WAIVER AND FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED REVOLVING CREDIT,
TERM LOAN AND SECURITY AGREEMENT
THIS WAIVER AND FIRST AMENDMENT TO SECOND AMENDED AND RESTATED
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT (this "AMENDMENT") is made
and entered into as of this 16 day of August, 2004, by and between each of
OPTICARE HEALTH SYSTEMS, INC., a Delaware corporation, OPTICARE EYE HEALTH
CENTERS, INC., a Connecticut corporation, PRIMEVISION HEALTH, INC., a Delaware
corporation, and OPTICARE ACQUISITION CORPORATION, a New York corporation
(collectively, the "BORROWER"), and CAPITALSOURCE FINANCE LLC, a Delaware
limited liability company (the "LENDER").
RECITALS
A. Pursuant to that certain Second Amended and Restated Revolving
Credit, Term Loan and Security Agreement dated as of March 29, 2004, by and
between Opticare Health Systems, Inc., Opticare Eye Health Centers, Inc. and
Primevision Health, Inc., each as borrower, and Lender (as amended to date and
as amended, supplemented, modified and restated from time to time, collectively,
the "LOAN AGREEMENT"), the Lender agreed to make available to such borrowers the
Revolving Facility.
B. Borrower has informed Lender that it has failed to maintain the
minimum Fixed Charge Ratio pursuant to Section 1 of Annex I to the Loan
Agreement for the Test Periods ending on March 31, 2004, April 30, 2004, May 31,
2004 and June 30, 2004, and has requested that Lender waive any Defaults or
Events of Default caused by such failure.
C. Lender has agreed to waive certain Defaults and Events of Default,
and to enter into certain amendments to the Loan Agreement upon the terms and
conditions set forth herein and in the Loan Agreement provided (among other
things) that the parties hereto execute and deliver this Amendment and otherwise
comply with the agreements set forth herein and in the Loan Agreement.
D. In furtherance of the foregoing, the parties hereto desire to enter
into this Amendment to amend certain aspects of the Loan Agreement as more
particularly provided herein.
NOW, THEREFORE, in consideration of the foregoing, the terms and
conditions, premises and other mutual covenants set forth in this Amendment, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Lender and Borrower hereby agree as follows:
SECTION 1. DEFINITIONS. Unless otherwise defined herein, all
capitalized terms used and not defined herein shall have the meanings assigned
to such terms in the Loan Agreement.
SECTION 2. AMENDMENTS TO LOAN AGREEMENT. The sections, definitions,
schedules, annexes and exhibits of and to the Loan Agreement referenced and/or
set forth on Annex A to this Amendment are hereby amended and restated in full
to read as set forth on such Annex A, which annex is incorporated herein and
made a part hereof and of the Loan Agreement.
SECTION 3. WAIVER. Lender hereby waives any Default or Event of Default
that has occurred with respect to Borrower's failure to maintain the minimum
Fixed Charge Ratio pursuant to Section 1 of Annex I to the Loan Agreement for
the Test Periods ending on March 31, 2004, April 30, 2004, May 31, 2004 and June
30, 2004.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
(a) Notwithstanding any other provision of this Amendment, each
Borrower hereby (a) confirms and makes all of the representations and warranties
set forth in the Loan Agreement and other Loan Documents with respect to such
Borrower and this Amendment and confirms that they are true and correct, (b)
represents and warrants that they are Affiliates of each other, and (c)
specifically represents and warrants to Lender that it has good and marketable
title to all of its respective Collateral, free and clear of any Lien or
security interest in favor of any other Person (other than Permitted Liens).
(b) Each Borrower hereby represents and warrants as of the date of this
Amendment and as of the Effective Date as follows: (i) it is duly incorporated
or organized, validly existing and in good standing under the laws of its
jurisdiction of organization; (ii) the execution, delivery and performance by it
of this Amendment and the Loan Documents, as applicable, are within its powers,
have been duly authorized, and do not contravene (A) its articles of
organization, operating agreement, or other organizational documents, or (B) any
applicable law; (iii) no consent, license, permit, approval or authorization of,
or registration, filing or declaration with any Governmental Authority or other
Person, is required in connection with the execution, delivery, performance,
validity or enforceability of this Amendment or the Loan Documents, as
applicable, by or against it; (iv) this Amendment and the Loan Documents, as
applicable, have been duly executed and delivered by it; (v) this Amendment and
the Loan Documents, as applicable, constitute its legal, valid and binding
obligations enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally or by general principles of equity; and (vi) it is
not in default under the Loan Agreement and no Default or Event of Default
exists, has occurred or is continuing.
SECTION 5. EXPENSES. Borrower shall pay all costs and expenses incurred
by Lender or any of its Affiliates, including, without limitation, documentation
and diligence fees and expenses, all search, audit, appraisal, recording,
professional and filing fees and expenses and all other out-of-pocket charges
and expenses (including, without limitation, UCC and judgment and tax lien
searches and UCC filings and fees for post-Closing UCC and judgment and tax lien
searches) in connection with entering into, negotiating, preparing, reviewing
and executing this Amendment and the Loan Documents contemplated hereby and all
related agreements, documents and instruments, including, without limitation,
the UCC-1 Financing Statements and searches required hereunder and under the
Loan Agreement, and all of the same may be charged to Borrower's account and
shall be part of the Obligations. In addition and without limiting the
foregoing, Borrower shall pay all taxes (other than taxes based upon or measured
by Lender's income or revenues or any personal property tax), if any, in
connection with the issuance of the amended note and the recording of the
security documents and financing statements therefor and pursuant to the
Security Documents contemplated hereby.
SECTION 6. REFERENCE TO THE EFFECT ON THE LOAN AGREEMENT. Upon the
effectiveness of this Amendment, (i) each reference in the Loan Agreement to
"this Agreement," "hereunder," "hereof," "herein" or words of similar import
shall mean and be a reference to the Loan Agreement as amended by this
Amendment, and (ii) each reference in any other Loan Document to the "Loan
Agreement" shall mean and be a reference to the Loan Agreement as amended by
this Amendment. Each reference herein to the Loan Agreement shall be deemed to
mean the Loan Agreement as amended by this Amendment. Except as specifically
amended hereby, the Loan Agreement and all other Loan Documents shall remain in
full force and effect and the terms thereof are expressly incorporated herein
and are ratified and confirmed in all respects. This Amendment is not intended
to be or to create, nor shall it be construed as or constitute, a novation or an
accord and satisfaction but shall constitute an amendment of the Loan Agreement.
The parties hereto agree to be bound by the terms and conditions of the Loan
Agreement as
amended by this Amendment as though such terms and conditions were set forth
herein in full. The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided in this Amendment, operate as a waiver
of any right, power or remedy of Lender, nor constitute a waiver of any
provision of the Loan Agreement or any other Loan Document or any other
documents, instruments and agreements executed or delivered in connection
therewith or of any Default or Event of Default under any of the foregoing
whether arising before or after the Effective Date or as a result of performance
hereunder.
SECTION 7. GOVERNING LAW AND JURY TRIAL. THIS AMENDMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE CHOICE OF LAW PROVISIONS SET
FORTH IN THE LOAN AGREEMENT AND SHALL BE SUBJECT TO THE WAIVER OF JURY TRIAL AND
NOTICE PROVISIONS OF THE LOAN AGREEMENT.
SECTION 8. HEADINGS AND COUNTERPARTS. The captions in this Amendment
are intended for convenience and reference only and do not constitute and shall
not be interpreted as part of this Amendment and shall not affect the meaning or
interpretation of this Amendment. This Amendment may be executed in one or more
counterparts, all of which taken together shall constitute but one and the same
instrument. This Amendment may be executed by facsimile transmission, which
facsimile signatures shall be considered original executed counterparts for all
purposes, and each party to this Amendment agrees that it will be bound by its
own facsimile signature and that it accepts the facsimile signature of each
other party to this Amendment.
SECTION 9. AMENDMENTS. This Amendment may not be changed, modified,
amended, restated, waived, supplemented, discharged, canceled or terminated
orally or by any course of dealing or in any other manner other than by the
written agreement of Lender and both Borrowers. This Amendment shall be
considered part of the Loan Agreement for all purposes under the Loan Agreement.
SECTION 10. ENTIRE AGREEMENT. This Amendment, the Loan Agreement and
the other Loan Documents constitute the entire agreement between the parties
with respect to the subject matter hereof and thereof and supersedes all prior
agreements and understandings, if any, relating to the subject matter hereof and
thereof and may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements between the parties. There are no unwritten oral
agreements between the parties.
SECTION 11. MISCELLANEOUS. Whenever the context and construction so
require, all words used in the singular number herein shall be deemed to have
been used in the plural, and vice versa, and the masculine gender shall include
the feminine and neuter and the neuter shall include the masculine and feminine.
This Amendment shall inure to the benefit of Lender, all future holders of any
note, any of the Obligations or any of the Collateral and all Transferees, and
each of their respective successors and permitted assigns. No Borrower may
assign, delegate or transfer this Amendment or any of its rights or obligations
under this Amendment without the prior written consent of Lender. No rights are
intended to be created under this Amendment for the benefit of any third party
donee, creditor or incidental beneficiary of Borrower or any Guarantor. Nothing
contained in this Amendment shall be construed as a delegation to Lender of any
Borrower's or any Guarantor's duty of performance, including, without
limitation, any duties under any account or contract in which Lender has a
security interest or Lien. This Amendment shall be binding upon Borrowers and
their respective successors and assigns.
SECTION 12. EFFECTIVE DATE. Notwithstanding the date of execution or
delivery of this Amendment or any other date set forth herein, this Amendment
shall be effective on the date (the "EFFECTIVE DATE") upon which the following
conditions precedent are satisfied:
(a) execution and delivery to Lender of this Amendment by each
Borrower;
(b) receipt by Lender of all fees, charges and expenses payable to
Lender on or prior to the Effective Date, including, without limitation, a
$25,000 amendment fee (which fee shall include all legal fees referred to in
Section 5 above); and
(c) receipt by Lender of a guaranty agreement in form and substance
acceptable to Lender executed by Palisade Concentrated Equity Partnership, L.P.
[SIGNATURES APPEAR ON NEXT PAGE]
IN WITNESS WHEREOF, the parties have caused this Waiver and
First Amendment to Second Amended and Restated Revolving Credit, Term Loan and
Security Agreement to be executed by their respective officers thereunto duly
authorized as of the date first written above.
LENDER: CAPITALSOURCE FINANCE LLC,
a Delaware limited liability company
By:/s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxx
Title: COO
BORROWERS:
OPTICARE HEALTH SYSTEMS, INC.,
a Delaware corporation
By:/s/ Xxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxxx
Its: CEO
PRIMEVISION HEALTH, INC.,
a Delaware corporation
By:/s/ Xxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxxx
Its: President
OPTICARE EYE HEALTH CENTERS, INC.,
a Connecticut corporation
By:/s/ Xxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxxx
Its: CEO
OPTICARE ACQUISTION CORP.
By:/s/ Xxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxxx
Its: President
ANNEX A
TO
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN
AND SECURITY AGREEMENT
Effective as of the Effective Date, the Loan Agreement is hereby
amended as follows:
1. AMENDMENT TO SECTION 2.1(C) OF THE LOAN AGREEMENT. Subsection (c) of
Section 2.1 of the Loan Agreement is hereby amended and restated in its entirety
as follows:
"Borrower shall be permitted to borrow on August 17, 2004, in
addition to the Availability (the "Overadvance") in a single draw not
to exceed $2,000,000 (the "Maximum Overadvance Amounts"). The
Overadvance shall be part of the Revolving Facility, evidenced by the
Revolving Note and, when aggregated with all other Advances, be subject
at all times to the Facility Cap. The Overadvance shall be repaid in
eleven monthly installments of $100,000 commencing on October 1, 2004,
and the aggregate balance of the Overadvance shall be due and payable
in full in cash on August 31, 2005, and if at any time the aggregate
outstanding balance of the Overadvance exceeds the Maximum Osveradvance
Amount, the Borrower shall immediately repay such excess. No
Overadvance shall be made at any time that a Default or Event of
Default shall have occurred and be continuing past any cure period. Any
mandatory prepayment of the Overadvance pursuant to Section 2.10 hereof
shall permanently reduce the Overadvance."
2. AMENDMENT TO SECTION 2.3 OF THE LOAN AGREEMENT. Section 2.3 of the
Loan Agreement is hereby amended and restated in its entirety as follows:
"Interest on outstanding Advances under the Revolving Note
shall be payable monthly in arrears on the first day of each calendar
month at an annual rate of Prime Rate plus 1.5%, provided, however,
that, notwithstanding, any provision of any Loan Document, (i) the
interest on all outstanding Overadvances under the Revolving Note shall
be payable monthly in arrears on the first day of each calendar month
at an annual rate of Prime Rate plus 5.5%, (ii) the interest on all
outstanding Advances (including all Overadvances) under the Revolving
Note shall be not less than 6.0%, and (iii) in each case shall be
calculated on the basis of a 360-day year and for the actual number of
calendar days elapsed in each interest calculation period. Interest
accrued on each Advance under the Revolving Note shall be due and
payable on the first day of each calendar month, in accordance with the
procedures provided for in Section 2.5 and Section 2.9, commencing
February 1, 2002, and continuing until the later of the expiration of
the Term and the full performance and irrevocable payment in full in
cash of the Obligations and termination of this Agreement."
3. AMENDMENT TO SECTION 3.4 OF THE LOAN AGREEMENT. Section 3.4(a) of
the Loan Agreement is hereby amended and restated in its entirety as follows:
(a) Revolver Early Termination Fee. If (i) Borrower terminates
the Revolving Facility under Section 11.1 hereof, (ii) Borrower is
required to make payment in full of the
Revolving Facility and/or Obligations relating to the Revolving
Facility upon the occurrence of an Event of Default, (iii) a voluntary
or involuntary Change of Control or payment pursuant to Section 2.11
occurs, (iv) any other voluntary or involuntary prepayment of the
Revolving Facility and/or Obligations relating to the Revolving
Facility by Borrower or any other Person occurs (other than reductions
to zero of the outstanding balance of the Revolving Facility resulting
from the ordinary course operation of the provisions of Section 2.5),
whether by virtue of Lender's exercising its right of set-off or
otherwise, (v) Lender accelerates the Revolving Note or makes any
demand on the Revolving Note, or (vi) any payment or reduction of the
outstanding balance of the Revolving Note and/or the Revolving
Facility is made during a bankruptcy, reorganization or other
proceeding or is made pursuant to any plan of reorganization or
liquidation or any Debtor Relief Law, (each, a "REVOLVER
TERMINATION"), then, at the effective date of any such termination,
Borrower shall pay Lender (in addition to the then outstanding
principal, accrued interest and other Obligations relating to the
Revolving Facility pursuant to the terms of this Agreement and any
other Loan Document), as yield maintenance for the loss of bargain and
not as a penalty, an amount equal to (x) if the revolver termination
occurs prior to December 31, 2005, 4% of the Facility Cap, or (y) if
the revolver termination occurs on or after December 31, 2005, but
prior to expiration of the Revolving Facility Term, 3% of the Facility
Cap; provided, however, that in the event the revolver termination
arises pursuant to a voluntary prepayment of the Revolving Facility
and Obligations relating to the Revolving Facility by Borrower
pursuant to a refinancing by a third party commercial financial
institution whose primary business is providing senior secured
financing the yield maintenance for the loss of bargain shall be equal
to an amount equal to (x) if the revolver termination occurs prior to
December 31, 2005, the greater of (1) 4% of the Facility Cap and (2)
the Yield Maintenance Amount, and (y) if the revolver termination
occurs prior to expiration of the Revolving Facility Term, the greater
of (1) 3% of the Facility Cap and (2) the Yield Maintenance Amount.
4. AMENDMENT TO ANNEX I OF THE LOAN AGREEMENT.
(a) Section 1 of Annex I to the Loan Agreement is hereby amended and
restated in its entirety as follows.
"Commencing on the last calendar day of the Test Period ending
March 31, 2005, and at the end of any calendar month during which any
of the Obligations are outstanding thereafter, the Fixed Charge Ratio
shall not be less than 1.0 to 1 for the most recent Test Period then
ended."
(b) Section 2 of Annex I to the Loan Agreement is hereby amended and
restated in its entirety as follows:
"Until full performance and satisfaction, and
indefeasible payment in full in cash, of all the Obligations, Borrower,
individually and collectively on a consolidated and consolidating
basis, will maintain a minimum Tangible Net Worth at all times (a) from
the Closing Date through November 13, 2003, equal to (-$26,965,000)
which is Borrower's Xxxxxxxx Xxx Xxxxx xx xx Xxxxxxxxx 00, 0000, (x)
from November 14, 2003 through March 31, 2004, equal to (-$10,000,000),
(c) from April 1, 2004 through August 15, 2004 equal to (-$2,000,000),
and (d) from August 16, 2004 through the end of the Term, equal to
(-$3,000,000); provided however, that if Borrower's minimum Tangible
Net Worth at any time declines below the levels set forth in this
covenant due to asset sales, then such decline shall not constitute a
default hereunder."
(c) Annex I is hereby amended by adding a new Section 3 to read in full
as follows:
"3) DEBT SERVICE COVERAGE RATIO (EBITDA TO DEBT SERVICE)
For each DSCR Test Period ending on the last day of each
calendar month set forth below, the Debt Service Coverage Ratio shall
not be less than ratio set forth across from such month:
Month DSCR
----- ----
October 2004 0.7: 1.0
November 2004 0.8: 1.0
December 2004 0.8: 1.0
January 2005 0.9: 1.0
February 2005 1.0: 1.0
(d) Annex I is hereby amended by adding the following definition
thereto in proper alphabetical order to read in full as follows:
"Debt Service Coverage Ratio" shall mean, at any date of
determination, for Borrower individually and collectively on a
consolidated and consolidating basis, the ratio of (a) EBITDA for the
DSCR Test Period most recently ended on or before such date, to (b)
the sum of (i) scheduled or other required payments of principal on
the Revolving Loan (excluding scheduled or other required payments of
principal on the Overadvance) and Term Loan, and (ii) Interest Expense
(with respect to the Revolving Loan and Term Loan for such period) for
the DSCR Test Period most recently ended on or before such date, in
each case taken as one accounting period."
"DSCR Test Period" shall mean the three (3) most recent
calendar months then ended (taken as one accounting period); provided,
however, that (i) for the calendar month ended October 31, 2004, the
DSCR Test Period shall be such calendar month; and (ii) for the
calendar month ended November 30, 2004, the DSCR Test Period shall be
the two preceding calendar months then ended (taken as one accounting
period).
(e) Annex I is hereby amended by amending and restating the following
definitions to read as follows:
"Fixed Charges" shall mean, the sum of the following: (a)
Total Debt Service, (b) Capital Expenditures, (c) income taxes paid in
cash or accrued, and (d) dividends and/or Distributions paid in cash.
"Total Debt Service" shall mean the sum of (i) scheduled or
other required payments of principal on Indebtedness (excluding
scheduled or other required payments of principal on the Overadvance),
and (ii) Interest Expense, in each case for such period.
5. AMENDMENT TO APPENDIX A OF THE LOAN AGREEMENT;.
(a) Appendix A is hereby amended by adding the following definition
thereto in proper alphabetical order to read in full as follows:
"First Amendment" shall mean that certain Waiver and First
Amendment to Second Amended and Restated Revolving Credit, Term Loan
and Security Agreement, dated as of August 16, 2004, by and between
the Borrowers and Lender.
(b) Appendix A is hereby amended by amending and restating the
following definitions to read as follows:
"Revolving Facility Term" shall mean the period commencing on
the Closing Date and ending on the date that is five (5) years after
the Closing Date"
"Yield Maintenance Amount" shall mean an amount equal to the
difference between (x) the all-in effective yield (measured as a
percentage per annum), excluding the Commitment Fee, which could be
earned on the Revolving Balance from the Closing Date through and
including January 25, 2007, and (y) the total interest and fees,
excluding the Commitment Fee, actually paid by Borrower to Lender on
the Revolving Facility prior to the later of the Termination Date or
the date of prepayment. As used herein, "Revolving Balance" shall mean,
on any date of determination, the average outstanding balance under the
Revolving Facility for the immediately preceding twelve (12) months
ending on such date.
