SECOND
AMENDED AND RESTATED
SECURED PROMISSORY NOTE
(DVI CONTRACT NO. 003-9805633-704)
$5,000,000.00 Doylestown, Pennsylvania
March 15, 2000
FOR VALUE RECEIVED AND INTENDING TO BE LEGALLY BOUND, the undersigned
(individually and collectively, the "Borrower") hereby jointly and severally
promise to pay to the order of DVI FINANCIAL SERVICES INC. ("Lender") the
principal sum of FIVE MILLION DOLLARS ($5,000,000.00), together with interest
thereon upon the following terms:
1. Collateral. This Note is secured, inter alia, by the following (a)
Amended and Restated Security Agreement of even date, given by Schick
Technologies, Inc., a New York corporation to Lender, (b) Security Agreement of
even date, given by Schick Technologies, Inc., a Delaware corporation to Lender,
and (c) Collateral Assignment of Patents, Trademarks, Copyrights, Licenses and
Trade Secrets dated July 30, 1999, between Schick Technologies, Inc., a Delaware
corporation and Lender (the Security Agreements, the Collateral Assignment, this
Note and all other documents, instruments and agreements collateral to this Note
or any of the foregoing, as the same may be modified, amended, supplemented
and/or replaced from time to time, are collectively referred to herein as the
"Loan Documents"). The term "Collateral" as used herein shall mean all real and
personal property of Borrower, or either of them, pledged to Lender under the
Loan Documents as security for Borrower's obligations hereunder.
2. Interest Rate. Interest on the unpaid principal balance hereof will
accrue from the date of advance until final payment thereof at the rate equal to
two and one-half percent (2 1/2%) per annum over the Prime Rate (such interest
rate to change immediately upon any change in the Prime Rate); provided,
however, that if any payment due to Lender hereunder is past due for more than
sixty (60) days, interest on the unpaid principal balance hereof shall
thereafter accrue until final payment thereof at the rate equal to five and
one-half percent (5 1/2%) per annum over the Prime Rate (such interest rate to
change immediately upon any change in the Prime Rate). For purposes of this
Note, "Prime Rate" shall mean the prime rate as published in The Wall Street
Journal.
3. Default Interest. Interest will accrue on the outstanding principal
amount hereof following the occurrence of an Event of Default until final
payment thereof at the rate of eighteen percent (18%) per annum (the "Default
Rate").
4. Late Charge. In the event that Borrower fails to pay any principal,
interest or other fees or expenses payable hereunder for a period of at least
five (5) days, in addition to paying such sums, Borrower will pay to Lender a
one-time late charge (for each such past due payment) equal to the greater of
(a) five percent (5%), of such past due payment, or (b) the product of (i)
fifteen (15) basis points, times (ii) the then outstanding principal balance
hereof, as compensation for the expenses incident to such past due payment.
5. Post Judgment Interest. Any judgment obtained for sums due hereunder or
under
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the Loan Documents will accrue interest at the Default Rate until paid.
6. Computation. Interest will be computed on the basis of a year of three
hundred sixty (360) days comprised of twelve (12) 30-day months and paid for the
actual number of days elapsed.
7. Principal and Interest Payments. The principal of this Note, and the
interest accrued thereon, are due and payable as follows:
(a) Monthly Interest Payments. On the fifteenth day of each calendar
month during the first twelve (12) months of the term of this Note,
Borrower will pay to the Lender accrued interest at the applicable rate, in
arrears, commencing on April 15, 2000.
(b) Monthly Principal and Interest Payments. Commencing April 15,
2001, and continuing on the fifteenth (15th) day of each calendar month
thereafter, Borrower will pay to Lender the principal of this Note and the
interest accrued thereon as follows: (i) on each of April 15, 2001, and May
15, 2001, the sum of Sixty Three Thousand Dollars ($63,000.00), then (ii)
on each of June 15, 2001, and July 15, 2001, the sum of Eighty Thousand
Dollars $80,000.00), then (iii) on each of August 15, 2001, and September
15, 2001, the sum of Ninety-Seven Thousand Dollars ($97,000.00), then (iv)
forty-two (42) equal and consecutive monthly payments each in the amount of
One Hundred Fourteen Thousand Seven Hundred Twenty Dollars and Seventy
Cents ($114,720.70), commencing on October 15, 2001, and continuing on the
fifteenth (15th ) day of each month thereafter, then (v) one final payment
due April 15, 2005, in an amount equal to the then remaining principal
balance hereof, plus all accrued and unpaid interest due thereon and all
costs, fees and expenses due hereunder or under any of the other Loan
Documents.
8. Place of Payment. Principal and interest hereunder shall be payable to
Lender at 500 Hyde Park, Doylestown, Pennsylvania 18901, or at such other place
as Lender, from time to time, may designate in writing.
9. Financial Reporting Requirements.
(a) Periodic Report. On an on-going basis, Borrower will deliver to
Lender such periodic annual financial statements (including balance sheet,
income statements and statements of cash flow) as requested by Lender,
including, without limitation, a forecast, in substantially the same form
and content as the Fiscal 2000-2001 Forecast, Statement of Operations and
Cash Flow (the "Basic Forecast") prepared by Greystone & Co., Inc.
Notwithstanding the foregoing, the forecast for each following fiscal year
of Borrower will be delivered to Lender not later than sixty (60) days
prior to the beginning of each such fiscal year.
(b) Cash Flow Reports. Within thirty (30) days of the end of each
fiscal quarter of Borrower, Borrower will deliver to Lender the following:
(i) A Cash Flow Statement for the fiscal quarter just ended
showing Borrower's cash flow position as of the end of such quarter
based on actual operating results (as calculated in the same manner as
shown on the Base Forecast) (the "Actual Cash Flow"), and
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(ii) A payment equal to fifty percent (50%) of the positive
Actual Cash Flow for the fiscal quarter just ended, which will be
applied against the payments due hereunder in inverse order of
maturity.
10. Events of Default. The occurrence of any one or more of the following
events shall constitute an Event or Events of Default hereunder:
(a) The failure of Borrower to pay any amount of principal or interest
on this Note, or any fee or other sums payable hereunder, or under any of
the other Loan Documents or the date on which such payment is due, whether
on demand, at the stated maturity or due date thereof, or by reason of any
requirement for the prepayment thereof, by acceleration or otherwise and
such failure continues unremedied for a period of fifteen (15) days from
and including the date such payment is first due;
(b) The failure of Borrower to duly perform or observe any obligation,
covenant or agreement on its part contained herein or in any other Loan
Document not otherwise specifically constituting an Event of Default under
this Section 10 and such failure continues unremedied for a period of
fifteen (15) days after notice from Lender to Borrower of the existence of
such failure;
(c) The failure of Borrower to perform or pay any other obligation to
Lender or any affiliate of Lender under any other agreement or note or
otherwise arising, whether or not related to this Agreement, after the
expiration of any notice and/or grace periods permitted in such documents;
(d) The adjudication of Borrower as a bankrupt or insolvent, or the
entry of an order for relief against Borrower or the entry of an order
appointing a receiver or trustee for Borrower of any of its property or
approving a petition seeking reorganization or other similar relief under
the bankruptcy or other similar laws of the United States or any state or
any other competent jurisdiction;
(e) A proceeding under any bankruptcy, reorganization, arrangement of
debt, insolvency, readjustment of debt or receivership law is filed by or
(unless dismissed or stayed within 60 days) against Borrower, or Borrower
makes an assignment for the benefit of creditors, or Borrower takes any
action to authorize any of the foregoing;
(f) All or any material part of the Collateral or the assets of
Borrower are attached, seized, subjected to a writ or distress warrant, or
levied upon, or come within the possession or control of any receiver,
trustee, custodian or assignee for the benefit of creditors;
(g) The entry of a final judgment for the payment of money in excess
of Fifty Thousand Dollars ($50,000.00), individually or in the aggregate,
against Borrower which, within fifteen (15) days after such entry, shall
not have been discharged or execution thereof stayed pending appeal or
shall not have been discharged within five (5) days after the expiration of
any such stay;
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(h) Any representation or warranty of Borrower in any of the Loan
Documents is discovered to be untrue in any material respect or any
statement, certificate or data furnished by Borrower or any Guarantor
pursuant hereto is discovered to be untrue in any material respect as of
the date as of which the facts therein set forth are stated or certified;
(i) Borrower voluntarily or involuntarily dissolves or is dissolved,
liquidates or is liquidated;
(j) A material and adverse change occurs in any of Borrower's
operations, management or financial condition or the value of the
Collateral;
(k) The validity or enforceability of this Note, or any of the Loan
Documents, is contested by the Borrower, or David Schick or Borrower denies
that Borrower has any or any further liability or obligation hereunder or
thereunder;
(l) The failure of Greystone Funding Corporation ("Greystone") to duly
perform or observe any obligation, covenant or agreement on its part
contained in that certain Lien Subordination and Intercreditor Agreement
dated as of March 15, 2000, by and between Greystone and Lender (the "Lien
Agreement"); or
(m) The occurrence of an Event of Default as defined in the Greystone
Loan Documents (as defined in Lien Agreement).
11. Default; Remedies. Upon the occurrence of an Event of Default, Lender,
at its option and without further notice to Borrower, may declare immediately
due and payable the entire unpaid balance of principal and all other sums due by
Borrower hereunder and under the other Loan Documents, together with interest
accrued thereon at the applicable rate specified above to the date of the Event
of Default and thereafter at the Default Rate. Payment thereof may be enforced
and recovered in whole or in part at any time and from time to time by one or
more of the remedies provided to Lender in this Note or in the Loan Documents or
as otherwise provided at law or in equity, all of which remedies are cumulative
and concurrent.
12. Waivers. Borrower and all endorsers hereby, jointly and severally,
waive presentment for payment, demand, notice of demand, notice of nonpayment or
dishonor, protest and notice of protest of this Note, and all other notices in
connection with the delivery, acceptance, performance, default or enforcement of
the payment of this Note.
13. Miscellaneous. If any provisions of this Note shall be held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision hereof. This Note has been delivered in and shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to the law of conflicts. This Note shall be binding upon Borrower
and upon Borrower's successors and assigns and shall benefit Lender and its
successors and assigns. The prompt and faithful performance of all of Borrower's
obligations hereunder, including without limitation, time of payment, is of the
essence of this Note.
14. Notices. All notices, requests and other communications made or given
in
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connection with this Note shall be in writing and, unless receipt is stated
herein to be required, shall be deemed to have been validly given if delivered
personally to the individual, division or department to whose attention notices
to a party are to be addressed, or by private carrier, telecopy (with original
forwarded by first-class mail), or registered or certified mail, return receipt
requested, in all cases, with charges prepaid, addressed as follows, until some
other address (or individual or division, department for attention) shall have
been designated by notice given by one party to the other:
To Borrower:
Schick Technologies, Inc.
31-00 47th Avenue
Long Island City, NY 11101
Attention: President
Telecopier No.: 718-937-5962
To Lender:
DVI Strategic Partner Group
707 Skokie Boulevard
Northbrook, IL 60062
Attention: Chief Operating Officer
Telecopier No.: 847-564-2965
With a copy to:
DVI, Inc.
500 Hyde Park
Doylestown, PA 18901
Attention: Legal Department
Telecopier No.: 215-345-7759
or after August 1, 2000:
DVI, Inc.
2500 York Road
Jamison, PA 18929
Attention: Legal Department
Telecopier No.: 215-488-5010
15. Submission to Jurisdiction. Borrower hereby consents to the
jurisdiction of any state or federal court located within the Commonwealth of
Pennsylvania, and irrevocably agrees that, subject to Lender's election, any
actions or proceedings relating to the Loan Documents or the transactions
contemplated hereunder may be litigated in such courts, and Borrower waives any
objection which it may have based on lack of personal jurisdiction, improper
venue or forum non conveniens to the conduct of any proceeding in any such court
and waives personal service of any
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and all process upon it, and consents that all such service of process be made
by mail or messenger directed to it at the address set forth in Section 14.
Nothing contained in this Section 15 shall affect the right of Lender to serve
legal process in any other manner permitted by law or affect the right of Lender
to bring any action or proceeding against Borrower or its property in the courts
of any other jurisdiction.
16. Fees, Costs and Expenses. Borrower shall pay upon demand all costs and
expenses incurred by Lender in connection with the enforcement of the Loan
Documents and the DVI Indebtedness, including, without limitation, all
reasonable legal fees and costs.
17. Limitation of Interest to Maximum Lawful Rate. In no event shall the
rate of interest payable hereunder exceed the maximum rate of interest permitted
to be charged by applicable law (including the choice of law rules) and any
interest paid in excess of the permitted rate shall be refunded to Borrower.
Such refund shall be made by application of the excessive amount of interest
paid against any sums outstanding and shall be applied in such order as Lender
may determine. If the excessive amount of interest paid exceeds the sums
outstanding, the portion exceeding the said sums outstanding shall be refunded
in cash by Lender. Any such crediting or refund shall not cure or waive any
default by Borrower hereunder. Borrower agrees, however, that in determining
whether or not any interest payable under this Note exceeds the highest rate
permitted by law, any non-principal payment, including, without limitation, late
charges, loan fees and expenses are and shall be deemed to the extent permitted
by law to be late charges, loan fees or expenses, as applicable, and not
interest.
18. Law Governing. This Note has been made, executed and delivered in the
Commonwealth of Pennsylvania and will be construed in accordance with and
governed by the laws of such Commonwealth (without giving effect to any
principles of conflicts of law).
19. Assignment or Sale by Lender. Lender may sell, assign or participate
all or a portion of its interest in this Note and/or any of the Loan Documents
and in connection therewith may make available to any prospective purchaser,
assignee or participant any information relative to Borrower and/or any
Guarantor in its possession.
20. No Assignment by Borrower. Borrower may not assign any of its rights
hereunder without the prior written consent of Lender, and Lender shall not be
required to lend hereunder except to Borrower as it presently exists.
21. Binding Effect. This Note and all rights and powers granted hereby will
bind and inure to the benefit of the parties hereto and their respective
permitted successors and assigns.
22. Modifications. No modification of this Note or any of the Loan
Documents shall be binding or enforceable unless in writing and signed by or on
behalf of the party against whom enforcement is sought.
23. JURY TRIAL WAIVER. BORROWER AND LENDER WAIVE ANY RIGHT TO TRIAL BY JURY
ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER ANY OF THE
LOAN DOCUMENTS OR (b) IN ANY
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WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF BORROWER OR
LENDER WITH RESPECT TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED
HERETO OR THERETO, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE. BORROWER AND LENDER AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THE LOAN DOCUMENTS MAY FILE AN ORIGINAL COUNTERPART OR A COPY
OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF BORROWER
AND LENDER TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. BORROWER ACKNOWLEDGES
THAT IT HAS HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL REGARDING THIS SECTION,
THAT IT FULLY UNDERSTANDS ITS TERMS, CONTENT AND EFFECT, AND THAT IT VOLUNTARILY
AND KNOWINGLY AGREES TO THE TERMS OF THIS SECTION.
24. Effect of Amendment. This Note, together with that certain Amended and
Restated Secured Promissory Note of even date given by Borrower to Lender in the
original principal amount of One Million Five Hundred Ninety-Six Thousand One
Hundred Eighty-Nine Dollars ($1,596,189.00), amends and restates, but does not
repay or satisfy, Borrower's obligations under that certain Amended and Restated
Secured Promissory Note dated July 30, 1999, (DVI Contract No.
003-9805633-70__).
25. CONFESSION OF JUDGMENT. EACH BORROWER HEREBY AUTHORIZES AND EMPOWERS
ANY ATTORNEY OR THE PROTHONOTARY OR CLERK OF ANY COURT IN THE COMMONWEALTH OF
PENNSYLVANIA, OR IN ANY OTHER JURISDICTION WHICH PERMITS THE ENTRY OF JUDGMENT
BY CONFESSION, TO APPEAR FOR THAT BORROWER AT ANY TIME AFTER THE OCCURRENCE OF
AN EVENT OF DEFAULT HEREUNDER IN ANY ACTION BROUGHT AGAINST BORROWER ON THIS
NOTE OR THE LOAN DOCUMENTS AT THE SUIT OF LENDER, WITH OR WITHOUT COMPLAINT OR
DECLARATION FILED, WITHOUT STAY OF EXECUTION, AS OF ANY TERM OR TIME, AND
THEREIN TO CONFESS OR ENTER JUDGMENT AGAINST BORROWER FOR THE ENTIRE UNPAID
OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AND ALL OTHER SUMS TO BE PAID BY
BORROWER TO OR ON BEHALF OF LENDER PURSUANT TO THE TERMS HEREOF OR OF THE LOAN
DOCUMENTS AND ALL ARREARAGES OF INTEREST THEREON, TOGETHER WITH ALL COSTS AND
OTHER EXPENSES AND AN ATTORNEY'S COLLECTION COMMISSION OF FIVE PERCENT (5%) OF
THE AGGREGATE AMOUNT OF THE FOREGOING SUMS, BUT IN NO EVENT LESS THAN $5,000.00;
AND FOR SO DOING THIS NOTE OR A COPY HEREOF VERIFIED BY AFFIDAVIT SHALL BE A
SUFFICIENT WARRANT. THE AUTHORITY GRANTED HEREIN TO CONFESS JUDGMENT SHALL NOT
BE EXHAUSTED BY ANY EXERCISE THEREOF BUT SHALL CONTINUE FROM TIME TO TIME AND AT
ALL TIMES UNTIL PAYMENT IN FULL OF ALL THE AMOUNTS DUE HEREUNDER. EACH BORROWER
ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED BY COUNSEL IN CONNECTION WITH THE
EXECUTION AND DELIVERY OF THIS NOTE AND THAT IT KNOWINGLY WAIVES ITS RIGHT TO BE
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HEARD PRIOR TO THE ENTRY OF SUCH JUDGMENT AND UNDERSTANDS THAT, UPON SUCH ENTRY,
SUCH JUDGMENT SHALL BECOME A LIEN ON ALL REAL AND PERSONAL PROPERTY OF THAT
BORROWER IN THE COUNTY WHERE SUCH JUDGMENT IS ENTERED AND THAT EXECUTION MAY
IMMEDIATELY BE ISSUED ON THE JUDGMENT TO GARNISH, LEVY ON OR ATTACH ANY PERSONAL
PROPERTY OF THAT BORROWER.
26. Nature of Obligations. The obligations of each Borrower under this Note
are joint and several. Lender may proceed against any Borrower for the entire
amount due hereunder, and each Borrower waives any right it may have to compel
Lender to proceed against any other Borrower or any of the Collateral.
IN WITNESS WHEREOF, Borrower, intending to be legally bound hereby, has
caused this Note to be duly executed the day and year first above written.
SCHICK TECHNOLOGIES, INC., a New York Corporation
By:
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Name:
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Title:
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SCHICK TECHNOLOGIES, INC., a Delaware Corporation
By:
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Name:
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Title:
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DVI FINANCIAL SERVICES INC.
By:
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Name:
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Title:
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