AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
BETWEEN
OPTICARE HEALTH SYSTEMS, INC.
OPTICARE EYE HEALTH CENTERS, INC.
PRIMEVISION HEALTH, INC.
and
CAPITALSOURCE FINANCE LLC
DATED AS OF
JANUARY 25, 2002
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
HEALTHCARE -- SENIOR REVOLVING CREDIT AND TERM LOAN AGREEMENT (A/R)
(NO SUBSIDIARIES)
REVOLVING CREDIT AND TERM LOAN AGREEMENT
TABLE OF CONTENTS
Page
I. DEFINITIONS............................................................1
1.1 General Terms...................................................1
II. ADVANCES, PAYMENT AND INTEREST.........................................2
2.1 The Revolving Facility..........................................2
2.2 The Revolving Note; Maturity....................................3
2.3 Revolving Note Interest.........................................3
2.4 Revolving Facility Disbursements; Requirement to Deliver
Borrowing Certificate...........................................3
2.5 Revolving Facility Collections; Repayment; Borrowing
Availability and Lockbox........................................4
2.6 Repayment of Excess Advances....................................5
2.7 Term Loan; Request for Increase.................................5
2.8 Term Note Interest..............................................5
2.9 Repayment of Term Loan; Maturity................................5
2.10 Intentionally Omitted...........................................6
2.11 Intentionally Omitted...........................................6
2.12 Intentionally Omitted...........................................6
2.13 Other Mandatory Prepayments on Term Loan........................6
2.14 Payments by Lender..............................................6
2.15 Collateral; Security Interest...................................6
2.16 Collateral Administration.......................................8
2.17 General - Manner of Payment.....................................9
2.18 Power of Attorney...............................................9
III. FEES AND OTHER CHARGES; ALLOCATION OF PURCHASE PRICE...................9
3.1 Commitment Fees; Warrants.......................................9
3.2 Unused Line Fee................................................10
3.3 Collateral Management Fee......................................10
3.4 Early Termination Fees.........................................10
3.5 Computation of Fees; Lawful Limits.............................11
3.6 Default Rate of Interest.......................................11
3.7 Acknowledgement of Joint and Several Liability.................11
3.8 Warrants.......................................................11
3.9 Allocation of Purchase Price...................................12
IV. CONDITIONS PRECEDENT..................................................12
4.1 Conditions to Initial Advance, Funding of Term Loan
and Closing....................................................12
4.2 Conditions to Each Advance and Funding of Term Loan............14
V. REPRESENTATIONS AND WARRANTIES........................................14
5.1 Organization and Authority.....................................15
5.2 Loan Documents.................................................15
5.3 Subsidiaries, Capitalization and Ownership Interests...........15
5.4 Properties.....................................................16
5.5 Other Agreements...............................................16
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
5.6 Litigation.....................................................16
5.7 Hazardous Materials............................................16
5.8 Tax Returns; Governmental Reports..............................17
5.9 Financial Statements and Reports...............................17
5.10 Compliance with Law............................................17
5.11 Intellectual Property..........................................18
5.12 Licenses and Permits; Labor....................................18
5.13 No Default.....................................................18
5.14 Disclosure.....................................................18
5.15 Existing Indebtedness; Investments, Guarantees and
Certain Contracts..............................................18
5.16 Other Agreements...............................................19
5.17 Insurance......................................................19
5.18 Names; Location of Offices, Records and Collateral.............19
5.19 Non-Subordination..............................................19
5.20 Accounts.......................................................19
5.21 Healthcare.....................................................20
5.22 Survival.......................................................20
VI. AFFIRMATIVE COVENANTS.................................................21
6.1 Financial Statements, Reports and Other Information............21
6.2 Payment of Obligations.........................................21
6.3 Conduct of Business and Maintenance of Existence and Assets....22
6.4 Compliance with Legal and Other Obligations....................23
6.5 Insurance......................................................23
6.6 True Books.....................................................23
6.7 Inspection; Periodic Audits....................................24
6.8 Further Assurances; Post Closing...............................24
6.9 Payment of Indebtedness........................................24
6.10 Lien Searches..................................................24
6.11 Use of Proceeds................................................25
6.12 Collateral Documents...........................................25
6.13 Right of First Refusal.........................................25
6.14 Taxes and Other Charges........................................25
6.15 Accounts Receivable Ageing.....................................26
6.16 Physical Inventory.............................................26
VII. NEGATIVE COVENANTS....................................................26
7.1 Financial Covenants............................................26
7.2 Indebtedness...................................................26
7.3 Liens..........................................................27
7.4 Investments; New Facilities or Collateral......................28
7.5 Dividends; Redemptions.........................................28
7.6 Transactions with affiliates; no new subsidiaries..............28
7.7 Charter Documents; Fiscal Year; Dissolution; Use of Proceeds...29
7.8 Truth of Statements............................................29
VIII. EVENTS OF DEFAULT.....................................................29
IX. RIGHTS AND REMEDIES AFTER DEFAULT.....................................32
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
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9.1 Rights and Remedies............................................32
9.2 Rights and Remedies not Exclusive..............................33
X. WAIVERS AND JUDICIAL PROCEEDINGS......................................34
10.1 Waivers........................................................34
10.2 Delay; No Waiver of Defaults...................................34
10.3 Jury Waiver....................................................34
10.4 Cooperation in Discovery and Litigation........................35
XI. EFFECTIVE DATE AND TERMINATION........................................35
11.1 Effectiveness and Termination..................................35
11.2 Survival.......................................................35
XII. MISCELLANEOUS.........................................................36
12.1 Governing Law; Jurisdiction; Service of Process; Venue.........36
12.2 Successors and Assigns; Participations; New Lenders............36
12.3 Application of Payments........................................36
12.4 Indemnity......................................................37
12.5 Notice.........................................................37
12.6 Severability; Captions; Counterparts; Facsimile Signatures.....38
12.7 Expenses.......................................................38
12.8 Entire Agreement...............................................38
12.9 Lender Approvals...............................................39
12.10 Confidentiality and Publicity..................................39
12.11 Reserved.......................................................39
1) Fixed Coverage Ratio (EBITDA/Fixed Charges).....................1
8) Minimum Net Worth...............................................1
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
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AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN
AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN AND SECURITY
AGREEMENT (the "AGREEMENT") dated as of January 25, 2002, is entered into
between OPTICARE HEALTH SYSTEMS, INC., a Delaware corporation ("PARENT"),
OPTICARE EYE HEALTH CENTERS, INC., a Connecticut corporation ("OPTICARE"), and
PRIMEVISION HEALTH, INC., a Delaware corporation ("PVH"; Parent, OptiCare and
PVH shall be referred to herein, individually and collectively, as "BORROWER"),
and CAPITALSOURCE FINANCE LLC, a Delaware limited liability company ("LENDER").
WHEREAS, Opticare, PVH, Consolidated Eye Care, Inc., a North Carolina
corporation ("CEC"), and Parent, as borrowers, the financial institutions from
time to time party thereto (the "PRIOR LENDERS"), Bank Austria, AG, as LC Issuer
and Bank Austria Creditanstalt Corporate Finance, Inc., as agent for the Prior
Lenders, are parties to that certain Amended and Restated Loan and Security
Agreement, dated as of August 13, 1999 (the "ORIGINAL LOAN AGREEMENT"), pursuant
to which, among other things, the Prior Lenders made available to Borrower 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 "PRIOR LOANS"); and
WHEREAS, Prior Lenders desire to sell and assign to Lender the Prior
Loans and all of their rights and obligations under the Loan Agreement and all
other documents related to the Prior Loans; and
WHEREAS, Borrower has requested that Lender amend and restate the
Original Loan Agreement and restructure the Prior Loans and make available to
Borrower (i) a revolving credit facility (the "REVOLVING FACILITY") in a maximum
principal amount at any time outstanding of up to TEN MILLION DOLLARS
($10,000,000) (the "FACILITY CAP") and (ii) a term loan (the "TERM LOAN") in a
maximum principal amount of THREE MILLION DOLLARS ($3,000,000) (the "MAXIMUM
TERM LOAN AMOUNT"), the proceeds of which shall be used by Borrower for
refinancing Borrower's existing obligations and indebtedness and for working
capital needs in connection with its businesses of medical practice services,
managed care services and the purchase and resale of optical products; and
WHEREAS, Lender is willing to restructure the loan facilities under the
Original Loan Agreement, and make the Revolving Facility and the Term Loan
available to Borrower upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and adequacy of which hereby are
acknowledged, Borrower and Lender hereby agree as follows:
I. DEFINITIONS
1.1 GENERAL TERMS
For purposes of this Agreement, in addition to the definitions above
and elsewhere in this Agreement, the terms listed in Appendix A hereto shall
have the meanings given such terms in Appendix A, which is incorporated herein
and made a part hereof. All capitalized terms used which are
not specifically defined shall have meanings provided in Article 9 of the UCC in
effect on the date hereof to the extent the same are used or defined therein.
Unless otherwise specified herein or in Appendix A, any agreement or contract
referred to herein or in Appendix A shall mean such agreement as modified,
amended or supplemented from time to time. Unless otherwise specified, as used
in the Loan Documents or in any certificate, report, instrument or other
document made or delivered pursuant to any of the Loan Documents, all accounting
terms not defined in Appendix A elsewhere in this Agreement shall have the
meanings given to such terms in and shall be interpreted in accordance with
GAAP.
II. ADVANCES, PAYMENT AND INTEREST
2.1 THE REVOLVING FACILITY; OVERADVANCE
(a) Subject to the provisions of this Agreement, Lender shall make
Advances to Borrower under the Revolving Facility from time to time during the
Term, provided that, notwithstanding any other provision of this Agreement, the
aggregate amount of all Advances at any one time outstanding under the Revolving
Facility shall not exceed the lesser of (a) the Facility Cap, and (b) the
Availability. The Revolving Facility is a revolving credit facility, which may
be drawn, repaid and redrawn, from time to time as permitted under this
Agreement. Any determination as to whether there is availability within the
Borrowing Base for Advances shall be made by Lender in its sole discretion and
is final and binding upon Borrower. Unless otherwise permitted by Lender, each
Advance shall be in an amount of at least $1,000. Subject to the provisions of
this Agreement, Borrower may request Advances under the Revolving Facility up to
and including the value, in Dollars, of (i) eighty-five percent (85%) of the
Borrowing Base for Accounts Receivables, provided, however, that commencing on
April 1, 2002 and for the remainder of the Revolver Term, such percentage shall
be eighty percent (80%); provided further, that any amounts advanced based on
the 85% Advance Rate that, as of May 1, 2002 are outstanding and in excess of
the Availability under the revised Advance Rate, shall be amortized and repaid
in full by July 31, 2002, provided, further, however, that any such amounts in
excess of the Availability shall be repaid from the proceeds of any HSO Contract
sales, plus (ii) fifty-five percent (55%) of the Borrowing Base for Eligible
Inventory Costs minus, if applicable, amounts reserved pursuant to this
Agreement (such calculated amount being referred to herein as the
"AVAILABILITY"). Advances under the Revolving Facility automatically shall be
made for the payment of interest on the Revolving Note and other Obligations on
the date when due to the extent available and as provided for herein.
(b) Lender has established the above-referenced advance rate for
Availability and, in its sole credit judgment, may further adjust the
Availability and such advance rate by applying percentages (known as "liquidity
factors") to Eligible Receivables by payor class based upon Borrower's actual
recent collection history for each such payor class (i.e., Medicare, Medicaid,
commercial insurance, etc.) in a manner consistent with Lender's underwriting
practices and procedures, including without limitation Lender's review and
analysis of, among other things, Borrower's historical returns, rebates,
discounts, credits and allowances (collectively, the "DILUTION ITEMS"). Such
liquidity factors and the advance rate for Availability may be adjusted by
Lender throughout the Term as warranted by Lender's underwriting practices and
procedures in its sole credit judgment. Also, Lender shall have the right to
establish from time to time, reserves against the Borrowing Base in connection
with any Material Adverse Change or Material Adverse Effect, which reserves
shall have the effect of reducing the amounts otherwise eligible to be disbursed
to Borrower under the Revolving Facility pursuant to this Agreement.
(c) Borrower shall be permitted to borrow an amount at any one time
outstanding of up to $750,000 in addition to the Availability (the
"Overadvance"), which shall be part of the Revolving Facility, evidenced by the
Revolving Note and subject at all times to the Facility Cap. The Overadvance
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amount may remain outstanding during the entire Revolver Term, subject to the
Facility Cap, and provided that no default or Event of Default shall have
occurred and be continuing past any cure period and provided, further, that upon
the sale of any HSO Contracts, the proceeds thereof shall be applied to
permanently reduce the Overadvance.
2.2 THE REVOLVING NOTE; MATURITY
(a) All Advances under the Revolving Facility shall be evidenced by the
Revolving Note, payable to the order of Lender, duly executed and delivered by
Borrower and dated the Closing Date, evidencing the aggregate indebtedness of
Borrower to Lender resulting from Advances under the Revolving Facility, from
time to time. Lender hereby is authorized, but is not obligated, to enter the
amount of each Advance under the Revolving Facility and the amount of each
payment or prepayment of principal or interest thereon in the appropriate spaces
on the reverse of or on an attachment to the Revolving Note. Lender will account
to Borrower monthly with a statement of Advances under the Revolving Facility
and charges and payments made pursuant to this Agreement, and in the absence of
manifest error, such accounting rendered by Lender shall be deemed presumptive
and conclusive unless Lender is notified by Borrower in writing to the contrary
within thirty (30) calendar days of Receipt of each accounting, which notice
shall be deemed an objection only to items specifically objected to therein.
(b) All amounts outstanding under the Revolving Note and other
Obligations shall be due and payable in full, if not earlier in accordance with
this Agreement, on the earlier of (i) the occurrence of an Event of Default if
required pursuant hereto or Lender's demand upon an Event of Default, and (ii)
the last day of the Revolver Term (such earlier date being the "MATURITY DATE").
2.3 REVOLVING NOTE INTEREST
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, the interest on outstanding Advances under the
Revolving Note shall be not less than 7.0%, in each case 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, 2001, 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.
2.4 REVOLVING FACILITY DISBURSEMENTS; REQUIREMENT TO DELIVER BORROWING
CERTIFICATE
So long as no Default or Event of Default shall have occurred and be
continuing, Borrower may give Lender irrevocable written notice requesting an
Advance under the Revolving Facility by delivering to Lender not later than
11:00 a.m. (New York City Time) at least one (1) (but not more than four (4)
Business Days before the proposed borrowing date of such requested Advance (the
"BORROWING DATE"), a completed Borrowing Certificate and relevant supporting
documentation satisfactory to Lender, which shall (i) specify the proposed
Borrowing Date of such Advance which shall be a Business Day, (ii) specify the
principal amount of such requested Advance, (iii) certify the matters contained
in Section 4.2, and (iv) specify the amount of any Medicare or Medicaid
recoupments and/or recoupments of any third-party payor being sought, requested
or claimed, or, to Borrower's knowledge,
3
threatened against Borrower or Borrower's affiliates. Each time a request for an
Advance is made (and, in any event and regardless of whether an Advance is being
requested, once a month as of the fifteenth (15th) day of each month for the
month then ended during the Term (and more frequently if Lender shall so request
until the Obligations are indefeasibly paid in cash in full and this Agreement
is terminated), Borrower shall deliver to Lender a Borrowing Certificate
accompanied by a separate detailed aging and categorizing of Borrower's accounts
receivable and inventory detail and such other supporting documentation with
respect to the figures and information in the Borrowing Certificate as Lender
shall reasonably request from a credit or security perspective or otherwise. On
each Borrowing Date, Borrower irrevocably authorizes Lender to disburse the
proceeds of the requested Advance to the appropriate Borrower's account(s) as
set forth on Schedule 2.5, in all cases for credit to the appropriate Borrower
(or to such other account as to which the appropriate Borrower shall instruct
Lender) via Federal funds wire transfer no later than 4:00 p.m. New York City
Time.
2.5 REVOLVING FACILITY COLLECTIONS; REPAYMENT; BORROWING AVAILABILITY AND
LOCKBOX
Each Borrower shall maintain one or more lockbox accounts (individually
and collectively, the "LOCKBOX ACCOUNT") with one or more banks acceptable to
Lender and to Borrower (each, a "LOCKBOX BANK"), and shall execute with each
Lockbox Bank one or more agreements acceptable to Lender (individually and
collectively, the "LOCKBOX AGREEMENT"), and such other agreements related
thereto as Lender may require. Each Borrower shall ensure that all collections
of their respective Accounts and all other cash payments received by any
Borrower are paid and delivered directly from Account Debtors and other Persons
into the appropriate Lockbox Account. The Lockbox Agreements shall provide that
the Lockbox Banks immediately will transfer all funds paid into the Lockbox
Accounts into a depository account or accounts maintained by Lender or an
affiliate of Lender at such bank as Lender may communicate to Borrower from time
to time (the "CONCENTRATION ACCOUNT"), except, with respect only to Accounts
payable by Medicaid/Medicare Account Debtors, as instructed by the applicable
Borrower to whom such Accounts are payable as permitted pursuant to the
applicable Lockbox Agreement. Notwithstanding and without limiting any other
provision of any Loan Document, Lender shall apply, on a daily basis, all funds
transferred into the Concentration Account pursuant to the Lockbox Agreement and
this Section 2.5 in such order and manner as determined by Lender. To the extent
that any Accounts collections of any Borrower or any other cash payments
received by any Borrower are not sent directly to the appropriate Lockbox
Account but are received by any Borrower or any of such Borrower's affiliates,
such collections and proceeds shall be held in trust for the benefit of Lender
and immediately remitted (and in any event within two (2) Business Days), in the
form received, to the appropriate Lockbox Account for immediate transfer to the
Concentration Account. Borrower acknowledges and agrees that compliance with the
terms of this Section 2.5 is an essential term of this Agreement, and that, in
addition to and notwithstanding any other rights Lender may have hereunder,
under any other Loan Document, under applicable law or at equity, upon each and
every failure by any Borrower or any of their affiliates to comply with any such
terms Lender shall be entitled to assess a non-compliance fee which shall
operate to increase the Applicable Rate by two percent (2.0%) per annum during
any period of non-compliance, whether or not a Default or an Event of Default
occurs or is declared, provided that nothing shall prevent Lender from
considering any failure to comply with the terms of this Section 2.5 to be a
Default or an Event of Default. All funds transferred to the Concentration
Account for application to the Obligations under the Revolving Facility shall be
applied to reduce the Obligations under the Revolving Facility, but, for
purposes of calculating interest hereunder, shall be subject to a seven (7)
Business Day clearance period. If as the result of collections of Accounts
and/or any other cash payments received by any Borrower pursuant to this Section
2.5 a credit balance exists with respect to the Concentration Account, such
credit balance shall not accrue interest in favor of a Borrower, but shall be
available to the appropriate Borrower in accordance with the terms of this
4
Agreement. If applicable, at any time prior to the execution of all or any of
the Lockbox Agreements and operation of all or any of the Lockbox Accounts, each
Borrower and their affiliates shall direct all collections or proceeds it
receives on Accounts or from other Collateral to the accounts(s) and in the
manner specified by Lender in its sole discretion.
2.6 REPAYMENT OF EXCESS ADVANCES
Any balance of Advances under the Revolving Facility outstanding at any
time in excess of the lesser of the Facility Cap or the Availability shall be
immediately due and payable by Borrower without the necessity of any demand, at
the Payment Office, whether or not a Default or Event of Default has occurred or
is continuing and shall be paid in the manner specified in Section 2.9.
2.7 TERM LOAN; REQUEST FOR INCREASE
(a) Subject to the terms and conditions set forth in this Agreement,
Lender agrees to loan to Borrower on the Closing Date the Term Loan to be
constituted of a single draw of not more than the Maximum Term Loan Amount, to
be disbursed to the appropriate Borrower's account(s) as set forth on Schedule
2.6 or as otherwise directed by Borrower in writing, provided that, the amount
drawn under the Term Loan shall not be greater than 40% of the value of
Borrower's Equipment, as determined by Lender in its sole discretion. The Term
Loan is not a revolving credit facility, and any repayments of principal shall
be applied to permanently reduce the Term Loan. The Term Loan shall be evidenced
by the Term Note.
(b) Lender acknowledges that Borrower may request an increase in the
Maximum Term Loan Amount based upon an increase in the volume of Borrower's
Equipment. Borrower acknowledges that any such increase is subject to Lender's
credit committee approval.
2.8 TERM NOTE INTEREST
Interest on the outstanding balance of the Term Loan under the Term
Note shall be payable monthly in arrears on the first day of each calendar month
at an annual rate of the Prime Rate plus 3.5%, provided, however, that,
notwithstanding, any other provision of any Loan Document, the interest on the
outstanding principal balance of the Term Loan under the Term Note shall be not
less than 9%, in each case 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 the Term Loan shall be due and payable on the first day of
each calendar month commencing March 1, 2002, and continuing until the later of
the expiration of the Term Loan Term and the full performance and irrevocable
payment in full in cash of the Obligations and termination of this Agreement.
Advances under the Revolving Facility shall be made automatically for the
payment of interest on the Term Loan and other Obligations on the date when due
to the extent available and as provided for herein.
2.9 REPAYMENT OF TERM LOAN; MATURITY
Payment of principal and all other amounts outstanding under the Term
Loan and all other Obligations due hereunder shall be due and payable monthly,
on the basis of a 15-year amortization, with payment in full of the balance due
upon the earlier of termination or the Term Loan
5
Maturity Date. The Term Note shall mature, if not earlier in accordance with
this Agreement, on the Term Loan Maturity Date.
2.10 OTHER MANDATORY PREPAYMENTS ON TERM LOAN
In addition to and without limiting any provision of any Loan Document:
(a) if a Change of Control occurs, on or prior to the first Business
Day following the date of such Change of Control, Borrower shall prepay the Term
Loan, including, without limitation, all outstanding Advances and all other
Obligations, in full in cash together with accrued interest thereon to the date
of prepayment and all other amounts owing to Lender under the Loan Documents
related to the Term Loan provided, however, that no prepayment hereunder shall
be required for any Change of Control caused by an equity investment as long as
Borrower is not otherwise in default under this Agreement; and
(b) if Opticare Eye Health Centers, Inc. sells any of its assets or
properties (other than in the ordinary course of Borrower's business), receives
any property damage insurance award which is not used to repair or replace the
property covered thereby, then it shall apply 100% of the proceeds thereof to
the prepayment of the Term Loan together with accrued interest thereon and all
other Obligations owing to Lender under the Loan Documents related to the Term
Loan, such payment to be applied at such time and in such manner and order as
Lender shall decide in its sole discretion.
2.11 INTENTIONALLY OMITTED
2.12 INTENTIONALLY OMITTED
2.13 INTENTIONALLY OMITTED
2.14 PAYMENTS BY LENDER
Should any amount required to be paid under any Loan Document be unpaid
when due, such amount may be paid by Lender, which payment shall be deemed a
request for an Advance under the Revolving Facility as of the date such payment
is due, and Borrower irrevocably authorizes disbursement of any such funds to
Lender by way of direct payment of the relevant amount, interest or Obligations.
No payment or prepayment of any amount by Lender or any other Person shall
entitle any Person to be subrogated to the rights of Lender under any Loan
Document unless and until the Obligations have been fully performed and paid
irrevocably in cash and this Agreement has been terminated. Any sums expended by
Lender as a result of any Borrower's or any Guarantor's failure to pay, perform
or comply with any Loan Document or any of the Obligations may be charged to
Borrower's account as an Advance under the Revolving Facility and added to the
Obligations.
2.15 GRANT OF SECURITY INTEREST; COLLATERAL
(a) To secure the payment and performance of the Obligations, each
Borrower hereby grants to Lender a continuing security interest in and Lien
upon, and pledges to Lender, all of its right, title and interest in and to the
following (collectively and each individually, the "COLLATERAL"), which security
interest is intended to be a first priority security interest:
6
(i) all of such Borrower's tangible personal property, including
without limitation all present and future Inventory and Equipment (including
items of equipment which are or become Fixtures), now owned or hereafter
acquired;
(ii) all of such Borrower's intangible personal property,
including without limitation all present and future Accounts, securities,
contract rights, Permits, General Intangibles, Chattel Paper, Documents,
Instruments and Deposit Accounts, rights to the payment of money or other forms
of consideration of any kind, tax refunds, insurance proceeds, now owned or
hereafter acquired, and all intangible and tangible personal property relating
to or arising out of any of the foregoing;
(iii) all of such Borrower's present and future Government
Contracts and rights thereunder and the related Government Accounts and proceeds
thereof, now or hereafter owned or acquired by such Borrower; provided, however,
that Lender shall not have a security interest in any rights under any
Government Contract of such Borrower or in the related Government Account where
the taking of such security interest would be a violation of an express
prohibition contained in the Government Contract (for purposes of this
limitation, the fact that a Government Contract is subject to, or otherwise
refers to, Title 31, ss. 203 or Title 41, ss. 15 of the United States Code shall
not be deemed an express prohibition against assignment thereof) or is
prohibited by applicable law; and
(iv) any and all additions to any of the foregoing, and any and
all replacements, products and proceeds (including insurance proceeds) of any of
the foregoing.
(b) Notwithstanding the foregoing provisions of this Section 2.15, such
grant of a security interest shall not extend to, and the term "Collateral"
shall not include, any General Intangibles of Borrower to the extent that (i)
such General Intangibles are not assignable or capable of being encumbered as a
matter of law or under the terms of any license or other agreement applicable
thereto (but solely to the extent that any such restriction shall be enforceable
under applicable law) without the consent of the licensor thereof or other
applicable party thereto, and (ii) such consent has not been obtained; provided,
however, that the foregoing grant of a security interest shall extend to, and
the term "Collateral" shall include, each of the following: (a) any General
Intangible which is in the nature of an Account or a right to the payment of
money or a proceed of, or otherwise related to the enforcement or collection of,
any Account or right to the payment of money, or goods which are the subject of
any Account or right to the payment of money, (b) any and all proceeds of any
General Intangible that is otherwise excluded to the extent that the assignment,
pledge or encumbrance of such proceeds is not so restricted, and (c) upon
obtaining the consent of any such licensor or other applicable party with
respect to any such otherwise excluded General Intangible, such General
Intangible as well as any and all proceeds thereof that might theretofore have
been excluded from such grant of a security interest and from the term
"Collateral."
(c) In addition to the foregoing, to secure the payment and performance
of the Obligations, (i) Parent shall pledge to Lender all of the securities it
owns in Opticare and PVH, and (ii) PVH will pledge to Lender all of the
securities it owns in connection with its subsidiaries who are listed on
Schedule 2.15 hereto, in each case pursuant to the Stock Pledge Agreement.
(d) Upon the execution and delivery of this Agreement, and upon the
proper filing of the necessary financing statements and proper delivery of the
necessary stock certificates, without any further action, Lender will have a
good, valid and perfected first priority Lien and security interest in the
Collateral, subject to no transfer or other restrictions or Liens of any kind in
favor of any other Person except for Permitted Liens. No financing statement
relating to any of the Collateral is on file in any public office except those
(i) on behalf of Lender, and/or (ii) in connection with Permitted Liens.
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2.16 COLLATERAL ADMINISTRATION
(a) All Collateral (except Deposit Accounts) will at all times be kept
by Borrower at the locations set forth on Schedule 5.18 hereto and shall not,
without thirty (30) calendar days prior written notice to Lender, be moved
therefrom, and in any case shall not be moved outside the continental United
States.
(b) Borrower shall keep accurate and complete records of its Accounts
and all payments and collections thereon and shall submit such records to Lender
on such periodic bases as Lender may request. In addition, if Accounts of
Borrower in an aggregate face amount in excess of $250,000 become ineligible
because they fall within one of the specified categories of ineligibility set
forth in the definition of Eligible Receivables, Borrower shall notify Lender of
such occurrence on the report due on the fifteenth (15th) day of each month
unless an earlier Request for Advance is submitted following such occurrence and
the Borrowing Base shall thereupon be adjusted to reflect such occurrence. If
requested by Lender, Borrower shall execute and deliver to Lender formal written
assignments of all of its Accounts weekly or daily as Lender may request,
including all Accounts created since the date of the last assignment, together
with copies of claims, invoices and/or other information related thereto. To the
extent that collections from such assigned accounts exceed the amount of the
Obligations, such excess amount shall not accrue interest in favor of Borrower,
but shall be available to the Borrower upon Borrower's written request.
(c) Whether or not an Event of Default has occurred, any of the
Lender's officers, employees, representatives or agents shall have the right, at
any time during normal business hours, in the name of Lender, any designee of
Lender or Borrower, to verify the validity, amount or any other matter relating
to any Accounts of Borrower. Borrower shall cooperate fully with Lender in an
effort to facilitate and promptly conclude such verification process.
(d) To expedite collection, Borrower shall endeavor in the first
instance to make collection of its Accounts for Lender. Lender shall have the
right at all times after the occurrence of an Event of Default to notify (i)
Account Debtors owing Accounts to Borrower other than Medicaid/Medicare Account
Debtors that their Accounts have been assigned to Lender and to collect such
Accounts directly in its own name and to charge collection costs and expenses,
including reasonable attorney's fees, to Borrower, and (ii) Medicaid/Medicare
Account Debtors that Borrower has waived any and all defenses and counterclaims
it may have or could interpose in any such action or procedure brought by Lender
to obtain a court order recognizing the assignment or security interest and lien
of Lender in and to any Account or other Collateral and that Lender is seeking
or may seek to obtain a court order recognizing the assignment or security
interest and lien of Lender in and to all Accounts and other Collateral payable
by Medicaid/Medicare Account Debtors.
(e) As and when determined by Lender in its reasonable discretion,
Lender will perform the searches described in clauses (i) and (ii) below against
Borrower and Guarantors (the results of which are to be consistent with
Borrower's representations and warranties under this Agreement), all at
Borrower's expense: (i) UCC searches with the Secretary of State and local
filing offices of each jurisdiction where Borrower and/or any Guarantors
maintains their respective executive offices, a place of business or assets; and
(ii) judgment, federal tax lien and corporate and partnership tax lien searches,
in each jurisdiction searched under clause (i) below.
(f) Borrower (i) shall provide prompt written notice to its current
bank to transfer all items, collections and remittances to the Concentration
Account, (ii) upon Lender's request after an Event of Default shall have
occurred and be continuing, shall provide prompt written notice to each
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Account Debtor (other than Medicaid/Medicare Account Debtors) that Lender has
been granted a lien and security interest in, upon and to all Accounts
applicable to such Account Debtor and shall direct each Account Debtor to make
payments to the appropriate Lockbox Account, and Borrower hereby authorizes
Lender, upon any failure to send such notices and directions within ten (10)
calendar days (or ten (10) calendar days after the Person becomes an Account
Debtor), to send any and all similar notices and directions to such Account
Debtors as set forth on Schedule 2.16 hereto, and (iii) shall do anything
further that may be lawfully required by Lender to secure Lender and effectuate
the intentions of the Loan Documents. At Lender's request, Borrower shall
immediately deliver to Lender all items for which Lender must receive possession
to obtain a perfected security interest and all notes, certificates, and
documents of title, chattel paper, warehouse receipts, instruments, and any
other similar instruments constituting Collateral.
2.17 GENERAL - MANNER OF PAYMENT
Any payments made by Borrower (other than payments automatically paid
through Advances under the Revolving Facility as provided herein), shall be made
only by wire transfer on the date when due, without offset or counterclaim, in
Dollars, in immediately available funds to such account as may be indicated in
writing by Lender to Borrower from time to time. Any such payment received after
3:00 p.m. New York City Time on the date when due shall be deemed received on
the following Business Day. Whenever any payment hereunder shall be stated to be
due or shall become due and payable on a day other than a Business Day, the due
date thereof shall be extended to, and such payment shall be made on, the next
succeeding Business Day, and such extension of time in such case shall be
included in the computation of payment of any interest (at the interest rate
then in effect during such extension) and/or fees, as the case may be.
2.18 POWER OF ATTORNEY
Lender is hereby irrevocably made, constituted and appointed the true
and lawful attorney for Borrower (without requiring any of them to act as such)
with full power of substitution to do the following: (i) endorse the name of any
such Person upon any and all checks, drafts, money orders, and other instruments
for the payment of money that are payable to such Person and constitute
collections on its or their Accounts; (ii) execute in the name of such Person
any financing statements, schedules, assignments, instruments, documents, and
statements that it is or they or are obligated to give Lender under any of the
Loan Documents; and (iii) do such other and further acts and deeds in the name
of such Person that Lender may deem necessary or desirable to enforce any
Account or other Collateral or to perfect Lender's security interest or lien in
any Collateral. In addition, if any such Person breaches its obligation
hereunder to direct payments of Accounts or the proceeds of any other Collateral
to the appropriate Lockbox Account, Lender, as the irrevocably made, constituted
and appointed true and lawful attorney for such Person pursuant to this
paragraph, may, by the signature or other act of any of Lender's officers or
authorized signatories (without requiring any of them to do so), direct any
federal, state or private payor or fiscal intermediary to pay proceeds of
Accounts or any other Collateral to the appropriate Lockbox Account.
III. FEES AND OTHER CHARGES; ALLOCATION OF PURCHASE PRICE
3.1 COMMITMENT FEES; WARRANTS
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On the Closing Date, Borrower shall pay to Lender (a) three quarters of
one percent (.75%) of the Facility Cap as a commitment fee for the Revolver; (b)
1% of the Maximum Term Loan Amount as a commitment fee for the Term Loan, and
(c) shall grant to Lender the Warrants to purchase 250,000 shares at $0.14 per
share of Opticare Health Systems, Inc.'s common stock.
3.2 UNUSED LINE FEE
(a) Each month, Borrower shall pay to Lender an unused line fee (the
"UNUSED LINE FEE") in an amount and to the extent necessary to cause Lender to
realize, when taken together with the interest accrued for such month on the
Revolver, an amount equal to $3,000. The Unused Line Fee shall be payable
monthly in arrears on the first day of each successive calendar month (starting
with the month in which the Closing Date occurs).
3.3 COLLATERAL MANAGEMENT FEE
Borrower shall pay Lender as additional interest a monthly collateral
management fee (the "COLLATERAL MANAGEMENT FEE") equal to 0.083% of the daily
average amount of the balances under the Revolving Facility outstanding during
the preceding month. The Collateral Management Fee shall be payable monthly in
arrears on the first day of each successive calendar month (starting with the
month in which the Closing Date occurs).
3.4 REVOLVER TERMINATION FEE; TERM LOAN FINANCE FEE
(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 1%
of the Facility Cap and shall pay the Obligations under the Term Loan in full.
(b) Term Loan Finance Fee. Upon (i) termination of the Term Loan for
any reason, (ii) acceleration of the Term Loan on account of any bankruptcy
proceeding, liquidation or Debtor Relief Law, or (iii) upon repayment of the
Term Loan in full (each, a "TERM LOAN TERMINATION"), then, at the effective date
of any such Term Loan Termination, Borrower shall pay Lender (in addition to the
then outstanding principal, accrued interest and other Obligations relating to
the Term Loan owing under the Term Loan pursuant to the terms of this Agreement
and any other Loan Document), as yield maintenance
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for the loss of bargain and not as a penalty, an amount equal to one percent
(1%) of the Term Loan amount.
3.5 COMPUTATION OF FEES; LAWFUL LIMITS
All fees hereunder shall be computed on the basis of a year of 360 days
and for the actual number of days elapsed in each calculation period, as
applicable. In no contingency or event whatsoever, whether by reason of
acceleration or otherwise, shall the interest and other charges paid or agreed
to be paid to Lender for the use, forbearance or detention of money hereunder
exceed the maximum rate permissible under applicable law which a court of
competent jurisdiction shall, in a final determination, deem applicable hereto.
If, due to any circumstance whatsoever, fulfillment of any provision hereof, at
the time performance of such provision shall be due, shall exceed any such
limit, then, the obligation to be so fulfilled shall be reduced to such lawful
limit, and, if Lender shall have received interest or any other charges of any
kind which might be deemed to be interest under applicable law in excess of the
maximum lawful rate, then such excess shall be applied first to any unpaid fees
and charges hereunder, then to unpaid principal balance owed by Borrower
hereunder, and if the then remaining excess interest is greater than the
previously unpaid principal balance, Lender shall promptly refund such excess
amount to Borrower and the provisions hereof shall be deemed amended to provide
for such permissible rate. The terms and provisions of this Section 3.5 shall
control to the extent any other provision of any Loan Document is inconsistent
herewith.
3.6 DEFAULT RATE OF INTEREST
Upon the occurrence and during the continuation of an Event of Default,
the Applicable Rate of interest in effect at such time with respect to the
Obligations shall be increased by 3.0% per annum (the "DEFAULT RATE").
3.7 ACKNOWLEDGEMENT OF JOINT AND SEVERAL LIABILITY
Each Borrower acknowledges that it is jointly and severally liable for
all of the Obligations under the Loan Documents. Each Borrower expressly
understands, agrees and acknowledges that (i) it is affiliated by common
ownership, (ii) each Borrower desires to have the availability of one common
credit facility instead of separate credit facilities, (iii) each Borrower has
requested that Lender extend such a common credit facility on the terms herein
provided, (iv) Lender will be lending against, and relaying on a lien upon, all
of the Borrowers' assets even though the proceeds of any particular loan made
hereunder may not be advanced directly to a particular Borrower, (v) each
Borrower will nonetheless benefit by the making of all such loans by Lender and
the availability of a single credit facility of a size greater than each could
independently warrant, and (vi) all of the representations, warranties,
covenants, obligations, conditions, agreements and other terms contained in the
Loan Documents shall be applicable to and shall be binding upon each Borrower.
3.8 WARRANTS
As additional consideration for the extensions of credit hereunder and
as more fully described in the Warrant Agreement, Systems shall issue and
deliver to CapitalSource Holdings LLC on the Closing Date, the Warrant. The
Warrant and number of securities purchasable upon exercise of the
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Warrant shall be subject to adjustment and shall be subject to various rights in
favor of Lender as set forth in the Warrant Agreement.
3.9 ALLOCATION OF PURCHASE PRICE
Under both GAAP consistently applied and the regulations of the
Internal Revenue Service, the issuance to Lender of the Term Note and the
Warrant for an aggregate purchase price equal to the aggregate principal amount
of the Term Note being so purchased results in the creation of "original issue
discount" on such Term Note (which original issue discount may also be deemed to
constitute the value of any Warrant issued in connection with the issuance of
such Term Note), and such regulations require the determination of the value of
any warrant so delivered. Pursuant to GAAP consistently applied and applicable
Treasury Regulations, Borrower and Lender agree to allocate $298,170 of the
purchase price to the Term Note and the remaining $18,300 of the purchase price
to the Warrant and that such allocation reflects the relative fair market values
of the Term Note and the Warrant as of their issue date. Borrower and Lender
agree to recognize and adhere to the determinations and allocations of original
issue discount and valuation of the Warrant set forth herein for all federal and
state income tax purposes. In the event of any proposed transfer of the Term
Note by Lender, Lender shall, prior to such transfer, xxxx the Term Note with a
legend pertaining to the original issue discount in the form required by
Treasury Regulation Section 1.1275-3(b)(1).
IV. CONDITIONS PRECEDENT
4.1 CONDITIONS TO INITIAL ADVANCE, FUNDING OF TERM LOAN AND CLOSING
The obligations of Lender to consummate the transactions contemplated
herein and to make the initial Advance under the Revolving Facility (the
"INITIAL ADVANCE") and to fund the Term Loan are subject to the satisfaction, in
the sole judgment of Lender, of the following:
(a) (i) Borrower shall have delivered to Lender (A) the Loan Documents
to which it is a party, each duly executed by an authorized officer of Borrower
and the other parties thereto, (B) a Borrowing Certificate for the Initial
Advance under the Revolving Facility executed by an authorized officer of
Borrower, and (ii) each Guarantor shall have delivered to Lender the Loan
Documents to which such Guarantor is a party, each duly executed and delivered
by such Guarantor or an authorized officer of such Guarantor, as applicable, and
the other parties thereto;
(b) all in form and substance satisfactory to Lender in its sole
discretion, Lender shall have received (i) a report of Uniform Commercial Code
financing statement, tax and judgment lien searches performed with respect to
each Borrower and Guarantor in each jurisdiction determined by Lender in its
sole discretion, and such report shall show no Liens on the Collateral (other
than Permitted Liens), (ii) each document (including, without limitation, any
Uniform Commercial Code financing statement) required by any Loan Document or
under law or requested by Lender to be filed, registered or recorded to create
in favor of Lender, a perfected first priority security interest upon the
Collateral, and (iii) evidence of each such filing, registration or recordation
and of the payment by Borrower of any necessary fee, tax or expense relating
thereto;
(c) Lender shall have received (i) the Charter and Good Standing
Documents, all in form and substance acceptable to Lender, (ii) a certificate of
the corporate secretary or assistant secretary of each Borrower dated the
Closing Date, as to the incumbency and signature of the Persons executing
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the Loan Documents, in form and substance acceptable to Lender, (iii) the
written legal opinion of counsel for Borrower and Guarantors, in form and
substance satisfactory to Lender and its counsel; and (iv) a certificate
executed by an authorized officer of each Borrower, which shall constitute a
representation and warranty by such Borrower as of the Closing Date and the
applicable Borrowing Date and the date of funding of the Term Loan that the
conditions contained in this Agreement have been satisfied;
(d) Lender shall have received a certificate of the chief financial
officer (or, in the absence of a chief financial officer, the chief executive
officer) of Borrower, on a consolidated basis, in form and substance
satisfactory to Lender (each, a "SOLVENCY CERTIFICATE"), certifying (i) the
solvency of such Person after giving effect to the transactions and the
Indebtedness contemplated by the Loan Documents, and (ii) as to such Person's
financial resources and ability to meet its obligations and liabilities as they
become due, to the effect that as of the Closing Date and the Borrowing Date for
the Initial Advance and the date of funding of the Term Loan and after giving
effect to such transactions and Indebtedness: (A) the assets of such Person, at
a Fair Valuation, exceed the total liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) of such Person, and (B) no
unreasonably small capital base with which to engage in its anticipated business
exists with respect to such Person;
(e) Lender shall have completed examinations, the results of which
shall be satisfactory in form and substance to Lender, of the Collateral, the
financial statements and the books, records, business, obligations, financial
condition and operational state of each Borrower and Guarantor, and each such
Person shall have demonstrated to Lender's satisfaction that (i) its operations
comply, in all respects deemed material by Lender, in its sole judgment, with
all applicable federal, state, foreign and local laws, statutes and regulations,
(ii) its operations are not the subject of any governmental investigation,
evaluation or any remedial action which could result in any expenditure or
liability deemed material by Lender, in its sole judgment, and (iii) it has no
liability (whether contingent or otherwise) that is deemed material by Lender,
in its sole judgment;
(f) Lender shall have received all fees, charges and expenses payable
to Lender on or prior to the Closing Date pursuant to the Loan Documents;
(g) all in form and substance satisfactory to Lender in its sole
discretion, Lender shall have received such consents, approvals and agreements,
including, without limitation, any applicable Landlord Waivers and Consents with
respect to any and all leases set forth on Schedule 5.4, from such third parties
as Lender and its counsel shall determine are necessary or desirable with
respect to (i) the Loan Documents and/or the transactions contemplated thereby,
and/or (ii) claims against any Borrower or Guarantor or the Collateral;
(h) Borrower shall be in compliance with Section 7.13(b) and Section
6.5, and Lender shall have received (i) certified copies of all such insurance
policies, and (ii) original certificates of such insurance policies confirming
that they are in effect and that the premiums due and owing with respect thereto
have been paid in full and naming Lender as loss payee and additional insured,
as appropriate;
(i) all corporate and other proceedings, documents, instruments and
other legal matters in connection with the transactions contemplated by the Loan
Documents (including, but not limited to, those relating to corporate and
capital structures of Borrower) shall be satisfactory to Lender;
13
(j) Lender shall have received, in form and substance satisfactory to
Lender, (i) each of the Assigned Documents, the Assigned Stock and all related
documents, agreements and instruments, including assignments of all Liens,
security interests and Uniform Commercial Code financing statements relating
thereto, and (ii) release and termination of any and all Liens, security
interest and/or Uniform Commercial Code financing statements not assigned to
Lender in, on, against or with respect to any of the Collateral (other than
Permitted Liens);
(k) the Warrant shall have been delivered to Lender and the Warrant and
a Registration Rights Agreement in connection therewith shall have been executed
and delivered to Lender, all in form and substance satisfactory to Lender; and
(l) Lender shall have received the stock certificates representing the
Assigned Stock.
4.2 CONDITIONS TO EACH ADVANCE AND FUNDING OF TERM LOAN
The obligations of Lender to make any Advance (including, without
limitation, the Initial Advance) and to fund the Term Loan are subject to the
satisfaction, in the sole judgment of Lender, of the following additional
conditions precedent:
(a) Borrower shall have delivered to Lender a Borrowing Certificate for
the Advance executed by an authorized officer of Borrower, which shall
constitute a representation and warranty by Borrower as of the Borrowing Date of
such Advance that the conditions contained in this Section 4.2 have been
satisfied; provided, however, that any determination as to whether to fund
Advances or extensions of credit shall be made by Lender in its sole discretion;
provided, however, that Lender acknowledges that it has received a satisfactory
Borrowing Certificate for the Initial Advance;
(b) each of the representation and warranties made by Borrower in or
pursuant to this Agreement shall be accurate, before and after giving effect to
such Advance and/or funding the Term Loan, and no Default or Event of Default
shall have occurred or be continuing or would exist after giving effect to the
Advance under the Revolving Facility or the funding of the Term Loan on such
date;
(c) immediately after giving effect to the requested Advance, the
aggregate outstanding principal amount of Advances under the Revolving Facility
shall not exceed the lesser of the Availability and the Facility Cap and the
aggregate outstanding principal amount of the Term Loan shall not exceed the
lesser of the Maximum Term Loan Amount and 40% of the value of the Equipment, as
determined by Lender;
(d) except as disclosed in the historical financial statements, there
shall be no liabilities or obligations with respect to Borrower of any nature
whatsoever which, either individually or in the aggregate, would reasonably be
likely to have a Material Adverse Effect;
(e) there shall not have occurred any Material Adverse Change or
Material Adverse Effect or Liability Event.
V. REPRESENTATIONS AND WARRANTIES
Each Borrower, jointly and severally, represents and warrants as of the
date hereof, the Closing Date, each Borrowing Date and, if applicable, the date
of funding of the Term Loan as follows:
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5.1 ORGANIZATION AND AUTHORITY
Each Borrower is a corporation duly organized, validly existing and in
good standing under the laws of its state of formation. Each Borrower (i) has
all requisite corporate power and authority to own its properties and assets and
to carry on its business as now being conducted and as contemplated in the Loan
Documents, (ii) is duly qualified to do business in every jurisdiction in which
failure so to qualify could reasonably be expected to have a Material Adverse
Effect, and (iii) has all requisite power and authority (A) to execute, deliver
and perform the Loan Documents to which it is a party, (B) to borrow hereunder,
(C) to consummate the transactions contemplated under the Loan Documents, and
(D) to grant the Liens with regard to the Collateral pursuant to the Security
Documents to which it is a party. No Borrower is an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, or is controlled by such an "investment company."
5.2 LOAN DOCUMENTS
The execution, delivery and performance by Borrower of the Loan
Documents to which it is a party, and the consummation of the transactions
contemplated thereby, (i) have been duly authorized by all requisite action of
each such Person and have been duly executed and delivered by or on behalf of
each such Person; (ii) do not violate any provisions of (A) applicable law,
statute, rule, regulation, ordinance or tariff, (B) any order of any
Governmental Authority binding on any such Person or any of their respective
properties, or (C) the certificate of incorporation or bylaws (or any other
equivalent governing agreement or document) of any such Person, or any agreement
between any such Person and its respective shareholders, members, partners or
equity owners or among any such shareholders, members, partners or equity
owners; (iii) are not in conflict with, and do not result in a breach or default
of or constitute an event of default, or an event, fact, condition or
circumstance which, with notice or passage of time, or both, would constitute or
result in a conflict, breach, default or event of default under, any indenture,
agreement or other instrument to which any such Person is a party, or by which
the properties or assets of such Person are bound, the effect of which could
reasonably be expected to have a Material Adverse Effect; (iv) except as set
forth therein, will not result in the creation or imposition of any Lien of any
nature upon any of the properties or assets of any such Person, and (iv) except
as set forth on Schedule 5.2, do not require the consent, approval or
authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person. When executed and delivered, each of
the Loan Documents to which Borrower is a party will constitute the legal, valid
and binding obligation of Borrower, enforceable against Borrower in accordance
with its terms, subject to the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general principles of equity
which may limit the availability of equitable remedies (whether in a proceeding
at law or in equity).
5.3 SUBSIDIARIES, CAPITALIZATION AND OWNERSHIP INTERESTS
Borrower has no Subsidiaries other than those listed on Schedule 5.3
hereto. Schedule 5.3 also states the authorized and issued capitalization of
each Borrower, the number and class of equity securities and/or ownership,
voting or partnership interests issued and outstanding of Borrower and the
record and beneficial owners thereof (including options, warrants and other
rights to acquire any of the foregoing). The outstanding equity securities
and/or ownership, voting or partnership interests of Borrower have been duly
authorized and validly issued and are fully paid and nonassessable, and each
Person listed on Schedule 5.3 owns beneficially and of record all the equity
securities and/or ownership, voting or partnership interests it is listed as
owning free and clear of any Liens other than Liens created by the Security
Documents. Schedule 5.3 also lists the directors, members, managers and/or
partners of
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Borrower. Except as listed on Schedule 5.3, Borrower does not own an interest or
participates or engages in any joint venture, partnership or similar
arrangements with any Person.
5.4 PROPERTIES
Each Borrower (i) is the sole owner and has good, valid and marketable
title to, or a valid leasehold interest in, all of its properties and assets,
including the Collateral, whether personal or real, subject to no transfer
restrictions or Liens of any kind except for Permitted Liens, and (ii) is in
compliance in all material respects with each lease to which it is a party or
otherwise bound. Schedule 5.4 lists all real properties (and their locations)
owned or leased by or to, and all other assets or property that are leased or
licensed by, Borrower and all leases (including leases of leased real property)
covering or with respect to such properties and assets. Borrower enjoys peaceful
and undisturbed possession under all such leases and such leases are all the
leases necessary for the operation of such properties and assets, are valid and
subsisting and are in full force and effect.
5.5 OTHER AGREEMENTS
Borrower is not (i) a party to any judgment, order or decree or any
agreement, document or instrument, or subject to any restriction, which would
materially adversely affect its ability to execute and deliver, or perform
under, any Loan Document or to pay the Obligations, (ii) in default in the
performance, observance or fulfillment of any obligation, covenant or condition
contained in any agreement, document or instrument to which it is a party or to
which any of its properties or assets are subject, which default, if not
remedied within any applicable grace or cure period could reasonably be expected
to have a Material Adverse Effect, nor is there any event, fact, condition or
circumstance which, with notice or passage of time or both, would constitute or
result in a conflict, breach, default or event of default under, any of the
foregoing which, if not remedied within any applicable grace or cure period
could reasonably be expected to have a Material Adverse Effect; or (iii) a party
or subject to any agreement, document or instrument with respect to, or
obligation to pay any, service or management fee with respect to, the ownership,
operation, leasing or performance of any of its business or any facility, nor is
there any manager with respect to any such facility.
5.6 LITIGATION
Except as set forth on Schedule 5.6 hereto, there is no action, suit,
proceeding or investigation pending or, to their knowledge, threatened against
Borrower that (i) questions or could prevent the validity of any of the Loan
Documents or the right of Borrower to enter into any Loan Document or to
consummate the transactions contemplated thereby, (ii) could reasonably be
expected to be or have, either individually or in the aggregate, any Material
Adverse Change or Material Adverse Effect, or (iii) could reasonably be expected
to result in any Change of Control or other change in the current ownership,
control or management of Borrower. Borrower is not aware that there is any basis
for the foregoing. Borrower is not a party or subject to any order, writ,
injunction, judgment or decree of any Governmental Authority. There is no
action, suit, proceeding or investigation initiated by Borrower currently
pending. Borrower has not any existing accrued and/or unpaid Indebtedness to any
Governmental Authority or any other governmental payor.
5.7 HAZARDOUS MATERIALS
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Borrower is in compliance in all material respects with all applicable
Environmental Laws. Borrower has not been notified of any action, suit,
proceeding or investigation (i) relating in any way to compliance by or
liability of Borrower under any Environmental Laws, (ii) which otherwise deals
with any Hazardous Substance or any Environmental Law, or (iii) which seeks to
suspend, revoke or terminate any license, permit or approval necessary for the
generation, handling, storage, treatment or disposal of any Hazardous Substance.
5.8 TAX RETURNS; GOVERNMENTAL REPORTS
Except as set forth on Schedule 5.8, Borrower (i) has filed all
federal, state, foreign (if applicable) and local tax returns and other reports
which are required by law to be filed by Borrower, and (ii) has paid all taxes,
assessments, fees and other governmental charges, including, without limitation,
payroll and other employment related taxes, in each case that are due and
payable, except only for items that Borrower is currently contesting in good
faith and that are described on Schedule 5.8.
5.9 FINANCIAL STATEMENTS AND REPORTS
All financial statements and financial information relating to Borrower
that have been or may hereafter be delivered to Lender by Borrower are accurate
and complete and have been prepared in accordance with GAAP consistently applied
with prior periods. Borrower has no material obligations or liabilities of any
kind not disclosed in such financial information or statements, and since the
date of the most recent financial statements submitted to Lender, there has not
occurred any Material Adverse Change, Material Adverse Effect or Liability Event
or, to Borrower's knowledge, any other event or condition that could reasonably
be expected to have a Material Adverse Effect or Liability Event.
5.10 COMPLIANCE WITH LAW
Except as set forth in Schedule 5.10, Borrower (i) is in compliance
with all laws, statutes, rules, regulations, ordinances and tariffs of any
Governmental Authority applicable to Borrower and/or Borrower's business, assets
or operations, including, without limitation, ERISA and Healthcare Laws, and
(ii) is not in violation of any order of any Governmental Authority or other
board or tribunal, except where noncompliance or violation could not reasonably
be expected to have a Material Adverse Effect. There is no event, fact,
condition or circumstance which, with notice or passage of time, or both, would
constitute or result in any noncompliance with, or any violation of, any of the
foregoing, in each case except where noncompliance or violation could not
reasonably be expected to have a Material Adverse Effect. Borrower has not
received any notice that Borrower is not in compliance in any respect with any
of the requirements of any of the foregoing. Borrower has (a) not engaged in any
Prohibited Transactions as defined in Section 406 of ERISA and Section 4975 of
the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder, (b) not failed to meet any applicable minimum funding
requirements under Section 302 of ERISA in respect of its plans and no funding
requirements have been postponed or delayed, (c) no knowledge of any event or
occurrence which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Title IV of ERISA to terminate any of the employee
benefit plans, (d) no fiduciary responsibility under ERISA for investments with
respect to any plan existing for the benefit of Persons other than its employees
or former employees, or (e) not withdrawn, completely or partially, from any
multi-employer pension plans so as to incur liability under the MultiEmployer
Pension Plan Amendments of 1980. With respect to Borrower, there exists no event
described in Section 4043 of ERISA, excluding Subsections 4043(b)(2) and
4043(b)(3) thereof, for which the thirty (30) day notice period contained in 12
C.F.R. ss. 2615.3 has
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not been waived. Borrower has maintained in all material respects all records
required to be maintained by the Joint Commission on Accreditation of Healthcare
Organizations, the Food and Drug Administration, Drug Enforcement Agency and
State Boards of Pharmacy and the federal and state Medicare and Medicaid
programs as required by the Healthcare Laws and, to the best knowledge of
Borrower, there are no presently existing circumstances which likely would
result in material violations of the Healthcare Laws. There is no Liability
Event.
5.11 INTELLECTUAL PROPERTY
Except as set forth on Schedule 5.11, Borrower does not own, license or
utilize, and is not a party to, any patents, patent applications, trademarks,
trademark applications, service marks, registered copyrights, copyright
applications, copyrights, trade names, trade secrets, software or licenses
(collectively, the "INTELLECTUAL PROPERTY").
5.12 LICENSES AND PERMITS; LABOR
Borrower is in compliance with and has all Permits and Intellectual
Property necessary or required by applicable law or Governmental Authority for
the operation of its businesses. All of the foregoing are in full force and
effect and not in known conflict with the rights of others. Borrower is not (i)
in breach of or default under the provisions of any of the foregoing, nor is
there any event, fact, condition or circumstance which, with notice or passage
of time or both, would constitute or result in a conflict, breach, default or
event of default under, any of the foregoing which, if not remedied within any
applicable grace or cure period could reasonably be expected to have a Material
Adverse Effect, (ii) a party to or subject to any agreement, instrument or
restriction that is so unusual or burdensome that it might have a Material
Adverse Effect, and/or (ii) and has not been, involved in any labor dispute,
strike, walkout or union organization which could reasonably be expected to have
a Material Adverse Effect
5.13 NO DEFAULT
There does not exist any Default or Event of Default or any event,
fact, condition or circumstance which, with the giving of notice or passage of
time or both, would constitute or result in a Default or Event of Default.
5.14 DISCLOSURE
No Loan Document nor any other agreement, document, certificate, or
statement furnished to Lender by or on behalf of Borrower in connection with the
transactions contemplated by the Loan Documents, nor any representation or
warranty made by Borrower in any Loan Document, contains any untrue statement of
material fact or omits to state any fact necessary to make the statements
therein not materially misleading. There is no fact known to Borrower that has
not been disclosed to Lender in writing that could reasonably be expected to
have a Material Adverse Effect.
5.15 EXISTING INDEBTEDNESS; INVESTMENTS, GUARANTEES AND CERTAIN CONTRACTS
Except as contemplated by the Loan Document or as otherwise set forth
on Schedule 5.15, Borrower (i) has no outstanding Indebtedness, (ii) is not
subject or party to any mortgage, note, indenture, indemnity or guarantee of,
with respect to or evidencing any Indebtedness of any other Person, or (iii)
does not own or hold any equity or long-term debt investments in, and does not
have any
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outstanding advances to or any outstanding guarantees for the obligations of, or
any outstanding borrowings from, any Person. Borrower has performed all material
obligations required to be performed by Borrower pursuant to or connection with
any items listed on Schedule 5.15 and there has occurred no breach, default or
event of default under any document evidencing any such items or any fact,
circumstance, condition or event which, with the giving of notice or passage of
time or both, would constitute or result in a breach, default or event of
default thereunder.
5.16 OTHER AGREEMENTS
Except as set forth on Schedule 5.16, (i) there are no existing or
proposed agreements, arrangements, understandings or transactions between
Borrower and any of Borrower's officers, members, managers, directors,
stockholders, partners, other interest holders, employees or affiliates or any
members of their respective immediate families, and (ii) none of the foregoing
Persons are directly or indirectly, indebted to or have any direct or indirect
ownership, partnership or voting interest in, to Borrower's knowledge, any
affiliate of Borrower or any Person with which Borrower has a business
relationship or which competes with Borrower (except that any such Persons may
own stock in (but not exceeding two (2%) percent of the outstanding capital
stock of) any publicly traded company that may compete with Borrower.
5.17 INSURANCE
Borrower has in full force and effect such insurance policies as are
customary in its industry and as may be required pursuant to Section 6.5 hereof.
All such insurance policies are listed and described on Schedule 5.17.
5.18 NAMES; LOCATION OF OFFICES, RECORDS AND COLLATERAL
During the preceding five years, Borrower has not conducted business
under or used any name (whether corporate, partnership or assumed) other than as
shown on Schedule 5.18A. Borrower is the sole owner of all of its names listed
on Schedule 5.18A, and any and all business done and invoices issued in such
names are Borrower's sales, business and invoices. Each trade name of Borrower
represents a division or trading style of Borrower. Borrower maintains its
places of business and chief executive offices only at the locations set forth
on Schedule 5.18B, and all Accounts of Borrower arise, originate and are
located, and all of the Collateral and all books and records in connection
therewith or in any way relating thereto or evidence the Collateral are located
and shall be only, in and at such locations. All of the Collateral is located
only in the continental United States.
5.19 NON-SUBORDINATION
The Obligations are not subordinated in any way to any other
obligations of Borrower or to the rights of any other Person, except as
disclosed on Schedule 5.19.
5.20 ACCOUNTS
In determining which Accounts are Eligible Receivables, Lender may rely
on all statements and representations made by Borrower with respect to any
Account. Unless otherwise indicated in writing to Lender, each Account of
Borrower (i) is genuine and in all respects what is purports to be and is not
evidenced by a judgment, (ii) arises out of a completed, bona fide sale and
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delivery of goods or rendering of Services by Borrower in the ordinary course of
business and in accordance with the terms and conditions of all purchase orders,
contracts, certifications, participations, certificates of need and other
documents relating thereto or forming a part of the contract between Borrower
and the Account Debtor, (iii) is for a liquidated amount maturing as stated in a
claim or invoice covering such sale of goods or rendering of Services, a copy of
which has been furnished or is available to Lender, (iv) together with Lender's
security interest therein, is not and will not be in the future (by voluntary
act or omission by Borrower), subject to any offset, lien, deduction, defense,
dispute, counterclaim or other adverse condition, is absolutely owing to
Borrower and is not contingent in any respect or for any reason (except Accounts
owed or owing by Medicaid/Medicare Account Debtors that may be subject to offset
or deduction under applicable law), (v) there are no facts, events or
occurrences which in any way impair the validity or enforceability thereof or
tend to reduce the amount payable thereunder from the face amount of the claim
or invoice and statements delivered to Lender with respect thereto, (vi) to the
best of Borrower's knowledge, (A) the Account Debtor thereunder had the capacity
to contract at the time any contract or other document giving rise thereto was
executed and (B) such Account Debtor is solvent, (vii) to the best of Borrower's
knowledge, subject to subsection (x) below, there are no proceedings or actions
which are threatened or pending against any Account Debtor thereunder which
might result in any material adverse change in such Account Debtor's financial
condition or the collectibility thereof, (viii) has been billed and forwarded to
the Account Debtor for payment in accordance with applicable laws and is in
compliance and conformance with any requisite procedures, requirements and
regulations governing payment by such Account Debtor with respect to such
Account, and, if due from a Medicaid/Medicare Account Debtor, is properly
payable directly to Borrower, (ix) Borrower has obtained and currently has all
Permits necessary in the generation thereof, and (x) Borrower has disclosed to
Lender on each Borrowing Certificate the amount of all Accounts of Borrower for
which Medicare is the Account Debtor and for which payment has been denied and
subsequently appealed pursuant to the procedure described in the definition of
Eligible Receivables hereof, and Borrower is pursuing all available appeals in
respect of such Accounts.
5.21 HEALTHCARE
Without limiting or being limited by any other provision of any Loan
Document, Borrower has timely filed or caused to be filed all cost and other
reports of every kind required by law, agreement or otherwise. Subject to
subsection (x) of Section 5.21, there are no claims, actions or appeals pending
(and Borrower has not filed any claims or reports which could reasonably result
in any such claims, actions or appeals) before any commission, board or agency
or other Governmental Authority, including, without limitation, any intermediary
or carrier, the Provider Reimbursement Review Board or the Administrator of the
Center for Medicare and Medicaid Services, with respect to any state or federal
Medicare or Medicaid cost reports or claims filed by Borrower, or any
disallowance by any commission, board or agency or other Governmental Authority
in connection with any audit of such cost reports. No validation review or
program integrity review related to Borrower or the consummation of the
transactions contemplated herein or to the Collateral have been conducted by any
commission, board or agency or other Governmental Authority in connection with
the Medicare or Medicaid programs, and to the knowledge of Borrower, no such
reviews are scheduled, pending or threatened against or affecting any of the
providers, any of the Collateral or the consummation of the transactions
contemplated hereby.
5.22 SURVIVAL
Borrower makes the representations and warranties contained herein with
the knowledge and intention that Lender is relying and will rely thereon. All
such representations and warranties will
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survive the execution and delivery of this Agreement, the making of the Advances
under the Revolving Facility and the funding of the Term Loan.
VI. AFFIRMATIVE COVENANTS
Each Borrower, jointly and severally, covenants and agrees that, until
full performance and satisfaction, and indefeasible payment in full in cash, of
all the Obligations and termination of this Agreement:
6.1 FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION
(a) Financial Reports. Borrower shall furnish to Lender (i) as soon as
available and in any event within ninety (90) calendar days after the end of
each fiscal year of Borrower, audited annual consolidated and consolidating
financial statements of Borrower, including the notes thereto, consisting of a
consolidated and consolidating balance sheet at the end of such completed fiscal
year and the related consolidated and consolidating statements of income,
retained earnings, cash flows and owners' equity for such completed fiscal year,
which financial statements shall be prepared and certified without qualification
by an independent certified public accounting firm satisfactory to Lender and
accompanied by related management letters, if available, and (ii) as soon as
available and in any event within forty-five (45) calendar days after the end of
each calendar month, unaudited consolidated and consolidating financial
statements of Borrower consisting of a balance sheet and statements of income,
retained earnings, cash flows and owners' equity as of the end of the
immediately preceding calendar month. With each such financial statement,
Borrower shall also deliver a certificate of its chief financial officer stating
that (A) all such financial statements shall be prepared in accordance with GAAP
consistently applied with prior periods, (B) such person has reviewed the
relevant terms of the Loan Documents and the condition of Borrower, (C) no
Default or Event of Default has occurred or is continuing, or, if any of the
foregoing has occurred or is continuing, specifying the nature and status and
period of existence thereof and the steps taken or proposed to be taken with
respect thereto, and (D) Borrower is in compliance with all financial covenants
attached as Annex I hereto. Such certificate shall be accompanied by the
calculations necessary to show compliance with the financial covenants in a form
satisfactory to the Lender.
(b) Other Materials. Borrower shall furnish to Lender upon Lender's
request and as soon as available, and in any event within fifteen (15) calendar
days after the preparation or issuance thereof or at such other time as set
forth below: (i) copies of such financial statements (other than those required
to be delivered pursuant to Section 6.1(a) prepared by, for or on behalf of
Borrower and any other notes, reports and other materials related thereto,
including, without limitation, any pro forma financial statements, (ii) any
reports, returns, information, notices and other materials that Borrower shall
send to its stockholders, members, partners or other equity owners at any time,
(iii) all Medicare and Medicaid information as required under sub-part (iv) of
this section; (iv) within fifteen (15) calendar days after the end of each
period for such period, (A) monthly sales and collection reports and accounts
receivable and accounts payable aging schedules, including a report of sales,
credits issued and collections received, all such reports showing a
reconciliation to the amounts reported in the monthly financial statements, and
(B) quarterly detail required to confirm contractual disallowances and other
adjustments under the borrowing base, (v) promptly upon receipt thereof, copies
of any reports submitted to Borrower by its independent accountants in
connection with any interim audit of the books of such Person or any of its
affiliates and copies of each management control letter provided by such
independent
21
accountants, and (vi) such additional information, documents, statements,
reports and other materials as Lender may reasonably request from a credit or
security perspective or otherwise from time to time.
(c) Notices. Borrower shall promptly, and in any event within ten (10)
calendar days after Borrower or any authorized officer of Borrower obtains
knowledge thereof, notify Lender in writing of (i) any pending or threatened
litigation, suit, investigation, arbitration, dispute resolution proceeding or
administrative proceeding brought or initiated by Borrower or otherwise
affecting or involving or relating to Borrower or any of its property or assets
to the extent (A) the amount in controversy exceeds $250,000, or (B) to the
extent any of the foregoing seeks injunctive relief, (ii) any Default or Event
of Default, which notice shall specify the nature and status thereof, the period
of existence thereof and what action is proposed to be taken with respect
thereto, (iii) any other development, event, fact, circumstance or condition
that could reasonably be expected to have a Material Adverse Effect, in each
case describing the nature and status thereof and the action proposed to be
taken with respect thereto, (iv) any notice received by Borrower from any payor
of a claim, suit or other action such payor has, claims or has filed against
Borrower, (v) any matter(s) affecting the value, enforceability or
collectibility of any of the Collateral, including, without limitation, claims
or disputes in the amount of $250,000 or more, singly or in the aggregate, in
existence at any one time, (vi) any notice given by Borrower to any other lender
of Borrower and shall furnish to Lender a copy of such notice, (vii) if any
Eligible Receivable ceases to be an Eligible Receivable, (viii) receipt of any
notice or request from any Governmental Authority or governmental payor
regarding any liability or claim of liability, (ix) receipt of any notice by
Borrower regarding termination of any manager of any facility owed, operated or
leased by Borrower, and/or (x) if any Account becomes evidenced or secured by an
instrument or chattel paper.
(d) Consents. Borrower shall obtain and deliver from time to time all
required consents, approvals and agreements from such third parties as Lender
shall determine are necessary or desirable in its reasonable discretion and that
are satisfactory to Lender with respect to (i) the Loan Documents and the
transactions contemplated thereby, (ii) claims against Borrower or the
Collateral, and/or (iii) any agreements, consents, documents or instruments to
which Borrower is a party or by which any properties or assets of Borrower or
any of the Collateral is or are bound or subject, including, without limitation,
Landlord Waivers and Consents with respect to leases.
(e) Operating Budget. Borrower shall furnish to Lender on or prior to
the Closing Date and for each fiscal year of Borrower thereafter not less than
thirty (30) calendar days after the commencement of such fiscal year,
consolidated and consolidating month by month projected operating budgets,
annual projections, profit and loss statements, balance sheets and cash flow
reports of and for Borrower for such upcoming fiscal year (including an income
statement for each month and a balance sheet as at the end of the last month in
each fiscal quarter), in each case prepared in accordance with GAAP consistently
applied with prior periods.
6.2 PAYMENT OF OBLIGATIONS
Borrower shall make full and timely indefeasible payment in cash of the
principal of and interest on the Loans, Advances and all other Obligations.
Simultaneously upon any prepayment of the Revolving Loan and termination of the
Revolving Facility, Borrower shall make full indefeasible payment in cash of the
principal of and interest on the Term Loan and all other Obligations relating to
the Term Loan.
6.3 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS
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Borrower shall (i) conduct its business in accordance with good
business practices customary to the industry, (ii) engage principally in the
same or similar lines of business substantially as heretofore conducted, (iii)
collect its Accounts in the ordinary course of business, (iv) maintain all of
its material properties, assets and equipment used or useful in its business in
good repair, working order and condition (normal wear and tear excepted and
except as may be disposed of in the ordinary course of business and in
accordance with the terms of the Loan Documents), (v) from time to time to make
all necessary or desirable repairs, renewals and replacements thereof, (vi)
maintain and keep in full force and effect its existence and all material
Permits and qualifications to do business and good standing in each jurisdiction
in which the ownership or lease of property or the nature of its business makes
such Permits or qualification necessary and in which failure to maintain such
Permits or qualification could reasonably be likely to have a Material Adverse
Effect; and (vii) remain in good standing and maintain operations in all
jurisdictions in which currently located, and (viii) provide Lender with thirty
(30) days prior notice of any change in the state of Borrower's incorporation or
formation.
6.4 COMPLIANCE WITH LEGAL AND OTHER OBLIGATIONS
Borrower shall (i) comply with all laws, statutes, rules, regulations,
ordinances and tariffs of all Governmental Authorities applicable to it or its
business, assets or operations, (ii) pay all taxes, assessments, fees,
governmental charges, claims for labor, supplies, rent and all other obligations
or liabilities of any kind, except liabilities being contested in good faith and
against which adequate reserves have been established, (iii) perform in
accordance with its terms each contract, agreement or other arrangement to which
it is a party or by which it or any of the Collateral is bound, except where the
failure to comply, pay or perform could not reasonably be expected to have a
Material Adverse Effect, (iv) maintain and comply with all Permits necessary to
conduct its business and comply with any new or additional requirements that may
be imposed on it or its business, and (v) properly file all Medicaid/Medicare
cost reports.
6.5 INSURANCE
Borrower shall (i) keep all of its insurable properties and assets
adequately insured in all material respects against losses, damages and hazards
as are customarily insured against by businesses engaging in similar activities
or owning similar assets or properties and at least the minimum amount required
by applicable law, including, without limitation, medical malpractice and
professional liability insurance, as applicable; and maintain general public
liability insurance at all times against liability on account of damage to
persons and property having such limits, deductibles, exclusions and
co-insurance and other provisions as are customary for a business engaged in
activities similar to those of Borrower; and (ii) maintain insurance under all
applicable workers' compensation laws; all of the foregoing insurance policies
to (A) be reasonably satisfactory in form and substance to Lender, (B) name
Lender as loss payee and additional insured, [EXCEPT WITH RESPECT TO BUSINESS
INTERRUPTION INSURANCE] and (C) expressly provide that they cannot be altered,
amended, modified or canceled without thirty (30) Business Days prior written
notice to Lender and that they inure to the benefit of Lender notwithstanding
any action or omission or negligence of or by Borrower or any insured
thereunder.
6.6 TRUE BOOKS
Borrower shall (i) keep true, complete and accurate books of record and
account in accordance with commercially reasonable business practices in which
true and correct entries are made of all of its and their dealings and
transactions in all material respects; and (ii) set up and maintain on its
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books such reserves as may be required by GAAP with respect to doubtful accounts
and all taxes, assessments, charges, levies and claims and with respect to its
business, and include such reserves in its quarterly as well as year end
financial statements.
6.7 INSPECTION; PERIODIC AUDITS
Borrower shall permit the representatives of Lender, at the expense of
Borrower, from time to time during normal business hours upon reasonable notice,
to (i) visit and inspect any of its offices or properties or any other place
where Collateral is located to inspect the Collateral and/or to examine or audit
all of its books of account, records, reports and other papers, (ii) make copies
and extracts therefrom, and (iii) discuss its business, operations, prospects,
properties, assets, liabilities, condition and/or Accounts with its officers and
independent public accountants (and by this provision such officers and
accountants are authorized to discuss the foregoing).
6.8 FURTHER ASSURANCES; POST CLOSING
At Borrower's cost and expense, Borrower shall (i) within five (5)
Business Days after Lender's demand, take such further actions, obtain such
consents and approvals and duly execute and deliver such further agreements,
assignments, instructions or documents as Lender may request with respect to the
purposes, terms and conditions of the Loan Documents and the consummation of the
transactions contemplated thereby, whether before, at or after the performance
and/or consummation of the transactions contemplated hereby or the occurrence of
a Default or Event of Default, (ii) without limiting and notwithstanding any
other provision of any Loan Document, execute and deliver, or cause to be
executed and delivered, such agreements and documents, and take or cause to be
taken such actions, and otherwise perform, observe and comply with such
obligations, as are set forth on Schedule 6.8, and (iii) upon the exercise by
Lender or any of its affiliates of any power, right, privilege or remedy
pursuant to any Loan Document or under applicable law or at equity which
requires any consent, approval, registration, qualification or authorization of
any Governmental Authority, execute and deliver, or cause the execution and
delivery of, all applications, certificates, instruments and other documents
that may be so required for such consent, approval, registration, qualification
or authorization. Without limiting the foregoing, upon the exercise by Lender or
any of its affiliates of any right or remedy under any Loan Document which
requires any consent, approval or registration with, consent, qualification or
authorization by, any Person, Borrower shall execute and deliver, or cause the
execution and delivery of, all applications, certificates, instruments and other
documents that Lender or its affiliate may be required to obtain for such
consent, approval, registration, qualification or authorization.
6.9 PAYMENT OF INDEBTEDNESS
Except as otherwise prescribed in the Loan Documents, Borrower shall
pay, discharge or otherwise satisfy at or before maturity (subject to applicable
grace periods and, in the case of trade payables, to ordinary course payment
practices) all of its material obligations and liabilities, except when the
amount or validity thereof is being contested in good faith by appropriate
proceedings and such reserves as Lender may deem proper and necessary in its
sole discretion shall have been made.
6.10 LIEN SEARCHES
If Liens other than Permitted Liens exist, Borrower immediately shall
take, execute and deliver all actions, documents and instruments necessary to
release and terminate such Liens.
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6.11 USE OF PROCEEDS
Borrower shall use the proceeds from the Revolving Facility and Term
Loan only for the purposes set forth in the third "WHEREAS" clause at the
beginning of this Agreement.
6.12 COLLATERAL DOCUMENTS; SECURITY INTEREST IN COLLATERAL
Borrower shall (i) execute, obtain, deliver, file, register and/or
record any and all financing statements, continuation statements, stock powers,
instruments and other documents, or cause the execution, filing, registration,
recording or delivery of any and all of the foregoing, that are necessary or
required under law or otherwise or reasonably requested by Lender to be
executed, filed, registered, obtained, delivered or recorded to create,
maintain, perfect, preserve, validate or otherwise protect the pledge of the
Collateral to Lender and Lender's perfected first priority Lien on the
Collateral (and Borrower irrevocably grants Lender the right, at Lender's
option, to file any or all of the foregoing), (ii) immediately upon learning
thereof, report to Lender any reclamation, return or repossession of goods in
excess of $10,000.00 (individually or in the aggregate), and (iii) defend the
Collateral and Lender's perfected first priority Lien thereon against all claims
and demands of all Persons at any time claiming the same or any interest therein
adverse to Lender, and pay all reasonable costs and expenses (including, without
limitation, in-house documentation and diligence fees and legal expenses and
reasonable attorneys' fees and expenses) in connection with such defense, which
may at Lender's discretion be added to the Obligations.
6.13 MAINTENANCE OF PROFESSIONAL SERVICES AND SUPPORT AGREEMENTS
OptiCare shall maintain the existing Professional Services and Support
Agreement, dated as of November 30, 1995 with OptiCare P.C. at all times until
the Obligations are indefeasibly repaid in full. PVH shall maintain the existing
Professional Services and Support Agreement, dated as of August 10, 1999 and its
existing blocked account arrangements with Optometric Eye Care Centers, P.A at
all times until the Obligations are indefeasibly repaid in full.
6.14 TAXES AND OTHER CHARGES
All payments and reimbursements to Lender made under any Loan Document
shall be free and clear of and without deduction for all taxes, levies, imposts,
deductions, assessments, charges or withholdings, and all liabilities with
respect thereto of any nature whatsoever, excluding taxes to the extent imposed
on Lender's net income. If Borrower shall be required by law to deduct any such
amounts from or in respect of any sum payable under any Loan Document to Lender,
then the sum payable to Lender shall be increased as may be necessary so that,
after making all required deductions, Lender receives an amount equal to the sum
it would have received had no such deductions been made. Notwithstanding any
other provision of any Loan Document, if at any time after the Closing (i) any
change in any existing law, regulation, treaty or directive or in the
interpretation or application thereof, (ii) any new law, regulation, treaty or
directive enacted or any interpretation or application thereof, or (iii)
compliance by Lender with any request or directive (whether or not having the
force of law) from any Governmental Authority: generally applicable to lender
similar to Lender (A) subjects Lender to any tax, levy, impost, deduction,
assessment, charge or withholding of any kind whatsoever with respect to any
Loan Document, or changes the basis of taxation of payments to Lender of any
amount payable thereunder (except for net income taxes, or franchise taxes
imposed in lieu of net income taxes, imposed
25
generally by federal, state or local taxing authorities with respect to interest
or commitment fees or other fees payable hereunder or changes in the rate of tax
on the overall net income of Lender), or (B) imposes on Lender any other
condition or increased cost in connection with the transactions contemplated
thereby or participations therein; and the result of any of the foregoing is to
increase the cost to Lender of making or continuing any Loan hereunder or to
reduce any amount receivable hereunder, then, in any such case, Borrower shall
pay to Lender within thirty (30) days of notice upon Lender any additional
amounts necessary to compensate Lender, on an after-tax basis, for such
additional cost or reduced amount as determined by Lender. If Lender becomes
entitled to claim any additional amounts pursuant to this Section 6.14 it shall
promptly notify Borrower of the event by reason of which Lender has become so
entitled, and each such notice of additional amounts payable pursuant to this
Section 6.14 submitted by Lender to Borrower shall, absent manifest error, be
presumptive and conclusive for all purposes. Without limiting or being limited
by any other provision of any Loan Document, Borrower at all times shall retain
and use a Person acceptable to Lender to process, manage and pay its payroll
taxes and shall cause to be delivered to Lender within fifteen (15) calendar
days after the end of each calendar quarter a report of its payroll taxes for
the immediately preceding calendar quarter and evidence of payment thereof by
providing copies of the reports of payroll taxes provided by ADP or other
service provider.
6.15 ACCOUNTS RECEIVABLE AGEING
Commencing in February 2002, Borrower shall provide to Lender a monthly
ageing of Accounts Receivable generated by each retail store located in North
Carolina.
6.16 PHYSICAL INVENTORY
Commencing in February 2002, Borrower shall provide to Lender a monthly
report of the results of a physical inventory conducted at Borrower's Waterbury
Connecticut distribution center.
VII. NEGATIVE COVENANTS
Each Borrower, jointly and severally, covenants and agrees that, until
full performance and satisfaction, and indefeasible payment in full in cash, of
all the Obligations and termination of this Agreement:
7.1 FINANCIAL COVENANTS
Borrower shall not violate the financial covenants set forth in Annex I
to this Agreement, which is incorporated herein and made a part hereof.
7.2 INDEBTEDNESS
Borrower shall not create, incur, assume or suffer to exist any
Indebtedness, except the following (collectively, "PERMITTED INDEBTEDNESS"): (i)
Indebtedness under the Loan Documents, (ii) any Indebtedness set forth on
Schedule 7.2, (iii) Capitalized Lease Obligations incurred after the Closing
Date and Indebtedness incurred pursuant to purchase money Liens as along as the
effect of
26
incurring the Capitalized Lease Obligations and/or Indebtedness does not violate
(or with the passage of time) the financial covenants set forth in Annex I, (iv)
Indebtedness in connection with advances made by a stockholder in order to cure
any default of the financial covenants set forth on Annex I; provided, however,
that such Indebtedness owed to a stockholder shall be on an unsecured basis,
subordinated in right of repayment and remedies to all of the Obligations and to
all of Lender's rights and in form and substance satisfactory to Lender; (v)
accounts payable to trade creditors and current operating expenses (other than
for borrowed money) which are not aged more than 150 calendar days from the
billing date, in each case incurred in the ordinary course of business and paid
within such time period, unless the same are being contested in good faith and
by appropriate and lawful proceedings and such reserves, if any, with respect
thereto as are required by GAAP and deemed adequate by Borrower's independent
accountants shall have been reserved; and (vi) borrowings incurred in the
ordinary course of business and not exceeding $250,000 individually or in the
aggregate outstanding at any one time; provided, however, that such Indebtedness
shall be on an unsecured basis, subordinated in right of repayment and remedies
to all of the Obligations and to all of Lender's rights and in form and
substance satisfactory to Lender. Borrower shall not make prepayments on any
existing or future Indebtedness to any Person other than to Lender or to the
extent specifically permitted by this Agreement or any subsequent agreement
between Borrower and Lender).
7.3 LIENS
Borrower shall not create, incur, assume or suffer to exist any Lien
upon, in or against, or pledge of, any of the Collateral or any of its
properties or assets or any of its shares, securities or other equity or
ownership or partnership interests, whether now owned or hereafter acquired,
except the following (collectively, "PERMITTED LIENS"): (i) Liens under the Loan
Documents or otherwise arising in favor of Lender, (ii) Liens imposed by law for
taxes, assessments or charges of any Governmental Authority for claims not yet
due or which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves or other appropriate provisions are
being maintained by such Person in accordance with GAAP to the satisfaction of
Lender in its sole discretion, (iii) (A) statutory Liens of landlords (provided
that any such landlord has executed a Landlord Waiver and Consent in form and
substance satisfactory to Lender) and of carriers, warehousemen, mechanics,
materialmen, and (B) other Liens imposed by law or that arise by operation of
law in the ordinary course of business from the date of creation thereof, in
each case only for amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained by such Person in accordance
with GAAP to the satisfaction of Lender in its sole discretion, (iv) Liens (A)
incurred or deposits made in the ordinary course of business (including, without
limitation, surety bonds and appeal bonds) in connection with workers'
compensation, unemployment insurance and other types of social security benefits
or to secure the performance of tenders, bids, leases, contracts (other than for
the repayment of Indebtedness), statutory obligations and other similar
obligations, or (B) arising as a result of progress payments under government
contracts, (v) purchase money Liens (A) securing Indebtedness permitted under
Section 7.2(iii), or (B) in connection with the purchase by such Person of
equipment in the normal course of business, provided that such payables shall
not exceed any limits on Indebtedness provided for herein and shall otherwise be
Permitted Indebtedness hereunder, (vi) Liens necessary and desirable for the
operation of such Person's business, provided Lender has consented to such Liens
in writing before their creation and existence and the priority of such Liens
and the debt secured thereby are both subject and subordinate in all respects to
the Liens securing the Collateral and to the Obligations and all of the rights
and remedies of Lender, all in form and substance satisfactory to Lender in its
sole discretion; and (vii) Liens disclosed on Schedule 7.3.
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7.4 INVESTMENTS; NEW FACILITIES OR COLLATERAL
Borrower, directly or indirectly, shall not without Lender's prior
written consent which shall not be unreasonably withheld or delayed (i)
purchase, own, hold, invest in or otherwise acquire Obligations or stock or
securities of, or any other interest in, or all or substantially all of the
assets of, any Person or any joint venture, or (ii) make or permit to exist any
loans, advances or guarantees to or for the benefit of any Person or assume,
guarantee, endorse, contingently agree to purchase or otherwise become liable
for or upon or incur any obligation of any Person (other than those created by
the Loan Documents and Permitted Indebtedness set forth on Schedule 7.2 and
other than (A) trade credit extended in the ordinary course of business, (B)
advances for business travel and similar temporary advances made in the ordinary
course of business to officers, directors and employees, and (C) the endorsement
of negotiable instruments for deposit or collection or similar transactions in
the ordinary course of business. Borrower, directly or indirectly, shall not
purchase, own, operate, hold, invest in or otherwise acquire any facility,
property or assets or any Collateral that is not located at the locations set
forth on Schedule 5.18B unless Borrower shall provide to Lender at least thirty
(30) Business Days prior written notice.
7.5 DIVIDENDS; REDEMPTIONS
Borrower shall not (i) declare, pay or make any dividend or
distribution on any shares of capital stock or other securities or interests
(other than dividends or distributions payable in its stock, or split-ups or
reclassifications of its stock), (ii) apply any of its funds, property or assets
to the acquisition, redemption or other retirement of any capital stock or other
securities or interests or of any options to purchase or acquire any of the
foregoing (provided, however, that Borrower may redeem its capital stock from
terminated employees pursuant to, but only to the extent required under, the
terms of the related employment agreements as long as no Default or Event of
Default has occurred and is continuing or would be caused by or result
therefrom), (iii) otherwise make any payments or Distributions to any
stockholder, member, partner or other equity owner in such Person's capacity as
such, (iv) make any payment of any management, service or related or similar fee
to any affiliate or subsidiary of Borrower except in the manner and amount as
set forth on Schedule 7.5, provided, that notwithstanding any provision of any
Loan Document, Borrower shall not make or suffer to exist any Distribution or
payment under any Service or Management Agreement or under any document or
instrument executed or delivered in connection with the Restructure Agreement in
any amount if a Default of Event of Default has occurred and is continuing or
would result therefrom.
7.6 TRANSACTIONS WITH AFFILIATES; NO NEW SUBSIDIARIES
(a) Borrower shall not enter into or consummate any transaction of any
kind with any of its affiliates or any Guarantor or any of their respective
affiliates other than: (i) salary, bonus, employee stock option and other
compensation and employment arrangements with directors or officers in the
ordinary course of business, provided, that no payment of any bonus shall be
permitted if a Default or Event of Default has occurred and remains in effect or
would be caused by or result from such payment, (ii) distributions and dividends
permitted pursuant to Section 7.5, (iii) transactions on overall terms at least
as favorable to Borrower as would be the case in an arm's-length transaction
between unrelated parties of equal bargaining power, (iv) transactions with
Lender or any affiliate of Lender, (v) payments permitted under and pursuant to
written agreements entered into by and between Borrower and one or more of its
affiliates that both (A) reflect and constitute transactions on overall terms at
least as favorable to Borrower as would be the case in an arm's-length
transaction between unrelated parties of equal bargaining power, and (B) are
subject to such terms and conditions as determined by Lender in its sole
discretion; provided, that notwithstanding the foregoing, Borrower shall not (Y)
enter into or
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consummate any transaction or agreement pursuant to which it becomes a party to
any mortgage, note, indenture or guarantee evidencing any Indebtedness of any of
its affiliates or otherwise to become responsible or liable, as a guarantor,
surety or otherwise, pursuant to agreement for any Indebtedness of any such
affiliate, or (B) make any payment to any of its affiliates not in the ordinary
course of its business without the prior written consent of Lender; provided
further, that Borrower shall not enter into any transactions, agreements,
contributions or capitalization arrangements or other undertaking with any
Dormant Subsidiary without Lender's prior written consent which shall not be
unreasonably withheld and without causing any such Dormant Subsidiary to become
a guarantor hereof.
(b) Borrower shall not create or acquire any new subsidiaries unless
(i) Lender is given prior written notice and (2) such new subsidiary becomes a
Borrower or Guarantor hereunder.
7.7 CHARTER DOCUMENTS; FISCAL YEAR; DISSOLUTION; USE OF PROCEEDS
Borrower shall not (i) amend, modify, restate or change its certificate
of incorporation or formation or bylaws or similar charter documents in a manner
that would be adverse to Lender, (ii) change its fiscal year unless Borrower
demonstrates to Lender's satisfaction compliance with the covenants contained
herein for both the fiscal year in effect prior to any change and the new fiscal
year period by delivery to Lender of appropriate interim and annual pro forma,
historical and current compliance certificates for such periods and such other
information as Lender may reasonably request, (iii) amend, alter or suspend or
terminate or make provisional in any material way, any Permit without the prior
written consent of Lender, which consent shall not be unreasonably withheld,
(iv) wind up, liquidate or dissolve (voluntarily or involuntarily) or commence
or suffer any proceedings seeking or that would result in any of the foregoing,
or (vi) use any proceeds of any Advance for "purchasing" or "carrying" "margin
stock" as defined in Regulations U, T or X of the Board of Governors of the
Federal Reserve System.
7.8 TRUTH OF STATEMENTS
Borrower shall not furnish to Lender any certificate or other document
that contains any untrue statement of a material fact or that omits to state a
material fact necessary to make it not misleading in light of the circumstances
under which it was furnished.
VIII. EVENTS OF DEFAULT
The occurrence of any one or more of the following shall constitute an
"Event of Default:"
(a) Borrower shall fail to pay any amount on the Obligations or
provided for in any Loan Document when due (whether on any payment date, at
maturity, by reason of acceleration, by notice of intention to prepay, by
required prepayment or otherwise);
(b) any representation, statement or warranty made or deemed made by
Borrower or any Guarantor in any Loan Document or in any other certificate,
document, report or opinion delivered in conjunction with any Loan Document to
which it is a party, shall not be true and correct in all material respects or
shall have been false or misleading in any material respect on the date when
made or deemed to have been made (except to the extent already qualified by
materiality, in which case it shall be true and correct in all respects and
shall not be false or misleading in any respect);
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(c) Borrower or any Guarantor or other party thereto other than Lender
shall be in violation, breach or default of, or shall fail to perform, observe
or comply with any covenant, obligation or agreement set forth in, any Loan
Document and such violation, breach, default or failure shall not be cured
within the applicable period set forth in the applicable Loan Document; provided
that, with respect to the affirmative covenants set forth in Article VI (other
than Sections 6.2, 6.3 and 6.11 for which there shall be no cure period), there
shall be a fifteen (15) calendar day cure period commencing from the earlier of
(i) Receipt by such Person of written notice from Lender of such breach,
default, violation or failure, and (ii) the time at which such Person or any
authorized officer thereof knew or became aware, of such failure, violation,
breach or default;
(d) (i) any of the Loan Documents ceases to be in full force and
effect, or (ii) any Lien created thereunder ceases to constitute a valid
perfected first priority Lien on the Collateral in accordance with the terms
thereof, or Lender ceases to have a valid perfected first priority security
interest in any of the Collateral or any securities pledged to Lender pursuant
to the Security Documents;
(e) one or more judgments or decrees is rendered against any Borrower
or Guarantor in an amount in excess of $250,000 in the aggregate, which is/are
not satisfied, stayed, vacated or discharged of record within thirty (30)
calendar days of being rendered;
(f) (i) any default occurs, which is not cured or waived, (x) in the
payment of any amount with respect to any Indebtedness (other than the
Obligations) of any Borrower or Guarantor in excess of $250,000, (y) in the
performance, observance or fulfillment of any provision contained in any
agreement, contract, document or instrument to which any Borrower or Guarantor
is a party or to which any of their properties or assets are subject or bound
under or pursuant to which any Indebtedness was issued, created, assumed,
guaranteed or secured and such default continues for more than any applicable
grace period or permits the holder of any Indebtedness to accelerate the
maturity thereof, or (z) in the performance, observance or fulfillment of any
provision contained in any agreement, contract, document or instrument between
any Borrower or Guarantor and Lender or affiliate of Lender (other than the Loan
Documents), or (ii) any Indebtedness of any Borrower or Guarantor is declared to
be due and payable or is required to be prepaid (other than by a regularly
scheduled payment) prior to the stated maturity thereof, or any obligation of
such Person for the payment of Indebtedness (other than the Obligations) is not
paid when due or within any applicable grace period, or any such obligation
becomes or is declared to be due and payable before the expressed maturity
thereof, or there occurs an event which, with the giving of notice or lapse of
time, or both, would cause any such obligation to become, or allow any such
obligation to be declared to be, due and payable;
(g) any Borrower or Guarantor shall (i) be unable to pay its debts
generally as they become due, (ii) file a petition under any insolvency statute,
(iii) make a general assignment for the benefit of its creditors, (iv) commence
a proceeding for the appointment of a receiver, trustee, liquidator or
conservator of itself or of the whole or any substantial part of its property,
or (v) file a petition seeking reorganization or liquidation or similar relief
under any Debtor Relief Law or any other applicable law or statute;
(h) (i) a court of competent jurisdiction shall (A) enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of any Borrower or Guarantor or the whole or any substantial part of
any such Person's properties, which shall continue unstayed and in effect for a
period of sixty (60) calendar days, (B) shall approve a petition filed against
any Borrower or Guarantor seeking reorganization, liquidation or similar relief
under the any Debtor Relief Law or any other applicable law or statute, which is
not dismissed within sixty (60) calendar days or, (C) under the provisions of
any Debtor Relief Law or other applicable law or statute, assume custody or
control of any
30
Borrower or Guarantor or of the whole or any substantial part of any such
Person's properties, which is not irrevocably relinquished within sixty (60)
calendar days, or (ii) there is commenced against any Borrower or Guarantor any
proceeding or petition seeking reorganization, liquidation or similar relief
under any Debtor Relief Law or any other applicable law or statute, which (A) is
not unconditionally dismissed within sixty (60) calendar days after the date of
commencement, or (B) is with respect to which such Borrower or Guarantor takes
any action to indicate its approval of or consent to;
(i) (i) any Change of Control occurs or any agreement or commitment to
cause or that may result in any such Change of Control is entered into, (ii) any
Material Adverse Effect, Material Adverse Change occurs or is reasonably
expected to occur, (iii) any Liability Event occurs or is reasonably expected to
occur, or (iv) any Borrower or Guarantor ceases any material portion of its
business operations as currently conducted;
(j) Lender receives any indication or evidence that any Borrower or
Guarantor may have directly or indirectly been engaged in any type of activity
which, in Lender's judgment, might result in forfeiture of any property to any
Governmental Authority which shall have continued unremedied for a period of ten
(10) calendar days after written notice from Lender;
(k) an Event of Default occurs under any other Loan Document;
(l) uninsured damage to, or loss, theft or destruction of, any portion
of the Collateral occurs that exceeds $100,000 in the aggregate;
(m) any Borrower or Guarantor or any of their respective directors or
senior officers is criminally indicted or convicted under any law that could
lead to a forfeiture of any Collateral;
(n) the issuance of any process for levy, attachment or garnishment or
execution upon or prior to any judgment against any Borrower or Guarantor or any
of their property or assets; or
(o) any Borrower or Guarantor does, or enters into or becomes a party
to any agreement or commitment to do, or cause to be done, any of the things
described in this Article VIII or otherwise prohibited by any Loan Document
(subject to any cure periods set forth therein);
(p) any Default or Event of Default shall occur and be continuing past
any cure period under (i) that certain Restructure Agreement, dated as of
December 17, 2001, as amended by the First Amendment to Restructure Agreement,
dated as of January 3, 2002, and as amended by the Second Amendment toe
Restructure Agreement, dated as of January 22, 2002, by and among Opticare
Health Systems, Inc., Xxxx X. Xxxxxxxxx and Palisade Concentrated Equity
Partnership, L.P. or under any document or instrument executed or delivered in
connection therewith (the "RESTRUCTURE DOCUMENTS"), or (ii) any Professional
Services and Support Agreement which impairs Lender's Collateral or its
position, all in Lender's sole judgment;
then, and in any such event, notwithstanding any other provision of any Loan
Document, Lender may, by written notice to Borrower (i) terminate its
obligations to make Loans hereunder, whereupon the same shall immediately
terminate, (ii) declare all or any of the Notes, all interest thereon and all
other Obligations to be due and payable immediately (except in the case of an
Event of Default under Section 8(d), (g), (h) or (i)(iii), in which event all of
the foregoing shall automatically and without further act by Lender be due and
payable, provided that, with respect to non-material breaches or violations that
constitute Events of Default under clause (ii) of Section 8(d), there shall be a
three (3) Business Day cure period commencing from the earlier of (A) Receipt by
the applicable Person of written notice from
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Lender of such breach or violation or of any event, fact or circumstance
constituting or resulting in any of the foregoing, and (B) the time at which
such Person or any authorized officer thereof knew or became aware, of such
breach or violation and resulting Event of Default or of any event, fact or
circumstance constituting or resulting in any of the foregoing)), in each case
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by Borrower, and (iii) prohibit any action permitted
to be taken under Article VII hereof.
IX. RIGHTS AND REMEDIES AFTER DEFAULT
9.1 RIGHTS AND REMEDIES
(a) In addition to the acceleration provisions set forth in Article
VIII above, upon the occurrence and continuation of an Event of Default, Lender
shall have the right to exercise any and all rights, options and remedies
provided for in any Loan Document, under the UCC or at law or in equity,
including, without limitation, the right to (i) apply any property of any
Borrower held by Lender to reduce the Obligations, (ii) foreclose the Liens
created under the Security Documents, (iii) realize upon, take possession of
and/or sell any Collateral or securities pledged (other than Collateral
consisting of Accounts owed or owing by Medicaid/Medicare Account Debtors absent
a court order or compliance with applicable law) with or without judicial
process, (iv) exercise all rights and powers with respect to the Collateral as
any Borrower, as applicable, might exercise (other than with respect to
Collateral consisting of Accounts owed or owing by Medicaid/Medicare Account
Debtors absent a court order or compliance with applicable law), (v) collect and
send notices regarding the Collateral (other than with respect to Collateral
consisting of Accounts owed or owing by Medicaid/Medicare Account Debtors absent
a court order or compliance with applicable law), with or without judicial
process, (vi) by its own means or with judicial assistance, enter any premises
at which Collateral and/or pledged securities are located, or render any of the
foregoing unusable or dispose of the Collateral and/or pledged securities on
such premises without any liability for rent, storage, utilities, or other sums,
and no Borrower shall resist or interfere with such action, (vii) at Borrower's
expense, require that all or any part of the Collateral be assembled and made
available to Lender at any place designated by Lender, (viii) reduce or
otherwise change the Facility Cap and/or the Maximum Loan Amount, and/or (ix)
relinquish or abandon any Collateral or securities pledged or any Lien thereon.
Notwithstanding any provision of any Loan Document, Lender, in its sole
discretion, shall have the right, at any time that Borrower fails to do so, and
from time to time, with prior notice which need not be in writing, to: (i)
obtain insurance covering any of the Collateral to the extent required
hereunder; (ii) pay for the performance of any of Obligations; (iii) discharge
taxes or Liens on any of the Collateral that are in violation of any Loan
document unless the Borrower is in good faith with due diligence by appropriate
proceedings contesting those items; and (iv) pay for the maintenance and
preservation of the Collateral. Such expenses and advances shall be added to the
Obligations until reimbursed to Lender and shall be secured by the Collateral,
and such payments by Lender shall not be construed as a waiver by Lender of any
Event of Default or any other rights or remedies of Lender.
(b) Borrower agrees that notice received by it at least ten (10)
calendar days before the time of any intended public sale, or the time after
which any private sale or other disposition of Collateral is to be made, shall
be deemed to be reasonable notice of such sale or other disposition. If
permitted by applicable law, any perishable Collateral which threatens to
speedily decline in value or which is sold on a recognized market may be sold
immediately by Lender without prior notice to Borrower. At any sale or
disposition of Collateral or securities pledged, Lender may (to the extent
permitted by applicable law) purchase all or any part thereof free from any
right of redemption by any
32
Borrower which right is hereby waived and released. Debtor covenants and agrees
not to, and not to permit or cause any of its Subsidiaries to, interfere with or
impose any obstacle to Secured Party's exercise of its rights and remedies with
respect to the Collateral. Secured Party, in dealing with or disposing of the
Collateral or any part thereof, shall not be required to give priority or
preference to any item of Collateral or otherwise to marshal assets or to take
possession or sell any Collateral with judicial process.
9.2 RIGHTS AND REMEDIES NOT EXCLUSIVE
Lender shall have the right in its sole discretion to determine which
rights, Liens and/or remedies Lender may at any time pursue, relinquish,
subordinate or modify, and such determination will not in any way modify or
affect any of Lender's rights, Liens or remedies under any Loan Document,
applicable law or equity. The enumeration of any rights and remedies in any Loan
Document is not intended to be exhaustive, and all rights and remedies of Lender
described in any Loan Document are cumulative and are not alternative to or
exclusive of any other rights or remedies which Lender otherwise may have. The
partial or complete exercise of any right or remedy shall not preclude any other
further exercise of such or any other right or remedy.
9.3 APPLICATION OF PROCEEDS
In addition to any other rights, options and remedies Lender has under
the Loan Documents, the UCC, at law or in equity, all dividends, interest,
rents, issues, profits, fees, revenues, income and other proceeds collected or
received from collecting, holding, managing, renting, selling, or otherwise
disposing of all or any part of the Collateral or any proceeds thereof upon
exercise of its remedies hereunder shall be applied in the following order of
priority: (i) first, to the payment of all reasonable costs and expenses of such
collection, storage, lease, holding, operation, management, sale, disposition or
delivery and of conducting Borrower's business and of maintenance, repairs,
replacements, alterations, additions and improvements of or to the Collateral,
and to the payment of all sums which Lender may be required or may elect to pay,
if any, for taxes, assessments, insurance and other charges upon the Collateral
or any part thereof, and all other payments that Lender may be required or
authorized to make under any provision of this Agreement (including, without
limitation, in each such case, in-house documentation and diligence fees and
legal expenses, search, audit, recording, professional and filing fees and
expenses and reasonable attorneys' fees and all expenses, liabilities and
advances made or incurred in connection therewith); (ii) second, to the payment
of all Obligations as provided herein; (iii) third, to the satisfaction of
Indebtedness secured by any subordinate security interest of record in the
Collateral if written notification of demand therefor is received before
distribution of the proceeds is completed, provided, that, if requested by
Lender, the holder of a subordinate security interest shall furnish reasonable
proof of its interest, and unless it does so, Lender need not address its
claims; and (iv) fourth, to the payment of any surplus then remaining to
Borrower, unless otherwise provided by law or directed by a court of competent
jurisdiction, provided that Borrower shall be liable for any deficiency if such
proceeds are insufficient to satisfy the Obligations or any of the other items
referred to in this section.
9.4 RIGHTS OF LENDER TO APPOINT RECEIVER
Without limiting and in addition to any other rights, options and
remedies Lender has under the Loan Documents, the UCC, at law or in equity, upon
the occurrence and continuation of an Event of Default, Lender shall have the
right to apply for and have a receiver appointed by a court of
33
competent jurisdiction in any action taken by Lender to enforce its rights and
remedies in order to manage, protect and preserve the Collateral and continue
the operation of the business of Borrower and to collect all revenues and
profits thereof and apply the same to the payment of all expenses and other
charges of such receivership including the compensation of the receiver and to
the payments as aforesaid until a sale or other disposition of such Collateral
shall be finally made and consummated.
X. WAIVERS AND JUDICIAL PROCEEDINGS
10.1 WAIVERS
Except as expressly provided for herein, Borrower hereby waives demand,
presentment, protest, all defenses with respect to any and all instruments and
all notices and demands of any description, and the pleading of any statute of
limitations as a defense to any demand under any Loan Document. Borrower hereby
waives any and all defenses and counterclaims it may have or could interpose in
any action or procedure brought by Lender to obtain an order of court
recognizing the assignment of, or Lien of Lender in and to, any Collateral,
whether or not payable by a Medicaid/Medicare Account Debtor.
10.2 DELAY; NO WAIVER OF DEFAULTS
No course of action or dealing, renewal, release or extension of any
provision of any Loan Document, or single or partial exercise of any such
provision, or delay, failure or omission on Lender's part in enforcing any such
provision shall affect the liability of any Borrower or Guarantor or operate as
a waiver of such provision or affect the liability of any Borrower or Guarantor
or preclude any other or further exercise of such provision. No waiver by any
party to any Loan Document of any one or more defaults by any other party in the
performance of any of the provisions of any Loan Document shall operate or be
construed as a waiver of any future default, whether of a like or different
nature, and each such waiver shall be limited solely to the express terms and
provisions of such waiver. Notwithstanding any other provision of any Loan
Document, by completing the Closing under this Agreement and/or by making
Advances or funding the Term Loan, Lender does not waive any breach of any
representation or warranty of under any Loan Document, and all of Lender's
claims and rights resulting from any such breach or misrepresentation are
specifically reserved.
10.3 JURY WAIVER
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THE LOAN DOCUMENTS OR IN
ANY WAY CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT
TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY, WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
34
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES TO THE WAIVER OF
THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.
10.4 COOPERATION IN DISCOVERY AND LITIGATION
In any litigation, arbitration or other dispute resolution proceeding
relating to any Loan Document, Borrower waives any and all defenses, objections
and counterclaims it may have or could interpose with respect to (i) any of its
directors, officers, employees or agents being deemed to be employees or
managing agents of Borrower for purposes of all applicable law or court rules
regarding the production of witnesses by notice for testimony (whether in a
deposition, at trial or otherwise), (ii) Lender's counsel examining any such
individuals as if under cross-examination and using any discovery deposition of
any of them as if it were an evidence deposition, and/or (iii) using all
commercially reasonable efforts to produce in any such dispute resolution
proceeding, at the time and in the manner requested by Lender, all Persons,
documents (whether in tangible, electronic or other form) and/or other things
under its control and relating to the dispute.
XI. EFFECTIVE DATE AND TERMINATION
11.1 EFFECTIVENESS AND TERMINATION
Subject to Lender's right to terminate and cease making Loans upon or
after any Event of Default, this Agreement shall continue in full force and
effect until the full performance and indefeasible payment in cash of all
Obligations, unless terminated sooner as provided in this Section 11.1. Borrower
may terminate this Agreement at any time upon not less than ten (10) calendar
days' prior written notice to Lender and upon full performance and indefeasible
payment in full in cash of all Obligations on or prior to such 10th calendar day
after Receipt by Lender of such written notice; provided, however, that,
notwithstanding any other provision of any Loan Document, Borrower shall have no
right to terminate the Revolving Loan, until after the first anniversary of the
Closing Date. All of the Obligations shall be immediately due and payable upon
any such termination on the termination date stated in any notice of termination
(the "TERMINATION DATE"); provided that, notwithstanding any other provision of
any Loan Document, the Termination Date shall be effective no earlier than the
first Business Day of the month following the expiration of the ten (10)
calendar days' prior written notice period. Notwithstanding any other provision
of any Loan Document, no termination of this Agreement shall affect Lender's
rights or any of the Obligations existing as of the effective date of such
termination, and the provisions of the Loan Documents shall continue to be fully
operative until the Obligations have been fully performed and indefeasibly paid
in cash in full. The Liens granted to Lender under the Security Documents and
the financing statements filed pursuant thereto and the rights and powers of
Lender shall continue in full force and effect notwithstanding the fact that
Borrower's borrowings hereunder may from time to time be in a zero or credit
position until all of the Obligations have been fully performed and indefeasibly
paid in full in cash.
11.2 SURVIVAL
All obligations, covenants, agreements, representations, warranties,
waivers and indemnities made by Borrower in any Loan Document shall survive the
execution and delivery of the Loan Documents, the Closing, the making of the
Loans and any termination of this Agreement until all Obligations are fully
performed and indefeasibly paid in full in cash. The obligations and provisions
of Sections 3.5, 3.6, 10.1, 10.3, 11.1, 11.2, 12.4, 12.7 and 12.9 shall survive
termination of the Loan Documents and any payment, in full or in part, of the
Obligations.
35
XII. MISCELLANEOUS
12.1 GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS; VENUE
The Loan Documents shall be governed by and construed in accordance
with the internal laws of the State of New York without giving effect to its
choice of law provisions other than Section 5-1401 of the New York General
Obligation laws. Any judicial proceeding against Borrower with respect to the
Obligations, any Loan Document or any related agreement may be brought in any
federal or state court of competent jurisdiction located in the State of New
York. By execution and delivery of each Loan Document to which it is a party,
Borrower and Lenders (i) accept the non-exclusive jurisdiction of the aforesaid
courts and irrevocably agrees to be bound by any judgment rendered thereby, (ii)
waive personal service of process, (iii) agree that service of process may be
made by certified or registered mail, return receipt requested, pursuant to
Section 12.5 hereof, and (iv) waive any objection to jurisdiction, venue of any
action instituted hereunder and agrees not to assert any defense based on lack
of jurisdiction or venue convenience. Nothing shall affect the right of Lender
to serve process in any manner permitted by law or shall limit the right of
Lender to bring proceedings against Borrower in any other courts having
jurisdiction. Any judicial proceedings against Lender involving, directly or
indirectly, the Obligations, any Loan Document or any related agreement shall be
brought only in a federal or state court located in the State of New York. All
parties acknowledge that they participated in the negotiation and drafting of
this Agreement and that, accordingly, no party shall move or petition a court
construing this Agreement to construe it more stringently against one party than
against any other.
12.2 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS
The Loan Documents shall inure to the benefit of Lender, Transferees
and all future holders of any Note, the Obligations and/or any of the
Collateral, and each of their respective successors and assigns. Each Loan
Document shall be binding upon the Persons' other than Lender that are parties
thereto and their respective successors and assigns, and no such Person may
assign, delegate or transfer any Loan Document or any of its rights or
obligations thereunder without the prior written consent of Lender. No rights
are intended to be created under any Loan Document for the benefit of any third
party creditor or incidental beneficiary of any Borrower or Guarantor. Nothing
contained in any Loan Document shall be construed as a delegation to Lender of
any other Person's duty of performance. BORROWER ACKNOWLEDGES AND AGREES THAT
Lender at any time and from time to time may (I) DIVIDE AND RESTATE ANY NOTE,
AND/OR (II) sell, assign or GRANT PARTICIPATING INTERESTS IN OR transfer all or
any part of its rights or obligations under ANY LOAN DOCUMENT, Note, the
obligations AND/OR the collateral TO OTHER PERSONS (EACH SUCH TRANSFEREE,
ASSIGNEE OR PURCHASER, A "TRANSFEREE"). Each Transferee shall have all of the
rights and benefits with respect to the Obligations, Notes, Collateral and/or
Loan Documents held by it as fully as if the original holder thereof, and either
Lender or any Transferee may be designated as the sole agent to manage the
transactions and obligations contemplated therein; provided that,
notwithstanding anything to the contrary in any Loan Document, Borrower shall
not be obligated to pay under this Agreement to any Transferee any sum in excess
of the sum which Borrower would have been obligated to pay to Lender had such
participation not been effected. Notwithstanding any other provision of any Loan
Document, Lender may disclose to any Transferee all information, reports,
financial statements, certificates and documents obtained under any provision of
any Loan Document.
12.3 APPLICATION OF PAYMENTS
36
To the extent that any payment made or received with respect to the
Obligations is subsequently invalidated, determined to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver, custodian or any other Person under any Debtor Relief Law,
common law or equitable cause or any other law, then the Obligations intended to
be satisfied by such payment shall be revived and shall continue as if such
payment had not been received by Lender. Any payments with respect to the
Obligations received shall be credited and applied in such manner and order as
Lender shall decide in its sole discretion.
12.4 INDEMNITY
Each Borrower jointly and severally shall indemnify Lender, its
affiliates and its and their respective managers, members, officers, employees,
affiliates, agents, representatives, successors, assigns, accountants and
attorneys (collectively, the "INDEMNIFIED PERSONS") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, reasonable fees and disbursements of counsel and in-house
documentation and diligence fees and legal expenses) which may be imposed on,
incurred by or asserted against any Indemnified Person with respect to or
arising out of, or in any litigation, proceeding or investigation instituted or
conducted by any Person with respect to any aspect of, or any transaction
contemplated by or referred to in, or any matter related to, any Loan Document
or any agreement, document or transaction contemplated thereby, whether or not
such Indemnified Person is a party thereto, except to the extent that any of the
foregoing arises out of the gross negligence or willful misconduct of such
Indemnified Person. If any Indemnified Person uses in-house counsel for any
purpose for which any Borrower is responsible to pay or indemnify, each Borrower
expressly agrees that its indemnification obligations include reasonable charges
for such work commensurate with the fees that would otherwise be charged by
outside legal counsel selected by such Indemnified Person in its sole discretion
for the work performed. Lender agrees to give Borrower reasonable notice of any
event of which Lender becomes aware for which indemnification may be required
under this Section 12.4, and Lender may elect (but is not obligated) to direct
the defense thereof, provided that the selection of counsel shall be subject to
Borrower's consent, which consent shall not be unreasonably withheld or delayed.
Any Indemnified Person may, in its reasonable discretion and with Borrower's
consent, take such actions as it deems necessary and appropriate to investigate,
defend or settle any event or take other remedial or corrective actions with
respect thereto as may be necessary for the protection of such Indemnified
Person or the Collateral. Notwithstanding the foregoing, if any insurer agrees
to undertake the defense of an event (an "INSURED EVENT"), Lender agrees not to
exercise its right to select counsel to defend the event if that would cause any
Borrower's insurer to deny coverage; provided, however, that Lender reserves the
right to retain counsel to represent any Indemnified Person with respect to an
Insured Event at its sole cost and expense. To the extent that Lender obtains
recovery from a third party other than an Indemnified Person of any of the
amounts that any Borrower has paid to Lender pursuant to the indemnity set forth
in this Section 12.4, then Lender shall promptly pay to such Borrower the amount
of such recovery.
12.5 NOTICE
Any notice or request under any Loan Document shall be given to any
party to this Agreement at such party's address set forth beneath its signature
on the signature page to this Agreement, or at such other address as such party
may hereafter specify in a notice given in the manner required under this
Section 12.5. Any notice or request hereunder shall be given only by, and shall
be deemed to have been received upon (each, a "RECEIPT"): (i) registered or
certified mail, return receipt requested, on the date on which such received as
indicated in such return receipt, (ii) delivery by a nationally
37
recognized overnight courier, one (1) Business Day after deposit with such
courier, or (iii) facsimile or electronic transmission on a Business Day, in
each case upon telephone or further electronic communication from the recipient
acknowledging receipt (whether automatic or manual from recipient), as
applicable.
12.6 SEVERABILITY; CAPTIONS; COUNTERPARTS; FACSIMILE SIGNATURES
If any provision of any Loan Document is adjudicated to be invalid
under applicable laws or regulations, such provision shall be inapplicable to
the extent of such invalidity without affecting the validity or enforceability
of the remainder of the Loan Documents which shall be given effect so far as
possible. The captions in the Loan Documents are intended for convenience and
reference only and shall not affect the meaning or interpretation of the Loan
Documents. The Loan Documents may be executed in one or more counterparts (which
taken together, as applicable, shall constitute one and the same instrument) and
by facsimile transmission, which facsimile signatures shall be considered
original executed counterparts. Each party to this Agreement agrees that it will
be bound by its own facsimile signature and that it accepts the facsimile
signature of each other party.
12.7 EXPENSES
Borrower shall pay, whether or not the Closing occurs, all reasonable
costs and expenses incurred by Lender and/or 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 and wire transfer fees and audit expenses), and
reasonable attorneys' fees and expenses, (i) in any effort to enforce, protect
or collect payment of any Obligation or to enforce any Loan Document or any
related agreement, document or instrument, (ii) in connection with entering
into, negotiating, preparing, reviewing and executing the Loan Documents and/or
any related agreements, documents or instruments, (iii) in connection with
instituting, maintaining, preserving, enforcing and/or foreclosing on Lender's
Liens in any of the Collateral or securities pledged under the Loan Documents,
whether through judicial proceedings or otherwise, (iv) in defending or
prosecuting any actions, claims or proceedings arising out of or relating to
Lender's transactions with Borrower, (v) in seeking, obtaining or receiving any
advice after a default or Event of Default shall have occurred with respect to
its rights and obligations under any Loan Document and any related agreement,
document or instrument in connection with such default or Event of Default,
and/or (vi) in connection with any modification, restatement, supplement,
amendment, waiver or extension of any Loan Document and/or any related
agreement, document or instrument. All of the foregoing shall be charged to
Borrower's account and shall be part of the Obligations. If Lender or any of its
affiliates uses in-house counsel for any purpose under any Loan Document for
which Borrower is responsible to pay or indemnify, Borrower expressly agrees
that its Obligations include reasonable charges for such work commensurate with
the fees that would otherwise be charged by outside legal counsel selected by
Lender or such affiliate in its sole discretion for the work performed. 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 any Note and the filing and/or
recording of any documents and/or financing statements.
12.8 ENTIRE AGREEMENT
38
This Agreement and the other Loan Documents to which Borrower is a
party constitute the entire agreement between Borrower and Lender with respect
to the subject matter hereof and thereof, and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof or thereof. Any
promises, representations, warranties or guarantees not herein contained and
hereinafter made shall have no force and effect unless in writing signed by
Borrower and Lender. No provision of this Agreement may 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 an
agreement in writing signed by Lender and Borrower. Each party hereto
acknowledges that it has been advised by counsel in connection with the
negotiation and execution of this Agreement and is not relying upon oral
representations or statements inconsistent with the terms and provisions hereof.
12.9 LENDER APPROVALS
Unless expressly provided herein to the contrary, any approval,
consent, waiver or satisfaction of Lender with respect to any matter that is
subject of any Loan Document may be granted or withheld by Lender in its sole
and absolute discretion.
12.10 CONFIDENTIALITY AND PUBLICITY
Borrower agrees, and agrees to cause each of its affiliates, (i) not to
transmit or disclose provision of any Loan Document to any Person (other than to
Borrower's advisors and officers on a need-to-know basis) without Lender's prior
written consent, (ii) to inform all Persons of the confidential nature of the
Loan Documents and to direct them not to disclose the same to any other Person
and to require each of them to be bound by these provisions. Lender reserves the
right to review and approve all materials that Borrower or any of its affiliates
prepares that contain Lender's name or describe or refer to any Loan Document,
any of the terms thereof or any of the transactions contemplated thereby.
Borrower shall not, and shall not permit any of its affiliates to, use Lender's
name (or the name of any of Lender's affiliates) in connection with any of its
business operations. Nothing contained in any Loan Document is intended to
permit or authorize Borrower or any of its affiliates to contract on behalf of
Lender.
12.11 RESERVED
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
39
IN WITNESS WHEREOF, each of the parties has duly executed this Amended
and Restated Revolving Credit, Term Loan and Security Agreement as of the date
first written above.
OPTICARE HEALTH SYSTEMS, INC.,
a Delaware corporation
By:
--------------------------------------
Name:
------------------------------------
Its:
-------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
Attention:
-------------------------------
Telephone:
-------------------------------
FAX:
-------------------------------------
E-Mail:
----------------------------------
PRIMEVISION HEALTH, INC.,
a Delaware corporation
By:
--------------------------------------
Name:
------------------------------------
Its:
-------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
Attention:
-------------------------------
Telephone:
-------------------------------
FAX:
-------------------------------------
E-Mail:
----------------------------------
40
OPTICARE EYE HEALTH CENTERS, INC.,
a Connecticut corporation
By:
--------------------------------------
Name:
------------------------------------
Its:
-------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
Attention:
-------------------------------
Telephone:
-------------------------------
FAX:
-------------------------------------
E-Mail:
----------------------------------
CAPITALSOURCE FINANCE LLC
By:
--------------------------------------
Name: Xxxxxxxx X. Xxxx
Its: Deputy General Counsel
CapitalSource Finance LLC
0000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx Xxxxx, XX 00000
Attention: Healthcare Finance Group,
Portfolio Manager
Telephone: (000) 000-0000
FAX: (000) 000-0000
E-Mail: xxxxx@xxxxxxxxxxxxx.xxx
41
HEALTHCARE -- SENIOR REVOLVING CREDIT AND TERM LOAN AGREEMENT (A/R)
(NO SUBSIDIARIES)
EXHIBITS
Exhibit A List of Assigned Documents
Exhibit B Form of Borrowing Certificate
SCHEDULES
SCHEDULE 2.6 Borrower's wire instructions for Advances under Revolving
Facility
SCHEDULE 2.16 Form of Notice to Account Debtors regarding Lien and Lockbox
after Default
SCHEDULE 5.2 Required Consents, Authorizations and Approvals
SCHEDULE 5.3 Subsidiaries, Equity Holders, Directors and Officers,
Joint Ventures, partnerships:
1. List all subsidiaries (greater than 50%)
2. Authorized and issued capitalization (number and class
including warrants and other rights to acquire or
convert), and the identity of the record and beneficial
owners thereof
3. All directors, member, managers and partners of Borrower
4. Joint ventures and similar agreements
SCHEDULE 5.4 Real Property and Leases:
1. Real property owned or leased
2. Assets leased or licensed
3. Leases (identify or copy)
SCHEDULE 5.6 Certain Pending or Threatened Litigation
SCHEDULE 5.8 Taxes and Tax Returns Outstanding and/or Contested
SCHEDULE 5.10 Compliance with Laws
SCHEDULE 5.11 Intellectual Property
(List patents, trademarks, copyrights, service marks and any
applications pending, trade secrets, software and licenses.)
SCHEDULE 5.15 Existing Indebtedness and Long Term Debt and Equity
Investments
SCHEDULE 5.16 Affiliate Agreements and equity ownership by related parties
SCHEDULE 5.17 Insurance Policies
SCHEDULE 5.18A Business Names Used by Borrower
SCHEDULE 5.18B Location of Executive Offices, Places of Business and location
of Collateral, Books and Records
SCHEDULE 5.19 Non-Subordination: Obligations or rights, if any, to which the
Loans may be subordinated in any manner
SCHEDULE 6.8 Further Assurances
SCHEDULE 7.2 Permitted Indebtedness
SCHEDULE 7.3 Existing Liens
SCHEDULE 7.5 Management Fees
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
2
HEALTHCARE -- SENIOR REVOLVING CREDIT AND TERM LOAN AGREEMENT (A/R)
(NO SUBSIDIARIES)
ANNEX I
FINANCIAL COVENANTS
1) FIXED COVERAGE RATIO (EBITDA/FIXED CHARGES)
At Closing and the making of the Initial Advance and the funding of the
Term Loan and at the end of any calendar month during which any of the
Obligations are outstanding, the Fixed Charge Ratio shall be a minimum of 1.5 to
1 for the most recent Test Period then ended.
2) MINIMUM NET WORTH
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 Net Worth at all
times equal to $(26,965,000), which is Borrower's Tangible Net Worth as of
September 30, 2001, provided however, that if Borrower's Minimum Net Worth at
any time declines below the level set forth in this covenant due to asset sales,
then such decline shall not constitute a default hereunder.
For purposes of the covenants set forth in this Annex I, the applicable
terms listed below shall have the following meanings:
"Capital Expenditures" shall mean, for any Test Period, the sum
(without duplication) of all expenditures (whether paid in cash or accrued as
liabilities) during the Test Period that are or should be treated as capital
expenditures under GAAP.
"Cash Equivalents" shall mean (a) securities issued, or directly and
fully guaranteed or insured, by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than six
months from the date of acquisition, (b) U.S. dollar denominated time deposits,
certificates of deposit and bankers' acceptances of (i) any domestic commercial
bank of recognized standing having capital and surplus in excess of
$500,000,000, or (ii) any bank (or the parent company of such bank) whose
short-term commercial paper rating from Standard & Poor's Ratings Services
("S&P") is at least A-2 or the equivalent thereof or from Xxxxx'x Investors
Service, Inc. ("XXXXX'X") is at least P-2 or the equivalent thereof in each case
with maturities of not more than six months from the date of acquisition (any
bank meeting the qualifications specified in clauses (b)(i) or (ii), an
"APPROVED BANK"), (c) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (a), above,
entered into with any Approved Bank, (d) commercial paper issued by any Approved
Bank or by the parent company of any Approved Bank and commercial paper issued
by, or guaranteed by, any industrial or financial company with a short-term
commercial paper rating of at least A-2 or the equivalent thereof by S&P or at
least P-2 or the equivalent thereof by Moody's, or guaranteed by any industrial
company with a long term unsecured debt rating of at least A or A2, or the
equivalent of each thereof, from S&P or Moody's, as the case may be, and in each
case maturing within six months after the date of acquisition and (e)
investments in money market funds substantially all of whose assets are
comprised of securities of the type described in clauses (a) through (d) above.
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
"Date of Determination" shall mean the last day of any calendar month
during which any of the Obligations are outstanding.
"EBITDA" shall mean, for any Test Period, the sum, without duplication,
of the following for Borrower, on a consolidated and consolidating basis: Net
Income determined in accordance with GAAP, plus, (a) Interest Expense, (b) taxes
on income, whether paid, payable or accrued, (c) depreciation expense, (d)
amortization expense, (e) all other non-cash, non-recurring charges and
expenses, excluding accruals for cash expenses made in the ordinary course of
business, and (f) loss from any sale of assets, other than sales in the ordinary
course of business, all of the foregoing determined in accordance with GAAP.
"Fixed Charge 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 Test Period most recently ended before
such date, to (b) Fixed Charges for the Test Period most recently ended before
such date, in each case taken as one accounting period.
"Fixed Charges" shall mean, on any calculation date, for any Test
Period, the sum of the following for Borrower individually and collectively on a
consolidated and consolidating basis: (a) Total Debt Service, excluding
scheduled balloon payments, if any, for such period for the Revolving Facility
and Term Loan.
"Interest Expense" shall mean, for any Test Period, total interest
expense (including attributable to Capital Leases in accordance with GAAP) of
Borrower individually and collectively on a consolidated and consolidating basis
with respect to all outstanding Indebtedness including capitalized interest but
excluding commissions, discounts and other fees owed with respect to letters of
credit and bankers' acceptance financing and net costs under Interest Rate
Agreements.
"Interest Rate Agreement" shall mean any interest rate swap, cap or
collar agreement or other similar agreement or arrangement designed to hedge the
position with respect to interest rates.
"Net Income" shall mean, for any Test Period, the net income (or loss)
of Borrower individually and collectively on a consolidated and consolidating
basis for such period taken as a single accounting period determined in
conformity with GAAP, provided that there shall be excluded (i) the income (or
loss) of any Person in which any other Person (other than any Borrower) has a
joint interest, except to the extent of the amount of dividends or other
distributions actually paid to a Borrower by such Person during such period,
(ii) the income (or loss) of any Person accrued prior to the date it becomes a
Borrower or is merged into or consolidated with a Borrower or that Person's
assets are acquired by a Borrower, (iii) the income of any Subsidiary of
Borrower to the extent that the declaration or payment of dividends or similar
distributions of that income by that Subsidiary is not at the time permitted by
operation of the terms of the charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Subsidiary, (iv) compensation expense resulting from the issuance of capital
stock, stock options or stock appreciation rights issued to former or current
employees, including officers, of a Borrower, or the exercise of such options or
rights, in each case to the extent the obligation (if any) associated therewith
is not expected to be settled by the payment of cash by a Borrower or any
affiliate thereof, and (v) compensation expense resulting from the repurchase of
capital stock, options and rights described in clause (iv) of this definition of
Net Income.
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
2
"Net Leverage Ratio" shall mean, at any date of determination, for
Borrower individually and collectively on a consolidated and consolidating
basis, the ratio of (i) Total Debt on such date, to (ii) EBITDA for the Test
Period most recently ended before such date (taken as one accounting period).
"Test Period" shall mean the three (3) most recent calendar months then
ended (taken as one accounting period), or such other period as specified in the
Agreement or any Annex thereto.
"Total Debt" shall mean, at any date of determination, for Borrower
individually and collectively on a consolidated and consolidating basis, the
total Indebtedness on such date less cash and Cash Equivalents held on such
date.
"Total Debt Service" shall mean for any period, for Borrower
individually and collectively on a consolidated and consolidating basis, the sum
of (i) scheduled or other required payments of principal on the Revolving Loan
and Term Loan, and (ii) Interest Expense, in each case for such period for the
Revolving Loan and Term Loan.
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
3
HEALTHCARE -- SENIOR REVOLVING CREDIT AND TERM LOAN AGREEMENT (A/R)
(NO SUBSIDIARIES)
APPENDIX A
DEFINITIONS
"Accounts" shall mean all "accounts" (as defined in the UCC) of
Borrower (or, if referring to another Person, of such other Person), including
without limitation, accounts, accounts receivables, monies due or to become due
and obligations in any form (whether arising in connection with contracts,
contract rights, instruments, general intangibles or chattel paper), in each
case whether arising out of goods sold or services rendered or from any other
transaction and whether or not earned by performance, now or hereafter in
existence, and all documents of title or other documents representing any of the
foregoing, and all collateral security and guaranties of any kind, now or
hereafter in existence, given by any Person with respect to any of the
foregoing.
"Account Debtor" shall mean any Person who is obligated under an
Account.
"Advances" shall mean a borrowing under the Revolving Facility. Any
amounts paid by Lender on behalf of Borrower or any Guarantor under any Loan
Document shall be an Advance for purposes of the Agreement.
"Applicable Rate" shall mean the interest rates applicable from time to
time to Advances under the Agreement.
"Assigned Documents" shall mean those documents and instruments being
purchased by Lender from Bank Austria in connection herewith and listed on
Exhibit A hereto.
"Assigned Stock" shall mean all of the stock originally pledged to Bank
Austria and assigned by Bank Austria to Lender in connection herewith.
"Bank of Austria" shall mean Bank Austria Creditanstalt Corporate
Finance, Inc.
"Borrowing Base" shall mean, as of any date of determination, the net
collectible Dollar value of Eligible Receivables, as determined with reference
to the most recent Borrowing Certificate and otherwise in accordance with the
Agreement; provided, however, that if as of such date the most recent Borrowing
Certificate is of a date more than four Business Days before or after such date,
the Borrowing Base shall be determined by Lender in its sole discretion.
"Borrowing Certificate" shall mean a Borrowing Certificate
substantially in the form of Exhibit B.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which the Federal Reserve or the Lender is closed.
"Capital Lease" shall mean, as to any Person, a lease of any interest
in any kind of property or asset by that Person as lessee that is, should be or
should have been recorded as a "capital lease" in accordance with GAAP.
"Capitalized Lease Obligations" shall mean all obligations of any
Person under Capital Leases, in each case, taken at the amount thereof accounted
for as a liability in accordance with GAAP.
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
"Change of Control" shall mean, with respect to any Borrower or
Guarantor, the occurrence of any of the following: (i) a merger, consolidation,
reorganization, recapitalization or share or interest exchange, sale or transfer
or any other transaction or series of transactions in which its stockholders,
managers, partners or interest holders immediately prior to such transaction or
series of transactions receive, in exchange for the stock or interests owned by
them, cash, property or securities of the resulting or surviving entity or any
affiliate thereof, if, as a result thereof, any Person (or group of Persons
acting in concert), other than the Permitted Majority Holders, beneficially owns
more than 50% of the voting power of the resulting or surviving entity or such
affiliate thereof, calculated on a fully diluted basis, (ii) a direct or
indirect sale, transfer or other conveyance or disposition, in any single
transaction or series of transactions, of all or substantially all of its
assets, (iii) a public offering of its securities, if as a result thereof, any
Person (or group of Persons acting in concert), other than Permitted Majority
Holders, beneficially owns more than 50% of the voting power of Borrower or such
Guarantor, or (iv) any "change in/of control" or "sale" or "disposition" or
similar event as defined in any document governing indebtedness of such Person
which gives the holder of such indebtedness the right to accelerate or otherwise
require payment of such indebtedness prior to the maturity date thereof. As used
herein, "Permitted Majority Holders" means Xxxx X. Xxxxxxxxx, his immediate
family members, his estate, trusts for the benefit of Xxxx X. Xxxxxxxxx and/or
such family members, Palisade Concentrated Equity Partnership, L.P.
("Palisade"), any affiliate of Palisade or any limited partner of Palisade.
"Charter and Good Standing Documents" shall mean, for each Borrower (i)
a copy of the certificate of incorporation or formation (or other charter
document) certified as of a date not more than three (3) Business Days before
the Closing Date by the applicable Governmental Authority of the jurisdiction of
incorporation or organization of such Borrower, including, in the case of Prime
Vision Health, Inc., attachments to such certificate evidencing the Merger, (ii)
a copy of the bylaws or similar organizational documents of certified as of a
date not more than three (3) Business Days before the Closing Date by the
corporate secretary or assistant secretary of such Borrower, (iii) an original
certificate of good standing as of a date acceptable to Lender issued by the
applicable Governmental Authority of the jurisdiction of incorporation or
organization of such Borrower and of every other jurisdiction in which such
Borrower has an office or conducts business or is otherwise required to be in
good standing, and (iv) copies of the resolutions of the Board of Directors or
managers (or other applicable governing body) and, if required, stockholders,
members or other equity owners authorizing the execution, delivery and
performance of the Loan Documents to which such Borrower is a party, certified
by an authorized officer of such Person as of the Closing Date.
"Chattel Paper" shall mean chattel paper as defined in Section 9-102 of
the UCC.
"Closing" shall mean the satisfaction, or written waiver by Lender, of
all of the conditions precedent set forth in the Agreement required to be
satisfied prior to the consummation of the transactions contemplated hereby.
"Closing Date" shall mean the date the Closing occurs.
"Collateral" shall mean, collectively and each individually, all
collateral and/or security granted to Lender by the Borrower and/or Guarantors
pursuant to the Loan Documents.
"Debtor Relief Law" shall mean, collectively, the Bankruptcy Code of
the United States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement,
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
2
receivership, insolvency, reorganization or similar debtor relief laws from time
to time in effect affecting the rights of creditors generally, as amended from
time to time.
"Default" shall mean any event, fact, circumstance or condition that,
with the giving of applicable notice or passage of time or both, would
constitute or be or result in an Event of Default.
"Deposit Account" shall mean, collectively, the Lockbox Accounts and
all bank or other depository accounts of any Borrower.
"Distribution" shall mean any fee, payment, bonus or other remuneration
of any kind, and any repayment of or debt service on loans or other
indebtedness.
"Document" shall mean a document as defined in Section 9-102 of the
UCC.
"Dormant Subsidiary" shall mean PrimeVision East, Inc., PrimeVision
Central, Inc., PrimeVision West Inc., Accountable Eye Care Associates, Inc.,
PrimeVision of North Carolina, Inc. and OptiCare IPA of New York, Inc.
"Eligible Inventory Costs" shall mean the value of Opticare Eye Health
Centers, Inc.'s and Primevision Health, Inc.'s saleable Inventory that is a
specific element or component purchased by such Borrower after taking into
account all discounts, and which inventory is maintained in the ordinary course
of such Borrower's business unless such Inventory is deemed ineligible by Lender
because:
(a) such Inventory is not subject to a valid perfected first priority
security interest in favor of Borrower, subject to no other lien of equal or
higher priority;
(b) any consent, license, approval or authorization required to be
obtained by the Borrower in connection with the granting of the security
interest under the Security Documents or in connection with manufacture or sale
of such Inventory has not been or was not duly obtained and is not in full force
and effect;
(c) any covenant, representation or warranty contained in this
Agreement or in any other Loan Document with respect to such Inventory has been
breached and remains uncured;
(d) such Inventory does not comply, or was not manufactured in
compliance, in all material respects with all applicable requirements of all
statutes, laws, rules, regulations, ordinances, codes, policies, rules of common
law, and the like, now or hereafter in effect, of any Governmental Authority,
including any judicial or administrative interpretations thereof, and any
judicial or administrative orders, consents, decrees or judgments;
(e) such Inventory does not, or at the time of its purchase from the
vendor did not, constitute "inventory" under Article 9 of the UCC as then in
effect in the jurisdiction whose law governs perfection of the security
interest;
(f) the Person for whose account such Inventory is being or was
produced has commenced a voluntary case under any federal bankruptcy or state or
federal insolvency laws or has made an assignment for the benefit of creditors,
or if a decree or order for relief has been entered by a
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
3
court having jurisdiction in respect of such Person in an involuntary case under
any federal bankruptcy or state or federal insolvency laws, or if any other
petition or application for relief under any federal bankruptcy or state or
federal insolvency laws has been filed against such Person, or if such Person
has failed, suspended business, ceased to be solvent, called a meeting of its
creditors, or has consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant portion of its
assets or affairs;
(g) the transfer of Inventory to Borrower by vendor, supplier or other
Person did not constitute a valid sale and transfer to Borrower of all right,
title and interest of such Person in the Inventory enforceable against all
creditors of and purchasers from the vendor;
(h) (A) such Borrower is not the sole owner of all right, title and
interest in and to such Inventory, (B) such Borrower does not have a valid
ownership interest therein free and clear of all Liens other than Liens granted
under the Loan Documents, or (C) any offsets, defenses or counterclaims have
been asserted or threatened in writing against such Inventory;
(i) such Inventory is not in good working order or is damaged;
(j) such Inventory is not located at one of such Borrower's premises or
warehouse;
(k) such Inventory is subject to a bona fide dispute or is or has been
classified as counterfeit or fraudulent;
(l) such Inventory has been sold, assigned, or otherwise encumbered by
any Borrower or Guarantor except pursuant to the Loan Documents;
(m) to the extent at Closing that such Inventory at Opticare Eye Health
Centers, Inc. exceeds the value existing as of December 31, 2001, of $1,825,000.
(n) such Inventory consists of equipment that such Borrower offers for
rental or that is being rented from Borrower or equipment borrowed by such
Borrower or given to such Borrower to serve as demonstration equipment.
(o) such Inventory otherwise is not satisfactory to Lender.
"Eligible Receivables" shall mean each Account arising in the ordinary
course of Borrower's business from the sale of goods or rendering of Services
which Lender, in its sole discretion, deems an Eligible Receivable unless:
(a) it is not subject to a valid perfected first priority security
interest in favor of Lender, subject to no other Lien of equal or higher
priority;
(b) it is not evidenced by an invoice, statement or other documentary
evidence satisfactory to Lender; provided, that Lender in its sole discretion
may from time to time include as Accounts that are not evidenced by an invoice,
statement or other documentary evidence satisfactory to Lender as Eligible
Receivables and determine the advance rate, liquidity factors and reserves
applicable to Advances made on any such Accounts;
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
4
(c) it or any portion thereof (in which case only such portion shall
not be an Eligible Receivable) is payable by a beneficiary, recipient or
subscriber individually and not directly by a Medicaid/Medicare Account Debtor
or commercial medical insurance carrier acceptable to Lender;
(d) it arises out of services rendered or a sale made to, or out of any
other transaction between with , one or more affiliates of any Borrower Entity;
(e) it remains unpaid for longer than the lesser of (i) 120 calendar
days after the earlier of the claim or invoice date, and (ii) 135 calendar days
after the applicable Services were rendered;
(f) with respect to all Accounts owed by any particular Account Debtor
and/or its affiliates, if more than ten 10% of the aggregate balance of all such
Accounts owing from such Account Debtor and/or its affiliates remain unpaid for
longer than the lesser of (i) 120 calendar days after the earlier of the claim
or invoice dates, and (ii) 135 calendar days after the applicable Services were
rendered;
(g) with respect to all Accounts owed by any particular Account Debtor
and/or its affiliates, 25% or more of all such Accounts are not deemed Eligible
Receivables for any reason hereunder (which percentage may, in Lender's sole
discretion, be increased or decreased);
(h) with respect to all Accounts owed by any particular Account Debtor
and/or its affiliates (except Medicaid/Medicare Account Debtors), if such
Accounts exceed 20% of the net collectible dollar value of all Eligible
Receivables at any one time (including Accounts from Medicaid/Medicare Account
Debtors) (which percentage may, in Lender's sole discretion, be increased or
decreased);
(i) any covenant, agreement, representation or warranty contained in
any Loan Document with respect to such Account has been breached and remains
uncured;
(j) the Account Debtor for such Account has commenced a voluntary case
under any Debtor Relief Law or has made an assignment for the benefit of
creditors, or a decree or order for relief has been entered by a court having
jurisdiction in respect of such Account Debtor in an involuntary case under any
Debtor Relief Law, or any other petition or application for relief under any
Debtor Relief Law has been filed against such Account Debtor, or such Account
Debtor has failed, suspended business, ceased to be solvent, called a meeting of
its creditors, or has consented to or suffered a receiver, trustee, liquidator
or custodian to be appointed for it or for all or a significant portion of its
assets or affairs, or Borrower, in the ordinary course of business, should have
known of any of the foregoing;
(k) it arises from the sale of property or services rendered to one or
more Account Debtors outside the continental United States or that have their
principal place of business or chief executive offices outside the continental
United States, including the Canadian Accounts generated by the Xxxxx Systems
division of Borrower;
(l) it represents the sale of goods or rendering of services to an
Account Debtor on a xxxx-and-hold, guaranteed sale, sale-and-return, sale on
approval, consignment or any other repurchase or return basis or is evidenced by
chattel paper or an instrument of any kind or has been reduced to judgment;
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
5
(m) the applicable Account Debtor for such Account is any Governmental
Authority, unless rights to payment of such Account have been assigned to Lender
pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Section
3727, et seq. and 41 U.S.C. Section 15, et seq.), or otherwise all with
applicable statutes or regulations respecting the assignment of government
Accounts have been complied with (for example, with respect to all Account
payable directly by a Medicaid/Medicare Account Debtor);
(n) it is subject to any offset, credit (including any resource or
other income credit or offset) deduction, defense, discount, chargeback, freight
claim, allowance, adjustment, dispute or counterclaim, or is contingent in any
respect or for any reason;
(o) any Borrower or Guarantor has made any agreement with an Account
Debtor for any deduction from such Account, except for discounts or allowances
made in the ordinary course of business for prompt payment, all of which
discounts or allowances are reflected in the calculation of the face value of
each invoice related thereto, such that only the discounted amount of such
Account after giving effect to such discounts and allowances shall be considered
an Eligible Receivable;
(p) any return, rejection or repossession of goods or services related
to it has occurred;
(q) it is not payable to Borrower;
(r) any Borrower or Guarantor has agreed to accept or has accepted any
non-cash payment for such Account;
(s) with respect to any Account arising from the sale of goods, the
goods have not been shipped to the Account Debtor or its designee;
(t) with respect to any Account arising from the performance of
Services, the Services have not been actually performed or the Services were
undertaken in violation of any law; or
(u) it fails to meet such other specifications and requirements which
may from time to time be established by Lender or is not otherwise satisfactory
to Lender, as determined in Lender's sole discretion.
"Environmental Laws" shall mean, collectively and each individually,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Superfund Amendment and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the Clean Air
Act, the Clean Water Act, any other "Superfund" or "Superlien" law and all other
federal, state and local and foreign environmental, land use, zoning, health,
chemical use, safety and sanitation laws, statutes, ordinances and codes
relating to the protection of the environment and/or governing the use, storage,
treatment, generation, transportation, processing, handling, production or
disposal of Hazardous Substances, in each case, as amended, and the rules,
regulations, policies, guidelines, interpretations, decisions, orders and
directives of Governmental Authorities with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the regulations thereunder.
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
6
"Equipment" shall mean equipment as defined in Section 9-102 of the
UCC.
"Event of Default" shall mean the occurrence of any event set forth in
Article VIII.
"Fair Valuation" shall mean the determination of the value of the
consolidated assets of a Person on the basis of the amount which may be realized
by a willing seller within a reasonable time through collection or sale of such
assets at market value on a going concern basis to an interested buyer who is
willing to purchase under ordinary selling conditions in an arm's length
transaction.
"Fixtures" shall mean fixtures as defined in Section 9-102 of the UCC.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time as applied by nationally
recognized accounting firms.
"General Intangibles" shall mean general intangibles as defined in
Section 9-102 of the UCC.
"Guarantor" shall mean, collectively and each individually, all
subsidiaries of any Borrower.
"Guaranty" shall mean, collectively and each individually, all
guarantees executed by any Guarantors all of which are part of the Assigned
Document as well as those certain Reaffirmations of Guaranty and Security
Documents executed and delivered in connection herewith.
"Government Account" shall be defined to mean all Accounts and
Receivables arising out of or with respect to any Government Contract.
"Governmental Authority" shall mean any federal, state, municipal,
national, local or other governmental department, court, commission, board,
bureau, agency or instrumentality or political subdivision thereof, or any
entity or officer exercising executive, legislative or judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case, whether of the United States or a state, territory or possession
thereof, a foreign sovereign entity or country or jurisdiction or the District
of Columbia.
"Government Contract" shall be defined to mean all contracts with the
United States Government or with any agency thereof, and all amendments thereto.
"Hazardous Substances" shall mean, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials as defined in or subject to any applicable Environmental Law.
"Healthcare Laws" shall mean all applicable statutes, laws, ordinances,
rules and regulations of any Governmental Authority with respect to regulatory
matters primarily relating to patient healthcare, healthcare providers and
healthcare services (including without limitation Section 1128B(b) of the Social
Security Act, as amended, 42 U.S.C. Section 1320a-7(b) (Criminal Penalties
Involving Medicare or State Health Care Programs), commonly referred to as the
"Federal Anti-Kickback Statute,"
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
7
and the Social Security Act, as amended, Section 1877, 42 U.S.C. Section 1395nn
(Prohibition Against Certain Referrals), commonly referred to as "Xxxxx
Statute").
"HSO Contracts" shall mean Borrower's health service organization
contracts.
"Indebtedness" of any Person shall mean, without duplication, (a) all
items which, in accordance with GAAP, would be included in determining total
liabilities as shown on the liability side of the balance sheet of such Person
as of the date as of which Indebtedness is to be determined, including any lease
which, in accordance with GAAP would constitute Indebtedness, (b) all
indebtedness secured by any mortgage, pledge, security, Lien or conditional sale
or other title retention agreement to which any property or asset owned or held
by such Person is subject, whether or not the indebtedness secured thereby shall
have been assumed, (c) all indebtedness of others which such Person has directly
or indirectly guaranteed, endorsed (otherwise than for collection or deposit in
the ordinary course of business), discounted or sold with recourse or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire, or
in respect of which such Person has agreed to supply or advance funds (whether
by way of loan, stock, equity or other ownership interest purchase, capital
contribution or otherwise) or otherwise to become directly or indirectly liable.
"Instrument" shall mean instrument as defined in Section 9-102 of the
UCC.
"Insurer" shall mean a Person that insures another Person against any
costs incurred in the receipt by such other Person of Services, or that has an
agreement with any Borrower to compensate it for providing Services to such
Person.
"Inventory" shall mean all "inventory" (as defined in the UCC) of
Borrower (or, if referring to another Person, of such other Person), now owned
or hereafter acquired, and all documents of title or other documents
representing any of the foregoing, and all collateral security and guaranties of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing..
"Landlord Waiver and Consent" shall mean a waiver/consent in form and
substance satisfactory to Lender from the owner/lessor of any premises not owned
by Borrower at which any of the Collateral is now or hereafter located for the
purpose of providing Lender access to such Collateral, in each case as such may
be modified, amended or supplemented from time to time.
"Liability Event" shall mean any event, fact, condition or circumstance
or series thereof (i) in or for which any Borrower becomes liable or otherwise
responsible for any amount owed or owing in excess of $1 million to any Medicaid
or Medicare program by a provider under common ownership with such Borrower or
any provider owned by such Borrower pursuant to any applicable law, ordinance,
rule, decree, order or regulation of any Governmental Authority after the
failure of any such provider to pay any such amount when owed or owing, (ii) in
which Medicaid or Medicare payments to any Borrower are lawfully set-off against
payments to such or any other Borrower to satisfy any liability of or for any
amounts owed or owing in excess of $1,000,000 to any Medicaid or Medicare
program by a provider under common ownership with such Borrower or any provider
owned by such Borrower pursuant to any applicable law, ordinance, rule, decree,
order or regulation of any Governmental Authority, or (iii) any of the foregoing
under clauses (i) or (ii) in each case pursuant to statutory or regulatory
provisions that are similar to any applicable law, ordinance, rule, decree,
order or regulation of any Governmental Authority referenced in clauses (i) and
(ii) above or successor provisions thereto.
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
8
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
restriction, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof), or any other arrangement pursuant to which title
to the property is retained by or vested in some other Person for security
purposes.
"Loan" or "Loans" shall mean, individually and collectively, the Term
Loan and all Advances under the Revolving Facility.
"Loan Documents" shall mean, collectively and each individually, the
Agreement, the Notes, the Security Documents, the Guarantees, the Stock Pledge
Agreements, the Lockbox Agreements, the Uniform Commercial Code Financing
Statements, the Subordination Agreement, the Landlord Waiver and Consents, the
Borrowing Certificates, the Warrant, the Registration Rights Agreement and all
other agreements, documents, instruments and certificates heretofore or
hereafter executed or delivered to Lender in connection with any of the
foregoing or the Loans, as the same may be amended, modified or supplemented
from time to time.
"Lockbox Accounts" shall mean the blocked accounts maintained by or for
Borrowers at the Lockbox Banks into which all collections or payments on their
Accounts and other Collateral are paid.
"Material Adverse Effect" or "Material Adverse Change" shall mean any
event, condition or circumstance or set of events, conditions or circumstances
or any change(s) which (i) has, had or could reasonably be expected to have any
material adverse effect upon or change in the validity or enforceability of any
Loan Document, (ii) has been or could reasonably be expected to be material and
adverse to the value of any of the Collateral or to the business, operations,
prospects, properties, assets, liabilities or condition of Borrower and/or
Guarantors, either individually or taken as a whole, in each case, in excess of
$1 million, or (iii) has materially impaired or could reasonably be expected to
materially impair the ability of any Borrower or Guarantor to perform the
Obligations or to consummate the transactions under the Loan Documents executed
by such Person.
"Medicaid/Medicare Account Debtor" shall mean any Account Debtor which
is (i) the United States of America acting under the Medicaid or Medicare
program established pursuant to the Social Security Act or any other federal
healthcare program, including, without limitation, CHAMPUS, (ii) any state or
the District of Columbia acting pursuant to a health plan adopted pursuant to
Title XIX of the Social Security Act or any other state health care program, or
(iii) any agent, carrier, administrator or intermediary for any of the
foregoing.
"Merger" shall mean that certain merger of OHNI and Xxxxx into PVHI,
effective January 9, 2002.
"Note" or "Notes" shall mean, collectively and each individually, the
Revolving Note and the Term Note.
"Obligations" shall mean all shall mean all present and future
obligations, Indebtedness and liabilities of Borrower and/or Guarantors to
Lender at any time and from time to time of every kind, nature and description,
direct or indirect, secured or unsecured, joint and several, absolute or
contingent, due or to become due, matured or unmatured, now existing or
hereafter arising, contractual or tortious, liquidated or unliquidated, under
any of the Loan Documents or otherwise relating to Notes and/or
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
9
Loans, including, without limitation, all applicable fees, charges and expenses
and/or all amounts paid or advanced by Lender on behalf of or for the benefit of
any Borrower and/or Guarantor for any reason at any time, including in each case
obligations of performance as well as obligations of payment and interest that
accrue after the commencement of any proceeding under any Debtor Relief Law by
or against any such Person.
"P.A." shall mean Optometric Eye Care Centers, P.A., a North Carolina
professional association.
"P.C." shall mean Opticare, P.C., a Connecticut professional
corporation.
"Payment Office" shall mean initially the address set forth beneath the
Lender's name on the signature page of the Agreement, and thereafter, such other
office of Lender, if any, which it may designate by notice to Borrower to be the
Payment Office.
"Professional Services and Support Agreement" shall mean those certain
agreements for the provision of administrative and professional services by and
between (i) Consolidated Eye Care, Inc., a North Carolina corporation, its
successors and assigns and Optometric Eye Care Centers, PA, a North Carolina
professional association dated August 10, 1999, and (ii) Opticare Eye Health
Centers, Inc. [a division of Borrower] and Opticare, P.C., a Connecticut
professional corporation, each as amended or restated, from time to time.
"Permit" shall mean collectively all licenses, leases, powers, permits,
franchises, certificates, authorizations, approvals, certificates of need,
provider numbers and other rights.
"Person" shall mean an individual, a partnership, a corporation, a
limited liability company, a business trust, a joint stock company, a trust, an
unincorporated association, a joint venture, a Governmental Authority or any
other entity of whatever nature.
"Prime Rate" shall mean a fluctuating interest rate per annum equal at
all times to the rate of interest announced publicly from time to time by
Citibank, N.A. as its base rate; provided, that such rate is not necessarily the
best rate offered to its customers, and, should Lender be unable to determine
such rate, such other indication of the prevailing prime rate of interest as may
reasonably be chosen by Lender; provided, that each change in the fluctuating
interest rate shall take effect simultaneously with the corresponding change in
the Prime Rate.
"Revolving Note" shall mean the Amended and Restated Revolving Note
payable to the order of Lender executed by Borrower evidencing the Revolving
Facility, as the same may be modified, amended or supplemented from time to
time.
"Revolving Facility Term" shall mean the period commencing on the
Closing Date and ending the date that is three (3) years after the Closing Date.
"Security Documents" shall mean the Assigned Documents, together with
any and all additional documents and instruments executed and delivered in
connection herewith necessary to create, continue or perfect the Liens in the
Collateral, as such may be modified, amended or supplemented from time to time.
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
10
"Services" shall mean medical and health care services provided to a
Person, including, but not limited to, medical and health care services which
are covered by a policy of insurance issued by an Insurer, physician services,
nurse and therapist services, dental services, hospital services, skilled
nursing facility services, comprehensive outpatient rehabilitation services,
home health care services, residential and out-patient behavioral healthcare
services.
"Subordination Agreement" shall mean, collectively and each
individually, subordination agreements executed by Palisade Concentrated Equity
Partnership, L.P. and Xxxx X. Xxxxxxxxx as Subordinated Creditors in favor of
Lender as senior lender delivered in connection herewith.
"Subsidiary" shall mean, (i) as to Borrower, any Person in which more
than 50% of all equity, membership, partnership or other ownership interests is
owned directly or indirectly by Borrower or one or more of its Subsidiaries, and
(ii) as to any other Person, any Person in which more than 50% of all equity,
membership, partnership or other ownership interests is owned directly or
indirectly by such Person or by one or more of such Person's Subsidiaries.
"Term Loan Term" shall mean the period commencing on the Closing Date
and ending on the earlier of (a) the date that is two (2) years after the
Closing Date, and (b) the date the Revolving Loan is terminated or otherwise is
due and payable hereunder.
"Term Note" shall mean, collectively and each individually, the Amended
and Restated Term Note payable to the order of Lender executed by Borrower
evidencing the Term Loan, as the same may be modified, amended or supplemented
from time to time.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of Maryland from time to time.
"Warrant" shall have the meaning given such term in the Warrant
Agreement.
"Warrant Agreement" shall mean the Warrant dated as of the Closing Date
by and between Parent and CapitalSource Holdings LLC, as such may be modified,
restated, amended or supplemented from time to time.
THIS DRAFT CREDIT AGREEMENT IS FOR DISCUSSION PURPOSES ONLY. THIS IS NOT A
COMMITMENT TO EXTEND CREDIT IN ANY FORM, AND REMAINS SUBJECT TO CREDIT COMMITTEE
APPROVAL, DUE DILIGENCE, NEGOTIATION AND DOCUMENTATION. NO ORAL COMMUNICATIONS
BETWEEN THE PARTIES SHALL BE DEEMED TO INDICATE ANY COMMITMENT TO EXTEND CREDIT
IN ANY FORM.
