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THIS SECURED PROMISSORY NOTE MAY NOT BE ASSIGNED WITHOUT THE PRIOR CONSENT OF
BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC., AS AGENT FOR THE LENDERS
UNDER THE BANK AUSTRIA LOAN AGREEMENT (AS DEFEINED HEREIN), AND IS SUBJECT TO
THE TERMS AND CONDITIONS OF THAT CERTAIN INTERCREDITOR, SUBORDINATION AND
PARTIAL SALES PROCEEDS ALLOCATION AGREEMENT DATED THE DATE HEREOF
SECURED PROMISSORY NOTE
$2,250,000 October 10, 2000
FOR VALUE RECEIVED, OptiCare Eye Health Centers, Inc., a Connecticut
corporation ("OptiCare"), Primevision Health, Inc., a Delaware corporation
("PVH"), and OptiCare Eye Health Networks, Inc, a North Carolina corporation
formerly known as Consolidated Eye Care, Inc., ("CEC" and, together with
OptiCare and PVH, the "Makers"), jointly and severally, promise to pay to the
order of Alexander Enterprise Holdings Corp., or its successors or assigns (the
"Payee"), in the lawful money of the United States of America the principal sum
of Two Million Two Hundred Fifty Thousand Dollars ($2,250,000) on the Maturity
Date (as hereinafter defined), with interest thereon from the date of this Note
to and including the date immediately preceding the Maturity Date calculated at
the Applicable Interest Rate (as hereinafter defined).
1. Joint and Several Liability. The obligations and liabilities of each
of the Makers shall be joint and several.
2. Interest. Interest shall accrue on the unpaid principal amount of
this Note at the Applicable Interest Rate from and including the date of this
Note to and including the day immediately preceding the Maturity Date and shall
be payable on each date on which any principal amount outstanding hereunder is
paid, whether at maturity, by acceleration or prepayment or otherwise. For the
purposes of this Section 2, the following terms shall have the meaning set forth
below:
"Applicable Interest Rate" shall mean an interest rate per annum equal
to the Eurodollar Rate plus two and one-quarter percent (2 1/4%).
"Business Day" means a day on which banks are not authorized or
required to be closed in New York, New York and on which dealings are carried on
in the London interbank market.
"Eurodollar Rate" shall mean for any Interest Period:
(a) the offered rate for deposits in United States Dollars
with a maturity comparable to such Interest Period appearing on the
display designated on page "EDS" of the Bloomberg Service (or any other
relevant page or screen of such Service, or on any
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successor or substitute page of such Service, or any successor to such
Service, providing rate quotations comparable to those currently
provided on such page of such Service, as determined by the Investor
from time to time, for purposes of providing quotations of interest
rate applicable to United States Dollar deposits in the London
interbank market) as of approximately 11:00 a.m. (London time) on the
date two Business Days prior to the commencement of such Interest
Period; and
(b) if such rate does not appear on said "EDS" page (or such
successor or substitute), the offered rate for deposits in United
States Dollars with a maturity comparable to such Interest Period
appearing on the display designated on page "LIBO" on the Reuter
Monitor Money Rates Service (or on any successor or substitute page for
such Service, or any successor to such Service, providing rate
quotations comparable to those currently provided on such page for such
Service, as determined by the Investor from time to time, for purposes
of providing quotations of interest rate applicable to United States
Dollar deposits in the London interbank market) as of approximately
11:00 a.m. (London time) on the date two Business Days prior to the
commencement of such Interest Period; and
(c) in the event that neither rate referred to in clauses (a)
or (b) is available at such time for any reason, the offered rate for
deposits in United States Dollars with a maturity comparable to such
Interest Period appearing on Page 3750 of the Telerate Service of
Bridge Information Services (or on any successor or substitute page of
such Service, or any successor to such Service, providing rate
quotations comparable to those currently provided on such page of such
Service, as determined by the Investor from time to time, for purposes
of providing quotations of interest rates applicable to United States
Dollar deposits in the London interbank market) as of approximately
11:00 a.m. (London time) on the date two Business Days prior to the
commencement of such Interest Period;
provided, however, that if (1) the relevant rates do not appear on page "EDS" on
the Bloomberg Service, (2) the relevant rates do not appear on page "LIBO" on
the Router monitor money Rate Service or (3) the relevant rates do not appear on
Telerate Page 3750, then the Eurodollar Rate shall be deemed to mean for such
Interest Period a fluctuating rate of interest per annum, calculated daily,
equal to the prime rate of interest as published in The Wall Street Journal
(Eastern edition) (and if more than one such rate is reported, the highest rate)
less 25 basis points (.25%).
"Interest Period" shall mean the period of six (6) months commencing on
the date hereof and each successive period of six (6) months, provided, however,
that:
(i) no Interest Period shall end after the Maturity Date;
(ii) each Interest Period that begins on the last Business Day
of a calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall end on the
last Business Day of the appropriate subsequent calendar month, provided that
such Business Day does not occur after the Maturity Date; and
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(iii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next succeeding Business Day,
provided that, if such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the last day of such
Interest Period shall occur on the immediately preceding Business Day.
Interest on the principal sum of this Note shall be calculated on the
basis of the actual number of days elapsed in a Three Hundred sixty-five (365)
day year.
3. Maturity Date; Mandatory Prepayment.
a. The term "Maturity Date" as used in this Note shall mean
June 1, 2003.
b. Upon the completion of any one or more Qualified Sales, as
such term is defined in that certain Amended and Restated Loan and
Security Agreement dated as of August 13, 1999, as amended, by and
among the Makers, OptiCare Health Systems, Inc., the lenders from time
to time party thereto (the "Lenders"), Bank Austria, AG, in its
capacity as LC Issuer, and Bank Austria Creditanstalt Corporate
Finance, Inc., as agent for the Lenders (the "Agent") (such Amended and
Restated Loan and Security Agreement, as amended by a certain First
Amendment dated June 30, 2000 and a certain Second Amendment dated the
date hereof and as it may be further amended from time to time, being
hereinafter referred to as the "Bank Austria Loan Agreement"), and
following the mandatory prepayment to the Lenders of the sum of
$5,000,000 pursuant to Section 2.13(b) of the Bank Austria Loan
Agreement, the Makers shall mandatorily prepay the lesser of (i) the
unpaid principal amount of this Note, together with all accrued and
unpaid interest and any other amounts due and owing to the Payee
hereunder or under the Security Agreement (as hereinafter defined) and
(ii) in the event that the Net Cash Proceeds (as such term is defined
in the Bank Austria Loan Agreement) are not sufficient to prepay the
entire unpaid principal amount of this Note, such portion of the unpaid
principal amount of this Note as is equal to the balance of such Net
Cash Proceeds, together with interest accrued and unpaid on such
principal amount prepaid.
4. Security. The obligations of the Makers under this Note are secured
pursuant to the terms of the Security Agreement (the "Security Agreement") dated
the date hereof, made by the Debtors party thereto in favor of the Payee. If an
Event of Default (as hereinafter defined) shall have occurred and the principal
amount of this Note shall have become immediately due and payable, the Payee
shall be entitled to exercise, in addition to any right, power or remedy
permitted by law or equity, all his remedies under such Security Agreement,
subject, however, to the terms and conditions of the Intercreditor,
Subordination and Partial Sales Proceeds Allocation Agreement dated the date
hereof made by the Payee in favor of the Agent and the Lenders (the
"Intercreditor Agreement").
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5. Defaults and Remedies.
a. The following events shall be "Events of Default"
hereunder:
(i) the Makers default in the payment when due
(whether at maturity, by acceleration or mandatory prepayment
or otherwise) of any principal amount of this Note or interest
on the principal amount of this Note;
(ii) a court of competent jurisdiction enters a
decree or order in an voluntary or involuntary case under any
present or future federal or state bankruptcy, insolvency or
similar law or appoints a conservator or receiver or
liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings,
or for the winding-up or liquidation of the affairs of any
Maker, which decree or order shall have remained in force
undischarged or unstayed for a period of 60 days;
(iii) any Maker consents to the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to it or of or relating to
all or substantially all of its property;
(iv) any Maker admits in writing its inability to pay
its debts generally as they become due, files a petition to
take advantage of any applicable insolvency or reorganization
statute, makes an assignment for the benefit of its creditors,
or voluntarily suspends payment of its obligations; or
(v) an Event of Default under, and as defined in, the
Bank Austria Loan Agreement, shall have occurred.
b. If an Event of Default, other than the Event of Default
specified in Sections 5(a)(ii), (iii) or (iv), occurs and is
continuing, the Payee may, at its option and in addition to any right,
power or remedy permitted by law or equity or herein granted, by notice
to the Makers declare the principal amount of this Note to be due and
payable immediately, and upon any such declaration the same shall
become and shall be immediately due and payable; provided, however,
that the Payee agrees that, if an Event of Default specified in Section
5(a)(v) occurs, the Payee shall not declare the principal amount of
this Note to be due and payable immediately unless and until the unpaid
principal amount outstanding under the Bank Austria Loan Agreement has
been declared or has otherwise become immediately due and payable. If
an Event of Default specified in Sections 5(a)(ii), (iii) or (iv)
hereof occurs, the principal amount of this Note shall automatically
become and be immediately due and payable, without any declaration or
other act on the part of the Payee.
6. Waivers. The Makers hereby waive presentment, demand for payment,
notice of dishonor and any and all other notices or demands in connection with
the delivery, acceptance, performance, default or enforcement of this Note and
hereby consent to any waivers or modifications that may be granted or consented
to by the Payee of this Note. No waiver by the Payee of any breach of any
covenant of the Makers herein contained or any term or condition
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hereof shall be construed as a waiver of any subsequent breach of the same or of
any other covenant, term or condition herein.
7. Default Interest. If any amount required to be paid under this Note
shall not be paid when due, the Makers shall pay default interest on the unpaid
balance of such amount at a rate per annum equal to the Applicable Interest Rate
plus two percent (2%).
8. Tax Indemnity.
a. If, as a result of any change in, or amendment to, the laws
or treaties (or regulations or rulings promulgated thereunder) of the
United States of America (or any political subdivision or taxing
authority thereof or therein) affecting taxation, or any change in
official position regarding the application or interpretation of such
laws, treaties, regulations or rulings (including a holding, judgment
or order by court of competent jurisdiction), which change amendment
application or interpretation becomes effective after the date hereof,
the Makers are required to deduct or withhold any tax from any sum
payable by the Makers hereunder, then, from and after such date, all
sums payable by the Makers hereunder, whether principal, interest,
expenses or otherwise, shall be paid in full, without any deduction or
withholding whatsoever and, each Maker hereby jointly and severally
agrees to pay to the Payee such additional amount as will result in the
receipt by the Payee of the full amount stated herein (including after
deducting any required amounts from such additional payments). In such
event, the Makers shall pay directly to the appropriate taxing
authority any tax to be paid by them pursuant to this Section 8. Each
Maker jointly and severally indemnifies and agrees to hold the Payee
harmless from any liability or fines with respect to the delay or
failure of any Maker to report such transaction or to pay such taxes or
other withholding, duties, fees or charges or to make any filing with
any taxing authority or any other government agency.
b. If any Maker shall pay any tax or charge as provided herein
or shall make any deduction or withholding from any amount paid
hereunder, within 10 days of payment of such amount, such Maker shall
forward to the Payee official receipts or other evidence acceptable to
the Payee establishing payment of such amount. Notwithstanding the
obligation of the Makers under this Section 8 to pay taxes as required
by this Section 8, if the Payee is required to pay any taxes or other
charges, the Payee may pay any such taxes and charges (if required
under law or otherwise) and shall be entitled to reimbursement if so
entitled hereunder upon forwarding to the Makers official receipts or
other evidence establishing payment of such amounts.
9. Enforcement. In the event that any Payee of this Note shall
institute any action for the enforcement or the collection of this Note, and
such action shall be successful, there shall be immediately due and payable, in
addition to the unpaid balance of this Note, all late charges, and all costs and
expenses of such action, including reasonable attorneys' fees. The Makers waive
the right to interpose any setoff, counterclaim or defense of any nature or
description whatsoever.
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10. Replacement of Note. Upon receipt by the Makers of evidence
satisfactory to them of the loss, theft, destruction or mutilation of this Note,
and (in case of loss, theft or destruction) of an indemnity reasonably
satisfactory to it, and upon reimbursement to the Makers of all reasonable
expenses incidental thereto, and upon surrender and cancellation of this Note if
mutilated, the Makers will make and delivery a new Note of like tenor in lieu of
this Note.
11. Amendments. This Note may not be changed, modified, amended, or
terminated except by a writing duly executed by the Makers and the Payee.
12. Notices. Any notice or other communication required or which may be
given hereunder shall be in writing and either delivered personally to the
addressee, faxed to the addressee or mailed, certified mail, postage prepaid,
and shall be deemed given when so delivered personally, faxed with confirmed
answer back, or if mailed, three (3) days after the date of mailing, as follows:
If to the Makers, to:
c/o Opticare Health Systems, Inc.
87 Grandview Avenue
Waterbury, Connecticut 06708
Attention: Chief Financial Officer
Facsimile: (203) 596-2227
If to the Payee, to:
c/o Alpha Private Equity Group
499 Park Avenue
New York, New York 10022
Attention: Jared Bluestein
Facsimile: (212) 421-0169
With a copy to:
Coudert Brothers
1114 Avenue of the Americas
New York, New York 10036
Attention: David A. Boillot, Esq.
Fax: (212) 626-4120
13. Governing Law. This Note and all transactions contemplated
hereunder or evidenced hereby shall be governed by, construed under, and
enforced in accordance with the laws of the State of New York
14. Assignment. None of the Makers may assign its rights or obligations
under this Note without the prior written consent of the Payee.
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15. Successors. This Note shall be binding upon the successors and
permitted assignees of the parties hereto.
16. Intercreditor Agreement. This Note and the rights of the Payee
herein are subject, in all respects, to the terms and provisions of the
Intercreditor Agreement in the event of any conflict between the terms of this
Note and the Intercreditor Agreement, the Intercreditor Agreement shall govern.
IN WITNESS WHEREOF, the Makers have caused this Note to be executed by
their duly authorized officers as of the day and year first above written.
OPTICARE EYE HEALTH CENTERS, INC.
By: /s/ Steven L. Ditman
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Name: Steven L. Ditman
Title: Chief Financial Officer
PRIMEVISION HEALTH, INC.
By: /s/ Steven L. Ditman
----------------------------------------
Name: Steven L. Ditman
Title: Chief Financial Officer
OPTICARE EYE HEALTH NETWORK, INC.
By: /s/ Steven L. Ditman
----------------------------------------
Name: Steven L. Ditman
Title: Chief Financial Officer
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