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
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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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.
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"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 ▇▇▇ 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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"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 ▇▇▇ 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 ▇▇▇▇, ▇▇▇▇ 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.
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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.
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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.
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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/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Financial Officer
[CORPORATE SEAL]
PRIMEVISION CENTRAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Financial Officer
[CORPORATE SEAL]
PRIMEVISION WEST, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Financial Officer
[CORPORATE SEAL]
(Signatures continued on following page.)
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(Signatures continued from preceding page.)
PRIMEVISION OF NORTH CAROLINA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Attest: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
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)
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(Signatures continued from previous page)
OPTOMETRIC EYE CARE CENTER, P.A.
By: /s/ D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: D. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
Attest: /s/ ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
Title: Secretary
[CORPORATE SEAL]
(Signatures continued on next page)
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(Signatures continued from preceding page.)
ACCOUNTABLE EYE CARE ASSOCIATES, INC.
By:
--------------------------------------
Name:
Title:
Attest:
----------------------------------
Name:
Title:
[CORPORATE SEAL]
