AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (this "Agreement"), is made
effective and entered into as of the 27th day of December 1999 (the "Agreement
Date"), by and between GREYSTONE FUNDING CORPORATION, a Virginia corporation
(the "Lender"), and SCHICK TECHNOLOGIES, INC., a Delaware corporation (the
"Company") and SCHICK TECHNOLOGIES, INC., a New York corporation ("Schick New
York"). The Company and Schick New York are hereinafter individually referred to
herein as a "Borrower" and collectively as the "Borrowers."
W I T N E S S E T H:
WHEREAS, the Borrowers are engaged in the business of designing,
developing and manufacturing, marketing, selling and servicing digital
radiographic imaging systems and devices for the dental and medical markets and
other related fields (collectively, the "Business Operations"); and
WHEREAS, the Borrowers have requested the Lender to extend to the
Borrowers a loan and line of credit in the principal amount of up to $7,500,000,
which the Borrowers will utilize in connection with the Business Operations and
as contemplated by this Agreement; and
WHEREAS, the Lender is ready, willing and able to make such line of credit
available to the Borrowers upon the terms and subject to the conditions set
forth in this Agreement;
WHEREAS, on December 27, 1999 the Lender purchased from the Company
certain stock of Photobit Corporation for $1,000,000 in cash together with a
promissory note (the "Stock Purchase") which Stock Purchase is being rescinded
as of its purchase date pursuant to an Agreement to Rescind Stock Purchase
between Lender and Company of even date herewith; and
WHEREAS, on December 27, 1999, in order to induce Lender to enter into a
Loan Agreement between the parties, the Company issued to Lender and its
designees warrants to purchase three million (3,000,000) shares of the Company's
Common Stock and, in connection with the Stock Purchase, the Company also issued
to Lender and its designees additional warrants to purchase two million
(2,000,000) shares of the Company's Common Stock; and
WHEREAS, Lender has agreed that the cash portion of the Stock Purchase
shall be retained by Borrower and deemed to constitute the initial Advance
hereunder if Company agrees that Lender shall retain the Warrants issued to it
by Borrower in connection with the Stock Purchase, and that Lender be issued
additional Warrants pursuant to the terms hereof; and
WHEREAS, the Company has agreed that Lender shall retain the Warrants
previously issued to it by Borrower and that it will issue to Lender additional
Warrants, effective as of December 27, 1999, pursuant to the terms hereof; and
WHEREAS, the Borrowers and Lender desire to amend and restate the Loan
Agreement among them dated December 27, 1999 to reflect the foregoing;
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NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereby agree as follows:
ARTICLE I. DEFINITIONS
Section 1.01. Defined Terms. In addition to the other terms defined
elsewhere in this Agreement, as used herein, the following terms shall have the
following meanings:
"Advances" shall mean funds advanced under the Line of Credit from
time to time by the Lender to either or both of the Borrowers pursuant to this
Agreement; each of which Advances shall be subject at all times to the terms and
conditions set forth herein.
"Advance Period" shall mean the period from the Agreement Date to a
date which shall be two (2) years following the Agreement Date.
"Advance Requests" shall mean a Borrower's written request made
during the Advance Period to the Lender for any one or more Advances under the
Line of Credit provided for herein.
"Affiliate" shall mean, with respect to any Person, any other Person
in control of, controlled by, or under common control with the first Person, and
any other Person who has a substantial interest, direct or indirect, in the
first Person or any of its Affiliates, including, without limitation, any
officer or director of the first Person or any of its Affiliates; for the
purpose of this definition, a "substantial interest" shall mean the direct or
indirect legal or beneficial ownership of more than five (5%) percent of any
class of stock or similar interest.
"Agreement" shall mean this Loan Agreement as it may from time to
time be amended and/or supplemented.
"Agreement Date" shall mean December 27, 1999.
"Applicable Law" shall mean all applicable provisions of all (a)
constitutions, statutes, ordinances, rules, regulations and orders of all
governmental and/or quasi-governmental bodies, (b) Government Approvals, and (c)
orders, judgments and decrees of all courts and arbitrators.
"Business Day" shall mean a day other than (a) a Saturday, (b) a
Sunday, or (c) in the case of a day on which any payment hereunder is to be made
in the State of New York, a day on which commercial banks in the State of New
York are authorized or required by law to close.
"Capital Base" shall mean, for any fiscal period in question, the
sum of (a) the consolidated stockholders' equity of the Company and its
consolidated Subsidiaries, as calculated in accordance with GAAP, and (b) all
Subordinated Debt outstanding at the end of such fiscal period.
"Capital Expenditures" shall mean with respect to any Person, all
expenditures of such Person for tangible assets which are capitalized, and the
fair value of any tangible assets leased by such Person under any lease which
would be a Capitalized Lease, determined in
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accordance with GAAP, including all amounts paid or accrued by such Person in
connection with the purchase (whether on a cash or deferred payment basis) or
lease (including Capitalized Lease Obligations) of any machinery, equipment,
tooling, real property, improvements to real property (including leasehold
improvements), or any other tangible asset of the Borrowers which is required,
in accordance with GAAP, to be treated as a fixed asset on the consolidated
balance sheet of such Person.
"Capitalized Lease" shall mean any lease which is or should be
capitalized on the balance sheet of the lessee thereunder in accordance with
GAAP.
"Capitalized Lease Obligation" shall mean with respect to any
Person, the amount of the liability which reflects the amount of future payments
under all Capitalized Leases of such Person as at any date, determined in
accordance with GAAP.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder, as in effect from time to
time.
"Collateral" shall mean all now-owned and hereafter-acquired
tangible and intangible personal property of the Borrowers, including, without
limitation, all cash, marketable securities, accounts receivable, inventories,
Contract rights, patents, trademarks, copyrights and other general intangibles,
machinery, equipment and interests in real estate of the Borrowers, together
with all products and proceeds thereof.
"Common Stock" shall mean the common stock, $.0l par value per
share, of the Company; being the only issued class or series of voting
securities of the Company.
"Contract" shall mean any indenture, agreement (other than this
Agreement), other contractual restriction, lease in which either of the
Borrowers is a lessor or lessee, license, instrument, or certificates of
incorporation of the Borrowers.
"Current Assets" shall mean, at a particular date, all assets which
would, in conformity with GAAP, be properly classified as current assets on the
consolidated balance sheet of the Company and its Subsidiaries as at such date.
"Current Liabilities" shall mean, at a particular date, all
liabilities which would, in conformity with GAAP, be properly classified as
current liabilities on the consolidated balance sheet of the Company and its
Subsidiaries as at such date, including all Line of Credit Advances then
outstanding under the Line of Credit Note.
"Current Ratio" shall mean, on any given date, the ratio of Current
Assets to Current Liabilities.
"Default" shall mean any of the events specified in Article VII
hereof, whether or not any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"EBITDA" shall mean earnings before interest, taxes, depreciation
and amortization.
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as in effect from time to time.
"ERISA Affiliate" shall mean, with respect to any Person, any other
Person which is under common control with the first Person within the meaning of
Section 4 14(b) or 414(c) of the Code.
"Event of Default" shall mean any of the events specified in Article
VII hereof, provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Excess Available Cash" shall mean for any particular fiscal quarter
in question, 100% of the positive amount, if any, by which the Company's and
Subsidiaries cash and cash equivalents on the last Business Day of the quarter,
as set forth in its statement of cash flows for such quarter, collectively on
the final day of such fiscal quarter, exceed (i) the total of (x) Net Cash to be
Used in Operating Activities, (y) Net Cash to be Used in Investing Activities
and (z) any required principal payments to DVI, for the coming fiscal quarter as
set forth in the Company's budget or (ii) an amount equal to the Company's
average monthly cash expenditures during the fiscal quarter in question.
"Existing Indebtedness" shall mean any Indebtedness of the Borrowers
incurred prior to the Agreement Date. Existing Indebtedness shall include
obligations to DVI.
"Existing Liens" shall mean any Lien or other encumbrance that was
incurred as a result of any Existing Indebtedness.
"Fiscal Year" shall mean the fiscal year of the Borrowers which ends
on March 31 of each year. In the event that such Fiscal Year is so changed from
March 31 to another date with the consent of the Lender, then the quarterly
periods and annual periods referred to in Article V hereof shall also be amended
to coincide with such Fiscal Year, as so changed.
"GAAP" shall mean generally accepted accounting principles in the
United States of America, consistently applied, unless the context otherwise
requires, with respect to any financial terms, ratios or covenants contained
herein, as then in effect with respect to the preparation of financial
statements; provided, however, that if any change in GAAP enacted subsequent to
the Agreement Date shall affect the financial covenants referred to herein, the
parties shall, in good faith, appropriately amend such covenants to reflect such
changes in GAAP.
"Government Approval" shall mean an authorization, consent,
non-action, approval, license or exemption of, registration or filing with, or
report to, any governmental or quasi-governmental department, agency, body or
other unit.
"Guaranty", "Guaranteed" or to "Guarantee", as applied to any
Indebtedness or Liability, shall mean and include the following, unless entered
into in the ordinary course of business: (a) a guaranty, directly or indirectly,
in any manner, including by way of endorsement (other than endorsements of
negotiable instruments for collection), of any part or all of such obligation,
and (b) an agreement, contingent or otherwise, and whether or not constituting a
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guaranty, assuring, or intended or the practical effect of which is to assure,
the payment or performance (or payment of damages in the event of
non-performance) of any part or all of such obligation whether by (i) the
purchase of securities or obligations, (ii) the purchase, sale or lease (as
lessee or lessor) of property, or the purchase or sale of services, primarily
for the purpose of enabling the obligor with respect to such obligation to make
any payment or performance (or payment of damages in the event of
non-performance) of or on account of any part or all of such obligation, or to
assure the owner of such obligation against loss, (iii) the supplying of funds
to or in any other manner investing in the obligor with respect to such
obligation, (iv) the repayment of amounts drawn down by beneficiaries of letters
of credit not arising out of the import of goods, (v) the supplying of funds to
or investing in a Person on account of all or any part of such Person's
obligation under a Guaranty of any such obligation or indemnifying or holding
harmless, in any way, such Person against any part or all of such obligation, or
(vi) otherwise.
"Indebtedness" of any Person shall mean, without duplication, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (ii) all indebtedness of such Person evidenced by
a note, bond, debenture or similar instrument, (iii) the outstanding undrawn
amount of all letters of credit issued for the account of such Person and,
without duplication, all un-reimbursed amounts drawn thereunder, (iv) all
indebtedness of any other person or entity secured by any Lien on any property
owned by such Person, whether or not such indebtedness has been assumed, (v) all
contingent obligations of such Person, (vi) all unfunded benefit liabilities of
such Person, (vii) all payment obligations of such Person under any interest
rate protection agreement (including, without limitation, any interest rate
swaps, caps, floors, collars and similar agreements) and currency swaps and
similar agreements, (viii) all indebtedness and liabilities of such Person
secured by any Lien or mortgage on any property of such Person, whether or not
the same would be classified as a liability on a balance sheet, (ix) the
liability of such Person in respect of banker's acceptances and the estimated
liability under any participating mortgage, convertible mortgage or similar
arrangement, (x) the aggregate principal amount of rentals or other
consideration payable by such Person in accordance with GAAP over the remaining
unexpired term of all Capitalized Leases of such Person, (xi) all judgments or
decrees by a court or courts or competent jurisdiction entered against such
Person, (xii) all indebtedness, payment obligations, contingent obligations,
etc. of any partnership in which such Person holds a general partnership
interest, provided that if such indebtedness is non-recourse, only the portion
of such indebtedness equal to such Person's percentage ownership interest in
such partnership shall be included in this definition, (xiii) all convertible
debt and subordinated debt owed by such Person, (xiv) all preferred stock issued
by such Person that, in either case, are redeemable for cash on a mandatory
basis, a cash equivalent, a note receivable or similar instrument or are
convertible on a mandatory basis to Indebtedness as defined herein (other than
Indebtedness described in clauses (iii), (vi), (x), (xi) or (xiv) of this
definition), and (xv) all obligations, liabilities, reserves and any other items
which are listed as a liability on a balance sheet of such Person determined on
a consolidated basis in accordance with GAAP, but excluding (A) all general
contingency reserves and reserves for deferred income taxes and investment
credit and (B) all customary trade payables and accrued expenses not more than
sixty (60) days past due and (C) any indebtedness of such Person evidenced by a
note or notes that is secured by a pledge of cash or cash equivalents with a
value equal to or greater than the amount of the related indebtedness and which
generates cash flow sufficient to pay all sums due on such indebtedness when the
same are due and payable.
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"Interest Coverage Ratio" shall mean, as to the Company and its
Subsidiaries on a consolidated basis for any given fiscal period, the ratio of
EBITDA earned in such fiscal period to the total amount of Interest Expense
incurred in such fiscal period.
"Interest Expense" shall mean, with respect to any Person for any
fiscal period, all interest on, or the interest component of, all Indebtedness.
"Investment", as applied to any Borrower, shall mean: (a) any shares
of capital stock, assets, evidence of Indebtedness or other security issued by
any other Person to a Borrower or any Subsidiary, (b) any loan, advance or
extension of credit to, or contribution to the capital of, any other Person,
other than credit terms extended to customers in the ordinary course of
business, (c) any Guaranty of any indebtedness or liability of any other Person,
(d) any obligation owed to a Borrower secured by a Lien on, or payable out of
the proceeds of production from, any property of any other Person, whether or
not such obligation shall have been assumed by such Person, (e) any other
investment by a Borrower or any Subsidiary thereof in any assets or securities
of any other Person, and (f) any commitment to make any Investment.
"Lien", as applied to the property or assets (or the income or
profits therefrom) of any Borrower, shall mean (in each case, whether the same
is consensual or nonconsensual or arises by contract, operation of law, legal
process or otherwise): (a) any mortgage, lien, pledge, attachment, assignment,
deposit arrangement, encumbrance, charge, lease constituting a Capitalized Lease
Obligation, conditional sale or other title retention agreement, or other
security interest or encumbrance of any kind in respect of any property
(including, without limitation, stock of any Subsidiary) of a Borrower, or upon
the income or profits therefrom, (b) any arrangement, express or implied, under
which any property of a Borrower is transferred, sequestered or otherwise
identified for the purpose of subjecting or making available the same for the
payment of indebtedness or the performance of any other liability in priority to
the payment of the general, unsecured creditors of a Borrower, (c) any
Indebtedness which remains unpaid more than five (5) calendar days after the
same shall have become due and payable and which, if unpaid, might by law
(including but not limited to bankruptcy or insolvency laws) or otherwise be
given any priority whatsoever over the general, unsecured creditors of a
Borrower, (d) any agreement (other than this Agreement) or other arrangement,
express or implied, which, directly or indirectly, prohibits a Borrower from
creating or incurring any Lien on any of its properties or assets or which
conditions the ability to do so on the security, on a pro rata or other basis,
of indebtedness other than indebtedness outstanding under this Agreement, and
(e) any arrangement, express or implied, under which any right or claim of a
Borrower is subject or subordinated in any way to any right or claim of any
other Person.
"Line of Credit" shall mean the line of credit in the maximum
principal amount outstanding at any one time of $7,500,000 to be made by the
Lender to the Borrowers pursuant to this Agreement.
"Maturity Date" shall mean the earlier of (a) the first date on
which the Company shall have received, in the aggregate, $12,500,000 or more
from equity and/or debt financings consummated subsequent to the Agreement Date,
or (b) December 27, 2004.
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"Material Adverse Effect" shall mean any event or condition that has
or could reasonably be anticipated to have a material adverse effect on the
Working Capital, condition (financial or otherwise), assets, liabilities,
reserves, business, prospects, management or Business Operations of either of
the Borrowers, when taken individually or as a consolidated whole.
"Net Income", as applied to the Borrowers, shall mean the net income
(or loss) of the Company and its consolidated Subsidiaries for the period in
question, after giving effect to deduction of or provision for all operating
expenses, all taxes and reserves (including reserves for deferred taxes) and all
other proper deductions, all determined in accordance with GAAP; provided that,
for purposes of calculating Net Income, there shall be excluded and no effect
shall be given to:
(a) any restoration of any contingency reserve, except to the
extent that provision for such reserve was made out of income for the subject
period;
(b) any net gains or losses on the sale or other disposition,
not in the ordinary course of business, of Investments and/or other capital
assets, provided that there shall also be excluded any related charges for taxes
thereon; and
(c) any net gain arising from the collection of the proceeds
of any insurance policy or policies.
"Note" shall mean the Line of Credit Promissory Note, dated the
Agreement Date in the maximum principal amount of $7,500,000 issued by the
Borrowers and payable to the order of the Lender, to represent the aggregate
amounts outstanding from time to time under the Line of Credit, all in the form
of Exhibit "A" annexed hereto and made a part hereof.
"Obligations" shall mean the collective reference to all
Indebtedness and other liabilities and obligations of every kind and description
owed by the Borrowers to the Lender from time to time, however evidenced,
created or incurred, whether direct or indirect, primary or secondary, fixed or
contingent, now or hereafter existing, due or to become due, including but not
limited to obligations represented by or arising under this Agreement, the Note
and/or the Security Documents.
"Permitted Liens" shall mean those Liens expressly permitted to
Section 6.02 below.
"Person" shall mean any individual, partnership, corporation,
limited liability company, banking association, business trust, joint stock
company, trust, unincorporated association, joint venture, governmental
authority or other entity of whatever nature.
"Principal Payment Date" shall mean the date which is forty-five
(45) days after the last business day of each December, March, June and
September commencing on May 15, 2000.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement in the form of Exhibit "D" hereto, dated the Agreement Date by and
between the Lender and the
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Company pursuant to which the Company will register the shares of the Company's
Common Stock underlying the Warrants.
"SEC" shall mean the Securities and Exchange Commission, or any
successor to the functions of such agency.
"Security Agreement" shall mean the Security Agreement in the form
of Exhibit "C" hereto, dated the Agreement Date, by and between the Lender and
the Borrower, as same may be amended and/or supplemented from time to time in
accordance therewith, pursuant to which the Lender has received a continuing
priority lien and security interest in and to all of the Collateral,
subordinated only to the first priority Lien of the Senior Lender.
"Security Documents" shall mean the collective reference to: (a) the
Security Agreement, (b) any specific assignments executed and delivered pursuant
to the Security Agreement, and (c) all UCC Financing Statements and other
documents filed or recorded to evidence and/or perfect the foregoing, or to
further or collaterally secure same, all as may be amended or supplemented from
time to time in accordance therewith.
"Senior Lender" shall mean DVI Financial Services, Inc. ("DVI")
which has provided the Borrower with loans and advances up to $6,222,415.63 in
the aggregate (the "Senior Indebtedness"); which is secured by first priority
Liens on the Collateral.
"Subordinated Debt" shall mean all indebtedness for money borrowed
and other liabilities of the Borrower, whether or not evidenced by promissory
notes, which is subordinated in right of payment, in a manner satisfactory to
the Lender (as evidenced by its prior written approval thereof), to all other
Obligations of the Borrowers to the Lender.
"Subsidiary" or "Subsidiaries" shall mean the individual or
collective reference to any corporation of which 50% or more of the outstanding
shares of stock of each class having ordinary voting power (other than stock
having such power only by reason of the happening of a contingency) is at the
time owned by the Company, directly or indirectly through one or more
Subsidiaries of the Company. Schick New York is a Subsidiary of the Company.
"UCC Financing Statements" shall mean the Uniform Commercial Code
financing statements on Form UCC-1 (or other applicable form) executed by the
Borrowers, in form for filing and recording in the appropriate state and county
jurisdictions in which any of the Borrower maintains any assets or conducts any
business.
"Warrants" shall refer to the eighteen million (18,000,000) warrants
issued hereunder by Borrower to Lender, which have an agreed-upon fair value of
$.03 per Warrant.
"Working Capital" shall mean, on any given date, the amount by which
the Borrowers' consolidated Current Assets shall exceed their consolidated
Current Liabilities, as determined in accordance with GAAP.
Section 1.02. Use of Defined Terms. All terms defined in this Agreement
shall have their defined meanings when used in the Note, the Security Documents,
and all certificates, reports or
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other documents made or delivered pursuant to this Agreement, unless otherwise
defined therein or unless the specific context shall otherwise require.
Section 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
ARTICLE II. GENERAL TERMS
Section 2.01. The Line of Credit.
(a) Advances; Periodic Repayments of Advances. Subject at all times to all
of the terms and conditions of this Agreement, including Section 2.02, Section
2.03 and Article IV hereof, during the Advance Period the Lender hereby agrees
to provide to the Borrowers a Line of Credit of up to a maximum of $7,500,000.
The Lender shall have no obligation to provide any Advances and the Borrowers
shall not submit any Advance Request to the Lender at any time (i) in which a
Default or an Event of Default hereunder shall have occurred and be continuing,
or (ii) following the Advance Period. Unless an Event of Default hereunder shall
have occurred and be continuing or this Agreement shall be sooner terminated
pursuant to the terms hereof, all outstanding Advances, together with all unpaid
accrued interest thereon, shall be due and payable in full by the Borrowers to
the Lender on the Maturity Date. Notwithstanding the foregoing, unless otherwise
agreed to in writing by the Lender in connection with the Restructuring Plan or
otherwise, on each Principal Payment Date, the Company shall reduce all Advances
outstanding on such Principal Payment Date by making a cash payment against such
Advances to the Lender in an amount which shall be equal to the Excess Available
Cash, if any, during the calendar quarter immediately preceding the Interest
Payment Date in question.
(b) Interest. The Borrowers shall pay the Lender interest on all
outstanding Advances under the Line of Credit at the rate of ten (10%) percent
per annum, all in accordance with the Note. Such interest shall be payable on a
quarterly basis on the last Business Day of each of December, March, June and
September, commencing December 30, 1999 (each an "Interest Payment Date"). The
amount of interest payable on each Interest Payment Date shall be based on the
average outstanding amount of the Advances in the calendar quarter immediately
preceding such Interest Payment Date (for the December 30, 1999 Interest Payment
Date, calculated from the Agreement Date to December 30, 1999). Interest shall
be based on a three hundred sixty (360) day year, counting the actual number of
days in each month. Unless a Default or Event of Default exists at the beginning
of any calendar quarter, the interest shall be calculated at the non-default
rate set forth in the Note; and in the event that a Default or Event of Default
shall occur during any calendar quarter, then the additional interest
attributable to the increase in interest rate resulting therefrom shall be
payable on demand (or, in the absence of demand, on the next scheduled Interest
Payment Date in conjunction with the quarterly interest payment).
(c) Prepayment. The Borrowers shall have the right to prepay outstanding
Advances in whole or in part, without premium or penalty, at any time and from
time to time.
(d) Maturity Date. Unless an Event of Default hereunder shall have
occurred and be continuing, hereof, the Borrowers shall pay in full all of the
Obligations in respect of
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the Line of Credit on the Maturity Date, subject to prior mandatory prepayments
or reductions of outstanding Advances out of Excess Available Cash as provided
in Section 2.0 1(a) hereof.
(e) The Note. The Loan shall be evidenced by the Note, the terms and
conditions of which are hereby incorporated herein by reference and made a part
hereof.
Section 2.02. Procedure for Making Advances. (a) Simultaneous with each
Advance Request, the Company will deliver to the Lender (i) a certificate
executed by the President, Chief Executive Officer or Chief Financial Officer of
Borrower attesting in their capacity as executive officers of such Borrower
that, as at the date of each Advance Request, no Default or Event of Default
hereunder shall have occurred and be continuing, and (ii) a reasonably detailed
statement of the intended use of the proceeds of such Advance, including if
applicable the item or items to be purchased and the Indebtedness or other
liabilities to be paid (the "Advance Analysis");
(b) The Lender shall notify the Company, in writing, within five (5)
Business Days of receipt of the Advance Analysis whether or not the Lender will
make the Advance. The Lender may refuse to make the Advance if: (i) it does not
approve the use of the proceeds of such Advance Request for the uses set forth
in the Advance Analysis (the "Written Notification"), which approval shall not
be unreasonably withheld. Among other things, it shall not be unreasonable for
the Lender to disapprove the Advance Request because either of the Borrowers has
suffered a Material Adverse Effect and such Material Adverse Effect remains
uncured. In addition, the Lender may refuse to make an Advance if, in the
exercise of its sole discretion it determines that it would be imprudent to make
such Advance because of the status of any litigation or investigation respecting
either of the Borrowers or their officers or directors;
(c) If Lender does not approve the Advance Request for any reason other
than the status of any litigation or investigation, the Written Notification
shall provide a reasonably detailed explanation of the reason(s) therefor. Upon
approval of the Advance Request by the Lender it will authorize an immediate
drawing of such Advance under the Line of Credit and fund the Advance for the
purposes specified in the Advance Analysis for any reason other than the status
of any litigation or investigation. In the event that the Lender does not
approve the Advance Analysis, the parties shall promptly undertake in good faith
to expeditiously resolve the matter; if the parties do not resolve the matter to
their mutual satisfaction by the earlier of (a) five (5) business days after
Borrower's receipt of the Written Notification, or (b) ten (10) business days
after Lender's receipt of the Advance Analysis, the parties shall submit this
matter to arbitration administered by the American Arbitration Association under
its Commercial Arbitration Rules, and jointly request that said arbitration be
conducted in an expedited manner, and the parties shall abide by and perform any
decision and/or award rendered by the arbitrator(s) and agree that a judgment of
any court having jurisdiction may be entered upon the award, and that neither
party shall seek to challenge or overturn the decision and/or award rendered by
the arbitrator(s). Any arbitration proceedings conducted hereunder shall be held
in New York, New York; and
(d) If the actual use of proceeds differs materially from the purposes
specified in the Advance Analysis, the Company shall notify the Lender in a
writing which shall provide (i) a reasonably detailed explanation of the reasons
for the change; and (ii) an updated statement of
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the intended use of proceeds. After receipt of such notice, the parties shall
follow the procedures enumerated in Sections 2.02(b) and 2.02(c) above.
(e) The Lender and Borrowers agree that the $1,000,000 cash payment made
by Lender in connection with the Stock Purchase shall be retained by the Company
and shall constitute the initial Advance hereunder made as of the Agreement
Date.
Section 2.03. Issuance of Warrants.
(a) On the Agreement Date, the Company shall issue to the Lender a total
of eighteen million (18,000,000) fully vested Warrants, of which five million
(5,000,000) Warrants are immediately exercisable as of the Agreement Date and
the remaining thirteen million (13,000,000) Warrants shall each become
exercisable once it is no longer subject to forfeiture, as set forth in Section
2.03(b) hereinafter.
(b) Lender and Borrowers agree that with respect to all Advances from
$1,000,001 to $7,500,000 in the aggregate, for each dollar which Lender does not
advance to Borrowers hereunder prior to the expiration or surrender of the Line
of Credit, Warrants to purchase two (2) shares of Company Common Stock shall be
forfeited and canceled.;
(c) By way of example of the application of Sections 2.03 (a) and (b)
above, if the Borrowers have outstanding at any one time under this Agreement
Advances of $3,000,000, then the Lender shall be entitled to exercise Warrants
to purchase an aggregate of 9,000,000 shares of Company Common Stock.
(d) By way of further example, based upon a maximum of $7,500,000 of
Advances which may be made by the Borrowers hereunder, if at any time or from
time to time prior to the Maturity Date there shall be outstanding at any time
the full $7,500,000 of Advances, the Lender shall be entitled to exercise
Warrants to purchase an aggregate of 18,000,000 shares of Company Common Stock,
at the exercise prices described in the Warrants.
(e) In all cases described in this Section 2.03, the number of shares of
Common Stock and exercise prices per share are subject to adjustment to protect
the holder against dilution, all as provided in the form of Warrants.
Section 2.04. Security for the Obligations. The Note and all other
Obligations shall at all times be secured by a security interest in all of the
Collateral which shall be subordinated only to the first priority Lien of the
Senior Lender, all pursuant to the terms of the Security Agreement and any
specific assignments executed and delivered pursuant thereto; all as evidenced
by UCC Financing Statements which the Lender and its counsel may require to be
executed and filed.
Section 2.05. Further Obligations. With respect to all Obligations for
which the interest rate is not otherwise specified herein (whether such
Obligations arise hereunder, pursuant to the Note or any of the Security
Documents, or otherwise), such Obligations shall bear interest at the rate(s) in
effect from time to time pursuant to the Note.
Section 2.06. Obligations Unconditional. The payment and performance of
all Obligations shall constitute the absolute and unconditional obligations of
the Borrowers, and
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shall be independent of any defense or rights of set-off, recoupment or
counterclaim which the Borrower might otherwise have against the Lender. All
payments required by this Agreement and/or the Note or Security Documents shall
be paid free of any deductions and without abatement, diminution or set-off.
Section 2.07. Reversal of Payments. To the extent that any payment or
payments made to or received by the Lender pursuant to this Agreement, the Note
or any of the Security Documents are subsequently invalidated, declared to be
fraudulent or preferential, set aside, or required to be repaid to any trustee,
receiver or other person under any state or federal bankruptcy or other such
law, then, to the extent thereof, such amounts shall be revived as Obligations
and continue in full force and effect hereunder and be secured pursuant to the
Security Documents, as if such payment or payments had not been received by the
Lender.
Section 2.08. Return of Warrants to the Company.
(a) In the event that the Lender refuses to make Advances duly requested
by the Borrowers in accordance with Section 2.02 hereof AND such refusal is:
(i) based on the Lender's concern over developments relating to the
pendency of any investigation or litigation respecting either of the
Borrowers or their officers or directors at the sole discretion of the
Lender, or
(ii) determined by arbitration to be an unreasonable refusal by
the Lender to make Advances as provided in Section 2.02(c) hereof,
the Company shall be entitled to receive from the Lender the number of
Warrants described in Section 2.08(b) hereof;
(b) If prior to date of such refusal to make Advances, the Lender has
Advanced to the Borrowers pursuant to this Agreement:
(i) up to a maximum level of Advances of $2,500,000, the Lender
shall return 2,000,000 Warrants to the Company;
(ii) between a maximum level of Advances of $2,500,000 and
$5,000,000, the Lender shall return 1,000,000 Warrants to the Company;
and
(iii) more than a maximum level of Advances of $5,000,000, the
Lender shall not be required to return any Warrants to the Company;
Section 2.09. Fair Value of Warrants. The parties agree that the Warrants
have a fair value, as of the Agreement Date, of $.03 per Warrant.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
The Borrowers hereby jointly and severally make the following
representations and warranties to the Lender, all of which representations and
warranties shall survive the Agreement Date, the delivery of the Notes and the
making of Advances, and are as follows:
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Section 3.01 Financial Matters.
(a) The Borrowers have heretofore furnished to the Lender (i) the audited
consolidated financial statements (including consolidated balance sheets,
consolidated statements of income and consolidated statements of cash flows) of
the Company and its consolidated Subsidiaries as at March 31, 1996, 1997, and
1998 and for each of the three (3) consecutive Fiscal Years ended on such dates,
and (ii) the unaudited consolidated financial statements (including consolidated
balance sheets, consolidated statements of income and consolidated statements of
cash flows) of the Company and its consolidated Subsidiaries as of the March 31,
1999 (collectively, the "Financial Statements").
(b) The Financial Statements have been prepared in accordance with GAAP on
a consistent basis for all periods, are complete and correct in all material
respects, and fairly present the consolidated financial condition of the Company
and its consolidated Subsidiaries as at said dates, and the results of
operations for the periods stated. The books of account and other financial
records of the Company and each of the Subsidiaries have been maintained in
accordance with GAAP, consistently applied. The Borrowers acknowledge that the
financial results set forth in its Financial Statements for the first, second
and third quarters of the Fiscal Year ended March 31,1999 will require
restatement and that the representations set forth in this Section 3.01(b) are
subject to, and qualified by, any such Restatement(s).
(c) Neither the Company nor any of the Subsidiaries has any liabilities,
Indebtedness, obligations or commitments of any kind or nature whatsoever,
whether absolute, accrued, contingent or otherwise above $100,000 in the
aggregate or $25,000 individually (collectively "Liabilities and
Contingencies"), including, without limitation, Liabilities and Contingencies
under employment agreements and with respect to any "earn-outs', stock
appreciation rights, or related compensation obligations, except: (i)
Liabilities and Contingencies disclosed in the Financial Statements or footnotes
thereto, or in the Pro Forma Balance Sheet, (ii) Liabilities and Contingencies
not incurred in the ordinary course of the Business Operations, all of which
(and the amounts thereof, to the extent determinable) are disclosed on Schedules
to this Agreement (to the extent required to be so disclosed hereunder) or in
public filings made with the SEC under the Securities Exchange Act of 1934, as
amended (true and complete copies of which filings have been furnished to the
Lender), (iii) Liabilities and Contingencies incurred in the ordinary course of
business and consistent with past practice since the date of the most recent
Financial Statements, which are not required to be disclosed on Schedules to
this Agreement, or (iv) those Liabilities which are not required to be disclosed
under GAAP. The reserves, if any, reflected on the consolidated balance sheet of
the Company and the Subsidiaries included in the most recent Financial
Statements are appropriate and reasonable. The Borrowers have not had and do not
presently have any contingent obligations, liabilities for taxes or unusual
forward or long-term commitments except as specifically set forth in the
Financial Statements or in Schedule "3.01" annexed hereto.
(d) Except as otherwise reflected on Schedule "3.01," Schedule "3.04" or
Schedule "3.05" to this Agreement, since the date of the most recent Financial
Statements, no Material Adverse Effect shall have occurred and shall be
continuing, including, without limitation, the following:
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(i) there has been no change in any assumptions underlying, or in
any methods of calculating, any bad debt, contingency or other reserve
relating to the Company or any of the Subsidiaries;
(ii) there have been no write-downs in the value of any inventory
of, and there have been no write-offs as uncollectible of any notes,
accounts receivable or other receivables of, the Company and the
Subsidiaries, except for write-downs and write-offs in the ordinary course
of business and consistent with past practice, none of which shall be
material (and all of which are described in the Schedules to this
Agreement or in the Financial Statements);
(iii) no material debts have been canceled, no claims or rights of
substantial value have been waived and no significant properties or assets
(real, personal or mixed, tangible or intangible) have been sold,
transferred, or otherwise disposed of by the Company or any Subsidiary,
except in the ordinary course of business and consistent with past
practice;
(iv) there has been no change in any method of accounting or
accounting practice utilized by the Company or any of the Subsidiaries;
(v) no material casualty, loss or damage has been suffered by the
Company or any of the Subsidiaries, regardless of whether such casualty,
loss or damage is or was covered by insurance; and
(vi) no action described in this Section 3.01(d) has been agreed to
be taken by the Company or any of the Subsidiaries.
Section 3.02. Organization; Corporate Existence. Each of the Borrowers:
(a) is a corporation duly organized, validly existing and in good standing under
the laws of the States of Delaware or New York, (b) has all requisite corporate
power and authority to own its properties and to carry on its businesses as now
conducted and as proposed hereafter to be conducted, (c) is duly qualified to do
business as a foreign corporation in each and every jurisdiction where such
qualification is necessary and where the failure to so qualify would have a
material adverse effect on its financial condition, business, operations, assets
or properties, and (d) has all requisite corporate power and authority to
execute and deliver, and perform all of its obligations under this Agreement,
the Notes, the Warrants and the Security Documents. True and complete copies of
the: (i) Certificates of Incorporation of each of the Borrowers, as amended and
restated to date, and (ii) By-Laws of each of the Borrowers, together with all
amendments thereto, have been furnished to the Lender.
Section 3.03. Authorization. The execution, delivery and performance by
each of the Borrowers of their respective obligations under this Agreement, the
Notes, the Warrants, the Registration Rights Agreement and the Security
Documents have been duly authorized by all requisite corporate action and will
not, either prior to or as a result of the consummation of the Advances
contemplated by this Agreement: (a) violate any provision of Applicable Law, any
order of any court or other agency of government, any provision of the
Certificates of Incorporation or By-Laws of the Borrowers, or any Contract,
indenture, agreement or other
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instrument to which any of the Borrowers is a party, or by which any of the
Borrowers or any of their assets or properties are bound, other than in
agreements between the Company and DVI relating to the creating of Liens or (b)
be in conflict with, result in a breach of, or constitute (after the giving of
notice of lapse of time or both) a default under, or, except as may be provided
in this Agreement, result in the creation or imposition of any Lien of any
nature whatsoever upon any of the property or assets of any of the Borrowers
pursuant to, any such Contract, indenture, agreement or other instrument. Except
in respect of the filing of a Form 10-K (including amendments thereto) and/or a
Form 8-K or Form l0-Q under the Securities Exchange Act of 1934, as amended, the
Borrowers are not required to obtain any Government Approval, consent or
authorization from, or to file any declaration or statement with, any
governmental instrumentality or agency in connection with or as a condition to
the execution, delivery or performance of any of this Agreement, the Notes, the
Warrants or the Security Documents.
Section 3.04. Litigation. Except as disclosed on Schedule "3.04" annexed
hereto, there is no action, suit or proceeding at law or in equity or by or
before any governmental instrumentality or other agency now pending or, to the
knowledge of the Borrowers, threatened against or directly affecting the
Borrowers or any of their respective assets, which, if adversely determined,
would have a Material Adverse Effect on any of such assets or on the business,
operations, properties, assets or condition, financial or otherwise, of the
Borrowers.
Section 3.05. Material Contracts. Except as disclosed on Schedule "3.05"
annexed hereto, none of the Borrowers is a party to any Contract, agreement or
instrument or subject to any charter or other corporate restriction that could
have a Material Adverse Effect on the Business Operations, properties, assets or
operations of the Borrowers or is subject to any liability or obligation under
or relating to any collective bargaining agreement, or in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any Contract, agreement or instrument to which it is a
party or by which any of its assets or properties is bound, which default,
individually or in the aggregate, could have a Material Adverse Effect on
Borrower.
Section 3.06. Title to Properties. The Borrowers have good and marketable
title to all of their respective properties and assets, free and clear of all
mortgages, security interests, restrictions, encumbrances or other Liens of any
kind, except for restrictions on the nature of use thereof imposed by Applicable
Law, and except for Existing Liens, none of which materially interfere with the
use and enjoyment of such properties and assets in the normal course of the
Business Operations as presently conducted, or materially impair the value of
such properties and assets for the purpose of such business.
Section 3.07. Real Properties. Each of the Borrowers is the record fee
owner or lessee of all of the Real Properties owned or leased by such Borrower,
and:
(a) All of the owned and leased real properties (other than real
properties under Immaterial Leases) will be owned or leased free and clear of
any and all mortgages, liens, charges, easements and encumbrances binding upon
any of the Borrowers, except for the Mortgages and the Lease Assignments, and
except for encumbrances or imperfections of title listed in Schedule "3.07"
annexed hereto or other related immaterial zoning, easements or other
restrictions of record, none of which shall: (i) be material in amount; (ii)
materially detract from
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the value of any of the Real Properties; (iii) materially impair the use of any
of the Real Properties in connection with the Business Operations; or (iv)
render title to any of the Real Properties unmarketable or indefeasible;
(b) Except as set forth in Schedule "3.07" annexed hereto, the Real
Properties and all buildings and improvements located thereon have been
constructed to have access, ingress, egress, water supply, storm and sanitary
sewage facilities, telephone, gas, electricity, fire protection, and, without
limitation, other required public utilities, which are adequate for the uses
thereof in the Borrowers' business; and all access, ingress and egress to and
from the Real Properties, and all utility connections thereto, are by public
streets and roads;
(c) Except as set forth in Schedule "3.07" annexed hereto, all buildings
and improvements located on the Real Properties (including, without limitation,
the roofs, basements, appliances, the plumbing, heating and electric systems,
the cesspools and septic systems, if any, and the elevators, if any) are in good
working order, condition and repair (reasonable wear and tear excepted) for the
purposes currently used by the Borrowers, and, to the Borrowers' knowledge, are
maintained in accordance with Applicable Law in all material respects; and, to
the Borrowers' knowledge, no condition exists pursuant to which any adjoining or
other landowner may claim damage to such landowner's property by reason of
drainage from or any other condition existing upon the Real Properties; and
(d) Except as set forth in Schedule "3.07" annexed hereto, the use of the
Real Properties in and for the purposes of the Business Operations is in full
compliance with all building, zoning and other Applicable Law in all material
respects.
Section 3.08. Machinery and Equipment. The machinery and equipment owned,
leased and/or otherwise used by the Borrowers is covered under the Security
Agreement and is, as to each individual material item of machinery and
equipment, and in the aggregate as to all such machinery and equipment, in good
and usable condition and in a state of good maintenance and repair (reasonable
wear and tear excepted), and adequate for its use in the Business Operations.
Section 3.09. Capitalization. Except as set forth on Schedule "3.09"
annexed hereto, the Company has no Subsidiaries other than Schick New York.
Neither the Company nor Schick New York owns any capital stock, equity or assets
of any other corporation, form or entity, except for the Company's investment in
Photobit Corporation. Schedule "3.09" annexed hereto fully describes the
capitalization of Photobit Corporation and the nature of the Company's
investment therein.
Section 3.10. Solvency. The Advances made and to be made by the Borrowers
under this Agreement, do not and will not render the Borrowers insolvent or with
unreasonably small capital for their business; value of all of the assets and
properties of the Borrowers do now, and will, upon the funding of the Advances
contemplated hereby, exceed the aggregate Liabilities and Indebtedness of the
Borrowers (including contingent liabilities); none of the Borrowers is
contemplating either the filing of a petition under any state or federal
bankruptcy or insolvency law, or the liquidation of all or any substantial
portion of its assets or property and the Borrowers have no knowledge of any
Person contemplating the filing of any such petition against the Borrowers.
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Section 3.11. Patents. Trademarks and Other Intellectual Property.
Schedule "3.11" annexed hereto correctly sets forth a list and brief description
of:
(a) all patents, patent applications, copyright registrations and
applications, registered trade names, and trademark registrations and
applications, both domestic and foreign, which are presently owned, filed or
held by any of the Company, any Subsidiaries or any of their Affiliates (or any
of them), and/or any of the directors or officers of the Company, and which are
used in the Business Operations;
(b) all material licenses, both domestic and foreign, which are owned or
controlled by any of the Company, any Subsidiaries or any of their Affiliates
(or any of them), and/or any of the directors or officers of the Company, and
which are used in the Business Operations; and
(c) all material written franchises, licenses and/or similar arrangements
granted to any of the Company, any Subsidiaries or any of their Affiliates (or
any of them), and/or any of the directors or officers of the Company for the
benefit of the Business Operations, or granted to others by the Company for the
benefit of the Business Operations. All letters patent, patent applications,
copyright registrations and applications, registered trade names, trademark
registrations and applications, franchises, licenses and other arrangements set
forth in Schedule "3.11" are, except as otherwise provided by their terms and
conditions, assignable to the Lender, subject to the rights of the Senior
Lender(s), and do not, to the knowledge of any Borrower, infringe upon the
rights of others, and are not subject to any pending challenge except as set
forth in Schedule "3.11". To the best of the Borrower's knowledge, no product,
system or apparatus sold by Borrower infringes on any patent owned by others.
Section 3.12. Full Disclosure. Except as set forth on Schedule "3.12"
annexed hereto, no statement of fact made by or on behalf of any of the
Borrowers in this Agreement, in any Security Document, or in any agreement,
certificate or schedule furnished to the Lender pursuant hereto (including,
without limitation, all registration statements, proxy materials and Forms 10-K,
l0-Q, 8-K, and amendments thereto, for the fiscal period from July 1997 through
September 30, 1999, as filed with the SEC) contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
necessary to make any statements contained herein or therein not misleading.
Except for matters of a general economic or political nature which do not affect
the Borrower uniquely, there is no fact presently known to the Borrower which
has not been disclosed to the Lender, which materially adversely affects, or so
far as the Borrower can foresee, will materially adversely affect, their
property, business, operations or condition (financial or otherwise).
Section 3.13. No Investment Company. None of the Borrowers is an
"investment company", or a company "controlled" by an "investment company", as
such terms are defined in the Investment Company Act of 1940, as amended.
Section 3.14. Margin Securities. None of the Borrowers owns or has any
present intention of acquiring any "margin security" within the meaning of
Regulation G (12 CFR Part 207), or any "margin stock" within the meaning of
Regulation U (12 CFR Part 221), of the Board of Governors of the Federal Reserve
System (herein called "margin security" and "margin stock"). None of the
proceeds of the Line of Credit will be used, directly or indirectly, for the
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purpose of purchasing or carrying, or for the purpose of reducing or retiring
any Indebtedness which was originally incurred to purchase or carry, any margin
security or margin stock or for any other purpose which might constitute the
transactions contemplated hereby a "purpose credit" within the meaning of said
Regulation G or Regulation U, or cause this Agreement to violate any other
regulation of the Board of Governors of the Federal Reserve System or the
Securities Exchange Act of 1934, as amended, or any rules or regulations
promulgated under such statutes.
Section 3.15. Tax Returns. Except as otherwise set forth in footnotes to
the consolidated balance sheet of Borrowers as at September 30, 1999, and except
for any non-material misstatement of income tax obligations and except for any
returns currently on extension pursuant to properly filed extension, the
Borrowers have filed all federal, state and local tax returns required to be
filed by any of them and have paid or made adequate provision (as reflected in
the balance sheets described in Section 3.01 hereof) for the payment of all
federal, state and local taxes, charges and assessments.
Section 3.16. ERISA. Except as set forth in Schedule "3.16" annexed
hereto, none of the Borrowers nor any ERISA Affiliate of any of the Borrowers
maintains or has any obligation to make any contributions to any pension, profit
sharing or other similar plan providing for deferred compensation to any
employee. With respect to any such plan(s) as may now exist or may hereafter be
established by the Borrowers or any ERISA Affiliate of any of the Borrowers, and
which constitutes an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA, except as set forth on Schedule "3.16": (a) the Borrowers
or the subject ERISA Affiliate have paid and shall cause to be paid when due all
amounts necessary to fund such plan(s) in accordance with its terms, (b) except
for normal premiums payable by the Borrowers to the Pension Benefit Guaranty
Corporation ("PBGC"), the Borrowers or the subject ERISA Affiliate have not
taken and shall not take any action which could result in any Liability to the
PBGC, or any of its successors or assigns, (c) the present value of all vested
accrued benefits thereunder shall not at any time exceed the value of the assets
of such plan(s) allocable to such vested accrued benefits, (d) there have not
been and there shall not be any transactions such as would cause the imposition
of any tax or penalty under Section 4975 of the Code or under Section 502 of
ERISA, which would adversely affect the funded benefits attributable to the
Borrowers or the subject ERISA Affiliate, (e) there has not been and there shall
not be any termination or partial termination thereof (other than a partial
termination resulting solely from a reduction in the number of employees of the
Borrowers or an ERISA Affiliate of the Borrowers, which reduction is not
anticipated by the Borrowers), and there has not been and there shall not be any
"reportable event" (as such term is defined in Section 4043(b) of ERISA) on or
after the effective date of Section 4043(b) of ERISA with respect to any such
plan(s) subject to Title IV of ERISA, (f) no "accumulated funding deficiency"
(as defined in Section 412 of the Code) has been or shall be incurred on or
after the effective date of Section 412 of the Code, (g) except as otherwise
reflected on Schedule "3.16" annexed hereto, such plan(s) have been and shall be
determined to be "qualified" within the meaning of Section 401(a) of the Code,
and have been and shall be duly administered in compliance with ERISA and the
Code, and (h) the Borrowers are not aware of any fact, event, condition or cause
which might adversely affect the qualified status thereof. As respects any
"multiemployer plan" (as such term is defined in Section 3(37) of ERISA) to
which any of the Borrowers or any ERISA Affiliate thereof has heretofore been,
is now, or may hereafter be required to make contributions, such Borrowers or
such ERISA Affiliate has made
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and shall make all required contributions thereto, and there has not been and
shall not be any "complete withdrawal" or "partial withdrawal" (as such terms
are respectively defined in Sections 4203 and 4205 of ERISA) therefrom on the
part of the Borrowers or such ERISA Affiliate.
Section 3.17. Compliance with Laws. The Borrowers are in compliance in all
material respects with all occupational safety, health, wage and hour,
employment discrimination, environmental, flammability, labeling and other
Applicable Law which are material to their respective businesses and the
Business Operations, and the Borrowers are not aware of any state of facts,
events, conditions or occurrences which may now or hereafter constitute or
result in a violation of any of such Applicable Law, or which may give rise to
the assertion of any such violation, the effect of which could have a material
adverse effect on any Borrowers.
Section 3.18. Licenses and Permits. Each of the Borrowers have all
federal, state and local licenses and permits required to be maintained in
connection with and material to the Business Operations (including all Food and
Drug Administration ("FDA") permits and licenses), and all such licenses and
permits are valid and in full force and effect.
Section 3.19. Environmental Laws.
(a) Except as disclosed on Schedule "3.19" annexed hereto: (i) the
Borrowers have complied in all material respects with all Environmental Laws
relating to their respective businesses and properties, and (ii) there exists no
Hazardous Substances in or under any Existing Real Properties or storage tanks,
except those that are stored and used in compliance with Applicable Laws.
(b) Except as disclosed in Schedule "3.19" annexed hereto, to the best of
the Borrowers' knowledge, there exist no past or present violations of
Environmental Laws which will result in a material adverse effect on the
business, operations, prospects, assets, property or condition (financial or
otherwise) of the Borrowers.
(c) During the term of this Agreement, and for so long as any Loans remain
outstanding, the Borrower shall comply in all material respects with all
applicable Environmental Laws, and shall, in addition, promptly notify the
Lender of any and all claims, demands or Notices received under any
Environmental Laws and the Borrowers' response thereto.
(d) As used in this Agreement, the following terms have the following
meanings:
"Environmental Laws" include all federal, state, and local laws, rules,
regulations, ordinances, permits, orders, and consent decrees agreed to by
the Borrowers, relating to health, safety, and environmental matters
applicable to the business and property of the Borrowers. Such laws and
regulations include but are not limited to the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C.ss.6901 et seq., as amended; the New Jersey
Environmental Cleanup and Recovery Act ("ECRA"); the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
ss.9601 et seq., as amended; the Toxic Substances Control Act ("TSCA"), 15
U.S.C.ss.2601 et seq., as amended; and the Clean Water Act, 33 U.S.C.ss.1331 et
seq., as amended.
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"Hazardous Substances", "Release", "Respond" and "Response" shall have the
meanings assigned to them in CERCLA, 42 U.S.C. ss.9601, as amended.
"Notice" means any summons, citation, directive, information request,
notice of potential responsibility, notice of violation or deficiency, order,
claim, complaint, investigation, proceeding, judgment, letter, or other
communication, written or oral, actual or threatened, from the United States
Environmental Protection Agency or other federal, state, or local agency or
authority, or any other entity or individual, public or private, concerning any
intentional or unintentional act or omission which involves management of
Hazardous Substances on or off any real properties; the imposition of any lien
on any real properties, including but not limited to liens asserted by
government entities in connection with any Borrower's response to the presence
or Release of Hazardous Substances; and any alleged violation of or
responsibility under any Environmental Laws.
Section 3.20. Reaffirmation. Each and every request by a Borrower for
Advances under Section 2.01 or Section 2.02 above shall constitute a
reaffirmation of the truth and accuracy in all material respects of the
Borrowers' representations and warranties hereunder and under the Security
Documents on and as of the date of such request.
Section 3.21. Labor Relations; Compliance. None of the Borrowers has been
or is a party to any collective bargaining or other labor Contract. Except as
disclosed in Schedule "3.21" annexed hereto, there has not been, there is not
presently pending or existing, and there is not Threatened, (a) any strike,
slowdown, picketing, work stoppage, or employee grievance process, (b) any
Proceeding against or affecting any Borrower relating to the alleged violation
of any Applicable Law pertaining to labor relations or employment matters,
including any charge or complaint filed by an employee or union with the
National Labor Relations Board, the Equal Employment Opportunity Commission, or
any comparable Governmental Body, organizational activity, or other labor or
employment dispute against or affecting any of the Borrowers or their premises,
or (c) any application for certification of a collective bargaining agent. No
event has occurred or circumstance exists that could provide the basis for any
work stoppage or other labor dispute. There is no lock-out of any employees by
any Borrower, and no such action is contemplated by any Borrower. Each Borrower
has complied in all respects with all Applicable Law relating to employment,
equal employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security and similar
taxes, occupational safety and health, and plant closing. No Borrower is liable
for the payment of any compensation, damages, taxes, fines, penalties, or other
amounts, however designated, for failure to comply with any of the foregoing
Applicable Law.
3.22. Insurance.
(a) All polices to which any Borrower is a party or that provide coverage
to any Borrower, or any director or officer of a Borrower:
(i) are valid, outstanding, and enforceable;
(ii) are issued by an insurer that is reasonably believed by
Borrowers to be financially sound and reputable;
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(iii) taken together, provide adequate insurance coverage for the
assets and the operations of the Borrowers for all risks to which the
Borrowers are normally exposed;
(iv) are sufficient for compliance with all Applicable Law and
Contracts to which any Borrower is a party or by which any of them is
bound;
(v) will continue in full force and effect following the
consummation of the execution, delivery of this Agreement, the warrants
and the Security Documents; and
(vi) do not provide for any retrospective premium adjustment or
other experienced-based liability on the part of any Borrower.
(b) Except as disclosed in Schedule "3.22" annexed hereto, no Borrower has
received (A) any refusal of coverage or any notice that a defense will be
afforded with reservation of rights, or (B) any notice of cancellation or any
other indication that any insurance policy is no longer in full force or effect
or will not be renewed or that the issuer of any policy is not willing or able
to perform its obligations thereunder.
(c) The Borrowers have paid all premiums due, and have otherwise performed
all of their respective obligations, under each policy to which any Borrower is
a party or that provides coverage to any Borrower or director thereof.
(d) The Borrowers have given notice to the insurer of all material claims
that may be insured thereby.
ARTICLE IV. CONDITIONS OF MAKING THE ADVANCES
The effectiveness of this Agreement, and the obligations of the Lender to
make any Advance hereunder, are subject to the following conditions precedent:
Section 4.01. Representations and Warranties. The representations and
warranties set forth in Article III hereof shall be true and correct in all
material respects on and as of the Agreement Date, and on each subsequent date
that an Advance is to be made, provided, however, that for the purpose of
determining whether the representations and warranties are true and correct as
of the date that an Advance may be made, the Company shall have the right to
amend its disclosure schedules attached to this Agreement, provided, that the
Lender receives such amended disclosure schedules at least five (5) business
days prior to such Advance Analysis and is provided with the necessary
documentation and access to the Company to determine the effect of such
amendment.
Section 4.02. Loan Documents. The Borrowers shall have duly executed and
delivered to the Lender upon the execution of this Agreement, all of the
following:
(a) All UCC Financing Statements, stock certificates and stock powers, and
other certificates and documents required thereunder;
(b) The Note;
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(c) A certificate of the Secretary or an Assistant Secretary of each of
the Borrowers certifying the votes of the Boards of Directors of the Borrowers,
each authorizing and directing the execution and delivery of this Agreement, the
Notes, the Warrants, the Security Agreement, and all further agreements,
instruments, certificates and other documents pursuant hereto and thereto;
(d) A certificate of the Secretary or an Assistant Secretary of each to
the Borrowers certifying the names of the officers of each of the Borrowers who
are authorized to execute and deliver this Agreement, the Notes, the Warrants,
the Security Agreement, and all other agreements, instruments, certificates and
other documents to be delivered pursuant hereto and thereto, together with the
true signatures of such officers. The Lender may conclusively rely on such
certificate until they shall receive any further such certificate canceling or
amending the prior certificate and submitting the signatures of the officers
named in such further certificate;
(e) Certificates of the Secretary of State of Delaware and New York, all
dated reasonably prior to the Agreement Date or the date of the Advance
Analysis, as applicable, stating that each Borrowers is duly incorporated and in
good standing in such jurisdiction and that Schick is qualified to do business
in New York;
(f) The Shareholders Agreement;
(g) The Security Agreement;
(h) The Registration Rights Agreement.
Section 4.03. Restructuring Plan. The Borrowers shall have developed,
completed and commenced to implement a written plan (the "Restructuring Plan"),
the content of which shall be satisfactory to and approved and authorized by
both the Board of Directors of the Company and the Lender (which shall not be
unreasonably withheld or delayed). The Restructuring Plan shall include, without
limitation, matters involving (a) the consent and renegotiating of the existing
loan with the Borrowers' Senior Lender, (b) the hiring and retaining of outside
consultants, (c) procedures for dealing with significant vendors and payment of
any significant outstanding payables, (d) procedures for dealing with the
collection of accounts receivable, (e) the hiring of any new executive level
employees and (f) a detailed annual operating and capital budget approved by
Lender (which approval shall not be unreasonably withheld).
Section 4.04. Board of Directors. The Greystone Designees shall (i) be
elected to the Boards of Directors of the Company and Schick New York and the
Company's Audit Committee and Compensation Committee, (ii) not have been removed
from such positions and (iii) if they resign from such positions shall promptly
be replaced by other individuals designated by the Lender as contemplated by
Section 5.14.
Section 4.05. RESERVED.
Section 4.06. The Warrants. The Company shall have issued to the Lender
the Warrants.
Section 4.07. RESERVED.
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Section 4.08. Further Matters. All legal matters, and the form and
substance of all documents, incident to the transactions contemplated hereby
shall be satisfactory to counsel for the Lender.
Section 4.09. No Default. No Default or Event of Default shall have
occurred and continues to occur without being remedied.
ARTICLE V. AFFIRMATIVE COVENANTS
The Borrowers hereby jointly and severally covenant and agree that, from
the date hereof and until all Obligations (whether now existing or hereafter
arising) have been paid in full and the Borrowers have no further right to
extension or funding under this Agreement, each of the Borrowers shall:
Section 5.01. Corporate and Insurance. Do or cause to be done all things
necessary to at all times (a) other than mergers solely among Borrowers,
preserve, renew and keep in full force and effect its corporate existence,
rights, licenses, permits and franchises, (b) comply with this Agreement and
maintain and preserve the Lender's Liens and the priority thereof, (c) maintain,
preserve and protect all of its franchises and material trade names, and
preserve all of its material property used or useful in the conduct of its
business and keep the same in good repair, working order and condition
(reasonable wear and tear excepted), and from time to time make, or cause to be
made, all needed and proper repairs, renewals, replacements, betterments and
improvements thereto, so that the Business Operations carried on in connection
therewith may be properly and advantageously conducted at all times, (d) keep,
under the coverage of an "umbrella" policy or other form of coverage reasonably
acceptable to the Lender, its insurable properties adequately insured at all
times, by financially sound and reputable insurers reasonably acceptable to the
Lender, to such extent and against such risks, including fire and other risks
and casualty insured against by extended coverage, and maintain, as part of such
coverage, liability and such other insurance, as is customarily maintained by
companies engaged in similar businesses (including, without limitation, products
liability insurance), in amounts reasonably satisfactory to the Lender and each
Lender, all of which insurance policies shall name the Lender and each Lender as
loss payee and an additional insured as its interests appear, and shall provide
for the Lender and each Lender to receive written notice thereof at least twenty
(20) days prior to any cancellation, modification or non-renewal of the subject
policy, and (e) comply with all Applicable Law material to its Business
Operations, whether now in effect or hereafter enacted, promulgated or issued.
Section 5.02. Payment of Taxes. File, pay and discharge, or cause to be
paid and discharged, all taxes, assessments and governmental charges or levies
imposed upon the Borrowers or upon their income and profits or upon any of their
property (real, personal or mixed) or upon any part thereof, before the same
shall become in default, as well as all lawful claims for labor, materials,
supplies and otherwise, which, if unpaid when due, might become a Lien or charge
upon such property or any part thereof, provided, however, that the Borrowers
shall not be required to pay and discharge or cause to be paid and discharged
any such tax, assessment, charge, levy or claim (other than taxes and/or
assessments relating to real property or the use thereof) so long as (a) the
validity thereof shall be contested in good faith by appropriate proceedings and
the Borrowers shall have set aside on their books adequate reserves with respect
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to any such tax, assessment, charge, levy or claim so contested, and (b) payment
with respect to any such tax, assessment, charge, levy or claim shall be made
before any of the Borrowers' property shall be seized or sold in satisfaction
thereof
Section 5.03. Notice of Proceedings. Give prompt written notice to the
Lender of:
(a) Any proceedings instituted against any of the Borrowers in any federal
or state court or before any commission or other regulatory body, whether
federal, state or local, which, if adversely determined, could have a material
adverse effect upon such Borrower's business, operations, properties, assets or
condition, financial or otherwise;
(b) Changes in location of material assets; and
(c) Material Adverse Effects or defaults to the Lender or the Senior
Lender.
Section 5.04. Periodic Reports. Furnish to the Lender:
(a) Within ninety (90) calendar days after the end of each Fiscal Year:
(i) consolidated balance sheets, statements of income, statements of
stockholders' equity, and statements of cash flows of the Borrowers, together
with footnotes and supporting schedules thereto, all certified by independent
certified public accountants selected by the Borrowers and reasonably acceptable
to the Lender (and commencing with Fiscal Year 2002 with the form of
certification to be without material qualification or otherwise satisfactory to
the Lender), showing the financial condition of the Borrowers at the close of
such Fiscal Year and the results of operations of the Borrowers during such
Fiscal Year; (ii) an unaudited consolidating balance sheet and statement of
income of each of the Borrowers, together with appropriate adjustments and
eliminations; and (iii) a schedule of all Contracts, capital contributions and
loan transactions between any Borrowers (on the one hand) and any other
Borrowers or any Subsidiary (on the other hand), including therein a schedule of
all cash capital contributions made by any Borrower and all Indebtedness
(including Indebtedness for Money borrowed) owed to any Borrower by any other
Borrower or any Subsidiary (hereinafter collectively referred to as
"Intercompany Investment(s)"), as at the end of such Fiscal Year;
(b) Within forty-five (45) calendar days after the end of each fiscal
quarter: (i) unaudited consolidated and consolidating balance sheets and
statements of income of the Borrowers, together with supporting schedules
thereto, prepared by the Borrowers and certified by the Company's Chairman,
President or Chief Financial Officer, such balance sheets to be as of the close
of such fiscal quarter and such statements of income to be for the period from
the beginning of the then-current Fiscal Year to the end of such fiscal quarter,
together with comparative statements of income for the corresponding fiscal
quarter in the immediately preceding Fiscal Year, in each case subject to normal
audit and year-end adjustments which shall not be material; (ii) a schedule of
all Intercompany Investments (specifying therein, the respective obligors and
obligees) as at the end of such fiscal quarter; and (iii) a written calculation
of Excess Available Cash.
(c) Concurrently with the delivery of each of the financial statements
required by Sections 5.04(a) and 5.04(b) above, a certificate (the "Compliance
Certificate") on behalf of the Borrowers (signed by the Chairman, Chief
Executive Officer, Chief Financial Officer or
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President of the Company, in substantially the form annexed as Exhibit "F" to
this Agreement, (i) calculating, setting forth, and certifying as to the
accuracy of the calculations required under Sections 5.08 through 5.11 hereof,
and (ii) certifying that he has examined the provisions of this Agreement and
that no Event of Default has occurred and/or is continuing;
(d) Such other supplemental financial information pertaining to the
Borrowers as the Lender may from time to time reasonably request (provided, that
as to items listed in clauses (iii) and (iv) below, not more frequently than
annually) including: (i) aging schedules of all accounts receivable and accounts
payable of the Borrowers as of the end of any one or more months, (ii) an
analysis of the Borrowers' inventory as at the end of any one or more months in
a form reasonably satisfactory to the requesting Lender, (iii) within thirty
(30) days after the commencement of each Fiscal Year, a consolidated Capital
Expenditure budget and a separate consolidated research and development
expenditure budget of the Borrowers for such Fiscal Year showing the nature and
amount of the proposed Capital Expenditures and proposed research and
development expenditures; and within ninety (90) days after the end of each
Fiscal Year, updated reports showing the actual Capital Expenditures and actual
research and development expenditures for such immediately preceding Fiscal
Year; and (iv) within thirty (30) days after the commencement of each Fiscal
Year, a consolidated cash flow and profit and loss projection of the Borrowers
for such Fiscal Year;
(e) Within ten (10) days after filing with the SEC, true and complete
copies of all registration statements, proxy materials and other periodic
reports (including Forms 10-K, l0-Q, 8-K and other related forms) filed on
behalf of any or all of the Borrowers or any Subsidiary with the SEC under the
Securities Act of 1933, as amended, and/or the Securities Exchange Act of 1934,
as amended; and
(f) Promptly, from time to time, such other information regarding the
Borrowers' operations, assets, business, affairs and financial condition, as the
Lender may reasonably request.
Section 5.05. Books and Records. Inspection. Maintain at its corporate
headquarters books and records respecting all of the Business Operations at the
Borrowers' principal places of business, and permit Lenders or representatives
of the Lender to inspect, at any time during normal business hours, upon
reasonable notice, and without undue disruption of the Business Operations, all
of the Borrowers' various books and records, and to make copies, abstracts
and/or reproductions thereof
Section 5.06. Notice of Default or Material Adverse Effect. Promptly
advise the Lender in writing of: (a) any Material Adverse Effect; or (b) the
existence or occurrence of any Default or Event of Default.
Section 5.07. Accounting. Maintain a standard system of accounting in
order to permit the preparation of consolidated financial statements in
accordance with GAAP.
Section 5.08. Current Ratio. Beginning in March 2001, as at the end of
each Fiscal Year, maintain a Current Ratio of not less than 1 to 1.
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Section 5.09. Interest Coverage Ratio. Beginning in March 2002, as at the
end of each Fiscal Year, maintain an Interest Coverage Ratio of not less than
1.50 to 1.
Section 5.10. EBITDA. As at the end of each Fiscal Year, maintain an
EBITDA at not less than the minimum amount set forth below for such date:
Fiscal Year Ending Minimum EBITDA
------------------ --------------
March 31,2001 0
March 31, 2002 $2,500,000
March 31, 2003 $5,000,000
March 31, 2004 $7,500,000
Section 5.11. RESERVED.
Section 5.12. Reports on Application of the Net Proceeds of Advances. The
Borrowers shall furnish to the Lender at (a) each regularly scheduled meeting of
the Board of Directors of the Company, and (b) on a quarterly basis on each
Interest Payment Date, a written report as to the application of the net
proceeds of all Advances, if any, made in the immediately preceding calendar
quarter.
Section 5.13. Further Deliveries. Exert its best efforts to obtain and
deliver to the Lender any and all further consents, including landlord's and/or
lessee's consents and estoppel certificates in respect of the Lease Assignments,
certificates of occupancy, and other relevant matters, to the extent that the
same have not previously been delivered, are not available for delivery, or are
not delivered to the Lender in accordance with this Agreement and the Security
Documents, and which subsequent deliveries are expressly consented to in writing
by Lender.
Section 5.14. Board of Directors of the Company and Subsidiaries.
(a) Take all requisite corporate actions to cause the Boards of Directors
of each of the Borrowers to elect two additional persons designated by the
Lender (collectively, the "Initial Greystone Designees") to the Board of
Directors of the Company and each of its subsidiaries.
(b) Take all requisite corporate actions to cause an additional person
designated by the Lender ("Subsequent Greystone Designee" and together with the
Initial Greystone Designees the "Greystone Designees") to be elected to the
Boards of Directors of the Borrowers in accordance with the following formula:
Greystone Designees = Schick Seats/ (1-Greystone %) - Schick Seats
provided, that, unless the Lender has Advanced to Borrowers pursuant to this
Agreement more than a maximum level of advances of $6,000,000, the number of
Greystone Designees shall not equal less than two directors or more than 50% of
each Board of Directors and provided that the number Greystone Designees shall
be rounded to the closest integer. If the Lender Advances
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more than a maximum level of Advances of $6,000,000 to the Borrowers pursuant to
this Agreement, Greystone Designees shall equal the Schick Seats plus one. As
used in this Section, "Schick Seats" shall mean the total number of seats
occupied on the Board of Directors excluding those seats occupied by Greystone
Designees; and "Greystone %" shall mean the number of Warrants then exercisable
by Greystone or any designee of Greystone under this Agreement, together with
the number of shares held by Greystone or any designee of Greystone as the
result of properly exercising its Warrants hereunder divided by the number of
Borrowers' shares which are issued and outstanding, plus the number of Warrants
issued and then exercisable by Greystone or any designee of Greystone under this
Agreement plus the number of shares held by Greystone or any designee of
Greystone as the result of properly exercising its Warrants. Schedule 5.14
annexed hereto sets forth a tabular application of the formula contained in this
Section.
(c) From and after the Agreement Date, fill vacancies created by death or
inability of any of the Greystone Designees to continue to serve on the Board of
Directors of the Company and its Subsidiaries, by another person designated by
the Lender.
(d) Take all requisite corporate actions to cause one person designated by
the Lender to serve on both the Company's Audit Committee and its Compensation
Committee.
Section 5.15. Environmental Response. In the event of any discharge,
spill, injection, escape, emission, disposal, leak or other Release of Hazardous
Substances on any Real Property owned or leased by any of the Borrowers, which
is not authorized by a permit or other approval issued by the appropriate
governmental agencies, and which requires notification to or the filing of any
report with any federal or state governmental agency, the Borrowers shall
promptly: (i) notify the Lender; and (ii) comply with the notice requirements of
the Environmental Protection Agency and applicable state agencies, and take all
steps necessary to promptly clean up such discharge, spill, injection, escape,
emission, disposal, leak or other Release in accordance with all applicable
Environmental Laws and the Federal National Contingency Plan, and, if required,
receive a certification from all applicable state agencies or the Environmental
Protection Agency, that such Real Property has been cleaned up to the
satisfaction of such agency(ies). In addition, if applicable, the Borrower shall
promptly register with the New Jersey Department of Environmental Protection any
underground storage tanks installed after the Agreement Date pursuant to the
applicable regulations contained in the New Jersey Underground Storage Tank Act,
N.J.S.A. 58: 10A-21, et seq.
Section 5.16. Management. Cause David Schick, to continue to be employed
as Chief Executive Officer of the Company at the pleasure of the Board of
Directors pursuant to the terms of an employment agreement to be executed by and
between Borrowers and David Schick, as attached hereto as Exhibit "E" except in
the event of death or disability.
Section 5.17. Right of First Refusal. In the event and to the extent that
the Company shall elect to (i) raise any additional capital through any public
or private offer and sale of any of its equity securities (an "Equity
Offering"), or the Company hereby agrees to grant to the Lender the right and
option (the "Right of First Refusal"), but not the obligation, to purchase any
such equity securities of the Company (the "Equity Securities"). Such Right of
First Refusal shall be implemented in accordance with the following procedures:
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(a) The Company shall give the Lender not less than twenty (20) Business
Days prior written notice of any intention by the Company to consummate any
Equity Offering. Within five (5) Business Days following receipt of such notice,
the Lender shall notify the Company, in writing, as to whether the Lender has an
interest in purchasing the Equity Securities being offered for sale. If the
Lender expresses an affirmative interest, the Company and the Lender shall
thereafter promptly meet and attempt to negotiate in good faith the terms and
conditions of the Lender's purchase of the Equity Securities. In the event that
the parties are unable to agree upon the terms and conditions of such
transaction by the earlier to occur of (i) fifteen (15) Business Days from the
Company's notice, or (ii) ten (10) Business Days from the initial meeting with
respect to such proposed transaction, then the Company shall be free to sell the
Equity Securities to any third party, subject, however, to the rights of the
Lender set forth in Section 5.17(b) below. Nothing herein shall prevent the
Company, at any time, from entering into negotiations with any third parties
concerning or relating to the sale of Equity Securities provided that a
Greystone representative shall be permitted to attend any such negotiations.
(b) In the event and to the extent that the Company shall receive a
written offer or proposal from any Person (whether or not Affiliated with the
Company) (a "Third Party") to purchase or sell any Equity Securities in a
proposed Equity Offering (the "Third Party Proposal"), the Company shall
promptly furnish to the Lender a true and complete copy of such Third Party
Proposal. Such Third Party Proposal for Equity Offerings must be in the form
either (i) a letter of intent, (ii) a Final Term Sheet or (iii) a Registration
Statement filed with the Securities and Exchange Commission. The Lender shall
have a period of ten (10) Business Days from receipt of such Third Party
Proposal to notify the Company in writing as to whether the Lender intends to
match the terms of such Third Party Proposal. If such Third Party Proposal is
from a proposed underwriter or agent seeking to sell the Equity Securities, the
Lender may, at its sole option, elect to match the Third Party Proposal by
purchasing the Equity Securities, at a price per share which shall be net of all
selling commissions, discounts and other offering expenses. To the extent that
there shall be any material amendments or modifications to such Third Party
Proposal, the Company shall promptly forward to the Lender a complete copy of
each such amended Third Party Proposal, and the twenty (20) Business Day period
in which the Lender may match such amended Third Party Proposal shall again
commence upon delivery to the Lender of such amended Third Party Proposal(s).
(c) In the event that the Lender shall notify the Company of its
unwillingness to match the terms of any final Third Party Proposal, or shall
fail to timely notify the Company of its intention to so match such final Third
Party Proposal, the Lender's Right of First Refusal with respect to such Third
Party Proposal shall expire.
Section 5.18. Employee Options. Take all requisite corporate action
reasonably within its control to cause the shareholders to vote at the first
annual meeting of Shareholders of the Company that takes place after the
Agreement Date to either increase the number of shares available under the
Company's 1996 Employee Stock Option Plan or to establish a new stock option
plan to authorize the issuance of options to purchase an aggregate of 750,000
shares of Common Stock.
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Section 5.19. Registration Rights. Shall register the shares of Schick
Common Stock underlying the Warrants as provided in the Registration Rights
Agreement and shall not be in breach of such Registration Rights Agreement.
Section 5.20. Intellectual Property.
(a) Borrower agrees to timely pay any and all maintenance, renewal,
annuity fees and the like to the appropriate governmental entity in order to
keep all of its intellectual property in full force and effect.
(b) Borrower agrees to bring any action or legal proceeding as may
reasonably be necessary in order to defend its intellectual property against
third party infringers thereof of which it has knowledge.
Section 5.21. Disclosure. The Company will promptly inform the Greystone
Designees of all developments with regard to the pendency of any investigation
or litigation respecting either the Borrowers or their officers or directors.
The Greystone Designees will determine in their own business judgment whether to
relay such information to other Greystone employees.
Section 5.22. Restructuring Plan. The Borrowers shall update and amend the
Restructuring Plan including the detailed budgets contained therein, once every
six months, provided that the content thereof shall be satisfactory to and
approved and authorized by both the Board of Directors of the Company and the
Lender (which shall not be unreasonably withheld). Upon such approval and
authorization the Borrowers shall diligently implement the Restructuring Plan.
ARTICLE VI. NEGATIVE COVENANTS
The Borrowers jointly and severally covenant and agree that, until all
Obligations (whether now existing or hereafter arising) have been paid in full
and the Borrowers have no further right to extension or funding under this
Agreement, unless the Lender shall otherwise consent in writing, none of the
Borrowers shall, directly or indirectly:
Section 6.01. Indebtedness and Liabilities. Incur, create, assume, become
or be liable in any manner with respect to, or permit to exist, any Indebtedness
or Liability, other than:
(a) Indebtedness to the Lender for Advances, or otherwise;
(b) Indebtedness and Liabilities with respect to trade obligations,
accounts payable and other normal accruals incurred in the ordinary course of
business, or with respect to which any of the Borrowers is contesting in good
faith the amount or validity thereof by appropriate proceedings, and then only
to the extent that the Borrowers have set aside on their books adequate reserves
therefor;
(c) Indebtedness under those Real Property Leases listed on Schedule
"3.07" annexed hereto;
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(d) Indebtedness under Existing Operating Leases listed on Schedule "3.05"
annexed hereto;
(e) Existing Indebtedness, but only to the extent set forth on Schedule
"6.01(e)" annexed hereto;
(f) Purchase money Indebtedness or other Indebtedness incurred or assumed
in connection with Investments (including the acquisition of additional assets
or businesses) and Capital Expenditures made following the Agreement Date;
provided, however, that: (i) the Borrowers shall, in connection with the
incurrence of any and all such Indebtedness, be in compliance with the
provisions of Section 6.06(c) and Section 6.09 hereof; and (ii) to the extent
that the Borrowers shall elect to incur Indebtedness for money borrowed (other
than purchase money Indebtedness) from any financial institution in connection
with any permitted Investment contemplated by Section 6.06(c) hereof, they shall
afford the Lender a right of first refusal to provide the financing therefor;
provided, that the terms and conditions of any such financing which the Lender
may (at their sole discretion) elect to offer shall be on terms and conditions
which, in the aggregate, shall be no less favorable to the Borrowers than those
offered by any other financial institution;
(g) Intercompany Investments which are represented by instruments that are
promptly delivered (with all necessary endorsements thereon) to the Lender
pursuant to the Security Agreement; and
(h) Subordinated Debt in such amounts and upon such terms and conditions
as shall be reasonably acceptable to the Lender.
Section 6.02. Liens. Create, incur, assume or suffer to exist any Lien or
other encumbrance of any nature whatsoever on any of its assets, now or
hereafter owned, other than:
(a) Subject to Section 5.02 above, Liens securing the payment of taxes
which are either not yet due or the validity of which is being contested in good
faith by appropriate proceedings, and as to which the Borrowers shall have set
aside on their books adequate reserves;
(b) Deposits under workers' compensation, unemployment insurance and
social security laws, or to secure the performance of bids, tenders, contracts
(other than for the repayment of Money Borrowed) or leases, or to secure
statutory obligations or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of business;
(c) Liens imposed by law, such as carriers', warehousemen's or mechanics'
liens, incurred by the Borrowers in good faith in the ordinary course of
business and discharged promptly after same are incurred, and fully bonded Liens
arising out of a judgment or award against the Borrowers with respect to which
the Borrowers shall currently be prosecuting an appeal, a stay of execution
pending such appeal having been secured;
(d) Liens in favor of the Lender;
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(e) Existing Liens which are to survive the Agreement Date and which are
expressly reflected and described as such in Schedule "6.02(e)" annexed hereto;
(f) Other Liens incurred in connection with Indebtedness expressly
permitted pursuant to Section 6.01 above, but only to the extent that such Liens
secure Indebtedness in amounts not in excess of those permitted by such Section
6.01;
(g) Encumbrances consisting of easements, rights-of-way, survey exceptions
and other similar restrictions on the use of real property reflected on title
reports accepted by the Lender, or minor irregularities in title thereto which
do not materially impair the use of such property in the operation of the
business of the Borrowers; and
(h) Liens arising out of judgments or awards with respect to which the
Borrowers shall be prosecuting an appeal in good faith and in respect of which a
stay of execution shall have been or is being sought.
Section 6.03. Guarantees. Except for the Guarantee by any one of the
Borrowers of obligations of any of the other Borrower, Guarantee, endorse or
otherwise in any manner become or be responsible for obligations of any other
Person, except: Guarantees, not to exceed $100,000 outstanding at any point in
time in the aggregate, in respect of the financing of automobiles or other items
for use by employees, consultants or agents of the Borrowers.
Section 6.04. Sales of Assets and Management. (a) Sell, lease, transfer,
encumber or otherwise dispose of any of the Borrowers' properties, assets,
rights, licenses or franchises other than (i) sales of inventories in the
ordinary course of business, (ii) licenses, joint ventures and related
transactions entered into, modified or terminated in the ordinary course of
business, including but not limited to the licensing of Borrowers' intellectual
property; (iii) the disposition of obsolete personal properties in the ordinary
course of business, (iv) the termination of Excluded Contracts, or (v) the
subletting of any of the real property leased by Borrowers or (b) turn over the
management of, or enter into any management contract with respect to the
Business Operations or such properties, assets, rights, licenses or franchises.
Section 6.05. Sale-Leaseback. Enter into any arrangement, directly or
indirectly, with any Person whereby any of the Borrowers shall sell or transfer
any property (real, personal or mixed) used in the Business Operations, whether
now owned or hereafter acquired, and thereafter rent or lease such property.
Section 6.06. Investments. Acquisitions. Make any Investment in, or
otherwise acquire or hold securities (including, without limitation, capital
stock and evidences of indebtedness) of, or make loans or advances to, or enter
into any arrangement for the purpose of providing funds or credit to, any other
Person (including any Affiliate), except:
(a) advances to employees of any one or more of the Borrower: (i) for
business expenses not to exceed at any time $50,000 in the aggregate, and (ii)
for personal needs not to exceed at any time $100,000 in the aggregate as to all
employees of the Borrower;
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(b) investments in obligations of the United States or certificates of
deposit of the Lender or other commercial banks, or other similar investments
reasonably satisfactory to the Lender;
(c) so long as no Default or Event of Default has occurred and is
continuing, an Investment in or acquisition of the securities, assets or
properties of any Person in which: (i) the aggregate consideration paid or
payable by any or all of the Borrowers (whether in the form of cash, notes
and/or any other securities obligating any of the Borrowers to mandatory
payments of dividends, Interest Expense or other redemption obligations) does
not exceed Three Hundred Thousand ($300,000) Dollars in any one Fiscal Year; and
(ii) the aggregate Indebtedness for money borrowed (including purchase money
Indebtedness incurred in connection with any such Investment) does not exceed
One Hundred Fifty Thousand ($150,000) Dollars in any one Fiscal Year; and
(d) intercompany investments, but only if and to the extent evidenced by
appropriate instruments (including, without limitation, in respect of
Indebtedness, negotiable promissory notes in principal amount equal to any and
all such Intercompany Investments so incurred), all of which shall be promptly
delivered (with all necessary endorsements thereon) to the Lender pursuant to
the Security Agreement.
Section 6.07. Corporate Form; Acquisitions. Dissolve or liquidate, or
consolidate or merge with or into, sell all or substantially all of the assets
of any of the Borrowers to, or otherwise acquire all or substantially all of the
securities, assets or properties of, any other Person; provided, that any such
transaction shall be permitted without the prior written consent of the Lender:
(a) if solely between or among Borrowers, or (b) if constituting an acquisition
or Investment otherwise permitted and within the dollar consideration and
Indebtedness limitations provided in Section 6.06(c) above.
Section 6.08. Dividends and Redemptions. Except for a transaction
otherwise permitted pursuant to Section 6.06(c) above, or (subject to the
provisions of Section 6.16 below) dividends paid or declared by any one or more
Borrowers to any other Borrower(s): (a) directly or indirectly declare or pay
any dividends, or make any distribution of cash or property, or both (other than
dividends solely in the form of Common Stock of the Company), to any Person in
respect of any of the shares of the capital stock of any of the Borrowers; or
(b) directly or indirectly redeem, purchase or otherwise acquire for
consideration any securities or shares of the capital stock of any of the
Borrower or any other Person.
Section 6.09. Indebtedness for Capital Expenditures. Other than
Indebtedness to the Lender, as contemplated by this Agreement: (a) incur
Indebtedness (including purchase money Indebtedness) in connection with Capital
Expenditures in any Fiscal Year, including direct purchases and/or Capitalized
Lease Obligations (other than Existing Capitalized Lease Obligations or
substitutes therefor at the same or lower annual rentals), for fixed assets or
personal property, where the aggregate Indebtedness (including purchase money
Indebtedness) so incurred shall exceed $250,000 in such Fiscal Year; or (b)
enter into any Operating Leases which obligates the Borrowers to rental payments
in any Fiscal Year which shall be $150,000, in the aggregate, in excess of the
Borrowers' aggregate rental payments under Operating Leases in the immediately
preceding Fiscal Year, provided, however, that the Borrower shall be permitted
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to exercise its option to renew the Company's real property leases on its
facilities in Long Island City, New York.
Section 6.10. Change of Business. As to any of the Borrowers, directly or
indirectly: (a) engage in a business materially different from the general
nature of the Business Operations as now being conducted or as same may
hereafter be reasonably expanded from time to time in like areas of business, or
(b) wind up its Business Operations or cease substantially all of its normal
Business Operations for a period in excess of thirty (30) consecutive days, or
(c) suffer any material disruption, interruption or discontinuance of a material
portion of its normal Business Operations for a period in excess of ninety (90)
consecutive days, or (d) materially amend or terminate any material agreement.
Section 6.11. Receivables. Sell, assign, discount or dispose in any way of
any accounts receivable, promissory notes or trade acceptances held by any of
the Borrowers with or without recourse, except for any sale, assignment,
discounting or disposal of any such accounts receivable, promissory notes or
trade acceptances in connection with efforts to collect same (including
endorsements) in the ordinary course of business.
Section 6.12. Corporate Charter and By-Laws. Agree, consent, permit or
otherwise undertake to amend any of the terms or provisions of the Company's
Certificate of Incorporation or By-Laws.
Section 6.13. Affiliate Transactions. Enter into any Contract, agreement
or transaction with any Affiliate of any of the Borrowers (other than among
Borrowers) except after prior written notice to the Lender and then only upon
the prior written consent of the Lender.
Section 6.14. Fiscal Year. Amend its Fiscal Year.
Section 6.15. Debt. Issue, prepay, redeem or purchase any Senior Debt,
Subordinated Debt or redeemable preferred stock, except in accordance with the
terms of the Restructuring Plan. Furthermore, subject to the provisions of
Section 6.16 and Section 6.17 below, the Company or any Subsidiary may redeem or
purchase capital stock of any other Subsidiary which is a Borrower, if and to
the extent wholly-owned by the Company or another Subsidiary.
Section 6.16. Sales of Capital Stock. Sell, lease, transfer, assign,
encumber or otherwise dispose of any shares of capital stock (collectively, a
"Stock Transfer") of the Company or any Subsidiary, except that stock options to
employees of the Company may be granted and exercised pursuant to existing stock
option plans of the Company.
Section 6.17. Compensation of Management. Increase compensation to
executive officers above the amount that has been agreed upon by Lender and the
Company's Compensation Committee.
Section 6.18. Litigation Settlements. Settle any material litigation which
involves the loss of any rights or payment of any moneys or royalties in excess
of $25,000 without the consent of Lender, which consent shall not be
unreasonably withheld or delayed.
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Section 6.19. Use of Advances. Draw any Advances for any purpose not
otherwise approved by the Lender.
Section 6.20. Restructuring Plan. Fail to materially adhere to the
Restructuring Plan, as amended from time to time, pursuant to Section 5.22
hereof.
ARTICLE VII. DEFAULTS
Section 7.01. Events of Default. Each of the following events is herein,
and in the Note and the Security Documents, sometimes referred to as an Event of
Default:
(a) if any representation or warranty made in this Agreement, or in any of
the Security Documents, or in any report, certificate, financial statement or
other instrument furnished in connection with this Agreement or the borrowing
hereunder, shall be false, inaccurate or misleading in any material respect when
made or when deemed made hereunder;
(b) any failure to pay principal of or interest on the Note or any other
Obligations of the Borrowers to the Lender when the same shall be due and
payable, whether on a Principal Payment Date, an Interest Payment Date, at the
Maturity Date thereof or at a date required for prepayment or by acceleration or
otherwise;
(c) any default in the performance of any of the financial covenants
contained in Section 5.08 through Section 5.10, or any default in the due
observance or performance of any covenant, condition or agreement contained in
any Section of Article VI hereof;
(d) any default in the due observance or performance of any covenant,
condition or agreement (other than in Section 5.08 through Section 5.10) to be
observed or performed under Article V hereof, or otherwise pursuant to the terms
hereof, and the continuance of such default unremedied for a period of twenty
(20) days after written notice thereof to the Borrowers;
(e) if either of the Borrowers have suffered any Material Adverse Effect
which shall remain unremedied for a period of thirty (30) days after written
notice thereof to the Borrowers;
(f) any default with respect to any Indebtedness for money borrowed of the
Borrowers (other than to the Lender) in an amount in excess of $50,000, if the
effect of such default is to permit the holder to accelerate the maturity of any
such Indebtedness for money borrowed or to cause such Indebtedness for money
borrowed to become due prior to the stated maturity thereof,
(g) any material default in the due observance or performance of any
covenant, condition or agreement on the part of the Borrowers to be observed or
performed under the Note, the Warrants or any of the Security Documents,
including, without limitation, any event which subordinates or otherwise renders
invalid or unenforceable the Lender's first Liens, encumbrances and security
interests on the assets and properties of the Borrowers (subject only to the
Permitted Liens) and the continuation of such default beyond any applicable
grace period provided therein;
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(h) if any Borrower shall: (i) apply for or consent to the appointment of
a receiver, trustee, custodian or liquidator of it or any of its properties,
(ii) admit in writing its inability to pay its debts as they mature, (iii) make
a general assignment for the benefit of creditors, (iv) be adjudicated a
bankrupt or insolvent or be the subject of an order for relief under Title 11 of
the United States Code, or (v) file a voluntary petition in bankruptcy, or a
petition or an answer seeking reorganization or an arrangement with creditors or
to take advantage of any bankruptcy, reorganization, insolvency, readjustment of
debt, dissolution or liquidation law or statute, or an answer admitting the
material allegations of a petition filed against him or it in any proceeding
under any such law, or (vi) take or permit to be taken any action in furtherance
of or for the purpose of effecting any of the foregoing;
(i) if any order, judgment or decree shall be entered, without the
application, approval or consent of the Borrowers, by any court of competent
jurisdiction, approving a petition seeking reorganization of any Borrowers, or
appointing a receiver, trustee, custodian or liquidator of any Borrowers, or of
all or any substantial part of its assets, and such order, judgment or decree
shall continue unstayed and in effect for any period of thirty (30) days;
(j) if final judgment(s) for the payment of money in excess of $25,000
individually or $100,000 in the aggregate shall be rendered against any
Borrowers, and the same shall remain undischarged, unsatisfied and unbonded for
a period of thirty (30) consecutive days following notice of said final
judgment(s) to such Borrowers, during which execution shall not be effectively
stayed;
(k) the occurrence of any levy upon or seizure or attachment of any
property of any Borrowers having an aggregate fair value in excess of $100,000
individually or $250,000 in the aggregate, which levy, seizure or attachment
shall not be set aside, bonded or discharged within thirty (30) days after the
date thereof,
(1) if the Greystone Designees are removed without good cause from or are
not elected or reelected to the Boards of Directors of the Borrowers or the
people designated by the Lender to serve on the Company's Audit Committee or
Compensation Committee have been removed without good cause from such committee
and no person designated by Greystone has been elected to replace such director
or committee member;
Section 7.02. Remedies. Upon the occurrence of any Event of Default, and
at all times thereafter during the continuance thereof: (a) the Note, and any
and all other Obligations of the Borrowers to the Lender, shall, at the Lender's
option (except in the case of Sections 7.01(g) and 7.01(h) hereof, the
occurrence of which shall automatically effect acceleration, regardless of any
action or forbearance in respect of any prior or ongoing Default or Event of
Default which may be inconsistent with such automatic acceleration), become
immediately due and payable, both as to principal, interest and other charges,
without presentment, demand, or notice of any kind, all of which are hereby
expressly waived, anything contained herein or in the Note or other evidence of
such Obligations to the contrary notwithstanding, (b) all outstanding
Obligations under the Note, and all other outstanding Obligations, shall bear
interest at the default rate of interest provided in the Note, (c) the Lender
may file suit against the Borrowers on the Note and/or seek specific performance
or injunctive relief thereunder (whether or not a remedy exists at law or is
adequate), (d) the Lender shall not be obligated to make any further Advances,
and (e) the
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Lender shall have the right, in accordance with the Note and the Security
Documents, to exercise any and all remedies in respect of such or all of the
collateral security for the Obligations as the Lender may determine in its
discretion (without any requirement of marshaling of assets, or other such
requirement).
ARTICLE VIII. PARTICIPATING LENDERS; ASSIGNMENT.
Section 8.01. Participations. Anything in this Agreement to the contrary
notwithstanding, the Lender may, at any time and from time to time, without the
requirement of any consent of the Borrowers, and without in any manner affecting
or impairing the validity of any Obligations or any collateral security
therefor, transfer, assign or grant participating interests in the Loan as the
Lender shall in its sole discretion determine, to such other Persons (the
"Participants") as the Lender may determine. The Lender shall give written
notice to the Borrowers of such Participations. Notwithstanding the granting of
any such participating interests: (a) the Borrowers shall look solely to the
Lender for all purposes of this Agreement and the transactions contemplated
hereby, (b) the Borrowers shall at all times have the right to rely upon any
waivers or consents signed by the Lender as being binding upon all of the
Participants, and (c) all communications in respect of this Agreement and such
transactions shall remain solely between the Borrowers and the Lender hereunder.
Section 8.02. Transfer. Anything in this Agreement to the contrary
notwithstanding, the Lender may, at any time and from time to time, without the
requirement of any consent of the Borrowers, and without in any manner affecting
or impairing the validity of any Obligations or any collateral security
therefor, transfer and assign all or any portion of its right to receive payment
or foreclose on its security interest provided for in this Agreement, the Note
and the Security Documents to any Person (an "Assignee Lender"). The Lender
shall give written notice to the Borrowers prior to making any such transfer or
assignment.
ARTICLE IX. MISCELLANEOUS
Section 9.01. Survival. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto, shall survive the making by the Lender of the Advances, and the
execution and delivery to the Lender of the Note, and shall continue in full
force and effect for so long as the Note or any other Obligations of the
Borrowers to the Lender are outstanding and unpaid. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and permitted assigns of such party; and all covenants,
promises and agreements in this Agreement contained, by or on behalf of the
Borrowers, shall inure to the benefit of the successors and assigns of the
Lender.
Section 9.02. Indemnification. The Borrowers shall indemnify the Lender
and its directors, officers, employees, attorneys and lenders against, and shall
hold the Lender and such Persons harmless from, any and all losses, claims,
damages and liabilities and related expenses, including reasonable counsel fees
and expenses, incurred by the Lender or any such Person arising out of, in any
way connected with, or as a result of: (a) the Borrowers' use of any of the
proceeds of the Loan made by the Lender to the Borrowers; (b) this Agreement,
the Borrowers' ownership and operation of the Borrowers' assets, including all
real properties and improvements
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or any Contract, the performance by the Borrowers or any other Person of their
respective obligations thereunder, and the consummation of the transactions
contemplated by this Agreement; and/or (c) any claim, litigation, investigation
or proceeding relating to any of the foregoing, whether or not the Lender or its
directors, officers, employees, attorneys or Lenders are a party thereto;
provided that the indemnity provisions set forth in this Section 9.02 shall not
apply to any such losses, claims, damages, liabilities or related expenses
arising from (i) any unexcused breach by the Lender of any of its obligations
under this Agreement, (ii) the willful misconduct or gross negligence of the
Lender, provided that any such loss, claim, damage, liability or expense has
resulted from the willful misconduct or gross negligence of the Lender and
further provided, that such willful misconduct or gross negligence was the
primary cause thereof (i.e., more than 50% of the causation), or (iii) the
breach of any commitment or legal obligation of the Lender to any Person. The
foregoing indemnity shall remain operative and in full force and effect
regardless of the expiration of the term of this Agreement, the consummation of
the transactions contemplated by this Agreement, the repayment of the Loan, the
invalidity or unenforceability of any term or provision of this Agreement, the
Security Documents or the Note, any investigation made by or on behalf of the
Lender, and the content or accuracy of any representation or warranty made by
the Borrowers or their Affiliates under this Agreement. All amounts due under
this Section 9.02 shall be payable on written demand therefor.
Section 9.03. Governing Law. This Agreement, the Note, the Warrants and
the Security Documents shall (irrespective of where same are executed and
delivered) be governed by and construed in accordance with the laws of the State
of New York (without giving effect to principles of conflicts of laws).
Section 9.04. Waiver and Amendment. Neither any modification or waiver of
any provision of this Agreement, the Note, the Warrants or the Security
Documents, nor any consent to any departure by the Borrowers therefrom, shall in
any event be effective unless the same shall be set forth in writing duly signed
or acknowledged by the Lender and the Borrowers, and then such waiver or consent
shall be effective only in the specific instance, and for the specific purpose,
for which given. No notice to or demand on the Borrowers in any instance shall
entitle the Borrowers to any other or future notice or demand in the same,
similar or other circumstances.
Section 9.05. Reservation of Remedies. Neither any failure nor any delay
on the part of any of the parties hereto in exercising any right, power or
privilege hereunder, or under the Note, any of the Security Documents, or any
other instrument given as security for any of the Obligations, shall operate as
a waiver thereof, nor shall a single or partial exercise thereof preclude any
other or future exercise, or the exercise of any other right, power or
privilege.
Section 9.06. Notices. All notices, requests, demands and other
communications under or in respect of this Agreement or any transactions
hereunder shall be in writing (which may include telegraphic or telecopied
communication) and shall be personally delivered or mailed (by prepaid
registered or certified mail, return receipt requested), sent by prepaid
recognized overnight courier service, or telegraphed or telecopied by facsimile
transmission to the applicable party at its address or telecopier number
indicated below.
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If to the Lender:
c/o Greystone & Co., Inc.
152 West 57th Street, 60th Floor
New York, New York 10019
Attn: Stephen Rosenberg
Telecopier # (212) 649-9701
with a copy to:
Greenberg Traurig
2005 Market Street
Philadelphia, PA 19103
Attn: Michael Lehr
Telecopier # (215) 988-7801
If to the Borrowers:
Schick Technologies, Inc.
31-00 47th Avenue
Long Island City, New York 11101
Attn: David Schick
Telecopier # (718) 729-3469
with a copy to:
Schick Technologies, Inc.
31-00 47th Avenue
Long Island City, New York 11101
Attn: Zvi Raskin, Esq.
Telecopier # (718) 937-5962
or, as to each party, at such other address or telecopier number as shall be
designated by such party in a written notice to the other parties delivered as
aforesaid. All such notices, requests, demands and other communications shall be
deemed given when personally delivered or when deposited in the mails with
postage prepaid (by registered or certified mail, return receipt requested) or
delivered to the telegraph company or overnight courier service, addressed as
aforesaid, or when submitted by facsimile transmission to a telecopier number
designated by such addressee.
Section 9.07. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Borrowers and the Lender and their respective
successors and permitted assigns, except that the Borrowers shall not assign any
of its rights or obligations hereunder without the prior written consent of the
Lender.
Section 9.08. Consent to Jurisdiction; Waiver of Jury Trial. The parties
hereto hereby consent to the jurisdiction of all courts of the State of New York
and the United States District Court for the Southern District of New York, as
well as to the jurisdiction of all courts from
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which an appeal may be properly taken from such courts, for the purpose of any
suit, action or other proceeding arising out of or with respect to this
Agreement, the Note, the Warrants, the Security Documents, any other agreements,
instruments, certificates or other documents executed in connection herewith or
therewith, or any of the transactions contemplated hereby or thereby, or any of
the parties' obligations hereunder or thereunder. The parties hereto hereby
expressly waive any and all objections which they may have as to venue in any of
such courts, and also waive trial by jury in any such suit, action or
proceeding. The Lender or Borrowers may file a copy of this Agreement as
evidence of the foregoing waiver of right to jury trial.
Section 9.09. Severability. If any provision of this Agreement is held
invalid or unenforceable, either in its entirety or by virtue of its scope or
application to given circumstances, such provision shall thereupon be deemed
modified only to the extent necessary to render same valid, or not applicable to
given circumstances, or excised from this Agreement, as the situation may
require, and this Agreement shall be construed and enforced as if such provision
had been included herein as so modified in scope or application, or had not been
included herein, as the case may be.
Section 9.10. Captions. The Article and Section headings in this Agreement
are included herein for convenience of reference only, and shall not affect the
construction or interpretation of any provision of this Agreement.
Section 9.11. Sole and Entire Agreement. This Agreement, the Note, the
Security Documents, and the other agreements, instruments, certificates and
documents referred to or described herein and therein constitute the sole and
entire agreement and understanding between the parties hereto as to the subject
matter hereof, and supersede all prior discussions, agreements and
understandings of every kind and nature between the parties as to such subject
matter.
[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers on the date set forth below, but
all as of the day and year first above written.
Effective Date: December 27, 1999
GREYSTONE FUNDING CORPORATION
By: /s/ Stephen Rosenberg
--------------------------------
Stephen Rosenberg
Chief Executive Officer
Date: March 17, 2000
SCHICK TECHNOLOGIES, INC., a Delaware
corporation
By: /s/ David Schick
---------------------------------
David Schick
Chief Executive Officer
Date: March 17, 2000
SCHICK TECHNOLOGIES, INC., a New York
corporation
By: /s/ David Schick
---------------------------------
David Schick
Chief Executive Officer
Date: March 17, 2000
