RESTRUCTURE AGREEMENT

           Agreement made this 17th day of December, 2001 between PALISADE CONCENTRATED EQUITY PARTNERSHIP, L.P. ("Palisade"), Dean J. Yimoyines ("Dr. Yimoyines") and OPTICARE HEALTH SYSTEMS, INC. ("OptiCare").

BACKGROUND

          A.      On or about August 13, 1999, OptiCare and certain of its subsidiaries borrowed money from and entered into a loan agreement, which has been amended from time to time (as amended, the Loan Agreement) with Bank Austria Creditanstalt Corporate Finance, Inc. as agent for the lenders (Bank Austria).

          B.      As of November 1, 2001, OptiCare and certain of its subsidiaries owed Bank Austria the sum of $29,700,000 of principal and approximately $1,900,000 of interest. OptiCare is, and has been for a significant period of time, in default of its obligations to Bank Austria under the Loan Agreement.

          C.      On or about October 10, 2000, OptiCare borrowed $2,250,000 for a bridge financing arrangement with Alexander Enterprise Holdings Corp. (Alexander Enterprise), which bridge loan was increased by $500,000 to the principal sum of $2,750,000 on or about January 5, 2001 (the Amended Bridge Loan). Of the $500,000 increase of the bridge loan, Palisade provided $400,000 and Linda Yimoyines (the wife of Dr. Yimoyines) provided $50,000, each as a participant with Alexander Enterprise in the Amended Bridge Loan.

          D.      Palisade has agreed, on the terms and subject to the conditions set forth in this Agreement, to make an additional cash investment in, and provide credit support to, OptiCare and certain of its subsidiaries, as provided below, to permit OptiCare and certain of its subsidiaries to repay Bank Austria its debt at a substantial discount and to repay the advance by Alexander Enterprise under the Amended Bridge Loan. In exchange for such cash and credit support, Palisade shall receive new preferred stock and warrants in OptiCare. At Palisades insistence, and as a condition to Palisades investment in OptiCare, Dr. Yimoyines (or his spouse, immediate family members, or a trust for the benefit of any of his family members) have agreed to provide an additional cash investment, as provided below, to purchase new preferred stock. All references in this Agreement to Dr. Yimoyines with respect to such investment and the purchase of such stock shall mean Dr. Yimoyines or his spouse, family members, or a trust for the benefit of any of his family members.

          E.      Palisade has assisted OptiCare in obtaining new financing from CapitalSource Finance, LLC (CapitalSource), which, provided certain conditions are satisfied, on the Effective Date (as defined below), will be loaning OptiCare substantial sums in reliance in part on credit support to be provided by Palisade.

          F.      Palisade entered into a letter of intent with Bank Austria to provide Bank Austria with certain letters of credit or other credit support described in Paragraph 2.12 in order to induce Bank Austria to accept payment of significantly less than the debt due to it.

           G.      Palisade and Dr. Yimoyines each has agreed to accept new preferred stock of OptiCare in lieu of repayment in cash for their respective participations in, and accrued interest on, the Amended Bridge Loan.

          NOW THEREFORE, for good and valuable consideration and intending to be legally bound hereby, the parties hereto agree as follow:

          1.       EFFECTIVE DATE; CREDIT SUPPORT CONTINGENCY. OptiCare shall use its best efforts to cause the issuance of New Preferred Stock, and the Warrant, an increase in the authorized number of Common Stock, and the other proposals listed on Annex A, (collectively, the Shareholder Proposals) to be approved, in accordance with applicable legal requirements, the provisions of OptiCares Certificate of Incorporation and Bylaws, and the requirements of the American Stock Exchange, by consent of the holders of more than 50% of the OptiCare voting stock or approval of OptiCares shareholders at a meeting to be scheduled, whichever is sooner. OptiCare shall submit the Shareholder Proposals for approval, accompanied by a recommendation of the OptiCare Board that the Shareholder Proposals be approved, as promptly as practicable. Subject to the appropriate approval of the shareholders on such date (the Approval Date), the Effective Date, as used herein, shall mean the business day immediately following the Approval Date or such later date on which the new financing from Capital Source is consummated. This Agreement is contingent upon Palisade and Bank Austria entering into a written agreement regarding the nature and amount of credit support to be supplied by Palisade to Bank Austria in connection with the $10,350,000 Bank Austria Note (defined below) and related matters (the Credit Support Contingency). At any time from and after the date hereof, if either OptiCare or Palisade, in its sole judgment, determines that a definitive agreement satisfactory to it in all respects resolving the Credit Support Contingency has not been entered into, OptiCare or Palisade may, upon notice to the other, terminate this Agreement. Upon such a termination, this Agreement will be null and void and neither party will be in any way obligated or liable under the terms hereof.

           2.      RESTRUCTURE DOCUMENTS. Subject to the conditions in this Agreement, OptiCare and Palisade agree to the following terms and to execute and deliver the following documents (collectively, the "Restructure Documents"):

                     2.1.       OptiCare is authorizing the issuance of 3,500,000 shares of Series B 12.5% voting convertible participating preferred stock having terms substantially as set forth in the Certificate of Designation attached as Schedule 2.1 (the "New Preferred Stock") with an aggregate initial redemption value of $1.40 per preferred share, for each share of New Preferred Stock, convertible into OptiCare Common Stock initially on a ten-for-one basis (subject to adjustment as provided therein), with voting rights on an as converted basis with OptiCare's Common Stock, as provided therein, at any time and having the other terms described therein, and will recommend that OptiCare's shareholders approve an increase in the amount of authorized shares of Common Stock to provide for the possible future exercise of warrants being granted to Palisade and conversion of the New Preferred Stock along with the other Shareholder Proposals.

                     2.2.       On the Effective Date, OptiCare will deliver (in addition to shares of New Preferred Stock delivered pursuant to paragraphs 2.9 and 2.10) a certificate representing 2,500,000 shares of the New Preferred Stock to Palisade and a certificate representing 353,143 shares of New Preferred Stock to Dr. Yimoyines; copies of such Certificates are annexed as "Schedule 2.2".

                     2.3.       In consideration of Palisade providing credit support or commitments set forth in Paragraphs 2.6 and 2.12, and for other assistance provided by Palisade, on the Effective Date OptiCare will issue a warrant (the "Warrant") to Palisade, permitting a purchase of 16,730,000 additional shares (as such number may be adjusted to correspond to the total amount of credit support or commitments provided by Palisade for OptiCare's benefit) of OptiCare Common Stock, a copy of which Warrant is annexed as "Schedule 2.3".

                     2.4.       In payment of the New Preferred Stock, Palisade shall, on the Effective Date, pay OptiCare a total of $3,500,000 and Dr. Yimoyines shall, on the Effective Date, pay OptiCare, in immediately available funds, a total of $500,000, each pursuant to the wire transfer instructions set forth in "Schedule 2.4".

                     2.5.       OptiCare is borrowing from CapitalSource on the Effective Date:

                     2.6.       CapitalSource's Standby Letter of Credit Facility of $5,000,000 will be supported and secured by either a letter of credit issued on the Effective Date by a bank or other credit support acceptable to CapitalSource which, subject to the terms and conditions in this Agreement, Palisade agrees to supply.

                     2.7.       OptiCare will use a portion of the proceeds of the loans from CapitalSource to repay Bank Austria cash in the sum of $13,000,000 pursuant to a Bank Austria Novation Agreement to be entered into.

                     2.8.       OptiCare will use a portion of the proceeds of the Palisade stock investment to repay $2,300,000 of principal plus interest of the Amended Bridge Loan to Alexander Enterprise pursuant to the payoff agreement and instructions attached as "Schedule 2.8".

                     2.9.       As of the Effective Date, Palisade, as a participant in the Amended Bridge Loan pursuant to the Participation Agreement relating thereto, executed in connection therewith and dated as of January 5, 2001 (the "Bridge Loan Participation Agreement"), shall be issued, in lieu of cash payment on account of its participation in the principal amount of $400,000 in the Amended Bridge Loan, 285,714 shares of OptiCare New Preferred Stock, plus additional shares of New Preferred Stock for accumulated interest.

                     2.10.       As of the Effective Date, Linda Yimoyines, as a participant in the Amended Bridge Loan pursuant to the Bridge Loan Participation Agreement relating thereto, shall be issued, in lieu of cash payment on account of his participation in the principal amount of $50,000 in the Amended Bridge Loan, 35,714 shares of OptiCare New Preferred Stock (plus additional shares of New Preferred Stock for accumulated interest).

                     2.11.       On the Effective Date, OptiCare and its subsidiaries shall issue a note to Bank Austria pursuant to the Bank Austria Novation Agreement in the principal amount of $10,350,000 (hereinafter referred to as the "$10,350,000 BA Note").

                     2.12.       On the Effective Date, Palisade shall provide Bank Austria with credit support acceptable to Bank Austria in the amount of $11,230,000 to secure the $10,350,000 BA Note and interest.

                     2.13.       If letters of credit are to be issued, OptiCare and Palisade jointly and severally agree to execute a customary Reimbursement Agreement on account of the letters of credit being issued to Bank Austria and CapitalSource pursuant to the terms of a Reimbursement Agreement in form and substance reasonably acceptable to OptiCare and Palisade.

                     2.14.       If requested by OptiCare, Palisade may from time to time in its sole discretion provide additional funds to OptiCare by purchasing OptiCare's 12.5% convertible notes to enable OptiCare to repay the $10,350,000 BA Note and $5,500,000 CapitalSource Standby Letter of Credit Facility. The terms of such notes are described on the attached Schedule 2.14.

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