LOAN AGREEMENT
LOAN AGREEMENT, dated as of September 1, 2005, is entered into between
OPTICARE HEALTH SYSTEMS, INC., a Delaware corporation and OPTICARE EYE HEALTH
CENTERS, INC., a Connecticut corporation (collectively the "Borrowers" and
individually a "Borrower") and REFAC, a Delaware corporation.
W I T N E S S E T H
WHEREAS, Borrowers are parties to a Second Amended and Restated
Revolving Credit, Term Loan and Security Agreement, dated March 29, 2004 and
amended on August 16, 2004, August 27, 2004 and January 12, 2005, with
CapitalSource Finance LLC ("CapitalSource"), a Delaware limited liability
company (such agreement, together with the amendments thereto hereinafter being
collectively referred to as the "CapitalSource Loan Agreement"); and
WHEREAS, OptiCare Health Systems, Inc. ("OHS") has entered into a
merger agreement (the "Merger Agreement"), dated August 22, 2005, with Refac and
its subsidiary, OptiCare Merger Sub, Inc.; and
WHEREAS, Borrowers Overadvance facility under the CapitalSource Loan
Agreement terminates on August 31, 2005; and
WHEREAS, Borrowers have requested a loan in the amount of One Million
Dollars ($1,000,000) to provide it with additional financing pending the closing
of the Merger Agreement; and
WHEREAS, Refac is willing to provide such loan upon the terms and
conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the agreements herein contained,
the parties hereto agree as follows:
1. LOAN.
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Refac hereby agrees to loan the Borrowers the principal amount of One
Million Dollars ($1,000,000) in accordance with the terms set forth in the
promissory note (the "Note") attached hereto as Exhibit "A".
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2. SECURITY INTEREST.
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2.1 CapitalSource holds a first security interest in and to the
"Collateral" defined in the CapitalSource Loan Agreement. Promptly after the
execution of this Agreement, Borrowers shall notify CapitalSource, in writing,
of the loan made hereunder. If, in the opinion of counsel for Borrowers, they
require the consent of CapitalSource in order to grant a security interest in
the Collateral to Refac, they shall use their best efforts to get such consent.
2.2 If such consent is not necessary or is obtained, as security for
the payment of the Note, Borrowers shall xxxxx Xxxxx a security interest in such
Collateral, subordinate to the security interest held by CapitalSource and shall
sign and deliver to Refac all such financing statements, instruments or other
documents necessary to perfect and/or protect such security interest.
2.3 If Borrowers are able to grant the security interest contemplated
by this Paragraph 2, the "Applicable Interest Rate" provided for in the Note
shall be 9.75% commencing upon the date that such security interest is perfected
and Borrowers agree to reimburse Refac for any and all filing fees and costs of
preparing and any and all documents necessary to perfect and/or protect same.
3. REPRESENTATIONS AND WARRANTIES.
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Borrowers hereby make the following representations and warranties to
Refac, each of which is material and is being relied upon by Refac:
3.1 Borrowers hereby acknowledge and agree that Refac is relying upon
all of the representations and warranties made by OHS in the Merger Agreement
with the same force and effect as if set forth herein in full.
3.2 The execution and delivery of this Agreement and the Note and the
performance by Borrowers of their obligations as set forth therein or any other
instrument or documents executed thereto, have been duly authorized by all
necessary corporate action and do not and will not conflict with, result in a
violation of, or constitute a default under any provisions of any Certificate of
Incorporation or By-law or any agreement or instrument binding upon any of the
Borrowers, or any law, or governmental regulation, or court decree or order.
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4. MISCELLANEOUS.
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4.1 Headings. The various headings in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
4.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given (i) upon personal delivery, (ii) one business day after being sent via a
nationally recognized overnight courier service if overnight courier service is
requested or (iii) upon receipt of electronic or other confirmation of
transmission if sent via facsimile, in each case at the addresses or fax numbers
(or at such other address or fax number for a party as shall be specified by
like notice) set forth below:
(a) if to REFAC, at
Xxx Xxxxxx Xxxxx
Xxxx Xxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X Xxxxxx
Fax: (000) 000-0000
(b) if to the Borrowers, to
OptiCare Health Systems, Inc.
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxxxxxx X. Xxxxx
Fax: (000) 000-0000
4.3 Governing Law. This Agreement and the Note shall be governed
by, and construed in accordance with, the laws of the State of New York, without
regard to the principles of conflicts of laws thereof.
4.4 Entire Agreement; No Third-Party Beneficiaries. This Agreement,
together with the Note, (a) constitutes the entire agreement and supersede all
prior agreements
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and understandings, whether written or oral, among the parties with respect to
the subject matter hereof and (b) is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
4.5 Counterparts; Facsimile. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties. Facsimile transmission
of any signed original document and/or retransmission of any signed facsimile
transmission will be deemed the same as delivery of an original. At the request
of any party, the parties will confirm facsimile transmission by signing a
duplicate original document.
4.6 Binding. This Agreement shall be binding upon the parties hereto
and their respective successors, and shall inure to the benefit of the parties
hereto and successors of Refac.
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly
executed the day and year first above written.
REFAC
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
OPTICARE HEALTH SYSTEMS, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxxxxxx X. Xxxxx
Title: Chief Executive Officer
OPTICARE EYE HEALTH CENTERS, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxxxxxx X. Xxxxx
Title: Chief Executive Officer
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