PAGE>
Certificates evidencing such transferred Warrants shall be issued to the
transferee and the surrendered Warrant Certificates shall be canceled. If less
than all the Warrants evidenced by Warrant Certificates surrendered for transfer
are to be transferred, new Warrant Certificates shall be issued to the holder
surrendering such Warrant Certificates evidencing such remaining number of
Warrants.
(c) Warrant Certificates may be exchanged at the option of the holders
thereof, when surrendered to the Issuer at the Warrant Office, for another
Warrant Certificate or other Warrant Certificates of like tenor and representing
in the aggregate a like number of Warrants. Warrant Certificates surrendered for
exchange shall be canceled.
(d) No charge shall be made for any such transfer or exchange except
for any tax or other governmental charge imposed in connection therewith. Except
as provided in subsection 14(b) each Warrant Certificate issued upon transfer or
exchange shall bear the legend set forth in subsection 14(b) if the Warrant
Certificate presented for transfer or exchange bore such legend.
Section 5. Mutilated or Missing Warrant Certificates. If any Warrant
Certificate shall be mutilated, lost, stolen or destroyed, the Issuer shall
issue, in exchange and substitution for and upon cancellation of the mutilated
Warrant Certificate, or in lieu of and substitution for the Warrant Certificate
lost, stolen or destroyed, a new Warrant Certificate of like tenor and
representing an equivalent number of Warrants, but only upon receipt of evidence
satisfactory to the Issuer of such loss, theft or destruction of such Warrant
Certificate and, if requested, indemnity satisfactory to it. The Issuer
acknowledges that a written indemnity by BACCFI or, if an Affiliate of BACCFI is
the holder of such lost, stolen or destroyed Warrant Certificate, by such
Affiliate, shall be satisfactory to the Issuer for such purpose. No service
charge shall be made for any such substitution, but all expenses and reasonable
charges associated with procuring such indemnity and all stamp, tax and other
governmental duties that may be imposed in relation thereto shall be borne by
the holder of such Warrant Certificate. Each Warrant Certificate issued in any
such substitution shall bear the legend set forth in subsection 14(b) if the
Warrant Certificate for which such substitution was made bore such legend.
Section 6. Duration and Exercise of Warrants.
(a) A Warrant evidenced by a Warrant Certificate shall be exercisable
in whole or in part by the registered holder thereof on any Business Day after
the Closing Date and on or before 5:00 p.m., New York time, on the Warrant
Expiration Date with respect to such Warrant, provided that, at any given time,
the registered holder(s) of the Warrants shall be required to exercise the
Warrants in an aggregate amount of at least 20,000 Warrants (or if less than an
aggregate of 20,000 Warrants are outstanding, the remainder of the Warrants then
outstanding).
(b) Subject to the provisions of this Warrant Agreement, the Warrants
evidenced by a Warrant Certificate may be exercised by the registered holder
thereof by the surrender of the Warrant Certificate evidencing the Warrants to
be exercised, with the form of election to purchase on the reverse thereof or
attached thereto duly completed and signed, to the Issuer at the Warrant Office,
and upon payment of the aggregate Exercise Price for the number of Warrant
Shares in respect of which such Warrants are being exercised in lawful money of
the United States of America and/or by surrender to the Issuer of shares of
Common Stock then owned by the Warrant Holder and valued for
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<PAGE>
purposes hereof at their Current Market Price Per Share at the time of exercise.
In lieu of exercising Warrants pursuant to the immediately preceding sentence,
the Warrant Holder shall have the right to require the Issuer to convert the
Warrants, in whole or in part and at any time or times (the "Conversion Right"),
into Warrant Shares, by surrendering to the Issuer the Warrant Certificate
evidencing the Warrants to be converted, accompanied by the form of conversion
notice on the reverse thereof or attached thereto which has been duly completed
and signed. Upon exercise of the Conversion Right, the Issuer shall deliver to
the Warrant Holder (without payment by the Warrant Holder of any Exercise Price)
that number of Warrant Shares which is equal to the quotient obtained by
dividing (x) the value of the number of Warrants being converted at the time the
Conversion Right is exercised (determined by subtracting the aggregate Exercise
Price for all such Warrants immediately prior to the exercise of the Conversion
Right from the aggregate current market price (determined on the basis of the
Current Market Price Per Share) of that number of Warrant Shares purchasable
upon exercise of such Warrants immediately prior to the exercise of the
Conversion Right (taking into account all applicable adjustments pursuant to
Section 12, including without limitation any adjustments which would be made
pursuant to subdivision (7) of subsection 12(c) upon exercise of the Warrants
being converted) by (y) the Current Market Price Per Share of one share of
Common Stock (or the number of shares of Common Stock into which one share of
Convertible Preferred Stock can be converted if the Warrants are being converted
into Convertible Preferred Stock) immediately prior to the exercise of the
Conversion Right. Any references in this Warrant Agreement to the "exercise" of
any Warrants, and the use of the term "exercise" herein, shall be deemed to
include (without limitation) any exercise of the Conversion Right. Any exercise
of a Warrant hereunder may be made subject to the satisfaction of one or more
conditions (including, without limitation, the consummation of a sale of the
capital stock of the Issuer or a merger or other business combination involving
the Issuer) which are set forth in a writing which is made a part of or is
appended to the aforementioned form of election to purchase or conversion notice
(as the case may be) by the Warrant Holder.
(c) Upon exercise of any Warrants hereunder, the Issuer shall issue and
cause to be delivered to or upon the written order of the registered holders of
such Warrants and in such name or names as such registered holders may
designate, a certificate for the Warrant Share or Warrant Shares issued upon
such exercise of such Warrants. Any Persons so designated to be named therein
shall be deemed to have become holders of record of such Warrant Share or
Warrant Shares as of the date of exercise of such Warrants.
(d) If less than all of the Warrants evidenced by a Warrant Certificate
are exercised at any time, a new Warrant Certificate or Certificates shall be
issued for the remaining number of Warrants evidenced by such Warrant
Certificate. Each new Warrant Certificate so issued shall bear the legend set
forth in subsection 14(b) if the Warrant Certificate presented in connection
with partial exercise thereof bore such legend unless the transfer restrictions
referred to in such legend are no longer applicable pursuant to subsection
14(d). All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled.
(e) At the election of a Warrant Holder made at the time of exercise,
the Warrant Shares to be issued upon such exercise may be either Common Stock or
Convertible Preferred Stock (or a combination thereof), provided that the
Warrant Holder shall not have the right to have issued to it upon exercise
Common Stock which, when aggregated with all other shares of Common Stock (other
than shares of Non-Attributable Stock) currently or previously held by or
currently issuable without
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restriction to the Warrant Holder, will exceed 4.99% of the then outstanding
Common Stock unless such Warrant Holder certifies that such Warrants have
previously been transferred either (i) in a widely dispersed public offering of
the Warrants, or (ii) in a private placement in which no purchaser, individually
or in concert with others, would have acquired more than 2% of the outstanding
Common Stock if the Warrants so transferred had been exercised for Common Stock,
or (iii) in compliance with Rule 144 (or any rule which is a successor thereto)
of the Securities Act, or (iv) into the secondary market in a market transaction
executed through a registered broker-dealer in blocks of no more than 2.0% of
the shares outstanding of the Issuer in any six-month period; provided further
that if the Warrant Holder is a bank or an Affiliate of a bank subject to the
provisions of the Bank Holding Company Act of 1956, as amended, such Common
Stock, together with all other shares of Common Stock currently or previously
held by or current issuable without restriction to such Warrant Holder and its
Affiliates (not including Non-Attributable Stock), will not exceed 4.99% of the
then outstanding Common Stock. In the event two or more Warrant Holders attempt
to exercise Warrants for Common Stock simultaneously and, if permitted, such
exercises would cause the 4.99% limitation to be exceeded, then the Issuer shall
notify the Warrant Holders who had attempted to exercise Warrants for Common
Stock and each such Warrant Holder shall be entitled to exercise for Common
Stock only such number of Warrants as shall equal the product of (i) the number
of Warrants the Warrant Holder sought to exercise for Common Stock times (ii) a
fraction, the numerator of which is the maximum number of Warrants which may be
exercised for Common Stock without exceeding the 4.99% limitation and the
denominator of which is the maximum number of Warrants sought to be exercised
for Common Stock by such Warrant Holders.
(f) Notwithstanding the foregoing provisions of this Section 6, in no
event shall any Warrant be exercisable for shares of Common Stock or Convertible
Preferred Stock which, when aggregated with all other capital stock of the
Issuer (other than shares of Non-Attributable Stock) currently held or
previously held by or currently issuable without restriction to Lender or its
Affiliates, would, upon issuance, represent in excess of 24.99% of the Equity of
the Issuer unless such shares, when issued, would constitute Non-Attributable
Stock.
Section 7. Fractional Shares. The Issuer shall not be required to issue
fractional shares of Common Stock or Convertible Preferred Stock upon exercise
of the Warrants but shall pay for any such fraction of a share an amount in cash
equal to the then Current Market Price Per Share of one share of Common Stock
multiplied by such fraction.
Section 8. Payment of Taxes. The Issuer will pay all taxes attributable
to the initial issuance of Warrant Shares upon the exercise of the Warrants,
provided that the Issuer shall not be required to pay (i) any income tax
incurred by the holder of the Warrant Certificate or the Warrant Shares upon
exercise of the Warrants or the issuance of the Warrant Shares, or (ii) any tax
which may be payable in respect of any transfer involved in the issue of any
Warrant Certificate or any certificate for Warrant Shares in a name other than
that of the registered holder of a Warrant Certificate surrendered upon the
exercise of a Warrant, and the Issuer shall not be required to issue or deliver
such certificate unless or until the person or persons requesting the issuance
thereof shall have paid to the Issuer the amount of such tax or shall have
established to the satisfaction of the Issuer that such tax has been paid.
Section 9. Stockholder Rights.
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(a) Nothing contained in this Warrant Agreement or in any of the
Warrant Certificates shall be construed as conferring upon the holders thereof
the right to vote or to consent or to receive notice as a stockholder in respect
of the meetings of stockholders or the election of directors of the Issuer or
any other matter, or any rights whatsoever as a stockholder of the Issuer.
(b) Nothing contained in this Warrant Agreement or in any of the
Warrant Certificates shall be construed as imposing any obligation on the
registered holders thereof to purchase any securities or as imposing any
liabilities on such holders as stockholders of the Issuer, whether such
obligation or liabilities are asserted by the Issuer or by creditors of the
Issuer.
Section 10. Reservation and Issuance of Warrant Shares; Certain
Corporate Actions.
(a) The Issuer will at all times have authorized, and reserve and keep
available, free from preemptive rights, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon the exercise of the Warrants
and conversion of the Convertible Preferred Stock the number of shares of Common
Stock and Convertible Preferred Stock deliverable upon exercise of all
outstanding Warrants and conversion of Convertible Preferred Stock.
(b) The Issuer covenants that all Warrant Shares will, upon issuance in
accordance with the terms of this Warrant Agreement and the Issuer's Certificate
of Incorporation, be fully paid and nonassessable and free from all taxes
(except as otherwise contemplated in Section 8 hereof) with respect to the
issuance thereof and from all liens, charges and security interests (other than
any created by or on behalf of any Warrant Holder).
(c) So long as any Warrants are outstanding, the Issuer shall make no
amendment of its Certificate of Incorporation which would affect the
authorization, dividend voting, liquidation, conversion, exchange or notice
rights or additional remedies provisions of the Convertible Preferred Stock
without the written consent of the holders of a majority of the Warrants.
(d) The Issuer will not, by amendment of its Certificate of
Incorporation or through any consolidation, merger, reorganization, transfer of
assets, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant Agreement or the Warrant Certificates. Without limiting the generality
of the foregoing, the Issuer (i) will not permit the par value or the determined
or stated value of any shares of the Issuer's Common Stock or Convertible
Preferred Stock receivable upon the exercise of the Warrants to exceed the
amount payable therefor upon such exercise, (ii) will take all such action as
may be necessary or appropriate in order that the Issuer may validly and legally
issue fully paid and nonassessable shares of the Issuer's Common Stock or
Convertible Preferred Stock (as the case may be), upon the exercise of the
Warrants from time to time outstanding, including, without limitation, amending
its Certificate of Incorporation to reduce or eliminate the par value of the
Common Stock, and (iii) will not take any action which results in an adjustment
in the number of Warrant Shares obtainable upon the exercise of any Warrants if
the total number of shares of the Issuer's Common Stock (or other securities)
issuable after such action upon the exercise of all of the then-outstanding
Warrants would exceed the total number of shares of the Issuer's Common Stock
(or other securities) then authorized by the Issuer's Certificate of
Incorporation and available for purpose of issuance upon such exercise.
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(e) If the Issuer proposes, prior to the Expiration Date, to enter into
a transaction that would constitute a Non-Surviving Combination, if consummated,
the Issuer shall give written notice thereof to each of the Warrant Holders
promptly after an agreement is reached with respect to the Non-Surviving
Combination but in any event no less than thirty (30) days prior to the
consummation thereof. Such notice shall describe the proposed transaction in
reasonable detail and specify the consideration to be received by the Warrant
Holders in respect thereto and/or any adjustment to be made to the number of
Warrant Shares obtainable upon the exercise of the Warrants as a result of such
Non-Surviving Combination. The Issuer shall also furnish to each Warrant Holder
all notices and materials furnished to its stockholders in connection with such
transaction as and when such notices and materials are furnished to its
stockholders. The Issuer agrees that it will not enter into an agreement
providing for a Non-Surviving Combination or effect any such Non-Surviving
Combination unless the party to such transaction that is the surviving entity
thereof (the "Survivor") (i) shall be obligated to distribute or pay to each
Warrant Holder, upon payment of the Exercise Price prior to the Expiration Date,
the number of shares of stock or other securities or other property (including
any cash) of the Survivor that would have been distributable or payable on
account of the Warrant Shares if such Warrant Holder's Warrants had been
exercised immediately prior to such Non-Surviving Combination (or, if
applicable, the record date therefor), as such number of shares or other
securities or other property may thereafter be adjusted pursuant to Section 12
of this Warrant Agreement or (ii) shall assume by written instrument all of the
obligations of the Issuer under this Warrant Agreement.
Section 11. Obtaining of Governmental Approvals and Stock Exchange
Listings. Subject, in the case of any registration under the Securities Act, to
the limitations set forth in Section 15, the Issuer will, at its own expense,
from time to time take all action which may be necessary to obtain and keep
effective any and all permits, consents and approvals of governmental agencies
and authorities which are or become requisite in connection with the issuance,
sale, transfer and delivery of the Warrant Certificates and the exercise of the
Warrants and the issuance, sale, transfer and delivery of the Warrant Shares and
all action which may be necessary so that such Warrant Shares, immediately upon
their issuance upon the exercise of the Warrants and conversion of the
Convertible Preferred Stock, will be listed on such securities exchange, if any,
on which the Common Stock and/or the Convertible Preferred Stock is then listed.
Section 12. Adjustment of Number of Warrant Shares Purchasable.
(a) The number of shares of Common Stock purchasable upon the exercise
of each Warrant is subject to adjustment from time to time upon the occurrence
of any of the events enumerated in this Section 12 at any time or from time to
time after the date hereof and prior to the Expiration Date.
(b) If the Issuer shall (i) declare a dividend on the Common Stock or
Convertible Preferred Stock in shares of its capital stock (whether shares of
Common Stock, Convertible Preferred Stock or of capital stock of any other
class), (ii) split or subdivide the outstanding Common Stock or Convertible
Preferred Stock or (iii) combine the outstanding Common Stock into a smaller
number of shares, each Warrant outstanding at the time of the record date for
such dividend or of the effective date of such split, subdivision or combination
shall thereafter entitle the holder of such Warrant to receive the aggregate
number and kind of shares which, if such Warrant had been exercised
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immediately prior to such time, such holder would have owned or have become
entitled to receive by virtue of such dividend, subdivision or combination. Such
adjustment shall be made successively whenever any event listed above shall
occur and, if a dividend which is declared is not paid, each Warrant outstanding
shall again entitle the holder thereof to receive the number of shares of Common
Stock or Convertible Preferred Stock as would have been the case had such
dividend not been declared. If at any time, as a result of an adjustment made
pursuant to this subsection 12(b), the holder of any Warrant thereafter
exercised shall become entitled to receive any shares of capital stock of the
Issuer other than shares of Common Stock and Convertible Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Warrant Shares contained in this Section 12, and the provisions of this Warrant
Agreement with respect to the Warrant Shares shall apply on like terms to such
other shares.
(c) If the Issuer shall issue any shares of Common Stock without
consideration or at a price per share less than the Current Market Price Per
Share of such class of Common Stock as at the date of such issuance, including
any shares of Common Stock deemed to have been issued pursuant to this
subsection 12(c) but excluding any Exempted Securities, each Warrant outstanding
on the date of such issuance shall thereafter entitle the holder of such Warrant
to receive a number of shares of Common Stock or Convertible Preferred Stock
equal to the product of (i) the number of shares of Common Stock or Convertible
Preferred Stock to which the holder of such Warrant was entitled immediately
prior to such issuance and (ii) the quotient that is obtained by dividing:
(X) the total number of shares of Common Stock
outstanding immediately after such issuance
(including any shares of Common Stock deemed to have
been issued pursuant to this subsection 12(c))
by
(Y) the sum of
(i) the number of shares of Common Stock outstanding
immediately prior to such issuance plus
(ii) the number of shares of Common Stock which the
aggregate consideration received (or deemed to be
received) by the Issuer upon such issuance would
purchase at such Current Market Price Per Share.
For purposes of any adjustment of the number of shares of Common Stock or
Convertible Preferred Stock obtainable upon the exercise of any Warrants
pursuant to this subsection 12(c), the following provisions shall be applicable:
(1) In the case of the issuance of Common Stock for cash, the
consideration therefor shall be deemed to be the amount of cash paid therefor,
without deducting therefrom any discounts, commissions or other expenses
allowed, paid or incurred by the Issuer in connection with the issuance or sale
thereof.
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(2) In the case of the issuance of Common Stock for a consideration
part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined by agreement between the holders of a
majority of the Warrants outstanding and the Issuer or, in the absence of such
an agreement, by an independent investment banking firm or an independent
appraiser engaged by the Issuer and reasonably acceptable to the holders of a
majority of the Warrants outstanding (in either case the cost of which
engagement will be borne by the Issuer). In the case of any issuance of Common
Stock upon the exercise of any warrants, options or other rights or the
conversion or exchange of any convertible or exchangeable securities, the
aggregate consideration received by the Issuer upon such issuance shall be
deemed to include the consideration, if any, received by the Issuer as
consideration for the issuance of such warrants, options or rights or such
convertible or exchangeable securities (excluding any cash received on account
of accrued interest or accrued dividends) and, in the case of any conversion or
exchange of securities, shall not include any amount attributable to the
converted or exchanged securities. If any warrant, option or right to purchase
or subscribe for any Common Stock or convertible securities is issued in
connection with the issuance or sale of other securities by the Issuer, together
comprising one integrated transaction in which no specific consideration is
allocated to such warrant, option or right, such warrant, option or right shall
be deemed to have been issued for no consideration.
(3) If (a) the Issuer shall issue warrants or options to purchase or
rights to subscribe for Common Stock other than Exempted Securities, and (b) the
consideration, if any, received by the Issuer as consideration for the issuance
of such warrants, options or rights plus the minimum aggregate consideration
required to be paid upon exercise of such warrants, options or rights (the
amount of such consideration to be determined in each case as set forth above)
shall be less than the product of the Current Market Price Per Share on the date
of such issuance multiplied by the maximum number of shares of Common Stock
deliverable upon such exercise, then such aggregate maximum number of shares
shall be deemed to have been issued at the time such warrants, options or rights
were issued, for a consideration equal to such minimum aggregate consideration.
(4) If (a) the Issuer shall issue (i) securities (other than Exempted
Securities) which are by their terms convertible into or exchangeable for Common
Stock or (ii) warrants or options to purchase or rights to subscribe for any
such convertible or exchangeable securities, and (b) the consideration received
by the Issuer for any such securities or any such warrants, options or rights
(excluding any cash received on account of accrued interest or accrued
dividends) plus the minimum aggregate consideration (not including any amount
attributed to the converted or exchanged securities), if any, to be received by
the Issuer upon the conversion or exchange of such securities or upon the
exercise of such warrants, options or rights and the conversion or exchange of
the securities received upon such exercise, as the case may be (the amount of
such consideration to be determined in each case as set forth above) shall be
less than the product of the Current Market Price Per Share on the date of such
issuance multiplied by the maximum number of shares deliverable upon conversion
of or in exchange for such convertible or exchangeable securities or upon the
exercise of any such warrants, options or rights and subsequent conversion or
exchanges thereof, then such securities, warrants, options or rights shall be
deemed to have been exercised and/or converted or exchanged, and the aggregate
maximum number of shares of Common Stock shall be deemed to have been issued at
the time such securities, warrants, options or rights were issued, for a
consideration equal to such minimum aggregate consideration.
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(5) Upon any reduction in the exercise price of Common Stock
deliverable upon exercise of any of such warrants, options or rights as are
referred to in this subsection 12(c) or any reduction in the amount of
consideration required to be paid or the conversion or exchange price or ratio
payable upon conversion or exchange of any of such convertible or exchangeable
securities, in each case other than a change resulting from any antidilution
provisions thereof which are no more favorable in such instance to the holder
thereof than the provisions of this Section 12 are to the Warrant Holders, (i)
if an adjustment shall previously have been made pursuant to this subsection
12(c) in respect of such warrants, options or rights or such securities, the
number of shares of Common Stock or Convertible Preferred Stock obtainable upon
the exercise of the Warrants shall forthwith be readjusted to such number of
shares as would have obtained had the adjustment made upon the issuance of such
warrants, options, rights or securities as have not been exercised, converted or
exchanged prior to such change (or any prior adjustment made pursuant to this
subdivision (5)) been made upon the basis of such change, and (ii) if an
adjustment has not previously been made pursuant to this subsection 12(c) in
respect of such options or rights or such securities, then such warrants,
options or rights or such securities shall be deemed to have been granted or
issued (as the case may be) for purposes of this subsection 12(c) as of the date
of such reduction, and any adjustments required to be made pursuant to this
subsection 12(c) as a result of such deemed grant or issuance shall forthwith be
made effective as of such date.
(6) All grants or issuances of options or other rights to acquire
shares of Common Stock (or securities convertible into or exchangeable for
shares of Common Stock) (other than Exempted Securities) issued to any officer,
director or employee of the Issuer or of any Subsidiary of the Issuer or to
members of the immediate family of any of them ("Management Options"), and all
issuances of shares of Common Stock (or securities convertible into or
exchangeable for shares of Common Stock) under or pursuant to such Management
Options shall, for purposes of subsection 12(c), be deemed to be granted and
issued for no consideration except to the extent cash or notes are paid or
payable therefor.
(7) If and when any Warrants shall be exercised as set forth herein,
(i) if there shall be any outstanding warrants or options to purchase or rights
to subscribe for shares of Common Stock or any outstanding warrants or options
to purchase or rights to subscribe for or securities which are by their terms
convertible into or exchangeable for Common Stock (in each case, other than
Exempted Securities) which in each case would, if issued on the date of such
Warrant exercise, result in an adjustment pursuant to either of subdivisions (3)
or (4) of this subsection 12(c), then such warrants or options shall be deemed
to have been exercised in full immediately prior to the exercise of such
Warrants for a consideration equal to the aggregate consideration, if any,
received by the Issuer upon the issuance of such warrants, options or rights
plus the minimum aggregate consideration required to be paid upon exercise of
such warrants, options or rights (the amount of such consideration to be
determined in each case as set forth above), and (ii) if there shall be any
outstanding securities which are by their terms convertible into or exchangeable
for Common Stock at the time of such Warrant exercise or at any time thereafter
which in each case would, if issued on the date of such Warrant exercise, result
in an adjustment pursuant to subdivision (4) of this subsection, then such
securities shall be deemed to have been converted or exchanged in full
immediately prior to the exercise of such Warrants for a consideration equal to
the aggregate consideration received by the Issuer for any such securities plus
the minimum aggregate consideration (not including any amount attributed to the
converted or exchanged securities), if any, required to be paid upon the
conversion or exchange of
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<PAGE>
such securities (the amount of such consideration to be determined in each case
as set forth above); provided that any adjustment made pursuant to this
subdivision (7) of subsection 12(c) shall only be made with respect to such
Warrants as are then being exercised.
(8) Shares of Common Stock owned by or held for the account of the
Issuer or any majority-owned Subsidiary shall not be deemed outstanding for the
purpose of any computation made pursuant to this subsection 12(c). Any
adjustment required to be made pursuant to this subsection 12(c) shall be made
successively whenever the date of issuance or deemed issuance of any such Common
Stock or any such options, rights or convertible or exchangeable securities is
fixed (which date of issuance shall be the record date for such issuance if a
record date therefor is fixed) and, in the event that (A) such shares or
options, rights, warrants or convertible or exchangeable securities are not so
issued, or (B) any such option, right, warrant or convertible or exchangeable
security (or the conversion or exchange right thereunder) expires according to
its terms without having been exercised, converted or exchanged, each Warrant
outstanding shall, as of the date of cancellation of such issuance in the case
of clause (A) above and the date of such expiration in the case of clause (B)
above, entitle the holder thereof to receive the number of shares of Common
Stock or Convertible Preferred Stock as would have been the case had the date of
such issuance of such unissued options, rights, warrants or convertible or
exchangeable securities not been fixed or such expired options, rights, warrants
or convertible or exchangeable securities not been issued, as the case may be.
If any adjustment is made pursuant to either of subdivisions (3) or (4) of this
subsection 12(c) upon the granting or issuance of any warrants, options or other
rights or any convertible or exchangeable securities or any adjustment or
readjustment is made pursuant to subdivision (5) of this subsection 12(c), then
any adjustment required to be made hereunder upon the exercise of any such
warrants, options or other rights or upon the exchange or conversion of any such
convertible or exchangeable securities (including any deemed exercise,
conversion or exchange pursuant to subdivision (7) of this subsection 12(c))
shall be made only to the extent that the number of shares of Common Stock or
Convertible Preferred Stock purchasable upon the exercise of a Warrant shall not
previously have been increased pursuant to this subsection 12(c) upon such grant
or issuance (or upon such adjustment or readjustment made pursuant to
subdivision (5) of this subsection 12(c), if applicable).
(d) In case the Issuer shall make a distribution to all holders of
Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Issuer is the continuing corporation) of
evidences of its indebtedness, cash or other assets, each Warrant outstanding on
the date of such distribution shall thereafter entitle the holder of such
Warrant to receive a number of shares of Common Stock and Convertible Preferred
Stock equal to the product of (i) the number of shares of Common Stock and
Convertible Preferred Stock which the holder of such Warrant was entitled
immediately prior to such date of distribution and (ii) a fraction of which the
numerator shall be the then Current Market Price Per Share of Common Stock on
such date and of which the denominator shall be the then Current Market Price
Per Share of Common Stock on such date less the fair market value, as determined
by agreement between the holders of a majority of the Warrants and the Issuer
or, in the absence of such an agreement, by an independent investment banking
firm or an independent appraiser engaged by the Issuer and reasonably acceptable
to the holders of a majority of the Warrants (in either case the cost of which
engagement will be borne by the Issuer) of the portion of the assets or
evidences of indebtedness, or the portion of the cash, so to be distributed
applicable to one share of then-outstanding Common Stock. Such adjustment shall
be made successively whenever a date for such distribution is fixed (which date
of distribution shall be
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the record date for such distribution if a record date therefor is fixed) and,
if such distribution is not so made, each Warrant outstanding shall again
entitle the holder thereof to receive the number of shares of Common Stock as
would have been the case had such date of distribution not been fixed.
(e) In the event of any capital reorganization of the Issuer, or of any
reclassification of the Common Stock (other than a subdivision or combination of
outstanding shares of Common Stock), or in case of the consolidation of the
Issuer with or the merger of the Issuer with or into any other corporation or of
the sale of the properties and assets of the Issuer as, or substantially as, an
entirety to any other corporation, each Warrant shall after such capital
reorganization, reclassification of Common Stock, consolidation, merger or sale
be exercisable upon the terms and conditions specified in this Warrant
Agreement, for the number of shares of stock or other securities or assets to
which a holder of the number of Warrant Shares purchasable (at the time of such
capital reorganization, reclassification of Common Stock, consolidation, merger
or sale) upon exercise of such Warrant would have been entitled upon such
capital reorganization, reclassification of Common Stock, consolidation, merger
or sale; and in any such case, if necessary, the provisions set forth in this
Section 12 with respect to the rights thereafter of the holders of the Warrants
shall be appropriately adjusted so as to be applicable, as nearly as may
reasonably be, to any shares of stock or other securities or assets thereafter
deliverable on the exercise of the Warrants.
(f) If any event occurs, as to which, in the good faith opinion of the
Board of Directors of the Issuer, the other provisions of this Section 12 are
not strictly applicable or (if strictly applicable) would not fairly protect the
purchase rights of the Warrants in accordance with the essential intent and
principles of such provisions, then the Board of Directors shall make an
adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to protect such purchase rights as
aforesaid, but in no event shall any such adjustment have the effect of
decreasing the number of shares of Common Stock or Convertible Preferred Stock
purchasable upon the exercise of each Warrant from that which would otherwise be
determined pursuant to this Section 12.
(g) No adjustment in the number of Warrant Shares purchasable shall be
required unless such adjustment would require an increase or decrease in the
aggregate number of Warrant Shares purchasable of at least 1%, provided that any
adjustments which by reason of this subsection 12(g) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 12 shall be made to the nearest cent or to
the nearest hundredth of a share, as the case may be.
(h) Irrespective of any adjustments in the number or kind of shares
purchasable upon the exercise of the Warrant, Warrant Certificates theretofore
or thereafter issued may continue to express the same number and kind of shares
as are stated on the Warrant Certificates initially issuable pursuant to this
Warrant Agreement.
(i) If any question shall at any time arise with respect to the number
of Warrant Shares purchasable following any adjustment pursuant to this Section
12, such question shall be determined by agreement between the holders of a
majority of the Warrants and the Issuer or, in the absence of such an agreement,
by an independent investment banking firm or an independent appraiser (which may
be the Issuer's regularly engaged accounting firm, provided that such accounting
firm is a "big five" accounting firm) engaged by the Issuer (in either case the
cost of which engagement will be borne
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by the Issuer) and reasonably acceptable to the Issuer and the holders of a
majority of Warrants and such determination shall be binding upon the Issuer and
the holders of the Warrants.
(j) Anything in this Section 12 to the contrary notwithstanding:
(1) the Issuer shall be entitled to make such increases in the
number of Warrant Shares purchasable upon the exercise of each Warrant,
in addition to those adjustments required by this Section 12, as it in
its sole discretion shall determine to be advisable in order that any
consolidation or subdivision of the Common Stock, or any issuance
wholly for cash or any shares of Common Stock at less than the Current
Market Price Per Share, or any issuance wholly for cash or shares of
Common Stock or securities which by their terms are convertible into or
exchangeable for shares of Common Stock or any stock dividend, or any
issuance of rights, options or warrants referred to hereinabove in this
Section 12, hereinafter made by the Issuer to the holders of its Common
Stock shall not be taxable to them; and
(2) no adjustment in the number of Warrant Shares purchasable
shall be required in the event the Issuer pays a cash dividend to
holders of Common Stock and/or Convertible Preferred Stock; provided
that the Issuer also pays a cash dividend to all holders of Warrants
which dividend shall be calculated as if the Warrants had been
exercised.
Section 13. Notices to Warrant Holders; Notices of Issuances and
Dividends.
(a) Upon any adjustment of the number of Warrant Shares purchasable
upon exercise of a Warrant pursuant to Section 12, the Issuer shall promptly but
in any event within 20 days thereafter, cause to be given to each of the
registered holders of the Warrants at its address appearing on the Warrant
Register by registered mail, postage prepaid, return receipt requested a
certificate signed by its chairman, president or chief financial officer setting
forth the number of Warrant Shares purchasable upon exercise of a Warrant as so
adjusted and describing in reasonable detail the facts accounting for such
adjustment and the method of calculation used. Where appropriate, such
certificate may be given in advance and included as a part of the notice
required to be mailed under the other provisions of this Section 13.
(b) In the event:
(i) that the Issuer shall authorize the issuance to all
holders of Common Stock or Convertible Preferred Stock of rights or
warrants to subscribe for or purchase capital stock of the Issuer or of
any other subscription rights or warrants; or
(ii) that the Issuer shall authorize the distribution to all
holders of Common Stock or Convertible Preferred Stock of evidences of
its indebtedness or assets (including, without limitation cash
dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends payable in Common Stock or Convertible
Preferred Stock); or
(iii) of any consolidation or merger to which the Issuer is a
party and for which approval of any stockholders of the Issuer is
required, or of the conveyance or transfer of the properties and assets
of the Issuer substantially as an entirety, or of any capital
reorganization
18
<PAGE>
or reclassification or change of the Common Stock (other
than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination); or
(iv) of the voluntary or involuntary dissolution, liquidation
or winding up of the Issuer; or
(v) that the Issuer proposes to take any other action which
would require an adjustment in the number of Warrant Shares or other
securities or assets to which each Warrant Holder is entitled pursuant
to Section 12;
then the Issuer shall cause to be given to each of the registered holders of the
Warrants at its address appearing on the Warrant Register at least 20 calendar
days prior to the applicable record date, if any, hereinafter specified, or, if
no such record date is specified, 20 calendar days prior to the taking of any
action referred to in clauses (i) through (v) above, by registered mail, postage
prepaid, return receipt requested, a written notice stating (i) the date as of
which the holders of record of Common Stock or Convertible Preferred Stock to be
entitled to receive any such rights, warrants or distribution are to be
determined, or (ii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective, or (iii) the date on which such other action is to be
effected, and the date as of which it is expected that holders of record of
Common Stock or Convertible Preferred Stock shall be entitled to exchange their
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up or other action. The failure to give the notice
required by this Section 13 or any defect therein shall not affect the legality
or validity of any distribution, right, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up or other action
referred to above, or the vote upon any such action.
(c) Prior to the expiration or exercise of all outstanding Warrants,
the Issuer shall furnish to each Warrant Holder:
(i) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Issuer, either (A) a copy of
the Issuer's Annual Report on Form 10-K (or any successor form) and any
documents incorporated by reference into such form for the prior fiscal
year, as filed with the Commission under the Exchange Act, or (B) a
copy of the consolidated balance sheet of the Issuer and its
consolidated Subsidiaries as at the end of such year and the related
consolidated statement of income and retained earnings and of cash flow
for such year, setting forth in each case in comparative form the
figures for the previous year certified by certified independent public
accountants not unacceptable to BACCFI, and the consolidated balance
sheet of the Issuer and its consolidated Subsidiaries as at the end of
such fiscal year;
(ii) as soon as available but in any event not later than 45
days after the end of each of the first three quarterly periods of each
fiscal year of the Issuer, either (A) a copy of the Issuer's Quarterly
Report on Form 10-Q (or any successor form) for the preceding fiscal
quarter, as filed with the Commission under the Exchange Act, or (B)
the unaudited consolidated balance sheet of the Issuer and its
consolidated Subsidiaries as at the end of each
19
<PAGE>
such quarter and the related unaudited consolidated statements of
income and retained earnings and of cash flow of the Issuer and its
consolidated Subsidiaries for such quarter and the portion of the
fiscal year through such date setting forth in each case in comparative
form the figures for the same period of the previous fiscal year,
certified by the chief financial or accounting officer as being fairly
stated in all material respects (subject to normal year-end audit
adjustments); and
(iii) promptly after the sending or filing thereof, as the
case may be, copies of any reports, certificates, budgets, definitive
proxy statements or financial statements which Issuer sends to its
shareholders and copies of any reports on Form 8-K which the Issuer
files with the Commission;
(iv) no later than April 30 of each year, a certificate of the
chairman, president or chief financial officer of the Issuer setting
forth the number of Warrant Shares purchasable upon exercise of a
Warrant as of the end of the preceding fiscal year and a description in
reasonable detail of any adjustments in such number during the
preceding fiscal year;
all such financial statements to be prepared in reasonable detail and in
accordance with generally accepted accounting principles applied consistently
throughout the periods reflected therein (except as approved by such accountants
and officer and disclosed therein). So long as the Loan Agreement remains in
effect, compliance by the Issuer with the provisions of Section 7.2 thereof
shall be deemed to be compliance with subsections 13(c)(i) and 13(c)(ii).
Section 14. Restrictions on Transfer.
(a) Each of BACCFI and its Affiliates who are issued Warrants pursuant
to this Agreement (i) represents that it is an "accredited investor" within the
meaning of the Securities Act and the rules and regulations thereunder, (ii)
represents that it has received adequate information about the Issuer to
determine the advisability of a purchase of the Issuer's securities, (iii)
represents that it is acquiring the Warrants for its own account for investment
and not with a view to any distribution or public offering within the meaning of
the Securities Act, except in any case pursuant to the registration of such
Warrants or Warrant Shares under the Securities Act or pursuant to a valid
exemption from such registration requirement, (iv) acknowledges that the
Warrants and the Warrant Shares issuable upon exercise thereof have not been
registered under the Securities Act, and (v) agrees that it will not sell or
otherwise transfer any of its Warrants or Warrant Shares except upon the terms
and conditions specified herein and that it will cause any transferee thereof to
agree to take and hold the same subject to the terms and conditions specified
herein, provided that the Warrant Holders may sell the Warrants or the Warrant
Shares purchased upon exercise of the Warrants and issued on conversion of the
Convertible Preferred Stock in one or more private transactions not requiring
registration under the Securities Act, as provided in Section 14(c) below.
(b) Except as provided in subsection 14(d) hereof each Warrant
Certificate and each certificate for the Warrant Shares issued to BACCFI or an
Affiliate thereof or to a subsequent transferee thereof pursuant to subsection
14(c) shall include a legend in substantially the following form (with such
changes therein as may be appropriate to reflect whether such legend refers to
Warrants or Warrant Shares), provided that such legend shall not be required if
such transfer is being
20
<PAGE>
made in connection with a sale which is exempt from registration pursuant to
Rule 144 under the Securities Act or if the opinion of counsel referred to in
subsection 14(c) is to the further effect that neither such legend nor the
restrictions on transfer in this Section 14 are required in order to ensure
compliance with the Securities Act:
THE WARRANTS AND SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH
ACT OR LAW. SUCH WARRANTS AND SHARES MAY BE TRANSFERRED ONLY IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN AND ARE SUBJECT TO OTHER
PROVISIONS OF THE WARRANT AGREEMENT, DATED AS OF AUGUST 13, 1999,
BETWEEN THE ISSUER AND BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE,
INC., A COMPLETE AND CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION
AT THE PRINCIPAL OFFICE OF THE ISSUER AND WILL BE FURNISHED TO THE
HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.
(c) Prior to or promptly after any assignment, transfer or sale of any
Warrant or any Warrant Shares (other than a transfer among BACCFI and/or its
Affiliates), the holder thereof shall give written notice to the Issuer of such
holder's intention to effect such assignment, transfer or sale, which notice
shall set forth the date of such proposed assignment, transfer or sale and the
identity of the proposed transferee. Each holder wishing to effect such a
transfer of any Warrant or Warrant Shares shall also furnish to the Issuer an
agreement by the transferee thereof that it is taking and holding the same
subject to the terms and conditions specified herein and, unless the transferee
is an Affiliate of such holder, a written opinion of such holder's counsel, in
form reasonably satisfactory to the Issuer, to the effect that the proposed
transfer may be effected without registration under the Securities Act.
(d) The restrictions set forth in this Section 14 shall terminate and
cease to be effective with respect to any Warrants or Warrant Shares which are
registered under the Securities Act or upon receipt by the Issuer of an opinion
of counsel, in form reasonably satisfactory to the Issuer, to the effect that
compliance with such restrictions is not necessary in order to comply with the
Securities Act with respect to the transfer of the Warrants and the Warrant
Shares; provided, however, that after two (2) years from the date of issuance of
any Warrants (or such shorter period as may be provided by Rule 144(k)
promulgated under the Securities Act), such restrictions will automatically
terminate (without the necessity of any opinion of counsel) as to such Warrants
and as to any Warrant Shares issued in respect of such Warrants upon exercise of
the Conversion Right set forth in subsection 6(b) above. Whenever such
restrictions shall so terminate the holder of such Warrants and/or Warrant
Shares shall be entitled to receive from the Issuer, without expense (other than
transfer taxes, if any), Warrant Certificates or certificates for such Warrant
Shares not bearing the legend set forth in subsection 14(b) at which time the
Issuer will rescind any transfer restrictions relating thereto.
(e) With a view to making available to BACCFI and its Affiliates and
subsequent holders of the Warrant Shares the benefits of certain rules and
regulations of the Securities and Exchange Commission (including, without
limitation, Rules 144 and 144A under the Securities Act) which may
21
<PAGE>
permit the sale of Warrants and Warrant Shares to the public or certain other
institutions without registration, the Issuer agrees to take any and all such
actions as may be required of it to make available to BACCFI and its Affiliates
and such subsequent holders such benefits, including without limitation, to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act or any
successor provision thereto from and after the date the Issuer first
becomes subject to the provisions of Section 13 or 15(d) of the
Exchange Act;
(ii) file with the Commission in a timely manner all reports
and other documents required of the Issuer under the Securities Act and
the Exchange Act from and after the date the Issuer first becomes
subject to the provisions of Section 13 or 15(d) of the Exchange Act;
and
(iii) so long as BACCFI or an Affiliate thereof owns any
Warrants or Warrant Shares, furnish to BACCFI forthwith upon request a
written statement by the Issuer as to its compliance with the reporting
requirements of Rule 144 or any successor provision thereto, and of the
Securities Act and the Exchange Act, (to the extent not previously
furnished to BACCFI under subsection 13(d)) a copy of the most recent
annual or quarterly report of the Issuer filed with the Commission, in
each case from and after the date the Issuer first becomes subject to
the provisions of Section 13 or 15(d) of the Exchange Act, and such
other reports and documents of the Issuer and other information in the
possession of or reasonably obtainable by the Issuer as BACCFI and its
Affiliates and subsequent holders of the Warrants may reasonably
request in availing itself of any rule or regulation of the Commission
allowing BACCFI and its Affiliates and subsequent holders of the
Warrants to sell any such securities without registration.
Section 15. [Intentionally Omitted].
Section 16. Mandatory Redemption, Put Rights and Mandatory Exchange.
(a)(i) Subject to the limitations hereinafter set forth, (A)
if the Issuer takes any action with respect to its capital stock
(including without limitation any purchase of its shares or any
combination of shares or reverse stock split and elimination of
fractional shares) which would cause the capital stock currently or
previously held by or currently issuable without restriction to BACCFI
and its Affiliates (not including Non-Attributable Stock) to exceed
24.99% of the Equity of the Issuer, then prior to or simultaneously
with such action, the Issuer shall purchase from BACCFI and/or its
Affiliates such number of Warrants, Warrant Shares or other shares of
capital stock (other than any shares purchased by BACCFI and/or its
Affiliates in the open market) as will reduce the shares of capital
stock currently or previously held by or currently issuable without
restriction to the BACCFI and its Affiliates (not including
Non-Attributable Stock) to 24.99% of the Equity of the Issuer (any such
mandatory purchase being herein called a "Mandatory Redemption"). In
the event of any Mandatory Redemption, the Issuer shall first purchase
any outstanding Warrants, and thereafter shall purchase Warrant Shares.
The price to be paid to the holder upon a Mandatory Redemption shall be
an amount equal to (A) the
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<PAGE>
Current Market Price Per Share at the date the event causing such
Mandatory Redemption occurs (the "Trigger Date"), multiplied by the
aggregate number of shares of Common Stock of the Issuer (x) issuable
upon exercise of the Warrants to be purchased by the Issuer and/or (y)
comprising the Warrant Shares to be purchased by the Issuer, minus (B)
the Exercise Price multiplied by the aggregate number of shares of
Common Stock issuable upon exercise of the Warrants being purchased
hereunder (collectively, the "Redemption Price").
(ii) The completion of all purchases and sales of Warrants and
Warrant Shares pursuant to a Mandatory Redemption shall take place on
the thirtieth (30th) day following the Trigger Date, unless another
date is mutually agreed upon by the Issuer and the selling holder (the
"Redemption Closing Date")
(b) The Redemption Prices for all purchases and sales of Warrants and
Warrant Shares pursuant to a Mandatory Redemption shall be determined and
calculated in accordance with subsection 16(a) by the Issuer's regularly engaged
independent accountants. The Issuer shall cause such accountants to deliver to
the Issuer and the selling holder, not later than 15 days prior to the
completion of each purchase and sale under subsection 16(a), a written
statement, signed by such accountants, setting forth in reasonable detail the
respective purchase price and the calculation thereof and stating that such
calculation was based on the books and records of the Issuer and was made and
delivered pursuant to this Section 16.
(c) If the Issuer takes any action with respect to its capital stock
(including without limitation any purchase of its shares or any combination of
shares or reverse stock split and elimination of fractional shares) which would
cause the Common Stock currently or previously held by or currently issuable
without restriction to BACCFI and its Affiliates (other than shares of
Non-Attributable Stock) to exceed 4.99% of the aggregate number of issued and
outstanding shares of Common Stock, prior to or simultaneously with such action,
the Issuer shall exchange such portion of Common Stock for Convertible Preferred
Stock as will reduce the shares of Common Stock currently or previously held by
or currently issuable without registration to the BACCFI and its Affiliates (not
including "Non-Attributable Stock") to 4.99% of the aggregate number of issued
and outstanding shares of Common Stock (a "Mandatory Exchange").
(d) As used in this Section 16, "Warrant Shares" shall include all
shares of Common Stock and/or Convertible Preferred Stock and other securities
of the Issuer or its Affiliates issued to holders of the Issuer's Common Stock
and/or Convertible Preferred Stock in respect of stock dividends, stock splits
and other distributions and any recapitalizations, to the extent the same were
not included in any adjustment of the Warrant Shares issuable upon exercise of
Warrants pursuant to Section 12 hereof.
(e) Notwithstanding any provision of this Warrant Agreement to the
contrary, all Warrants and Warrant Shares which are sold pursuant to an
effective registration statement under the Securities Act or in accordance with
Rule 144 promulgated under the Securities Act shall, upon such sale, cease to be
subject to the provisions of this Section 16.
Section 17. Amendments and Waivers. Any provision of this Warrant
Agreement may be amended, supplemented, waived, discharged or terminated by a
written instrument signed by the Issuer and the holders of not less than a
majority of the outstanding Warrants (or in the case of Sections 14
23
<PAGE>
and 16 the holders of a majority of the aggregate outstanding Warrants and
Non-Public Warrant Shares, voting as a single group), provided that (i) this
Agreement may not be amended, supplemented or waived so as to increase the
Exercise Price, reduce the number of Warrant Shares issuable upon exercise of
any Warrants, alter the period during which any Warrants may be exercised
(except to provide for a later Expiration Date), or reduce the Redemption
Amount, in each case without the consent of the holders of all outstanding
Warrants, and (ii) this Section 17 may not be amended or supplemented without
the consent of the holders of all outstanding Warrants and Non-Public Warrant
Shares, voting as a single group, and no waiver of the requirements of this
Section 16 shall be binding upon any such holder without its consent.
Section 18. Specific Performance. The parties agree that irreparable
damage will result in the event that the obligations of the Issuer under this
Warrant Agreement are not specifically enforced, and that any damages available
at law for a breach of any such obligations would be inadequate. Therefore, the
holders of the Warrants and/or Non-Public Warrant Shares shall have the right to
specific performance by the Issuer of the provisions of this Warrant Agreement,
and appropriate injunctive relief may be applied for and granted in connection
therewith. The Issuer hereby irrevocably waives, to the extent that it may do so
under applicable law, any defense based on the adequacy of a remedy at law which
may be asserted as a bar to the remedy of specific performance in any action
brought against the Issuer for specific performance of this Warrant Agreement by
the holders of the Warrants and/or Non-Public Warrant Shares. Such remedies and
all other remedies provided for in this Warrant Agreement shall, however, be
cumulative and not exclusive and shall be in addition to any other remedies
which may be available under this Warrant Agreement.
Section 19. Notices.
(a) Any notice or demand to be given or made by the Warrant Holders or
the holders of Warrant Shares to or on the Issuer pursuant to this Warrant
Agreement shall be sufficiently given or made if sent by registered mail, return
receipt requested, postage prepaid, addressed to the Issuer at the Warrant
Office.
(b) Any notice to be given by the Issuer to the Warrant Holders or the
holders of Warrant Shares shall be sufficiently given or made if sent by
registered mail, return receipt requested, postage prepaid, addressed to such
holder as such holder's name and address shall appear on the Warrant Register or
the Common Stock or Convertible Preferred Stock registry of the Issuer, as the
case may be.
Section 20. Binding Effect. This Warrant Agreement shall be binding
upon and inure to the sole and exclusive benefit of the Issuer, its successors
and assigns, BACCFI, Affiliates of BACCFI and the registered holders from time
to time of the Warrants and the Warrant Shares.
Section 21. Continued Validity. A holder of Warrant Shares shall
continue to be entitled with respect to such Warrant Shares to all rights and
subject to all obligations to which it would have been entitled or subject as a
Warrant Holder under Sections 14 through 24 of this Warrant Agreement. The
Issuer will, at the time of each exercise of any Warrant, in whole or in part,
upon the request of the holder of the Warrant Shares issued upon such exercise
thereof, acknowledge in writing, in form reasonably satisfactory to such holder,
24
<PAGE>
its continuing obligation to afford to such holder all such rights, provided,
however, that if such holder shall fail to make any such request, such failure
shall not affect the continuing obligation of the Issuer to afford to such
holder all such rights.
Section 22. Counterparts. This Warrant Agreement may be executed in one
or more separate counterparts and all of said counterparts taken together shall
be deemed to constitute one and the same instrument.
Section 23. New York Law. THIS WARRANT AGREEMENT AND EACH WARRANT
CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Section 24. Benefits of This Warrant Agreement. Nothing in this Warrant
Agreement shall be construed to give to any Person other than the Issuer and the
registered holders of the Warrants and the Warrant Shares any legal or equitable
right, remedy or claim under this Warrant Agreement.
Section 25. Voting and Consents to be on a Fully Converted Basis.
Wherever this Warrant Agreement calls for the written consent or vote of any
combinations of the holders of the Warrants, any of the Warrant Shares, voting
as a single group, the Warrants shall be counted as if they had been exercised
for Common Stock and shares of Convertible Preferred Stock shall be counted as
if they had been converted to Common Stock.
[Remainder of page intentionally left blank]
25
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IN WITNESS WHEREOF the parties hereto have caused this Warrant
Agreement to be duly executed and delivered by their proper and duly authorized
officers, as of the date and year first above written.
OPTICARE HEALTH SYSTEMS, INC.
f/k/a SARATOGA RESOURCES, INC.
By: /s/ Dean J. Yimoyines
--------------------------------
Name: Dean J. Yimoyines
----------------------------
Title: Chief Executive Officer
----------------------------
Attest: /s/ Steven L. Ditman
-----------------------------
Name: Steven L. Ditman
----------------------------
Title: Chief Financial Officer
---------------------------
BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC.
By: /s/ Scott Kray
--------------------------------
Name: Scott Kray
-------------------------
Title: Vice President
-------------------------
By: /s/ Robert M. Biringer
--------------------------------
Name: Robert M. Biringer
--------------------------
Title: Executive Vice President
-------------------------
<PAGE>
------------------------------------------------
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
DATED AS OF AUGUST 13, 1999
------------------------------------------------
BY AND AMONG
CONSOLIDATED EYE CARE, INC.,
OPTICARE EYE HEALTH CENTERS, INC.,
AND
PRIMEVISION HEALTH, INC.,
AS BORROWERS,
OPTICARE HEALTH SYSTEMS, INC.,
AS THE PARENT,
THE LENDERS NAMED HEREIN,
BANK AUSTRIA, AG
AS THE LC ISSUER
AND
BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC.,
AS THE AGENT
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS, TERMS AND REFERENCES 1
1.1 Certain Definitions...............................................1
1.2 Use of Defined Terms.............................................24
1.3 Accounting Terms; Calculations...................................24
1.4 Other Terms......................................................24
1.5 Terminology......................................................24
1.6 Exhibits.........................................................24
2. THE LOANS 24
2.1 Term Loans.......................................................24
2.2 Revolving Loans..................................................25
2.3. Loans Outstanding Under Original Loan Agreement.................26
2.4 Borrowing Procedures.............................................27
2.5 Loan Account; Statements of Account..............................27
2.6 Use of Proceeds..................................................28
2.7 Several Obligations of the Lenders; Remedies Independent.........28
2.8 Letters of Credit................................................28
2.9 Term; Termination................................................32
2.10 Loans in Excess of Limitations..................................32
2.11 Payments........................................................32
2.12 Prorata Treatment...............................................33
2.13 Prepayments/Commitment Reduction................................33
2.14 Sharing of Payments, Etc........................................35
2.15 Certain Notices; Minimum Amounts................................37
3. PHYSICIAN LETTERS OF CREDIT 38
3.1. Issuance of Physician Letters of Credit.........................38
3.2. Letter of Credit Documents......................................38
3.3. Lender Participations...........................................38
3.4. Borrower Reimbursement..........................................39
3.5. Reimbursement by Revolving Credit Loans.........................40
3.7. Draws on Physician Letters of Credit............................40
3.8. Unconditional Obligation........................................41
3.9. Rights of LC Issuer.............................................41
3.10. Provisions Controlling.........................................41
4. FEES AND INTEREST 42
4.1 Interest.........................................................42
4.2 Limitations on Interest Periods..................................42
<PAGE>
4.3 Conversions and Continuations....................................43
4.4 Commitment Fee...................................................43
4.5 Letter of Credit Fees............................................43
4.6 Illegality.......................................................43
4.7 Inability to Determine Fixed Rate................................43
4.8 Increased Costs and Reduced Return...............................44
4.9 Compensation.....................................................45
4.10 Notice of Amounts Payable to Lenders............................45
4.11 Interest Savings Clause.........................................45
5. SECURITY INTEREST - COLLATERAL 46
5.1 Security Interest................................................46
5.2 Additional Security..............................................47
5.3 Perfection of Security Interest..................................47
5.4 Right to Inspect; Verifications..................................47
6. REPRESENTATIONS AND WARRANTIES 48
6.1 Corporate Existence and Qualification............................48
6.2 Corporate Authority; Valid and Binding Effect....................48
6.3 No Conflict......................................................48
6.4 Governmental Action..............................................49
6.5 No Material Litigation...........................................49
6.6 Solvency.........................................................49
6.7 Taxes............................................................49
6.8 Financial Information............................................49
6.9 Title to Assets..................................................51
6.10 Violations of Law...............................................51
6.11 ERISA...........................................................51
6.12 Environmental Laws..............................................51
6.13 Margin Stock....................................................52
6.14 No Default......................................................52
6.15 Chief Executive Office; Collateral Locations....................52
6.16 Corporate and Trade or Fictitious Names.........................53
6.17 Accounts........................................................53
6.18 Adequacy of Intangible Assets...................................54
6.19 Equipment.......................................................54
6.20 Inventory.......................................................54
6.21 Investments.....................................................54
6.22 Indebtedness....................................................54
6.23 Existing Liens..................................................54
6.24 Security Interest...............................................54
6.25 Regulatory Matters..............................................55
6.26 Disclosure......................................................55
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6.27 Capitalization..................................................55
6.28 Merger Agreements...............................................55
6.29 Necessary Authorizations and Healthcare Compliance..............55
6.30 Conduct.........................................................56
6.31 Employment Agreements...........................................56
6.32 Year 2000 Compliance............................................57
6.33 Agreements of PVH and Related Matters...........................57
7. AFFIRMATIVE COVENANTS 57
7.1 Records Respecting Collateral; Lockbox or Blocked Account
Arrangement......................................................57
7.2 Reporting Requirements...........................................57
7.3 Tax Returns......................................................59
7.4 Compliance With Laws.............................................59
7.5 Environmental Laws...............................................59
7.6 ERISA............................................................60
7.7 Books and Records................................................60
7.8 Notifications to the Agent and the Lenders.......................60
7.9 Insurance........................................................61
7.10 Maintenance of Property.........................................61
7.11 Preservation of Corporate Existence.............................61
7.12 Equipment.......................................................62
7.13 Additional Documents............................................62
7.14 Subsidiaries....................................................62
7.15 Upstream Payment of Dividends and Distributions.................62
7.16 Year 2000 Compliance............................................62
8. NEGATIVE COVENANTS 63
8.1 Liens............................................................63
8.2 Indebtedness.....................................................63
8.3 Asset Sales......................................................63
8.4 Guaranties.......................................................63
8.5 Investments......................................................63
8.6 Prohibition of Fundamental Changes...............................64
8.7 Issuance of Stock................................................64
8.8 Fiscal Year......................................................64
8.9 ERISA............................................................65
8.10 Relocations; Use of Name........................................65
8.11 Affiliate Transactions..........................................65
8.12 Dividends.......................................................65
8.13. Amendments or Prepayments of Subordinated Debt.................65
9. FINANCIAL COVENANTS 66
9.1 Minimum Cash Flow................................................66
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9.2 Leverage Ratio...................................................66
9.3. Senior Leverage Ratio...........................................67
9.4 Interest Coverage Ratio..........................................68
9.5. Senior Interest Coverage Ratio..................................68
9.6 Fixed Charge Coverage Ratio......................................68
9.7 Capital Expenditures.............................................68
10. EVENTS OF DEFAULT 68
10.1 Obligations.....................................................69
10.2 Misrepresentations..............................................69
10.3. Affirmative Covenants..........................................69
10.4 Other Covenants.................................................69
10.5 Other Debts.....................................................69
10.6 Tax Lien........................................................69
10.7 ERISA...........................................................69
10.8 Voluntary Bankruptcy............................................70
10.9 Involuntary Bankruptcy..........................................70
10.10 Suspension of Business.........................................70
10.11 Judgments......................................................70
10.12 RICO...........................................................71
10.13 Guaranty.......................................................71
10.14 Failure of Security............................................71
10.15 Management.....................................................71
11. REMEDIES 71
11.1 Default Rate....................................................71
11.2 Termination; Acceleration of the Obligations....................71
11.3 Set-off.........................................................72
11.4 Rights and Remedies of a Secured Party..........................72
11.5 Take Possession of Collateral...................................72
11.6 Sale of Collateral..............................................72
11.7 Notice..........................................................73
11.8 Actions in Respect of the Letters of Credit Upon Default........73
11.9 Appointment of the Agent as the Obligors' Lawful Attorney.......73
12. CONDITIONS PRECEDENT 74
12.1 Conditions Precedent to the Effective Date......................74
12.2 All Loans.......................................................77
12.3 Delay in Satisfaction of Conditions Precedent...................79
13. THE AGENT 79
13.1 Appointment, Powers and Immunities..............................79
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13.2 Reliance by Agent...............................................79
13.3 Defaults........................................................80
13.4 Rights as a Lender..............................................80
13.5 Indemnification.................................................80
13.6 Non-Reliance on Agent and other Lenders.........................81
13.7 Failure to Act..................................................81
13.8 Resignation or Removal of Agent; Co-Agent.......................81
13.9 Collateral Matters..............................................82
13.10 The Obligors Not a Beneficiary.................................84
14. MISCELLANEOUS 84
14.1 Waiver..........................................................84
14.2 Survival........................................................84
14.3 Assignments; Successors and Assigns.............................84
14.4 Counterparts....................................................86
14.5 Expense Reimbursement...........................................87
14.6 Severability....................................................88
14.7 Notices.........................................................88
14.8 Entire Agreement - Amendment....................................88
14.9 Time of the Essence.............................................89
14.10 Interpretation.................................................89
14.11 No Joint Venturer..............................................89
14.12 Cure of Defaults by Agent......................................89
14.13 Indemnity......................................................89
14.14Consequential Damages...........................................90
14.15 Attorney-in-Fact...............................................90
14.16. No Claims; Offset.............................................90
14.17 Sole Benefit...................................................90
14.18 Financing Statements...........................................90
14.19 Governing Law; Jurisdiction....................................91
14.20 Waiver of Jury Trial...........................................91
SCHEDULES AND EXHIBITS
Schedule I - Commitments of the Lenders
Schedule 1.1 - Physician Practices; Physician Practice Notes; Seller Notes
Schedule 2.8 - Existing Letters of Credit
Schedule 3.1 - Physician Letters of Credit
Schedule 6.1 - Corporate Existence and Qualification
Schedule 6.5 - Litigation and Related Proceedings
Schedule 6.7 - Tax-Related Matters
Schedule 6.11 - ERISA Matters
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Schedule 6.12 - Environmental Permits, Etc. Not Secured; Hazardous Substances
Used with Regard to the Obligors' Assets
Schedule 6.15 - Executive Offices; Business and Collateral Locations
Schedule 6.16 - Corporate and Trade or Fictitious Names
Schedule 6.18 - Intangible Assets
Schedule 6.21 - Investments
Schedule 6.22 - Indebtedness
Schedule 6.23 - Existing Liens
Schedule 6.27 - Capitalization
Schedule 6.29 - Necessary Authorizations and Healthcare Compliance
Schedule 6.31 - Employment Agreements
Schedule 6.33 - Agreements of PVH and Related Matters
Exhibit A - Form of Term Note
Exhibit B - Form of Revolving Note
Exhibit C - Form of Notice of Borrowing
Exhibit D - Form of Request for Letter of Credit
Exhibit E - Form of Physician Note Letter of Credit
Exhibit F - Form of Physician Put Letter of Credit
Exhibit G - Form of Transition Agreement
Exhibit H - Form of Services Agreement
Exhibit I - Form of Compliance Certificate
Exhibit J - Form of Joinder Agreement
Exhibit K - Form of Opinion of Bergman, Horowitz & Reynolds, P.C.
Exhibit L - Form of Assignment
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (the "Agreement")
is made and entered into as of the 13th day of August, 1999, by and among
CONSOLIDATED EYE CARE, INC., a North Carolina corporation ("CEC"), OPTICARE EYE
HEALTH CENTERS, INC., a Connecticut corporation ("Opticare"), PRIMEVISION
HEALTH, INC., a Delaware corporation ("PVH" and, together with CEC and Opticare,
the "Borrowers"), OPTICARE HEALTH SYSTEMS, INC., a Delaware corporation f/k/a
Saratoga Resources, Inc. (the "Parent" and, together with the Borrowers, the
"Obligors"), each of the Lenders from time to time party hereto (hereinafter
referred to individually as a "Lender" and collectively as the "Lenders"), BANK
AUSTRIA, AG, in its capacity as LC Issuer, and BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC., as agent for the Lenders (in such capacity, together
with its successors and assigns in such capacity, hereinafter referred to as the
"Agent");
W I T N E S S E T H:
WHEREAS, the PVH, the Agent and the Lenders are party to that certain
Loan and Security Agreement, dated as of July 3, 1996, as amended and restated
by that certain Amended and Restated Loan and Security Agreement dated as of May
30, 1997, as amended by that certain First Amendment to Loan and Security
Agreement dated as of June 26, 1998, as amended (collectively, the "Original
Loan Agreement"), pursuant to which the Lenders made available to the PVH term
loans in the principal amount of Thirty Two Million Dollars ($32,000,000) and
revolving loans in a principal amount of up to Eighteen Million Dollars
($18,000,000); and
WHEREAS, PVH has been, or will be acquired by the Parent, and in
connection with such acquisition, the aggregate amount of indebtedness under the
Original Loan Agreement has been reduced and the Obligors desire to restructure
the loan facilities under the Original Loan Agreement as hereinafter set forth;
and
WHEREAS, the Lenders and the Agent are willing to extend restructure
the loan facilities under the Original Loan Agreement as hereinafter set forth,
subject to the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the foregoing premises, to induce
the Agent and the Lenders to extend the financing provided for herein, and for
other good and valuable consideration, the sufficiency and receipt of all of
which are acknowledged by the Obligors, the Obligors, the Lenders, the LC Issuer
and the Agent agree as follows:
1. DEFINITIONS, TERMS AND REFERENCES
1.1 CERTAIN DEFINITIONS. When used herein, the following terms shall
have the following meanings:
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"Account Debtor" shall mean any "account debtor", as such term is
defined in Section 9-105(1)(a) of the UCC and, in any event, shall include any
Person who is or may become obligated on any Account.
"Accounts" shall mean any "accounts", as such term is defined in
Section 9-106 of the UCC, of any Person, whether now owned or hereafter arising
or acquired, and in any event shall include all of such Person's accounts,
contract rights, book debts and other forms of obligations, whether now existing
or hereafter acquired or arising or in which such Person now has or hereafter
acquires any rights, including, without limitation, all present and future
rights to payments for goods, merchandise or Inventory sold or leased or for
services rendered, whether or not represented by invoices or other billing, and
whether or not earned by performance; proceeds of any letter of credit on which
such Person is a beneficiary and all forms of obligations whatsoever owing to
such Person, together with all instruments and documents of title representing
any of the foregoing, all rights in any goods, merchandise or Inventory which
any of the foregoing may represent, all rights in any returned or repossessed
goods, merchandise or Inventory, and all rights, security and guaranties with
respect to each of the foregoing, including, without limitation, any rights of
stoppage in transit.
"Acquisition" shall mean any transaction, or any series of related
transactions, consummated on or after the Effective Date, by which (i) the
Parent and/or any of its Subsidiaries acquires the capital stock or all or any
part of the assets of any Person, or any division of any Person, whether through
Investment, purchase of assets, merger or otherwise or (ii) any Person that was
not theretofore a Subsidiary of the Parent becomes a Subsidiary of the Parent
and is consolidated with the Parent for financial reporting purposes.
"Adjusted Cash Flow" shall mean, for any period, the Cash Flow of the
Parent and its Subsidiaries for such period adjusted on a pro forma basis in
accordance with GAAP to reflect such cost savings resulting from the Saratoga
Acquisitions as are demonstrated by Parent and approved by the Agent.
"Affiliate" shall mean, as to any Person, any other Person which,
directly or indirectly, owns or controls, on an aggregate basis, including all
beneficial ownership and ownership or control as a trustee, guardian or other
fiduciary, at least ten percent (10%) of the outstanding shares of capital stock
or other equivalent ownership interests having ordinary voting power to elect
the board of directors or other governing body (irrespective of whether, at the
time, stock or securities of any other class or classes of such Person shall
have or might have voting power by reason of the happening of any contingency)
of such Person, or which controls, is controlled by or is under common control
with such Person; provided, however, that in no event shall Obligors and their
Subsidiaries, on the one hand, and the Agent, the LC Issuer or any Lender, on
the other hand, be deemed or regarded as Affiliates of each other. For the
purposes of this definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of management and
policies, whether through the ownership of voting securities, by contract or
otherwise.
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<PAGE>
"Agent" shall have the meaning given to such term in the Recitals to
this Agreement.
"Aggregate Commitment" shall mean, at any time, the aggregate amount of
the Commitments of all of the Lenders at such time, which as of the Effective
Date shall be Twelve Million Seven Hundred Thousand Dollars ($12,700,000), as
the same may be reduced from time to time in accordance with Section 2.13
hereof.
"Agreement" shall mean this Amended and Restated Loan and Security
Agreement, as amended, restated supplemented or otherwise modified from time to
time.
"Amortization Date" shall mean January 1, April 1, July 1 and October 1
of each year, commencing January 1, 2001.
"Annualized Four Quarter Period" shall mean, with respect to Adjusted
Cash Flow, Fixed Charges or Interest Expense, (a) in the case of the fiscal
quarter ending December 31, 1999, the amount of such Adjusted Cash Flow, Fixed
Charges or Interest Expense, as the case may be, for such fiscal quarter,
multiplied by four (4); (b) in the case of the fiscal quarter ending March 31,
2000, the amount of such Adjusted Cash Flow, Fixed Charges or Interest Expense,
as the case may be, for the two fiscal quarter period then ending, multiplied by
two (2); (c) in the case of the fiscal quarter ending June 30, 2000, the amount
of such Adjusted Cash Flow, Fixed Charges or Interest Expense, as the case may
be, for the three fiscal quarter period then ending, multiplied by four-thirds
(4/3rds); and (d) in the case of each subsequent fiscal quarter, the amount of
such Adjusted Cash Flow, Fixed Charges or Interest Expense, as the case may be,
for the four fiscal quarter period then ending.
"Applicable Law" shall mean, with respect to any Person, all provisions
of statutes, rules, regulations and orders of any Governmental Authority
applicable to such Person, and all orders and decrees of all courts and
arbitrators in proceedings or actions in which such Person in question is a
party.
"Applicable Margin" shall mean (a) with respect to Eurodollar Loans,
two and one-quarter percent (2 1/4%) per annum and (b) with respect to Base Rate
Loans, three quarters of one percent (3/4%) per annum; provided, however, that
if subsequent to the Effective Date and prior to February 9, 2000, Parent has
received Net Cash Proceeds of not less than $7,000,000 in the aggregate from the
issuance of Qualified Junior Capital, then following the receipt of such Net
Cash Proceeds, the Applicable Margin shall be (i) with respect to Eurodollar
Loans, one and three-quarters percent (1 3/4%) per annum and (b) with respect to
Base Rate Loans, one-quarter percent (1/4%) per annum.
"ASC Subsidiary" shall have the meaning specified in Section 8.5(d)
hereof.
"Asheville Eye" shall mean Asheville Eye Medical and Surgical
Associates, P.L.L.C.
"Bank Austria" means Bank Austria, AG, an Austrian banking corporation
having offices in New York, New York, and its successors and assigns.
3
<PAGE>
"BACACF" means Bank Austria Creditanstalt Corporate Finance, Inc., a
Delaware corporation, and its successors and assigns.
"Bankruptcy Code" shall mean the Bankruptcy Reform Act of 1978, as the
same may be amended from time to time.
"Base Lending Rate" shall mean an interest rate per annum, fluctuating
daily, equal to the higher of (a) the rate announced by Bank Austria from time
to time at its principal office in New York, as its prime rate for domestic
(United States) commercial loans in effect on such day; and (b) the Federal
Funds Rate in effect on such day plus one-half of one percent (1/2 of 1%). The
Base Lending Rate is not necessarily intended to be the lowest rate of interest
charged by Bank Austria in connection with extensions of credit. Each change in
the Base Lending Rate shall result in a corresponding change in the interest
rate hereunder with respect to a Base Rate Loan and such change shall be
effective on the effective date of such change in the Base Lending Rate.
"Base Rate Loan" shall mean a Loan bearing interest at a rate based on
the Base Lending Rate.
"Borrower" shall have the meaning given to such term in the Recitals of
this Agreement.
"Borrowing Availability" shall mean,
(a) for the period beginning on the Effective Date and ending
on December 31, 1999, an amount equal to Twelve Million Seven Hundred
Thousand ($12,700,000) Dollars;
(b) if no Qualifying Equity Offering has previously closed,
then for the period beginning January 1, 2000 and until the closing by
the Parent of a Qualifying Equity Offering:
(i) for the period beginning on January 1, 2000 and
ending on June 30, 2000, an amount equal to Adjusted Cash Flow
multiplied by 4.50;
(ii) for the period beginning on July 1, 2000 and
ending on March 31, 2001, an amount equal to Adjusted Cash
Flow multiplied by 4.25;
(iii) for the period beginning on April 1, 2001 and
ending on June 30, 2001, an amount equal to Adjusted Cash Flow
multiplied by 4.00;
(iv) for the period beginning on July 1, 2001 and
ending on September 30, 2001, an amount equal to Adjusted Cash
Flow multiplied by 3.75;
(v) for the period beginning on October 1, 2001 and
ending on June 30, 2002, an amount equal to Adjusted Cash Flow
multiplied by 3.25;
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<PAGE>
(vi) for the period beginning on July 1, 2002 and
ending on September 30, 2002, an amount equal to Adjusted Cash
Flow multiplied by 3.00;
(vii) for the period beginning on October 1, 2002 and
ending on June 30, 2003, an amount equal to Adjusted Cash Flow
multiplied by 2.75;
(viii) thereafter, an amount equal to Adjusted Cash
Flow multiplied by 2.50;
(c) commencing with the later to occur of January 1, 2000 and
the closing of a Qualifying Equity Offering:
(i) for the period beginning on January 1, 2000 and
ending on March 31, 2000, an amount equal to Adjusted Cash
Flow multiplied by 4.50;
(ii) for the period beginning on April 1, 2000 and
ending on June 30, 2000, an amount equal to Adjusted Cash Flow
multiplied by 4.25;
(iii) for the period beginning on July 1, 2000 and
ending on September 30, 2000, an amount equal to Adjusted Cash
Flow multiplied by 4.00;
(iv) for the period beginning on October 1, 2000 and
ending on March 31, 2001, an amount equal to Adjusted Cash
Flow multiplied by 3.75;
(v) for the period beginning on April 1, 2001 and
ending on June 30, 2001, an amount equal to Adjusted Cash Flow
multiplied by 3.50;
(vi) for the period beginning on July 1, 2001 and
ending on September 30, 2001, an amount equal to Adjusted Cash
Flow multiplied by 3.25;
(vii) for the period beginning on October 1, 2001 and
ending on June 30, 2002, an amount equal to Adjusted Cash Flow
multiplied by 3.00;
(viii) for the period beginning on July 1, 2002 and
ending on September 30, 2002, an amount equal to Adjusted Cash
Flow multiplied by 2.75;
(ix) thereafter, an amount equal to Adjusted Cash
Flow multiplied by 2.50.
"Bauman Security Agreement" shall mean that certain Security Agreement,
dated as of October 23, 1998 by and among Bauman & Associates of Cheshire, Inc.,
Bauman & Associates of Torrington, Inc., Bauman & LeFevre Optometrists and
Robert C. Bauman, as sellers, and Opticare, as debtor.
5
<PAGE>
"Bauman Properties" shall mean the Equipment, Inventory and Trademarks
of Opticare located or, in the case of the Trademarks, used in the business
conducted at (a) 1785 Highland Avenue, Cheshire, Connecticut, (b) 811 East Main
Street, Torrington, Connecticut, (c) 997 Main Street, Watertown, Connecticut and
(d) 604 Lakewood Road, Waterbury, Connecticut, in each case only to the extent
that such Equipment, Inventory and Trademarks are subject to the Bauman Security
Agreement.
"Business Day" shall mean a day on which banks are not required or
authorized to close in Greenwich, Connecticut or New York City, New York and, if
such day relates to a borrowing of, a payment or prepayment of principal or
interest on a Continuation or Conversion of or into, or an Interest Period for,
a Eurodollar Loan or a notice by a Borrower with respect to any such borrowing,
payment, prepayment, Continuation, Conversion or Interest Period, which is also
a day on which dealings by and between banks in U.S. dollar deposits are carried
out in the London interbank Eurodollar market.
"California Practices" shall mean, collectively, Riverside Eye
Specialists Medical Group, Inc.; Lawrence S. Rice, a Medical Corporation; Robert
M. Thomas, Jr. M.D., A Medical Corporation; Mark E. Schneider, M.D., Inc.;
and Jeffrey P. Wasserstrom, M.D., a Medical Corporation.
"Capital Expenditures" shall mean, for any period, expenditures
(including the aggregate amount of Capital Lease Obligations incurred during
such period) incurred to acquire or construct fixed assets, plant and equipment
(including renewals, improvements and replacements, but excluding repairs)
during such period, computed on a consolidated basis for the Parent and its
consolidated Subsidiaries in accordance with GAAP.
"Capital Lease Obligations" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property, which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board) and,
for the purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof determined in accordance with GAAP (including such
Statement No. 13).
"Capital Stock" means (a) in the case of a corporation, corporate
stock; (b) in the case of an association or business entity, any and all shares,
interest, participations, rights or other equivalents (however designated) of
equity interests; (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); (d) any other
interest or participation that confers on a Person the right to receive a share
of the profits and losses of, or distributions of assets of, the issuing Person;
and (e) any securities convertible into or exchangeable for any of the foregoing
or any warrants, rights or options to acquire any of the foregoing.
"Cash Flow" shall mean, for any period for which the same is computed,
the sum of (a) net income (loss) for such period, plus (b) Interest Expense for
such period, plus (c) depreciation
6
<PAGE>
and amortization for financial reporting purposes for such period, plus (d)
income tax expense for such period, as each such item is computed on a
consolidated basis for the Parent and its Subsidiaries in accordance with GAAP.
"CEC" shall have the meaning given to such term in the Recitals to this
Agreement.
"Chattel Paper" shall mean any "chattel paper", as such term is defined
in Section 9-105(1)(b) of the UCC, of any Person, whether now owned or hereafter
acquired or arising.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder from time to time.
"Collateral" shall mean the property of the Obligors described in
Section 5.1 or Section 5.2, or any part thereof, as the context shall require,
and all other property of any other Person, in which the Agent has, or is to
have, a Lien on pursuant thereto or pursuant to any of the Loan Documents, as
security for payment of the Obligations.
"Commitment" shall mean, with respect to any Lender, the obligation of
such Lender to make Revolving Loans to the Borrowers and to incur Line Letter of
Credit Obligations on the Effective Date or otherwise at the request of the
Borrowers, subject to the terms and conditions hereof, as the same may be
reduced from time to time in accordance with Section 2.12 hereof. The Commitment
of each Lender as of the Effective Date is set forth on SCHEDULE I hereto.
Repayments of the Revolving Credit Loans shall not affect the amount of the
Commitment unless (a) such repayment is accompanied by a notice from the
Obligors reducing the Commitment pursuant to Section 2.13 or (b) such reduction
is expressly required by the terms hereof.
"Commitment Fee" shall mean that amount due and payable to the Lenders
from the Borrowers pursuant to and in the amount specified in Section 4.4
hereof.
"Common Stock" shall mean the common stock of the Parent, as currently
authorized by the Certificate of Incorporation of the Parent, together with all
shares of the same class of common stock as are hereafter authorized.
"Commitment Termination Date" shall mean the earlier to occur of (a)
the date upon which the Commitments are reduced to zero, whether voluntarily or
involuntarily, in accordance with the terms hereof, and (b) the Maturity Date.
"Continue", "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 4.3 hereof of a Loan as a Eurodollar Loan from
one Interest Period to the next Interest Period.
"Contracts" shall mean all contracts, undertakings, or other agreements
(other than rights evidenced by Chattel Paper, Documents or Instruments) in or
under which a Person may now or
7
<PAGE>
hereafter have any right, title or interest, including, without limitation, with
respect to an Account, any agreement relating to the terms of payment or the
terms of performance thereof.
"Convert", "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 4.3 hereof of a Base Rate Loan into a Eurodollar Loan or of
a Eurodollar Loan into a Base Rate Loan.
"Converting Physician Practices" shall mean those Physician Practices
identified as Converting Physician Practices on SCHEDULE 1.1 hereto.
"Convertible Preferred Stock" shall mean the Series A Convertible
Preferred Stock, par value $0.001 per share, of the Parent.
"Current Assets" shall mean, for any Person and at any time, all assets
of such Person which, in accordance with GAAP, would be classified as current
assets at such time.
"Current Liabilities" shall mean, for any Person and at any time, all
liabilities of such Person which, in accordance with GAAP, would be classified
as current liabilities at such time.
"Default" shall mean the occurrence of any event or condition which,
after satisfaction of any requirement for the giving of notice or the lapse of
time, or both, would become an Event of Default.
"Default Rate" shall mean, (a) with respect to the unpaid portion of
any Loan, an interest rate per annum equal to two percent (2%) above the
interest rate set forth for such Loan in Section 4.1(a)(i) or (ii) hereof, as
applicable, or (b) with respect to any portion of the Obligations other than
Loans, two percent (2%) above the rate set forth in Section 4.1(a)(ii) hereof.
"Dissident Physician Practices" means, collectively, Eye Care
Solutions, Inc., a Medical Group; Francisco J. Pablan, M.D.; and Parris-Castoro
Eye Care Center, P.A.
"Documents" shall mean any "documents", as such term is defined in
Section 9-105(1)(f) of the UCC, of any Person, whether now owned or hereafter
acquired or arising.
"Effective Date" shall mean the date that this Agreement has been
signed by each of the Obligors, the Lenders, the LC Issuer and the Agent and on
which all of the conditions precedent set forth in Section 12.1 have been
satisfied.
"Eligible Assignee" shall mean any bank or other entity to which a
Lender assigns all or any part of any Loan pursuant to Section 14.3(c) and
"Eligible Assignees" shall mean, collectively, all banks and other entities to
which any Lender assigns all or any part of any Loan pursuant to Section 14.3(c)
hereof provided such entity is acceptable to the Agent and, if required, the
Parent.
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<PAGE>
"Eligible Physician Practice Notes" shall mean promissory notes
executed and delivered by Converting Physician Practices in favor of PVH or its
Subsidiaries which, unless otherwise expressly approved by BACACF (a) bear
interest at a rate of not less than seven and one-half percent (7 1/2%) per
annum; (b) provide for monthly payments of interest and principal; (c) are
repayable in full not later than the second anniversary of the Effective Date;
(d) provide that they are payable without offset, deduction or counterclaim; (e)
are secured by the Inventory and Accounts of the makers thereof; (f) provide for
the makers thereof to deliver to the holder thereof such maker's quarterly
financial statements and a quarterly agings of Accounts; (g) are otherwise on
terms and conditions satisfactory to BACACF and (h) have been endorsed to
BACACF. The Eligible Physician Practice Notes are set forth on SCHEDULE 1.1
hereto.
"Environmental Laws" shall mean all federal, state, local and foreign
laws relating to pollution or protection of the environment, including laws
relating to emissions, discharges, releases or threatened releases of any
Hazardous Substance into the environment (including without limitation ambient
air, surface water, ground water or land), or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of Hazardous Substances and any and all
regulations, codes, standards, plans, orders, decrees, judgments, injunctions,
notices or demand letters issued, entered, promulgated or approved thereunder.
"Equipment" shall mean any "equipment", as such term is defined in
Section 9-109(2) of the UCC, of any Person, whether now owned or hereafter
existing or arising, and in any event shall include all of such Person's
equipment, fixtures and leasehold improvements, whether now existing or
hereafter acquired or arising or in which such Person now has or hereafter
acquires any rights, including, without limitation, all furniture, machinery,
vehicles and trade fixtures, together with any and all accessories, accessions,
parts and appurtenances thereto, substitutions therefor and replacements
thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and all rules and regulations from time to time
promulgated thereunder.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which, together with any Obligor or any Subsidiary of any Obligor,
is treated as a single employer under Section 414(b), (c), (m) or (o) of the
Code.
"Eurodollar Loan" shall mean a Loan bearing interest for a particular
Interest Period at a rate based on the Quoted Rate.
"Event of Default" shall mean any of the events or conditions described
in Article 10 hereof.
"Excess Cash Flow" shall mean, for the Parent and its consolidated
Subsidiaries for any period of calculation, Cash Flow for such period, minus
scheduled payments of principal on the Loans and other Indebtedness for money
borrowed during such period, minus cash Interest Expense paid or payable during
such period, plus any decrease in Working Capital during such
9
<PAGE>
period, minus any increase in Working Capital during such period, minus Capital
Expenditures made during such period, to the extent such Capital Expenditures
are expressly permitted hereunder, minus the cash purchase price paid during
such period in respect of Acquisitions, to the extent such Acquisitions are
expressly permitted hereunder or are consented to by the Required Lenders.
"Federal Funds Rate" shall mean, for any day, the overnight federal
funds rate in New York City, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) in the Federal Reserve
Statistical Release H.15 (519) or any successor publication, or if such rate is
not so published for any day which is a Business Day, the average of the
quotations for such day on overnight federal funds transactions in New York City
received by the Agent from three federal funds brokers of recognized standing
selected by the Agent.
"Fixed Charges" shall mean, for any period, the sum of (a) scheduled
payments of principal of Indebtedness during such period, plus (b) Interest
Expense for such period, in each case calculated on a consolidated basis for the
Parent and its Subsidiaries in accordance with GAAP.
"Fixed Charge Coverage Ratio" shall mean, as of the end of any fiscal
quarter for which the same is computed, the ratio of (a) Adjusted Cash Flow for
the Annualized Four Quarter Period then ending to (b) Fixed Charges for the
Annualized Four Quarter Period then ending, in each case calculated on a
consolidated basis for the Parent and its Subsidiaries in accordance with GAAP.
"Foreign Tax" shall mean and include any present or future tax, levy,
cost or charge of any nature imposed by any Governmental Authority, excluding
taxes on or measured by the net income of any Lender imposed by any jurisdiction
in which the principal or relevant lending office of any Lender is located.
"GAAP" shall mean generally accepted accounting principles consistently
applied and maintained throughout the period indicated and consistent with the
prior financial practice of the Parent and its Subsidiaries, as reflected in the
financial information referred to in Section 6.8 hereof.
"General Intangibles" shall mean all "general intangibles", as such
term is defined in Section 9-106 of the UCC, of any Person, whether now existing
or hereafter acquired or arising or in which such Person now has or hereafter
acquires any rights, including, without limitation, all rights under escrow
agreements and in all property held pursuant thereto, choses in action, causes
of action, corporate or other business records, inventions, designs, Patents,
patent applications, service marks, Trademarks, trade names, trade secrets, good
will, copyrights, registrations, licenses, franchises, customer lists, agency
and other contracts, tax refund claims, computer programs, all claims under
guaranties, security interests or other security held by or granted to such
Person to secure payment of any of the Accounts by an Account Debtor, all rights
to indemnification, and all other intangible property of every kind and nature
(other than Accounts).
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"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, and any agency, department or other
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any government.
"Guarantee" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock or equity interests of any Person, or an agreement to purchase, sell
or lease (as lessee or lessor) property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of such
debtor's obligations or an agreement to assure a creditor against loss, and
including, without limitation, causing a bank or other financial institution to
issue a letter of credit or other similar instrument for the benefit of another
Person, but excluding (a) endorsements for collection or deposit in the ordinary
course of business and (b) any such agreement pursuant to which the obligation
is fulfilled solely by the issuance of common stock of the guarantor. The terms
"Guarantee" and "Guaranteed" used as a verb shall have a correlative meaning.
"Guarantors" shall mean, collectively, each of the Persons signatory to
the Guaranty, and "Guarantor" means any of the Guarantors.
"Guaranty" shall mean that certain Guaranty, dated as of the date
hereof, executed by the Obligors and each of the Guarantors in favor of the
Agent and the Lenders, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"Hazardous Substances" shall mean any pollutant, contaminant,
hazardous, toxic or dangerous waste, substance or material, or any other
substance or material regulated or controlled pursuant to any Environmental Law,
including, without limiting the generality of the foregoing, asbestos, PCBs,
petroleum products (including crude oil, natural gas, natural gas liquids,
liquified natural gas or synthetic gas) or any other substance defined as a
"hazardous substance," "extremely hazardous waste," "restricted hazardous
waste," "hazardous material," "hazardous chemical," "hazardous waste,"
"regulated substance," "toxic chemical," "toxic substance" or other similar term
in any Environmental Law.
"Indebtedness" shall mean, as applied to any Person at any time, (a)
all indebtedness, obligations or other liabilities of such Person, contingent or
otherwise (i) for borrowed money or evidenced by debt securities, debentures,
acceptances, notes or other similar instruments, and any accrued interest, fees
and charges relating thereto; (ii) under profit payment agreements or similar
agreements; (iii) with respect to letters of credit issued for such Person's
account; (iv) to pay the deferred purchase price of property or services, except
unsecured accounts payable and accrued expenses arising in the ordinary course
of business which are not more than sixty (60) days past due; or (v) Capital
Lease Obligations; (b) all indebtedness, obligations or other liabilities of
such Person or others secured by a Lien on any property of such Person, whether
or
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not such indebtedness, obligations or liabilities are assumed by such Person,
all as of such time; (c) all indebtedness, obligations or other liabilities of
such Person in respect of any foreign exchange contract or Interest Hedge
Agreement, net of liabilities owed to such Person by the counterparties thereon;
(d) all shares of Capital Stock subject (upon the occurrence of any contingency
or otherwise) to mandatory redemption prior to the Maturity Date; and (e)
indebtedness of others Guaranteed by such Person; provided, however, that
Indebtedness shall not include promissory notes, if any, executed on the date
hereof which under GAAP are not set forth or are required in accordance with
GAAP to be set forth on the balance sheet of the maker thereof.
"Instruments" shall mean any "instrument", as such term is defined in
Section 9-105(l)(i) of the UCC, of any Person, whether now owned or hereafter
arising or acquired, other than instruments that constitute, or are a part of a
group of writings that constitute, Chattel Paper.
"Intercompany Loans" shall mean loans made by any Obligor to a
Subsidiary of such Obligor from time to time.
"Intercompany Loan Documents" shall mean the instruments, documents and
agreements between PVH and its Subsidiaries, including, but not limited to,
intercompany loan and security agreements and the promissory notes, entered into
by PVH and its Subsidiaries to evidence intercompany loans made by PVH to such
Subsidiaries in connection with the Original Loan Agreement.
"Interest Coverage Ratio" shall mean, as of the end of any fiscal
quarter for which the same is computed, the ratio of (a) Adjusted Cash Flow for
the Annualized Four Quarter Period then ending to (b) Interest Expense for the
Annualized Four Quarter Period then ending, in each case calculated on a
consolidated basis for the Parent and its Subsidiaries in accordance with GAAP.
"Interest Expense" shall mean, for any period, total interest expense,
whether paid, accrued or capitalized (including the interest component of
Capital Lease Obligations), including, but not limited to, all origination and
other fees, all amortization of original issue discount and the net amount
payable under any Interest Hedge Agreement with any Person, all as calculated on
a consolidated basis for the Parent and its Subsidiaries in accordance with
GAAP.
"Interest Hedge Agreement" shall mean, for any Person, an interest rate
swap, cap or collar agreement or similar arrangement between such Person and one
or more financial institutions providing for the transfer or mitigation of
interest risks either generally or under specific contingencies.
"Interest Period" shall mean, in connection with any Eurodollar Loan,
the period beginning on the date such Eurodollar Loan is made, Continued or
Converted and continuing for one (1), two (2), three (3) or six (6) months as
selected by the applicable Borrower by notice to the Agent. Notwithstanding the
foregoing, however, (a) any applicable Interest Period which would otherwise end
on a day which is not a Business Day shall be extended to the next
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succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the immediately preceding
Business Day; (b) any applicable Interest Period which begins on a day for which
there is no numerically corresponding day in the calendar month during which
such Interest Period is to end shall (subject to clause (a) above) end on the
last day of such calendar month; and (c) no Interest Period shall extend beyond
the Maturity Date or such other date as would interfere with the repayment
obligations of the applicable Borrower hereunder.
"Inventory" shall mean all "inventory" of any Person, as such term is
defined in Section 9-109(4) of the UCC, whether now existing or hereafter
acquired or arising or in which such Person now has or hereafter acquires any
rights, including, without limitation, any and all goods, merchandise and other
personal property, wheresoever located and whether or not in transit, which is
or may at any time be held for sale or lease or to be furnished under any
contract of service or held as raw materials, work in process, finished goods or
materials, and supplies of any kind, nature or description used or consumed in
such Person's business, including, without limitation, all such property the
sale or other disposition of which has given rise to an Account and which may
have been returned to or repossessed or stopped in transit by such Person.
"Investment" shall mean, for any Person: (a) the acquisition (whether
for cash, property, services or securities or otherwise) of Capital Stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person or any agreement to make any such acquisition
(including, without limitation, any "short sale" or any sale of any securities
at a time when such securities are not owned by the Person entering into such
short sale); (b) any deposit with, or advance, loan or other extension of credit
to, such Person (other than any such advance, loan or extension of credit
representing the purchase price of goods, intangibles or services sold or
supplied in the ordinary course of business) or Guarantee of, or other
contingent obligation with respect to, Indebtedness or other liability of such
Person and (without duplication) any amount committed to be advanced, lent or
extended to such Person; (c) any Acquisition other than the acquisition of
goods, intangibles or services purchased in the ordinary course of business and
accounted for as an expense in accordance with GAAP or as a Capital Expenditure
or (d) the entering into of any Interest Hedge Agreement.
"Investment Property" shall mean all "investment property" of a Person,
as such term is defined in Section 9-115 of the UCC, whether now owned or
existing or hereafter acquired or arising, and, in any event, shall include all
of the following: (a) all securities of held by such Person, whether
certificated or uncertificated; (b) any share, participation or other interest
in another Person or in property or in an enterprise of another Person held
directly or indirectly by such Person which is, or is of a type, dealt in or
traded on financial markets, or which is recognized in any area in which it is
issued or dealt in as a medium for investment; (c) all commodity futures
contracts of such Person, options on any commodity futures contract held by such
Person, all commodity options or other contracts of such Person that are traded
on, or subject to the rules of, a board of trade that has been designated as a
contract market for such contracts pursuant to the federal commodities laws or
which are traded on one or more foreign commodity boards of trade, exchanges, or
markets and are carried on the books of registered futures commodity merchant or
on
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the books of a Person providing clearance or settlement services for a board of
trade that has been designated as a contract market for such a contract pursuant
to the federal commodities laws; (d) any of the foregoing held, directly or
indirectly, in the name of any other Person to the extent such other Person has
expressly agreed to treat such Person as the Person entitled to exercise the
rights comprising the foregoing; and (e) all right, title and interest of such
Person in any account to which any of the foregoing have been credited.
"Joinder Agreement" shall have the meaning given to such term in
Section 7.13 of this Agreement.
"Lenders" shall have the meaning given to such term in the Recitals of
this Agreement.
"Letter of Credit" shall mean either a Line Letter of Credit, a
Physician Note Letter of Credit or a Physician Put Letter of Credit or any
combination thereof, as the context may require.
"Letter of Credit Documents" shall mean, collectively, such
reimbursement agreements and other instruments, documents or agreements as shall
be executed by any Obligor with or in favor of the LC Issuer in connection with
the issuance of an Letter of Credit hereunder.
"Letter of Credit Obligations" shall mean, collectively, the Line
Letter of Credit Obligations and the Physician Letter of Credit Obligations.
"Leverage Ratio" shall mean, on any date, the ratio of (a) the
principal amount of Indebtedness outstanding as of such date, to (b) Adjusted
Cash Flow for the Annualized Four Quarter Period ending on or most recently
ended prior to such date, in each case computed on a consolidated basis for the
Parent and its Subsidiaries in accordance with GAAP.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the UCC or comparable law of any jurisdiction).
"Line Letter of Credit" shall mean any documentary or standby letter of
credit issued or deemed issued for the account of any Obligor or for which the
Lenders have incurred Line Letter of Credit Obligations under Section 2.8 of
this Agreement.
"Line Letter of Credit Obligations" shall mean all outstanding
obligations incurred by the LC Issuer or any of its Affiliates at the request of
any Obligor, whether direct or indirect, contingent or otherwise, due or not
due, in connection with the issuance or deemed issuance by the LC Issuer or any
of its Affiliates, of Line Letters of Credit, including, without limitation, the
undrawn amount of any outstanding Line Letter of Credit, any amount disbursed by
the LC Issuer or any of its Affiliates pursuant to a Line Letter of Credit for
which the LC Issuer has not
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been reimbursed by any Obligor pursuant to Section 2.8 hereof. The amount of
such Line Letter of Credit Obligations at any time shall equal the maximum
amount which may be payable by the LC Issuer pursuant to the Line Letters of
Credit at such time.
"Loans" shall mean, collectively, the Revolving Loans and the Term
Loans, and "Loan" shall mean either a Revolving Loan or a Term Loan.
"Loan Documents" shall mean this Agreement, the Notes, the Guaranty,
the Security Agreement, the Stock Pledge Agreement, the Letter of Credit
Documents, the documents executed by the Obligors or their respective
Subsidiaries pursuant to Sections 5.2 or 12.1 hereof, any financing statements
covering portions of any collateral, including the Collateral, and any and all
other instruments, documents, and agreements now or hereafter executed and/or
delivered by the any Obligor or any Subsidiary of any Obligor in connection
herewith, or any one, more, or all of the foregoing, as the context shall
require, and "Loan Document" shall mean any one of the Loan Documents.
"Margin Stock" shall mean "margin stock" as such term is defined from
time to time in Regulations T, U or X of the Board of Governors of the Federal
Reserve System.
"Marlin Subordinated Convertible Note" shall mean that certain
Subordinated Convertible Promissory Note of even date herewith in the principal
amount of $4,000,000, executed by Parent in favor of Marlin Capital, L.P.
"Material Adverse Effect" shall mean any event or condition which,
alone or when taken with other events or conditions occurring or existing
concurrently therewith (a) has or is reasonably expected to have a material
adverse effect on the business, operations, condition (financial or otherwise),
assets, liabilities or properties of the Parent and its Subsidiaries, taken as a
whole; (b) has or is reasonably expected to have any material adverse effect
whatsoever on the validity or enforceability of this Agreement or any Loan
Document; (c) materially impairs or is reasonably expected to materially impair
the ability of the Obligors, or any of them, to pay and perform the Obligations;
(d) materially impairs or is reasonably expected to materially impair the
ability of the Agent, the LC Issuer or the Lenders to enforce their respective
rights and remedies under this Agreement and the Loan Documents; or (e) has or
is reasonably expected to have any material adverse effect on the Collateral,
the Liens of the Agent in the Collateral or the priority of such Liens.
"Maturity Date" shall mean June 1, 2004.
"Merger Agreement" shall mean that certain Agreement and Plan of Merger
dated as of April 12, 1999, by and among Parent, Opticare Shellco Merger
Corporation, a Delaware corporation, PrimeVision Shellco Merger Corporation, a
Delaware corporation, Opticare and PVH.
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"MPPAA" shall mean the Multiemployer Pension Plan Amendments Act of
1980, amending Title IV of ERISA.
"Multiemployer Plan" shall have the same meaning as set forth in
Section 4001(a)(3) of ERISA.
"Necessary Authorizations" shall mean, with respect to any Person, all
certificates of need, authorizations, certifications, consents, approvals,
permits, licenses, accreditations and exemptions, filings and registrations, and
reports required by Applicable Law, including, without limitation, Applicable
Law relating to the ownership and operation of the Obligors and its Subsidiaries
and related services provided by each such Person, and "Necessary Authorization"
shall mean any one of the Necessary Authorizations.
"Net Cash Proceeds" shall mean, with respect to any sale, lease,
transfer or other disposition of any asset or the sale or issuance of any
Indebtedness or Capital Stock, the aggregate amount of cash received from time
to time by or on behalf of such Person in connection with such transaction,
after deducting therefrom only
(a) reasonable and customary brokerage commissions,
underwriting fees and discounts, legal fees, finder's fees and other
similar fees and commissions, and
(b) other out-of-pocket expenses reasonably in connection with
such transaction, such as appraisals, transportation costs and similar
expenses;
(c) in the case of the sale, lease, transfer or other
disposition of assets, the amount of taxes payable in connection with
or as a result of such transaction,
(d) in the case of the sale, lease, transfer or other
disposition of assets, amounts provided as a reserve, in accordance
with GAAP, against any liabilities under any indemnification
obligations associated with such transaction (provided that, to the
extent and at the time any such amounts are released from such reserve,
such amounts shall constitute Net Cash Proceeds at the time of such
release), and
(e) in the case of the sale, lease, transfer or other
disposition of assets, the principal amount, premium or penalty, if
any, interest and other amounts on any Indebtedness which is secured by
such assets and which is repaid with such proceeds (other than any such
Debt assumed by the purchaser of such asset),
in each case to the extent, but only to the extent, that the amounts so deducted
are, at the time of receipt of such cash, actually paid or committed to be paid
to a Person that is not an Affiliate or, in the case of taxes, are reasonably
determined to be payable, and are in each case properly attributable to such
transaction or to the asset that is the subject thereof.
"Notes" shall mean, collectively, the Revolving Notes and the Term
Notes, and "Note" shall mean a Revolving Note or a Term Note.
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"Notice of Borrowing" shall have the meaning given such term in Section
2.15 hereof.
"Obligations" shall mean the Loans, the Letter of Credit Obligations
and any and all other indebtedness, liabilities and obligations of the Obligors,
or any of them, to the Agent, the LC Issuer or any Lender of every kind and
nature (including, without limitation, interest, charges, expenses, attorneys'
fees and other sums chargeable to the Obligors, or any of them, by the Agent,
the LC Issuer or any Lender and future advances made to or for the benefit of
the Obligors, or any of them), arising under this Agreement or under any of the
other Loan Documents, or acquired by the Agent from any other source, whether
arising by reason of an extension of credit, opening of a letter of credit,
loan, lease, guaranty, indemnification, Interest Hedge Agreement or in any other
manner, direct or indirect, absolute or contingent, primary or secondary, due or
to become due, now existing or hereafter acquired. Without limiting the
generality of the foregoing, the "Obligations" shall include any right of
recourse held by BACACF under any of the assignments referred to in Section
12.1(d) hereof.
"Obligors" shall have the meaning given to such term in the Recitals of
this Agreement.
"OECC" shall mean Optometric Eye Care Center, P.A., a North Carolina
corporation, and its successors and assigns.
"Opticare" shall have the meaning given to such term in the Recitals of
this Agreement.
"Original Loan Agreement" shall have the meaning given to such term in
the Recitals of this Agreement.
"Participant" shall mean any bank or other entity to which a Lender
sells a participating interest in any Loan or Loans pursuant to Section 14.3(b)
hereof, and "Participants" shall mean, collectively, all banks or other entities
to which any Lender sells a participating interest in any Loan or Loans pursuant
to Section 14.3(b) hereof.
"Patents" shall mean all of the following, whether now owned or
existing or hereafter acquired or arising or in which any Obligor now has or
hereafter acquires any rights: (a) all patents and patent applications, (b) all
inventions and improvements described and claimed therein, (c) all reissues,
divisions, continuations, renewals, extensions and continuations-in-part
thereof, (d) all income, royalties, damages and payments now and hereafter due
and/or payable to any Obligor with respect thereto, including without
limitation, damages and payments for past, present or future infringements or
misappropriations thereof, (e) all rights to sue for past present and future
infringements or misappropriations thereof, and (f) all other rights
corresponding thereto throughout the world.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
under ERISA, or any successor agency or Person performing substantially the same
functions.
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"Permitted Liens" shall mean: (a) those existing on the date hereof
with respect to specific items of Equipment and described on SCHEDULE 6.23
attached hereto; (b) liens, security interests and encumbrances in favor of the
Agent, or liens, security interests and encumbrances in favor of any Obligor and
assigned to the Agent; (c) liens for (i) property taxes not delinquent, (ii)
taxes not yet subject to penalties, (iii) pledges or deposits made under
Workmen's Compensation, Unemployment Insurance, Social Security and similar
legislation, or in connection with appeal or surety bonds incident to
litigation, or to secure statutory obligations, and (iv) mechanics' and
materialmen's liens with respect to liabilities which are not yet due or which
are being contested in good faith; (d) liens arising in connection with Capital
Lease Obligations permitted hereunder; and (e) purchase money liens on Equipment
and related software; provided, however, that (i) such lien is created
contemporaneously with the acquisition of such Equipment and related software;
(ii) such lien attaches only to the specific items of Equipment and related
software so acquired; (iii) such lien secures only the Indebtedness incurred to
acquire such Equipment and related software; and (iv) the Indebtedness secured
by such lien is permitted by the terms of Section 8.2 hereof.
"Person" shall mean and include any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, entity, party or government
(whether national, federal, state, county, city, municipal, or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"Physician Letter of Credit" shall mean either a Physician Note Letter
of Credit or a Physician Put Letter of Credit and "Physician Letters of Credit"
shall mean, collectively, all of the Physician Note Letters of Credit and
Physician Put Letters of Credit.
"Physician Letter of Credit Obligations" shall mean all outstanding
obligations incurred by the LC Issuer or any of its Affiliates, whether direct
or indirect, contingent or otherwise, due or not due, in connection with the
issuance or deemed issuance by the LC Issuer or any of its Affiliates, of the
Physician Letters of Credit, including, without limitation, the undrawn amount
of any outstanding Physician Letter of Credit, any amount disbursed by the LC
Issuer or any of its Affiliates pursuant to a Physician Letter of Credit for
which the LC Issuer has not been reimbursed by any Obligor pursuant to Section
3.4 hereof. The amount of the Physician Letter of Credit Obligations at any time
shall equal the maximum amount which may be payable by the LC Issuer pursuant to
the Physician Letters of Credit at such time.
"Physician Note Letter of Credit" shall mean any standby letter of
credit issued or deemed issued for the account of PVH as security for a
promissory note executed by PVH or one of its Subsidiaries in favor of a
Physician Practice and in respect of which the Lenders have incurred Physician
Letter of Credit Obligations under Article 3 of this Agreement.
"Physician Practice" shall mean any professional corporation,
association, general partnership, professional limited liability company,
limited liability company, limited partnership, or other entity or sole
proprietorship engaged in the practice of ophthalmology or ambulatory
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surgical services that was, prior to the Effective Date, party to an
Administrative Services Agreement with PVH or one of its Subsidiaries.
"Physician Put Letter of Credit" shall mean any direct-pay letter of
credit issued or deemed issued for the account of PVH as security for a share
put option granted by PVH or one of its Subsidiaries in favor of a Physician
Practice and in respect of which the Lenders have incurred Physician Letter of
Credit Obligations under Article 3 of this Agreement.
"Plan" shall mean any employee benefit plan, program, arrangement,
practice or contract, maintained by or on behalf of any Obligor or an ERISA
Affiliate, which provides benefits or compensation to or on behalf of employees
or former employees, whether formal or informal, whether or not written,
including but not limited to the following types of plans:
(i) Executive Arrangements - any bonus, incentive
compensation, stock option, deferred compensation, commission,
severance, "golden parachute," "rabbi trust," or other executive
compensation plan, program, contract, arrangement or practice
("Executive Arrangements");
(ii) ERISA Plans - any "employee benefit plan", except any
Multiemployer Plan, as defined in Section 3(3) of ERISA, whether
maintained by or for a single employee or by or for multiple employees,
including, but not limited to, any defined benefit pension plan, profit
sharing plan, money purchase plan, savings or thrift plan, stock bonus
plan, employee stock ownership plan, or any plan, fund, program,
arrangement or practice providing for medical (including
post-retirement medical), hospitalization, accident, sickness,
disability, or life insurance benefits ("ERISA Plans");
(iii) Other Employee Fringe Benefits - any stock purchase,
vacation, scholarship, day care, prepaid legal services, severance pay
or other fringe benefit plan, program, arrangement, contract or
practice ("Fringe Benefit Plans"); and
(iv) Multiemployer Plan - any Multiemployer Plan.
"Pro Rata Share" shall mean, at any particular time and with respect to
any Lender, a fraction, expressed as a percentage, the numerator of which shall
be the sum of (i) the then outstanding principal balance of such Lender's Term
Loan and (ii) such Lender's Commitment, and the denominator of which shall be
the sum of (x) the aggregate outstanding principal balance of all Term Loans and
(y) the Aggregate Commitment, as the same may be adjusted from time to time
pursuant to the terms of this Agreement; provided, that following the
termination or reduction of the Commitments to zero, "Pro Rata Share" shall
mean, at any particular time and with respect to any Lender, a fraction,
expressed as a percentage, the of numerator of which shall be the sum of the
then outstanding principal balance of such Lender's Term Loan and Revolving
Loans, and the denominator of which shall be the sum of the aggregate
outstanding principal balance of all Term Loans and all Revolving Loans
hereunder.
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"Qualified Junior Capital" shall mean shall mean: (a) Capital Stock of
Parent which is not required (other than solely at the option of Parent) to be
purchased, redeemed or otherwise retired by Parent or any of its Subsidiaries,
and which is not convertible (other than solely at the option of Parent) into
Indebtedness of Parent or any of its Subsidiaries, at any time before the date
falling 180 days after the Effective Date; (b) other Capital Stock of Parent
issued on terms and conditions reasonably satisfactory to the Required Lenders
and which the Required Lenders agree shall be Qualified Junior Capital for the
purposes of this Agreement; and (c) Subordinated Debt of Parent which is not
required (other than solely at the option of Parent) to be amortized, repaid,
purchased or otherwise retired by Parent or any of its Subsidiaries (unless
solely in exchange for the issuance of Capital Stock constituting Qualified
Junior Capital) at any time before the date falling one year after the Maturity
Date and on which interest is capitalized or paid in kind or, if paid in cash,
is payable at a rate and on terms approved by the Required Lenders for the
purposes of determining whether such Subordinated Debt qualifies as Qualified
Junior Capital for the purposes of this Agreement.
"Qualifying Equity Offering" shall mean the issuance by the Parent of
Capital Stock constituting Qualified Junior Capital and resulting in Net Cash
Proceeds of at least $3,000,000.
"Quoted Rate" shall mean, when used with respect to an Interest Period
for a Eurodollar Loan, the quotient of (i) the offered rate quoted by Bank
Austria in the interbank Eurodollar market in Greenwich, Connecticut or London,
England on or about 11:00 a.m. (Greenwich, Connecticut or London time, as the
case may be) two (2) Business Days prior to such Interest Period for U.S. dollar
deposits of an aggregate amount comparable to the principal amount of the
Eurodollar Loan to which the Quoted Rate is to be applicable and for a period
comparable to such Interest Period, divided by (ii) one (1) minus the Reserve
Percentage. For purposes of this definition, (a) "Reserve Percentage" shall mean
with respect to any Interest Period, the percentage which is in effect on the
first day of such Interest Period under Regulation D as the maximum reserve
requirement for member banks of the Federal Reserve System in Greenwich,
Connecticut with deposits comparable in amount to those of the Agent against
Eurocurrency Liabilities and (b) "Eurocurrency Liabilities" has the meaning
assigned to that term in Regulation D, as in effect from time to time. The
Quoted Rate for the applicable period shall be adjusted automatically on and as
of the effective date of any change in the applicable Reserve Percentage.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as it may be amended from time to time.
"Regulatory Change" shall mean, with respect to any Lender, the
adoption on or after the Effective Date of any applicable federal, state, or
foreign law, rule or regulation or any change after such date in any such
federal, state or foreign law, rule or regulation (including, without
limitation, Regulation D), or any adoption or change in the interpretation or
administration thereof by any court, Governmental Authority, central bank or
comparable agency or monetary authority charged with the interpretation or
administration thereof, or compliance by such Lender with any request or
directive made after such date (whether or not having the force of law) of any
such court, authority, central bank or comparable agency or monetary authority.
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"Reportable Event" shall have the meaning set forth in Section 4043 of
ERISA.
"Request for a Line Letter of Credit" shall have the meaning given such
term in Section 2.15 hereof.
"Required Lenders" shall mean, subject to the terms of the last
paragraph of Section 14.8 hereof, one or more Lenders have an aggregate Pro Rata
Share equal to or greater than sixty-seven percent (67%).
"Revolving Loan" shall mean, collectively, the loans made pursuant to
Section 2.2 hereof, and "Revolving Loans" shall mean any loan made pursuant to
Section 2.2 hereof. A Revolving Loan may consist of either a Base Rate Loan, a
Eurodollar Loan or a combination thereof, each of which is a "type" of Loan.
"Revolving Note" shall have the meaning given to such term in Section
2.2.
"Saratoga Acquisitions" shall mean, collectively, (a) the Acquisition
by Parent or a Subsidiary of Parent of all of the issued and outstanding Capital
Stock of PVH, and (b) the Acquisition by Parent or a Subsidiary of Parent of all
of the issued and outstanding Capital Stock of Opticare, in each case in
accordance with the terms of the Merger Agreement.
"Security Agreement" shall mean that certain Security Agreement, dated
as of the date hereof, executed by each of the Guarantors in favor of the Agent,
as the same may be amended, restated, supplemented or otherwise modified from
time to time.
"Seller Notes" shall mean those certain promissory notes executed by
PVH or one of its Subsidiaries in favor of either a Physician Practice or the
physicians owning a Physician Practice, payable in the amounts, and to the
Persons, set forth on SCHEDULE 1.1 hereof.
"Senior Interest Coverage Ratio" shall mean, as of the end of any
fiscal quarter for which the same is computed, the ratio of (a) Adjusted Cash
Flow for the Annualized Four Quarter Period then ending to (b) Interest Expense
(other than Interest Expense on Subordinated Debt and on the Seller Notes) for
the Annualized Four Quarter Period then ending, in each case calculated on a
consolidated basis for the Parent and its Subsidiaries in accordance with GAAP.
"Senior Leverage Ratio" shall mean, on any date, the ratio of (a) the
principal amount of Indebtedness outstanding as of such date that is not
Subordinated Debt or evidenced by Seller Notes, to (b) Adjusted Cash Flow for
the Annualized Four Quarter Period then ending or most recently ended, in each
case computed on a consolidated basis for the Parent and its Subsidiaries in
accordance with GAAP.
"Solvent" shall mean, as to any Person, that such Person (a) has
capital sufficient to carry on its business and transactions and all business
and transactions in which it is about to engage,
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(b) is able to pay its debts as they mature and (c) owns assets (both tangible
and intangible) whose fair salable value is greater than the amount required to
pay its Indebtedness.
"Stock Pledge Agreement" shall mean that certain Stock Pledge
Agreement, dated as of the date hereof, executed by the Obligors and each of the
Guarantors in favor of the Agent, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
"Subordinated Debt" shall mean (a) the Marlin Subordinated Convertible
Note; (b) that certain Subordinated Promissory Note of even date herewith in the
principal amount of $2,000,000, executed by Parent in favor of Marlin Capital,
L.P. and (c) any other Indebtedness of any Obligor or any Subsidiary thereof
that has been subordinated to the Indebtedness and the other obligations owing
under this Agreement and the other Loan Documents on terms and conditions
reasonably satisfactory to the Agent and the Lenders.
"Subsidiary" shall mean, as to any Person, any other Person, of which
more than fifty percent (50%) of the outstanding shares of Capital Stock or
other ownership interest having ordinary voting power to elect a majority of the
board of directors of such corporation or similar governing body of such other
Person (irrespective of whether or not at the time stock or other ownership
interests of any other class or classes of such other Person shall have or might
have voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by such Person or by one or more
"Subsidiaries" of such Person.
"Term Loan" shall mean a term loan made by a Lender pursuant to Section
2.1 hereof. A Term Loan may consist of either a Base Rate Loan, a Eurodollar
Loan or a combination thereof, each of which is a "type" of Loan.
"Term Note" shall have the meaning given to such term in Section 2.1
hereof.
"Total Liabilities" shall mean all obligations, indebtedness or other
liabilities of any kind or nature, fixed or contingent, due or not due, which,
in accordance with GAAP, would be classified as a liability on the consolidated
balance sheet of the Parent and its Subsidiaries.
"Trademarks" shall mean all of the following, whether now owned or
existing or hereafter acquired or arising or in which any Obligor now has or
hereafter acquires any rights: (a) all trademarks (including service marks and
trade names, whether registered or at common law), registrations and
applications therefor, and the entire product lines and goodwill of the business
of any such Obligor connected therewith and symbolized thereby, (b) all renewals
thereof, (c) all income, royalties, damages and payments now and hereafter due
or payable or both with respect thereto, including, without limitation, damages
and payments for past, present or future infringements or misappropriations
thereof, (d) all rights to sue for past, present and future infringements or
misappropriations thereof, and (e) all other rights corresponding thereto
throughout the world.
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"Transferee" shall mean any Participant or Eligible Assignee under this
Agreement, and "Transferees" shall mean all Participants and Eligible Assignees
under this Agreement.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the State of New York.
"Working Capital" shall mean, for any Person as of any date, (a) the
Current Assets of such Person and its Subsidiaries as of such date, minus (b)
the Current Liabilities of such Person and its Subsidiaries as of such date, in
each case determined on a consolidated basis in accordance with GAAP.
"Year 2000 Compliant" shall mean, as to any computer software or other
processing device, that such software or devices:
(a) are able, without delay, error, invalid or incorrect
results, premature endings or interruption, to consistently and correctly
recognize, handle, accept, sort, manipulate, calculate, display, store,
retrieve, access, compare and process date, year and time data and information
before, between, during and after January 1, 1999, September 9, 1999, December
31, 1999, January 1, 2000, February 29, 2000, March 1, 2000 and any other date
after December 31, 1999 (all of the foregoing being collectively defined as the
"Relevant Dates"), including, but not limited to, accepting any date, year or
time data, and performing calculations or other operations or functions on
dates, years or times or portions of dates, years or times and without delay,
error, invalid or incorrect results, premature endings or interruption;
(b) before, between, during and after any of the Relevant
Dates, function accurately in accordance with any applicable documentation or
other materials and without delay, interruption, premature endings, error,
incorrect or invalid results or changes in operations associated with the
occurrence of any of the Relevant Dates or the advent of any new century, year,
leap year or any other date, year or time related matter;
(c) consistently and accurately responds to, stores and
provides output of two-digit year data or six-digit date data, and properly
resolves any ambiguity as to century or year in a disclosed, defined and
predetermined manner;
(d) will not be adversely affected in any manner by the advent
of the year 2000 A.D. or the passing or transition of any year, century or other
Relevant Date; and,
(e) consistently, correctly, accurately, unambiguously and
without delay, error, invalid or incorrect results, premature endings or
interruption, receives, provides, processes and interfaces date, year and time
data between software, applications, hardware, firmware, equipment, embedded
chips or other applicable items, in a disclosed, defined and predetermined
manner.
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1.2 USE OF DEFINED TERMS. All terms defined in this Agreement
and the Exhibits hereto shall have the same defined meanings when used in any
other Loan Document, unless the context shall require otherwise.
1.3 ACCOUNTING TERMS; CALCULATIONS. All accounting terms not
specifically defined herein shall have the meanings generally attributed to such
terms under GAAP. Calculations hereunder shall be made and financial data
required hereby shall be prepared, both as to classification of items and as to
amounts, in accordance with GAAP.
1.4 OTHER TERMS. All other terms used in this Agreement which
are not specifically defined herein but which are defined in the UCC shall have
the meanings set forth therein.
1.5 TERMINOLOGY. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural, and the plural shall
include the singular. Titles of Articles and Sections in this Agreement are for
convenience only, and neither limit nor amplify the provisions of this
Agreement, and all references in this Agreement to Articles, Sections,
Subsections, paragraphs, clauses, subclauses, Exhibits or Schedules shall refer
to the corresponding Article, Section, Subsection, paragraph, clause, subclause
of, Exhibit or Schedule attached to, this Agreement, unless specific reference
is made to the articles, sections or other subdivisions of, Exhibits or
Schedules to, another document or instrument. All references to instrument,
document or agreement shall, unless the context otherwise requires, refer to
such instrument, document or agreement as the same may be, from time to time,
amended, modified, supplemented, renewed, extended, replaced or restated.
1.6 EXHIBITS. All Exhibits and Schedules attached hereto are
by reference made a part hereof.
2. THE LOANS
2.1 TERM LOANS. (a) Prior to the Effective Date, the Lenders
made term loans (the "Original Term Loans") to PVH in an aggregate principal
amount of $32,000,000.00. As provided in Section 2.3 hereof, $21,500,000 in
principal amount of such Original Term Loans shall constitute term loans
hereunder (the "Term Loans") for all purposes hereunder. The Term Loans owing to
each Lender shall be evidenced by a promissory note, substantially in the form
of EXHIBIT A attached hereto, payable to such Lender in the original principal
amount of such Lender's Term Loans (together with any and all amendments,
modifications and supplements thereto, and any renewals, replacements or
extensions thereof (including, but not limited to, pursuant to Section 14.3(c)
hereof), in whole or in part, individually, a "Term Note" and, collectively, the
"Term Notes").
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(b) The Term Loans shall be repayable in fifteen (15)
quarterly principal installments, with the first fourteen (14) installments
payable in the amounts and on the Amortization Dates as follows:
Amortization Date Principal Installment
----------------- ---------------------
April 1, 2000 $ 375,000
July 1, 2000 $ 375,000
October 1, 2000 $ 375,000
January 1, 2001 $1,375,000
April 1, 2001 $1,000,000
July 1, 2001 $1,000,000
October 1, 2001 $1,000,000
January 1, 2002 $1,000,000
April 1, 2002 $1,000,000
July 1, 2002 $1,000,000
October 1, 2002 $1,000,000
January 1, 2003 $1,500,000
April 1, 2003 $1,500,000
July 1, 2003 $1,500,000
October 1, 2003 $1,500,000
January 1, 2004 $2,000,000
April 1, 2004 $2,000,000
The fifteenth (15th) principal installment shall be payable on the Maturity Date
in an amount equal to the aggregate outstanding principal balance of the Term
Loans. Once repaid, the Term Loans may not be reborrowed.
2.2 REVOLVING LOANS. Subject to the terms and conditions
hereof and provided that there then exists no Default or Event of Default, each
Lender severally agrees to make revolving loans (each a "Revolving Loan" and
collectively the "Revolving Loans"), as requested by the Borrowers in accordance
with the provisions of Section 2.4 hereof and for the purpose set forth in
Section 2.6 hereof, to the Borrowers from time to time on and after the
Effective Date and up to, but not including, the Commitment Termination Date;
provided, that (a) the aggregate outstanding principal amount of Revolving Loans
from all Lenders and the Line Letter of Credit Obligations shall not exceed at
any one time the Aggregate Commitment; (b) the aggregate outstanding principal
amount of Revolving Loans from any Lender and such Lender's Pro Rata Share of
the Line Letter of Credit Obligations shall not exceed at any one time such
Lender's Commitment; and (c) the aggregate outstanding principal amount of
Revolving Loans and Term Loans from all Lenders and the Line Letter of Credit
Obligations shall not exceed at any one time the Borrowing Availability. The
Revolving Loans made by each Lender shall be evidenced by a promissory note,
substantially in the form of EXHIBIT B attached hereto, payable to such Lender
in the principal face amount of such Lender's Commitment (together with any and
all amendments, modifications and supplements thereto, and any renewals,
replacements or extensions thereof (including, but not limited to, pursuant to
Section 14.3(c) hereof), in whole or in part, individually, a "Revolving
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Note" and, collectively, the "Revolving Credit Notes"). Revolving Loans may be
borrowed, repaid and reborrowed in accordance with the terms hereof. The
Commitments shall terminate, and all then-outstanding Revolving Loans shall be
due and payable, on the Commitment Termination Date.
2.3. LOANS OUTSTANDING UNDER ORIGINAL LOAN AGREEMENT. Prior to
the Effective Date, the Lenders made "Term Loans" (as such term is defined in
the Original Loan Agreement; such loans are hereinafter referred to as the
"Original Term Loans") and "Revolving Loans" (as such term is defined in the
Original Loan Agreement; such loans are hereinafter referred to as the "Original
Revolving Loans") to PVH from time to time. As of August 6, 1999, the aggregate
outstanding principal balance of such Original Term Loans were $30,443,701 the
aggregate outstanding principal balance of such Original Revolving Loans was
$7,511,606.34. Of such Original Term Loans and such Original Revolving Loans
(a) $21,500,000.00 shall constitute shall constitute Term
Loans under this Agreement and shall henceforth be governed by the
terms and conditions of this Agreement,
(b) $328,271.34 shall constitute Revolving Loans under this
Agreement and shall henceforth be governed by the terms and conditions
of this Agreement;
(c) $195,000 has been forgiven;
(d) $5,000 was been used to purchase 500,000 shares of common
stock of PVH pursuant to that certain Subscription Agreement of even
date herewith between PVH and BACACF;
(e) $5,684,070.00 has been repaid in cash subsequent to August
6, 1999 and on or prior to the date hereof;
(f) $2,450,000.00 has been converted to equity by the issuance
of 418,803 shares of Convertible Preferred Stock of Parent to BACACF,
as the sole lender under the Original Loan Agreement;
(g) $3,877,387.00 has been repaid by the outright transfer to
BACACF, the sole lender under the Original Loan Agreement, of the
Eligible Physician Practice Notes;
(h) $1,237,278.00 has been repaid by the outright transfer to
BACACF, the sole lender under the Original Loan Agreement, of the
Service Agreement fees payable by the California Practices;
(i) $888,130.00 has been repaid by the outright transfer to
BACACF, the sole lender under the Original Loan Agreement, of the right
to the settlement proceeds of the claims against the Dissident
Practices; and
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(j) $1,790,171 has been repaid by the outright transfer to
BACACF, of the sole lender under the Original Agreement, of the right
to the amounts payable to PVH and/or its affiliates pursuant to that
certain letter agreement dated as of July 23, 1999 among among PVH,
Asheville Eye, BACACF, Opticare Health Systems, Inc and Opticare Eye
Health Centers, Inc. or otherwise payable in respect of any and all
claims that PVH and/or its affiliates may have against Asheville Eye.
2.4 BORROWING PROCEDURES. (a)The applicable Borrower shall
give the Agent a Notice of Borrowing in connection with each request for a
borrowing of Revolving Loans hereunder in accordance with Section 2.15 hereof.
The Agent shall promptly notify each Lender of any Notice of Borrowing received
hereunder. Not later than 11:00 a.m. (prevailing Eastern time), on the date
specified for each borrowing hereunder, each Lender shall make available to the
Agent the amount of the Revolving Loan to be made by such Lender in accordance
with such Lender's Pro Rata Share, in immediately available funds at an account
designated by the Agent. The Agent shall, subject to the terms and conditions of
this Agreement, not later than 1:00 p.m. (prevailing Eastern time) on the
Business Day specified for such borrowing, make such amount available to the
requesting Borrower at the Agent's principal United States office or such other
place as the Agent and such requesting Borrower may agree.
(b) Unless the Agent shall have been notified by any Lender at
least one (1) Business Day prior to the date on which any Eurodollar Loan is to
be made to any Borrower and not later than 11:00 a.m. (prevailing Eastern time)
on the date any Base Rate Loan is to be made, that such Lender does not intend
to make available to the Agent such Lender's Pro Rata Share of such borrowing,
the Agent may assume that such Lender has made such amount available to the
Agent on the date of such Loan and the Agent may, in reliance upon such
assumption, make available to the Borrower requesting such Loan a corresponding
amount. If such corresponding amount is not in fact made available to the Agent
by such Lender, the Agent shall be entitled to recover such corresponding amount
on demand from such Lender, which demand shall be made in a reasonably prompt
manner. If such Lender does not pay such a corresponding amount forthwith upon
the Agent's demand therefor, the Agent shall promptly notify such requesting
Borrower and such requesting Borrower shall pay such corresponding amount to the
Agent. The Agent shall also be entitled to recover from such Lender interest on
such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to such requesting Borrower
to the date such corresponding amount as recovered by the Agent at a rate per
annum equal to the Federal Funds Rate, for the first two (2) Business Days, and
thereafter at the rate per annum then in effect with respect to Base Rate Loans.
Nothing herein shall be deemed to relieve any Lender from its obligation to
fulfill its Commitment or to prejudice any rights which the Agent or such
requesting Borrower may have against any Lender as a result of any default by
such Lender hereunder.
2.5 LOAN ACCOUNT; STATEMENTS OF ACCOUNT. The Agent will
maintain one or more loan accounts for the Borrowers to which the Agent will
charge all amounts advanced to or for the benefit of the Borrowers hereunder or
under any of the other Loan Documents and to which the Agent will credit all
amounts collected under each such credit facility from or on behalf of the
Borrowers. The Agent will account to the Borrowers periodically with a statement
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of charges and payments made pursuant to this Agreement, and each such account
statement shall be deemed final, binding and conclusive, absent clear error,
unless the Agent is notified by the Borrowers in writing to the contrary within
ninety (90) days of the date of each account statement. Any such notice shall
only be deemed an objection to those items specifically objected to therein. The
unpaid principal amount of the Loans, the unpaid interest accrued thereon, the
interest rate or rates applicable to such unpaid principal amount, and the
accrued and unpaid fees, premiums and other amounts due hereunder shall at all
times be ascertained from the records of the Agent and such records shall
constitute prima facie evidence of the amounts so due and payable.
2.6 USE OF PROCEEDS. (a) The proceeds of the Loans shall be
used (i) to provide financing to facilitate the Saratoga Acquisitions, (ii) for
the general working capital needs of the Borrowers and (iii) to repay
Indebtedness of Opticare to Fleet National Bank.
(b) No portion of the proceeds of any Loan may be used to
"purchase" or "carry," as such terms are defined in Regulations T, U or X of the
Board of Governors of the Federal Reserve System, any Margin Stock, or to extend
credit for the purpose of purchasing or carrying Margin Stocks.
2.7 SEVERAL OBLIGATIONS OF THE LENDERS; REMEDIES INDEPENDENT.
The failure of any Lender to make any Loan to be made by it on the date
specified therefor shall not relieve any other Lender of its obligation to make
any Loan to be made by it on such date, but neither any Lender nor the Agent
shall be responsible for the failure of any other Lender to make a Loan to be
made by such other Lender. The amounts payable by any Borrower at any time
hereunder and under the Notes to each Lender shall be a separate and independent
debt and each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement and its Note, and it shall not be necessary for any other
Lender or the Agent to consent to, or be joined as an additional party in, any
proceeding for such purposes.
2.8 LINE LETTERS OF CREDIT.
(a) Subject to the terms and conditions hereof and provided
that there exists no Default or Event of Default, at any time and from time to
time from the Effective Date to (but not including) the Maturity Date, the LC
Issuer shall, in the exercise of its sole discretion and for the benefit of the
Lenders and in reliance upon the agreement of the Lenders set forth in Section
2.8(c) below, issue, for the account of any Borrower, such Line Letters of
Credit as such Borrower may request by a Request for Line Letter of Credit (in
the manner described in Section 2.15), each in such form as may be requested
from time to time by such Borrower and agreed to by the LC Issuer; provided,
however, that after giving effect to the issuance of any such Line Letter of
Credit, (i) the aggregate amount of all Line Letter of Credit Obligations of all
of the Borrowers outstanding under or with respect to Line Letters of Credit at
any one time does not exceed $1,500,000, (ii) the aggregate amount of all
outstanding Revolving Loans, together with all outstanding Line Letter of Credit
Obligations, will not exceed the Aggregate Commitment, and (iii) the sum of the
aggregate outstanding principal amount of Revolving Loans and Term Loans from
all Lenders and the Line Letter of Credit Obligations does not exceed at any one
time the
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Borrowing Availability. Each of the Lenders shall, upon the issuance of such
Line Letter of Credit, be deemed to have purchased a participation in such Line
Letter of Credit pursuant to Section 2.8(c) below. No Line Letter of Credit
shall be issued by the LC Issuer under this Section 2.8(a) except to the extent
reasonably necessary in connection with transactions in the ordinary course of
business of the Parent and its Subsidiaries. The expiration date of any such
Line Letter of Credit shall not extend beyond the earlier of (i) the Maturity
Date, and (ii) any date fixed for termination of the Commitment pursuant to
Section 2.13 hereof.
(b) Each Request for a Line Letter of Credit under Section
2.8(a) above shall be submitted to the LC Issuer at least three (3) Business
Days prior to the date when such Line Letter of Credit is required, accompanied
by an appropriate letter of credit application on the LC Issuer's customary form
and such other Letter of Credit Documents (including, without limitation, a
reimbursement agreement) in such form and containing such terms and conditions
as the LC Issuer requires, executed by an authorized officer of the requesting
Borrower.
(c) Attached hereto as SCHEDULE 2.8 is a list of certain
letters of credit issued by BACACF or an Affiliate of BACACF for the account of
PVH and outstanding as of the Effective Date. On the Effective Date: (i) such
letters of credit shall be deemed to be Line Letters of Credit issued pursuant
to and in compliance with Section 2.8(a); (ii) the face amount of such Line
Letters of Credit shall be included in the calculation of Line Letter of Credit
Obligations; and (iii) the provisions of this Section 2.8 shall apply thereto as
if such Letters of Credit were issued hereunder.
(d) Simultaneously with the issuance by the LC Issuer of any
Line Letter of Credit under Section 2.8(a) above, and on the Effective Date with
respect to the Letters of Credit referred to in Section 2.8(c) above, each
Lender shall be deemed to have irrevocably and unconditionally purchased and
received from the LC Issuer, without recourse or warranty, an undivided interest
and participation in such Line Letter of Credit (including, without limitation,
all obligations of the applicable Borrower with respect thereto) and any
security therefor or guaranty pertaining thereto, equal to such Lender's Pro
Rata Share of such Line Letter of Credit. Each Lender severally agrees that it
shall be absolutely liable, without regard to the occurrence of any Default or
Event of Default or any other condition precedent whatsoever, to the extent of
such Lender's Pro Rata Share, to reimburse the LC Issuer on demand for the
amount of each draft paid by the LC Issuer under such Line Letter of Credit to
the extent that such amount is not reimbursed by the applicable Borrower. The
failure of any Lender to make available to the LC Issuer its Pro Rata Share of
the unreimbursed amount of any such payment shall not relieve any other Lender
of its obligation hereunder to make available to the LC Issuer its Pro Rata
Share of the unreimbursed amount of any payment on the date such payment is to
be made. The obligations of each Lender to make payments to the LC Issuer with
respect to any Line Letter of Credit and its participations therein pursuant to
the provisions of this Section or otherwise and the obligations of the
applicable Borrower to make payments to the LC Issuer for the account of the
Lenders with respect to any Line Letter of Credit shall be irrevocable, and
shall not be subject to any qualification or exception whatsoever.
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In the event that any payment by the applicable Borrower
received by the LC Issuer with respect to a Line Letter of Credit and
distributed by the LC Issuer to Lenders on account of their participations is
thereafter set aside, avoided or recovered from the LC Issuer in connection with
any receivership, liquidation, reorganization or bankruptcy proceeding, each
Lender which received such distribution shall, upon demand by the LC Issuer,
contribute such Lender's Pro Rata Share of the amount set aside, avoided or
recovered, together with interest at the rate required to be paid by the LC
Issuer upon the amount required to be repaid by it. Each Lender shall share, pro
rata, in accordance with its participating interest, in any interest (but not in
the processing, administration and similar fees charged by the LC Issuer, which
fees shall be solely for the account of the LC Issuer) which accrues to the LC
Issuer pursuant to any applicable reimbursement agreement.
(e) Each Borrower hereby agrees to reimburse the LC Issuer for
payments made by the LC Issuer under any Line Letter of Credit requested by such
Borrower on demand therefor by the Agent or the LC Issuer or as otherwise
provided in any reimbursement agreement executed in connection with the issuance
of such Line Letter of Credit.
(f) If the applicable Borrower fails to make any payment as
and when required by Section 2.8(e), or if the applicable Borrower fails to
request a Revolving Loan in an amount sufficient to pay the outstanding Line
Letter of Credit Obligations, each Lender may, without notice to or the consent
of such Borrower, make a Revolving Loan under Section 2.2 in an aggregate amount
equal to the amount paid by such Lender in respect of its Line Letter of Credit
Obligations pursuant to Section 2.8(d) above and, for this purpose, the
conditions precedent to the making of a Revolving Loan under this Agreement
shall not apply. The proceeds of such Loan shall be paid to the LC Issuer to
reimburse it for any payments made by it in respect of such Line Letter of
Credit Obligations.
(g) The issuance of any supplement, modification, amendment,
renewal or extension to or of any Line Letter of Credit shall be treated in all
respects the same as the issuance of a new Line Letter of Credit, and each such
Line Letter of Credit, and all Line Letter of Credit Obligations in respect
thereof, shall in each case remain subject to this Section 2.8.
(h) If any draft shall be presented or other demand for
payment shall be made under any Line Letter of Credit, the LC Issuer shall
notify the applicable Borrower of the date and amount of the draft presented or
demand for payment and of the date and time when it expects to pay such draft or
honor such demand for payment. If the applicable Borrower fails to reimburse the
LC Issuer as provided in Section 2.8(e) above, the LC Issuer may at any time
thereafter notify the Lenders of the amount of any such unpaid reimbursement
obligation. No later than 3:00 p.m. (prevailing Eastern time) on the Business
Day next following the receipt of such notice, each Lender shall make available
to the LC Issuer at the LC Issuer's principal United States office in
immediately available funds, such Lender's Pro Rata Share of such unpaid
reimbursement obligation, together with an amount equal to the product of (i)
the average, computed for the period referred to in clause (iii) below, of the
weighted average interest rate paid by the LC Issuer for federal funds acquired
by the LC Issuer during each day included in such period, times (ii) an amount
equal to such Lender's Pro Rata Share of such unpaid
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reimbursement obligation, times (iii) a fraction, the numerator of which is the
number of days that elapse from and including the date the LC Issuer paid the
draft presented for honor or otherwise made payment to the date on which such
Lender's Pro Rata Share of such unpaid reimbursement obligation shall become
immediately available to the LC Issuer and the denominator of which is 360;
provided, however, that if the LC Issuer fails to give the Lenders notice of
such Obligor's failure to reimburse the LC Issuer, as the case may be, within
three (3) Business Days following such failure, the Lenders shall be required to
pay interest only for the period from and including the date the LC Issuer made
payment through and including the third Business Day following such failure. The
responsibility of the LC Issuer to the Obligors and the Lenders shall be only to
determine that the documents (including each draft) delivered under each Line
Letter of Credit in connection with such presentment shall be in conformity in
all material respects with such Line Letter of Credit.
(i) The Borrowers' respective obligations under this Section
2.8 shall be absolute and unconditional under any and all circumstances and
irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to payment
which either such Obligor may have or have had against the LC Issuer, any Lender
or any beneficiary of a Line Letter of Credit. Each Obligor further agrees with
the Agent, the LC Issuer and the Lenders that the Agent, the LC Issuer and the
Lenders shall not be responsible for, and the Borrowers' respective
reimbursement obligations under Section 2.8(e) shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even if such documents should in fact prove to be in any or all
respects invalid, fraudulent or forged, or any dispute between or among any
Obligor, the beneficiary of any Line Letter of Credit or any financing
institution or other party to which any Line Letter of Credit may be transferred
or any claims or defenses whatsoever of any Obligor against the beneficiary of
any Line Letter of Credit or any such transferee. Neither the Agent, the LC
Issuer nor the Lenders shall be liable for any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Line Letter of Credit. Each Obligor agrees
that any action taken or omitted by the Agent, the LC Issuer or any Lender under
or in connection with each Line Letter of Credit and the related drafts and
documents, if done in good faith and without gross negligence, shall be binding
upon the Obligors and shall not result in any liability on the part of the
Agent, the LC Issuer or any Lender to the any Obligor.
(j) The LC Issuer shall be entitled to rely, and shall be
fully protected in relying, upon any Line Letter of Credit, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it in good faith to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel, independent accountants and other experts selected
by the LC Issuer. The LC Issuer shall be fully justified in failing or refusing
to take any action under this Agreement unless it shall first have received such
advice or concurrence of the Required Lenders as it reasonably deems appropriate
or it shall first be indemnified to its reasonable satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action.
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(k) As between the Obligors, on the one hand, and the Agent,
the LC Issuer and the Lenders, on the other, the provisions of this Agreement,
to the extent in conflict with any provision of any Letter of Credit Documents,
shall control. Without limiting the generality of the foregoing, (l)
notwithstanding the terms of Section 2(a) of the application for the Line
Letters of Credit, the rate of interest applicable to amounts drawn on the
letters of credit shall be as set forth in Section 4.1 hereof; (m) the Events of
Default applicable to such Letter of Credit Obligations shall be those set forth
in Section 10 hereof and not those set forth in Section 5 of the application for
the Line Letters of Credit; and (n) Section 8 of the application for the Line
Letters of Credit shall not be applicable.
2.9 TERM; TERMINATION. This Agreement shall terminate upon the
latest to occur of (a) the Commitment Termination Date, (b) the repayment and
satisfaction of all Obligations, and (c) the termination or expiration of all
Letters of Credit.
2.10 LOANS IN EXCESS OF LIMITATIONS. Each Obligor acknowledges
that neither the Lenders nor the LC Issuer are obligated and does not presently
intend to (a) make Loans or other extensions of credit to any Borrower or incur
Line Letter of Credit Obligations in a principal amount at any time exceeding
the Borrowing Availability; or (b) make Revolving Loans to or for the account of
any Borrower or incur Line Letter of Credit Obligations in an aggregate
principal amount at any time the exceeding the Aggregate Commitments. However,
it is agreed that, should the Revolving Loans and the Line Letter of Credit
Obligations exceed the Aggregate Commitment, or should the Loans, the Line
Letter of Credit Obligations and the other extensions of credit hereunder, in
the aggregate, exceed the Borrowing Availability or any other limitation set
forth herein, all of the Obligors' obligations to the Lenders with respect to
such Loans, Line Letter of Credit Obligations or extensions of credit shall
nevertheless constitute Obligations under this Agreement and shall be entitled
to the benefit of all Liens granted under this Agreement and all other Loan
Documents. Notwithstanding the foregoing, if any amounts outstanding hereunder
shall exceed any of such limitations, the Obligors shall immediately repay such
excess amounts to the Lenders and/or the Agent, as the case may be.
2.11 PAYMENTS.
(a) Each payment by any Borrower pursuant to this Agreement or
the Notes shall be made prior to 1:00 p.m. (prevailing Eastern time) on the date
due and shall be made without set-off or counterclaim to the Agent at its
principal U.S. office or at such other place or places as the Agent may
designate from time to time in writing to the Borrowers required to make such
payment. Each such payment shall be in lawful currency of the United States of
America and in immediately available funds. The Agent shall promptly remit to
each Lender such Lender's share of any payment received by the Agent from any
Obligor.
(b) Each payment made by any Obligor hereunder shall either
(i) be exempt from, and be made without reduction by reason of, any Foreign Tax
or (ii) to the extent that any such payment shall be subject to any Foreign Tax,
be accompanied by an additional payment by such Obligor of such amount as may be
necessary so that the net amount received by each
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Lender (after deducting all applicable Foreign Taxes) is the same as each such
Lender would have received had such payment not been subject to such Foreign
Tax. Upon any payment of Foreign Tax by the such Obligor, such Obligor shall
promptly (and in any event within thirty (30) days) furnish to the Agent, Lender
or LC Issuers, as appropriate, such tax receipts, certificates and other
evidence of such payment as such Obligor may have or the Agent, the LC Issuer or
any Lender may reasonably request.
(c) If the due date of any payment hereunder or under any of
the Notes would otherwise fall on a day which is not a Business Day then such
payment due date shall be extended to the next succeeding Business Day and
interest shall be payable on the principal amount of such payment for the period
of such extension unless such Business Day falls in another calendar month, in
which case such payment shall be due on the immediately preceding Business Day.
If the Agent has not received any payment due hereunder by the close of business
on the date such payment is due, the Obligors authorize the Lenders, at their
option, to charge such payment as a borrowing of Revolving Loans.
2.12 PRORATA TREATMENT. Except to the extent otherwise
provided herein: (a) each borrowing from the Lenders under Sections 2.1 and 2.2
hereof shall be made from the Lenders and each payment of Commitment Fee under
Section 4.4 hereof shall be made to the Agent for the account of the Lenders pro
rata according to their respective Pro Rata Shares; (b) each termination or
reduction of the amount of the Commitments under Section 2.13 hereof shall be
applied to the Lenders, pro rata according to their respective Pro Rata Shares;
(c) the making, Conversion and Continuation of Loans of a particular type shall
be made pro rata among the Lenders according to their respective Pro Rata Shares
and the then current Interest Period for each Eurodollar Loan shall be
coterminous; (d) each payment or prepayment of principal of Loans by any
Borrower shall be made for the account of the Lenders pro rata in accordance
with their respective Pro Rata Shares; provided, that if immediately prior to
giving effect to any such payment in respect of any Loans the outstanding
principal amount of the Loans shall not be held by the Lenders pro rata in
accordance with their respective Pro Rata Shares in effect at the time such
Loans were made (by reason of a failure of a Lender to make a Loan hereunder in
the circumstances described in the last paragraph of Section 14.8 hereof), then
such payment shall be applied to the Loans in such manner as shall result, as
nearly as is practicable in the judgment of the Agent, in the outstanding
principal amount of the Loans being held by the Lenders prorata in accordance
with their respective Pro Rata Shares; and (e) each payment of interest on Loans
by any Borrower shall be made for account of the Lenders prorata in accordance
with the amounts of interest on such Loans then due and payable to the
respective Lenders.
2.13 PREPAYMENTS/COMMITMENT REDUCTION.
(a) The Obligors shall make a mandatory prepayment of the
Loans owing by them on November 15 of each year, commencing on November 15,
2000, in an amount equal to 50% of Excess Cash Flow determined for the Parent
and its Subsidiaries for the four fiscal quarter period most recently ended
prior to such date. Any mandatory prepayment made under this Section 2.13(a)
shall be applied first, to the remaining principal installments of the Term
Loans in the inverse order of maturity, then to the outstanding principal
balance of the Revolving
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Loans, and then to the cash collateral account described in Section 11.8 hereof
to the extent of any Letter of Credit Obligations then outstanding. Any
mandatory prepayments of Revolving Loans under this Section 2.13(a) 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.
(b) Obligors shall make a mandatory prepayment of the Loans
owing by them immediately following 90 days after sale, transfer or other
disposition of any assets by any Obligors or any of their respective
Subsidiaries (other than the sale of inventory in the normal course of such
Person's business or a transfer to an Obligor or an Guarantor), if all or any
portion of the Net Cash Proceeds of such sale, transfer or other disposition of
assets are not used or contracted to use within such 90 day period to purchase
assets similar to, and of comparable or greater value as, the assets so sold,
transferred or disposed of (the "Excess Proceeds"), in an amount equal to 100%
of such Excess Proceeds; provided, however, that Borrowers shall not be required
to make any prepayments pursuant to this Section 2.13(b) except to the extent
the aggregate amount of Excess Proceeds received by the Obligors during any
fiscal year exceeds $50,000. At such time as the aggregate Excess Proceeds not
previously used to permanently prepay the Loans equals or exceeds $50,000 in the
aggregate, such prepayment shall be made in an amount equal to the aggregate
amount of such Excess Proceeds. Any mandatory prepayment made under this Section
2.13(b) shall be applied first, to the remaining principal installments of the
Term Loans in the inverse order of maturity, then to the outstanding principal
balance of the Revolving Loans, and then to the cash collateral account
described in Section 11.8 hereof to the extent of any Letter of Credit
Obligations then outstanding. 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.
(c) The Obligors shall make a mandatory prepayment of the
Loans owing by them immediately following the incurrence of any Indebtedness of
the type described in clauses (a)(i) of the definition thereof by any Obligor or
by any Subsidiary of any Obligor or following the issuance of any Capital Stock
by any Subsidiary of Parent, in an amount equal to 100% of the Net Cash Proceeds
of such issuance except that no such prepayment shall be required (i) in the
case of the issuance of Capital Stock of the ASC Subsidiary permitted by Section
8.7(c) hereof or the incurrence of Indebtedness by the ASC Subsidiary permitted
by Section 8.2(d) hereof, to the extent the Net Proceeds of such Capital Stock
or Indebtedness are used to capitalize or fund the ASC Subsidiary; and (ii) in
connection with the incurrence of intercompany Indebtedness permitted by Section
8.2(a) or the incurrence of Indebtedness permitted pursuant to Section 8.2(f)
hereof. Any mandatory prepayment made under this Section 2.13(c) shall be
applied first, to the remaining principal installments of the Term Loans in the
inverse order of maturity, then to the outstanding principal balance of the
Revolving Loans, and then to the cash collateral account described in Section
11.8 hereof to the extent of any Letter of Credit Obligations then outstanding.
Any mandatory prepayments of Revolving Loans under this Section 2.13(c) 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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(d) The Obligors shall make a mandatory prepayment of the
Loans owing by them immediately following the issuance of any Capital Stock by
Parent, in an amount equal to 50% of the Net Cash Proceeds of such issuance;
provided, however, that in the case of the first issuance of Qualified Junior
Capital and provided that such issuance occurs within 180 days of the Effective
Date, Obligors shall make a mandatory prepayment of the Loans in an amount equal
to 100% of the first $3,000,0000 of Net Proceeds of such issuance. Any mandatory
prepayment made under this Section 2.13(d) shall be applied first, to the
remaining principal installments of the Term Loans in the inverse order of
maturity, then to the outstanding principal balance of the Revolving Loans, and
then to the cash collateral account described in Section 11.8 hereof to the
extent of any Letter of Credit Obligations then outstanding. Any mandatory
prepayments of Revolving Loans under this Section 2.13(d) 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.
(e) Upon written notice to the Agent in accordance with
Section 2.15 hereof, any Borrower may, at its option, prepay all or a portion of
the Term Loans and/or Revolving Loans owing by such Borrower, or reduce or
terminate the Aggregate Commitments, in the case of a partial prepayment or
Commitment reduction in integral multiples of $500,000, on the date specified in
such notice, by paying to the Agent for the benefit of the Lenders the accrued
amount of the Commitment Fee applicable to the amount of the Aggregate
Commitment reduction, together with the amount of the Term Loans being prepaid,
as the case may be.
(f) In no event may the Borrowers reduce the Commitments below
the sum of (i) the aggregate principal amount of Revolving Loans outstanding and
(ii) the Line Letter of Credit Obligations, unless, simultaneously with such
reduction, the principal amount of the Revolving Loans and/or Line Letter of
Credit Obligations in excess of the Commitments, as so reduced, is paid in full.
(g) All prepayments in respect of the Term Loans shall be
applied to the remaining principal installments thereof in the inverse order of
maturity.
(h) The Commitments, once terminated or reduced, may not be
reinstated.
(i) Proceeds of insurance due to casualty shall be held by the
Agent and, in the case of a casualty resulting in proceeds of not more than
$50,000, such proceeds shall, so long as there exists no Default or Event of
Default, be made available to the Obligors for the restoration or replacement of
the Collateral.
2.14 SHARING OF PAYMENTS, ETC.
(a) Each Obligor agrees that, in addition to (and without
limitation of) any right of set-off, banker's lien or counterclaim a Lender may
otherwise have, each Lender shall be entitled, at its option, to offset balances
held by it for account of such Obligor at any of its
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offices, in dollars or in any other currency, against any principal of or
interest on any of such Lender's Loans or any other amount payable to such
Lender hereunder, that is not paid when due (regardless of whether such balances
are then due to such Obligor), in which case it shall promptly notify the
Obligors and the Agent thereof; provided that such Lender's failure to give such
notice shall not affect the validity thereof.
(b) If any Lender shall obtain from any Obligor payment of any
principal of or interest on any Loan owing to it or payment of any other amount
under this Agreement through the exercise of any right of set-off, banker's lien
or counterclaim or similar right or otherwise (other than from the Agent as
provided herein), and, as a result of such payment, such Lender shall have
received more than its Pro Rata Share of the principal of or interest on the
Loans or such other amounts then due hereunder by such Obligor, it shall
promptly notify the Agent of such payment and promptly purchase from such other
Lenders participations in (or, if and to the extent specified by such Lender,
direct interests in) the Loans or such other amounts, respectively, owing to
such other Lenders (or in interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all the Lenders shall share the benefit of such
excess payment (net of any expenses that may be incurred by such Lender in
obtaining or preserving such excess payment) prorata in accordance with the
unpaid principal of and/or interest on the Loans or such other amounts,
respectively, owing to each of the Lenders; provided, that if at the time of
such payment the outstanding principal amount of the Loans shall not be held by
the Lenders in accordance with their respective Pro Rata Shares in effect at the
time such Loans were made (by reason of a failure of a Lender to make a Loan
hereunder in the circumstances described in the last paragraph of Section 14.8
hereof), then such purchases of participations and/or direct interests shall be
made in such manner as will result, as nearly as is practicable in the judgment
of the Agent, in the outstanding principal amount of the Loans being held by the
Lenders according to each Lender's Pro Rata Share. To such end all the Lenders
shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must otherwise
be restored.
(c) Each Obligor agrees that any Lender so purchasing such a
participation (or direct interest) may exercise all rights of set-off, banker's
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender were a direct holder of Loans or other amounts (as the case
may be) owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to
exercise any such right or shall affect the right of any Lender to exercise, and
retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of any Obligor. If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a set-off to which this Section 2.14 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section 2.14 to
share in the benefits of any recovery on such secured claim.
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2.15 CERTAIN NOTICES; MINIMUM AMOUNTS. (a) All notices given
by the Obligors to the Agent of terminations or reductions of Commitments, or of
borrowings, Conversions, Continuations or prepayments of Loans hereunder or
requests for the issuance of Line Letters of Credit shall either be oral, with
prompt written confirmation by telecopy, or in writing, with such written
confirmation or writing, in the case of a borrowing, Conversion or Continuation,
to be substantially in the form of EXHIBIT C attached hereto (a "Notice of
Borrowing") and, in the case of a request for the issuance of a Line Letter of
Credit, to be substantially in the form of EXHIBIT D attached hereto (a "Request
for a Line Letter of Credit"); shall be irrevocable; shall be effective only if
received by the Agent or, in the case of a Line Letter of Credit, by the LC
Issuer prior to 10:00 a.m. (prevailing Eastern time) on a Business Day which is:
(i) at least fifteen (15) days prior to such termination or reduction of any of
the Commitments; (ii) not later than the date such Loan is to be made as,
Converted to or Continued as a Base Rate Loan; (iii) at least three (3) Business
Days prior to the date such Loan is to be made as, Converted to or Continued as
a Eurodollar Loan; (iv) at least five (5) days prior to any such prepayment, in
the case of a prepayment of a Eurodollar Loan; (v) not later than the date of
any such prepayment, in the case of a prepayment of a Base Rate Loan; or (vi) at
least three (3) Business Days prior to the date such Line Letter of Credit is to
be issued. Each such notice to reduce the Commitments or to prepay the Loans
shall specify the aggregate amount of Commitments to be reduced or of the Loans
to be prepaid and the date of such reduction or prepayment. Each such notice of
borrowing, Conversion or Continuation shall specify: (A) the amount of such
borrowing, Conversion or Continuation; (B) that the amount of the Loans to be
made, Converted or Continued, when aggregated with all other Loans to be
outstanding following the funding, Conversion or Continuation of such Loans,
does not exceed Borrowing Availability; (C) whether such Loan will be made,
Converted or Continued as a Eurodollar Loan or as a Base Rate Loan; (D) the date
such Loan is to be made, Converted or Continued (which shall be a Business Day
and, if such Loan is to Convert or Continue a Eurodollar Loan then outstanding,
shall not be prior to the then current Interest Period for such outstanding
Loan); and (E) if such Loan is a Eurodollar Loan, the duration of the Interest
Period with respect thereto. If the requesting Borrower fails to specify the
duration of the Interest Period for any Eurodollar Loan, such Borrower shall
instead be deemed to have requested that such Loan be made as, Converted to or
Continued as a Base Rate Loan. Each request for a borrowing, Conversion or
Continuation of a Loan, for the issuance of a Line Letter of Credit or for any
other financial accommodation by the requesting Borrower pursuant to this
Agreement or the other Loan Documents shall constitute (x) an automatic warranty
and representation by such Borrower to the Agent, the LC Issuer and each Lender
that there does not then exist a Default or Event of Default or any event or
condition which, with the making of such Loan or the issuance of such Line
Letter of Credit, would constitute a Default or Event of Default and (y) an
affirmation that as of the date of such request all of the representations and
warranties of the Obligors contained in this Agreement and the other Loan
Documents are true and correct in all material respects, both before and after
giving effect to the application of the proceeds of the Loan or the Line Letter
of Credit, as applicable. If on the last day of the Interest Period of any
Eurodollar Loan hereunder, the Agent has not received a timely notice hereunder
to Convert, Continue or prepay such Loan, the requesting Borrower shall be
deemed to have submitted a notice to Convert such Loan to a Base Rate Loan.
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(b) Except for Conversions or prepayments made pursuant to
Sections 4.6 or 4.7 hereof, each borrowing, Conversion and partial prepayment of
principal of Loans shall be in a minimum principal amount of $500,000, shall be
in an integral multiple of $100,000 in excess thereof, and if a Eurodollar Loan,
shall be in a minimum principal amount of $1,000,000 (borrowings, Conversions or
prepayments of or into Loans of different types or, in the case of Eurodollar
Loans, having different Interest Periods at the same time hereunder to be deemed
separate borrowings, Conversions and prepayments for purposes of the foregoing,
one for each type of Loan or Interest Period).
3. PHYSICIAN LETTERS OF CREDIT.
3.1. ISSUANCE OF PHYSICIAN LETTERS OF CREDIT. Subject to the terms and
conditions hereof, the LC Issuer shall, on the Effective Date and for the
benefit of the Lenders and in reliance upon the agreement of the Lenders set
forth in Section 3.3 below, issue, for the account of PVH, the Physician Note
Letters of Credit and the Physician Put Letters of Credit in the amounts and in
favor of the Persons as are set forth on SCHEDULE 3.1 hereto. Each Physician
Note Letter of Credit shall be in the form of EXHIBIT E hereto and each
Physician Note Letter of Credit shall be in the form of EXHIBIT F hereto;
provided, however, that the aggregate amount of all Physician Letter of Credit
Obligations outstanding under or with respect to Physician Letters of Credit at
any one time does not exceed $1,423,000. Each of the Lenders shall, upon the
issuance of such Physician Letter of Credit, be deemed to have purchased a
participation in such Physician Letter of Credit pursuant to Section 3.3 below.
The expiration date of any such Physician Letter of Credit shall not extend
beyond September 5, 2001.
3.2. LETTER OF CREDIT DOCUMENTS. In connection with the issuance of
each Physician Letter of Credit PVH shall execute and deliver an appropriate
letter of credit application on the LC Issuer's customary form and such other
Letter of Credit Documents in such form and containing such terms and conditions
as the LC Issuer requires, executed by an authorized officer of the requesting
Borrower.
3.3. LENDER PARTICIPATIONS. Simultaneously with the issuance by the LC
Issuer of each Physician Letter of Credit under Section 3.1 above, each Lender
shall be deemed to have irrevocably and unconditionally purchased and received
from the LC Issuer, without recourse or warranty, an undivided interest and
participation in such Physician Letter of Credit (including, without limitation,
all obligations of the applicable Obligor with respect thereto) and any security
therefor or guaranty pertaining thereto, equal to such Lender's Pro Rata Share
of such Physician Letter of Credit. Each Lender severally agrees that it shall
be absolutely liable, without regard to the occurrence of any Default or Event
of Default or any other condition precedent whatsoever, to the extent of such
Lender's Pro Rata Share, to reimburse the LC Issuer on demand for the amount of
each draft paid by the LC Issuer under such Physician Letter of Credit to the
extent that such amount is not reimbursed by the applicable Borrower. The
failure of any Lender to make available to the LC Issuer its Pro Rata Share of
the unreimbursed amount of any such payment shall not relieve any other Lender
of its obligation hereunder to make available to the LC Issuer its Pro Rata
Share of the unreimbursed amount of any payment on the date such payment is to
be made. The obligations of each Lender to make payments to the LC Issuer with
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respect to any Physician Letter of Credit and its participations therein
pursuant to the provisions of this Section or otherwise and the obligations of
the applicable Borrower to make payments to the LC Issuer for the account of the
Lenders with respect to any Physician Letter of Credit shall be irrevocable, and
shall not be subject to any qualification or exception whatsoever.
In the event that any payment by the applicable Borrower received by
the LC Issuer with respect to a Physician Letter of Credit and distributed by
the LC Issuer to Lenders on account of their participations is thereafter set
aside, avoided or recovered from the LC Issuer in connection with any
receivership, liquidation, reorganization or bankruptcy proceeding, each Lender
which received such distribution shall, upon demand by the LC Issuer, contribute
such Lender's Pro Rata Share of the amount set aside, avoided or recovered,
together with interest at the rate required to be paid by the LC Issuer upon the
amount required to be repaid by it. Each Lender shall share, pro rata, in
accordance with its participating interest, in any interest (but not in the
processing, administration and similar fees charged by the LC Issuer, which fees
shall be solely for the account of the LC Issuer) which accrues to the LC Issuer
pursuant to any applicable reimbursement agreement.
3.4. REIMBURSEMENT. The Obligors and the Lenders hereby agree to
reimburse the LC Issuer for payments made by the LC Issuer under any Physician
Letter of Credit as follows:
(a) Upon notice from the LC Issuer that a demand for payment
has been made on an Physician Note Letter of Credit, Obligors shall immediately
pay to the LC Issuer the amount of such payment in immediately available funds;
and
(b) Upon notice from the LC Issuer that a demand for payment
has been made on a Physician Put Letter of Credit, (i) the Lenders shall pay to
the LC Issuer their Pro Rate Share of such payment in accordance with Section
3.7 below and (ii) the Obligors shall assign to each Lender, for its own
account, such Lender's Pro Rata Share of the shares of Capital Stock of Parent
required to be tendered to the LC Issuer as a condition to such payment (the
"Put Stock") in full satisfaction of Obligors' reimbursement obligation in
respect of such Physician Put Letter of Credit; provided, however, that if any
Lender has notified Obligors that does not wish to have its Pro Rata Share of
the Put Stock assigned to it because the Put Stock is voting stock, then, rather
than assigning to such Lender its Pro Rata Share of the Put Stock, the Obligors
shall return such shares of Put Stock to Parent and Parent agrees that it shall
issue to such Lender a number of shares of Convertible Preferred Stock equal to,
upon conversion, such Lender's Pro Rata Share of the Put Stock. The Obligors
hereby irrevocably appoint the Agent and the LC Issuer as their agent and
attorney in fact, authorized to endorse, transfer or otherwise assign, in such
Obligor's name or in the Agent's or the LC Issuer's name, the shares of Put
Stock to the Lenders. Until such transfer and assignment have been consummated,
the Put Stock shall be deemed to have been pledged, and the Obligors do hereby
pledge the Put Stock, to the Agent for the benefit of the LC Issuer and the
Lenders as security for the reimbursement of the payment made in respect of such
Physician Put Letter of Credit.
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3.5. REIMBURSEMENT BY REVOLVING CREDIT LOANS. If PVH fails to make any
payment in respect of any Physician Note Letter of Credit as and when required
by Section 3.4, or if PVH fails to request a Revolving Loan in an amount
sufficient to pay the outstanding Physician Letter of Credit Obligations (other
than any Physician Letter of Credit Obligations arising out of Physician Put
Letters of Credit), each Lender may, without notice to or the consent of such
Borrower, make a Revolving Loan under Section 2.2 in an aggregate amount equal
to the amount paid by such Lender in respect of its Pro Rata Share of such
Physician Letter of Credit Obligations pursuant to Section 3.3 above and, for
this purpose, the conditions precedent to the making of a Revolving Loan under
this Agreement shall not apply. The proceeds of such Loan shall be paid to the
LC Issuer to reimburse it for any payments made by it in respect of such
Physician Letter of Credit Obligations.
3.6. MODIFICATIONS, ETC. The issuance of any supplement, modification,
amendment, renewal or extension to or of any Physician Letter of Credit shall be
treated in all respects the same as the issuance of a new Physician Letter of
Credit, and each such Physician Letter of Credit, and all Physician Letter of
Credit Obligations in respect thereof, shall in each case remain subject to this
Section 3.
3.7. DRAWS ON PHYSICIAN LETTERS OF CREDIT. If any draft shall be
presented or other demand for payment shall be made under any Physician Letter
of Credit, the LC Issuer shall notify the applicable Borrower of the date and
amount of the draft presented or demand for payment and of the date and time
when it expects to pay such draft or honor such demand for payment. If the
applicable Borrower fails or is not required to reimburse the LC Issuer in cash
pursuant to Section 3.4(a) above, the LC Issuer may at any time thereafter
notify the Lenders of the amount of any such unpaid reimbursement obligation. No
later than 3:00 p.m. (prevailing Eastern time) on the Business Day next
following the receipt of such notice, each Lender shall make available to the LC
Issuer at the LC Issuer's principal United States office in immediately
available funds, such Lender's Pro Rata Share of such unpaid reimbursement
obligation, together with an amount equal to the product of (i) the average,
computed for the period referred to in clause (iii) below, of the weighted
average interest rate paid by the LC Issuer for federal funds acquired by the LC
Issuer during each day included in such period, times (ii) an amount equal to
such Lender's Pro Rata Share of such unpaid reimbursement obligation, times
(iii) a fraction, the numerator of which is the number of days that elapse from
and including the date the LC Issuer paid the draft presented for honor or
otherwise made payment to the date on which such Lender's Pro Rata Share of such
unpaid reimbursement obligation shall become immediately available to the LC
Issuer and the denominator of which is 360; provided, however, that if the LC
Issuer fails to give the Lenders notice of such Obligor's failure to reimburse
the LC Issuer, as the case may be, within three (3) Business Days following such
failure, in the case of a payment under a Physician Note Letter of Credit, or
following the payment under the Letter of Credit, in the case of a Physician Put
Letter of Credit, the Lenders shall be required to pay interest only for the
period from and including the date the LC Issuer made payment through and
including the third Business Day following such failure. The responsibility of
the LC Issuer to the Obligors and the Lenders shall be only to determine that
the documents (including each draft) delivered under each Physician Letter of
Credit in connection with such presentment shall be in conformity in all
material respects with such Physician Letter of Credit.
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3.8. UNCONDITIONAL OBLIGATION. The Obligors' respective obligations
under this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of the occurrence of any Default or Event of
Default or any condition precedent whatsoever or any setoff, counterclaim or
defense to payment which either such Obligor may have or have had against the LC
Issuer, any Lender or any beneficiary of a Physician Letter of Credit. Each
Obligor further agrees with the Agent, the LC Issuer and the Lenders that the
Agent, the LC Issuer and the Lenders shall not be responsible for, and the
Borrowers' respective reimbursement obligations under Section 3.4 shall not be
affected by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even if such documents should in fact prove to be in
any or all respects invalid, fraudulent or forged, or any dispute between or
among any Obligor, the beneficiary of any Physician Letter of Credit or any
financing institution or other party to which any Physician Letter of Credit may
be transferred or any claims or defenses whatsoever of any Obligor against the
beneficiary of any Physician Letter of Credit or any such transferee. Neither
the Agent, the LC Issuer nor the Lenders shall be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with any Physician Letter
of Credit. Each Obligor agrees that any action taken or omitted by the Agent,
the LC Issuer or any Lender under or in connection with each Physician Letter of
Credit and the related drafts and documents, if done in good faith and without
gross negligence, shall be binding upon the Obligors and shall not result in any
liability on the part of the Agent, the LC Issuer or any Lender to the any
Obligor.
3.9. RIGHTS OF LC ISSUER. The LC Issuer shall be entitled to rely, and
shall be fully protected in relying, upon any Physician Letter of Credit, draft,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it in good faith to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel, independent accountants and other experts selected
by the LC Issuer. The LC Issuer shall be fully justified in failing or refusing
to take any action under this Agreement unless it shall first have received such
advice or concurrence of the Required Lenders as it reasonably deems appropriate
or it shall first be indemnified to its reasonable satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action.
3.10. PROVISIONS CONTROLLING. As between the Obligors, on the one hand,
and the Agent, the LC Issuer and the Lenders, on the other, the provisions of
this Agreement, to the extent in conflict with any provision of any Letter of
Credit Documents, shall control. Without limiting the generality of the
foregoing, (a) notwithstanding the terms of Section 2(a) of the application for
the Physician Letters of Credit, the rate of interest applicable to amounts
drawn on the letters of credit shall be as set forth in Section 4.1 hereof; (b)
the Events of Default applicable to such Letter of Credit Obligations shall be
those set forth in Section 10 hereof and not those set forth in Section 5 of the
application for the Physician Letters of Credit; and (c) Section 8 of the
application for the Physician Letters of Credit shall not be applicable.
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4. FEES AND INTEREST
4.1 INTEREST.
(a) Subject to modification pursuant to Subsection (b) below
and Section 11.1 hereof, the average daily outstanding principal amount of the
Loans and all other Obligations (other than Obligations representing the undrawn
amount of outstanding Letters of Credit) shall bear interest from the date
thereof until paid in full at the following rates:
(i) the outstanding principal amount of each
Eurodollar Loan shall bear interest at a fixed rate of interest per
annum equal to the Quoted Rate for the then-current Interest Period for
such Loan plus the Applicable Margin for Eurodollar Loans, calculated
on the basis of a 360-day year and actual days elapsed; and
(ii) the outstanding principal amount of each Base
Rate Loan, all Letter of Credit Obligations and all other sums payable
by the Obligors hereunder shall bear interest at a fluctuating rate per
annum equal to the Base Lending Rate plus the Applicable Margin for
Base Rate Loans, calculated daily on the basis of a 360-day year and
actual days elapsed.
(b) Accrued interest shall be payable (i) in the case of Base
Rate Loans, monthly on the first day of each month hereafter for the previous
month, commencing with the first such day following the Effective Date; (ii) in
the case of a Eurodollar Loan, on the last day of each Interest Period,
provided, however, that if any Interest Period in respect of a Eurodollar Loan
is longer than three (3) months, such interest prior to maturity shall be paid
on the last Business Day of each three (3) month interval within such Interest
Period as well as on the last day of such Interest Period; (iii) in the case of
any Loan, upon the payment or prepayment thereof; (iv) in the case of any other
sum payable hereunder as set forth elsewhere in this Agreement or, if not so set
forth, on demand; and (v) in the case of interest payable at the Default Rate,
on demand.
4.2 LIMITATIONS ON INTEREST PERIODS. No Borrower may select
any Interest Period which extends beyond any Amortization Date or the Maturity
Date, in the case of the Term Loans, or the Maturity Date, in the case of
Revolving Loans, unless, in the case of Term Loans, after giving effect to such
Interest Period for such Eurodollar Loan, the aggregate outstanding principal
amount of the Term Loans which consist of Eurodollar Loans having Interest
Periods extending beyond such Amortization Date is not greater than the
aggregate principal amount of the Term Loans scheduled to be outstanding
immediately following the principal payment to be made on such Amortization
Date. The Borrowers shall not have more than three (3) different Interest
Periods for Eurodollar Loans outstanding at any given time in the aggregate for
all Borrowers during the term of this Agreement.
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4.3 CONVERSIONS AND CONTINUATIONS. So long as there then
exists no Default or Event of Default, each Borrower shall have the right, from
time to time, to Convert Loans of one type to Loans of the other type and to
Continue Loans of one type as Loans of the same type; provided, however, that
Eurodollar Loans may not be Continued or Converted prior to the end of the
Interest Period applicable thereto.
4.4 COMMITMENT FEE. Beginning on the Effective Date and
continuing until the day immediately prior to the Commitment Termination Date,
the Borrowers, jointly and severally, shall pay to the Agent for the account of
each Lender a commitment fee equal to one-half of one percent (1/2 of 1%) per
annum of the sum of the aggregate average daily unused amount of such Lender's
Commitment, calculated on the basis of a 360-day year and actual days elapsed,
payable in arrears on the first day of each calendar quarter for the previous
calendar quarter or portion thereof (commencing on the first such date to occur
following the Effective Date) and on the Commitment Termination Date (or such
earlier date on which the obligation of the Lenders to make Loans under such
credit facility hereunder shall terminate).
4.5 LETTER OF CREDIT FEES. As additional consideration for the
issuance of any Letters of Credit pursuant to Section 2.8 hereof, the Borrowers,
jointly and severally, hereby agree to pay to the Agent a letter of credit fee,
in addition to the processing, administrative and similar fees charged by the
Agent in connection with the issuance of Letters of Credit and any other sums
due pursuant to Section 2.8 hereof, a percentage per annum equal to the
then-effective Applicable Margin applicable to Eurodollar Loans of the average
daily aggregate undrawn amount of the Letters of Credit, payable on the first
date of each quarter and on the Commitment Termination Date.
4.6 ILLEGALITY. Notwithstanding any other provision of this
Agreement to the contrary, in the event that it shall become unlawful for any
Lender to obtain funds in the London interbank market or for such Lender to
maintain a Eurodollar Loan, then such Lender shall promptly notify the
Borrowers, whereupon (a) the right of any Borrower to request any Eurodollar
Loan shall thereupon terminate and (b) any Eurodollar Loan then outstanding
shall commence to bear interest at the rate applicable to Base Rate Loans on the
last day of the then applicable Interest Period or at such earlier time as may
be required by Applicable Law.
4.7 INABILITY TO DETERMINE FIXED RATE. In the event that the
Agent determines (which determination shall be conclusive absent manifest error)
that, by reason of circumstances affecting the London interbank market,
quotation of interest rates for the relevant deposits referred to in the
definition of the "Quoted Rate" herein are not being provided in the relevant
amounts or for the relevant maturities for the purpose of determining rates of
interest for a Eurodollar Loan, the Agent will give notice of such determination
to the Borrowers and each Lender at least one day prior to the date specified in
such notice of borrowing, Conversion or Continuation for such Loan to be made.
If any such notice is given, no Lender shall have any obligation to make
available, maintain, Convert or Continue Eurodollar Loans. Until the earlier of
the date any such notice has been withdrawn by the Agent or the date when the
Agent, the Lenders and the Borrowers have mutually agreed upon an alternate
method of determining the
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rates of interest payable on a Eurodollar Loan, as the case may be, the
Borrowers shall not have the right to have or maintain any Eurodollar Loan.
4.8 INCREASED COSTS AND REDUCED RETURN.
(a) If any Regulatory Change:
(i) shall subject any Lender to any tax, duty or
other charge with respect to any Eurodollar Loan, or shall change the
basis of taxation of payments to such Lender of the principal of or
interest on any Eurodollar Loan (except for changes in the rate of tax
on the overall net income of such Lender imposed by the jurisdiction in
which such Lender's principal office is located); or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors of
the Federal Reserve System) against assets of, deposits with or for the
account of, or credit extended by, any Lender; or
(iii) shall impose on any Lender or on the London
interbank market any other condition or expense with respect to this
Agreement, the Notes or their making, issuance or maintenance of such
Lender's Commitment hereunder or of any Eurodollar Loan;
and the result of any such Regulatory Change is, in such Lender's reasonable
judgment, to increase the costs which such Lender determines are attributable to
its making or maintaining any Loan, or its obligation to make available any
Loan, or to reduce the amount of any sum received or receivable by such Lender
under this Agreement or the Notes with respect to any Loan, then, the Borrowers,
jointly and severally, shall pay to such Lender, within thirty (30) days after
written demand therefor pursuant to Section 4.10 hereof, such additional amount
or amounts as will compensate such Lender for such increased cost or reduction.
(b) In addition to any amounts payable pursuant to subsection
4.8(a) above, if the LC Issuer or any Lender shall have determined that the
applicability of any law, rule, regulation or guideline adopted after the date
hereof or any law, rule, regulation or guideline regarding capital adequacy, or
any change in any of the foregoing or in the enforcement or interpretation or
administration of any of the foregoing by any court or any central bank or other
Governmental Authority, charged with the enforcement or interpretation or
administration thereof, or compliance by the LC Issuer or any Lender (or any
lending office of any Lender) or the LC Issuer's or such Lender's holding
company with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on the LC
Issuer's or such Lender's capital or on the capital of the LC Issuer's or such
Lender's holding company, if any, as a consequence of its making or maintaining
any Loan, its incurring any Letter of Credit Obligations, or its incurring any
obligations under this Agreement to a level below that which the LC Issuer or
such Lender or the LC Issuer's or such Lender's holding company could have
achieved but for such applicability,
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adoption, change or compliance (taking into consideration the LC Issuer's or
such Lender's policies and the policies of the LC Issuer's or such Lender's
holding company with respect to capital adequacy) by an amount deemed by the LC
Issuer or such Lender to be material, then, Borrower hereby agrees to pay to the
LC Issuer or such Lender from time to time, within thirty (30) days after
written demand therefor pursuant to Section 4.10 hereof, such additional amount
or amounts as will compensate the LC Issuer or such Lender or the LC Issuer's or
such Lender's holding company for any such reduction suffered.
4.9 COMPENSATION. Each Borrower shall pay to each Lender, upon
the request of such Lender therefor, such amount or amounts as shall be
sufficient (in the reasonable opinion of such Lender) to compensate it for any
and all losses or expenses which such Lender may sustain or incur as a
consequence of (a) failure by such Borrower to consummate (including, without
limitation, as a result of the failure of any of the conditions precedent
specified in Section 12 hereof to be satisfied) any prepayment, borrowing,
Conversion or Continuation made by such Borrower in respect of any Eurodollar
Loan after notice therefor has been given; or (b) payment, prepayment or
Conversion of any Eurodollar Loan on any day other than the last day of the
Interest Period for such Loan (including, without limitation, any prepayment
pursuant to Sections 2.10, 2.13, 4.6, or 4.11 hereof or any payment resulting
from an acceleration of the Loans pursuant to Section 11.2 hereof). The
Borrowers' respective obligations under this Section shall survive the
termination of this Agreement and the repayment of the Obligations.
4.10 NOTICE OF AMOUNTS PAYABLE TO LENDERS. If any Lender or
the LC Issuer shall seek payment of any amounts from any Borrower pursuant to
Sections 2.11(b), 4.8 or 4.9 hereof, it shall notify such Borrower of the amount
payable by such Borrower to such Lender thereunder. A certificate of such Lender
or LC Issuer seeking payment pursuant to Sections 2.11(b), 4.8 or 4.9 hereof,
setting forth in reasonable detail the factual basis for and the computation of
the amounts specified, shall be conclusive, absent clear error, as to the
amounts owed. The Borrowers' obligations under this Section shall survive the
termination of this Agreement and the repayment of the Obligations.
4.11 INTEREST SAVINGS CLAUSE. Nothing contained in this
Agreement or in any of the Notes or in any Letter of Credit Documents or any of
the other Loan Documents shall be construed to permit the LC Issuers or any
Lender to receive at any time interest, fees or other charges in excess of the
amounts which the LC Issuers or such Lender is legally entitled to charge and
receive under any law to which such interest, fees or charges are subject. In no
contingency or event whatsoever shall the compensation payable to the LC Issuers
or any Lender by any Borrower, howsoever characterized or computed, hereunder or
under the Note issued to the LC Issuers or such Lender or under any other
agreement or instrument evidencing or relating to the Obligations, exceed the
highest rate permissible under any law to which such compensation is subject.
There is no intention that the LC Issuers or any Lender shall contract for,
charge or receive compensation in excess of the highest lawful rate, and, in the
event it should be determined that any excess has been charged or received,
then, ipso facto, such rate shall be reduced to the highest lawful rate so that
no amounts shall be charged which are in excess thereof; and the LC Issuers or
such Lender shall apply such excess against the Loans then outstanding (with
such application being made first against the Base Rate Loans, to the extent
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thereof, second against the Eurodollar Loans, to the extent thereof, and then to
any other Obligations hereunder) and, to the extent of any amounts remaining
thereafter, refund such excess to the Borrowers.
5. SECURITY INTEREST - COLLATERAL
5.1 SECURITY INTEREST. As security for the Obligations, each
Obligor hereby grants to the Agent, for the benefit of the Lenders, a continuing
Lien on and security interest in and to the following described property,
whether now owned or existing or hereafter acquired or arising or in which such
Obligor now has or hereafter acquires any rights and wheresoever located
(sometimes herein collectively referred to as "Collateral"):
(a) Accounts;
(b) Chattel Paper;
(c) Contracts;
(d) Documents;
(e) Equipment;
(f) General Intangibles;
(g) Instruments;
(h) Inventory;
(i) Investment Property;
(j) all Intercompany Loan Documents entered into from time to
time, the rights of such Obligor as holder of such Intercompany Loan Documents,
including, without limitation any security interest in any and all assets of
each Subsidiary of such Obligor granted to such Obligor by such Subsidiary;
(k) all monies, residues and property of any kind of such
Obligor, now or at any time or times hereafter, in the possession or under the
control of the Agent or any Lender or a bailee of the Agent or any Lender;
(l) all accessions to, substitutions for and all replacements,
products and proceeds of the foregoing, including, without limitation, proceeds
of insurance policies insuring the Collateral;
(m) all books and records (other than patient medical records
but otherwise including, without limitation, patient billing and payment
records, customer lists, credit files,
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computer programs, print-outs and other computer materials and records) of such
Obligor pertaining to any of the foregoing; and
(n) any and all other property of such Obligor;
provided, however, that notwithstanding the foregoing, the Bauman Properties
shall be excluded from the Collateral so long as they are encumbered by the
Bauman Security Agreement; provided, further that to the extent the Bauman
Properties are no longer encumbered by the Bauman Security Agreement, the Lien
granted hereby shall, automatically and without further act by any Obligor,
attached to such Bauman Properties and thereafter such Bauman Properties shall
constitute Collateral hereunder and shall secured the Collateral.
5.2 ADDITIONAL SECURITY. As additional security for the
Obligations, each Obligor shall pledge to the Agent, for the benefit of the
Lenders, (i) pursuant to the terms and conditions of the Stock Pledge Agreement,
all of the issued and outstanding shares of Capital Stock of each Subsidiary
which it currently holds or holds subsequent to the Effective Date (the
"Subsidiary Stock"), and (ii) each Intercompany Loan Document that it may hold
subsequent to the Effective Date. The Obligors agree that all of such additional
security shall be included in the "Collateral".
5.3 PERFECTION OF SECURITY INTEREST. Until the termination of
the Commitments, the payment and satisfaction in full of all Obligations and the
termination or expiration of all Letters of Credit, whichever last occurs (and
except as expressly provided herein to the contrary), the Agent's security
interest in the Collateral and all products and proceeds thereof shall continue
in full force and effect. Each Obligor shall perform any and all steps requested
by the Agent or the Required Lenders to perfect, maintain or protect the Agent's
security interest in the Collateral, including, without limitation, executing
and filing financing or continuation statements, or amendments or assignments
thereof, in form and substance satisfactory to the Agent; delivering to the
Agent all documents, instruments or chattel paper included in the Collateral,
the possession of which is necessary or appropriate to perfect the Agent's
security interest therein; and delivering to the Agent all letters of credit on
which any Obligor is named as a beneficiary. The Agent may file one or more
financing statements disclosing the Agent's security interest under this
Agreement without the applicable Obligor's signatures appearing thereon and such
Obligor shall pay the costs of, or incidental to, any recording or filing of any
financing statements concerning the Collateral. Each Obligor agrees that a
carbon, photographic, photostatic, or other reproduction of this Agreement or of
a financing statement is sufficient as a financing statement.
5.4 RIGHT TO INSPECT; VERIFICATIONS. The Agent and each Lender
(or any Person or Persons designated by it), in its sole discretion, shall have
the right to call at any place of business or property location of any Obligor
at any reasonable time, and, without hindrance or delay, to inspect the
Collateral and to inspect, audit, check and make extracts from such Obligor's
books, records, journals, orders, receipts and any correspondence and other data
relating to the Collateral, to any such Obligor's business or to any other
transactions between the parties hereto and to discuss any of the foregoing with
any of such Obligor's employees, officers and directors
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and with its independent accountants. Additionally, the Agent may, at any time
and from time to time in its sole discretion, require such Obligor to verify the
individual Account Debtors immediately upon its request therefor. To facilitate
the foregoing, upon request from the Agent made at any time and from time to
time hereafter, each Obligor shall furnish the Agent and the Lenders with a then
current Account Debtor address list.
6. REPRESENTATIONS AND WARRANTIES
In order to induce the Agent, the LC Issuer and the Lenders to
enter into this Agreement and to make Loans and the extensions of credit
hereunder, each Obligor hereby makes the following representations and
warranties to the Agent, the LC Issuer and the Lenders, which shall be true and
correct in all material respects on the Effective Date and shall continue to be
true and correct at the time of the making of any Loan or the issuance of any
Letter of Credit and until the Loans have been repaid in full and the Letters of
Credit shall have expired or otherwise terminated:
6.1 CORPORATE EXISTENCE AND QUALIFICATION. Each of the Parent
and its Subsidiaries is an organization duly organized, validly existing and in
good standing under the laws of its state of organization, which states of
organization for the Parent Subsidiaries as of the date hereof are set forth on
SCHEDULE 6.1 hereto. Each of the Parent and its Subsidiaries is duly qualified
as a foreign corporation in good standing in each state in which the failure to
so qualify as a foreign corporation could have a Material Adverse Effect, which
states in the case of the Parent and its Subsidiaries as of the date hereof are
set forth on SCHEDULE 6.1 hereto.
6.2 CORPORATE AUTHORITY; VALID AND BINDING EFFECT. Each of the
Parent and its Subsidiaries has the corporate or organizational power and
authority to execute, deliver and perform under this Agreement and the other
Loan Documents to which it is a party, and to borrow hereunder, and has taken
all necessary and appropriate corporate action to authorize the execution,
delivery and performance of this Agreement and such other Loan Documents. This
Agreement and the other Loan Documents to which Parent or any Subsidiary of
Parent is a party constitute the valid and legally binding obligations of each
such Person, enforceable against each such Person in accordance with their
respective terms except as such enforceability may be limited by general
principles of equity and bankruptcy, insolvency and similar laws affecting the
enforcement of creditors' rights generally.
6.3 NO CONFLICT. The execution, delivery and performance by
the Parent and its Subsidiaries of this Agreement and the other Loan Documents
(a) are not in contravention of any provisions of Applicable Law applicable to
Obligors, the contravention of which might have a Material Adverse Effect; (b)
will not violate or result in a default under any agreement or indenture to
which the Parent or any of its Subsidiaries is a party or by which the Parent or
any of its Subsidiaries is bound, the violation or default of which might have a
Material Adverse Effect; (c) do not contravene the Certificate or Articles of
Incorporation, Bylaws or other organizational documents of the Parent or any of
its Subsidiaries; and (d) will not result in or require the creation or
imposition of any Lien on any of the property or assets of the Parent or any of
its
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Subsidiaries other than Liens in favor of the Agent created by this Agreement or
the Loan Documents.
6.4 GOVERNMENTAL ACTION. The execution, delivery and
performance of this Agreement and the other Loan Documents do not require any
registration with, consent or approval of, or any notice to, or other action to,
with or by any Governmental Authority except (a) filings, consent or notices
which have been obtained and a copy thereof furnished to the Agent; and (b)
filings necessary to perfect the Liens granted by this Agreement and the other
Loan Documents.
6.5 NO LITIGATION.
(a) Except as set forth on SCHEDULE 6.5 hereof, as of the
Effective Date, there are no proceedings pending or threatened against the
Parent or any Subsidiary of the Parent before any court or administrative
agency.
(b) There are no proceedings pending or threatened against the
Parent or any Subsidiary of the Parent before any court or administrative agency
which, if decided adversely to the Parent or such Subsidiary, might have a
Material Adverse Effect.
6.6 SOLVENCY. Giving effect to the execution and delivery of
the Loan Documents and the making of each Loan hereunder and the making of each
of the Intercompany Loans, the Parent and each of its Subsidiaries are Solvent.
6.7 TAXES. The Parent and each of its Subsidiaries have filed
all federal, state, local and foreign tax returns, reports and estimates which
are required to be filed, and all taxes (including penalties and interest, if
any) shown on such returns, reports and estimates which are due and not yet
delinquent or which are otherwise due and payable have been fully paid except
where such taxes are being contested in good faith by appropriate proceedings
and for which adequate reserves have been established. Such tax returns properly
and correctly reflect the income and taxes of the Parent and its Subsidiaries
for the periods covered thereby except for such amounts which in the aggregate
are immaterial. The federal tax identification numbers of the Parent and each of
its Subsidiaries as of the date hereof are set forth on SCHEDULE 6.7. The
federal tax identification number for each Person that becomes a Subsidiary
after the date hereof is set forth in the Joinder Agreement executed by such
Person or has otherwise been provided to the Agent in writing and certified as
correct by an officer of such Subsidiary.
6.8 FINANCIAL INFORMATION.
(a) The audited, consolidated, annual financial statements of
Parent and its Subsidiaries for the fiscal year ended December 31, 1998,
consisting of a consolidated balance sheet, consolidated statement of
operations, consolidated statement of changes in stockholders equity,
consolidated statement of cash flows and accompanying notes, certified by Ernst
& Young LLP, certified public accountants, are true and correct in all material
respects and contain no material misstatement or omission, and fairly present
the consolidated financial position,
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assets and liabilities of Parent and its Subsidiaries as of the date thereof,
and the consolidated results of operations of Parent and its Subsidiaries for
the period then ended and as of the date thereof, there were no liabilities of
Parent or any of its Subsidiaries, fixed or contingent, which are material that
are not reflected or disclosed in such financial statements.
(b) The audited, consolidated, annual financial statements of
PVH and its Subsidiaries for the fiscal year ended December 31, 1998, consisting
of a consolidated balance sheet, consolidated statement of operations,
consolidated statement of changes in stockholders equity, consolidated statement
of cash flows and accompanying notes, certified by Ernst & Young LLP, certified
public accountants, are true and correct in all material respects and contain no
material misstatement or omission, and fairly present the consolidated financial
position, assets and liabilities of PVH and its Subsidiaries as of the date
thereof, and the consolidated results of operations of PVH and its Subsidiaries
for the period then ended and as of the date thereof, there were no liabilities
of PVH or any of its Subsidiaries, fixed or contingent, which are material that
are not reflected or disclosed in such financial statements.
(c) The audited, consolidated, annual financial statements of
Opticare and its Subsidiaries for the fiscal year ended December 31, 1998,
consisting of a consolidated balance sheet, consolidated statement of
operations, consolidated statement of changes in stockholders equity,
consolidated statement of cash flows and accompanying notes, certified by
Deloitte & Touche LLP, certified public accountants, are true and correct in all
material respects and contain no material misstatement or omission, and fairly
present the consolidated financial position, assets and liabilities of Opticare
and its Subsidiaries as of the date thereof, and the consolidated results of
operations of Opticare and its Subsidiaries for the period then ended and as of
the date thereof, there were no liabilities of Opticare or any of its
Subsidiaries, fixed or contingent, which are material that are not reflected or
disclosed in such financial statements.
(d) The consolidated pro forma cash flow statement, opening
balance sheet and financial projections for the Parent provided to the Agent
(the "Projections") (i) are based on reasonable estimates and assumptions; (ii)
contain no material misstatement or omission; and (iii) reflected, as of the
date so delivered, and continue to reflect, as of the date hereof, the
reasonable and good faith estimate of the Parent of the results of operations
and the information projected therein for the periods covered thereby.
(e) The pro-forma consolidated balance sheet of Parent and its
consolidated Subsidiaries as of June 30, 1999, prepared by Parent, a true and
correct copy of which has been delivered to the Agent and the Lenders, contains
no material misstatement or omission and fairly presents the pro-forma
consolidated financial position of Parent and its consolidated Subsidiaries as
of the date thereof, giving effect to the transactions contemplated by this
Agreement and the Merger Agreement, based on the assumptions set forth therein,
all of which assumptions have been made in good faith and on a basis believed by
Borrowers to be reasonable as of the Effective Date.
(f) Since June 30, 1999, (i) there has been no material
adverse change in the assets, liabilities, financial position or results of
operations of the Parent or any of its Subsidiaries, and (ii) neither the Parent
nor any of its Subsidiaries have (A) incurred any
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obligation or liability, fixed or contingent, which could have a Material
Adverse Effect; (B) incurred any Indebtedness other than as expressly permitted
by Section 8.2; or (C) Guaranteed the obligations of any other Person, other
than as expressly permitted under Section 8.4.
6.9 TITLE TO ASSETS. The Obligors have good and marketable
title to and ownership of the Collateral and the Parent and its Subsidiaries
have good and marketable title to and ownership of all of their other assets,
free and clear of all material liens, claims, security interests and
encumbrances except for Permitted Liens.
6.10 VIOLATIONS OF LAW. Neither the Parent nor any of its
Subsidiaries are in violation of any applicable statute, regulation or ordinance
of any Governmental Authority in any material respect which could have a
Material Adverse Effect.
6.11 ERISA. Except as disclosed on SCHEDULE 6.11 attached
hereto:
(a) Identification of Plans. Neither any Obligor nor any ERISA
Affiliate maintains or contributes to, or has maintained or contributed to, any
Plan or Multiemployer Plan that is subject to regulation by Title IV of ERISA;
(b) Compliance. Each Plan has at all times been maintained, by
its terms and in operation, in accordance with all Applicable Laws, except for
such noncompliance (when taken as a whole) that will not have a Material Adverse
Effect;
(c) Liabilities. Neither any Obligor nor any ERISA Affiliate
is currently or to the best knowledge of any such Obligor or any ERISA Affiliate
will become subject to any liability (including withdrawal liability), tax or
penalty whatsoever to any person whomsoever with respect to any Plan including,
but not limited to, any tax, penalty or liability arising under Title I or Title
IV of ERISA or Chapter 43 of the Code, except such liabilities (when taken as a
whole) as will not have a Material Adverse Effect; and
(d) Funding. Each Obligor and each ERISA Affiliate has made
full and timely payment of (i) all amounts required to be contributed under the
terms of each Plan and Applicable Law and (ii) all material amounts required to
be paid as expenses of each Plan. No Plan has any "amount of unfunded benefit
liabilities" (as defined in Section 4001(a)(18) of ERISA).
(e) Insolvency; Reorganization. No Plan is insolvent (within
the meaning of Section 4245 of ERISA) or in reorganization (within the meaning
of Section 4241 of ERISA).
6.12 ENVIRONMENTAL LAWS.
(a) Except as set forth on SCHEDULE 6.12 hereto, the Parent
and its Subsidiaries have obtained all permits, licenses and other
authorizations, if any, which are required under Environmental Laws and the
Parent and its Subsidiaries are in compliance in all
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material respects with all terms and conditions of the required permits,
licenses and authorizations, and are also in compliance in all material respects
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, notifications, schedules and timetables contained in
the Environmental Laws;
(b) Neither the Parent nor any of its Subsidiaries is aware
of, and has not received notice of, the disposal or release or presence of
Hazardous Substances on any of its properties except for Hazardous Materials,
such as cleaning solvents, pesticides and other materials used, produced,
manufactured, processed, treated, recycled, generated, stored, disposed of,
managed, or otherwise handled in minimal amounts in the ordinary course of
business in compliance with all applicable Environmental Laws, or of any past,
present or future events, conditions, circumstances, activities, practices,
incidents, actions or plans which may interfere with or prevent compliance or
continued compliance on the part of the Parent or such Subsidiary in any
material respect with Environmental Laws, or may give rise to any material
common law or legal liability, or otherwise form the basis of any material
claim, action, demand, suit, lien, proceeding, hearing, study or investigation,
based on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment, of any Hazardous
Substance;
(c) All assets of the Parent and its Subsidiaries are free
from Hazardous Substances except as disclosed in SCHEDULE 6.12 hereto except
where the presence of any Hazardous Substance would not have a Material Adverse
Effect, and the use and disposal of any and all such Hazardous Substances is
effected by the Parent and its Subsidiaries in material compliance with all
applicable Environmental Laws; and
(d) There is not pending or, to the best of the Obligors'
knowledge, threatened against the Parent or any of its Subsidiaries, and the
Obligors know of no facts or circumstances that might give rise to, any civil,
criminal or administrative action, suit, demand, claim, hearing, notice or
demand letter, notice of violation, environmental lien, investigation, or
proceeding relating in any way to Environmental Laws.
6.13 MARGIN STOCK. Neither the Parent nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for buying or carrying Margin Stock. Not more
than twenty five percent (25%) of the aggregate fair market value of the assets
of the Parent and its Subsidiaries consists of Margin Stock.
6.14 NO DEFAULT. Neither the Parent nor any of its
Subsidiaries is in default with respect to (a) any note, indenture, loan
agreement, mortgage, lease, deed or other similar agreement relating to
Indebtedness to which the Parent or such Subsidiaries are a party or by which
the Parent or such Subsidiaries are bound, or (b) any other instrument, document
or agreement to which the Parent or such Subsidiaries are a party, or by which
the Parent or such Subsidiaries or any of their respective properties are bound.
6.15 CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS. (a) In the
case of the Parent and each Subsidiary of the Parent as of the date hereof, each
such Person's principal place of
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business, chief executive office and office where such Person keeps all of its
books and records are set forth on SCHEDULE 6.15 attached hereto, and neither
any such Person nor any of its predecessors has had any other chief executive
office or principal place of business during the preceding five (5) years other
than as set forth on SCHEDULE 6.15. SCHEDULE 6.15 sets forth a true, correct and
complete list of all places of business and all locations at which any material
assets of each such Person are located.
(b) In the case of each Person who becomes a Subsidiary on or
as of a date after the date hereof, such Person's principal place of business,
chief executive office, and the office where such Person keeps its books and
records are set forth in the Joinder Agreement executed by such Person, and
neither any such Person nor any of its predecessors has had any other chief
executive office or principal place of business during the preceding five (5)
years. A true, correct and complete list of all places of business and all
locations at which any material assets of such Person are located is set forth
in the Joinder Agreement to which such Person is a party.
6.16 CORPORATE AND TRADE OR FICTITIOUS NAMES. During the five
(5) years immediately preceding the date of this Agreement, neither the Parent
nor any of its Subsidiaries nor any of their respective predecessors has been
known as or used any corporate, trade or fictitious name other than its current
corporate name and except as disclosed on SCHEDULE 6.16 hereto or otherwise
disclosed to the Agent.
6.17 ACCOUNTS. With regard to each Account now or hereafter
shown on any schedule or aging of Accounts provided to the Agent hereunder or
with respect to which a security interest has been granted or assigned to the
Agent in connection herewith:
(a) Such Account arises or will arise under a contract between
the Parent or a Subsidiary of the Parent and the Account Debtor, such contract
providing for the bona fide sale of goods or performance of services in the
ordinary course of business for or on behalf of the Account Debtor except to the
extent otherwise expressly indicated on such schedule or aging of accounts;
(b) The Parent or a Subsidiary of the Parent has made delivery
of the goods or has rendered the services ordered to date to which such Account
relates and the Account Debtor has accepted such goods and/or services;
(c) The amount of the face value of such Accounts is actually
and absolutely owing to the Parent or a Subsidiary of the Parent, is not
contingent for any reason and, except as otherwise expressly noted on such
schedule or aging of accounts, there are no setoffs, counterclaims, disputes or
deductions existing or asserted with respect thereto, except to the extent, if
any, that such Account Debtor(s) may be entitled to normal trade discounts,
adjustments, returns and allowances;
(d) The Parent or the applicable Subsidiary of the Parent will
have preserved and will continue to preserve any Liens and any rights to Liens
available by virtue of the sales giving rise to such Account; and
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(e) Such Account is free and clear of all Liens other than
Liens in favor of the Agent.
6.18 ADEQUACY OF INTANGIBLE ASSETS. The Parent and its
Subsidiaries possess all intellectual property licenses, Patents, patent
applications, copyrights, Trademarks, trademark applications, and trade names
and all governmental registrations and licenses reasonably necessary to continue
to conduct their respective businesses as heretofore conducted by them, and all
such intellectual property licenses, Patents, patent applications, copyrights,
Trademarks, trademark applications, trade names, licenses and registrations
which have been registered with any Governmental Authority are listed on
SCHEDULE 6.18 hereto or have otherwise been disclosed in writing to the Agent.
6.19 EQUIPMENT. The Parent's and each of its Subsidiaries'
Equipment is and shall remain in good condition, normal wear and tear excepted,
meets all standards imposed by any Governmental Authority having regulatory
authority over such material and its use and is currently usable in the normal
course of each such Person's business.
6.20 INVENTORY. The Parents and each Subsidiaries' Inventory
is and shall remain in good condition, meets all material standards imposed by
any Governmental Authority having regulatory authority over such goods, their
use and/or sale, is either currently usable or currently salable in the normal
course of the Parent's or any such Subsidiary's business and is not subject to
any output contract or similar agreement between the Parent or any Subsidiary of
the Parent and any other Person.
6.21 INVESTMENTS. SCHEDULE 6.21 is a complete list of all
Subsidiaries, Investment Property and other Investments held by the Obligors or
their Subsidiaries in any Person, including but not limited to, all interests in
any partnership or joint venture. Except as otherwise disclosed on SCHEDULE
6.21, all shares of stock in any corporation held by an Obligor or any of their
Subsidiaries are evidenced by stock certificates issued in the name of such
Obligor or such Subsidiary and all other Investment Property of any Obligor or
any Subsidiary is held directly in the name of such Obligor or such Subsidiary
and is not held in any brokerage or similar account, in the name of any
financial institution or in any nominee name.
6.22 INDEBTEDNESS. SCHEDULE 6.22 hereto is a complete and
correct list of each credit agreement, loan agreement, indenture, note purchase
agreement, guarantee or other arrangement providing for or otherwise relating to
any Indebtedness to, or guarantee by, the Parent or any of its Subsidiaries,
other than any other Indebtedness permitted under Section 8.2, and the aggregate
principal or face amount outstanding as of the date hereof or which may become
outstanding under each such arrangement is correctly described in said SCHEDULE
6.22.
6.23 EXISTING LIENS. SCHEDULE 6.23 hereto is a complete and
correct list of each Lien securing Indebtedness of the Parent or any Subsidiary
of the Parent.
6.24 SECURITY INTEREST. This Agreement creates a valid
security interest in the Collateral securing payment of the Obligations, subject
only to Permitted Liens, and all filings
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and other actions necessary or desirable to perfect and protect such security
interest have been taken, and the Agent has a valid and perfected first priority
security interest in the Collateral, subject only to Permitted Liens.
6.25 REGULATORY MATTERS. Neither the Parent nor any Subsidiary
is subject to regulation under the Investment Company Act of 1940, as amended,
the Public Utility Holding Company Act of 1935, as amended, the Federal Power
Act, the Interstate Commerce Act or any other federal or state statute or
regulation which materially limits its ability to incur Indebtedness or its
ability to consummate the transactions contemplated hereby.
6.26 DISCLOSURE. Neither this Agreement nor any other
instrument, document, agreement, financial statement or certificate furnished to
the Agent, any of the Lenders contain an untrue statement of a material fact or
omits to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading or omits
to state any fact which may in the future have a Material Adverse Effect.
6.27 CAPITALIZATION. The authorized capital stock of the
Parent consists of 50,000,000 shares of Common Stock, $0.001 par value per
share, of which there will be 9,000,000 shares issued and outstanding
immediately following the effectiveness of the Saratoga Acquisitions and
5,000,000 shares of preferred stock, 550,000 of which have been designated as
Convertible Preferred Stock, $0.001 par value per share, 418,803 shares of which
are issued and outstanding. All of such issued and outstanding shares of Capital
Stock have been validly issued and are fully paid and non-assessable. Except as
set forth on SCHEDULE 6.27 HERETO, There are outstanding no options, warrants or
other securities exercisable or exchangeable for or convertible into shares of
any class of Capital Stock of the Parent.
6.28 MERGER AGREEMENTS. True and complete copies of the Merger
Agreement and of the all agreements, documents and instruments to be executed
and delivered in connection therewith have been delivered to the Agent and the
Lenders. No party is in default under any such agreement.
6.29 NECESSARY AUTHORIZATIONS AND HEALTHCARE COMPLIANCE. (a)
The Parent and each of the Subsidiaries has secured all Necessary
Authorizations, including, without limitation, all permits, licenses,
authorizations, certifications and approvals required, necessary or reasonably
useful to the lawful ownership and operation of its business except where the
failure to secure such Necessary Authorization could not have a Material Adverse
Effect. All such Necessary Authorizations are in full force and effect and all
such Necessary Authorizations held as of the date hereof are set forth on
SCHEDULE 6.29 attached hereto. None of said Necessary Authorizations are the
subject of any pending or threatened attack or revocation by the grantor of the
Necessary Authorization. Except as described on SCHEDULE 6.29 attached hereto,
neither the Parent nor any Subsidiary thereof is required to obtain any
additional Necessary Authorizations in connection with the ownership or
operation of its business or the execution, delivery and performance of this
Agreement or any other Loan Document, the borrowing hereunder and thereunder and
the granting of a security interest in, a security title to and a continuing
lien on the Collateral.
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(b) Each of the Parent and its Subsidiaries is participating
in, or enrolled in, or otherwise authorized to receive reimbursement from or is
a party to, the Medicare and Medicaid Programs to the extent described in
SCHEDULE 6.29 attached hereto. Except as set forth on SCHEDULE 6.29, all
necessary certifications and contracts required for participation in such
reimbursement programs are in full force and effect and have not been amended or
otherwise modified, rescinded, revoked or assigned as of the date hereof, and no
condition exists or event has occurred which in itself or with the giving of
notice or the lapse of time or both would result in the suspension, revocation,
impairment, forfeiture or non-renewal of any such participation agreement,
certification, or eligibility to receive reimbursement. Each of the Parent and
its Subsidiaries is in compliance with the requirements of Medicare and Medicaid
applicable thereto, except to the extent that reimbursement thereunder will not
be materially affected or impaired by noncompliance therewith.
(c) All billings by the Parent and each of its Subsidiaries to
the Medicare and Medicaid Program have been made in material accordance with the
applicable law (including, without limitation, in accordance with all applicable
regulations and published policies and procedures and in the case of billings
effective on or after January 1, 1989 in accordance with the provisions of the
Omnibus Budget Reconciliation Act of 1987) and there has been no intentional
overbilling or overcollecting from such program, other than routine adjustments
and disallowances made in the ordinary course of business by such programs with
respect to the billings.
6.30 CONDUCT. Neither the Parent nor any of its Subsidiaries
has engaged in any activities which are prohibited under 42 U.S.C. ss. 1320a-7b,
or the regulations promulgated thereunder, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct,
including, but not limited to, the following: (a) knowingly and willfully making
or causing to be made a false statement or misrepresentation of a material fact
in any application for any benefit or payment; (b) knowingly and willfully
making or causing to be made any false statement or misrepresentation of a
material fact for use in determining rights to any benefit or payment; (c)
failure to disclose knowledge by a claimant of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with intent to fraudulently secure such benefit
or payment; and (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate), directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (i) in return for referring an individual to a Person for the
furnishing or arranging for the furnishing of any item or serve for which
payment may be made in whole or in part by Medicare or Medicaid, or (ii) in
return for purchasing, leasing, or ordering or arranging for or recommending
purchasing, leasing, or ordering any good, facility, service, or item for which
payment may be made in whole or in part by Medicare or Medicaid.
6.31 EMPLOYMENT AGREEMENTS. SCHEDULE 6.31 is a complete and
correct list, as of the date of this Agreement, of each employment agreement
entered into by the Parent or any Subsidiary of the Parent, and all such
employment agreements are substantially in the form
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of the employment agreements which the Parent and the Subsidiaries thereof have
previously furnished to the Agent and the Lenders.
6.32 YEAR 2000 COMPLIANCE. The Parent and its Subsidiaries
have adopted and implemented a plan which, no later than August 31, 1999 and at
all times thereafter, will cause all software and other processing capabilities
of the Parent and each of its Subsidiaries to be Year 2000 Compliant.
6.33 AGREEMENTS OF PVH AND RELATED MATTERS. (a) SCHEDULE 1.1
attached hereto contains a true and complete list of the Converting Physician
Practices that have entered into a Transition Agreement and a Services Agreement
with PVH and/or its Subsidiaries. Each such Transition Agreement is in the form
of the Transition Agreement attached hereto as EXHIBIT G, and each such Services
Agreement is in the form of the Services Agreement attached hereto as EXHIBIT H,
in each case except for such changes or modifications thereto as have been
expressly approved by the Agent. True, complete and correct copies of such
Services Agreements and such Transition Agreements have been delivered to the
Agent prior to the Effective Date. Each Transition Agreement and each Services
Agreement expressly provides that such agreement may be assigned to the Agent as
collateral for the Obligations hereunder.
(b) SCHEDULE 6.33 hereto contains a true and complete list of
all other material agreements to which the Obligors, or any of them, are party.
7. AFFIRMATIVE COVENANTS
The Obligors covenant to the Agent, the LC Issuer and the Lenders that
from and after the Effective Date, and until the Commitment Termination Date and
the payment and satisfaction in full of the Obligations an the expiration or
termination of the Letters of Credit, whichever last occurs, unless the Required
Lenders otherwise consent in writing:
7.1 RECORDS RESPECTING COLLATERAL; LOCKBOX OR BLOCKED ACCOUNT
ARRANGEMENT. The Obligors shall, and shall cause each of their Subsidiaries to,
keep all records with respect to the Collateral or any other collateral at the
offices set forth in Section 6.15 hereof and not remove such records from such
address and, upon request of the Required Lenders following the occurrence of an
Event of Default, enter into such lockbox or blocked account arrangement with
respect to collection of the Accounts and execute and deliver such documents in
connection therewith as the Required Lenders may reasonably require.
7.2 REPORTING REQUIREMENTS. The Obligors shall, and shall
cause each of their Subsidiaries to:
(a) Furnish or cause to be furnished to the Agent and each
Lender:
(i) (A) As soon as practicable, and in any event within thirty
(30) days after the end of each month, a consolidated interim unaudited
financial statement of the Parent and its Subsidiaries, including a
balance sheet, income statement and statement of cash flows,
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for the month and year-to-date period then ended, prepared in
accordance with GAAP, subject to normal year-end adjustments,
consistent with the past practice of the Parent and its Subsidiaries,
and certified by the chief financial officer of the Parent as fairly
presenting the consolidated financial position of the Parent and its
Subsidiaries as at such date and the consolidated results of their
operations and the consolidated results of their cash flows for the
month and year-to-date periods ended on said date;
(ii) As soon as available, and in any event within ninety (90)
days after the end of each fiscal year, a consolidated audited annual
financial statement of the Parent, including a balance sheet, income
statement and statement of cash flow for the fiscal year then ended,
prepared in accordance with GAAP, in comparative form and accompanied
by the unqualified opinion of a nationally recognized firm of
independent certified public accountants regularly retained by the
Parent and its Subsidiaries and acceptable to the Agent and the
Required Lenders;
(iii) Together with the annual financial statements referred
to in clause (ii) above, a statement from such independent certified
public accountants that, in making their examination of such financial
statements, they obtained no knowledge of any Default or Event of
Default or, in lieu thereof, a statement specifying the nature and
period of existence of any such Default or Event of Default disclosed
by their examination;
(iv) Together with the annual or interim financial statements
referred to in clauses (i) and (ii) above, a compliance certificate of
the chief executive officer or chief financial officer of the Parent in
substantially the form of EXHIBIT I hereto (a "Compliance Certificate")
certifying that, to the best of his or her knowledge, no Default or
Event of Default has occurred and is continuing or, if a Default or
Event of Default has occurred and is continuing, a statement as to the
nature thereof and the action which is proposed to be taken with
respect thereto, and that the calculations setting forth the Parent's
compliance with the financial covenants set forth in Article 9 hereof
are true and accurate;
(v) Not later than November 15 of each year, commencing
November 15, 2000, (A) a consolidated income statement and statement of
cash flows, for the four quarter period ending as of the most recent
fiscal quarter end, prepared in accordance with GAAP, consistent with
the past practice of the Parent and its Subsidiaries, and certified by
the chief financial officer of the Parent as fairly presenting the
consolidated results of their operations and the consolidated results
of their cash flows for the four fiscal quarter period ended on said
date; and (B) a certificate of the chief executive officer or chief
financial officer of the Parent setting forth the calculation of the
Excess Cash Flow of the Parent and its Subsidiaries for the four
quarter period ending on such most recent fiscal quarter end;
(vi) Promptly after the sending or filing thereof, as the case
may be, copies of any definitive proxy statements, financial statements
or reports which the Parent or its
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Subsidiaries send to their shareholders and copies of any regular
periodic and special reports or registration statements which the
Parent or its Subsidiaries file with the Securities and Exchange
Commission (or any Governmental Authority substituted therefor),
including, but not limited to, all Form 10-K and Form 10-Q reports, or
any report or registration statement which the Parent or its
Subsidiaries file with any national securities exchange;
(vii) At least fifteen (15) Business Days prior to the time
any consent by the Required Lenders will be necessary, the Parent and
its Subsidiaries shall furnish to the Agent and the Lenders all
pertinent information regarding any proposed Acquisition by the Parent
or its Subsidiaries to which the consent of the Required Lenders is
required hereunder which is reasonably necessary or appropriate to
permit the Lenders to evaluate such Acquisitions in a manner consistent
with prudent banking standards; and
(viii) As soon as available, and in any event within thirty
(30) days after the end of each quarter, an accounts receivable aging,
showing the aggregate dollar value of the Accounts, the age of each
individual Account as of the last day of the preceding month
(segregating such items in such manner and to such degree as the
Required Lenders may request), including the type and dollar value of
the Accounts and the location of the Account Debtor thereon as of the
end of the preceding month;
(ix) Such other information respecting the condition or
operations, financial or otherwise, or the property of the Obligors and
their respective Subsidiaries as the Agent or the Lenders may from time
to time reasonably request.
7.3 TAX RETURNS. The Obligors shall, and shall cause each of
their respective Subsidiaries to, file all federal, state and local tax returns
and other reports that any such Person is required by law to file, maintain
adequate reserves for the payment of all taxes, assessments, governmental
charges and levies imposed upon them, their respective incomes, or their
respective profits, or upon any property belonging to them, and pay and
discharge all such taxes, assessments, governmental charges and levies prior to
the date on which penalties attach thereto, except where the same may be
contested in good faith by appropriate proceedings and for which adequate
reserves have been established.
7.4 COMPLIANCE WITH LAWS. The Obligors shall, and shall cause
each of their respective Subsidiaries to, comply in all material respects with
all laws, statutes, rules, regulations and ordinances of any Governmental
Authority applicable to any such Person, including, without limitation, any such
laws, statutes, rules, regulations or ordinances regarding the collection,
payment, and deposit of employees' income, unemployment, and Social Security
taxes and with respect to pension liabilities.
7.5 ENVIRONMENTAL LAWS. The Obligors shall, and shall cause
each of their respective Subsidiaries to, comply in all material respects with
all Environmental Laws and, in the event of any "release" or "threatened
release" of any Hazardous Substance onto, at or under the property of the
Obligors or any of their respective Subsidiaries which requires or may require
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notification, response, assessment, investigation or remedial action pursuant to
any Environmental Law, after notifying the Agent and the Lenders and all
appropriate Governmental Authorities thereof, proceed with due diligence and at
the Obligors' or such Subsidiaries' cost and expense to respond appropriately,
in accordance with all requirements of the Environmental Laws.
7.6 ERISA. The Obligors shall, and shall cause each of their
respective Subsidiaries to:
(a) At all times make prompt payment of contributions required
to meet the minimum funding standards set forth in Section 302 and 305 of ERISA
with respect to each Plan and otherwise comply with ERISA and all rules and
regulations promulgated thereunder in all material respects;
(b) Promptly after the occurrence thereof with respect to any
Plan, or any trust established thereunder, notify the Agent and the Lenders of
(i) a "reportable event" described in Section 4043 of ERISA and the regulations
issued from time to time thereunder (other than a "reportable event" not subject
to the provisions for thirty (30) days' notice to the PBGC under such
regulations), or (ii) any other event which could subject any Obligor or any
ERISA Affiliate to any tax, penalty or liability under Title I or Title IV of
ERISA or Chapter 43 of the Code;
(c) At the same time and in the same manner as such notice
must be provided to the PBGC, or to a Plan participant, beneficiary or
alternative payee, give the Agent and the Lenders any notice required under
Section 101(d), 302(f)(4), 303, 307, 4041(b)(1)(A) or 4041(c)(1)(A) or ERISA or
under Section 401(a)(29) or 412 of the Code with respect to any Plan;
(d) Furnish to the Agent or any Lender, promptly upon the
request of the Agent or such Lender, (i) true and complete copies of any and all
documents, government reports and determination or opinion letters for any Plan;
and (ii) a current statement of withdrawal liability, if any, for each
Multiemployer Plan; and
(e) Furnish to the Agent or any Lender, promptly upon the
request of the Agent or such Lender therefor, such additional information
concerning any Plan that relates to the ability of any Obligor to make any
payments hereunder, as may be reasonably requested.
7.7 BOOKS AND RECORDS. The Obligors shall, and shall cause
each of their respective Subsidiaries to, keep adequate records and books of
account with respect to its business activities in which proper entries are made
in accordance with GAAP reflecting all its financial transactions.
7.8 NOTIFICATIONS TO THE AGENT AND THE LENDERS. The Obligors
shall notify the Agent and the Lenders in writing within ten (10) Business Days:
(a) upon any Obligor's learning thereof, of any litigation affecting any Obligor
or any of its Subsidiaries claiming damages of $500,000 or more, individually or
when aggregated with other litigation pending
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against the Obligors and their respective Subsidiaries, or any of them, whether
or not covered by insurance, and of the threat or institution of any suit or
administrative proceeding against any Obligor or any of their respective
Subsidiaries which may have a Material Adverse Effect and establish such
reasonable reserves with respect thereto as may be required by GAAP; (b) upon
learning thereof, of any Default or Event of Default hereunder; (c) upon any
Obligor's knowledge thereof, of any event or condition which would have a
Material Adverse Effect; and (d) upon the occurrence thereof, of any default by
any Obligor or any of their respective Subsidiaries under (i) any note,
indenture, loan agreement, mortgage, lease, deed or other similar agreement
relating to any Indebtedness of such Obligor or such Subsidiary having a
principal balance of $500,000 or more or (ii) any other instrument, document or
agreement to which any Obligor or any of their respective Subsidiaries is a
party or by which any Obligor or any of their respective Subsidiaries or any of
their respective property is bound, the default of which might have a Material
Adverse Effect.
7.9 INSURANCE. Each Obligor shall, and shall cause each of its
Subsidiaries to keep its insurable properties adequately insured at all times by
financially sound and reputable insurers; maintain such other insurance, to such
extent and against such risks, including fire and other risks insured against by
extended coverage, as is customary with companies in the same or similar
businesses, including public liability insurance against claims for personal
injury or death or property damage occurring upon, in, about or in connection
with the use of any properties owned, occupied or controlled by it; and maintain
such other insurance as may be required by law. Each Obligor shall cause such
policies referred to in this Section to name the Agent the loss payee as its
interests may appear. Each Obligor shall furnish to the Agent by December 15 of
each year a schedule listing the insurance policies in effect for the next
succeeding year, the nature of the coverage, the annual premium cost, the
insurer for each policy and the rating of each insurer as is listed in all of
which shall be reasonably satisfactory to the Agent. In the event of any
termination or notice of non-payment by any insurer with respect to any policy
or any lapse in the coverage thereunder, such Obligor shall give prompt written
notice to Johanna Connor, Senior Vice President, Bank Austria Creditanstalt
Corporate Finance, Inc., at Two Greenwich Plaza, Fourth Floor, Greenwich,
Connecticut 06830, or at such other location as the Agent may advise the
Obligors in writing, of the occurrence of such termination, nonpayment or lapse.
7.10 MAINTENANCE OF PROPERTY. Each Obligor shall, and shall
cause each of its Subsidiaries to, keep all General Intangibles reasonably
necessary to the operation of its businesses in full force and effect except for
immaterial General Intangibles allowed to lapse by such Obligor or any of its
Subsidiaries in the ordinary course of such Obligor's or such Subsidiary's
business and any other General Intangible for which such Obligor or any of its
Subsidiaries has obtained a substantially similar substitution and the lapse of
which, because of such substitution, does not have a Material Adverse Effect and
maintain all of its other property necessary or useful in the proper conduct of
its respective businesses in good working condition, ordinary wear and tear
excepted.
7.11 PRESERVATION OF CORPORATE EXISTENCE. Each Obligor shall,
and shall cause each of its Subsidiaries to, except as permitted by Section 8.6
hereof, preserve and
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maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of incorporation, and qualify and remain qualified as a foreign
corporation in each jurisdiction in which such qualification is necessary or
desirable in view of its business and operations or the ownership of its
properties.
7.12 EQUIPMENT. Each Obligor shall keep and maintain the
Equipment in good operating condition, reasonable wear and tear excepted, shall
repair and make all necessary replacements thereof so that the operating
efficiency thereof shall at all times be maintained and preserved except such
Equipment which is immaterial or which is no longer usable in such Obligor's
business, and shall not permit any item of Equipment to become a fixture to real
estate or accession to other personal property unless the Agent has a first
priority lien on or security interest in such real estate or other personal
property. Each such Obligor shall, immediately on demand therefor by the Agent,
deliver to the Agent any and all evidence of ownership of any of the Equipment
(including, without limitation, certificates of title and applications for
title, together with any necessary applications to have the Agent's Lien noted
thereon, in the case of vehicles).
7.13 ADDITIONAL DOCUMENTS. Upon formation or Acquisition by
any Obligor or any Subsidiary of such Obligor of any new Subsidiary, the
Obligors shall deliver, or cause to be delivered to the Agent, for the benefit
of the Lenders, (a) a Joinder Agreement, in the form attached hereto as EXHIBIT
J (a "Joinder Agreement"), pursuant to which such new Subsidiary shall become a
party to the Guaranty, the Security Agreement and the Stock Pledge Agreement,
and (b) any and all other instruments, documents or agreements reasonably
necessary or desirable to create, evidence or perfect a lien on or security
interest in favor of the Agent, for the benefit of the Lenders, in the assets of
such new Subsidiary and/or to reaffirm the obligations of the Obligors and their
respective Subsidiaries.
7.14 SUBSIDIARIES. Except as permitted by Section 8.7 hereof,
maintain at all times during the term of this Agreement ownership of all the
issued and outstanding Capital Stock of each Subsidiary of any Obligor.
7.15 UPSTREAM PAYMENT OF DIVIDENDS AND DISTRIBUTIONS. In the
event that any wholly owned Subsidiary receives a dividend or other distribution
(other than a dividend paid in stock) from a Subsidiary of such Subsidiary, the
Subsidiary receiving such dividend or other distribution shall promptly, and in
any event within ten (10) days of its receipt of such dividend or distribution,
pay such dividend or distribution to an Obligor.
7.16 YEAR 2000 COMPLIANCE. Cause, on or prior to August 31,
1999 and at all times thereafter, all software and other processing capabilities
of Parent and its Subsidiaries to be Year 2000 Compliant.
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8. NEGATIVE COVENANTS
The Obligors covenant with the Agent, the LC Issuer and the Lenders
that from and after the Effective Date and until the termination of this
Agreement and the payment and satisfaction in full of the Obligations and the
expiration or termination of the Letters of Credit, whichever last occurs,
without the prior written consent of the Required Lenders:
8.1 LIENS. The Obligors shall not, and shall not permit any of
their respective Subsidiaries to, create, assume, or suffer to exist any Lien of
any kind in any of the Collateral or its other assets except for Permitted
Liens.
8.2 INDEBTEDNESS. The Obligors shall not, and shall not permit
any of their respective Subsidiaries to, incur, assume, or suffer to exist any
Indebtedness other than (a) the Obligations and Indebtedness of Subsidiaries of
any Obligor to such Obligor or to other Subsidiaries of such Obligor permitted
under Section 8.5, (b) Subordinated Debt, (c) the Seller Notes, (d) the ASC
Subsidiary may incur Indebtedness in a principal amount not to exceed $1,500,000
in the aggregate; (e) Indebtedness set forth on Schedule 6.22 hereto and (f)
other Indebtedness incurred in a principal amount not to exceed (i) $1,000,000
during any fiscal year or (ii) $5,000,000 in the aggregate.
8.3 ASSET SALES. The Obligors shall not, and shall not permit
any of their respective Subsidiaries to, sell, lease or otherwise dispose of any
of the Collateral or any interest therein or any of its other assets except for
(a) the sale or lease of Inventory in the ordinary course of business; and (b)
the sale of assets no longer used or useful in the business of any Obligor or
its Subsidiaries and having an aggregate net book value of not more than
$500,000 during any fiscal year.
8.4 GUARANTIES. The Obligors shall not, and shall not permit
any of their respective Subsidiaries to, Guarantee the obligations of any other
Person, except that, subject to the other terms and limitations contained
herein, (a) each Subsidiary of the any Obligor shall Guarantee the Obligations
hereunder pursuant to the Guaranty, (b) any such Person may endorse negotiable
instruments for deposit or collection and similar transactions in the ordinary
course of business; (c) Parent may Guarantee Indebtedness of the ASC Subsidiary
to the extent permitted by Section 8.2(d) hereof and (d) the Obligors and their
respective Subsidiaries may enter into other Guarantees from time to time to the
extent such Guarantees constitute Indebtedness which would otherwise be
permitted under Section 8.2 hereof.
8.5 INVESTMENTS. The Obligors shall not, and shall not permit
any of their respective Subsidiaries to, make any Investment in any Person
except for the following:
(a) Any Obligor or any Subsidiary of any Obligor may make
Acquisitions of Persons, so long as the aggregate purchase price payable in
respect of any Acquisition or related series of Acquisitions (with property
being valued at the fair market value thereof and notes and assumed liabilities
being valued at the face amount thereof) is not in excess of $2,000,000 for
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any individual Acquisition or related series of Acquisitions, provided, that at
the time of each such Acquisition, both before and after giving effect thereto,
there does not exist a Default or Event of Default hereunder.
(b) Any Obligor may make intercompany advances to any
Guarantor Borrower for the working capital purposes of Guarantor.
(c) Any Obligor or any Subsidiary of any Obligor may make
investments in (i) certificates of deposit issued by commercial banks located in
the United States (including foreign banks with a United States Federal Branch)
having combined capital and surplus in excess of Five Hundred Million Dollars
($500,000,000), and having a maturity date within one year after the date such
investment is made; (ii) readily marketable commercial paper of a domestic
issuer rated at least "A-1" by Standard & Poor's Ratings Group or "P-1" by
Moody's Investors Service, Inc.; and (iii) direct obligations of the United
States of America or agencies thereof or obligations fully guaranteed by the
United States of America.
(d) Opticare may form a Subsidiary and transfer the assets of
its Norwalk, Connecticut ambulatory surgical center to such Subsidiary (the "ASC
Subsidiary").
8.6 PROHIBITION OF FUNDAMENTAL CHANGES. The Obligors shall
not, and shall not permit any of their respective Subsidiaries to, enter into
any transaction of merger or consolidation or amalgamation, or liquidate, wind
up or dissolve itself (or suffer any liquidation or dissolution) or make any
substantial change in the basic type of business conducted by any such Obligor
or any Subsidiary thereof as of the date hereof except that:
(a) any Subsidiary of an Obligor may be merged or consolidated
with or into: (i) an Obligor if such Obligor shall be the continuing or
surviving corporation or (ii) any other such Subsidiary; provided that if any
such transaction shall be between a Subsidiary and a wholly-owned Subsidiary,
the wholly-owned Subsidiary shall be the continuing or surviving corporation;
and
(b) any wholly-owned Subsidiary of any Obligor (but excluding
an Obligor) may be dissolved into its parent corporation.
8.7 ISSUANCE OF STOCK. The Obligors shall not, and shall not
permit any of their respective Subsidiaries to, issue any shares of Capital
Stock, except that (a) the Parent may issue shares of Capital Stock constituting
Qualified Junior Capital; (b) any Subsidiary of the Parent may issue shares of
Capital Stock to the Parent or any other wholly-owned Subsidiary of the Parent;
and (c) the ASC Subsidiary may sell shares of Capital Stock representing, upon
issuance, not more than 49% of issued and outstanding shares of Capital Stock of
the ASC Subsidiary, on a fully diluted basis.
8.8 FISCAL YEAR. The Obligors shall not, and shall not permit
any of their respective Subsidiaries to, change their fiscal year from December
31 of each year.
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8.9 ERISA. Except as otherwise set forth on SCHEDULE 6.11, the
Obligors shall not, and shall not permit any of their respective ERISA
Affiliates to, take, or fail to take any action with respect to a Plan
including, but not limited to, (a) establishing any Plan, (b) amending any Plan,
(c) terminating or withdrawing from any Plan, or (d) incurring an amount of
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA, where
such action or failure could have a Material Adverse Effect, result in a Lien on
the property of any Obligor or any Subsidiary of any Obligor, or require any
Obligor or any such Subsidiary to provide any security.
8.10 RELOCATIONS; USE OF NAME. The Obligors shall not, and
shall not permit any of their respective Subsidiaries to, relocate its executive
office; open new places of business or relocate existing places of business,
unless the Obligors notify the Agent in writing at least thirty (30) days prior
to such opening or such relocation and promptly executes, or causes the
applicable Subsidiary to execute, such UCC-1 financing statements and amendments
to UCC-1 financing statements as the Agent may reasonably request; maintain any
Collateral or any collateral under any Loan Document, at any locations and other
than those locations set forth on SCHEDULE 6.15 hereto or those locations with
respect to which the Agent has filed or caused to be filed such UCC financing
statements as are required by Applicable Law to perfect the Agent's security
interest in Collateral or collateral located at such location; or use any
corporate name (other than its own) or any fictitious name; in each case except
upon at least thirty (30) days prior written notice to the Agent and after the
delivery to the Agent of financing statements, if required by the Agent, in form
satisfactory to the Agent.
8.11 AFFILIATE TRANSACTIONS. The Obligors shall not, and shall
not permit any of their respective Subsidiaries to, enter into any transaction,
including, without limitation, with any Affiliate except in the ordinary course
of and pursuant to the reasonable requirements of the Obligors' or such
Subsidiaries' business and upon fair and reasonable terms no less favorable to
the Obligors or such Subsidiaries than those which would prevail in a comparable
arm's-length transaction with a Person not an Affiliate.
8.12 DIVIDENDS. The Obligors shall not, and shall not permit
any of their respective Subsidiaries to, declare or pay any dividends on, or
make any distribution with respect to, the shares of any class of its Capital
Stock, redeem or retire any of its Capital Stock, or take any action having an
effect equivalent to the foregoing in any fiscal year, except that, so long as
there shall not then exist or would not result a Default or Event of Default,
(a) Subsidiaries of a Borrower may declare and pay cash dividends to such
Borrower or to another Subsidiary of such Borrower, and (b) any Obligor may
declare and pay dividends solely in shares of Common Stock.
8.13. AMENDMENTS OR PREPAYMENTS OF SUBORDINATED DEBT. The
Obligors shall not, and shall not permit any of their respective Subsidiaries
to, amend or modify, or permit the modification or amendment of, any of the
terms or provisions of any Subordinated Debt, or cancel or forgive, make any
voluntary or optional payment or prepayment on, or redeem or acquire for value
(including without limitation by way of depositing with any trustee with respect
thereto money or securities before due for the purpose of paying when due) any
Subordinated Debt except that Parent may, to the extent the Net Cash Proceeds of
the first Qualified Junior Capital issued after the Effective Date are not
required by Section 2.13 hereof to be used to make
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a prepayment on the Loans, redeem the Marlin Subordinated Convertible Note out
of such excess Net Cash Proceeds.
9. FINANCIAL COVENANTS
The Obligors covenant with the Agent, the LC Issuers and the Lenders
that from and after the Effective Date and until the termination of this
Agreement and the payment and satisfaction in full of the Obligations and the
expiration or termination of the Letters of Credit, whichever last occurs,
unless the Required Lenders otherwise consent in writing:
9.1 MINIMUM CASH FLOW . The Obligors shall have (a) Adjusted
Cash Flow for the fiscal quarter ending December 31, 1999 of not less than
$1,750,000, and (b) as of the end of each fiscal quarter during the applicable
periods set forth flow, Adjusted Cash Flow for the Annualized Four Quarter
Period then ending of not less than the amount set forth opposite each such
applicable period:
Applicable Period Amount
----------------- ------
01/01/00 - 12/31/00 $ 7,800,000
01/01/01 - 06/30/01 $ 8,000,000
07/01/01 - 09/30/01 $ 8,500,000
10/01/01 - 06/30/02 $ 9,000,000
07/01/02 - 12/31/02 $ 9,500,000
01/01/03 - 06/30/03 $10,000,000
07/01/03 - 09/30/03 $10,500,000
10/01/03 - 09/30/04 $11,000,000
Thereafter $11,000,000
9.2 LEVERAGE RATIO.
(a) Commencing with the Effective Date and continuing until
the closing by the Parent of a Qualifying Equity Offering, the Obligors shall
maintain at all times during the applicable periods set forth below a Leverage
Ratio of not greater than the ratio set forth opposite each such applicable
period:
Applicable Period Ratio
----------------- -----
12/31/99 - 03/30/01 6.00:1.00
03/31/01 - 09/29/01 5.50:1.00
09/30/01 - 12/30/01 4.50:1.00
12/31/01 - 06/29/03 4.00:1.00
Thereafter 3.50:1.00
(b) Commencing with the closing by the Parent of a Qualifying
Equity Offering, the Obligors shall maintain at all times during the applicable
periods set forth below a Leverage Ratio of not greater than the ratio set forth
opposite each such applicable period:
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Applicable Period Ratio
----------------- -----
12/31/99 - 06/29/00 6.00:1.00
06/30/00 - 09/29/00 5.75:1.00
09/30/00 - 12/30/00 5.50:1.00
12/31/00 - 03/30/01 5.00:1.00
03/31/01 - 06/29/01 4.75:1.00
06/30/01 - 09/29/01 4.50:1.00
09/30/01 - 12/30/01 4.00:1.00
12/31/01 - 09/29/03 3.50:1.00
Thereafter 3.00:1.00
9.3. SENIOR LEVERAGE RATIO.
(a) Commencing with the Effective Date and continuing until
the closing by the Parent of a Qualifying Equity Offering, the Obligors shall
maintain at all times during the applicable periods set forth below a Senior
Leverage Ratio of not greater than the ratio set forth opposite each such
applicable period:
Applicable Period Ratio
----------------- -----
12/31/99 - 09/29/00 4.50:1.00
09/30/00 - 06/29/01 4.25:1.00
06/30/01 - 12/30/01 4.00:1.00
12/31/01 - 06/29/02 3.50:1.00
06/30/02 - 09/29/02 3.25:1.00
09/30/02 - 12/30/02 3.00:1.00
12/31/02 - 09/29/03 2.75:1.00
Thereafter 2.50:1.00
(b) Commencing with the closing by the Parent of a Qualifying
Equity Offering, the Obligors shall maintain at all times during the applicable
periods set forth below a Senior Leverage Ratio of not greater than the ratio
set forth opposite each such applicable period:
Applicable Period Ratio
----------------- -----
12/31/99 - 09/29/00 4.50:1.00
09/30/00 - 12/30/00 4.25:1.00
12/31/00 - 03/30/01 4.00:1.00
03/31/01 - 06/29/01 3.75:1.00
06/30/01 - 09/29/01 3.50.1.00
09/30/01 - 12/30/01 3.25:1.00
12/31/01 - 09/29/02 3.00:1.00
09/30/02 - 12/30/02 2.75:1.00
Thereafter 2.50:1.00
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9.4 INTEREST COVERAGE RATIO. The Obligors shall maintain, as
of the end of each fiscal quarter during the applicable periods set forth below,
an Interest Coverage Ratio of not less than the ratio set forth below opposite
each such applicable period:
Applicable Period Ratio
----------------- -----
12/31/99 - 09/29/01 2.25:1.00
09/30/01 - 12/30/01 2.50:1.00
Thereafter 3.00:1.00
9.5. SENIOR INTEREST COVERAGE RATIO. The Obligors shall
maintain, as of the end of each fiscal quarter during the applicable periods set
forth below, an Senior Interest Coverage Ratio of not less than the ratio set
forth below opposite each such applicable period:
Applicable Period Ratio
----------------- -----
12/31/99 - 09/29/01 3.00:1.00
09/30/01 - 12/30/03 3.50:1.00
Thereafter 4.00:1.00
9.6 FIXED CHARGE COVERAGE RATIO. The Obligors shall maintain,
as of the end of each fiscal quarter during the applicable periods set forth
below, a Fixed Charge Coverage Ratio of not less than the ratio set forth below
opposite each such applicable period:
Applicable Period Ratio
----------------- -----
12/31/99 - 03/31/01 1.25:1.00
04/01/01 - 09/30/03 1.00:1.00
Thereafter 1.25:1.00
9.7 CAPITAL EXPENDITURES. The Obligors shall not permit
Capital Expenditures to during any calendar year of the Parent and its
Subsidiaries set forth below to exceed the amount set forth opposite each such
calendar year:
Calendar Year Amount
------------- ------
2000 $2,500,000
2001 $2,500,000
2002 $3,000,000
2003 $3,500,000
Thereafter $4,000,000
10. EVENTS OF DEFAULT
The occurrence of any of the following events or conditions shall
constitute an Event of Default hereunder:
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10.1 OBLIGATIONS. Any Obligor shall fail to make any payment
of principal of the Obligations when due or shall fail to make any payment of
interest on the Loans or of any other Obligations (other than payments of
principal) within five (5) Business Days of when due.
10.2 MISREPRESENTATIONS. Any Obligor or any Subsidiary of any
Obligor or any other Guarantor shall make any representations or warranties in
any of the Loan Documents or in any certificate or statement furnished at any
time hereunder or in connection with any of the Loan Documents which proves to
have been untrue or misleading in any material respect when made or furnished
and which continues to be untrue or misleading in any material respect.
10.3. AFFIRMATIVE COVENANTS. Any Obligor or any of its
Subsidiaries shall default in the observance or performance of any covenant or
agreement contained in Article 7 of this Agreement (other than those set forth
in Sections 7.8) or contained in Section 8.1 and such default continues for
thirty (30) days after such Obligor receives notice thereof.
10.4 OTHER COVENANTS. Any Obligor or any Subsidiaries of any
Obligor or any other Guarantor shall default in the observance or performance of
any covenant or agreement contained in this Agreement or under any of the other
Loan Documents to which such Person is a party.
10.5 OTHER DEBTS. (a) Any Obligor or any Subsidiary of any
Obligor shall fail to pay any principal of or premium or interest on any of its
Indebtedness, which is outstanding in a principal amount of at least $500,000 in
the aggregate, when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace or cure period, if any,
specified in the agreement, mortgage, indenture or instrument relating to such
Indebtedness; or (b) any other event shall occur or condition shall exist under
any agreement, mortgage, indenture or instrument relating to any such
Indebtedness and shall continue after the applicable grace or cure period, if
any, specified in such agreement, mortgage, indenture or instrument, if the
effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or (c) any such Indebtedness
shall be accelerated or otherwise declared to be due and payable prior to the
stated maturity thereof, or (d) any such Indebtedness shall be required to be
prepaid (other than by a regularly scheduled required prepayment), redeemed,
purchased or defeased, or an offer to repay, redeem, purchase or defease such
Indebtedness shall be required to be made, in each case prior to the stated
maturity thereof.
10.6 TAX LIEN. A notice of Lien is filed of record with
respect to all or any portion of the assets of any Obligor, any Subsidiary of
any Obligor or any other Guarantor by any Governmental Authority, including,
without limitation, the PBGC.
10.7 ERISA. The occurrence of any of the following events: (a)
the happening of a Reportable Event with respect to any Plan which Reportable
Event could result in a material liability for any Obligor or any ERISA
Affiliate or which otherwise could have a Material Adverse Effect; (b) the
disqualification or involuntary termination of a Plan for any reason which could
result in a material liability for any Obligor or any ERISA Affiliate or which
otherwise
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could have a Material Adverse Effect; (c) the voluntary termination of any Plan
while such Plan has a funding deficiency (as determined under Section 412 of the
Code) which could result in a material liability for any Obligor or any ERISA
Affiliate or which otherwise could have a Material Adverse Effect; (d) the
appointment of a trustee by an appropriate United States district court to
administer any such Plan; (e) the institution of any proceedings by the PBGC to
terminate any such Plan or to appoint a trustee to administer any such Plan; (f)
the failure of any Obligor to notify the Agent and the Lenders promptly upon
receipt by such Obligor or any of its Subsidiaries of any notice of the
institution of any proceeding or other actions which may result in the
termination of any such Plan.
10.8 VOLUNTARY BANKRUPTCY. Any Obligor, any Subsidiary of any
Obligor, or any other Guarantor shall (a) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its Property, (b)
make a general assignment for the benefit of its creditors, (c) commence a
voluntary case under the Bankruptcy Code (as now or hereafter in effect), (d)
file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
readjustment of debts, (e) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code, or (f) take any corporate action for
the purpose of effecting any of the foregoing.
10.9 INVOLUNTARY BANKRUPTCY. A proceeding or case shall be
commenced, without the application or consent of any Obligor, any Subsidiary of
any Obligor, or any other Guarantor, in any court of competent jurisdiction,
seeking (a) its liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (b) the appointment of a trustee,
receiver, custodian, liquidator or the like of any such Person or of all or any
substantial part of its assets, or (c) similar relief in respect of any such
Person under any law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of sixty (60) or more days; or an order for relief against
any such Person shall be entered in an involuntary case under the Bankruptcy
Code.
10.10 SUSPENSION OF BUSINESS. The suspension of the
transaction of the usual business of any Obligor, any Subsidiary of any Obligor,
or any other Guarantor (except as a result of a merger permitted by Section 8.6
hereof if such business is continued by the surviving corporation, or except as
a result solely of a force majeure for a period not to exceed three (3) Business
Days) or the involuntary dissolution of any such Person.
10.11 JUDGMENTS. Any judgment, decree or order for the payment
of money which, when aggregated with all other judgments, decrees or orders for
the payment of money pending against any Obligor, any Subsidiary of any Obligor,
or any other Guarantor, exceeds the sum of Five Hundred Thousand Dollars
($500,000) in the aggregate for all such Persons, shall be rendered against any
such Person and remain unsatisfied and in effect for a period of sixty (60)
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consecutive days without being vacated, discharged, satisfied or stayed or
bonded pending appeal.
10.12 RICO. Any Obligor, any Subsidiary of any Obligor, any
other Guarantor, or any of their respective directors, shareholders or executive
officers shall be indicted under the Racketeer Influenced and Corrupt
Organizations Act of 1970 (18 U.S.C. ss. 1961 et seq.) or the Required Lenders
otherwise believe in good faith that all or any portion of the assets of any
Obligor, any Subsidiary of any Obligor, or any Guarantor are subject to
forfeiture pursuant to 18 U.S.C. ss. 1963.
10.13 GUARANTY. At any time, for any reason other than the
consent of the Lenders given in accordance with Section 14.8, any guaranty of
the Obligations ceases to be in full force and effect in any material respect or
guarantor thereunder seeks to repudiate its obligations thereunder and the Liens
intended to be created thereby or in connection therewith are, or such guarantor
seeks to render such Liens, invalid and unperfected.
10.14 FAILURE OF SECURITY. At any time, for any reason other
than the consent of the Lenders given in accordance with Section 14.8, Liens in
favor of the Agent contemplated by the Loan Documents shall, at any time, for
any reason, be invalidated or otherwise cease to be in full force and effect, or
such Liens shall be subordinated or shall not have the priority contemplated by
this Agreement or the other Loan Documents.
10.15 MANAGEMENT. Dean J. Yimoyines and Steven L. Ditman cease
to be the chief executive officer and chief financial officer, respectively, of
the Parent and the vacancy so created is not filled by another Person reasonably
acceptable to the Agent and the Required Lenders.
11. REMEDIES
Upon the occurrence or existence of any Event of Default, and during
the continuation thereof, without prejudice to the rights of the Agent and the
Lenders to enforce their claims against the Obligors for damages for failure by
any Obligor to fulfill any of its obligations hereunder, the Agent and the
Lenders shall have the following rights and remedies, in addition to any other
rights and remedies available to the Agent and the Lenders at law, in equity or
otherwise:
11.1 DEFAULT RATE. In the event of the occurrence of (a) an
Event of Default set forth in Section 10.8 or 10.9 hereof, the outstanding
principal balance of the Obligations shall bear interest at the Default Rate
until paid in full; and (b) any other Event of Default, at the election of the
Required Lenders, the outstanding principal balance of the Obligations shall
bear interest at the Default Rate until paid in full.
11.2 TERMINATION; ACCELERATION OF THE OBLIGATIONS. In the
event of the occurrence of (a) an Event of Default set forth in Sections 10.8 or
10.9 hereof, the Commitments shall automatically and immediately terminate and
the Obligations shall automatically and
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immediately become due and payable; and (b) any other Event of Default, the
Required Lenders, at their option, may terminate the Commitments and declare all
of the Obligations to be immediately due and payable, whereupon all of the
Obligations shall become immediately due and payable, in either case without
presentment, demand, protest, notice of non-payment or any other notice required
by law relative thereto, all of which are hereby expressly waived by each of the
Obligors, anything contained herein to the contrary notwithstanding.
11.3 SET-OFF. The right of each Lender to set-off, without
notice to any Obligor, any and all deposits at any time credited by or due from
such Lender to any Obligor, whether in a general or special, time or demand,
final or provisional account or any other account or represented by a
certificate of deposit and whether or not unmatured or contingent.
11.4 RIGHTS AND REMEDIES OF A SECURED PARTY. All of the rights
and remedies of a secured party under the UCC or under other Applicable Law, all
of which rights and remedies shall be cumulative, and none of which shall be
exclusive, to the extent permitted by law, in addition to any other rights and
remedies contained in this Agreement, and in any of the other Loan Documents.
11.5 TAKE POSSESSION OF COLLATERAL. The right of the Agent to
(a) enter upon the premises of any Obligor, or any other place or places where
the Collateral is located and kept, through self-help and without judicial
process, without first obtaining a final judgment or giving any such Obligor
notice and opportunity for a hearing on the validity of the Agent's or the
Lenders' claim and without any obligation to pay rent to such Obligor, and
remove the Collateral therefrom to the premises of the Agent or any agent of the
Agent, for such time as the Agent may desire, in order to effectively collect or
liquidate the Collateral, and/or (b) require the Obligors, or any of them, to
assemble the Collateral and make it available to the Agent at a place to be
designated by the Agent which is reasonably convenient to the Agent.
11.6 SALE OF COLLATERAL. The right of the Agent to sell or to
otherwise dispose of all or any of the Collateral, at public or private sale or
sales, with such notice as may be required by law, in lots or in bulk, for cash
or on credit, all as the Agent, in its sole discretion, may deem advisable; such
sales may be adjourned from time to time with or without notice. The Agent shall
have the right to conduct such sales on any Obligor's premises or elsewhere and
shall have the right to use any Obligor's premises without charge for such sales
for such time or times as the Agent may see fit. The Agent is hereby granted a
license or other right to use, without charge, any Obligor's labels, patents,
copyrights, rights of use of any name, trade secrets, trade names, trademarks,
service marks and advertising matter, or any property of a similar nature,
whether owned by any such Obligor or with respect to which such Obligor has
rights under license, sublicense or other agreements, as it pertains to the
Collateral, in preparing for sale, advertising for sale and selling any
Collateral and the Obligors' rights under all licenses and all franchise
agreements shall inure to the benefit of the Agent and the Lenders. The Agent
shall have the right to sell, lease or otherwise dispose of the Collateral, or
any part thereof, for cash, credit or any combination thereof, and the Agent may
purchase all or any part of the Collateral at public or, if permitted by law,
private sale and, in lieu of actual payment of such purchase price, may set off
the amount of such price against the Obligations. The proceeds realized from the
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sale of any Collateral shall be applied first to the costs, expenses and
reasonable attorneys' fees and expenses incurred by the Agent for collection and
for acquisition, completion, protection, removal, storage, sale and delivery of
the Collateral; second to interest due upon any of the Obligations; and third to
the principal of the Obligations. If any deficiency shall arise, the Obligors
shall remain liable to the Lenders therefor.
11.7 NOTICE. Any notice required to be given by the Agent of a
sale, lease, other disposition of the Collateral or any other intended action by
the Agent, given to the Obligors, or any of them, in the manner set forth in
Section 14.7 below, ten (10) days prior to such proposed action, shall
constitute commercially reasonable and fair notice thereof to all of the
Obligors.
11.8 ACTIONS IN RESPECT OF THE LETTERS OF CREDIT UPON DEFAULT.
If any Event of Default shall have occurred and be continuing, the LC Issuer
may, irrespective of whether any of the other actions described in this Article
11 or otherwise are being taken, make demand upon the Obligors, or any of them,
to, and forthwith upon such demand the applicable Obligor(s) will, pay to the LC
Issuer in accordance with Section 2.10, for deposit in a non-interest bearing
cash collateral account, an amount equal to the aggregate face amount of all
Letters of Credit then outstanding. If at any time the LC Issuer or the Required
Lenders determine that any funds held in any such cash collateral account are
subject to any right or claim of any Person other than the Agent, the LC Issuer
and the Lenders or that the total amount of such funds is less than the
aggregate face amount of all Letters of Credit, the Obligors, or any of them,
will, forthwith upon demand by the Required Lenders, pay to the LC Issuer, as
additional funds to be deposited and held in such cash collateral account, an
amount equal to the excess of (a) such aggregate face amount of all outstanding
Letters of Credit over (b) the total amount of funds, if any, then held in such
cash collateral account that the LC Issuer or the Required Lenders determine to
be free and clear of any such right and claim.
11.9 APPOINTMENT OF THE AGENT AS THE OBLIGORS' LAWFUL
ATTORNEY. Each of the Obligors irrevocably designates, makes, constitutes and
appoints the Agent (and all Persons designated by the Agent) as such Obligor's
true and lawful attorney, and the Agent or the Agent's agent, may, without
notice to such Obligor, and at such time or times thereafter as the Agent or
said agent, in its sole discretion, may determine, in such Obligor's or the
Agent's name: (a) demand payment of the Accounts; (b) enforce payment of the
Accounts, by legal proceedings or otherwise; (c) exercise all of such Obligor's
rights and remedies with respect to the collection of the Accounts; (d) settle,
adjust, compromise, extend or renew the Accounts; (e) settle, adjust or
compromise any legal proceedings brought to collect the Accounts; (f) notify the
postal authorities to change the address and delivery of mail addressed to such
Obligor to such address as the Agent may designate provided that the Agent
agrees to forward to such Obligor all such mail not relating to the Collateral;
(g) if permitted by Applicable Law, sell or assign the Accounts upon such terms,
for such amounts and at such time or times as the Agent deems advisable; (h)
discharge and release the Accounts; (i) take control, in any manner, of any item
of payment or proceeds on the Accounts; (j) prepare, file and sign such
Obligor's name on a Proof of Claim in Bankruptcy or similar document against any
Account Debtor; (k) prepare, file and sign such Obligor's name on any notice of
Lien, assignment or satisfaction of Lien or similar
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document in connection with the Accounts; (l) do all acts and things necessary,
in the Agent's sole discretion, to fulfill such Obligor's obligations under this
Agreement; (m) endorse the name of such Obligor upon any of the items of payment
or proceeds on any Account, and deposit the same to the account of the Lenders
on account of the Obligations; (n) endorse the name of such Obligor upon any
chattel paper, document, instrument, invoice, freight bill, bill of lading or
similar document or agreement relating to the Accounts or Inventory; (o) use
such Obligor's stationery and sign the name of such Obligor to verifications of
the Accounts and notices thereof to Account Debtors; and (p) use the information
recorded on or contained in any data processing equipment and computer hardware
and software relating to the Accounts and Inventory to which such Obligor has
access.
12. CONDITIONS PRECEDENT
12.1 CONDITIONS PRECEDENT TO THE EFFECTIVE DATE.
Notwithstanding any other provision of this Agreement, it is understood and
agreed that the Effective Date shall not occur, and this Agreement shall not
become effective, unless and until the following conditions have been met, to
the sole and complete satisfaction of the Lenders, the LC Issuer, the Agent and
their respective counsel:
(a) Borrowing Availability. Borrowing Availability shall, in
the case of the initial Loans, be adequate, in the judgment of the Required
Lenders, to provide sufficient funds for the purposes referred to in Section 2.6
hereof, and immediately after giving effect to the making of the initial Loans
on the Effective Date, the aggregate amount of all Revolving Loans plus the
amount of all Line Letter of Credit Obligations then outstanding shall not
exceed $6,000,000.
(b) Litigation. No action, suit, litigation, proceeding,
investigation, regulation or legislation, including, but not limited to, any
arising under the Environmental Laws, shall have been instituted, threatened or
proposed before any court, governmental agency or legislative body which (i)
seeks to enjoin, restrain, or prohibit, or to obtain substantial damages in
respect of, or which is related to or arises out of the Saratoga Acquisitions,
the Merger Agreement, this Agreement or the transactions contemplated hereunder
or thereunder; or (ii) if decided adversely to any Obligor or any of its
Subsidiaries may result in a Material Adverse Effect.
(c) Pro-Forma Balance Sheet. Parent shall have delivered to
the Agent an updated pro-forma consolidated balance sheet of Parent and its
consolidated Subsidiaries as of June 30, 1999, prepared by Parent, which fairly
presents the pro-forma consolidated financial position of Parent and its
consolidated Subsidiaries as of the date thereof, giving effect to the
transactions contemplated by this Agreement and the Merger Agreement.
(d) Reduction of Loans Under Original Agreement. BACACF shall
have received (i) cash payments of not less than $5,684,070.00 in reduction of
the principal and interest outstanding under the Original Loan Agreement; (ii)
Eligible Physician Practice Notes in the aggregate principal amount of not less
than $3,902,387, duly endorsed and assigned to BACACF
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for its own account, in exchange for a reduction of not more than $3,902,387 in
the principal amount outstanding under the Original Loan Agreement; (iii) an
outright assignment of the fees payable by the California Practices under their
respective Service Agreement; (iv) an assignment of the claims of PVH and its
Subsidiaries against the Dissident Physician Practices in exchange for a
reduction of not more than $888,130 in the principal amount outstanding under
the Original Loan Agreement and (v) an assignment of the proceeds of the claims
of PVH and its Subsidiaries against Asheville Eye in exchange for a reduction of
not more than $1,790,171 in the principal amount outstanding under the Original
Loan Agreement.
(e) Marlin Guaranty. Marlin Capital, L.P. shall have executed
and delivered to BACACF, as the sole lender under the Original Loan Agreement, a
guaranty agreement, guaranteeing the collection of not less than $1,335,000 from
Asheville Eye not later than September 13, 1999 on terms and conditions
satisfactory to the Lender.
(f) Payment of Accrued Interest under Original Agreement. All
accrued and unpaid interest under the Original Loan Agreement shall have been
paid in full.
(g) Conversion of Physician Practices. Not less than 40 of the
Physician Practices shall be Converting Physician Practices and each of the
Converting Physician Practices shall have (i) repurchased the assets used or
generated by its practice, (ii) entered into a Transition Agreement,
substantially in the form of EXHIBIT G hereto, and, pursuant thereto, consented
to the termination of its administrative services agreement with PVH or one of
its Subsidiaries and (iii) entered into a Services Agreement with such PVH
Subsidiary or with PVH, substantially in the form of EXHIBIT H hereto all on the
terms and conditions set forth in the transition agreement executed by such
Physician Practice with PVH and approved by the Lenders.
(h) Documentation. The Agent and the Lenders shall have
received the following documents, each duly executed and delivered to the Agent
and the Lenders, and each to be satisfactory in form and substance to the Agent
and its counsel:
(i) this Agreement;
(ii) the Notes;
(iii) the Guaranty;
(iv) the Security Agreement;
(v) the Stock Pledge Agreement;
(vi) a certificate signed by the President and the
Chief Financial Officer of the Obligors dated as of the Effective Date,
stating that the representations and warranties set forth in Article 6
hereof are true and correct in all material respects on and as of such
date with the same effect as though made on and as of such date,
stating that each of the Obligors is on such date in compliance with
all the terms and conditions set
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forth in this Agreement on its part to be observed and performed, and
stating that on such date, and after giving effect to the making of any
initial Loan no Default or Event of Default has occurred or is
continuing;
(vii) a certificate executed by the Chief Financial
Officer of each of the Obligors dated as of the Effective Date with
respect to the Equipment owned by each such Obligor or any Subsidiary
of such Obligor and the locations at which such Equipment is
maintained;
(viii) a certificate of the Secretary of each Obligor
dated as of the Effective Date certifying (A) that attached thereto is
a true and correct copy of the Certificate or Articles of Incorporation
as in effect on the date of such certification,(B) that attached
thereto is a true and correct copy of the By-laws of such Obligor, as
in effect on the date of such certification, (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 Agreement, the other Loan Documents, the Merger
Agreement and the consummation of the transactions contemplated hereby
and thereby; and (D) as to the incumbency and genuineness of the
signatures of the officers of such Obligor executing this Agreement or
any of the other Loan Documents;
(ix) a certificate of the Secretary of each Guarantor
dated as of the Effective Date certifying (A) that attached thereto is
a true and correct copy of the Certificate or Articles of Incorporation
of such Guarantor, as in effect on the date of such certification,(B)
that attached thereto is a true and correct copy of the By-laws of such
Guarantor, as in effect on the date of such certification, (C) that
attached thereto is a true and complete copy of Resolutions adopted by
the Board of Directors of such Guarantor, authorizing the execution,
delivery and performance of the Loan Documents and the consummation of
the transactions contemplated hereby to which such Guarantor is a
party; and (D) as to the incumbency and genuineness of the signatures
of the officers of such Guarantor executing this Agreement or any of
the other Loan Documents;
(x) a copy of the Articles or Certificate of
Incorporation of each of the Obligors, each Subsidiary of each Obligor
and each other Guarantor, and all amendments thereto, certified in each
case by the Secretary of State of the state of such Person's
incorporation, dated as of a date close to the Effective Date;
(xi) Good Standing Certificates, in each case dated
as of a date close to the Effective Date, issued in respect of the
Obligors, their respective Subsidiaries and the other Guarantors, by
the Secretaries of State of each state listed on SCHEDULE 6.1 hereto;
(xii) copies of all filing receipts or
acknowledgments issued by any Governmental Authority to evidence any
filing or recordation necessary to perfect the security interests of
the Agent in the Collateral and evidence in a form acceptable to the
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Required Lenders that such security interests constitute valid and
perfected first priority security interests;
(xiii) certificates of insurance evidencing the
Obligors' casualty and liability insurance policies (including business
interruption policies), together, in the case of such casualty
policies, with loss payable and mortgagee endorsements on the Agent's
standard form naming the Agent as loss payee, in each case in form and
substance satisfactory to the Agent;
(xiv) the written opinion of Bergman, Horowitz &
Reynolds, P.C., counsel to the Obligors and the Guarantors, dated as of
the Effective Date, in the form attached hereto as EXHIBIT K hereto, as
to the transactions contemplated by this Agreement;
(xv) all landlord consents and such other similar
waivers necessary to assure the Agent of a first priority position in
the Collateral;
(xvi) such other documents, instruments and
agreements with respect to the transactions contemplated by this
Agreement, in each case in such form and containing such additional
terms and conditions as may be reasonably satisfactory to the Required
Lenders, and containing, without limitation, representations and
warranties which are customary and usual in such documents.
(i) Saratoga Acquisitions.
(i) The Agent shall be satisfied with the results of
its due diligence regarding the Obligors and their respective
Subsidiaries, and with the results of its due diligence regarding the
Saratoga Acquisitions.
(ii) All of the conditions to the Saratoga
Acquisitions contained in the Merger Agreement and the agreements,
documents and instruments to be executed and delivered in connection
therewith shall have been satisfied (or waived with the consent of the
Lenders and the Agent), and the Saratoga Acquisitions shall have
occurred in accordance with the terms of the Merger Agreement.
(iii) The Agent shall have received copies of the
opinions of counsel to each of the Obligors that will be delivered in
connection with the Saratoga Acquisitions and the Merger Agreement, and
the Agent and the Lenders shall be entitled to rely on each such
opinion of counsel.
(iv) The Saratoga Acquisitions shall have been
consummated in accordance with the terms and conditions of the Merger
Agreement.
12.2 ALL LOANS. The obligation of each Lender to make any Loan
hereunder (including the initial Loan) and the obligation of the Agent to issue
any Letter of Credit
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hereunder (including the initial Letter of Credit) shall be subject to
fulfillment of the following conditions:
(a) No Injunction. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain
substantial damages in respect of, or which is related to or arises out of this
Agreement, such Loan or such Letter of Credit or which in the judgment of the
Agent or the Required Lenders, would make it inadvisable to make such Loan or
issue such Letter of Credit;
(b) No Material Adverse Change. There shall not have occurred
any material adverse change in the assets, liabilities, business, operations or
condition (financial or otherwise) of the Obligors, or any of them, or any
event, condition, or state of facts which would be expected to have a Material
Adverse Effect subsequent to the making of such Loan to, or the issuance of such
Letter of Credit on behalf of, the Obligors, or any of them, including, without
limitation, any material adverse change in the financial condition of the
Obligors from that reflected in the audited financial statements of the Obligors
dated December 31, 1998 previously furnished to the Agent and the Lenders, as
determined by the Agent and the Lenders in their sole discretion;
(c) Solvency. The Lenders and the Agent shall be satisfied
that, giving effect to the making of such Loan or the issuance of such Letter of
Credit, the Obligors and each of their respective Subsidiaries will be Solvent;
(d) No Default or Event of Default. There shall exist no
Default or Event of Default or any event or condition which, with the making of
such Loan or the issuance of such Letter of Credit, would constitute a Default
or Event of Default; and
(e) Representations and Warranties. All of the representations
and warranties made by the Obligors, and each of them, hereunder shall be true
and correct in all material respects as of the date of the making of such Loan
or the issuance of such Letter of Credit with the same force and effect as if
made on and as of such date except for such changes in such representations and
warranties which do not constitute a Default or Event of Default hereunder,
which do not, individually or in the aggregate, have a Material Adverse Effect
and which have, to the extent required, been disclosed to the Agent and the
Lenders pursuant to Section 7.2 hereof or otherwise.
(f) Regulatory Restrictions. Neither any Obligor nor any of
its Subsidiaries shall be subject to any statute, rule, regulation, order, writ
or injunction of any Governmental Authority which would restrict or hinder the
conduct of such Obligor's or such Subsidiary's business as conducted or proposed
to be conducted and which could have a Material Adverse Effect. In addition, the
Agent and the Lenders shall have reasonably satisfied itself that each Obligor
and each of their respective Subsidiaries is in compliance with all Applicable
Laws of any Governmental Authority the failure to comply with which, in the
opinion of the Agent and the Lenders, could have a Material Adverse Effect.
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(g) Regulatory Approvals. Each Obligor shall have received all
required regulatory and other approvals or consents with regard to this
Agreement and the Loan Documents, such Loan or in respect of any Collateral
being pledged in connection with such Loan.
12.3 DELAY IN SATISFACTION OF CONDITIONS PRECEDENT. If the
Lenders make a Loan or the LC Issuer issues a Letter of Credit prior to the
fulfillment of any condition precedent set forth in this Article 12, the making
of such Loan or the issuance of such Letter of Credit shall constitute only an
extension of time for the fulfillment of such condition and not a waiver
thereof. The failure of the Obligors, or any of them, for any reason, to satisfy
or cause to be satisfied any such condition precedent within thirty (30) days
after the date thereof shall constitute an Event of Default for all purposes
under this Agreement and the Loan Documents, unless such failure is waived in
writing by the Required Lenders.
13. THE AGENT
13.1 APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder with
such powers as are specifically delegated to the Agent by the terms of this
Agreement, together with such other powers as are reasonably incidental thereto.
The Agent (which term as used in this sentence and in Section 13.5 hereof and
the first sentence of Section 13.6 hereof shall include reference to its
Affiliates and its own and its Affiliates' officers, directors, employees and
agents): (a) shall have no duties or responsibilities except those expressly set
forth in this Agreement, and shall not by reason of this Agreement be a trustee
for any Lender; (b) shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement or any of
the other Loan Documents, or in any certificate or other instrument, document or
agreement referred to or provided for in, or received by any of them under, this
Agreement or any of the other Loan Documents, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, any
Note or any of the other Loan Documents or for any failure by any Obligor or any
other Person to perform any of its obligations hereunder or thereunder; (c)
subject to Section 13.3 hereof, shall not be required to initiate or conduct any
litigation or collection proceedings hereunder; and (d) shall not be responsible
for any action taken or omitted to be taken by it hereunder or under any other
agreement, document or instrument referred to or provided for herein or in
connection herewith, except for its own gross negligence or willful misconduct.
The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it in good faith. The Agent may deem and treat the payee of any Note
as the holder thereof for all purposes hereof unless and until a written notice
of the assignment or transfer complying with the terms and conditions of Section
14.3 hereof.
13.2 RELIANCE BY AGENT. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telex, facsimile, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel,
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independent accountants and other experts selected by the Agent. As to any
matters not expressly provided for by this Agreement, the Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder in
accordance with instructions signed by the Required Lenders (unless the
instructions of or consent of all of the Lenders is required hereunder), and
such instructions and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders; provided, however, the Agent shall not be
required to take any action which (a) the Agent reasonably believes will expose
it to personal liability unless the Agent receives an indemnification
satisfactory to it from the Lenders with respect to such action or (b) is
contrary to this Agreement, the Notes, the other Loan Documents or Applicable
Law.
13.3 DEFAULTS. The Agent shall not be deemed to have knowledge
or notice of the occurrence of a Default or Event of Default (other than the
non-payment of principal of or interest on Loans or of Commitment Fees) unless
the Agent has received notice from a Lender or an Obligor specifying such
Default or Event of Default and stating that such notice is a "Notice of
Default." In the event that the Agent receives such a notice of the occurrence
of a Default or Event of Default, the Agent shall give prompt notice thereof to
the Lenders (and shall give each Lender prompt notice of each such non-payment).
The Agent shall (subject to Section 13.7 hereof) take such action with respect
to such Default or Event of Default as shall be directed by the Required Lenders
(unless the directions of or consent of all of the Lenders is required
hereunder), provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Lenders.
13.4 RIGHTS AS A LENDER. With respect to its Commitment and
the Loans made by it, BACACF (and any successor acting as Agent) in its capacity
as a Lender hereunder shall have the same rights and powers hereunder as any
other Lender and may exercise the same as though it were not acting as the
Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. BACACF (and any
successor acting as Agent) and its Affiliates may (without having to account
therefor to any Lender) accept deposits from, lend money to and generally engage
in any kind of banking, trust or other business with any Obligor (and any of its
Affiliates) as if it were not acting as the Agent, and BACACF and its Affiliates
may accept fees and other consideration from any Obligor for services in
connection with this Agreement or otherwise without having to account for the
same to the Lenders.
13.5 INDEMNIFICATION. The Lenders agree to indemnify the Agent
and the LC Issuer (to the extent not reimbursed under Sections 14.5 or 14.13
hereof, but without limiting the obligations of the Obligors under said Sections
14.5 or 14.13), for their respective Pro Rata Shares of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Agent or the LC Issuer in any way
relating to or arising out of this Agreement or any other instruments, documents
or agreements contemplated by or referred to herein or the transactions
contemplated hereby (including, without limitation, the costs and expenses which
the Obligors are obligated to pay under Section 14.5 hereof but excluding,
unless
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an Event of Default has occurred and is continuing, normal administrative costs
and expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or of any such other instruments,
documents or agreements, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified. The obligations of the Lenders under
this Section 13.5 shall survive the termination of this Agreement.
13.6 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender
agrees that it has, independently and without reliance on the Agent, the LC
Issuer or any other Lender, and based on such documents and information as it
has deemed appropriate, made its own credit analysis of the Obligors and its own
decision to enter into this Agreement and that it will, independently and
without reliance upon the Agent, the LC Issuer or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under this Agreement. The Agent shall not be required to keep itself informed as
to the performance or observance by the Obligors, or any of them, of this
Agreement or any other instrument, document or agreement referred to or provided
for herein or to inspect the properties or books of the Obligors. Except for
notice, reports and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or business of the
Obligors, or any of them (or any of their Affiliates), which may come into the
possession of the Agent or any of its Affiliates.
13.7 FAILURE TO ACT. Except for action expressly required of
the Agent hereunder, the Agent shall in all cases be fully justified in failing
or refusing to act hereunder unless it shall receive further assurances to its
satisfaction from the Lenders of their indemnification obligations under Section
13.5 hereof against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.
13.8 RESIGNATION OR REMOVAL OF AGENT; CO-AGENT. (a) Subject to
the appointment and acceptance of a successor Agent as provided below, the Agent
may resign at any time by giving notice thereof to the Lenders and the Obligors,
and the Agent may be removed at any time with cause by the Required Lenders.
Upon any such resignation or removal, the Required Lenders shall have the right
to appoint a successor Agent. If no successor Agent shall have been so appointed
by the Required Lenders and shall have accepted such appointment with thirty
(30) days after the retiring Agent's giving of notice of resignation or the
Required Lender's removal of the retiring Agent, the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent, which shall be a bank which
has a combined capital and surplus of at least Three Hundred Million Dollars
($300,000,000). Upon the acceptance of any appointment as Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article 13
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Agent.
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(b) In the event that Applicable Law imposes any restrictions
on the identity of an agent such as the Agent or requires the appointment of any
co-agent in connection therewith, the Agent may, in its discretion, for the
purpose of complying with such restrictions, appoint one or more co-agents
hereunder. Any such co-Agent(s) shall have the same rights, powers, privileges
and obligations as the Agent and shall be subject to and entitled to the
benefits of all provisions of this Agreement and the Loan Documents relative to
the Agent. In addition to any rights of the Required Lenders set forth in
subsection (a) above, any such Co-Agent may be removed at any time by the Agent.
13.9 COLLATERAL MATTERS. (a) Authority. Each Lender authorizes
and directs the Agent to enter into the Loan Documents relating to the
Collateral for the benefit of the Lenders. Each Lender agrees that any action
taken by the Agent or the Required Lenders (or, where required by the express
terms of this Agreement, a greater proportion of the Lenders) in accordance with
the provisions of this Agreement or the other Loan Documents, and the exercise
by the Agent or the Required Lenders (or, where so required, such greater
proportion) of the powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Lenders. Without limiting the generality
of the foregoing, the Agent shall have the sole and exclusive right and
authority to (i) act as the disbursing and collecting agent for the Lenders with
respect to all payments and collections arising in connection with this
Agreement and the Loan Documents relating to the Collateral; (ii) execute and
deliver each Loan Document relating to the Collateral and accept delivery of
each such agreement delivered by any Obligor, and Subsidiary thereof or any
Guarantor; (iii) act as collateral agent for the Lenders for purposes of the
perfection of all security interests and Liens created by such agreements and
all other purposes stated therein, provided, however, the Agent hereby appoints,
authorizes and directs the Lenders to act as collateral sub-agents for the Agent
and the Lenders for purposes of the perfection of all security interests and
Liens with respect to the Obligors', their Subsidiaries' and any other
Guarantor's respective deposit accounts maintained with, and cash and other
property held by, such Lender; (iv) manage, supervise and otherwise deal with
the Collateral; (v) take such action as is necessary or desirable to maintain
the perfection and priority of the security interest and Liens created or
purported to be created by the Loan Documents, and (vi) except as may be
otherwise specifically restricted by the terms of this Agreement or any other
Loan Document, exercise all remedies given to the Agent or the Lenders with
respect to the Collateral under the Loan Documents, Applicable Law or otherwise.
(b) Each Lender hereby directs, in accordance with the terms
of this Agreement, the Agent to release or to subordinate any Lien held by the
Agent for the benefit of the Lenders:
(i) against all of the Collateral, upon final and indefeasible
payment in full of the Obligations and termination of this Agreement;
(ii) against any part of the Collateral sold or disposed of by
any Obligor or any of their respective Subsidiaries, if such sale or
disposition is permitted by
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Section 8.3 hereof or is otherwise consented to by the Required
Lenders, as certified to the Agent by the applicable Obligor in an
Officer's Certificate;
(iii) against any part of the Collateral constituting property
in which any Obligor owned no interest at the time the Lien was granted
or at any time thereafter; or
(iv) if approved, authorized or ratified in writing by the
Agent at the direction of Required Lenders.
Each Lender hereby directs the Agent to execute and deliver or file such
termination and partial release statements and do such other things as are
necessary to release Liens to be released pursuant to Section 13.9(b) hereof
promptly upon the effectiveness of any such release.
(c) Without in any manner limiting the Agent's authority to
act without any specific or further authorization or consent by Required Lenders
(as set for in Section 13.9(b) hereof), each Lender agrees to confirm in
writing, upon request by the Obligors, the authority to release Collateral or
any other collateral securing the Obligations conferred upon the Agent under
clauses (i) through (iv) of Section 13.9(b) hereof. So long as no Default or
Event of Default is then continuing, upon receipt by the Agent of any such
written confirmation from the Required Lenders of its authority to release any
particular items or types of Collateral or other collateral, and in any event
upon any sale and transfer of Collateral or other collateral which is expressly
permitted pursuant to the terms of this Agreement, and upon at least five (5)
Business Days prior written request by the Obligors, the Agent shall (and is
hereby irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the Liens granted to the Agent for the
benefit of Lenders herein or pursuant hereto upon such Collateral or such other
collateral; provided, that (i) the Agent shall not be required to execute any
such document on terms which, in the Agent's opinion, would expose the Agent to
liability or create any obligation or entail any consequence other that the
release of such Liens without recourse or warranty, and (ii) such release shall
not in any manner discharge, affect or impair the Obligations or any Liens upon
(or obligations of any Obligor in respect of) all interests retained by any
Obligor, including without limitation the proceeds of any sale, all of which
shall continue to constitute part of the Collateral.
(d) The Agent shall have no obligation whatsoever to the
Lenders or to any other Person to assure that the Collateral or any other
collateral securing the Obligations exists or is owned by any of the Obligors or
any Guarantor or is cared for, protected or insured or has been encumbered or
that the Liens granted to the Agent pursuant to this Agreement or any of the
Loan Documents have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to the Agent in this Section 13.9 or
in any of the Loan Documents, it being understood and agreed that in respect of
such Collateral or such other collateral, or in any act, omission or event
related thereto, the Agent may act in any manner it may deem appropriate, in its
sole discretion, given its own interest in such Collateral or such
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other collateral as one of the Lenders and that the Agent shall have no duty or
liability whatsoever to any Lender.
13.10 THE OBLIGORS NOT A BENEFICIARY. The provisions of this
Article 13 are solely for the benefit of the Agent, the LC Issuer and the
Lenders and none of the Obligors nor any Subsidiary of any of the Obligors shall
have any right to rely on or enforce any of the provisions hereof. In performing
its functions and duties under this Agreement, the Agent shall act solely as the
agent of the Lenders and does not assume and shall not be deemed to have assumed
any obligations or relationship of agency, trustee or fiduciary with or for the
Obligors or any Subsidiary of any of the Obligors.
14. MISCELLANEOUS
14.1 WAIVER. Each and every right and remedy granted to the
Agent and the Lenders under this Agreement or any Loan Document delivered
hereunder or in connection herewith or allowed it by law or in equity, shall be
cumulative and may be exercised from time to time. No failure on the part of the
Agent or any Lender to exercise, and no delay in exercising, any right or remedy
shall operate as a waiver thereof, nor shall any single or partial exercise by
the Agent or any Lender of any right or remedy preclude any other or future
exercise thereof or the exercise of any other right or remedy. No waiver by the
Agent or the Lenders of any Default or Event of Default shall constitute a
waiver of any subsequent Default or Event of Default.
14.2 SURVIVAL. All representations, warranties and covenants
made herein shall survive the execution and delivery of all of the Loan
Documents. The terms and provisions of this Agreement shall continue in full
force and effect until the termination of this Agreement in accordance with
Section 2.9 hereof and all of the Letters of Credit have expired or otherwise
terminated; provided, however, that the Obligors' obligations under Sections
2.11(b), 4.8, 4.9, 14.5 and 14.13 hereof shall survive the repayment of the
Obligations and the termination of this Agreement.
14.3 ASSIGNMENTS; SUCCESSORS AND ASSIGNS. (a) This Agreement
is a continuing obligation and binds, and the benefits hereof shall inure to,
the Obligors, the Agent, the LC Issuer and each Lender and their respective
successors and assigns; provided, that no Obligor may transfer or assign any or
all of its rights or obligations hereunder without the prior written consent of
all of the Lenders.
(b) Any Lender may at any time sell to one or more Persons
(each a "Participant") participating interests in any Loan owing to such Lender,
any Note held by such lender, any Commitment hereunder or any other interest of
such Lender hereunder. In the event of any such sale by a Lender of
participating interest to a Participant, such Lender's obligations under this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Note for all purposes under this Agreement, and the Borrowers and the Agent
shall continue to deal solely with and directly with such Lender in connection
with such Lender's rights and obligations under this
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Agreement. In no event shall a Lender that sells a participation be obligated to
the Participant to take or refrain from taking any action hereunder except that
such Lender may agree that it will not (except as provided below), without the
consent of the Participant, agree to (i) any change of any date fixed for the
payment of principal or of interest on the related loan or loans, (ii) any
change of the amount of any principal, interest or fees due on any date fixed
for the payment thereof with respect to the related loan or loans, (iii) any
change of the principal of the related loan or loans, (iv) any change in the
rate at which either interest is payable thereon or (if the Participant is
entitled to any part thereof) fee is payable hereunder from the rate at which
the Participant is entitled to receive interest or fee (as the case may be) in
respect of such participation, (v) the release or substitution of all or any
substantial part of the collateral (if any) held as security for the Loans, or
(vi) the release of any Guarantee given to support a payment of the Loans. Each
Lender selling a participating interest in any Loan, Note, commitment or other
interest under this Agreement shall, within ten (10) domestic Business Days of
such sale, provide the Obligors and the Agent with written notification stating
that such sale has occurred and identifying the Participant and the interest
purchased by such Participant. Each of the Obligors agrees that each Participant
shall be entitled to the benefits of Sections 4.8 and 4.9 with respect to its
participation in Loans outstanding from time to time.
(c) Each Lender may, with the Agent's consent and in
accordance with Applicable Law, at any time assign, pursuant to an assignment
substantially in the form of EXHIBIT L attached hereto and incorporated herein
by reference, without the any Obligor's consent to one or more banks having
unimpaired capital and surplus of Two Hundred Fifty Million Dollars
($250,000,000) or more or may assign, subject, so long as there exists no Event
of Default hereunder, to the Parent's consent (which shall not be unreasonably
withheld), to any other financial institution (in either case, "Eligible
Assignees") all or any part of any Loans owing to such Lender, any of the Notes
held by such Lender, such Lender's reimbursement and other rights and
obligations in connection with any Letter of Credit issued hereunder, the
portion of the Commitments held by such Lender or any other interest of such
Lender hereunder; provided, however, that each such assignment by a Lender of
its Loans, Notes, Commitments, and Letter of Credit Obligations shall be made in
such manner so that the same portion of its Loans, Notes, Commitments, and
Letter of Credit Obligations is assigned to the respective assignee; provided,
further, that after giving effect to any such assignment (other than an
assignment of all of any Lender's interest), the aggregate amount of the
Commitment of each Lender, Physician Letter of Credit Obligations and the Term
Loans owing to such Lender shall be no less than Five Million Dollars
($5,000,000). The Obligors and the Lenders agree that to the extent of any
assignment the Assignee shall be deemed to have the same rights and benefits
with respect to the Obligors under this Agreement and any of the Notes and any
Letter of Credit as it would have had if it were a Lender hereunder on the
Effective Date and the assigning Lender shall be released from its Commitment
and other obligations hereunder, to the extent of such assignment. Upon the
making of an assignment, the assigning Lender shall pay to the Agent an
assignment fee of $3,000.
(d) In addition to the assignments and participations
permitted under the foregoing provisions of this Section 14.3, any Lender may
assign and pledge all or any portion of its Loans and its Note to any Federal
Reserve Bank as collateral security pursuant to Regulation
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A and any Operating Circular issued by such Federal Reserve Bank. No such
assignment shall release the assigning Lender from its obligations hereunder.
(e) Each of the Obligors authorizes each Lender to disclose to
any Participant or Eligible Assignee ("Transferee") and any prospective
Transferee any and all financial information in such Lender's possession
concerning the Obligors which has been delivered to such Lender by any of the
Obligors or the Agent pursuant to this Agreement or which has been delivered to
such Lender by the Obligors, or any of them, in connection with such Lender's
credit evaluation of the Obligors prior to entering into this Agreement.
(f) Any Lender shall be entitled to have any Note held by it
subdivided in connection with a permitted assignment of all or any portion of
such Note and the respective Loans evidenced thereby pursuant to Section 14.3(c)
above. In the case of any such subdivision, the new Note (the "New Note") issued
in exchange for a Note (the "Old Note") previously issued hereunder (i) shall be
substantially in the form of EXHIBIT A or B hereto, as appropriate, (ii) shall
be dated the date of such assignment, (iii) shall be otherwise duly completed
and (iv) shall bear a legend, to the effect that such New Note is issued in
exchange for such Old Note and that the indebtedness represented by such Old
Note shall not have been extinguished by reason of such exchange. Without
limiting the obligations of the Obligors under Section 14.5 hereof, the Lenders
shall use reasonable best efforts to ensure that any such assignment does not
result in the imposition of any intangibles, documentary stamp and other taxes,
if any, which may be payable in connection with the execution and delivery of
any such New Note.
(g) If, pursuant to this Section 14.3, any interest in this
Agreement or the Notes is transferred to any Transferee which is organized under
the laws of any jurisdiction other than the United States or any State thereof,
the Lender making such transfer shall cause such Transferee, concurrently with
the effectiveness of such transfer, (i) to represent to Obligors and the Agent
that under Applicable Law and treaties no taxes will be required to be withheld
by Borrowers or the Agent with respect to any payments to be made to such
Transferee hereunder or in respect of the Loans, (ii) to furnish to the Agent
and Borrowers either United States Internal Revenue Service Form 4224 or United
States Internal Revenue Service Form 1001 (wherein such Transferee claims
entitlement to complete exemption from United States federal withholding tax on
all payments hereunder) and (iii) to agree (for the benefit of the Agent and
Obligors) to provide the Agent and Borrowers a new Form 4224 or Form 1001 upon
the obsolescence of any previously delivered form and comparable statements in
accordance with applicable United States laws and regulations and amendments
duly executed and completed by such Transferee, and to comply from time to time
with all applicable United States laws and regulations with regard to such
withholding tax exemption.
(h) Anything in this Section 14.3 to the contrary
notwithstanding, no Lender may assign or participate any interest in any Loan
held by it hereunder to any of the Obligors or any of their respective
Affiliates or Subsidiaries without the prior written consent of each Lender.
14.4 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which when fully executed shall be an original, and
all of said counterparts
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taken together shall be deemed to constitute one and the same agreement. Any
signature page to this Agreement may be witnessed by a telecopy or other
facsimile of any original signature page and any signature page of any
counterpart hereof may be appended to any other counterpart hereof to form a
completely executed counterpart hereof.
14.5 EXPENSE REIMBURSEMENT. The Obligors, jointly and
severally, agree to reimburse the Agent for all of the Agent's reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation, negotiation, execution, and delivery of this Agreement, the Notes,
the Letters of Credit and the other Loan Documents, including audit costs,
appraisal costs, the cost of searches, filings and filing fees, taxes and the
reasonable fees and disbursements of the Agent's attorneys, Messrs. Troutman
Sanders LLP (and any counsel retained by them); provided, however, that the
Obligors shall not be obligated to reimburse the Agent for such fees and
expenses of Troutman Sanders LLP (and any counsel retained by them) incurred in
connection with the negotiation, execution and delivery of this Agreement on the
Effective Date to the extent such fees and expenses exceed $125,000. The
Obligors, jointly and severally, further agree to reimburse the Agent for all of
the Agent's costs and expenses incurred in connection with the modification or
amendment of this Agreement, the Notes, the Letters of Credit and the other Loan
Documents from time to time, including audit costs, appraisal costs, the cost of
searches, filings and filing fees, taxes and the reasonable fees and
disbursements of the Agent's attorneys, Messrs. Troutman Sanders LLP and any
counsel retained by them. The Obligors further agree, jointly and severally, to
reimburse the Agent, the LC Issuer and each Lender for all costs and expenses
incurred by the Agent, the LC Issuer or such Lender (including attorneys' fees
and disbursements) following a Default or Event of Default to: (a) restructure,
refinance or "workout" the transactions contemplated by this Agreement; (b)
commence, defend or intervene in any court proceeding; (c) file a petition,
complaint, answer, motion or other pleading, or to take any other action in or
with respect to any suit or proceeding (bankruptcy or otherwise) relating to the
Collateral, this Agreement, the Notes, any Letter of Credit or any of the other
Loan Documents; (d) protect, collect, lease, sell, take possession of, or
liquidate any of the Collateral; (e) attempt to enforce any security interest in
any of the Collateral or to seek any advice with respect to such enforcement;
and (f) enforce any of the Agent's and the Lenders' rights to collect any of the
Obligations. The Obligors also agree, jointly and severally, to pay, and to save
harmless the Agent, the LC Issuer and the Lenders from any delay in paying, any
intangibles, documentary stamp and other taxes, if any, which may be payable in
connection with the execution and delivery of this Agreement, the Notes or any
of the other Loan Documents, or the recording of any thereof, the issuance of
any Letter of Credit or in any modification hereof or thereof. Additionally, the
Obligors shall pay to the Agent, the LC Issuer and each Lender on demand any and
all fees, costs and expenses which the Agent, the LC Issuer or such Lender pays
to a bank or other similar institution arising out of or in connection with (x)
the forwarding to any Borrower or any other Person on any Borrower's behalf, by
the Agent, the LC Issuer or such Lender of proceeds of any Loan and (y) the
depositing for collection by of any check or item of payment received by or
delivered to the Agent, the LC Issuer or such Lender on account of the
Obligations. All fees, costs and expenses provided for in this Section 14.5 may,
at the option of the Required Lenders, be charged as Loans to the applicable
Borrowers' revolving loan accounts with the Lenders provided for in Section 2.5
hereof. The Obligors' obligations under this Section shall survive the
termination of this Agreement and the repayment of the Obligations.
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14.6 SEVERABILITY. If any provision of this Agreement or any
of the Loan Documents or the application thereof to any party thereto or
circumstances shall be invalid or unenforceable to any extent, the remainder of
this Agreement or such Loan Documents and the application of such provisions to
any other party thereto or circumstance shall not be affected thereby and shall
be enforced to the greatest extent permitted by law.
14.7 NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been given or made when (a) delivered by hand (including, but not limited
to, by means of overnight courier service), (b) sent by facsimile (with receipt
confirmed), provided that a copy is mailed by certified mail, return receipt
requested, or (c) except as otherwise provided herein, deposited in the mail,
registered or certified mail, postage prepaid, in the case of the Obligors, or
any of them, to the following address:
Opticare Health Systems, Inc.
87 Grandview Avenue
Waterbury, Connecticut 06708
Attention: Chief Financial Officer
Facsimile: (203) 596-2227
and in the case of the Agent or any Lender, to the address of such party at the
"Address for Notices" specified below its name on the signature pages hereto, or
to such other address as may be designated hereafter in writing by any of the
respective parties hereto.
14.8 ENTIRE AGREEMENT - AMENDMENT. This Agreement and the
other Loan Documents constitute the entire agreement between the parties hereto
with respect to the subject matter hereof and supersede all prior negotiations,
understandings and agreements between such parties in respect of such subject
matter. Neither this Agreement nor any provision hereof may be changed, waived,
discharged, modified or terminated except pursuant to a written instrument
signed by the Obligors, the Agent and the Required Lenders or by the Obligors
and the Agent acting with the consent of the Required Lenders; provided,
however, that no such amendment, waiver, discharge, modification or termination
shall, except pursuant to an instrument signed by the Obligors, the Agent and
all of the Lenders or by the Obligors and the Agent acting with the consent of
all of the Lenders, (a) increase the amount of, extend the term of, or extend
the time or waive any requirement for the termination of the Commitments; (b)
extend the date fixed for the scheduled payment of all or any portion of the
principal of, or interest on, any Loan; (c) reduce the amount of any scheduled
payment of principal of, or the rate of interest on, any Loan; (d) reduce any
fee payable hereunder; (e) alter the terms of this Section 14.8; (f) release any
Guarantee of the Obligations; (g) reduce the Commitment of any Lender in any
manner which would change such Lender's Pro Rata Share; or (h) amend the
definitions of the term "Required Lenders" or Borrowing Availability set forth
in Section 1.1 hereof; provided, further, that any amendment, waiver, discharge
modification or termination of any provision of Section 13 hereof, or which
increases the obligations of the Agent hereunder and under the Loan Documents,
shall require the written consent of the Agent.
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Anything in this Agreement to the contrary notwithstanding, if
any Lender shall fail to fulfill its obligations to make any Loan hereunder
then, for so long as such failure shall continue, such Lender shall (unless the
Required Lenders, determined as if such Lender were not a "Lender" hereunder,
shall otherwise consent in writing) be deemed for all purposes relating to
amendments, modifications, waivers or consents under this Agreement or the Notes
(including, without limitation, under this Section 14.8) to have no Loans, no
Commitment, shall not be treated as a "Lender" hereunder when performing the
computation of Required Lenders, and shall have no rights under the preceding
paragraph of this Section 14.8, provided that any action taken by the other
Lenders with respect to the matters referred to in clauses (a) through (h) of
the preceding paragraph shall not be effective as against such Lender.
14.9 TIME OF THE ESSENCE. Time is of the essence in this
Agreement and the other Loan Documents.
14.10 INTERPRETATION. No provision of this Agreement shall be
construed against or interpreted to the disadvantage of any party hereto by any
court or other Governmental Authority by reason of such party having or being
deemed to have structured or dictated such provision.
14.11 NO JOINT VENTURER. Neither this Agreement nor any
agreements, instruments, documents or transactions contemplated hereby
(including the Loan Documents) shall in any respect be interpreted, deemed or
construed as making the Agent, the LC Issuer, any Lender or any of their
respective Affiliates a partner or joint venturer with the Obligors, or any of
them, or as creating any similar relationship or entity, and each of the
Obligors agrees that it will not make any assertion, contention, claim or
counterclaim to the contrary in any action, suit or other legal proceeding
involving the Agent, the LC Issuer or the Lenders and the Obligors, or any of
them.
14.12 CURE OF DEFAULTS BY AGENT. If, hereafter, any Obligor
defaults in the performance of any duty or obligation to the Agent and the
Lenders, or any of them, hereunder, the Agent may, at its option, but without
obligation, cure such default and any costs, fees and expenses incurred by such
Lender in connection therewith including, without limitation, for the purchase
of insurance, the payment of taxes and the removal or settlement of liens and
claims, shall be included in the Obligations and be secured by the Collateral.
14.13 INDEMNITY. In addition to any other indemnity provided
for herein, the Obligors hereby jointly and severally indemnify the Agent, the
LC Issuer and each Lender from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including, without limitation,
reasonable fees and disbursements of counsel) which may be imposed on, incurred
by, or asserted against the Agent, the LC Issuer or such Lender in any
litigation, proceeding or investigation instituted or conducted by any
Governmental Authority or any other Person (other than either of the Obligors)
with respect to any aspect of, or any transaction contemplated by, or referred
to in, or any matter related to, this Agreement or the other Loan Documents
whether or
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not the Agent, the LC Issuer or such Lender is a party thereto, except to the
extent that any of the foregoing arises out of gross negligence or willful
misconduct of the Agent, the LC Issuer or such Lender, as the case may be.
Additionally, the Obligors hereby jointly and severally indemnify and hold the
Agent, the LC Issuer and each Lender harmless from all loss, cost (including,
without limitation, reasonable fees and disbursements of counsel), liability and
damage whatsoever incurred by the Agent, the LC Issuer or such Lender by reason
of any violation of any applicable Environmental Laws for which the Obligors, or
any of them or any of their respective Subsidiaries, have any liability or which
occurs upon any real estate owned by or under the control of any Obligor or any
of their respective Subsidiaries, or by reason of the imposition of any
governmental lien for the recovery of environmental cleanup costs expended by
reason of such violation. The Obligors' respective obligations under this
Section shall survive the termination of this Agreement and the repayment of the
Obligations.
14.14. CONSEQUENTIAL DAMAGES. THE LENDER SHALL NOT BE
RESPONSIBLE OR LIABLE TO BORROWER, ANY OF ITS SUBSIDIARIES, OR ANY OTHER PERSON
OR ENTITY FOR ANY PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE
ALLEGED AS A RESULT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
14.15 ATTORNEY-IN-FACT. Each of the Obligors hereby
designates, appoints and empowers the Agent irrevocably as its attorney-in-fact,
at such Obligor's cost and expense, to do in the name of such Obligor any and
all actions which the Agent may deem necessary or advisable to carry out the
terms hereof upon the failure, refusal or inability of such Obligor to do so,
and the Obligors, jointly and severally, hereby agree to indemnify and hold the
Agent harmless from any costs, damages, expenses or liabilities arising against
or incurred by the Agent in connection therewith except to the extent that any
of such costs, damages, expenses or liabilities arise out of the Agent's gross
negligence or willful misconduct.
14.16. NO CLAIMS; OFFSET. Obligors hereby represent, warrant,
acknowledge and agree to and with the Agent, the LC Issuer and the Lenders that
(a) neither Obligor nor any of their respective Subsidiaries holds or claims any
right of action, claim, cause of action or damages, either at law or in equity,
against the Agent, the LC Issuer or any Lender which arise from, may arise from,
allegedly arise from, are based upon or are related in any manner whatsoever to
the Original Loan Agreement, this Agreement or any of the Loan Documents or
which are based upon acts or omissions of the Agent, the LC Issuer or any Lender
in connection therewith and (b) the Obligations are absolutely owed to the
Lenders, without offset, deduction or counterclaim.
14.17 SOLE BENEFIT. The rights and benefits set forth in this
Agreement and in the other Loan Documents are for the sole and exclusive benefit
of the parties thereto and may be relied upon only by such parties.
14.18 FINANCING STATEMENTS. Each of the Obligors acknowledges
and agrees that it is such Obligor's intent that all financing statements filed
hereunder shall remain in full force and effect until this Agreement shall have
been terminated in accordance with the
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provisions hereof, even if, at any time or times prior to such termination, no
Loans or Letters of Credit shall be outstanding hereunder. Accordingly, each
such Obligor hereby waives any right which it may have under Section 9-404(1) of
the UCC to demand the filing of termination statements with respect to the
Collateral, and hereby agrees that the Agent shall not be required to send such
termination statements to the Obligors, or any of them, or to file such
termination statements with any filing office, unless and until this Agreement
shall have been terminated in accordance with its terms, all Obligations paid in
full in immediately available funds and all Letters of Credit shall have expired
or otherwise terminated. Upon such termination, payment in full, and termination
or expiration, the Agent shall execute appropriate termination statements and
deliver the same to the Obligors.
14.19 GOVERNING LAW; JURISDICTION. THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
AND THEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW).
EACH OF THE OBLIGORS HEREBY (A) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY
NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR THE PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES, THE LETTERS
OF CREDIT OR THE OTHER LOAN DOCUMENTS; (B) AGREES THAT SECTIONS 5-1401 AND
5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO
THIS AGREEMENT; AND (C) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, NOTHING HEREIN SHALL LIMIT THE
RIGHT OF THE AGENT, THE LC ISSUER OR THE LENDERS TO BRING PROCEEDINGS AGAINST
THE OBLIGORS, OR ANY OF THEM, IN THE COURTS OF ANY OTHER JURISDICTION.
14.20 WAIVER OF JURY TRIAL. EACH OBLIGOR, THE AGENT, THE LC
ISSUER AND EACH LENDER EACH HEREBY KNOWINGLY, INTELLIGENTLY AND INTENTIONALLY
WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL
PROCEEDING BASED ON OR ARISING OUT OF, UNDER, IN CONNECTION WITH, OR RELATING TO
THIS AGREEMENT, ANY OF THE NOTES, ANY OF THE LETTERS OF CREDIT, ANY OF THE OTHER
LOAN DOCUMENTS, THE TRANSACTIONS CONTEMPLATED HEREBY, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF ANY
OBLIGOR, THE AGENT, THE LC ISSUER OR ANY LENDER. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE LENDERS MAKING THE LOANS AND OTHER FINANCIAL ACCOMMODATIONS
TO THE BORROWERS HEREUNDER.
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IN WITNESS WHEREOF, each of the Obligors, the Agent and the
Lenders has set its hand and seal as of the day and year first above written.
"PARENT"
OPTICARE HEALTH SYSTEMS, INC.
By: /s/ Steven L. Ditman
-----------------------------------
Name: Steven L. Ditman
Title: Chief Financial Officer
Attest: /s/ Dean J. Yimoyines
-------------------------------
Name: Dean J. Yimoyines
Title: Chief Executive Officer
[CORPORATE SEAL]
"BORROWERS"
OPTICARE EYE HEALTH CENTERS, INC.
By: /s/ Steven L. Ditman
-----------------------------------
Name: Steven L. Ditman
Title: Chief Financial Officer
Attest: /s/ Dean J. Yimoyines
-------------------------------
Name: Dean J. Yimoyines
Title: Chief Executive Officer
[CORPORATE SEAL]
(Signatures continued on next page)
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(Signatures continued from previous page)
PRIMEVISION HEALTH, INC.
By: /s/ David A. Durfee
-----------------------------------
Name: David A. Durfee
Title: Acting President
Attest: /s/ Gregg Luchs
-------------------------------
Name: Gregg Luchs
Title: Chief Financial Officer
[CORPORATE SEAL]
CONSOLIDATED EYE CARE, INC.
By: /s/ Allan L.M. Barker
-----------------------------------
Name: Allan L.M. Barker
Title: President
Attest: /s/ D. Blair Harrold
-------------------------------
Name: D. Blair Harrold
Title: Secretary
[CORPORATE SEAL]
(Signatures continued on next page)
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(Signatures continued from previous page)
"LC ISSUER"
BANK AUSTRIA AG
By: /s/ Robert M. Biringer
----------------------------------
Robert M. Biringer
Executive Vice President
By: /s/ Scott Kray
----------------------------------
Scott Kray
Vice President
Address for Notices:
Bank Austria AG
245 Park Avenue
New York, New York 10167
Attn: _________________
Telecopy Number: _________________
WITH COPIES TO:
Bank Austria AG
Two Ravinia Drive
Suite 1680
Atlanta, Georgia 30346
Attn: Robert M. Biringer
Scott Kray
Telecopy Number: (770) 390-1851
and
Troutman Sanders LLP
Suite 5200
600 Peachtree Street
Atlanta, Georgia 30308-2216
Attn: Hazen H. Dempster, Esq.
Telecopy Number: (404) 885-3900
(Signatures continued on next page)
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<PAGE>
(Signatures continued from previous page)
"AGENT"
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC.
By: /s/ Robert M. Biringer
---------------------------------
Robert M. Biringer
Executive Vice President
By: /s/ Scott Kray
---------------------------------
Scott Kray
Vice President
Address for Notices:
Bank Austria Creditanstalt Corporate Finance, Inc.
Two Greenwich Plaza
Fourth Floor
Greenwich, Connecticut 06830
Attn: _________________
Telecopy Number: _________________
WITH COPIES TO:
Bank Austria Creditanstalt Corporate Finance, Inc.
Two Ravinia Drive
Suite 1680
Atlanta, Georgia 30346
Attn: Robert M. Biringer
Scott Kray
Telecopy Number: (770) 390-1851
and
Troutman Sanders LLP
Suite 5200
600 Peachtree Street
Atlanta, Georgia 30308-2216
Attn: Hazen H. Dempster, Esq.
Telecopy Number: (404) 885-3900
(Signatures continued on next page)
95
<PAGE>
(Signatures continued from previous page)
"LENDERS"
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC.
By: /s/ Robert M. Biringer
----------------------------------
Robert M. Biringer
Executive Vice President
By: /s/ Scott Kray
----------------------------------
Scott Kray
Vice President
Address for Notices:
Bank Austria Creditanstalt Corporate Finance, Inc.
Two Greenwich Plaza
Fourth Floor
Greenwich, Connecticut 06830
Attn: ____________________
Telecopy Number: __________________
WITH COPIES TO:
Bank Austria Creditanstalt Corporate Finance, Inc.
Two Ravinia Drive
Suite 1680
Atlanta, Georgia 30346
Attn: Robert M. Biringer
Scott Kray
Telecopy Number: (770) 390-1851
and
Troutman Sanders LLP
Suite 5200
600 Peachtree Street
Atlanta, Georgia 30308-2216
Attn: Hazen H. Dempster, Esq.
Telecopy Number: (404) 885-3900
96
<PAGE>
GUARANTY
THIS GUARANTY (this "Guaranty") is made as of the 13th day of August,
1999, by and among each of OPTICARE HEALTH SYSTEMS, INC., a Delaware corporation
(the "Parent"), OPTICARE EYE HEALTH CENTERS, INC., a Connecticut corporation
("Opticare"), PRIMEVISION HEALTH, INC., a Delaware corporation ("PVH"),
CONSOLIDATED EYE CARE, INC., a North Carolina corporation ("CEC" and, together
with Opticare and PVH, the "Borrowers"), and each of the other subsidiaries and
affiliates of the Parent and the Borrowers parties listed on the signature pages
hereto (collectively, and together with the Parent and the Borrowers, the
"Guarantors" and each, a "Guarantor"), in favor of THE Lenders and the LC Issuer
referred to below, and BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC., in
its capacity as agent for the Lenders and the LC Issuer (in such capacity, the
"Agent").
W I T N E S S E T H :
WHEREAS, the Borrowers and the Parent are parties to that certain
Amended and Restated Loan and Security Agreement, dated as of even date herewith
(as the same may be further amended, restated, supplemented or otherwise
modified from time to time, the "Loan Agreement"), with the financial
institutions from time to time party thereto (the "Lenders"), Bank Austria, AG,
as LC Issuer (in such capacity, the "LC Issuer") and the Agent, pursuant to
which, among other things, and subject to the terms and conditions contained
therein, the Lenders will make available to the Borrowers 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 "Loans"); and
WHEREAS, as a condition to their entry into the Loan Agreement and to
the making of the Loans and other extensions of credit thereunder, the Lenders,
the LC Issuer and the Agent have required that each of the Guarantors enter into
this Guaranty; and
WHEREAS, the Borrowers desire to obtain the Loan and/or other
extensions of credit under the Loan Agreement, and each of the Guarantors has
determined that it is and will be in the best interest and to the direct
advantage of such Guarantor to assist the Borrowers in borrowing money and
obtaining other extensions of credit from the Lenders and the LC Issuer in order
to further the business of the Guarantors, and each Guarantor has therefore
agreed to make and execute this Guaranty in favor of the Agent, the LC Issuer
and the Lenders to induce them to enter into the Loan Agreement and to extend to
the Borrowers the credit contemplated thereby;
NOW, THEREFORE, for good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, each Guarantor hereby
agrees with the Agent, the
<PAGE>
LC Issuer and the Lenders as follows:
1. DEFINITIONS
All capitalized terms used herein without definition shall have the
respective meanings given to such terms in the Loan Agreement.
2. GUARANTY
2.1. CONTINUING GUARANTY OF PAYMENT. In consideration of the Loans and
other extensions of credit now and hereafter made by the Lenders, the LC Issuer
and the Agent, each Guarantor, jointly and severally, hereby irrevocably,
absolutely and unconditionally guarantees to the Lenders, the LC Issuer and the
Agent the prompt and complete payment when due of (a) all of the obligations of
each Guarantor under this Guaranty and under the other Loan Documents to which
such Guarantor is a party; (b) all "Obligations" of the Borrowers, and each of
them, under and as such term is defined in the Loan Agreement, whether for
principal, interest (including interest accruing after the commencement of any
proceeding under any bankruptcy or insolvency law of any jurisdiction with
respect to any Borrower, whether or not allowable as a claim thereunder),
premium (if any), contingent and fixed liabilities with respect to letters of
credit, expenses, fees, indemnities, commissions, reimbursements, charges,
penalties and other liabilities or amounts payable thereunder or with respect
thereto; and (c) all other indebtedness, liabilities and obligations of each
Guarantor to the Agent, the LC Issuer and the Lenders, or any of them, of every
kind and description, whether direct, indirect or contingent, now or hereafter
existing, due or to become due, whether otherwise secured or unsecured and
howsoever evidenced, incurred or arising under or in connection with this
Agreement, the Loan Agreement or any other Loan Document (collectively, the
"Guaranteed Obligations"). For purposes of this Guaranty, the Guaranteed
Obligations shall be due on the earliest of:
(i) the due date thereof (by acceleration or otherwise);
(ii) with respect to any obligation due on demand, upon demand
therefor made by the Lenders, the LC Issuer and the Agent, or any of
them, upon any of the Borrowers or any of the Guarantors;
(iii) the giving of notice by the Lenders and the Agent to any
Borrower or any Guarantor of the occurrence of any default by any
Guarantor hereunder (including any material misrepresentation by any
such Guarantor made herein or in connection herewith) or any Event of
Default; or
(iv) the commencement of any bankruptcy, insolvency or similar
proceeding brought by or against any Borrower or any Guarantor and, in
the case of any such proceeding instituted against any Borrower or any
Guarantor, either such Borrower or such Guarantor consents to such
proceeding, an order granting the relief requested in such
2
<PAGE>
proceeding is entered or such proceedings continues unstayed and
undismissed for a period of 60 days.
This is a guaranty of payment rather than of collection; this is also a
continuing guaranty and all liabilities to which this Guaranty applies, or may
apply, under the terms hereof shall be presumed to have been created in reliance
hereon.
2.2. NATURE OF OBLIGATIONS. The obligations of each Guarantor to make
payment to the Lenders, the LC Issuer and the Agent, or any of them, hereunder
are direct and primary obligations which shall not be discharged for any reason
until the Commitments under the Loan Agreement have been terminated and the
Guaranteed Obligations have been paid in full. Without limiting the generality
of the foregoing, the obligations of each Guarantor hereunder shall remain in
force irrespective of:
(a) any invalidity, illegality or unenforceability of, or any
defect in, any of the Loan Documents or the Guaranteed Obligations or
any defense which any Borrower, any Guarantor or any of their
respective Subsidiaries may have with respect thereto;
(b) the existence or absence of any legal action to enforce
the Guaranteed Obligations or the Loan Documents or any security
therefor, the issuance of any judgment therefor or the execution of any
such judgment; or
(c) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a guarantor or surety of any
type.
This Guaranty is several and independent of, and may be enforced
regardless of, any other obligation (direct or contingent) of any Guarantor or
any other Person with respect to the Guaranteed Obligations.
2.3. MAXIMUM GUARANTEED AMOUNT. Anything in this Guaranty or in any
other Loan Document to the contrary notwithstanding, in any action or proceeding
involving any state corporate law or any state or federal bankruptcy,
insolvency, reorganization or other law affecting the rights of creditors
generally, if the obligations of any Guarantor hereunder would otherwise be held
or determined to be void, invalid or unenforceable on account of the amount of
its liability hereunder, then notwithstanding any other provision hereof to the
contrary, the amount of such liability shall, without any further action by such
Guarantor or any other Person, be automatically limited and reduced to the
highest amount which is valid and enforceable as determined in such action or
proceeding.
2.4. PAYMENTS. All payments required hereunder shall be payable in
Dollars. Each such payment shall be made to the Lenders, the LC Issuer or the
Agent, as applicable, without set-off or counterclaim and in freely transferable
and immediately available funds at such place as the Agent may direct and for
the account of the Lenders, the LC Issuer or the Agent, as applicable, and
shall:
3
<PAGE>
(a) be exempt from, and be made without reduction by reason
of, any Taxes; or
(b) to the extent that any such payment shall be subject to
any Taxes, be accompanied by an additional payment by the Guarantors
of such amount as may be necessary so that the net amount realized by
any such Lender, the LC Issuer or the Agent, as applicable (after
taking into account all applicable Taxes) is the same as such Person
would have realized had such payment not been subject to such Taxes.
"Taxes" shall mean and include any and all present or future taxes,
levies, imposts, deductions, charges or withholding, and all liabilities with
respect thereto excluding, (i) income and franchise taxes imposed by the
jurisdiction under the laws of which such Lender, the LC Issuer or the Agent,
as applicable, is organized or is or should be qualified to do business or any
political subdivision thereof and (ii) income and franchise taxes imposed by
the jurisdiction of the Lender's Office or any political subdivision thereof. A
certificate of such Lender, the LC Issuer or the Agent, as applicable, as to
additional amounts due under this Section 2.4 shall be conclusive absent
manifest error. Upon any payment of Taxes by any Guarantor, such Guarantor
shall promptly (and in any event within thirty (30) days) furnish to any such
Person such tax receipts, certificates and other evidence of such payment as
such Guarantor may have or such Lender, the LC Issuer or the Agent may
reasonably request.
3. SUBORDINATION AND INDEMNITY
3.1. SUBORDINATION. Subject to the next following sentence of this
Section 3.1:
(a) all claims of any Guarantor against any Borrower or any
other Guarantor shall be subject and subordinate to the prior payment
to the Lenders, the LC Issuer and the Agent of all Guaranteed
Obligations and all obligations of each Guarantor hereunder; and
(b) no Guarantor shall be entitled to receive any payment or
exercise any set-off in respect of any such claim described in Section
3.1(a) above and, to the extent any such payment is received (whether
directly, by way of dividend in bankruptcy, set-off or otherwise),
such Guarantor will forthwith deliver the same (or the value thereof)
to the Agent, for the benefit of the Lenders, the LC Issuer and the
Agent, in precisely the form received (except for endorsement or
assignment where necessary), for application to the Guaranteed
Obligations and, until so delivered, the same shall be held in trust
as the property of the Lenders, the LC Issuer and the Agent.
Notwithstanding the foregoing, until the occurrence of any default or
Event of Default under this Guaranty, the Loan Agreement or any of the other
Loan Documents, each Guarantor may receive and retain payment in respect of any
obligation owed to it by any Borrower or any other Guarantor. If any Guarantor
fails to make any necessary endorsement or assignment on any instrument of
payment to which the Lenders, the LC Issuer and the Agent, or any of them, is
4
<PAGE>
entitled, the Agent and any of its officers or employees are hereby irrevocably
authorized to make the same on behalf of such Guarantor.
3.2. OTHER WAIVERS. Except to the extent required by law and to the
extent that such requirement cannot be waived, each Guarantor waives notice of
acceptance of this Guaranty and notice of any liability to which it may apply,
and waives diligence, presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liabilities, suit or taking other action or
making any demand by the Lenders, the LC Issuer and the Agent, or any of them,
against, and any other notice to, any party liable thereon. Each Guarantor
agrees that the Lenders, the LC Issuer and the Agent, or any of them, may at
any time and from time to time, upon or without any terms or conditions and in
whole or in part (a) change the manner, place or terms of, and/or change or
extend the time of payment of, renew or alter, any of the Guaranteed
Obligations, any of the terms thereof, any security therefor, or any liability
incurred directly or indirectly in respect thereof, and this Guaranty shall
apply to the Guaranteed Obligations so changed, extended, renewed or altered,
(b) fail to record, perfect or protect, or sell, exchange, release, surrender,
realize upon or otherwise deal with in any manner and in any order, any
property or Person whatsoever at any time securing or guaranteeing the
Guaranteed Obligations or any liabilities (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and/or any offset
there against, (c) exercise or refrain from exercising any rights against any
Borrower, any Guarantor or any other Person, or otherwise act or refrain from
acting, (d) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part of the Guaranteed Obligations to the payment of any
other liability (whether due or not) of the Borrowers, or any of them, to the
creditors of such Borrowers or Borrower, (including the Lenders, the LC Issuer
and the Agent, or any of them), (e) apply any sum by whomsoever paid or
howsoever realized to any liability or liabilities of the Borrowers, or any of
them, to the Lenders, the LC Issuer and the Agent, or any of them, regardless
of what liability or liabilities of the Borrowers, or any of them, remain
unpaid, (f) consent to or waive any breach of, or any act, omission or default
under, or modify, supplement or amend any provision of, any of the Loan
Documents, (g) increase the amount of indebtedness of the Borrowers, or any of
them, to the Lenders, the LC Issuer and the Agent, or any of them, whether
under the Loan Documents or otherwise, (h) release or compromise with any other
Person obligated on the Guaranteed Obligations, or any portion thereof, without
releasing the Guarantors hereunder, (i) take any other act which injures or
increases the risk to which the Guarantors are exposed hereunder. It is
understood and agreed that the Lenders, the LC Issuer and/or the Agent may take
any such action, without the consent of, or notice to, any Guarantor, without
incurring responsibility or liability to any Guarantor, and without impairing
or releasing the obligations of the Guarantors, or any of them, hereunder. Each
Guarantor further (x) waives any right to demand that Lenders, the LC Issuer
and the Agent, or any of them, deliver any evidence of the Guaranteed
Obligations, or any security therefor, to such Guarantor upon tender of the
Guaranteed Obligations by such Guarantor, or (2) to require Lenders, the LC
Issuer and the Agent, or any of them, to proceed to collect the Guaranteed
Obligations from the Borrowers or any other Person liable thereon upon and (y)
agrees that the obligations of each Guarantor hereunder shall not be impaired
or released by reason of any failure by the Lenders, the LC Issuer and the
Agent, or any of them, to comply with any such provision.
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<PAGE>
3.3. NO SUBROGATION. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by the
Lenders, the LC Issuer or the Agent, no Guarantor shall be entitled to be
subrogated to any of the rights of the Lenders, the LC Issuer and the Agent, or
any of them, against any Borrower, any other Guarantor or any collateral
security or guarantee or right of offset held by any Lender, the LC Issuer or
the Agent for the payment of the Guaranteed Obligations, nor shall any
Guarantor seek or be entitled to seek any contribution or reimbursement from
any Borrower or any other Guarantor in respect of payments made by such
Guarantor hereunder, until all amounts owing to the Lenders, the LC Issuer and
the Agent by the Borrowers, and each of them, on account of the Guaranteed
Obligations are paid in full and the Commitments are terminated. If any amount
shall be paid to any Guarantor on account of such subrogation rights at any
time when all of the Guaranteed Obligations shall not have been paid in full,
such amount shall be held by such Guarantor in trust for the Lenders, the LC
Issuer and the Agent, segregated from other funds of such Guarantor, and shall,
forthwith upon receipt by such Guarantor, be turned over to the Agent in the
exact form received by such Guarantor (duly indorsed by such Guarantor to the
Agent, if required), to be applied against the Guaranteed Obligations, whether
matured or unmatured, in such order as the Lenders, the LC Issuer and the Agent
may determine.
3.4. REINSTATEMENT. This Guaranty shall continue to be effective, or
be reinstated, as the case may be, if at any time payment, or any part thereof,
of any of the Guaranteed Obligations is rescinded or must otherwise be restored
or returned by the Lenders, the LC Issuer and the Agent, or any of them, upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of any
Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or custodian, trustee or similar
officer for, any Borrower or any Guarantor or any part of their respective
property, or otherwise, all as though such payments had not been made.
3.5. INTEREST. If any Guarantor fails to pay when due to the extent
permitted by law, any obligation hereunder, then, to the extent permitted by
law, such obligation shall bear interest, payable on demand, from the due date
thereof until paid (after as well as before judgment) at a rate per annum equal
to two and three-quarters (2 3/4%) in excess of the Base Rate from time to time
in effect.
4. REPRESENTATIONS AND WARRANTIES
Each Guarantor hereby makes the following representations and
warranties to the Lenders, the LC Issuer and the Agent, which shall be true and
correct in all material respects on the date hereof and shall continue to be
true and correct at the time of the making of any Loan and until the
Commitments have been terminated and the Guaranteed Obligations have been
repaid in full (unless such representation and warranty is made as of a
specific date, in which case, such representation and warranty shall be true in
all material respects as of such date):
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<PAGE>
4.1. CORPORATE EXISTENCE AND QUALIFICATION. Each Guarantor is a
corporation duly organized validly existing and in good standing under the laws
of its state of organization and is duly qualified as either a foreign
corporation in good standing in each other state wherein the conduct of its
business or the ownership of its property requires such qualification and where
the failure to be so qualified would not reasonably be expected to have a
Material Adverse Effect.
4.2. AUTHORIZATION OF AGREEMENT, LOAN DOCUMENTS AND BORROWING. Each
Guarantor has the right, power and authority and has taken all necessary
corporate and other action to authorize the execution, delivery and performance
of this Guaranty and each of the other Loan Documents to which it is a party in
accordance with their respective terms. This Guaranty and each of the other
Loan Documents have been duly executed and delivered by the duly authorized
officers of each Guaranty party thereto, and constitute the legal, valid and
binding obligation of such Guarantor, enforceable in accordance with their
respective terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar state or federal debtor
relief laws from time to time in effect which affect the enforcement of
creditors' rights in general and the availability of equitable remedies.
4.3. COMPLIANCE OF GUARANTY, LOAN DOCUMENTS WITH LAWS, ETC. The
execution, delivery and performance by each Guarantor of the Guaranty and the
other Loan Documents to which each such Guarantor is a party, in accordance
with their respective terms, and the transactions contemplated hereby, do not
and will not, by the passage of time, the giving of notice or otherwise, (a)
require any Governmental Approval or violate any Applicable Law relating to any
Guarantor, (b) conflict with, result in a breach of or constitute a default
under the articles of incorporation, bylaws, articles of organization,
operating agreement or other organizational documents of any such Guarantor or
any indenture, agreement or other instrument to which such Guarantor is a party
or by which any of its properties may be bound or any Governmental Approval
relating to such Guarantor, or (c) result in or require the creation or
imposition of any Lien upon or with respect to any property now owned or
hereafter acquired by such Guarantor other than Liens arising under the Loan
Documents.
4.4. COMPLIANCE WITH LAW; GOVERNMENTAL APPROVALS. Except as described
in the Loan Agreement, each Guarantor and each of their respective Subsidiaries
(a) has all Governmental Approvals required by any Applicable Law for it to
conduct its business, each of which is in full force and effect, is final and
not subject to review on appeal and is not the subject of any pending or, to
the best of its knowledge, threatened attack by direct or collateral
proceeding, and (b) is in compliance with each Governmental Approval applicable
to it and in compliance with all other Applicable Laws relating to it or any of
its respective properties.
4.5. SOLVENCY. Giving effect to the execution and delivery of this
Guaranty and the other Loan Documents to which it is a party, each Guarantor
(a) has capital sufficient to carry on its respective business and transactions
and all respective business and transactions in which it is about to engage,
(b) is able to pay its respective debts as they mature and (c) owns property
whose fair saleable value is greater than the amount required to pay its
respective debts.
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<PAGE>
4.6. REGULATORY MATTERS. No Guarantor is subject to regulation under
the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Federal Power Act, the Interstate Commerce
Act or any other federal or state statue or regulation which materially limits
its ability to incur indebtedness or its ability to consummate the transactions
contemplated hereby.
4.7. REPRESENTATIONS AND WARRANTIES IN LOAN AGREEMENT. Each of the
representations and warranties set forth in the Loan Agreement is true and
correct to the extent such representation and warranty pertains to such
Guarantor and all such representations and warranties are, to the extent
pertaining to each Guarantor, hereby incorporated herein and made a part hereof
by this reference with the same force and effect as if set forth herein in
full.
5. MISCELLANEOUS
5.1. REMEDIES CUMULATIVE; WAIVER. Each and every right and remedy
granted to the Lenders, the LC Issuer and the Agent under this Guaranty, or any
other document delivered hereunder or in connection herewith or allowed it by
law or in equity, shall be cumulative and may be exercised from time to time.
The Lenders, the LC Issuer and the Agent shall not, by any act (except by a
written instrument pursuant to Section 5.8 hereof), delay, indulgence, omission
or otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any breach of any of the terms and conditions hereof. No failure
on the part of the Lenders, the LC Issuer and the Agent, or any of them, to
exercise, and no delay in exercising, any right or remedy shall operate as a
waiver thereof, nor shall any single or partial exercise by the Lenders, the LC
Issuer and the Agent, or any of them, of any right or remedy preclude any other
or future exercise thereof or the exercise of any other right or remedy. No
waiver by the Lenders and the Agent of any Event of Default shall constitute a
waiver of any subsequent Event of Default.
5.2. SURVIVAL. All representations, warranties and covenants made
herein shall survive the execution and delivery of all of the Loan Documents.
The terms and provisions of this Guaranty shall continue in full force and
effect until all of the Guaranteed Obligations have been paid in full and the
Lenders, the LC Issuer and the Agent have terminated this Guaranty in writing,
whichever last occurs; provided, further, that each Guarantor's obligations
under Section 5.5 hereof shall survive the repayment of the Guaranteed
Obligations and the termination of this Guaranty.
5.3. ASSIGNMENTS; SUCCESSORS AND ASSIGNS. This Guaranty shall be
binding upon Guarantors and their respective successors and permitted assigns
and shall inure to the benefit of the Lenders, the LC Issuer and the Agent and
their respective successors, transferees and assigns; provided, that no
Guarantor may transfer or assign any or all of its rights or obligations
hereunder without the prior written consent of the Lenders and the Agent.
5.4. COUNTERPARTS. This Guaranty may be executed in two or more
counterparts, each of which when fully executed shall be an original, and all
of said counterparts taken together shall be deemed to constitute one and the
same agreement. Any signature page to this Guaranty
8
<PAGE>
may be witnessed by a telecopy or other facsimile of any original signature
page and any signature page of any counterpart hereof may be appended to any
other counterpart hereof to form a completely executed counterpart hereof.
5.5. EXPENSE REIMBURSEMENT. Each Guarantor agrees to reimburse the
Lenders, the LC Issuer and the Agent for the amount of all costs and expenses
actually incurred by the Lenders, the LC Issuer and the Agent (including
reasonable attorneys' fees and disbursements) in connection with: (a) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any collateral securing the Guaranteed Obligations, (b) the
exercise or enforcement of any of the rights of the Lenders, the LC Issuer and
the Agent, or any of them, hereunder or under such Loan Documents; and (c) the
failure by such Guarantor to perform or observe any of the provisions of this
Guaranty. Each Guarantor's obligations under this Section 5.5 shall survive the
termination of this Guaranty.
5.6. SEVERABILITY. If any provision of this Guaranty or the
application thereof to any party thereto or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Guaranty and the application
of such provisions to any other party thereto or circumstance shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
5.7. NOTICES. All notices, requests, demands and other communications
under this Guaranty shall be in writing, and shall be deemed to have been made
or give when (a) delivered to any Guarantor in the manner and at the address
provided for in Section 14.7 of the Loan Agreement and (b) when delivered to
any Lender, the LC Issuer or the Agent in the manner and at the address as
provided in Section 14.7 of the Loan Agreement. Each Guarantor hereby
irrevocably appoints the Parent as it agent for purposes of receiving any
notice under this Guaranty or in connection with any other Loan Document.
5.8. AMENDMENT. This Guaranty and the other Loan Documents to which
each Guarantor is a party constitute the entire agreement between the parties
hereto with respect to the subject matter hereof and supersede all prior
negotiations, understandings and agreements between such parties in respect of
such subject matter. Neither this Guaranty nor any provision hereof may be
changed, waived, discharged, modified or terminated except pursuant to a
written instrument signed by each Guarantor and by the Lenders and the Agent.
5.9. TIME OF THE ESSENCE. Time is of the essence in this Guaranty.
5.10. ATTORNEY-IN-FACT. Each Guarantor hereby designates, appoints and
empowers the Agent irrevocably as its attorney-in-fact, at such Guarantor's
cost and expense, to do in the name of such Guarantor any and all actions which
the Agent may deem necessary or advisable to carry out the terms hereof upon
the failure, refusal or inability of such Guarantor to do so (provided that an
Event of Default shall have occurred and be continuing), and each Guarantor
hereby agrees to indemnify and hold the Agent harmless from any costs, damages,
expenses or liabilities arising against or incurred by the Agent in connection
therewith except to the extent that any of such costs, damages, expenses or
liabilities arise out of gross negligence or willful misconduct of
9
<PAGE>
the party to be indemnified.
5.11. INDEPENDENT APPRAISAL. Each Guarantor acknowledges and
represents that it has relied upon its own due diligence in making its own
independent appraisal of each Borrower and its business, affairs and financial
condition, will continue to be responsible for making its own independent
appraisal of such matters and has not relied upon and will not hereafter rely
upon any Lender, the LC Issuer or the Agent for information for such appraisal
or other assessment or review and, further, will not rely upon any such
information which may now or hereafter be prepared by or for the Lenders, the
LC Issuer and the Agent, or any of them, for any appraisals regarding any
Borrower.
5.12. MASTER AGREEMENT. This Guaranty is a master guaranty and it is
the intent of the parties hereto that the identity of the Guarantors hereunder
will change from time to time as new Subsidiaries or Affiliates of any of the
Guarantors or any of the Borrowers are required to join this Guaranty as
additional Guarantors (the "Additional Guarantors"). Any Person which is not a
foreign corporation within the meaning of Section 7701(5) of the Internal
Revenue Code of 1986, and the rules and regulations thereunder, each as amended
or supplemented from time to time, shall join this Guaranty as an Additional
Guarantor by executing and delivering to the Agent, or any Person designated by
the Agent, a joinder agreement, in form and substance satisfactory to Agent (a
"Joinder Agreement"). Upon execution and delivery of a Joinder Agreement by an
Additional Guarantor, such Additional Guarantor shall thereafter be regarded as
a "Guarantor" hereunder as if such Additional Guarantor had been an original
party to this Guaranty. Neither the addition of any Additional Guarantor to
this Guaranty nor the release by the Lenders and the Agent of any Guarantor
party to this Guaranty shall affect the obligations of any other Guarantor
under this Guaranty and each Guarantor waives any defenses it may have arising
out of the addition of any Additional Guarantor or the release of any Guarantor
hereunder. Each Guarantor agrees that it shall execute and deliver any
instrument, document or agreement from time to time as the Agent or any Lender
may request to evidence its acknowledgment of the terms of this Guaranty,
including, without limitation, Section 2.2 and this Section 5.12; provided,
that the failure of any Guarantor to so execute and deliver any such
instrument, document or agreement shall not in any way release such Guarantor
from its obligations hereunder.
10
<PAGE>
5.13. GOVERNING LAW; CONSENT TO JURISDICTION.
(a) THIS GUARANTY, 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 REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
(b) EACH GUARANTOR HEREBY (A) NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY
NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR THE PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY; (B) AGREES THAT
SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK SHALL APPLY TO THIS GUARANTY; AND (C) IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY
CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, NOTHING
HEREIN SHALL LIMIT THE RIGHT OF THE LENDERS, THE LC ISSUER AND THE AGENT, OR
ANY OF THEM, TO BRING PROCEEDINGS AGAINST ANY GUARANTOR IN THE COURTS OF ANY
OTHER JURISDICTION.
(c) EACH GUARANTOR AND ITS RESPECTIVE SUBSIDIARIES HEREBY
IRREVOCABLY APPOINTS OPTICARE HEALTH SYSTEMS, INC. TO SERVE AS ITS AGENT FOR
SERVICE OF PROCESS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE LENDERS, THE LC ISSUER AND THE AGENT, OR ANY OF
THEM, TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY GUARANTOR OR ITS RESPECTIVE
SUBSIDIARIES IN ANY OTHER JURISDICTION.
5.14. WAIVER OF JURY TRIAL. AFTER REVIEWING THIS PROVISION
SPECIFICALLY WITH ITS COUNSEL, EACH GUARANTOR HEREBY KNOWINGLY, INTELLIGENTLY
AND INTENTIONALLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL
PROCEEDING BASED ON OR ARISING OUT OF, UNDER, IN CONNECTION WITH, OR RELATING
TO THIS GUARANTY, THE TRANSACTIONS CONTEMPLATED HEREBY, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF
ANY BORROWER, ANY GUARANTOR, ANY LENDER, THE LC ISSUER OR THE AGENT. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS AND THE LC ISSUER TO ENTER
INTO THE
11
<PAGE>
LOAN AGREEMENT AND TO MAKE THE LOANS AND OTHER FINANCIAL
ACCOMMODATIONS TO THE BORROWERS THEREUNDER.
----------------
Initials
5.15. NO PUNITIVE DAMAGES.
(a) The Lenders, the LC Issuer, the Agent and each of the Guarantors
(on behalf of itself and its Subsidiaries) hereby agree that no such Person
shall have a remedy of punitive or exemplary damages against any other party to
a Loan Document and each such Person hereby waives any right or claim to
punitive or exemplary damages that they may now have or may arise in the future
in connection with any Dispute, whether such Dispute is resolved through
arbitration or judicially.
(b) The parties agree that they shall not have a remedy of punitive or
exemplary damages against any other party in any Dispute and hereby waive any
right or claim to punitive or exemplary damages they have now or which may
arise in the future in connection with any Dispute whether the Dispute is
resolved by arbitration or judicially.
12
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused its duly authorized
officers to set their hands and the seal of such Guarantor as of the day and
year first above written.
"Guarantors"
OPTICARE HEALTH SYSTEMS, INC.
By: /s/ Steven L. Ditman
-----------------------------------------
Name: Steven L. Ditman
Title: Chief Financial Officer
Attest: /s/ Dean J. Yimoyines
-------------------------------------
Name: Dean J. Yimoyines
Title: Chief Executive Officer
[CORPORATE SEAL]
OPTICARE EYE HEALTH CENTERS, INC.
By: /s/ Steven L. Ditman
-----------------------------------------
Name: Steven L. Ditman
Title: Chief Financial Officer
Attest: /s/ Dean J. Yimoyines
-------------------------------------
Name: Dean J. Yimoyines
Title: Chief Executive Officer
[CORPORATE SEAL]
PRIMEVISION HEALTH, INC.,
By: /s/ David A. Durfee
-----------------------------------------
Name: David A. Durfee
Title: Acting President
Attest: /s/ Gregg Luchs
-------------------------------------
Name: Gregg Luchs
Title: Chief Financial Officer
[CORPORATE SEAL]
(Signatures continued on following page.)
13
<PAGE>
(Signatures continued from preceding page.)
CONSOLIDATED EYE CARE, INC.
By: /s/ Allan L.M. Barker
------------------------------------------
Name: Allan L.M. Barker
Title: President
Attest: /s/ D. Blair Harrold
--------------------------------------
Name: D. Blair Harrold
Title: Secretary
[CORPORATE SEAL]
PRIMEVISION EAST, INC.
By: /s/ David A. Durfee
------------------------------------------
Name: David A. Durfee
Title: President
Attest: /s/ Gregg Luchs
--------------------------------------
Name: Gregg Luchs
Title: Chief Financial Officer
[CORPORATE SEAL]
PRIMEVISION CENTRAL, INC.
By: /s/ David A. Durfee
------------------------------------------
Name: David A. Durfee
Title: President
Attest: /s/ Gregg Luchs
--------------------------------------
Name: Gregg Luchs
Title: Chief Financial Officer
[CORPORATE SEAL]
(Signatures continued on following page.)
14
<PAGE>
(Signatures continued from preceding page.)
PRIMEVISION WEST, INC.
By: /s/ David A. Durfee
------------------------------------------
Name: David A. Durfee
Title: President
Attest: /s/ Gregg Luchs
--------------------------------------
Name: Gregg Luchs
Title: Chief Financial Officer
[CORPORATE SEAL]
PRIMEVISION OF NORTH CAROLINA, INC.
By: /s/ David A. Durfee
------------------------------------------
Name: David A. Durfee
Title: President
Attest: /s/ Gregg Luchs
--------------------------------------
Name: Gregg Luchs
Title: Chief Financial Officer
[CORPORATE SEAL]
ASSOCIATION OF EYE CARE CENTERS
TOTAL VISION HEALTH PLAN, INC.
By:
------------------------------------------
Name:
Title:
Attest:
--------------------------------------
Name:
Title:
[CORPORATE SEAL]
(Signatures continued on following page.)
15
<PAGE>
OPTOMETRIC EYE CARE CENTER, P.A.
By: /s/ D. Blair Harrold
-----------------------------------------
Name: D. Blair Harrold
Title: President
Attest: /s/ Allan L.M. Barker
-------------------------------------
Name: Allan L.M. Barker
Title: Secretary
[CORPORATE SEAL]
16
<PAGE>
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made as of the 13th day
of August, 1999, by and among each of the parties listed on the signature pages
hereto (collectively, the "Debtors" and each, a "Debtor"), in favor of BANK
AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC., in its capacity as agent for the
"Lenders" and the "LC Issuer" referred to below (in such capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, Opticare Eye Health Centers, Inc., a Connecticut corporation
("Opticare"), Primevision Health, Inc., a Delaware corporation ("PVH"),
Consolidated Eye Care, Inc., a North Carolina corporation ("CEC" and, together
with Opticare and PVH, the "Borrowers"), and Opticare Health Systems, Inc., a
Delaware corporation (the "Parent"), are parties to that certain Amended and
Restated Loan and Security Agreement, dated as of even date herewith (as the
same may be further amended, restated, supplemented or otherwise modified from
time to time, the "Loan Agreement"), with the financial institutions from time
to time party thereto (the "Lenders"), Bank Austria, AG, as LC Issuer (in such
capacity, the "LC Issuer") and the Agent, pursuant to which, among other things,
and subject to the terms and conditions contained therein, the Lenders will make
available to the Borrowers 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 "Loans"); and
WHEREAS, as a condition to entry into the Loan Agreement and to the
making of the Loan and other extensions of credit thereunder, the Lenders, the
LC Issuer and the Agent have required that each of the Debtors enter into that
certain Guaranty, dated of even date herewith (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the "Guaranty"),
pursuant to which, among other things, each of such Debtors has guaranteed the
payment and performance of the Borrowers' respective obligations under the Loan
Agreement; and
WHEREAS, as a further condition to their entry into the Loan Agreement
and to the making of the Loans, the Lenders, the LC Issuer and the Agent have
required that each of the Debtors enter into this Agreement, pursuant to which,
among other things, the Debtors shall grant a security interest in all of their
respective assets and properties more fully described herein as security for
their respective obligations under the Loan Agreement, the Guaranty, and each of
the agreements, documents and instruments executed and delivered in connection
therewith; and
WHEREAS, the Borrowers desire to obtain the Loans and the other
extensions of credit under the Loan Agreement, and each of the Debtors has
determined that it is and will be in the best interest and to the direct
advantage of such Debtor to assist the Borrowers in borrowing money and
obtaining other extensions of credit from the Lenders and the LC Issuer in order
to
<PAGE>
further the business of the Debtors, and each Debtor has therefore agreed to
make and execute this Agreement in favor of the Agent to induce the Lenders, the
LC Issuer and the Agent to enter into the Loan Agreement and to extend to the
Borrowers the credit contemplated thereby;
NOW, THEREFORE, for good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the Debtors, and each
of them, hereby agree with the Agent, for the benefit of the Lenders, the LC
Issuer and the Agent, as follows:
1. DEFINITIONS
All capitalized terms used herein shall have the respective meanings
given to such terms in the Loan Agreement, except that the following terms when
used herein shall have the following respective meanings:
"Accounts" shall mean any "accounts", as such term is defined in
Section 9-106 of the UCC, of any Debtor, whether now owned or hereafter
acquired, and, in any event shall include all of such Debtor's accounts,
contract rights, book debts and other forms of obligations, whether now existing
or hereafter acquired or arising or in which such Debtor now has or hereafter
acquires any rights, including, without limitation, all present and future
rights to payments for goods, merchandise or Inventory sold or leased or for
services rendered, whether or not represented by invoices or other billing, and
whether or not earned by performance; proceeds of any letter of credit on which
such Debtor is a beneficiary and all forms of obligations whatsoever owing to
such Debtor, together with all instruments and documents of title representing
any of the foregoing, all rights in any goods, merchandise or Inventory which
any of the foregoing may represent, all rights in any returned or repossessed
goods, merchandise or Inventory, and all rights, security and guaranties with
respect to each of the foregoing, including, without limitation, any rights of
stoppage in transit.
"Chattel Paper" shall mean any "chattel paper", as such term is defined
in Section 9-105(1)(b) of the UCC, of any Debtor, whether now owned or hereafter
acquired or arising.
"Collateral" shall have the meaning ascribed to such term in Section
2.1 hereof.
"Contracts" shall mean all contracts, undertakings or other agreements
(other than rights evidenced by Chattel Paper, Documents or Instruments) in or
under which a Debtor may now or hereafter have any right, title or interest ,
including, without limitation, with respect to an Account, any agreement
relating to the terms of payment or the terms of performance thereof.
"Documents" shall mean any "documents", as such term is defined in
Section 9-105(1)(f) of the UCC, of any Debtor ,whether now owned or hereafter
acquired or arising.
"Equipment" shall mean any "equipment", as such term is defined in
Section 9-109(2) of the UCC, of any Debtor, whether now owned or hereafter
acquired or arising, and, in any event, shall include all of such Debtor's
equipment, fixtures and leasehold improvements, whether now existing or
hereafter acquired or arising or in which any Debtor now has or hereafter
acquires any
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<PAGE>
rights, including, without limitation, all furniture, machinery, vehicles and
trade fixtures, together with any and all accessories, accessions, parts and
appurtenances thereto, substitutions therefor and replacements thereof.
"Event of Default" shall mean the occurrence of any one or more of the
following events:
(a) the occurrence of any Event of Default under, and as such
term is defined in, the Loan Agreement; or
(b) any of the Collateral shall be attached or levied upon or
seized in any legal proceedings, or held by virtue of any lien or
distress, or any other event or condition shall occur or exist which
shall result in the Agent no longer having a perfected, first priority
security interest in the Collateral, subject only to Permitted Liens;
or
(c) any representations or warranties made by the Debtors, or
any of them, in this Agreement, in any Loan Document or in any
certificate or statement furnished at any time hereunder or in
connection herewith proves to have been untrue or misleading in any
material respect when made or furnished and which continues to be
untrue or misleading in any material respect; or
(d) default by any Pledgor in the observance or performance of
the covenants set forth in Section 4 (other than Section 4.6) hereof
and the continuation of such default for more than thirty (30) after
Pledgors receive notice thereof; or
(e) default by any Debtor in the observance or performance of
any other covenant or agreement contained in this Agreement or any
other Loan Document to which such Debtor is a party; or
(f) this Agreement ceases to be in full force and effect or
any Debtor renounces or disputes any of its obligations hereunder.
"General Intangibles" shall mean any "general intangibles", as such
term is defined in Section 9-106 of the UCC, of any Debtor, whether now existing
or hereafter acquired or arising or in which such Debtor acquires any rights,
including, without limitation, all rights under escrow agreements and in all
property held pursuant thereto, choses in action, causes of action, corporate or
other business records, inventions, designs, Patents, patent applications,
service marks, Trademarks, trade names, trade secrets, goodwill, copyrights,
registrations, licenses, franchises, customer lists, agency and other contracts,
tax refund claims, computer programs, all claims under guaranties, Liens or
other security held by or granted to any Debtor to secure payment of any of the
Accounts by an Account Debtor, all rights to indemnification, and all other
intangible property of every kind and nature (other than Accounts).
"Instruments" shall mean any "instrument", as such term is defined in
Section 9-105(1)(i) of the UCC, of any Debtor, whether now owned or hereafter
arising or acquired, other than instruments that constitute, or are a part of a
group of writings that constitute, Chattel Paper.
-3-
<PAGE>
"Intercompany Note" means a promissory note executed by a Subsidiary of
any Debtor in favor of such Debtor.
"Inventory" shall mean all "inventory" of any Debtor, as such term is
defined in Section 9-109(4) of the UCC, whether now existing hereafter acquired
or arising or in which such Debtor now has or hereafter acquires any rights,
including, without limitation, any and all goods, merchandise and other personal
property, wheresoever located and whether or not in transit, which is or may at
any time be held for sale or lease or to be furnished under any contract of
service or held as raw materials, work in process, finished goods or materials,
and supplies of any kind, nature or description used or consumed in the business
of any Debtor, including, without limitation, all such property, the sale or
other disposition of which has given rise to an Account and which may have been
returned to or repossessed or stopped in transit by Debtor.
"Investment Property" shall mean all "investment property" of each
Debtor, as such term is defined in Section 9-115 of the UCC, whether now owned
or existing or hereafter acquired or arising, and, in any event, shall include
all of the following: (a) all securities of each Debtor, whether certificated or
uncertificated; (b) any share, participation or other interest in a Person or in
property or in an enterprise of a Person held directly or indirectly by any
Debtor which is, or is of a type, dealt in or traded on financial markets, or
which is recognized in any area in which it is issued or dealt in as a medium
for investment; (c) all commodity futures contracts of any Debtor, options on
any commodity futures contract held by any Debtor, all commodity options or
other contracts of any Debtor that are traded on, or subject to the rules of, a
board of trade that has been designated as a contract market for such contracts
pursuant to the federal commodities laws or which are traded on one or more
foreign commodity boards of trade, exchanges, or markets and are carried on the
books of registered futures commodity merchant or on the books of a Person
providing clearance or settlement services for a board of trade that has been
designated as a contract market for such a contract pursuant to the federal
commodities laws; (d) any of the foregoing held, directly or indirectly, in the
name of any other Person to the extent such other Person has expressly agreed to
treat any Debtor as the Person entitled to exercise the rights comprising the
foregoing; and (e) all right, title and interest of any Debtor in any account to
which any of the foregoing have been credited.
"Patents" shall mean all of the following, whether now owned or
existing or hereafter acquired or arising or in which any Debtor now has or
hereafter acquires any rights: (a) all patents and patent applications, (b) all
inventions and improvements described and claimed therein, (c) all reissues,
divisions, continuations, renewals, extensions and continuations-in-part
thereof, (d) all income, royalties, damages and payments now and hereafter due
and/or payable to any Debtor with respect thereto, including without limitation,
damages and payments for past, present or future infringements or
misappropriations thereof, (e) all rights to sue for past present and future
infringements or misappropriations thereof, and (f) all other rights
corresponding thereto throughout the world.
"Permitted Liens" shall mean the Liens on the assets of the Debtors
expressly permitted under Section 10.2 of the Loan Agreement.
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<PAGE>
"Secured Obligations" shall mean (a) all obligations of the Borrowers,
and each of them, under the Loan Agreement; (b) all of the obligations of the
Debtors, and each of them, under the Guaranty, under this Agreement and under
the other Loan Documents to which any Debtor is a party; and (c) all other
indebtedness, liabilities and obligations of the Debtors, or any of them, to the
Lenders, the LC Issuer and the Agent, or any of them, whether direct, indirect
or contingent, now or hereafter existing, due or to become due, whether
otherwise secured or unsecured and howsoever evidenced, incurred or arising in
connection with the Loan Agreement.
"Trademarks" shall mean all of the following, whether now owned or
existing or hereafter acquired or arising or in which any Debtor now has or
hereafter acquires any rights: (a) all trademarks (including service marks and
trade names, whether registered or at common law), registrations and
applications therefor, and the entire product lines and goodwill of the business
of any such Debtor connected therewith and symbolized thereby, (b) all renewals
thereof, (c) all income, royalties, damages and payments now and hereafter due
or payable or both with respect thereto, including, without limitation, damages
and payments for past, present or future infringements or misappropriations
thereof, (d) all rights to sue for past, present and future infringements or
misappropriations thereof, and (e) all other rights corresponding thereto
throughout the world.
2. SECURITY INTERESTS
2.1. COLLATERAL. In order to secure the payment and performance of the
Secured Obligations, the Debtors, and each of them, hereby grant to the Agent,
for the benefit of the Lenders, the LC Issuer and the Agent, a continuing, first
priority lien on and security interest in and to the following described
property of the Debtors, whether now owned or existing or hereafter acquired or
arising or in which such Debtor now has or hereafter acquires any rights and
wheresoever located (sometimes herein collectively referred to as the
"Collateral"):
(a) Accounts;
(b) Chattel Paper;
(c) Contracts;
(d) Documents;
(e) Equipment;
(f) General Intangibles;
(g) Instruments;
(h) Inventory;
(i) Investment Property;
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(j) all Intercompany Notes entered into from time to
time, the rights of such Debtor as holder of such
Intercompany Notes, including, without limitation any
security interest in any and all assets of each
Subsidiary of such Debtor granted to such Debtor by
such Subsidiary;
(k) all monies, residues and property of any kind of such
Debtor, now or at any time or times hereafter, in the
possession or under the control of the Agent or a
bailee of the Agent;
(l) all accessions to, substitutions for and all
replacements, products and proceeds of the foregoing,
including, without limitation, proceeds of insurance
policies insuring any of the foregoing;
(m) all books and records (other than patient medical
records but otherwise including, without limitation,
patient billing and payment records, customer lists,
credit files, computer programs, print-outs and other
computer materials and records) of such Debtor
pertaining to any of the foregoing;
(n) any and all other property of the Debtors, and each
of them; and
(o) all products and proceeds of any of the foregoing.
Notwithstanding the foregoing, in no event shall the Collateral include
any employment contract with any optometrist.
2.2. NATURE OF SECURITY INTEREST. The security interests granted
pursuant to this Agreement are granted as security only and shall not subject
the Agent to, or transfer to the Agent, or in any way affect or modify, any
obligation or liability of any Debtor under any of the Collateral or any
transaction which gave rise thereto.
2.3. PERFECTION OF SECURITY INTEREST. Until the termination of the
Commitments and the payment and satisfaction in full of all Secured Obligations,
whichever last occurs, the Agent's security interest in the Collateral and all
products and proceeds thereof, shall continue in full force and effect. Each
Debtor shall perform any and all steps requested by the Agent to perfect,
maintain and protect the Agent's security interest in the Collateral, including,
without limitation, executing and filing financing or continuation statements,
or amendments thereof, in form and substance satisfactory to the Agent;
delivering to the Agent all Documents, Instruments or Chattel Paper included in
the Collateral, the possession of which is necessary or appropriate to perfect
the Agent's security interest therein; delivering to the Agent all letters of
credit on which such Debtor is named as a beneficiary; and obtaining and
delivering such consents and waivers from such landlords, developers or other
Persons as the Agent may reasonably request. The Agent may file one (1) or more
financing statements disclosing the Agent's security interest under this
Agreement without Debtor's signature appearing thereon and the Debtors, or any
of them, shall pay the costs of, or incidental to, any recording or filing of
any financing statements
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concerning the Collateral. Each Debtor agrees that a carbon, photographic,
photostatic, or other reproduction of this Agreement or of a financing
statement is sufficient as a financing statement.
2.4. RIGHT TO INSPECT; VERIFICATIONS. The Agent (or any Person or
Persons designated by it), in its sole discretion, shall have the right to call
at any place of business or property location of each Debtor at any reasonable
time, and, without hindrance or delay, to inspect the Collateral and to inspect,
audit, check and make extracts from each Debtor's respective books, records,
journals, orders, receipts and any correspondence and other data relating to the
Collateral, to each Debtor's respective business or to any other transactions
between the parties hereto and to discuss any of the foregoing with each
Debtor's respective employees, officers and directors and independent
accountants. Additionally, the Agent may, at any time and from time to time in
its sole discretion, require any Debtor to verify the individual Account debtors
promptly upon its request therefor. To facilitate the foregoing, upon request
from the Agent made at any time and from time to time hereafter, the Debtors
shall furnish the Agent with a then current Account debtor address list.
3. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders, the LC Issuer and the Agent to enter
into the Loan Agreement and to make the Loans and other extensions of credit
thereunder, each Debtor hereby makes the following representations and
warranties to the Lenders, the LC Issuer and the Agent, which representations
and warranties shall be true and correct on the date hereof and shall continue
to be true and correct at the time of the making of any Loan and until the Loans
have been repaid in full:
3.1. CORPORATE EXISTENCE AND QUALIFICATION. Each Debtor is either a
corporation or a limited liability company, duly organized or formed, validly
existing and in good standing under the laws of its state of organization or
formation and is duly qualified as either a foreign corporation or a foreign
limited liability company, as the case may be, in good standing in each other
state wherein the conduct of its business or the ownership of its property
requires such qualification and where the failure to be qualified would not
reasonably be expected to have a Material Adverse Effect.
3.2. CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS. Each Debtor's
respective principal place of business, chief executive office and office where
it keeps all its respective books and records is set forth on Schedule 3.2
attached hereto, and except as set forth therein, neither of the Debtors nor any
of their respective predecessors has had any other chief executive office or
principal place of business during the preceding seven (7) years. Schedule 3.2
attached hereto and incorporated herein by reference sets forth a true, correct
and complete list of all places of business and all locations at which any
Collateral is located.
3.3. NO VIOLATION OF LAW. No Debtor is in violation of any applicable
statute, regulation or ordinance of any governmental entity, or of any agency
thereof, in any respect materially and adversely affecting the Collateral or the
business, property, assets, operations,
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prospects or condition, financial or otherwise, of the Debtors, or any of them,
or any of their respective Subsidiaries.
3.4. CORPORATE AUTHORITY. Each Debtor has the corporate power and
authority to execute, deliver and perform its obligations under this Agreement,
the Guaranty and the other Loan Documents to which it is a party and has taken
all necessary and appropriate corporate action to authorize the execution,
delivery and performance of this Agreement, the Guaranty and the other Loan
Documents to which it is a party.
3.5. SOLVENCY. Giving effect to the execution and delivery of this
Agreement, the Guaranty and the other Loan Documents to which it is a party,
each Debtor (a) has capital sufficient to carry on its respective business and
transactions and all respective business and transactions in which it is about
to engage, (b) is able to pay its respective debts as they mature and (c) owns
property whose fair salable value is greater than the amount required to pay its
respective debts.
3.6. CORPORATE AND TRADE OR FICTITIOUS NAMES. During the seven (7)
years immediately preceding the date of this Agreement, no Debtor has been known
as or used any corporate, trade or fictitious name other than its current
corporate name and except as disclosed on Schedule 3.6 hereto.
3.7. SECURITY INTEREST. This Agreement creates a valid security
interest in the Collateral securing payment of the Secured Obligations, subject
only to Permitted Liens, and all filings and other actions necessary or
desirable to perfect and protect such security interest have been taken, and the
Agent has a valid and perfected first priority security interest in the
Collateral, subject only to Permitted Liens.
3.8. REGULATORY MATTERS. No Debtor is subject to regulation under the
Investment Company Act of 1940, as amended, the Public Utility Holding Company
Act of 1935, as amended, the Federal Power Act, the Interstate Commerce Act or
any other federal or state statue or regulation which materially limits its
ability to incur indebtedness or its ability to consummate the transactions
contemplated hereby.
3.9. ACCOUNTS. With regard to each Account now or hereafter shown on
any schedule or aging of Accounts provided to the Agent by or on behalf of a
Debtor hereunder:
(a) Such Account arises or will arise under a contract between
such Debtor and an Account Debtor in each case providing for the bona fide sale
of goods or performance of services by such Debtor in the ordinary course of its
business for or on behalf of the Account Debtor except to the extent otherwise
expressly indicated on such schedule or aging of accounts;
(b) Such Debtor has made delivery of the goods or has rendered
the services ordered to which such Account relates and the Account Debtor has
accepted such goods and/or services except to the extent otherwise expressly
indicated on such schedule or aging of accounts;
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(c) Except to the extent otherwise expressly indicated on such
schedule or aging of accounts, the amount of the face value of such Accounts is
actually and absolutely owing to such Debtor, is not contingent for any bona
fide reason known to any Debtor, and there are no setoffs, counterclaims,
disputes or deductions existing or asserted with respect thereto (except to the
extent, if any, that such Account Debtor(s) may be entitled to normal trade
discounts, warranties, adjustments, returns and allowances).
(d) Such Debtor will have preserved and will continue to
preserve any Liens and any rights to Liens available by virtue of the sales
giving rise to such Account;
(e) Such Account is free and clear of all Liens other than
Permitted Liens; and
(f) Such Debtor has full right, power and authority to
collaterally assign such Account.
3.10. ADEQUACY OF INTANGIBLE ASSETS. Each Debtor possesses all
intellectual property licenses, patents, patent applications, copyrights,
trademarks, trademark licenses, trademark applications, and trade names and all
governmental registrations and licenses reasonably necessary to continue to
conduct its business as heretofore conducted by it and all such intellectual
property licenses, patents, patent applications, copyrights, trademarks,
trademark licenses, trademark applications, trade names, licenses and
registrations which have been registered with any Governmental Authority are
listed on SCHEDULE 6.18 to the Loan Agreement..
3.11. EQUIPMENT. The Equipment of each Debtor is and shall remain in
good condition, normal wear and tear excepted, meets all standards imposed by
any Governmental Authority having regulatory authority over such Equipment and
its use and is currently usable in the normal course of such Debtor's business.
3.12. INVENTORY. The Inventory of each Debtor is and shall remain in
good condition, meets all standards imposed by any Governmental Authority having
regulatory authority over such goods, their use and/or sale, is either currently
usable or currently salable in the normal course of such Debtor's business and
is not subject to any output contract or similar agreement between Debtor and
any other Person.
3.13. INVESTMENT PROPERTY. SCHEDULE 6.21 to the Loan Agreement is a
complete list of all Subsidiaries, Investment Property and other Investments of
any Debtor in any Person, including but not limited to, all interests in any
partnership or joint venture. Except as otherwise disclosed on such SCHEDULE
6.21, all shares of stock in any corporation held by any Debtor are evidenced by
stock certificates issued in the name of such Debtor and all other Investment
Property of Debtors or their respective Subsidiaries is held directly in the
name of such Debtor or such Subsidiary and is not held in any brokerage or
similar account, in the name of any financial institution or in any nominee
name.
3.14. REPRESENTATIONS AND WARRANTIES IN LOAN AGREEMENT. Each of the
representations and warranties pertaining to each Debtor set forth in the Loan
Agreement is true
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and correct to the extent such representation and warranty pertains to such
Debtor and all such representations and warranties are, to the extent pertaining
to each Debtor, hereby incorporated herein and made a part hereof by this
reference with the same force and effect as if set forth herein in full.
4. AFFIRMATIVE COVENANTS
Each Debtor covenants to the Lenders, the LC Issuer and the Agent from
and after the date hereof, and until the later to occur of termination of the
Loan Agreement and the payment and satisfaction in full of the Secured
Obligations, it will, unless the Agent otherwise consents in writing:
4.1. REPORTING REQUIREMENTS. Furnish or cause to be furnished to the
Agent such information respecting the Collateral as the Agent may from time to
time reasonably request.
4.2. MAINTENANCE OF COLLATERAL. Diligently and in good faith, use its
best efforts to protect the value of the Collateral and to prevent any action
from being taken which would or could, in the exercise of its reasonable
business judgment, jeopardize or diminish the security afforded to the Agent by
this Agreement or diminish the value of the Collateral.
4.3. FURTHER ASSURANCES. At any time and from time to time, at its own
expense, promptly execute and deliver all further certificates, financing
statements, instruments and documents, and take all further action that may be
necessary or desirable, or that the Agent may reasonably request, to perfect,
preserve and protect any pledge, assignment or security interest granted or
purported to be granted hereby or to enable the Agent to exercise its rights and
remedies hereunder. Upon any failure by any Debtor to do so, the Agent may make,
execute and record any and all such instruments, certificates and documents for
and in the name of such Debtor, and each Debtor hereby irrevocably appoints the
Agent as the agent and attorney-in-fact to do so.
4.4. INSURANCE.
(a) Keep all of its property insured by insurance companies
reasonably acceptable to the Agent and licensed to do business in all
jurisdictions in which the Collateral is located against loss or damage by fire
or other risk usually insured against under extended coverage endorsement and
theft, burglary, and pilferage, together with such other hazards as the Agent
may reasonably from time to time request, in amounts satisfactory to the Agent;
and
(b) Deliver certificates of insurance for such policy or
policies to the Agent, naming the Agent as loss payee thereon pursuant to a
lender's loss payee clause satisfactory to the Agent and containing
endorsements, in form and substance satisfactory to the Agent, providing among
other things that the insurance shall not be cancelable, except upon thirty (30)
days' prior written notice to the Agent.
4.5. TAXES. Pay all taxes, assessments and charges levied, assessed or
imposed upon the Collateral prior to the date on which penalties attach thereto,
except where the same may be
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contested in good faith by appropriate proceedings and for which adequate
reserves have been established.
4.6. NOTIFICATIONS TO THE AGENT. Notify the Agent immediately by
telephone (with each such notice to be confirmed in writing within three (3)
Business Days) upon occurrence thereof, of any default or Event of Default
hereunder.
4.7. MAINTENANCE OF INTELLECTUAL PROPERTY. Keep all General Intangibles
in full force and effect except for immaterial General Intangibles allowed to
lapse by a Debtor in the ordinary course of its business and any other General
Intangible for which such Debtor has obtained a substantially similar
substitution or the lapse of which, because of such substitution, will not have
a Material Adverse Effect and maintain all of its other property necessary or
useful in the proper conduct of its business in good working condition, ordinary
wear and tear excepted.
4.8. EQUIPMENT. Keep and maintain the Equipment in good operating
condition, reasonable wear and tear excepted, repair and make all necessary
replacements, renewals, additions or improvements thereto so that the value and
operating efficiency thereof shall at all times be maintained and preserved and
not permit any item of Equipment to become a fixture to real estate or accession
to other personal property unless the Agent has a first priority Lien on such
real estate or other personal property. Each Debtor shall, immediately on demand
therefor by the Agent, deliver to the Agent any and all existing evidence of
ownership of any of the Equipment (including, without limitation, certificates
of title and applications for title, together with any necessary applications to
have the Agent's Lien noted thereon, in the case of vehicles).
4.9. AFFIRMATIVE COVENANTS UNDER LOAN AGREEMENT. Perform each of the
affirmative covenants set forth in Article 9 of the Loan Agreement, insofar as
such covenant is applicable to and requires performance of the Debtor, which
covenants are, to the extent applicable to the Debtor, incorporated herein by
reference and made a part hereof with the same force and effect as if set forth
herein in full.
5. NEGATIVE COVENANTS
Each Debtor covenants with the Lenders, the LC Issuer and the Agent
that from and after the date hereof and until the later to occur of termination
of the Loan Agreement and the payment and satisfaction in full of the Secured
Obligations, it will not, without the prior written consent of the Agent:
5.1. NO ENCUMBRANCES. Create, assume, or suffer to exist any mortgage,
deed of trust, pledge, assignment, lien, charge, encumbrance on, security
interest or security title of any kind in any of the Collateral or its other
assets except for Permitted Liens.
5.2. RELOCATIONS; USE OF NAME. Relocate its executive offices, open new
places of business or relocate existing places of business; maintain any
Collateral or records with respect to Collateral at any other locations than
those locations presently kept or maintained, as set forth on SCHEDULE 3.2
hereto; or use any corporate name (other than its own) or any fictitious name,
in each
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case, except upon thirty (30) days prior written notice to the Agent and
after the delivery to the Agent of financing statements, if required by the
Agent, in form satisfactory to the Agent.
5.3 NEGATIVE COVENANTS UNDER LOAN AGREEMENT. Violate any covenant or
agreement set forth in the Loan Agreement, insofar as any such covenant is
applicable to and requires observance by the Debtor, which covenants are, to the
extent applicable to the Debtor, incorporated herein by reference and made a
part hereof with the same force and effect as if set forth herein in full.
6. REMEDIES
Upon the occurrence or existence of any Event of Default, and during
the continuation thereof, without prejudice to the rights of the Agent to
enforce its claim against the Debtors, or any of them, for damages for failure
by the Debtors, or any of them, to fulfill any of the obligations hereunder, the
Agent shall have the following rights and remedies, in addition to any other
rights and remedies available to the Agent at law, in equity or otherwise:
6.1. SET-OFF. The right of the Agent to set-off, without notice to the
Debtors, any and all deposits at any time credited by or due from such Agent to
such Debtor, whether in a general or special, time or demand, final or
provisional account or any other account or represented by a certificate of
deposit and whether or not unmatured or contingent.
6.2. RIGHTS AND REMEDIES OF A SECURED CREDITOR. All of the rights and
remedies of a secured party under the UCC or under other applicable law, all of
which rights and remedies shall be cumulative, and none of which shall be
exclusive, to the extent permitted by law, in addition to any other rights and
remedies contained in this Agreement, and in any of the other Loan Documents.
6.3. TAKE POSSESSION OF COLLATERAL. The right of the Agent to (a) enter
upon the premises of any Debtor, or any other place or places where the
Collateral is located and kept, through self-help and without judicial process,
without first obtaining a final judgment or giving the Debtors notice and
opportunity for a hearing on the validity of the Agent's claim and without any
obligation to pay rent to any Debtor, and remove the Collateral therefrom to the
premises of the Agent or any agent of the Agent, for such time as the Agent may
desire, in order to effectively collect or liquidate the Collateral; and/or (b)
require the Debtors to assemble the Collateral and make it available to the
Agent at a place to be designated by the Agent.
6.4. SALE OF COLLATERAL. The right of the Agent to sell or to otherwise
dispose of all or any of the Collateral, at public or private sale or sales,
with such notice as may be required by law, in lots or in bulk, for cash or on
credit, all as the Agent, in its sole discretion, may deem advisable; such sales
may be adjourned from time to time with or without notice. The Agent shall have
the right to conduct such sales on any Debtor's premises or elsewhere and shall
have the right to use any Debtor's premises without charge for such sales for
such time or times as the Agent may see fit. The Agent is hereby granted a
license or other right to use, without charge, each Debtor's labels, patents,
copyrights, rights of use of any name, trade secrets, trade names,
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trademarks, service marks and advertising matter, or any property of a similar
nature, whether owned by each Debtor or with respect to which each Debtor has
rights under license, sublicense or other agreements, as it pertains to the
Collateral, in preparing for sale (including, without limitation, finishing any
unfinished Inventory of each Debtor), advertising for sale and selling any
Collateral and each Debtor's rights under all licenses and all franchise
agreements shall inure to the benefit of the Agent. The Agent shall have the
right to sell, lease or otherwise dispose of the Collateral, or any part
thereof, for cash, credit or any combination thereof, and the Agent or any
Lender may purchase all or any part of the Collateral at public or, if permitted
by law, private sale and, in lieu of actual payment of such purchase price, may
set off the amount of such price against the Secured Obligations. The proceeds
realized from the sale of any Collateral shall be applied first to the costs,
expenses and attorneys' fees and expenses incurred by the Agent for collection
and for acquisition, completion, protection, removal, storage, sale and delivery
of the Collateral; second to interest due upon any of the Secured Obligations;
and third to the principal of the Secured Obligations. If any deficiency shall
arise, the Debtors, and each of them, shall remain liable to the Lenders, the LC
Issuer and the Agent therefor.
6.5. JUDICIAL PROCEEDINGS. The right to proceed by an action or actions
at law or in equity to obtain possession of the Collateral, to recover the
Secured Obligations and amounts secured hereunder or to foreclose under this
Agreement and sell the Collateral or any portion thereof, pursuant to a judgment
or decree of a court or courts of competent jurisdiction, all without the
necessity of posting any bond.
6.6. NOTICE. Any notice required to be given by the Agent of a sale,
lease, other disposition of the Collateral or any other intended action by the
Agent, given to the Debtors in the manner set forth in Section 7.7 below, ten
(10) days prior to such proposed action, shall constitute commercially
reasonable and fair notice thereof to such Debtor.
6.7. APPOINTMENT OF AGENT AS DEBTOR'S LAWFUL ATTORNEY. Each Debtor
irrevocably designates, makes, constitutes and appoints the Agent (and all
persons designated by the Agent) as such Debtor's true and lawful attorney, and
the Agent or the Agent's agent, may, without notice to such Debtor, and at such
time or times thereafter as the Agent or said agent, in its sole discretion, may
determine, in such Debtor's or the Agent's name: (a) demand payment of the
Accounts; (b) enforce payment of the Accounts, by legal proceedings or
otherwise; (c) exercise all of such Debtor's rights and remedies with respect to
the collection of the Accounts; (d) settle, adjust, compromise, extend or renew
the Accounts; (e) settle, adjust or compromise any legal proceedings brought to
collect the Accounts; (f) if permitted by applicable law, sell or assign the
Accounts upon such terms, for such amounts and at such time or times as the
Agent deems advisable; (g) discharge and release the Accounts; (h) take control,
in any manner, of any item of payment or proceeds on the Accounts; (i) prepare,
file and sign such Debtor's name on a Proof of Claim in Bankruptcy or similar
document against any Account debtor; (j) prepare, file and sign such Debtor's
name on any notice of lien, assignment or satisfaction of lien or similar
document in connection with the Accounts; (k) do all acts and things necessary,
in the Agent's sole discretion, to fulfill such Debtor's obligations under this
Agreement; (l) endorse the name of such Debtor upon any of the items of payment
or proceeds on any Account, and deposit the same to the account of the Agent on
account of the Secured Obligations; (m) endorse the name of such Debtor upon any
Chattel Paper, Document, Instrument, invoice, freight bill, bill of lading or
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similar document or agreement relating to the Accounts or Inventory; (n) use
such Debtor's stationery and sign the name of such Debtor to verifications of
the Accounts and notices thereof to Account debtors; and (o) use the information
recorded on or contained in any data processing equipment and computer hardware
and software relating to the Accounts and Inventory to which each Debtor has
access.
7. MISCELLANEOUS
7.1. WAIVER. Each and every right and remedy granted to the Agent under
this Agreement, or any other document delivered hereunder or in connection
herewith or allowed it by law or in equity, shall be cumulative and may be
exercised from time to time. No failure on the part of the Agent to exercise,
and no delay in exercising, any right or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise by the Agent of any right or
remedy preclude any other or future exercise thereof or the exercise of any
other right or remedy. No waiver by the Agent of any Event of Default shall
constitute a waiver of any subsequent Event of Default.
7.2. SURVIVAL. All representations, warranties and covenants made
herein shall survive the execution and delivery of all of the Loan Documents.
The terms and provisions of this Agreement shall continue in full force and
effect until all of the Commitments have been terminated, all of the Secured
Obligations have been paid in full and the Agent has terminated this Agreement
in writing, whichever last occurs; provided, further, that Debtors' obligations
under Section 7.5 shall survive the repayment of the Secured Obligations and the
termination of this Agreement.
7.3. ASSIGNMENTS; SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the Debtors and their respective permitted successors and assigns
and shall inure to the benefit of the Agent, the Lenders and the LC Issuer and
their respective successors and assigns; provided, that no Debtor may transfer
or assign any or all of its rights or obligations hereunder without the prior
written consent of the Agent.
7.4. COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which when fully executed shall be an original, and all of
said counterparts taken together shall be deemed to constitute one and the same
agreement. Any signature page to this Agreement may be witnessed by a telecopy
or other facsimile of any original signature page and any signature page of any
counterpart hereof may be appended to any other counterpart hereof to form a
completely executed counterpart hereof.
7.5. EXPENSE REIMBURSEMENT. The Debtors, and each of them, agree to
reimburse the Agent for all costs and expenses incurred by the Agent (including
reasonable attorneys' fees and disbursements) to: (a) commence, defend or
intervene in any court proceeding; (b) file a petition, complaint, answer,
motion or other pleading, or to take any other action in or with respect to any
suit or proceeding (bankruptcy or otherwise) relating to the Collateral or this
Agreement, the Notes or any of the other Loan Documents; (c) protect, collect,
lease, sell, take possession of, or liquidate any of the Collateral; (d) attempt
to enforce any security interest in any of the Collateral or to seek any advice
with respect to such enforcement; and (e) enforce any of
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the Agent's rights to collect any of the Secured Obligations. The Debtors, and
each of them, also agree to pay, and to save harmless the Agent from any delay
in paying, any intangibles, documentary stamp and other taxes, if any, which may
be payable in connection with the execution and delivery of this Agreement, the
Guaranty or any of the other Loan Documents, or the recording of any thereof, or
in any modification hereof or thereof. The Debtors' obligations under this
Section 7.5 shall survive the termination of this Agreement.
7.6. SEVERABILITY. If any provision of this Agreement or the
application thereof to any party hereto or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to any other party hereto or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
7.7. NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing, and shall be deemed to have been made
or give when (a) delivered to any Debtor in the manner and at the address
provided for in Section 14.7 of the Loan Agreement and (b) when delivered to the
Agent in the manner and at the address as provided in Section 14.7 of the Loan
Agreement. Each Debtor hereby irrevocably appoints the Parent as it agent for
purposes of receiving any notice under this Agreement or in connection with any
other Loan Document.
7.8. AMENDMENT. Neither this Agreement nor any provision hereof may be
changed, waived, discharged, modified or terminated except pursuant to a written
instrument signed by the Debtors and the Agent.
7.9. TIME OF THE ESSENCE. Time is of the essence in this Agreement.
7.10. ATTORNEY-IN-FACT. The Debtors, and each of them, hereby
designate, appoint and empower the Agent irrevocably as their attorney-in-fact,
at the Debtors' cost and expense, to do in the name of the Debtors any and all
actions which the Agent may deem necessary or advisable to carry out the terms
hereof upon the failure, refusal or inability of the Debtors to do so, and the
Debtors, and each of them, hereby agree to indemnify and hold the Agent harmless
from any costs, damages, expenses or liabilities arising against or incurred by
the Agent in connection therewith except to the extent that any of such costs,
damages, expenses or liabilities arise out of the Agent's gross negligence or
willful misconduct.
7.11. TERMINATION STATEMENTS. Each Debtor acknowledges and agrees that
it is each such Debtor's intent that all financing statements filed hereunder
shall remain in full force and effect until the Commitment has been terminated,
at any time or times prior to such termination, no loans or the Loan shall be
outstanding hereunder. Accordingly, each Debtor waives any right which it may
have under Section 9-404(1) of the UCC to demand the filing of termination
statements with respect to the Collateral, and agrees that the Agent shall not
be required to send such termination statements to the Debtors, or to file them
with any filing office, unless and until the Commitment has been terminated and
all Secured Obligations paid in full in immediately available funds. Upon such
termination and payment in full, the Agent shall execute appropriate termination
statements and deliver the same to the Debtors.
-15-
<PAGE>
7.12. SECURITY AGREEMENT. This Agreement is a master agreement and it
is the intent of the parties hereto that the identity of the Debtors hereunder
will change from time to time as new Subsidiaries or affiliates of the Borrowers
are required to join this Agreement as additional Debtors (the "Additional
Debtors"). Any Person may join this Agreement as an Additional Debtor by
executing and delivering to the Agent, or any Person designated by the Agent, a
Joinder Agreement, in form and substance satisfactory to Agent (a "Joinder
Agreement"), with a copy of this Agreement attached thereto. Upon execution and
delivery of an Joinder Agreement by an Additional Debtor, such Additional Debtor
shall thereafter be regarded as a "Debtor" hereunder as if such Additional
Debtor had been an original party to this Agreement and the Agent shall have
received, by virtue of this Agreement and such Joinder Agreement, a valid Lien
on and security interest in any Collateral described in such Joinder Agreement
and in all other collateral relating thereto. Neither the addition of any
Additional Debtor to this Agreement nor the release by Agent of any Debtor party
to this Agreement shall affect the obligations of any other Debtor under this
Agreement, the Guaranty or any other Loan Document and each Debtor waives any
defenses it may have arising out of the addition of any Additional Debtor or the
release of any Debtor or any Collateral hereunder.
7.13. GOVERNING LAW; CONSENT TO JURISDICTION. THIS SECURITY AGREEMENT,
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
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH DEBTOR HEREBY (A) SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN NEW YORK,
NEW YORK FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS SECURITY AGREEMENT; AND (B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, NOTHING
HEREIN SHALL LIMIT THE RIGHT OF THE AGENT TO BRING PROCEEDINGS AGAINST ANY
DEBTOR IN THE COURTS OF ANY OTHER JURISDICTION. EACH DEBTOR HEREBY IRREVOCABLY
APPOINTS THE PARENT AS ITS AUTHORIZED AGENT AND ATTORNEY-IN-FACT TO RECEIVE ON
BEHALF OF ANY DEBTOR AND ITS PROPERTY SERVICE OF COPIES OF THE SUMMONS AND
COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY COURT IN OR OF THE STATE OF NEW YORK. SUCH SERVICE MAY
BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO SUCH DEBTOR, IN CARE
OF THE PARENT, IN ACCORDANCE WITH SECTION 7.7 HEREOF AND SUCH DEBTOR HEREBY
IRREVOCABLY AUTHORIZES AND DIRECTS THE PARENT TO ACCEPT SUCH SERVICE ON ITS
BEHALF AND AGREES THAT THE FAILURE OF THE AGENT TO GIVE ANY NOTICE OF ANY SUCH
SERVICE TO ANY DEBTOR SHALL NOT IMPAIR OR AFFECT THE VALIDITY OF SUCH SERVICE OR
OF ANY JUDGMENT RENDERED IN ANY ACTION OR PROCEEDING BASED THEREON.
-16-
<PAGE>
7.14. WAIVER OF JURY TRIAL. AFTER REVIEWING THIS PROVISION SPECIFICALLY
WITH ITS RESPECTIVE COUNSEL, EACH DEBTOR AND THE AGENT HEREBY KNOWINGLY,
INTELLIGENTLY AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LEGAL PROCEEDING BASED ON OR ARISING OUT OF, UNDER, IN CONNECTION WITH, OR
RELATING TO THIS SECURITY AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN),
OR ACTIONS OF ANY DEBTOR OR THE AGENT. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR THE LENDERS AND THE LC ISSUER TO MAKE THE LOANS AND OTHER FINANCIAL
ACCOMMODATIONS TO THE BORROWERS.
-------------
Initials
7.15. NO PUNITIVE DAMAGES.
(a) The Agent and each of the Debtors (on behalf of itself and
its Subsidiaries) hereby agree that no such Person shall have a remedy of
punitive or exemplary damages against any other party to a Loan Document and
each such Person hereby waives any right or claim to punitive or exemplary
damages that they may now have or may arise in the future in connection with any
Dispute, whether such Dispute is resolved through arbitration or judicially.
(b) The parties agree that they shall not have a remedy of
punitive or exemplary damages against any other party in any Dispute and hereby
waive any right or claim to punitive or exemplary damages they have now or which
may arise in the future in connection with any Dispute whether the Dispute is
resolved by arbitration or judicially.
-17-
<PAGE>
IN WITNESS WHEREOF, the Debtors, and each of them, have caused their
duly authorized officers to set their hands and seals as of the day and year
first above written.
"DEBTORS"
PRIMEVISION EAST, INC.
By: /s/ David A. Durfee
--------------------------------------
Name: David A. Durfee
Title: President
Attest: /s/ Gregg Luchs
----------------------------------
Name: Gregg Luchs
Title: Chief Financial Officer
[CORPORATE SEAL]
PRIMEVISION CENTRAL, INC.
By: /s/ David A. Durfee
--------------------------------------
Name: David A. Durfee
Title: President
Attest: /s/ Gregg Luchs
----------------------------------
Name: Gregg Luchs
Title: Chief Financial Officer
[CORPORATE SEAL]
PRIMEVISION WEST, INC.
By: /s/ David A. Durfee
--------------------------------------
Name: David A. Durfee
Title: President
Attest: /s/ Gregg Luchs
----------------------------------
Name: Gregg Luchs
Title: Chief Financial Officer
[CORPORATE SEAL]
(Signatures continued on following page.)
-18-
<PAGE>
(Signatures continued from preceding page.)
PRIMEVISION OF NORTH CAROLINA, INC.
By: /s/ David A. Durfee
--------------------------------------
Name: David A. Durfee
Title: President
Attest: /s/ Gregg Luchs
----------------------------------
Name: Gregg Luchs
Title: Chief Financial Officer
[CORPORATE SEAL]
ASSOCIATION OF EYE CARE CENTERS TOTAL
VISION HEALTH PLAN, INC.
By:
--------------------------------------
Name:
Title:
Attest:
----------------------------------
Name:
Title:
[CORPORATE SEAL]
(Signatures continued on next page)
-19-
<PAGE>
(Signatures continued from previous page)
OPTOMETRIC EYE CARE CENTER, P.A.
By: /s/ D. Blair Harrold
--------------------------------------
Name: D. Blair Harrold
Title: President
Attest: /s/ Allan L.M. Barker
----------------------------------
Name: Allan L.M. Barker
Title: Secretary
[CORPORATE SEAL]
(Signatures continued on next page)
-20-
<PAGE>
(Signatures continued from preceding page.)
ACCOUNTABLE EYE CARE ASSOCIATES, INC.
By:
--------------------------------------
Name:
Title:
Attest:
----------------------------------
Name:
Title:
[CORPORATE SEAL]
<PAGE>
CONDITIONAL ASSIGNMENT AND
TRADEMARK SECURITY AGREEMENT
THIS CONDITIONAL ASSIGNMENT AND TRADEMARK SECURITY AGREEMENT (the
"Agreement"), dated as of August 13, 1999, between OPTICARE EYE HEALTH CENTERS,
INC., a Connecticut corporation (the "Grantor"), and BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC., in its capacity as agent for the "Lenders" and the "LC
Issuer" referred to below (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, Grantor owns the trademarks, trademark applications, service
marks and service mark applications listed on Schedule I annexed hereto.
WHEREAS, the Grantor and certain affiliates of the Grantor
(collectively, the "Borrowers") and Opticare Health Systems, Inc., a Delaware
corporation (the "Parent"), are parties to that certain Amended and Restated
Loan and Security Agreement, dated as of even date herewith (as the same may be
further amended, restated, supplemented or otherwise modified from time to time,
the "Loan Agreement"), with the financial institutions from time to time party
thereto (the "Lenders"), Bank Austria, AG, as LC Issuer (in such capacity, the
"LC Issuer") and the Agent, pursuant to which, among other things, and subject
to the terms and conditions contained therein, the Lenders will make available
to the Borrowers term loans in an aggregate original principal amount of Twenty
One Million Five Hundred Thousand Dollars ($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 "Loans"); and
WHEREAS, the Lenders, the LC Issuer and the Agent have required, as a
condition to their entry into the Loan Agreement and the making of the Loans and
the other extensions of credit pursuant to the terms thereof, that Grantor and
certain of its affiliates (collectively, the "Guarantors") execute and deliver
to the Agent that certain Guaranty, dated as of August 13, 1999 (as the same may
be amended, restated, supplemented, or otherwise modified from time to time, the
"Guaranty"), to guarantee the obligations of each Guarantor and each Borrower;
and
WHEREAS, the Lenders, the LC Issuer and the Agent have further
required, as a condition to their entry into the Loan Agreement and the making
of the Loans and the other extensions of credit pursuant to the terms thereof,
that Grantor execute and deliver to the Agent this Agreement to secure the
obligations of the Grantor under the Loan Agreement, the Guaranty, and each of
the agreements, documents and instruments executed and delivered in connection
therewith; and
WHEREAS, the Borrowers desire to obtain the Loans and the other
extensions of credit under the Loan Agreement, and the Grantor has determined
that it is and will be in the best interest and to the direct advantage of such
Grantor to assist the Borrowers in borrowing money and obtaining other
extensions of credit from the Lenders and the LC Issuer in order to further the
business of the Grantor, and the Grantor has therefore agreed to make and
execute this
<PAGE>
Agreement in favor of the Agent to induce the Lenders, the LC Issuer and the
Agent to enter into the Loan Agreement and to extend to the Borrowers the credit
contemplated thereby;
NOW, THEREFORE, in consideration of the premises, the terms and
conditions herein, and for other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, it is hereby agreed as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein
have the meanings set forth in the Loan Agreement.
2. Grant of Security Interest
(a) Grantor hereby grants to the Agent, for the benefit of the
Agent, the Lenders and the LC Issuer, a continuing security interest in all of
Grantor's right, title, and interest in the following (the "Trademark
Collateral"), whether now owned or hereafter acquired or arising, in order to
secure the due and punctual payment and performance of all the Secured
Obligations (as hereinafter defined):
(i) All "Trademarks" (as defined below), whether now owned or
hereafter arising or acquired by Grantor, including each trademark
identified on Schedule I hereto. For purposes of this Agreement,
"Trademarks" shall mean all trade names, trademarks, service marks, and
logos (registered and unregistered) and state, federal, and foreign
trademark and service mark registrations and state, federal and foreign
registration applications (in use and intent to use) and all renewals
and divisions thereof, all income, royalties, damages, and payments now
or hereafter due and/or payable with respect thereto, the right to
recover for all past, present, and future infringements thereof, all
other rights of any kind whatsoever accruing thereunder or pertaining
thereto, all rights corresponding thereto throughout the world,
together, in each case, with the product lines and goodwill of the
business connected with the use of, and symbolized by, each such
Trademark and all proceeds of the foregoing; and
(ii) All agreements providing for the grant of any right in or to
any Trademark (whether Grantor is the licensee or the licensor
thereunder) including but not limited to those agreements on Schedule
II hereto and all proceeds of the foregoing (the "Trademark Licenses").
(b) This security interest is granted in conjunction with the
security interest granted to the Agent under the Loan Agreement. The rights and
remedies of the Agent with respect to the security interest granted hereby are
in addition to those set forth in the Loan Agreement, and those which are now or
hereafter available to the Agent as a matter of law or equity. Each right,
power, and remedy of the Agent provided for herein or in the Loan Agreement, or
now or hereafter existing at law or in equity shall be cumulative and concurrent
and shall be in addition to every right, power, or remedy provided for herein.
The exercise by the Agent of any one or more of the rights, powers, or remedies
provided for in this Agreement or in
2
<PAGE>
the Loan Agreement or now or hereafter existing at law or in equity shall not
preclude the simultaneous or later exercise by the Agent of any or all other
rights, powers, or remedies.
3. Secured Obligations. The collateral assignment contained herein
shall secure the due and punctual payment of (i) the Obligations, as defined in
the Loan Agreement, and (ii) any and all other indebtedness, liabilities, and
obligations of the Grantor to the Agent, the Lenders and the LC Issuer of every
kind and nature (including, without limitation, interest, charges, expenses,
attorneys' fees, and other sums chargeable to the Grantor by the Agent and
future advances made to or for the benefit of the Grantor), whether arising
under this Assignment, the Loan Agreement, or any other Loan Document
(collectively, the "Secured Obligations").
4. Modification of Agreement
This Agreement may not be changed, waived or terminated except
in accordance with the amendment provisions of the Loan Agreement.
Notwithstanding the foregoing, Grantor authorizes the Agent, upon notice to
Grantor, to modify this Agreement in the name of and on behalf of Grantor
without obtaining Grantor's signature to such modification, to the extent that
such modification constitutes an amendment of Schedule I to add any right,
title, or interest in any Trademark owned or subsequently acquired by Grantor.
5. Representations and Warranties
(a) Schedule I hereto contains a true and accurate list of all
Grantor's Trademark registrations and applications.
(b) Grantor is the sole owner of the Trademarks and Trademark
Licenses, free and clear of all liens, claims and encumbrances, other than the
lien created by the Loan Agreement and this Agreement; the records of the United
States Patent and Trademark Office currently reflect that Grantor is the owner
of all Trademark registrations and applications; and none of the Trademark
Collateral has been licensed by Grantor to any third party, except for the
Trademark Licenses listed on Schedule II.
(c) To the best of Grantor's knowledge, each Trademark is valid,
subsisting, unexpired, and enforceable, and to the extent necessary to maintain
its rights thereto, Grantor has used and continues to use the appropriate
statutory notice of registration in connection with its use of all federally
registered Trademarks.
(d) No holding, decision, or judgment has been rendered in any
action or proceeding limiting, canceling, or questioning the validity of
Grantor's rights in any Trademark and no such action or proceeding is pending
or, to the best of Grantor's knowledge, threatened. To the best of Grantor's
knowledge, there is no subsisting material breach or default under any Trademark
License.
(e) To the best of Grantor's knowledge, (i) the conduct of
Grantor's business does not infringe upon any trademark or other intellectual
property right owned or controlled by a
3
<PAGE>
third party and (ii) except as previously disclosed in writing to the Agent, no
third party is infringing upon any of the Trademark Collateral.
6. Covenants of Grantor
(a) Except for Trademarks which are no longer in use, or shall no
longer be used, in connection with its business, Grantor will not do any
commercially reasonable act or omit to do any commercially reasonable act (and
not permit any licensees or sublicensees of Grantor to do any commercially
reasonable act) whereby any Trademark of Grantor will become abandoned,
invalidated, or unenforceable, and Grantor shall diligently pursue each
Trademark application unless it shall reasonably determine that a registration
is not likely to issue or the costs associated with such registration process
will not be commercially justified by the sales of the related product, and
shall maintain each Trademark registration in full force and effect. In the
event that any Trademark owned by, or, to the extent permitted by the related
Trademark License, licensed to, Grantor, is infringed or diluted by a third
party, Grantor shall promptly take all commercially reasonable actions to stop
such infringement or dilution and protect its exclusive rights in such
Trademark.
(b) Grantor agrees to promptly report to the Agent on an annual
basis and, in the event of a continuing Event of Default, on a quarterly basis
(i) the filing of any application for registration of any Trademark (whether
such application is filed by Grantor or through any agent, employee, licensee,
or designee) and (ii) the registration of any Trademark. Grantor agrees to
execute and deliver to the Agent an amendment to this Agreement covering such
new applications or registrations for Trademarks in form appropriate for
recordation in the United States Patent and Trademark Office.
(c) Without the prior written consent of the Agent, Grantor shall
not (i) sell, assign (by operation of law or otherwise), or otherwise dispose of
any of the Trademark Collateral or any rights therein (except as contemplated by
paragraph (c)(iii)), (ii) grant any lien or security interest in any of the
Trademark Collateral (except for the lien created by this Agreement and the Loan
Agreement, or (iii) license any of the Trademark Collateral to any third party,
except that, unless an Event of Default has occurred and is continuing, Grantor
may grant non-exclusive licenses of any of the Trademarks to a third party in
the ordinary course of business; provided that the Agent shall receive a
security interest in any fees, royalties, and payments with respect to all and
any such licenses.
7. Grant of License
(a) Grantor hereby grants to the Agent a non-exclusive,
royalty-free right and license, with rights of sublicense, in and to the
Trademark Collateral, and a sublicense in and to Grantor's rights under
Trademark Licenses to the extent permitted under the terms of such Trademark
Licenses, to use such Trademark Collateral or operate under such Trademark
Licenses, effective upon the occurrence and during the continuance of an Event
of Default, in connection with the enforcement of the Agent's rights and
remedies hereunder and under the Loan Agreement. Without limiting the generality
of the foregoing, the Agent shall have the
4
<PAGE>
right, pursuant to the foregoing license and sublicense, to use the Trademark
Collateral in connection with the foreclosure upon any of the Collateral granted
hereunder or under the Loan Agreement.
(b) The license granted pursuant to Section 7(a) is conditional
upon the requirement that the goods sold and services rendered by the Agent
under the Trademark Collateral shall be of a nature and quality substantially
consistent with those theretofore offered under such Trademarks by Grantor.
8. Remedies Upon Default; Power of Attorney
(a) Upon the occurrence and during the continuance of a Default
or an Event of Default under the Loan Agreement, and subject to the notice
provisions therein, the Trademarks shall be assigned, transferred, set over, and
delivered to the Agent or its designee, and Grantor hereby irrevocably
constitutes and appoints the Agent and any officer, agent or employee thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of Grantor and in
the name of Grantor or the Agent's own name or the name of the Agent's designee,
upon the occurrence of an Event of Default, (i) to complete, date, execute, and
file, or cause to be filed, the Assignment attached hereto as Exhibit A and
incorporated hereby by reference (the "Assignment") in the United States Patent
and Trademark Office and in all other applicable offices, and to execute and
deliver any and all documents and instruments which may be necessary or
desirable to accomplish the purpose of the Assignment, (ii) to collect proceeds
of any Trademark Collateral, (iii) in any transaction authorized by the Loan
Agreement, convey any Trademark Collateral to any purchaser thereof, payment or
discharge of taxes or liens levied or placed upon or threatened against any
Trademark Collateral, the legality or validity thereof and the amounts necessary
to discharge the same to be determined by the Agent in its sole discretion, and
such payments made by the Agent to become the obligations of Grantor to the
Agent, due and payable immediately without demand. The Agent's authority
hereunder shall include, without limitation, the authority to endorse and
negotiate any checks or instruments constituting proceeds of any Trademark
Collateral in the name of Grantor, execute and give receipt for any certificate
of ownership or any document (constituting Trademark Collateral), sign Grantor's
name on all financing statements or any other documents necessary or appropriate
by the Agent to preserve, protect or perfect the security interest in any
Trademark Collateral (to the extent permitted by Applicable Law) and to file the
same, prepare, file, and sign Grantor's name on any notice of Lien, and prepare,
file, and sign Grantor's name on a proof of claim in bankruptcy or similar
document against any customer of Grantor with respect to any claim of Grantor
comprising part of any Trademark Collateral, and to take any other actions
arising from or incident to the powers granted to the Agent in the Loan
Agreement.
(b) Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue of this power of attorney. This power
of attorney is a power coupled with an interest and shall be irrevocable.
5
<PAGE>
(c) In addition to the foregoing, upon the occurrence of a
Default or an Event of Default, the Agent shall have all rights and remedies of
a secured party under the applicable Uniform Commercial Code and as provided in
the Loan Agreement and as otherwise available at law and equity.
9. Waiver. Each and every right and remedy granted to the Agent
under this Agreement, or any other document delivered hereunder or in connection
herewith or allowed it by law or in equity, shall be cumulative and may be
exercised from time to time. No failure on the part of the Agent to exercise,
and no delay in exercising, any right or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise by the Agent of any right or
remedy preclude any other or future exercise thereof or the exercise of any
other right or remedy. No waiver by the Agent of any Event of Default shall
constitute a waiver of any subsequent Event of Default.
10. Survival. All representations, warranties and covenants made
herein shall survive the execution and delivery of all of the Loan Documents.
The terms and provisions of this Agreement shall continue in full force and
effect until all of the Commitments have been terminated, all of the Secured
Obligations have been paid in full and the Agent has terminated this Agreement
in writing, whichever last occurs; provided, that Grantor's obligations under
Section 13 shall survive the repayment of the Secured Obligations and the
termination of this Agreement. At the time of such termination of this
Agreement, the Agent, upon the Grantor's request and at the Grantor's expense,
shall execute and deliver such instruments and documents as are reasonably
necessary to terminate the security interest granted hereby.
11. Assignments; Successors and Assigns. This Agreement shall be
binding upon the Grantor and its respective permitted successors and assigns and
shall inure to the benefit of the Agent, the Lenders and the LC Issuer and their
respective successors and assigns; provided, that no Grantor may transfer or
assign any or all of its rights or obligations hereunder without the prior
written consent of the Agent.
12. Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which when fully executed shall be an original, and all of
said counterparts taken together shall be deemed to constitute one and the same
agreement. Any signature page to this Agreement may be witnessed by a telecopy
or other facsimile of any original signature page and any signature page of any
counterpart hereof may be appended to any other counterpart hereof to form a
completely executed counterpart hereof.
13. Expense Reimbursement. The Grantor agrees to reimburse the Agent
for all costs and expenses incurred by the Agent (including attorneys' fees and
disbursements) to: (a) commence, defend or intervene in any court proceeding;
(b) file a petition, complaint, answer, motion or other pleading, or to take any
other action in or with respect to any suit or proceeding (bankruptcy or
otherwise) relating to the Trademark Collateral or this Agreement, the Notes or
any of the other Loan Documents; (c) protect, collect, license, sell, take
possession of, or liquidate any of the Trademark Collateral; (d) attempt to
enforce any security interest in any of the Trademark Collateral or to seek any
advice with respect to such enforcement; and (e) enforce
6
<PAGE>
any of the Agent's rights to collect any of the Secured Obligations. The Grantor
also agrees to pay, and to save harmless the Agent from any delay in paying any
taxes, if any, which may be payable in connection with the execution and
delivery of this Agreement, the Guaranty or any of the other Loan Documents, or
the recording of any thereof, or in any modification hereof or thereof. The
Grantor's obligations under this Section 13 shall survive the termination of
this Agreement.
14. Severability. If any provision of this Agreement or the
application thereof to any party hereto or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to any other party hereto or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
15. Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing, and shall be deemed to have been made
or give when (a) delivered to the Grantor in the manner and at the address
provided for in Section 14.7 of the Loan Agreement and (b) when delivered to the
Agent in the manner and at the address as provided in Section 14.7 of the Loan
Agreement. The Grantor hereby irrevocably appoints the Parent as its agent for
purposes of receiving any notice under this Agreement or in connection with any
other Loan Document.
16. Time of the Essence. Time is of the essence in this Agreement.
17. Governing Law; Consent to Jurisdiction. THIS AGREEMENT, 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 REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. THE GRANTOR HEREBY (A) SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN NEW YORK,
NEW YORK FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS SECURITY AGREEMENT; AND (B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, NOTHING
HEREIN SHALL LIMIT THE RIGHT OF THE AGENT TO BRING PROCEEDINGS AGAINST THE
GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION. THE GRANTOR HEREBY IRREVOCABLY
APPOINTS THE PARENT AS ITS AUTHORIZED AGENT AND ATTORNEY-IN-FACT TO RECEIVE ON
BEHALF OF THE GRANTOR AND ITS PROPERTY SERVICE OF COPIES OF THE SUMMONS AND
COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY COURT IN OR OF THE STATE OF NEW YORK. SUCH SERVICE MAY
BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO THE GRANTOR, IN CARE
OF THE PARENT, IN ACCORDANCE WITH SECTION 15 HEREOF AND THE GRANTOR HEREBY
IRREVOCABLY
7
<PAGE>
AUTHORIZES AND DIRECTS THE PARENT TO ACCEPT SUCH SERVICE ON ITS BEHALF AND
AGREES THAT THE FAILURE OF THE AGENT TO GIVE ANY NOTICE OF ANY SUCH SERVICE TO
THE GRANTOR SHALL NOT IMPAIR OR AFFECT THE VALIDITY OF SUCH SERVICE OR OF ANY
JUDGMENT RENDERED IN ANY ACTION OR PROCEEDING BASED THEREON.
18. Waiver of Jury Trial. AFTER REVIEWING THIS PROVISION
SPECIFICALLY WITH ITS RESPECTIVE COUNSEL, THE GRANTOR AND THE AGENT HEREBY
KNOWINGLY, INTELLIGENTLY AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LEGAL PROCEEDING BASED ON OR ARISING OUT OF, UNDER, IN
CONNECTION WITH, OR RELATING TO THIS SECURITY AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE GRANTOR OR THE AGENT. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS AND THE LC ISSUER TO MAKE THE
LOANS AND OTHER FINANCIAL ACCOMMODATIONS TO THE BORROWERS.
-------------
Initials
19. No Punitive Damages. The Agent and the Grantor (on behalf of
itself and its Subsidiaries) hereby agree that no such Person shall have a
remedy of punitive or exemplary damages against any other party to a Loan
Document and each such Person hereby waives any right or claim to punitive or
exemplary damages that they may now have or may arise in the future in
connection with any dispute, whether such dispute is resolved through
arbitration or judicially.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
("Grantor")
OPTICARE EYE HEALTH CENTERS, INC.
By: /s/ Steven L. Ditman
------------------------------------
Name: Steven L. Ditman
Title: Chief Financial Officer
Attest: /s/ Dean J. Yimoyines
--------------------------------
Name: Dean J. Yimoyines
Title: Chief Executive Officer
[CORPORATE SEAL]
("Agent")
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC., as Agent
By: /s/ Robert M. Biringer
-----------------------------------
Name: Robert M. Biringer
Title: Executive Vice President
By: /s/ Scott Kray
-----------------------------------
Name: Scott Kray
Title: Vice President
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PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement") is made as of the
13th day of August, 1999, by and among each of OPTICARE HEALTH SYSTEMS, INC., a
Delaware corporation (the "Parent"), OPTICARE EYE HEALTH CENTERS, INC., a
Connecticut corporation ("Opticare"), PRIMEVISION HEALTH, INC., a Delaware
corporation ("PVH"), CONSOLIDATED EYE CARE, INC., a North Carolina corporation
("CEC" and, together with Opticare and PVH, the "Borrowers"), and each of the
other subsidiaries and affiliates of the Parent and the Borrowers parties listed
on the signature pages hereto (collectively, and together with the Parent and
the Borrowers, the "Pledgors" and each, a "Pledgor"), in favor of BANK AUSTRIA
CREDITANSTALT CORPORATE FINANCE, INC., in its capacity as agent for the
"Lenders" and the "LC Issuer" referred to below (in such capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, the Borrowers and the Parent are parties to that certain
Amended and Restated Loan and Security Agreement, dated as of even date herewith
(as the same may be further amended, restated, supplemented or otherwise
modified from time to time, the "Loan Agreement"), with the financial
institutions from time to time party thereto (the "Lenders"), Bank Austria, AG,
as LC Issuer (in such capacity, the "LC Issuer") and the Agent, pursuant to
which, among other things, and subject to the terms and conditions contained
therein, the Lenders will make available to the Borrowers term loans in an
aggregate original principal amount of Twenty One Million Five Hundred Thousand
Dollars ($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 "Loans"); and
WHEREAS, as a condition to entry into the Loan Agreement and to the
making of the Loan and other extensions of credit thereunder, the Lenders, the
LC Issuer and the Agent have required that each of the Pledgors enter into that
certain Guaranty, dated of even date herewith (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the "Guaranty"),
pursuant to which, among other things, each of such Pledgors has guaranteed the
payment and performance of the Borrowers' respective obligations under the Loan
Agreement; and
WHEREAS, certain of the Pledgors own the percentages of the issued and
outstanding shares of capital stock described on Exhibit A attached hereto
("Shares") of the subsidiaries listed thereon (each, a "Subsidiary" and
collectively, the "Subsidiaries"); and
WHEREAS, as a further condition to their entry into the Loan Agreement
and to the making of the Loans, the Lenders, the LC Issuer and the Agent have
required that each of the Pledgors enter into this Agreement, pursuant to which,
among other things, the Pledgors shall grant a security interest in all of their
right, title and interest in and to the Shares, and related
<PAGE>
collateral more fully described herein as security for their respective
obligations under the Loan Agreement, the Guaranty, and each of the agreements,
documents and instruments executed and delivered in connection therewith; and
WHEREAS, the Borrowers desire to obtain the Loans and the other
extensions of credit under the Loan Agreement, and each of the Pledgors has
determined that it is and will be in the best interest and to the direct
advantage of such Pledgor to assist the Borrowers in borrowing money and
obtaining other extensions of credit from the Lenders and the LC Issuer in order
to further the business of the Pledgors, and each Pledgor has therefore agreed
to make and execute this Agreement in favor of the Agent to induce the Lenders,
the LC Issuer and the Agent to enter into the Loan Agreement and to extend to
the Borrowers the credit contemplated thereby;
NOW, THEREFORE, for good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the Pledgors, and
each of them, hereby agree with the Agent, for the benefit of the Lenders, the
LC Issuer and the Agent, as follows:
1. DEFINITIONS. When used herein, the following terms shall have the
following respective meanings:
"Collateral" shall have the meaning given such term in Section 2
hereof.
"Event of Default" means the occurrence of any one or more of the
following events:
(a) the occurrence of any Event of Default under, and as such
term is defined in, the Loan Agreement; or
(b) any of the Collateral shall be attached or levied upon or
seized in any legal proceedings, or held by virtue of any lien or
distress, or any other event or condition shall occur or exist which
shall result in the Agent no longer having a perfected, first priority
security interest in the Collateral, subject only to Permitted Liens;
or
(c) default by any Pledgor in the observance or performance of
the covenants set forth in Sections 4.4 or 4.6 hereof and the
continuation of such default for more than thirty (30) after Pledgors
receive notice thereof; or
(d) default by any Pledgor in the observance or performance of
any other covenant or agreement contained in this Agreement; or
(e) this Agreement ceases to be in full force and effect or any
Pledgor renounces or disputes any of its obligations hereunder.
"Permitted Liens" means the Liens on the Collateral expressly permitted
under Section 8.1 of the Loan Agreement.
"Pledged Stock" shall have the meaning given such term in Section 2(a)
hereof.
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"Secured Obligations" means (a) all Obligations of the Parent and the
Borrowers, and each of them, under the Loan Agreement; (b) all of the
obligations of the Pledgors, and each of them, under the Guaranty, under this
Agreement and under the other Loan Documents to which any Pledgor is a party;
and (c) all other indebtedness, liabilities and obligations of the Pledgors, or
any of them, to the Agent, the LC Issuer or any Lender of every kind and
description, whether direct, indirect or contingent, now or hereafter existing,
due or to become due, whether otherwise secured or unsecured and howsoever
evidenced, incurred or arising under the Loan Agreement.
"Stock" means all shares, options, interests, participations or other
equivalents (howsoever designated) of or in any Person, whether certificated or
uncertificated, and whether voting or non-voting, including, without limitation,
common stock, warrants, preferred stock, convertible debentures and all
agreements, instruments and documents convertible, in whole or in part, into any
one or more or all of the foregoing.
Except to the extent otherwise defined herein, all other capitalized
terms contained in this Agreement shall have the meanings ascribed to such terms
in the Loan Agreement.
2. PLEDGE. Each Pledgor hereby pledges, conveys, hypothecates,
mortgages, assigns, sets over, delivers and grants to the Agent, for the benefit
of the Agent, the Lenders and the LC Issuer, as security for the payment and
performance when due of all the Secured Obligations, a security interest in, all
of such Pledgor's right, title and interest in and to the following, whether now
owned or hereafter acquired (collectively, the "Collateral"):
(a) all of the Shares and all additional Stock of each of the
Subsidiaries, together with all Put Stock (as such term is defined in
Section 3.4 of the Loan Agreement), in each case from time to time
acquired by such Pledgor in any manner from and after the date hereof,
whether or not represented by certificates (collectively, the "Pledged
Stock"), including, without limitation, all stock rights, rights to
subscribe, stock splits, stock dividends, new securities and
certificates, subscriptions, additions and replacements declared or
issued with respect to or on account of any Pledged Stock,
(b) all cash, dividends, distributions, payments, additional
securities, interests, investment property, general intangibles,
accounts and other property at any time and from time to time arising
or receivable or otherwise distributed in respect of or in exchange for
any and all such Pledged Stock, whether now owned or existing or
hereafter acquired or arising; and
(c) all products and proceeds of any of the foregoing.
3. REPRESENTATIONS AND WARRANTIES OF PLEDGORS. Each Pledgor hereby
represents and warrants to the Lenders, the LC Issuer and the Agent as follows:
3.1. Corporate Existence and Qualification. Such Pledgor is a
corporation duly organized, validly existing and in good standing under the laws
of its state of organization and is duly qualified as a foreign corporation in
good standing in each other state wherein the conduct
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<PAGE>
of its business or the ownership of its property requires such qualification and
where the failure to be so qualified would not reasonably be expected to have a
Material Adverse Effect.
3.2. Authority; Valid and Binding Effect. Such Pledgor has the
corporate power and authority to execute and deliver this Agreement and the
other Loan Documents to which it is a party and to perform its obligations
hereunder and thereunder, and has taken all necessary and appropriate corporate
action to authorize the execution, delivery and performance of this Agreement
and such other Loan Documents to which it is a party. This Agreement and the
other Loan Documents to which each Pledgor is a party constitute the valid and
legally binding obligations of such Pledgor, enforceable against such Pledgor
and each in accordance with their respective terms, except to the extent
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization and other similar laws applicable to creditors generally.
3.3. No Conflict. The execution, delivery and performance by each
Pledgor of this Agreement (a) are not in contravention of any provisions of
Applicable Law; (b) will not violate or result in a default under any agreement
or indenture to which such Pledgor is a party or by which such Pledgor or any of
its assets or properties are bound; (c) do not contravene such Pledgor's
Certificate or Articles of Incorporation, By-laws, or other applicable
organizational documents; and (d) will not result in or require the creation or
imposition of any Lien on any of the property or assets of such Pledgor other
than Liens in favor of the Agent created by this Agreement.
3.4. Governmental Action. The execution, delivery and performance of
this Agreement do not require any registration with, consent or approval of, or
any notice to, or other action to, with or by any Governmental Authority, except
for (a) filings, consents or notices which have been obtained and a copy thereof
furnished to Agent; and (b) filings necessary to perfect the Liens granted by
this Agreement. With respect to shares of AECC Total Vision Health Plan of
Texas, Inc. pledged hereunder, the Agent must file a DOI Form A and obtain the
consent of the State of Texas Department of Insurance prior to exercising its
rights under Section 6 hereof.
3.5. Security Interest. This Agreement and the pledge of the Collateral
pursuant hereto create a valid first priority security interest in the
Collateral in favor of the Agent, for the benefit of the Lenders, securing the
payment of the Secured Obligations. Upon the physical delivery (and continued
possession thereof) of certificates evidencing the Shares to the Agent, such
security interest in the Shares will be duly perfected and all filings and all
other instruments, documents and agreements necessary to perfect such security
interest in the remaining Collateral have been executed and delivered to Agent.
3.6. Title. Each Pledgor is the legal and equitable owner of, and has
the complete and unconditional authority to pledge, its Collateral and holds the
same free and clear of any and all liens, claims, charges, encumbrances and
security interests of any nature whatsoever, except for the security interest
created by this Agreement; no effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in any
recording office, except such as may have been filed in favor of the Agent
relating to this Agreement; no Pledgor has granted or given any proxy, power of
attorney, option or right of first refusal with
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<PAGE>
respect to any of the Collateral except to the Agent; and no Pledgor is a party
to any agreement which restricts its right to vote, assign, pledge, transfer or
give a proxy or power of attorney with respect to any of the Collateral or any
interest therein.
3.7. Shares. The Shares constitute the percentage of the issued and
outstanding shares of Stock of each of the domestic Subsidiaries of the Pledgors
as is set forth on Exhibit A with respect to such Subsidiary. All the Shares
have been duly authorized, are validly issued in full compliance with all
applicable securities laws and other Applicable Law, and are fully paid and
nonassessable; and there are no existing options, warrants or commitments of any
kind or nature or any outstanding securities or other instruments convertible
into shares of any class of voting stock of such Subsidiaries, and no stock of
such Subsidiaries is held in treasury of such Subsidiaries.
3.8. No Violation of Securities Laws. Each Pledgor's execution and
delivery of this Agreement does not directly or indirectly violate or result in
a violation of any securities laws.
3.9. Uncertificated Shares. Except as described on Exhibit A hereto,
all shares of Stock included in the Collateral are evidenced by stock
certificates and constitute "certificated securities" as such term is defined in
Article 8 of the Uniform Commercial Code. There are no certificates or other
instruments or documents evidencing or representing any of the shares of Stock
shown on Exhibit A hereto as being uncertificated (the "Uncertificated Stock"),
and the Pledgors will cause any and all instruments, documents, or certificates
hereafter issued evidencing or representing such Uncertificated Stock or other
Collateral hereafter issued or arising which is not evidenced by any
instruments, documents or instruments (each in transferable form, duly endorsed
if required or accompanied by executed undated instruments of transfer in blank
satisfactory to the Agent) to be forthwith delivered to and deposited with the
Agent in pledge hereunder (and held apart separately in trust for the benefit of
the Agent, the LC Issuer and the Lenders pending such delivery). The
Uncertificated Stock has not been represented by any certificates since the
issuance thereof and at all times subsequent thereto and including the date of
this Agreement. The Uncertificated Securities are not credited to a "securities
account" within the meaning of the Uniform Commercial Code. After giving effect
to this Agreement, the Control Agreement and the other Loan Documents, no Person
other than the Agent has "control" within the meaning of Article 8 of the
Uniform Commercial Code in respect of the Uncertificated Stock. The Pledgors
have not elected to have the Uncertificated Stock governed by Article 8 of the
Uniform Commercial Code. The Pledgors shall not permit or suffer (a) the
Uncertificated Stock to be represented by any certificates or otherwise become
"certificated securities" or to be credited to a "securities account" within the
meaning of the Uniform Commercial Code or (b) any Person other than the Agent to
have "control" within the meaning of Article 8 of the Uniform Commercial Code in
respect of the Uncertificated Stock. The Pledgors will not cause or elect to
have the Uncertificated Stock be governed by Article 8 of the Uniform Commercial
Code.
3.10. Principal Place of Business, Etc. The principal place of business
and chief executive office of each Pledgor, the office where the records of each
Pledgor regarding the Collateral are kept, the federal taxpayer identification
number of the Pledgor, and any tradename
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<PAGE>
or fictitious name under which any Pledgor does business, or has done business
at any time during the period of five (5) years prior to the date hereof, are
all set forth on Schedule I hereto.
4. COVENANTS AND AGREEMENTS OF PLEDGORS. Each Pledgor covenants and
agrees as follows:
4.1. Delivery of Certificates. Concurrently with the execution of this
Agreement, such Pledgor will deliver to the Agent, for the benefit of the Agent,
the LC Issuer and the Lenders, all certificates evidencing the Collateral,
accompanied by executed stock powers undated and in blank, and by such other
instruments or documents as the Agent or its counsel may reasonably request.
4.2. After Acquired Collateral Delivery. Promptly, and in any event
within ten (10) days after any Pledgor acquires any additional Stock or receives
or is issued any Stock or other securities or property in respect of any of the
Collateral, whether or not for value paid for it, such Pledgor shall (a) deliver
such Stock or other securities or property (including, but not limited to, any
and all certificates evidencing any such Stock or securities) to the Agent, for
the benefit of the Agent, the LC Issuer and the Lenders, together with stock
powers or other appropriate instruments of transfer, executed in blank, all to
be held subject to the terms of this Agreement; and (b) execute and deliver such
pledge agreements, security agreements, financing statements or other
instruments, documents or agreements as may be necessary or appropriate to
confirm, evidence or perfect the security interests granted hereby.
4.3. No New Stock. Except as permitted by the Loan Agreement, no
Pledgor will, subsequent to the date of this Agreement, cause or permit any of
its Subsidiaries to issue any Stock or securities convertible into Stock, unless
and except upon first having obtained the prior written consent of the Lenders
and the Agent.
4.4. Taxes. Each Pledgor will pay all taxes, assessments and charges
levied, assessed or imposed upon the Collateral owned by it prior to the date on
which penalties attach thereto, except where the same may be contested in good
faith by appropriate proceedings and for which adequate reserves have been
established.
4.5. No Transfer. No Pledgor will sell, assign, transfer or otherwise
dispose of all or any portion of the Collateral owned by such Pledgor, or any
rights therein, without the prior written consent of the Agent and the Lenders.
4.6. Further Assurances. Each Pledgor agrees at anytime and from time
to time, at such Pledgor's expense, to execute and deliver all further
instruments and documents and to perform all acts and do all things that may be
reasonably necessary or desirable or that the Agent may request, now or
hereafter, to evidence, preserve or protect the creation, attachment or
perfection of the security interests herein granted to the Agent or to enable
the Agent to exercise and enforce its rights and remedies hereunder with respect
to the Collateral including, without limitation, all action specified in Section
6 hereof.
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4.7. No Amendments. Without the prior written consent of the Lenders
and the Agent, no Pledgor will approve or consent to any changes to the
Certificate or Articles of Incorporation, By-Laws, or other organizational
document of any Subsidiary which would in any way impair or diminish the rights
of the Agent hereunder.
4.8. Right to Perform. In the event that the Pledgors, or any of them,
fails or refuses to perform any of their respective obligations set forth
herein, the Agent shall have the right, without obligation, to do all things it
deems necessary or advisable to discharge the same, and any sums paid by the
Agent, or the cost thereof, including without limitation, attorneys' fees, shall
constitute Secured Obligations, be secured by the Collateral and bear interest
as provided in the Loan Agreement until paid.
4.9. No Obligation. Each Pledgor acknowledges and agrees that nothing
contained herein shall obligate the Agent or impose a duty upon it to assume any
duties or obligations of such Pledgor with respect to any of the Collateral.
5. DISTRIBUTIONS; ETC.
5.1. Right of Pledgor to Receive Distributions. So long as no Event of
Default exists hereunder or under the Loan Agreement, or would exist upon the
payment of the distribution amounts described in this Section 5.1, each Pledgor
shall have the right to receive cash distributions declared and paid with
respect to the Collateral owned by such Pledgor, to the extent such
distributions are permitted by the Loan Agreement. Any and all stock or
liquidating distributions, other distributions in property, return of capital or
other distributions made on or in respect of Collateral, whether resulting from
a subdivision, combination or reclassification of the outstanding capital stock
of any Subsidiary or received in exchange for Collateral or any part thereof or
as a result of any merger, consolidation, acquisition or other exchange of
assets to which any Subsidiary may be a party or otherwise, shall be and become
part of the Collateral pledged hereunder and, if received by any Pledgor, shall
be received in trust, for the benefit of the Agent, shall be segregated from
other funds of such Pledgor and shall be forthwith paid over to the Agent as
Collateral in the same form as so received (together with any necessary
endorsements.)
5.2. Holding Collateral; Exchanges. The Agent may hold any of the
Collateral, endorsed or assigned in blank, and may deliver any of the Collateral
to the applicable issuer for the purpose of making denominational exchanges or
registrations or transfers or for such other reasonable purpose in furtherance
of this Agreement as the Agent may deem desirable.
The Agent shall have the right, at any time in its discretion and
without notice to the Pledgors, or any of them, to transfer or register in the
name of the Agent, for the benefit of the Agent, the LC Issuer and the Lenders,
or any of its nominees, any or all of the Collateral; provided, that
notwithstanding the foregoing, until any transfer of beneficial ownership with
respect to the Collateral pursuant to any exercise of remedies under Section 6
hereof, the applicable Pledgor shall continue to be the beneficial owner of the
Collateral. In addition, the Agent, for the benefit of the Agent, the LC Issuer
and the Lenders, shall have the right at any
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time to exchange certificates or instruments representing or evidencing
Collateral for certificates or instruments of smaller or larger denominations.
5.3. Termination of Pledgor's Right to Receive Distributions. Upon and
after the occurrence of any Event of Default and during the continuation
thereof, all rights of the Pledgors to receive any cash distributions pursuant
to Section 5.1 hereof shall cease, and all such rights shall thereupon become
vested in the Agent, for the benefit of the Agent, the Lenders and the LC
Issuer, and the Agent shall have the sole and exclusive right to receive and
retain the distributions which the Pledgors would otherwise be authorized to
receive and retain pursuant to Section 5.1 hereof. In such event, each Pledgor
shall pay over to the Agent, for the benefit of the Agent, the LC Issuer and the
Lenders, any distributions thereafter received by it with respect to the
Collateral and any and all money and other property paid over to or received by
the Agent pursuant to the provisions of this Section 5.3 shall be retained by
the Agent as Collateral hereunder and/or shall be applied to the repayment of
the Secured Obligations in accordance with the provisions hereof.
6. REMEDIES. Upon and after an Event of Default, the Agent shall have
the following rights and remedies:
6.1. Set-Off. The right of the Agent to set-off, without notice to the
Pledgors, or any of them, any and all deposits at any time credited by or due
from the Agent to the Pledgors, or any of them, whether in a general or special,
time or demand, final or provisional account or any other account or represented
by a certificate of deposit and whether or not matured or contingent.
6.2. Secured Creditor. All of the rights and remedies of a secured
party under the Uniform Commercial Code of the state where such rights and
remedies are asserted, or under other applicable law all of which rights and
remedies shall be cumulative, and none of which shall be exclusive, to the
extent permitted by law, in addition to any other rights and remedies contained
in this Agreement.
6.3. Right of Sale. The Agent may, without demand and without
advertisement, notice or legal process of any kind (except as may be required by
law and, in the case of notices, as may be expressly required by the Loan
Agreement and this Agreement), all of which the Pledgors waive, at any time or
times (a) apply any cash distributions received by the Agent pursuant to Section
5.3 hereof to the Secured Obligations; and (b) if following such application
there remains outstanding any Secured Obligations, sell the remaining
Collateral, or any part thereof, at public or private sale or at any broker's
board or on any securities exchange, for cash, upon credit or for future
delivery as the Agent shall deem appropriate. At any such sale, the Collateral,
or any portion thereof, to be sold may be sold in one lot as an entirety or in
separate parcels, as the Agent may (in its sole and absolute discretion)
determine. The Agent shall not be obligated to make any sale of the Collateral
if it shall determine not to do so, regardless of the fact that notice of the
sale of the Collateral may have been given. In case the sale of all or part of
the Collateral is made on credit or for future delivery, the Collateral so sold
may be retained by the Agent until the sale price is paid by the purchaser or
purchasers thereof, but the Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again. At any sale
or sales
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made pursuant to this Section 6.3, the Agent or any Lender may bid for and
purchase, free from any claim or right of whatever kind, including any equity of
redemption, of the Pledgors, or any of them, any such demand, notice, claim,
right or equity being hereby expressly waived and released, any or all of the
Collateral offered for sale, and may make any payment on the account thereof by
using any claim for moneys then due and payable to the Agent or such Lender by
the Pledgors as a credit against the purchase price; and the Agent or such
Lender, upon compliance with the terms of sale, may hold, retain and dispose of
the Collateral without further accountability therefor to the Pledgors, or any
of them, or any third party. The Agent shall be authorized at any sale (if, on
the advice of counsel, it deems it advisable to do so) to restrict the
prospective bidders or purchasers to Persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or resale thereof, and upon consummation of any
sale the Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each purchaser at any
sale shall hold the property sold absolutely free from any claim or right on the
part of the Pledgors, or any of them, and each Pledgor hereby waives (to the
extent permitted by law) all rights of redemption, stay and/or appraisal which
such Pledgor now has or may have at any time in the future under any rule of law
or statute now existing or hereafter enacted. The proceeds realized from the
sale of any Collateral shall be applied first to the reasonable costs, expenses
and attorneys' fees and expenses incurred by the Agent and the Lenders for
collection and for acquisition, completion, protection, removal, sale and
delivery of the Collateral; second, to interest due upon any of the Secured
Obligations; and third, to the principal of the Secured Obligations. If any
deficiency shall arise, the Pledgors, and each of them, shall remain liable to
the Lenders therefor in accordance with the terms of the Loan Agreement and the
Guaranty. If any surplus shall remain, the Agent shall pay such surplus to the
Person legally entitled thereto.
6.4. Notice. Any notice required to be given by the Agent of a sale, or
other disposition of the Collateral or any other intended action by the Agent,
given to the Pledgors, or any of them, in the manner specified in Section 8.9 at
least ten (10) days prior to the date of such intended action, shall constitute
commercially reasonable and fair notice thereof to such Pledgor(s).
6.5. Securities Laws. In view of the position of the Pledgors in
relation to the securities now or hereafter included in the Collateral, or
because of other present or future circumstances, a question may arise under the
securities laws with respect to any disposition of the Collateral permitted
hereunder. The Pledgors understand that compliance with the securities laws may
very strictly limit the course of the Agent's conduct if the Agent attempts to
dispose of all or any part of the Collateral and may also limit the extent to
which or the manner in which any subsequent transferee of any Collateral may
dispose of the same. The Pledgors will not attempt to hold the Agent responsible
for selling all or any part of the Collateral at a price less than that
available on any public or private market, and each Pledgor agrees that even if
the Agent shall accept the first offer received or does not approach more than
one possible purchaser the manner of such sale shall still be deemed
commercially reasonable. Without limiting the generality of the foregoing, the
Pledgors clearly understand and agree that the Agent shall be entitled to place
all or any part of the Collateral for private placement by an investment banking
firm, that any such investment banking firm may purchase all or any part of the
Collateral for its own account, and that the Agent shall be entitled to place
all or any part of the Collateral privately with a
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purchaser or purchasers, notwithstanding the existence of a public or private
market upon which the quotations or sales prices may exceed substantially the
price at which the Agent sells.
7. POWER OF ATTORNEY; PROXY.
7.1. Appointment of the Agent as Pledgor's Attorney-In-Fact. Each
Pledgor irrevocably designates, makes, constitutes and appoints the Agent (and
all Persons designated by the Agent) as its true and lawful attorney (and
agent-in-fact) and the Agent, or the Agent's agent, may, without notice to the
Pledgors, or any of them, in the name of the Pledgors, or any of them, or in the
name of the Agent after the occurrence of an Event of Default: (a) at such time
or times thereafter as the Agent or said agent, in its discretion may determine,
endorse the name of the Pledgors, or any of them, upon any checks, notes,
acceptance, money orders, certificates, drafts or other forms of payment of
security that come into the Agent's possession and apply the same to the
reduction of the Secured Obligations; (b) transfer the Collateral on the books
of applicable Pledgors with full power of substitution in the premises, and (c)
do all acts and things necessary, in the Agent's discretion, to fulfill the
obligations of Pledgors, and each of them, under this Agreement.
7.2. Irrevocable Proxy. Upon the delivery from the Agent to Pledgors,
or any of them, following the occurrence and during the continuation of any
Event of Default of notice affirmatively assuming voting rights with respect to
the Stock included in the Collateral, the Agent, or its nominee, without further
notice or demand of any kind to such Pledgors, or any of them, shall have the
sole and exclusive right to exercise all voting powers pertaining to any and all
of the Collateral (and to give written consents in lieu of voting thereon) and
may exercise such power in such manner as the Agent, in its sole discretion,
shall determine. THIS PROXY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE. The
exercise by the Agent of any of its rights and remedies under this Section shall
not be deemed a disposition of Collateral under Article 9 of the Uniform
Commercial Code nor an acceptance by the Agent of any of the Collateral in
satisfaction of any of the Secured Obligations.
7.3. Release and Termination. Each Pledgor acknowledges and agrees that
this Agreement shall continue in full force and effect unless and until all
Secured Obligations have been fully and irrevocably paid and performed and all
financing arrangements among Pledgors, on one hand, and the Agent, the LC Issuer
and the Lenders, on the other hand, have been terminated. After this Agreement
has terminated, the Agent, at Pledgors' expense, shall return all Collateral
then in its possession and control to the respective Pledgors.
8. MISCELLANEOUS.
8.1. Modification of Agreement; Sale of Interest. This Agreement may
not be modified, altered or amended, except by an agreement in writing signed by
the Pledgors and the Agent. No Pledgor may sell, assign or transfer this
Agreement or any portion thereof, including, without limitation, such Pledgor's
rights, title, interests, remedies, powers, and/or duties hereunder. Each
Pledgor hereby consents to the Agent's assignment and transfer of this Agreement
including, without limitation, the Agent's rights, title, interests, remedies,
powers, and/or duties hereunder upon the appointment of any successor to the
Agent. Each Pledgor also
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hereby consents to the assignment or transfer, at any time or times hereafter,
of the beneficial interests granted under this Agreement or of any portion
thereof, upon the participation, sale, assignment, transfer, or other
disposition by any Lender of its Commitment and/or the Loans made by it, or any
portion thereof, in accordance with the Loan Agreement.
8.2. Expenses. The Pledgors, jointly and severally, will upon demand
pay to the Agent the amount of all reasonable expenses, including, without
limitation, the reasonable fees and expenses of its counsel, in connection with
(a) the administration of this Agreement, (b) the custody, preservation or sale
of or the collection from, or other realization upon, any of the Collateral, (c)
the exercise, enforcement of any rights of the Agent hereunder, and/or (d) the
failure by the Pledgors, or any of them, to perform or observe any of the
provisions hereof.
8.3. Loan Document. This Agreement shall be construed as a Loan
Document and shall be subject to all of the benefits, terms and conditions of
the Loan Agreement with respect thereto.
8.4. Waiver by the Agent. Each and every right and remedy granted to
the Agent under this Agreement, or any other document delivered hereunder or in
connection herewith or allowed it by law or in equity, shall be cumulative and
may be exercised from time to time. The failure of the Agent, at any time or
times hereafter, to require strict performance of any provision of this
Agreement by the Pledgors, or any of them, shall not waive, affect or diminish
any right of the Agent thereafter to demand strict compliance and performance
therewith. Any suspension or waiver by the Agent or the Lenders of an Event of
Default by the Pledgors, or any of them, under this Agreement shall not suspend,
waive or affect any other Event of Default by the Pledgors, or any of them,
under this Agreement, whether the same is prior or subsequent thereto and
whether of the same or of a different type. None of the undertakings,
agreements, warranties, covenants and representations of the Pledgors, and each
of them, contained in this Agreement and no Event of Default hereunder shall be
deemed to have been suspended or waived by the Lenders or the Agent, unless such
suspension or waiver is by an instrument in writing signed by a duly authorized
representative of the Lenders and the Agent and directed to such Pledgor or
Pledgors specifying such suspension or waiver.
8.5. Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
8.6. Parties. This Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of each Pledgor and the Agent.
This provision, however, shall not be deemed to modify Section 8.1 hereof.
8.7. Conflict of Terms. Except as otherwise provided in this Agreement
by specific reference to the applicable provision of the Loan Agreement, if any
provision contained in this Agreement is in conflict with, or inconsistent with,
any provision in the Loan Agreement, the provision contained in the Loan
Agreement shall govern and control.
11
<PAGE>
8.8. Waivers by Pledgors. Except as otherwise provided for in this
Agreement, each Pledgor hereby waives (a) presentment, demand and protest and
notice of presentment, protest, default, non-payment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by the Agent on which such Pledgor may in any way be liable and
hereby ratifies and confirms whatever the Agent may do in this regard; (b) any
bond or security which might be required by any court prior to allowing the
Agent to exercise any of its remedies; and (c) the benefit of all valuation,
appraisement and exemption laws.
8.9. Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing, and shall be deemed to have been made
or give when (a) delivered to any Pledgor in the manner and at the address
provided for in Section 14.7 of the Loan Agreement and (b) when delivered to any
Lender, the LC Issuer or the Agent in the manner and at the address as provided
in Section 14.7 of the Loan Agreement. Each Pledgor hereby irrevocably appoints
the Parent as it agent for purposes of receiving any notice under this Agreement
or in connection with any other Loan Document.
8.10. Survival. All representations, warranties and covenants made
herein shall survive the execution and delivery of all of this Agreement and the
other Loan Documents. The terms and provisions of this Agreement shall continue
in full force and effect until all of the Secured Obligations have been paid in
full and the Lenders, the LC Issuer and the Agent have terminated the Loan
Agreement in writing, whichever last occurs; provided, further, that Pledgor's
obligations under Section 8.2 shall survive the repayment of the Secured
Obligations and the termination of this Agreement.
8.11. Time of the Essence. Time is of the essence in this Agreement.
8.12. Section Titles. The section titles contained in this Agreement
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.
8.13. Reinstatement. This Agreement shall continue to be effective, or
be reinstated, as the case may be, if at any time payment, or any part thereof,
of any of the Secured Obligations is rescinded or must otherwise be restored or
returned by the Agent, the LC Issuer or any Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Pledgors, or any
of them, or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or custodian, trustee or similar officer for the Pledgors, or
any of them, or any part of their respective property, or otherwise, all as
though such payments had not been made.
8.14. Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which when fully executed shall be an original and all of
said counterparts taken together, shall constitute one and the same agreement.
Any signature page to this Agreement may be witnessed by a telecopy or facsimile
of any original signature page and any signature page of any counterpart hereof
may be appended to any other counterpart hereof to form a completely executed
counterpart hereof.
12
<PAGE>
8.15. Master Pledge and Security Agreement. This Agreement is a master
agreement and it is the intent of the parties hereto that the identity of the
Pledgors hereunder may change from time to time as new Subsidiaries or
Affiliates of the Parent are required to join this Agreement as additional
Pledgors (the "Additional Pledgors"). Any Person may join this Agreement as an
Additional Pledgor by executing and delivering to the Agent, or any Person
designated by the Agent, a Joinder Agreement, in form and substance satisfactory
to Agent (a "Joinder Agreement"), with a copy of this Agreement attached
thereto. Upon execution and delivery of an Joinder Agreement by an Additional
Pledgor, such Additional Pledgor shall thereafter be regarded as a "Pledgor"
hereunder as if such Additional Pledgor had been an original party to this
Agreement and the Agent shall have received, by virtue of this Agreement and
such Joinder Agreement, a valid Lien on and security interest in any Collateral
described in such Joinder Agreement and in all other collateral relating
thereto. Neither the addition of any Additional Pledgor to this Pledgor
Agreement nor the release by the Agent of any Pledgor party to this Agreement
shall affect the obligations of any other Pledgor under this Agreement, the
Guaranty or any other Loan Document and each Pledgor waives any defenses it may
have arising out of the addition of any Additional Pledgor or the release of any
Pledgor or any Collateral hereunder.
8.16. GOVERNING LAW; JURISDICTION. THIS AGREEMENT 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 REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. EACH PLEDGOR HEREBY (A) SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN NEW YORK, NEW YORK FOR
THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT; AND (B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE REGARDING THE LAYING OF THE
VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
8.17. WAIVER OF JURY TRIAL. AFTER REVIEWING THIS PROVISION SPECIFICALLY
WITH ITS COUNSEL, EACH PLEDGOR HEREBY KNOWINGLY, INTELLIGENTLY AND INTENTIONALLY
WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING BASED ON OR
ARISING OUT OF, UNDER, IN CONNECTION WITH, OR RELATING TO THIS AGREEMENT, ANY OF
THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY, THE TRANSACTIONS CONTEMPLATED
HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN), OR ACTIONS OF SUCH PLEDGOR OR THE AGENT. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE LENDERS AND THE LC ISSUER MAKING THE LOANS AND OTHER
FINANCIAL ACCOMMODATIONS TO THE BORROWERS UNDER THE LOAN AGREEMENT.
13
<PAGE>
----------------
Initials
8.18. No Punitive Damages.
(a) The Agent and each of the Pledgors (on behalf of itself and its
Subsidiaries) hereby agree that no such Person shall have a remedy of punitive
or exemplary damages against any other party to a Loan Document and each such
Person hereby waives any right or claim to punitive or exemplary damages that
they may now have or may arise in the future in connection with any Dispute,
whether such Dispute is resolved through arbitration or judicially.
(b) The parties agree that they shall not have a remedy of punitive or
exemplary damages against any other party in any Dispute and hereby waive any
right or claim to punitive or exemplary damages they have now or which may arise
in the future in connection with any Dispute whether the Dispute is resolved by
arbitration or judicially.
(Signatures begin on following page.)
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<PAGE>
IN WITNESS WHEREOF, each Pledgor has caused its duly authorized
officers to set their respective hands and the seal of such Pledgor as of the
date first above written.
"PLEDGORS"
OPTICARE HEALTH SYSTEMS, INC.
By: /s/ Steven L. Ditman
------------------------------------
Name: Steven L. Ditman
Title: Chief Financial Officer
Attest: /s/ Dean J. Yimoyines
--------------------------------
Name: Dean J. Yimoyines
Title: Chief Executive Officer
[CORPORATE SEAL]
OPTICARE EYE HEALTH CENTERS, INC.
By: /s/ Steven L. Ditman
------------------------------------
Name: Steven L. Ditman
Title: Chief Financial Officer
Attest: /s/ Dean J. Yimoyines
--------------------------------
Name: Dean J. Yimoyines
Title: Chief Executive Officer
[CORPORATE SEAL]
PRIMEVISION HEALTH, INC.
By: /s/ David A. Durfee
------------------------------------
Name: David A. Durfee
Title: Acting President
Attest: /s/ Gregg Luchs
--------------------------------
Name: Gregg Luchs
Title: Chief Financial Officer
[CORPORATE SEAL]
(Signatures continued on following page.)
15
<PAGE>
(Signatures continued from preceding page.)
CONSOLIDATED EYE CARE, INC.
By: /s/ Allan L.M. Barker
-----------------------------------------
Name: Allan L.M. Barker
Title: President
Attest: /s/ D. Blair Harrold
-------------------------------------
Name: D. Blair Harrold
Title: Secretary
[CORPORATE SEAL]
PRIMEVISION EAST, INC.
By: /s/ David A. Durfee
-----------------------------------------
Name: David A. Durfee
Title: President
Attest: /s/ Gregg Luchs
-------------------------------------
Name: Gregg Luchs
Title: Chief Financial Officer
[CORPORATE SEAL]
PRIMEVISION CENTRAL, INC.
By: /s/ David A. Durfee
-----------------------------------------
Name: David A. Durfee
Title: President
Attest: /s/ Gregg Luchs
-------------------------------------
Name: Gregg Luchs
Title: Chief Financial Officer
[CORPORATE SEAL]
(Signatures continued on following page.)
16
<PAGE>
(Signatures continued from preceding page.)
PRIMEVISION WEST, INC.
By: /s/ David A. Durfee
-----------------------------------------
Name: David A. Durfee
Title: President
Attest: /s/ Gregg Luchs
-------------------------------------
Name: Gregg Luchs
Title: Chief Financial Officer
[CORPORATE SEAL]
PRIMEVISION OF NORTH CAROLINA, INC.
By: /s/ David A. Durfee
-----------------------------------------
Name: David A. Durfee
Title: President
Attest: /s/ Gregg Luchs
-------------------------------------
Name: Gregg Luchs
Title: Chief Financial Officer
[CORPORATE SEAL]
(Signatures continued on following page.)
17
<PAGE>
(Signatures continued from preceding page.)
ASSOCIATION OF EYE CARE CENTERS
TOTAL VISION HEALTH PLAN, INC.
By:
------------------------------------------
Name:
Title:
Attest:
--------------------------------------
Name:
Title:
[CORPORATE SEAL]
ACCOUNTABLE EYE CARE ASSOCIATES, INC.
By:
------------------------------------------
Name:
Title:
Attest:
--------------------------------------
Name:
Title:
[CORPORATE SEAL]
18
<PAGE>
ASSIGNMENT OF NOTES AND SECURITY AGREEMENTS
THIS ASSIGNMENT OF NOTES AND SECURITY AGREEMENTS (the "Assignment") is
dated as of August 13, 1999, by and between PRIMEVISION HEALTH, INC., a Delaware
corporation ("PVH"), and BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC.
("BACACF").
W I T N E S S E T H:
WHEREAS, PVH and BACACF are parties to that certain Amended and
Restated Loan and Security Agreement dated as of May 30, 1997, as amended (as so
amended, the "Original Loan Agreement"), pursuant to which BACACF made available
to PVH revolving credit loans and term loans (collectively, the "Loans"), the
aggregate outstanding principal balance of which Loans, as of the date hereof,
is $37,955,307.34; and
WHEREAS, PVH has entered into that certain Agreement and Plan of
Merger, dated as of April 12, 1999, with Opticare Health Systems, Inc., a
Delaware corporation f/k/a Saratoga Resources, Inc. (the "Parent"), Opticare
Shellco Merger Corporation, a Delaware corporation, PrimeVision Shellco Merger
Corporation, a Delaware corporation ("PVH Shellco"), and Opticare Eye Health
Centers, Inc., a Connecticut corporation ("Opticare"), pursuant to which, among
other things, PVH Shellco shall merge with and into PVH and PVH shall become a
wholly-owned subsidiary of Parent (the "Acquisition"); and
WHEREAS, PVH and/or certain of its subsidiaries are parties to certain
Administrative Services Agreements (collectively, the "Administrative Services
Agreements") with the physician practices listed on Schedule I attached hereto
(collectively, the "Practices"); and
WHEREAS, in conjunction with the Acquisition, PVH, its subsidiaries and
the Practices have agreed to terminate the Administrative Services Agreements,
and in connection therewith the applicable Practice will either enter into a
Transition Agreement and Services Agreement, or will repurchase its receivables,
inventory, equipment and other assets owned by PVH or its subsidiaries; and
WHEREAS, in connection with each such entry into a Transition Agreement
and Services Agreement (collectively, the "Conversion Agreements"), or with such
repurchase of assets, the applicable Practice has executed and delivered, or
will execute and deliver, to PVH the promissory notes (the "Notes") and the
security agreements (the "Security Agreements" and, together with the "Notes",
the "Assigned Agreements") described on Schedule I attached hereto; and
WHEREAS, in connection with the Acquisition, BACAF and PVH will enter
into that certain Amended and Restated Loan and Security Agreement dated as of
even date herewith (the "Restated Loan Agreement"), by and among the Parent,
PVH, Opticare, Consolidated Eye Care, Inc., a North Carolina corporation
("CEC"), the lenders party thereto (the "Lenders"), Bank
<PAGE>
Austria, AG, as the LC Issuer (the "LC Issuer"), and BACACF, as agent for the
Lenders and the LC Issuer, pursuant to which, among other things, the existing
indebtedness and other obligations owing by PVH to BACACF under the Original
Loan Agreement will be restructured; and
WHEREAS, in connection with the Acquisition and the restructuring of
the indebtedness and other obligations owing by PVH to BACACF under the Original
Loan Agreement, PVH desires to assign all of its rights and remedies under the
Notes and the Security Agreements to BACACF as satisfaction of a portion of the
indebtedness owing under the Original Loan Agreement in an amount equal to
$3,902,387.00; and
WHEREAS, BACACF is willing to agree to such assignment, subject to the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, the terms and
conditions herein, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, it is hereby agreed as follows:
1. DEFINITIONS. Capitalized terms contained herein and not otherwise
defined herein shall have the meanings given to such terms in the Restated Loan
Agreement.
2. ASSIGNMENT. PVH hereby assigns, transfers and sets over unto BACACF
as absolute owner and not as security, without recourse or warranty except as
provided herein, all of PVH's right, title and interest in and to the Notes and
the Security Agreements, and all of its rights and remedies thereunder,
including in each case, without limitation, the right to receive payments under
the Notes, the right to exercise any and all rights and remedies under any Note
or any Security Agreement upon the happening of any breach or default giving
rise to any such right or remedy (including rights to the payment of money,
rights of indemnity and setoff, and rights to defer payment or amounts or to
compel specific performance) in favor of PVH under the Assigned Agreements, and
the right to do any and all other things whatsoever which PVH is or may become
entitled to do under the Notes and Security Agreements.
3. SATISFACTION OF INDEBTEDNESS. In consideration of the assignment
contained herein, and subject to the terms and conditions of this Assignment,
BACACF agrees that, upon the effectiveness of the assignment contained herein,
the Obligations owing under the Original Loan Agreement shall be reduced by an
amount equal to Three Million Nine Hundred Two Thousand Three Hundred
Eighty-Seven Dollars ($3,902,387.00) (the "Reduction Amount").
4. RIGHT OF RECOURSE IN THE EVENT OF OFFSET. If and to the extent,
notwithstanding the foregoing, any Practice asserts any right of offset or any
defense to payment or performance under the Assigned Agreements to which such
Practice is a party, which right of offset or defense arises in whole or in part
out of the failure or alleged failure by PVH or any Affiliate of PVH to perform
any obligation owing to such Practice after the date hereof, whether under the
Conversion Agreements or otherwise, PVH shall pay to BACACF the amount of such
offset, or the amount of such Note subject to, or alleged to be subject to, such
defense. Any amount owing
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<PAGE>
hereunder shall be payable to BACACF on demand, shall constitute a part of the
Obligations and shall be secured by the Collateral. Upon payment of any amount
hereunder, BACACF shall, at the request of PVH, assign to PVH, without recourse
or warranty, any claim BACACF may have in respect of such offset or defense
against the Practice asserting such offset or defense. If in any proceeding to
collect on any of the Notes any Practice raises any defense that is adverse to
the interests of PVH, PVH shall be entitled, at its own expense, to intervene in
and participate in such proceeding to the extent reasonably necessary to protect
its interests.
5. ADDITIONAL CONSIDERATION.. (a) Any and all amounts recovered by
BACACF from the Practices in respect of the Assigned Agreements shall be applied
by BACACF as it shall deem appropriate; provided, however, that as additional
consideration to PVH for the assignment hereunder, BACACF agrees that to the
extent the amount recovered in respect of the Assigned Rights (as hereinafter
defined) exceeds the sum of (i) the aggregate costs and expenses incurred after
the date hereof by BACACF and its Affiliates in connection with the collection
of the Assigned Rights (including, without limitation, attorneys' fees and
expenses); plus (ii) interest on the uncollected amount of the Aggregate
Reduction Amount (as hereinafter defined), calculated from the date hereof until
the collection of the Aggregate Reduction Amount in full at the rate of eight
percent (8%), calculated on the basis of a 360-day year and actual days elapsed;
plus (iii) the Aggregate Reduction Amount; it will apply such excess to the
reduction of the Obligations outstanding under the Restated Loan Agreement. The
parties hereto hereby acknowledge and agree that such application shall be
deemed to be for all purposes a reduction of the purchase price paid for the
Assigned Rights.
(b) For purposes of this Section 5:
(i) "Aggregate Reduction Amount" shall mean the sum of (w) the
"Reduction Amount", as such term is defined in that certain Assignment
of Rights to Payments under Services Agreements dated as of the date
hereof (as amended, restated, supplemented or otherwise modified from
time to time, the "Assignment of Rights to Payments under Services
Agreements"), by and between PVH and BACACF, (x) the "Reduction
Amount", as such term is defined in that certain Irrevocable Power of
Attorney and Assignment of Claim Proceeds dated as of the date hereof
(as amended, restated, supplemented or otherwise modified from time to
time, the "Assignment of Claim Proceeds"), by and among BACACF, PVH,
PrimeVision East, Inc., a Delaware corporation, and PrimeVision West,
Inc., a Delaware corporation, (y) the "Reduction Amount", as such term
is defined in that certain Irrevocable Power of Attorney and Assignment
of Claim Proceeds (Asheville Eye) dated as of the date hereof (as
amended, restated, supplemented or otherwise modified from time to
time, the "Asheville Assignment of Claim Proceeds"), by and among
BACACF, PVH, and PrimeVision of North Carolina, Inc., a North Carolina
corporation, and (z) the Reduction Amount hereunder, and
(ii) "Assigned Rights" shall mean, collectively, (1) the
"Assigned Payments", as such term is defined in the Assignment of
Rights to Payments under Services
- 3 -
<PAGE>
Agreements, (2) the "Assigned Proceeds", as such term is defined in
the Assignment of Claim Proceeds, and (3) the Assigned Agreement
hereunder.
6. REPRESENTATIONS AND WARRANTIES. PVH represents and warrants to
BACACF as follows:
(a) PVH is a corporation duly organized, validly existing and
in good standing under the laws of the State of North Carolina and is
duly qualified as a foreign corporation in good standing in each other
state wherein the conduct of its business or the ownership of its
property requires such qualification;
(b) PVH has the corporate right, power and authority to
execute, deliver and perform, and has taken all necessary corporate and
other action to authorize the execution, delivery and performance of,
this Assignment and the agreements, documents and instruments executed
in connection herewith and to assign the Assigned Agreements as set
forth herein; this Assignment has been duly executed and delivered by
the duly authorized officers of PVH, and constitutes the legal, valid
and binding obligation of PVH, enforceable in accordance with its
terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar state or
federal debtor relief laws from time to time in effect which affect the
enforcement of creditors' rights in general and the availability of
equitable remedies;
(c) the execution, delivery and performance by PVH of this
Assignment in accordance with its terms, and the transactions
contemplated hereby, do not and will not, by the passage of time, the
giving of notice or otherwise, (1) require any Governmental Approval or
violate any Applicable Law, (2) conflict with, result in a breach of or
constitute a default under the articles of incorporation, bylaws of PVH
or any indenture, agreement or other instrument to which PVH is a party
or by which PVH or any of its properties may be bound or any
Governmental Approval relating to PVH, or (3) result in or require the
creation or imposition of any Lien upon or with respect to any of the
Assigned Agreements;
(d) the original of each Note has been delivered to BACACF,
duly endorsed by PVH;
(e) PVH's interest in each of the Assigned Agreements is free
and clear of any Liens or other encumbrances, and PVH has not assigned
all or any part of its right, title and interest in and to the Assigned
Agreements to any Person, other than to BACACF pursuant to this
Assignment;
(f) PVH has entered into no agreement with any of the
Practices to compromise or otherwise render the Assigned Agreement
unenforceable in whole or in part; and
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<PAGE>
(f) this Assignment is effective to transfer all of PVH's
right, title and interest in and to the Assigned Agreements to BACACF.
7. PAYMENTS TO PVH. If any amount shall be paid to PVH or any Affiliate
of PVH on account of any of the Notes or Security Agreements, such amount shall
be held by PVH or such Affiliate in trust for BACACF, segregated from other
funds of PVH or such Affiliate, and shall, forthwith upon receipt by PVH or such
Affiliate, be turned over to BACACF in the exact form received (duly indorsed to
BACACF, if required).
8. NO ASSUMPTION OF LIABILITY. This Assignment is limited to the
Assigned Agreement, the rights of PVH thereunder and the duties of PVH expressly
provided for therein. This Assignment shall not subject BACACF to, or transfer
or pass to BACACF, or in any way affect or modify, any liability of PVH or any
other Person to the makers of the Notes or the debtors under the Security
Agreements other than the liabilities, if any, expressly arising under the terms
of the Assigned Agreements.
9. INDEMNITY. PVH hereby indemnifies BACACF from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
(including, without limitation, reasonable fees and disbursements of counsel)
which may be imposed on, incurred by, or asserted against BACACF arising out of
any breach or violation by PVH of any of the representations, warranties or
covenants contained herein in any material respect.
10. EFFECTIVENESS. The assignment contained herein shall not become
effective unless and until all of the conditions precedent to the effectiveness
of the Restated Loan Agreement have been satisfied, and the Restated Loan
Agreement has become effective in accordance with its terms.
11. FURTHER ASSURANCES. In furtherance of the assignment effected
hereby, PVH will, from time to time, do and perform any other act or acts and
will execute, acknowledge, deliver and file, register, record and deposit (and
will refile, reregister, rerecord and redeposit whenever required) any and all
further instruments required by law or requested by BACACF in order to confirm,
evidence or further assure the assignment of the Assigned Agreements hereunder.
Without limiting the foregoing, PVH agrees that it shall (a) execute any
agreements, documents and instruments that may be necessary or desirable to
assign each financing statement which perfects the security interest granted
under any Security Agreement to BACACF, and (b) execute and deliver any notice
to the makers of the Notes requested by BACACF to notify such makers of the
assignment of the Notes to BACACF hereunder and irrevocably directing each such
maker to make all payments on such Notes directly to BACACF.
12. POWER OF ATTORNEY. PVH does hereby constitute BACACF its true and
lawful attorney, irrevocably, with full power of substitution, in BACACF's name
or otherwise, to ask, require, demand, receive, compound and give acquittance
for each and every payment due or to become due, or any such payment or
payments, under or arising out of any of the Assigned
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<PAGE>
Agreements to which PVH is or may become entitled, to enforce compliance with
each or any term or provision of any one (1) or more of the Assigned Agreements
by each other party thereto, to endorse each and every check or other instrument
or order in connection therewith, or any one (1) or more of them, and to file
any claim or claims, take any action or actions or institute any proceeding or
proceedings which BACACF may deem to be necessary or advisable. The foregoing
power of attorney is coupled with an interest and shall be irrevocable until all
amounts owing under the Notes and Security Agreements have been fully paid and
discharged.
13. COOPERATION. PVH, at its own expense, and without unreasonable
condition or delay, shall cooperate with BACACF, its Affiliates, and their
respective attorneys and agents, as any such Person may reasonably request, to
assist BACACF and its Affiliates in their efforts to enforce the Assigned
Agreements and to recover any and all amounts now or hereafter owing in respect
thereof. Without limiting the foregoing, PVH shall, and shall cause its
Subsidiaries to:
(i) make available to BACACF and its counsel, upon reasonable
notice, its employees, agents, officers, directors and counsel
for questioning, deposition, or testimony at any trial,
hearing or other proceeding in connection with the Assigned
Agreement; and
(ii) provide copies or, to the extent requested by BACACF,
originals of such corporate records, files or documents
pertaining to the Assigned Agreement or which are reasonably
necessary or appropriate to enforce the Assigned Agreements.
PVH also agrees that BACACF may, upon reasonable notice, call
at any place of business or property location of PVH or any of
its Subsidiaries during normal business hours, and, without
hindrance or delay, to inspect, audit, check and make extracts
from any such Person's books, records, journals, orders,
receipts and any correspondence and other data relating to
Assigned Agreements and to discuss any of the foregoing with
any of such Person's employees, officers and directors and
with its independent accountants and attorneys. PVH hereby
authorizes its accountants and its attorneys to discuss any
matter relating to the Assigned Agreements with BACACF and its
agents, attorneys, officers, directors or employees.
14. NO FURTHER ASSIGNMENTS. PVH agrees to make no further assignments
of the Assigned Agreements or any interest therein.
15. LOAN DOCUMENT. This Assignment constitutes a Loan Document, as such
term is defined in the Restated Loan Agreement, and all amounts owing hereunder
are included in the Obligations under the Restated Loan Agreement, are secured
by the Collateral, and are guaranteed pursuant to the Guaranty.
16. COUNTERPARTS. This Assignment may be executed in counterparts, each
of which shall be an original, and all such counterparts shall constitute but
one and the same instrument.
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<PAGE>
17. TIME IS OF THE ESSENCE. Time is of the essence in this Assignment.
18. GOVERNING LAW; CONSENT TO JURISDICTION. THIS ASSIGNMENT, 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 REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. PVH HEREBY (A) SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR THE
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT;
(B) AGREES THAT SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK SHALL APPLY TO THIS AGREEMENT; AND (C) IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTWITHSTANDING ANYTHING HEREIN TO
THE CONTRARY, NOTHING HEREIN SHALL LIMIT THE RIGHT OF BACACF TO BRING
PROCEEDINGS AGAINST PVH IN THE COURTS OF ANY OTHER JURISDICTION.
19. WAIVER OF JURY TRIAL. AFTER REVIEWING THIS PROVISION SPECIFICALLY
WITH ITS RESPECTIVE COUNSEL, PVH AND BACACF HEREBY KNOWINGLY, INTELLIGENTLY AND
INTENTIONALLY WAIVE ANY AND ALL RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LEGAL PROCEEDING BASED ON OR ARISING OUT OF, UNDER, IN CONNECTION
WITH, OR RELATING TO THIS ASSIGNMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN),
OR ACTIONS OF PVH OR BACACF. THIS PROVISION IS A MATERIAL INDUCEMENT FOR BACACF
TO ENTER INTO THIS AGREEMENT.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to set their hands and seals as of the date first above
written.
"PVH"
PRIMEVISION HEALTH, INC.
By: /s/ David A. Durfee
-----------------------------------------
Name: David A. Durfee
Title: Acting President
Attest: /s/ Gregg Luchs
-------------------------------------
Name: Gregg Luchs
Title: Chief Financial Officer
[CORPORATE SEAL]
"BACACF"
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC.
By: /s/ Scott Kray
-----------------------------------------
Scott Kray
Vice President
By: /s/ Robert M. Biringer
-----------------------------------------
Name: Robert M. Biringer
Title: Executive Vice President
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