SECURED PROMISSORY NOTE
$5,000,000.00 Doylestown, Pennsylvania
January 25, 1999
FOR VALUE RECEIVED AND INTENDING TO BE LEGALLY BOUND, the undersigned
("Borrower") hereby promises to pay to the order of DVI FINANCIAL SERVICES INC.
("Lender"), the principa1 sum of FIVE MILLION ($5,000,000.00), together with
interest thereon upon the following terms:
1. Collateral. This Note is secured by a certain Security Agreement of even
date herewith given by Borrower to Lender (such security agreement, this Note
and all other documents, instruments and agreements collateral thereto are
collectively referred to herein as the "Loan Documents").
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
one-half of one percent 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 paid at a
rate of eighteen percent (18%) per annum (the "Default Rate").
4. Post Judgment Interest. Any judgment obtained for sums due hereunder or
under the Loan Documents will accrue interest at the Default Rate until paid.
5. 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.
6. Principal and Interest Payments. Principal and accrued interest thereon
is due and payable as follows:
(a) Interest Only. Borrower will pay accrued interest monthly
commencing on February 1, 1999 and continuing on the first day of each
month thereafter:
(b) Principal and Interest. All principal and accrued and unpaid
interest due hereon shall be due and payable in full on the earlier of (i)
April 30, 1999, or (ii) the date on which the pending financing transaction
with Chase Manhattan Bank, N.A. or any of its affiliates is closed.
7. Place of Payment. Principal and interest hereunder shall be payable as
provided in the Loan Agreement, or at such other place as Lender, from time to
time, may designate in writing.
1
8. Financial Reporting Requirements. In addition to the requirements set
forth hereinabove, Borrower shall keep proper books of record and account in
which full and true entries will be made of all dealings or transactions of or
in relationship to the business and affairs of Borrower in accordance with
generally accepted accounting principles consistently applied. Borrower will
furnish Lender as soon as available and in any event within forty-five (45) days
after the end of each quarter, current balance sheets and statements of income
and retained earnings, and such other information reporting the condition or
operations, financial or otherwise, of the Borrower as Lender may reasonably
request.
9. 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 five (5) days after the
date such payment is first due;
(b) The failure of Borrower to duly perform or observe in any material
respect 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 9 and such failure continues unremedied
for a period of ten (10) days after notice from Lender to Borrower of the
existence of such failure;
(c) The failure of Borrower to pay or perform in any material respect
any other material obligation to 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
2
ten (10) 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;
(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;
(k) The validity or enforceability of this Note, or any of the Loan
Documents, is contested by the Borrower; any stockholder of Borrower; or
Borrower denies that it has any or any further liability or obligation
hereunder or thereunder.
10. Default Remedies. Upon the occurrence of an Event of Default Lender, at
its option and without 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.
11. 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.
12. 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 Borrowers
obligations hereunder, including without limitation, time of payment, is of the
essence of this Note.
13. Notices. All notices, requests and other communications made or given
in 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 or division or department to whose attention
notices to a party are to be addressed, or by private carrier, or registered or
certified mail, return receipt requested, or by telecopy with the original
forwarded by first-class mail, in all cases, with charges prepaid, addressed as
follows, until some other address (or
3
individual or division or 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 Affiliated Capital
707 Skokie Boulevard
Northbrook, IL 60062
Attention: Chief Operating Officer
Telecopier No.: 847-564-2965
With a copy to:
DVI Financial Services Inc.
500 Hyde Park
Doylestown, PA 18901
Attention: Legal Department
Telecopier No.: 215-345-7759
14. 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 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 13. Nothing contained in this Section 14 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.
15. 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.
16. 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
4
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.
17. 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).
18. 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.
19. 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.
20. 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.
21. 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.
22. 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 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 BELATED 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
5
THIS SECTION.
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.
By:________________________
Name:______________________
Title:_____________________
DVI FINANCIAL SERVICES INC.
By:________________________
Name:______________________
Title:_____________________
6