Exhibit 10.3
OPTICARE HEALTH SYSTEMS, INC.
PROMISSORY NOTE
$1,000,000 September 1, 2005
Waterbury, Connecticut
OPTICARE HEALTH SYSTEMS, INC., a Delaware corporation and OPTICARE EYE
HEALTH CENTERS, INC., a Connecticut corporation (collectively, the "Borrowers"
and individually, a "Borrower"), for value received, hereby jointly and
severally unconditionally promise to pay to the order of REFAC (the "Holder"), a
Delaware corporation on the Maturity Date (as defined herein) the principal
amount of One Million Dollars ($1,000,000), together with interest thereon as
provided herein. The Borrowers further agree to pay interest accrued on the
unpaid principal amount outstanding hereunder from time to time from the date
hereof, in like money, in the manner and at the rates and on the dates specified
herein.
1. Interest; Payments.
(a) The entire principal balance, together with any accrued
but unpaid interest and charges due on any late payments shall be due and
payable on January 25, 2007 (the "Maturity Date"). Notwithstanding the
foregoing or anything herein to the contrary, if the merger provided for in
the Merger Agreement (the "Merger Agreement"), dated August 22, 2005, between
Refac, OptiCare Merger Sub, Inc. and OptiCare Health Systems, Inc. ("OHS") is
not completed on or before January 31, 2006, the Maturity Date shall be March
31, 2006.
(b) If the Maturity Date would fall on a day that is not a
Business Day (as defined below), the payment due on the Maturity Date will be
made on the next succeeding Business Day with the same force and effect as if
made on the Maturity Date. "Business Day" means any day which is not a
Saturday or Sunday and is not a day on which banking institutions are
generally authorized or obligated to close in the city of New York, New York.
(c) Until this Promissory Note (the "Note") is paid in full,
interest shall accrue on the unpaid principal amount at the Applicable
Interest Rate (calculated on the basis of a 360-day year consisting of twelve
30-day months) from the date hereof up to but excluding the Maturity Date. For
purposes of this Note, "Applicable Interest Rate" shall mean Prime Rate plus
5.5%. "Prime Rate" shall have the same meaning as in the Second Amended and
Restated Revolving Credit, Term Loan and Security Agreement, dated March 29,
2004 and amended on August 16, 2004, August 27, 2004 and January 12, 2005,
between the Borrowers and CapitalSource Finance LLC ("CapitalSource"), a
Delaware limited liability company. Such agreement, together with the
amendments thereto is herein collectively referred to as the "CapitalSource
Loan Agreement".
(d) Payment of interest on this Note shall be made by wire
transfer of immediately available funds on the fifteenth day of each calendar
month commencing October 15, 2005 to an account designated by Holder or, if no
such account is designated, by certified or official bank check sent to Holder
at its address set forth in Section 4(a) hereof or to such other address as
Holder may designate for such purpose from time to time by written notice to
OHS, in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts.
(e) Payment of the principal and accrued interest on the
Maturity Date shall be made by wire transfer of immediately available funds to
an account designated by Holder or, if no such account is designated, by
certified or official bank check sent to Holder at its address set forth in
Section 4(a) hereof or to such other address as Holder may designate for such
purpose from time to time by written notice to OHS, in such coin or currency
of the United States of America as at the time of payment shall be legal
tender for the payment of public and private debts.
(f) The obligations to make the payments provided for in
this Note are absolute and unconditional and not subject to any defense,
set-off, counterclaim, rescission, recoupment or adjustment whatsoever. The
Borrowers hereby expressly waive demand and presentment for payment, notice of
non-payment, notice of dishonor, protest, notice of protest and diligence in
taking any action to collect any amount called for hereunder, and shall be
directly and primarily liable for the payment of all sums owing and to be
owing hereon, regardless of and without any notice, diligence, act or omission
with respect to the collection of any amount called for hereunder.
(g) If any payment hereunder is not made within ten (10)
days from its due date, a late charge of five percent (5%) of each payment so
overdue may be charged by Holder for the purpose of defraying the expenses
incident to handling such delinquent payment.
(h) All agreements herein made are expressly limited so that
in no event whatsoever, whether by reason of advancement of proceeds hereof,
acceleration of maturity of the unpaid balance hereof or otherwise, shall the
amount paid or agreed to be paid to Holder for the use of the money advanced
or to be advanced hereunder exceed the maximum rate permitted by law (the
"Maximum Rate"). If, for any circumstances whatsoever, the fulfillment of any
provision of this Note or any other agreement or instrument now or hereafter
evidencing, securing or in any way relating to the debt evidenced hereby shall
involve the payment of interest in excess of the Maximum Rate, then, ipso
facto, the obligation to pay interest hereunder shall be reduced to the
Maximum Rate; and if, for any circumstance whatsoever, Holder shall ever
receive interest, the amount of which would exceed the amount collectible at
the Maximum Rate, such amount as would be excessive interest shall be applied
to the reduction of the principal balance remaining unpaid hereunder and not
to the payment of interest. This provision shall control every other provision
in any and all other agreements and instruments existing or hereafter arising
between the Borrowers and Holder with respect to the debt evidenced hereby.
(i) Borrowers may prepay all or part of the unpaid principal
balance due hereunder at any time or from time to time without penalty.
2. Events of Default.
The occurrence of any of the following events shall constitute
an event of default (an "Event of Default"):
(a) A default in the payment of the principal or interest on
this Note, when and as the same shall become due and payable.
(b) A default in the performance, or a breach, of any of the
covenants of OHS contained in the Merger Agreement.
(c) A default in the performance, or a breach, of any other
covenant or agreement of any of the Borrowers in or pursuant to this Note, the
Merger Agreement or the CapitalSource Loan Agreement.
(d) Any material breach of a representation, warranty or
certification made by any of the Borrowers in or pursuant to this Note, the
Merger Agreement or the CapitalSource Loan Agreement.
(e) A default or event of default which remains uncured
following any applicable grace or cure period shall have occurred with respect
to the Borrowers' indebtedness to CapitalSource.
(f) The entry of a decree or order by a court having
jurisdiction adjudging any of the Borrowers as bankrupt or insolvent, or
approving a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of any of the Borrowers under federal bankruptcy
law, as now or hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, and the continuance of any such
decree or order unstayed and in effect for a period of 60 days; or the
commencement by any of the Borrowers of a voluntary case under federal
bankruptcy law, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency, or other similar law, or the consent
by any of the Borrowers to the institution of bankruptcy or insolvency
proceedings against it, or the filing by any of the Borrowers of a petition or
answer or consent seeking reorganization or relief under federal bankruptcy
law or any other applicable federal or state law, or the consent by any of the
Borrowers to the filing of such petition or to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator or similar official of such
Borrower or of any substantial part of the property of such Borrower, or the
making by any of the Borrowers of an assignment for the benefit of creditors,
or the admission by any of the Borrowers in writing of its inability to pay
its debts generally as they become due, or the taking of corporate action by
any such Borrower in furtherance of any such action.
3. Remedies Upon Default.
Upon the occurrence of an Event of Default, Holder, by notice
in writing given to OHS, may declare the entire principal amount then
outstanding of, and the accrued interest on, this Note to be due and payable
immediately, and upon any such declaration the same shall become and be due and
payable immediately, without presentation, demand, protest or other formalities
of any kind, all of which are expressly waived by the Borrowers. Holder may
institute such actions or proceedings in law or equity as it shall deem
expedient for the protection of its rights and may prosecute and enforce its
claims against all assets of the Borrowers, and in connection with any such
action or proceeding shall be entitled to receive from the Borrowers payment of
the principal amount of this Note, plus accrued interest to the date of payment,
plus reasonable expenses of collection, including, without limitation,
reasonable attorneys' fees and expenses actually incurred.
4. Miscellaneous.
(a) Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be sent by registered or
certified mail, postage prepaid, overnight courier, confirmed telex or
facsimile transmission or otherwise by hand or by messenger, addressed (i) if
to the Borrowers, to the attention of OHS, at its offices at 00 Xxxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000 to the attention of Chief Executive
Officer, or (ii) if to Holder, at its offices at Xxx Xxxxxx Xxxxx, Xxxx Xxx,
Xxx Xxxxxx 00000, to the attention of Chief Executive Officer and (iii) in
either case, to such other address as the party shall have furnished to the
other party in writing in accordance with the provisions of this Section 4(a).
Notice to the estate of any party shall be sufficient if addressed to the
party as provided in this Section 4(a). Any notice or other communication
given by certified mail shall be deemed given at the time of certification
thereof, except for a notice changing a party's address which shall be deemed
given at the time of receipt thereof. Any notice given by other means
permitted by this Section 4(a) shall be deemed given at the time of receipt
thereof.
(b) Upon receipt of evidence reasonably satisfactory to OHS,
of the loss, theft, destruction or mutilation of this Note (and upon surrender
of this Note if mutilated), the Borrowers shall execute and deliver to Holder
a new Note of like date, tenor and denomination.
(c) No course of dealing and no delay or omission on the
part of Holder or the Borrowers in exercising any right or remedy shall
operate as a waiver thereof or otherwise prejudice Holder's or the Borrowers'
rights, powers or remedies, as the case may be. No right, power or remedy
conferred by this Note upon Holder or the Borrowers shall be exclusive of any
other right, power or remedy referred to herein or now or hereafter available
at law, in equity, by statute or otherwise, and all such remedies may be
exercised singly or concurrently.
(d) This Note may be amended only by a written instrument
executed by the Borrowers (or its successor or permitted assignee, if
applicable) and Holder hereof. Any amendment shall be endorsed upon this Note
and all future Holders shall be bound thereby.
(e) If one or more provisions of this Note are held to be
unenforceable under applicable law, such provision shall be excluded from this
Note and the balance of this Note shall be interpreted as if such provision
were so excluded and shall be enforceable in accordance with its terms.
(f) This Note shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
principles governing conflicts of law.
(g) The Borrowers irrevocably consent to the exclusive
jurisdiction of any of the federal and state courts located in the State of
New York sitting in New York County, New York in connection with any action or
proceeding arising out of or relating to this Note, any document or instrument
delivered pursuant to, in connection with or simultaneously with this Note, or
a breach of this Note or any such document or instrument.
[END OF PAGE]
IN WITNESS WHEREOF, intending to be legally bound hereby, each of the
Borrowers have executed this Note under seal, intending to be legally bound
hereby, the day and year first above written.
OPTICARE HEALTH SYSTEMS, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxx
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Name: Xxxxxxxxxxx X. Xxxxx
Title: Chief Executive Officer
OPTICARE EYE HEALTH CENTERS, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxx
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Name: Xxxxxxxxxxx X. Xxxxx
Title: Chief Executive Officer
