Fill and Sign the Agreement Line Credit Form

LOAN AGREEMENT -------------- LOAN AGREEMENT (this "Agreement"), is made and entered into the 27th day of December 1999, 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; 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: "Additional Warrants" shall mean, in addition to the Initial Warrants, those additional Warrants entitling the Lender to purchase up to 13,000,000 shares of Common Stock (subject to adjustment as provided therein), which shall be issued to the Lender based upon the maximum level of Advances made by the Lender to the Borrowers hereunder, all as described in Section 2.03 of this Agreement. "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 the date this Agreement is executed by the Lender, being the date set forth on the signature page hereof. "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 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. 2 "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, $.01 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. "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 414(b) or 414(c) of the Code. 3 "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 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 4 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. 5 "Initial Warrants" shall mean warrants to purchase 3,000,000 shares of Common Stock of the Company in the form of Exhibit "B" annexed hereto. "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. 6 "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. "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. 7 "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 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. 8 "Warrants" shall mean the collective reference to the Initial Warrants and the Additional Warrants. "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 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 9 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 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 2.01(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 10 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 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. Section 2.03. Issuance of Initial Warrants and Additional Warrants. (a) On the Agreement Date, the Company shall issue to the Lender the Initial Warrants. (b) In addition to the Initial Warrants to be issued to the Lender on the Agreement Date, it is the intention of the Company and the Lender that the Lender shall be entitled to receive Additional Warrants based upon the maximum level of Advances outstanding during the Advance Period. Accordingly, it is hereby agreed that with respect to all Advances from $1,000,001 to $7,500,000 in the aggregate, for each dollar Advanced by the Lender to the Borrowers hereunder, the Lender shall be entitled to receive Warrants to purchase two (2) shares of Company Common Stock at an exercise price of $0.75 per share (subject to adjustment to protect the holder against dilution as provided in the Warrants); (c) By way of example of the application of Section 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 receive Warrants to purchase an aggregate of 7,000,000 shares of Company Common Stock, as follows (i) the Initial Warrants entitling the Lender to purchase 3,000,000 shares of Common Stock at an exercise price of $0.75 per share; and (ii) Additional Warrants entitling the Lender to purchase 4,000,000 shares of Common Stock at an exercise price of $0.75 per share. (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 receive Initial Warrants and Additional Warrants to purchase an aggregate of 16,000,000 shares of Company Common Stock, at the exercise prices described herein and 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. 11 (f) On or before the date that the Lender shall make each and every Advance under this Agreement pursuant to the procedures set forth in Section 2.02 above, the Company shall issue to the Lender the appropriate number of Additional Warrants contemplated by this Section 2.03. (g) The form and content of all Additional Warrants, other than the number of shares of Common Stock issuable upon full exercise thereof, shall be identical in all material respects to the Initial Warrant. 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 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 12 (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; (c) If the DVI Consent shall not have been received by February 15, 2000, the Lender shall return 3,000,000 Warrants to the Company. 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: 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 13 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: (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; 14 (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 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 10-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 15 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 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 16 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. 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 17 (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, 10-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 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 18 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 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 19 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. "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 20 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