<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
--- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------- ----------
Commission File No. 1-5439
DEL LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-1953103
- ------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
565 Broad Hollow Road, Farmingdale, New York 11735
--------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 844-2020
--------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES (X) NO ( )
The number of shares of Common Stock, $1 par value, outstanding as of May 9,
1997 was 5,666,157.
<PAGE>
DEL LABORATORIES, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Financial Statements:
Consolidated Condensed Balance Sheets as of
March 31, 1997 and December 31, 1996.....................................3
Consolidated Condensed Statements of
Earnings for the three months ended March 31, 1997 and 1996..............4
Consolidated Condensed Statements of
Cash Flows for the three months ended March 31, 1997 and 1996............5
Notes to Consolidated Condensed Financial Statements.....................6
Management's Discussion and Analysis of Financial
Condition and Results of Operations............................................7
Other Information.............................................................10
Signatures....................................................................11
</TABLE>
2
<PAGE>
PART 1--FINANCIAL INFORMATION
Item 1. Financial Statements
DEL LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
(In thousands except for share and per share data)
<TABLE>
<CAPTION>
Assets MARCH 31 DECEMBER 31
------ 1997 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents.............................. $ 15,259 $ 14,516
Accounts receivable-less allowance for
doubtful accounts of $1,450 and
$1,500, respectively............................... 34,396 30,781
Inventories............................................ 36,069 33,788
Income taxes receivable................................ -- 324
Deferred income taxes.................................. 2,250 2,250
Prepaid expenses and other current assets.............. 1,556 1,840
---------- -----------
Total current assets.......................... 89,530 83,499
Property, plant and equipment, net..................... 26,662 26,628
Intangibles arising from acquisitions, net............. 8,409 8,497
Other assets........................................... 4,041 3,758
---------- -----------
Total assets.................................. $ 128,642 $ 122,382
---------- -----------
---------- -----------
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Accounts payable....................................... $ 17,778 $ 17,338
Accrued liabilities.................................... 16,165 14,895
Income taxes payable................................... 1,512 --
---------- -----------
Total current liabilities..................... 35,455 32,233
Long-term pension liability, less current portion...... 4,132 4,132
Deferred income taxes.................................. 1,175 1,175
Long-term debt, less current portion................... 40,000 40,000
---------- -----------
Total liabilities............................. 80,762 77,540
---------- -----------
Shareholders' equity:
Preferred stock $.01 par value, authorized
1,000,000 shares; no shares issued................... -- --
Common stock $1 par value, authorized
10,000,000 shares; issued 8,784,514 shares........... 8,785 8,785
Additional paid-in capital............................. 4,321 4,321
Foreign currency translation adjustment................ (406) (547)
Retained earnings...................................... 64,451 61,353
---------- -----------
77,151 73,912
Less: Treasury stock, at cost, 3,157,367 shares
and 3,141,949 shares, respectively................... (27,679) (27,334)
Receivable for stock options exercised................. (1,592) (1,736)
---------- -----------
Total shareholders' equity.................... 47,880 44,842
---------- -----------
Total liabilities and shareholders' equity.... $ 128,642 $ 122,382
---------- -----------
---------- -----------
</TABLE>
See accompanying notes to unaudited consolidated condensed financial statements.
3
<PAGE>
DEL LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(In thousands except for per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31 MARCH 31
1997 1996
--------- ---------
<S> <C> <C>
Net sales........................................................... $ 61,319 $ 56,094
--------- ---------
Cost of goods sold.................................................. 23,809 22,815
Selling and administrative expenses................................. 31,196 28,361
--------- ---------
55,005 51,176
--------- ---------
Operating income.............................................. 6,314 4,918
--------- ---------
Interest expense.................................................... 950 952
Interest income..................................................... (128) (82)
--------- ---------
Interest expense, net........................................ 822 870
--------- ---------
Earnings before income taxes........................................ 5,492 4,048
Income taxes........................................................ 2,197 1,660
--------- ---------
Net earnings.................................................. $ 3,295 $ 2,388
--------- ---------
--------- ---------
Weighted average common shares outstanding (A)...................... 6,338 6,500
--------- ---------
--------- ---------
Earnings per common share (A)....................................... $ 0.52 $ 0.37
--------- ---------
--------- ---------
Dividends per common share (A)...................................... $ 0.035 $ 0.026
--------- ---------
--------- ---------
</TABLE>
(A) March 31, 1996 amounts are adjusted to reflect a 4-for-3 stock split
effective November 8, 1996.
See accompanying notes to unaudited consolidated condensed financial statements.
4
<PAGE>
DEL LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(In thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31 MARCH 31
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings........................................................ $ 3,295 $ 2,388
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization.................................... 1,396 1,199
Provision for doubtful accounts.................................. 52 138
Other non-cash operating items................................... 282 77
Changes in operating assets and liabilities:
Accounts receivable.............................................. (3,667) (6,935)
Inventories...................................................... (2,281) (2,178)
Prepaid expenses and other current assets........................ 284 878
Other assets and other liabilities............................... (283) 260
Accounts payable................................................. 440 2,661
Accrued liabilities.............................................. 1,270 2,983
Income taxes..................................................... 1,836 258
--------- ---------
Net cash provided by operating activities.................... 2,624 1,729
--------- ---------
Cash flows used in investing activities:
Property, plant and equipment additions.......................... (1,341) (1,353)
--------- ---------
Net cash used in investing activities........................ (1,341) (1,353)
--------- ---------
Cash flows used in financing activities:
Principal payments of long-term debt............................. -- (17)
Proceeds from issuance of common stock
upon exercise of options....................................... 9 136
Decrease in receivable for stock options exercised............... 5 145
Purchase of treasury stock....................................... (355) (362)
Dividends paid................................................... (197) (292)
--------- ---------
Net cash used in financing activities........................ (538) (390)
--------- ---------
Effect of exchange rate changes on cash............................. (2) --
--------- ---------
Net increase (decrease) in cash and cash equivalents................ 743 (14)
Cash and cash equivalents beginning of year......................... 14,516 8,563
--------- ---------
Cash and cash equivalents at end of period.......................... $ 15,259 $ 8,549
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to unaudited consolidated condensed financial statements.
5
<PAGE>
DEL LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
(UNAUDITED)
1. In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the financial
position as of March 31, 1997, the results of operations for the three
months ended March 31, 1997 and 1996 and the statements of cash flows for
the three months ended March 31, 1997 and 1996.
Results for an interim period are not necessarily indicative of results
for the entire year and such results are subject to year-end adjustments
and independent audit.
These financial statements should be read in conjunction with the
consolidated financial statements of the Company contained in the
Company's Form 10-K for the year ended December 31, 1996.
2. Classification of inventories at March 31, 1997 and December 31, 1996 were
as follows (in thousands):
1997 1996
--------- ---------
Raw Materials.............................. $ 18,173 $ 15,346
Work In Process............................ 3,853 3,862
Finished Goods............................. 14,043 14,580
--------- ---------
$ 36,069 $ 33,788
--------- ---------
--------- ---------
3. Earnings per common share is computed under the "modified treasury stock
method" which assumes the exercise of all outstanding options and warrants
and the use of the proceeds thereof to acquire up to 20% of the outstanding
common stock of the Company. Excess proceeds not utilized for the purchase
of such shares are assumed utilized, first to reduce outstanding debt and
then any remainder is assumed invested in interest bearing securities with
net earnings increased for the hypothetical interest expense savings or
interest income, net of taxes.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
(1) LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Under its institutional debt covenants, the Company is permitted a level of
short-term borrowing not to exceed $15,000,000. Currently, the Company has
arrangements with banks which provide up to $27,500,000 of short-term lines
of credit at the prime rate of interest. There were no borrowings under
these lines during the quarter ended March 31, 1997 or the year ended
December 31, 1996.
The Company has, from time to time, acquired shares of its common stock
pursuant to a plan approved by the Board of Directors in 1987. The Company
will generally undertake such purchases if, as and when management believes
that the prevailing market price for its Common Stock does not adequately
reflect the intrinsic value of the Company's business. During the quarter
ended March 31, 1997 the Company purchased 17,000 shares at an average cost
of $20.88 per share, and such shares were placed in treasury. The shares
purchased were predominantly from employees who held shares issued pursuant
to the Company's stock option plans, with the balance through open market
purchases. As of March 31, 1997 the Company was authorized to purchase up
to 170,725 additional shares based on the then existing Board authorization.
Net accounts receivable at March 31, 1997 increased by $3,615,000 from the
December 31, 1996 level. The increase is attributable to a sales
concentration in the latter part of the quarter. Inventories at March 31,
1997 increased by $2,281,000 from December 31, 1996. This increase was
comparable to the increase during the quarter ended March 31, 1996.
During the quarter ended March 31, 1997, the Company generated $2,624,000
cash from operations. The Company believes that cash from future operations,
cash on hand and amounts available from short-term lines of credit, referred
to above, will be sufficient to satisfy the Company's liquidity needs for
the foreseeable future.
In March 1997, the Company entered into an agreement to purchase land and
buildings in North Carolina. This property is to be used as a distribution
center and is replacing facilities leased under a lease expiring in 1997.
The Company expects to close on the property during the second quarter of
1997. The cost of the property is $5,500,000 with the seller financing the
transaction interest free. The agreement calls for payments over the next
three years, with a final payment of $3,850,000 in April, 2000. When the
closing is completed, the Company will record the transaction based on the
present value of the loan on the date of closing and will accrete interest
over the life of the loan. Any remaining leasehold improvements related to
the leased facility will be fully amortized by the end of the lease term.
(2) RESULTS OF OPERATIONS
---------------------
SALES
-----
Sales for the first quarter of 1997 were $61.3 million, 9.3% above the $56.1
million of sales for the first quarter of 1996.
The first quarter 1997 results reflect a sales increase in both the
Cosmetics and Pharmaceutical Divisions, although the percentage of sales
growth in the Cosmetics Division was slightly higher than the percentage of
sales growth in the Pharmaceutical Division.
COST OF SALES
-------------
Cost of sales for the first quarter of 1997, as a percentage of net sales,
decreased to 38.8%, as compared with 40.7 % in the corresponding period of
1996.
The decrease in cost of sales resulted from decreases in both the Cosmetics
and Pharmaceutical Divisions. These decreases were the result of increased
production levels and production efficiencies that allowed a greater
absorption of manufacturing overhead. In addition, the Company constantly
reviews product cost in order to produce its products at the lowest possible
cost.
7
<PAGE>
SELLING AND ADMINISTRATIVE EXPENSES
-----------------------------------
Selling and administrative expenses increased by $2.8 million in the first
quarter of 1997 versus the first quarter of 1996 and also increased as a
percentage of net sales to 50.9% from 50.6%. The increase of .3% as a
percentage of sales is attributable to increased advertising and promotional
expenses during the 1997 period.
NET INTEREST EXPENSE
--------------------
Net interest expense for the first quarter of 1997 was $822,000 compared
with $870,000 incurred in the first quarter of 1996. This reduction was
attributable to increased interest income from investment of cash balances.
PROVISION FOR INCOME TAXES
--------------------------
The provision for income taxes is based on the Company's expected effective
tax rate for the year, which is 40% of earnings in 1997. In 1996, the
Company's effective tax rate was 41%.
NET EARNINGS
------------
Net earnings for the first quarter of 1997 were $3,295,000, 38.0% above the
$2,388,000 reported for the first quarter of 1996.
LEGAL MATTERS
-------------
In July 1994, the Equal Employment Opportunity Commission ("EEOC") filed
suit against the Company in the United States District Court for the
Eastern District of New York alleging sexual discrimination against certain
present and former employees of the Company, in violation of Title VII of
the Civil Rights Act of 1964, as amended. On August 3, 1995, the Court
approved a consent decree between the Company and the EEOC settling the
case. The Company denied that it engaged in any unlawful conduct, and the
consent decree expressly acknowledges that the settlement does not
constitute an admission by the Company of any violation of any law, rule or
regulation relating to employment discrimination. The Board of Directors
determined that the settlement was in the best interest of the Company and
its shareholders, considering the expense that would have resulted from
continued litigation and the time and attention of management and employees
that would necessarily have been required.
Pursuant to the settlement, the Company agreed to pay 15 former employees a
total sum of $1,185,000. The settlement also incorporated the Company's
revised sexual harassment policy which includes a revised complaint
procedure.
In August 1995, two stockholder derivative actions were filed in the State
of Delaware Chancery Court against the members of the Company's Board of
Directors, alleging breaches of fiduciary duties and waste of corporate
assets in connection with the Company's settlement with the EEOC relating
to claims of sexual harassment by an executive of the Company. This action
was consolidated into a single action, In Re Del Laboratories, Inc.,
Derivative Litigation, Consolidated C.A. No. 14466.
In March 1997, the parties agreed, subject to Court approval, to a proposed
settlement in which the Company's insurance carrier, on behalf of the
individual defendants, will pay $400,000 to the Company, and the Board will
make the Human Resources Committee a permanent committee of the Board to be
composed only of "independent" directors (as defined in the Internal Revenue
Code). The Human Resources Committee will be charged with review and
oversight of the Company's compliance with the requirements of Title VII
relating to employment practices, including discrimination, wrongful
discharge and retaliation. The Company has agreed not to oppose an
application to the Court by the plaintiffs' attorneys for an attorneys' fee
of $150,000 which has been provided for in the consolidated financial
statements of the Company.
The defendants continue to deny all allegations of wrongdoing and have
advised the Company that they are entering into the proposed settlement to
eliminate the burden and expense of further litigation.
8
<PAGE>
The Company is of the opinion, on the basis of currently available
information, that none of the matters referred to above will have a material
effect on the Company's results of operations or financial condition.
NEW ACCOUNTING PRONOUNCEMENTS
-----------------------------
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standard (SFAS) No. 128, "Earnings Per Share". This
pronouncement must be implemented for annual and interim periods that
end after December 15, 1997. SFAS No. 128 does not permit early application.
When implemented, SFAS No. 128 requires restatement of all prior period
earnings per share data. SFAS No. 128 calls for the calculation of basic
earnings per share, which is calculated using only weighted average shares
outstanding during the period and does not consider the assumed exercise of
shares utilizing the treasury stock method (see note 3 to consolidated
condensed financial statements). The Company believes that the adoption of
SFAS No. 128 will increase basic earnings per share as compared with
previously reported primary earnings per share. In addition, SFAS No. 128
requires the disclosure of diluted earnings per share. The Company is
evaluating the requirements of calculating diluted earnings per share but
does not believe that the adoption of SFAS No. 128 will have a material
effect on previously reported primary earnings per share as compared with
diluted earnings per share.
9
<PAGE>
PART II--OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibit Index
<TABLE>
<CAPTION>
ITEM NO. EXHIBIT EXHIBIT NO. DESCRIPTION
- -------- ------- ----------- -----------
<C> <S> <C> <C>
2 Plan of acquisition reorganization, -- Not Applicable
arrangement, liquidation, or succession
3 Articles of Incorporation and By-Laws -- Not Applicable
4 Instruments defining the rights of security -- Not Applicable
holders, including indentures
10 Material Contracts 1 First Amendment to Loan Agreement dated
as of March 31, 1997 by and among the
Registrant, Jackson National Life Insurance
Company and Jackson National Life Insurance
Company of Michigan
11 Statement re: computation of per share -- Not Applicable
earnings
15 Letter re: unaudited interim financial -- Not Applicable
information
18 Letter re: change in account- -- Not Applicable
ing principles
19 Report furnished to security holders -- Not Applicable
22 Published report regarding matters submitted -- Not Applicable
to vote of security holders
24 Power of Attorney -- Not Applicable
27 Financial Data Schedule 2 --
99 Additional exhibits -- Not Applicable
</TABLE>
(b) Reports on Form 8-K
-------------------
NONE
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<CAPTION>
DEL LABORATORIES, INC.
-------------------------------
(Registrant)
<S> <C>
Date: May 14, 1997 /s/ Dan K. Wassong
- ------------------ -------------------------------
Dan K. Wassong
Chairman, President and
Chief Executive Officer
Date: May 14, 1997 /s/ Melvyn C. Goldstein
- ------------------ -------------------------------
Melvyn C. Goldstein
Vice President of Finance
and Principal Financial Officer
</TABLE>
11
<PAGE>
EX-1
First Amendment to Loan Agreement
DEL LABORATORIES, INC.
------------------------
FIRST AMENDMENT
TO LOAN AGREEMENT
------------------------
FIRST AMENDMENT, dated as of March 31, 1997 (this
"Amendment"), to the Loan Agreement, dated as of May 26, 1993
(the "Loan Agreement"), by and among Del Laboratories, Inc., a
Delaware corporation (the "Company"), Jackson National Life
Insurance Company, a Michigan insurance corporation and Jackson
National Life Insurance Company of Michigan, a Michigan insurance
corporation (Jackson National Life Insurance Company and Jackson
National Life Insurance Company of Michigan are collectively
referred to herein as "Lenders").
R E C I T A L S:
WHEREAS, the Company has requested that Lenders consent to
modify the Loan Agreement in order to increase the ability of the
Company to redeem certain of its capital stock; and
WHEREAS, Lenders have agreed that upon this Amendment
becoming effective certain provisions of the Loan Agreement will
be amended as provided below;
NOW, THEREFORE, the parties agree as follows:
A. Defined Terms. Terms defined in the Loan Agreement and
used herein shall have the same meanings given to them in the
Loan Agreement.
B. Amendments to Loan Agreement.
1. Clause (A) in Section 5.8 of the Loan Agreement
shall be deleted in its entirety and replaced with the following:
"(A) the aggregate amount of all Restricted Payments made
during the period commencing on January 1, 1993, and ending on
and including the date of any action (the "Computation Period")
shall not exceed the sum of
(1) $6,000,000, plus
<PAGE>
(2) 50% (or, in the case of a net loss, minus 100%)
of Consolidated Net Income for the Computation Period, plus
(3) the amount of the net proceeds, in excess of the
first $6,500,000 of net proceeds, received by the Company at any
time during the period commencing on January 1, 1997, and ending
on and including the date of such Restricted Payment, directly
from the issuance of any of the Company's shares of capital
stock, including but not limited to the net proceeds received by
the Company upon the exercise of any stock options or other
rights to purchase capital stock of the Company, less the amount
of all outstanding loans and advances made by the Company or any
of its Affiliates to employees of the Company or other Persons
during such period for the purpose of permitting such Persons to
purchase shares or exercise stock options of the Company, and
less the amount of all purchases, redemptions and retirements of
shares of the Company effected substantially concurrently with
the issuance of any shares of the capital stock of the Company
during such period which do not qualify as a "Restricted Payment"
by virtue of Section (B)(2) of the definition thereof, plus
(4) the amount of all Restricted Payments made by the
Company, up to a maximum of $6,500,000, either directly or
indirectly through a registered broker-dealer or an employee
stock ownership trust (an "ESOT"), to purchase, repurchase or
redeem shares of capital stock of the Company held by employees
or former employees of the Company and its Subsidiaries (or their
respective heirs, personal representatives, successors or
assigns) during the period commencing on October 1, 1996, and
ending on and including the date of the Restricted Payment,
provided that
(a) the total amount of all payments made to,
and stock purchase made from, Martin E. Revson not exceed
$1,500,000 (any excess payment being a prohibited Restricted
Payment),
(b) any such payment or purchase of capital stock
is otherwise made in compliance with the terms of the Loan Agreement, and
(c) payments made in cash to any employee or former
employee of the Company or any of its Subsidiaries (or to such person's
heirs, personal representatives, successors or assigns) in
satisfaction of such employee's or former employee's account
balances under the Company's ESOT shall not be considered
Restricted Payments for purposes of this Agreement provided that
such cash payments are made consistent in all respects with the
terms of the ESOT and its past practices and are not made for the
purpose, directly or indirectly, of purchasing or redeeming
capital stock of the Company, and".
2. Section 5.14 of the Loan Agreement shall be
amended by adding the following clause at the end of that
Section:
-2-
<PAGE>
"provided, however, that with respect to purchases of
shares of the capital stock of the Company from Affiliates, any
purchase made for cash at a price not greater than the average
daily closing price of such shares on all national securities
exchanges and/or reported through the automated quotation system
of a registered securities association during the ten
business day period immediately preceding the date of the
purchase shall be deemed to have been made on an arm's length
basis."
C. Conditions to Effectiveness. This Amendment shall become
effective on the date (the "Amendment Effective Date") on which
the following conditions precedent have been satisfied or waived:
1. The Company shall have executed and delivered this
Amendment to the Lenders.
2. The Lenders shall have received a Later Date
Certificate, dated as of the Amendment Effective Date, signed by
the Secretary of the Company, certifying such facts concerning
the Company, the incumbency of its officers, and its authority to
enter into this Amendment as the Lenders may reasonably require.
3. The Lenders shall have received the executed legal
opinion, dated the Amendment Effective Date, of Zimet, Haines,
Friedman & Kaplan, counsel to the Company, or such other law firm
as may be acceptable to the Lenders, satisfactory in form and
substance to the Lenders, which shall cover such matters incident
to this Amendment or the other loan documents as the Lenders
may reasonably require.
D. General.
1. Representation and Warranties. To induce the
Lenders to enter into this Amendment, the Company hereby
represents and warrants to the Lenders as of the Amendment
Effective Date that:
(a) No Material Adverse Change or Default. Since May
26, 1993, there has been no development or event nor any
prospective development or event, which has had or could
reasonably be expected to have a material adverse effect on the
assets, business or financial condition of the Company. No Event
of Default has occurred and will be continuing after giving
effect to this Amendment.
(b) Corporate Power; Authorization; Enforceable
Obligations.
(i) The Company has the corporate power and
authority, and the legal right, to make and deliver this
Amendment and to perform all of its obligations under the Loan
Agreement, as amended by this Amendment, and the other loan
documents, and has taken all
-3-
<PAGE>
necessary corporate action to authorize the execution and
delivery of this Amendment and the performance of the loan
documents, as so amended.
(ii) No consent or authorization of, approval by,
notice to, filing with or other act by or in respect of, any
governmental authority or any other Person is required in
connection with the execution and delivery of this Amendment or
with the performance, validity or enforceability of the loan
documents, as amended by this Amendment.
(iii) When executed and delivered, this Amendment and
the Loan Agreement, as amended by this Amendment, will constitute
a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as
affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting the enforcement of creditors' rights generally, general
equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair
dealing.
(c) No Legal Bar. The execution and delivery of this
Amendment and the performance of the Company's obligations under
the loan documents, as amended by this Amendment, will not
violate any statute, rule, law, ordinance, regulation or order
(statutes, rules, laws, ordinances, regulations and orders
are collectively referred to as, "Governmental Rule") applicable
to the Company or any material contractual obligation of the
Company and will not result in, or require, the creation or
imposition of any Encumbrance on any of its properties or
revenues pursuant to any such Governmental Rule or contractual
obligation which could reasonably be expected to have a material
adverse effect on the assets, business or financial condition of
the Company.
(d) Representation and Warranties. The
representations and warranties made by the Company in the Loan
Agreement and in Exhibit B thereto are true and correct in all
material respects on and as of the Amendment Effective Date,
before and after giving effect to the effectiveness of this
Amendment, as if made on and as of the Amendment Effective Date,
other than those that relate to an earlier or specific date
provided, however, that the Company makes no representation as to
the continued accuracy of the information contained in Schedules
D-1 through D-8 of the Loan Agreement.
2. Payment of Expenses. The Company agrees to pay or
reimburse Lenders for all of their out-of-pocket costs and
reasonable expenses incurred in connection with this Amendment,
any other documents prepared in connection herewith and the
transactions contemplated hereby, including, without limitation,
the reasonable fees and disbursements of counsel to Lenders.
3. No Other Amendments; Confirmation.
-4-
<PAGE>
(a) Except as expressly amended, modified and supplemented
hereby, the provisions of the Loan Agreement and each of the
other loan documents are and shall remain in full force and
effect. The Company may not rely in any way upon the Lenders'
willingness to enter into this Amendment or assume that the
Lenders will agree to any future amendment of the Loan Agreement
or other loan documents.
(b) The Company hereby confirms its obligations under the
Loan Agreement and acknowledges that it has no defenses, claims
or set-offs to the enforcement by the Lenders of any of the
Company's stated obligations thereunder.
4. Governing Law; Counterparts.
(a) This Amendment and the rights and obligations of
the parties hereto shall be governed by, and construed and
interpreted in accordance with, the internal, substantive laws of
the State of Illinois without regard to its conflicts of law
doctrine.
(b) This Amendment may be executed by one or more of
the parties to this Amendment on any number of separate
counterparts, and all of said counterparts taken together shall
be deemed to constitute one and the same instrument. A set of the
copies of this Amendment signed by all the parties shall be
lodged with the Company and with the Lenders. This Amendment may
be delivered by facsimile transmission of the relevant signature
pages hereof.
[The next page is the signature page]
-5-
<PAGE>
IN WITNESS HEREOF, the parties hereto have caused
this First Amendment to be duly executed and delivered by their
respective proper and duly authorized officers as of the date and
year first above written.
DEL LABORATORIES, INC. a Delaware
corporation
By: /s/ Melvyn C. Goldstein
----------------------------
Its: Vice President, Finance
JACKSON NATIONAL LIFE INSURANCE
COMPANY, a Michigan insurance corporation
By: PPM America, Inc., its agent
By: /s/ B.D. Gorchow
------------------------
Its: Senior Vice President
JACKSON NATIONAL LIFE INSURANCE
COMPANY as successor by merger to
JACKSON NATIONAL LIFE INSURANCE
COMPANY OF MICHIGAN, a Michigan
insurance corporation
By: PPM America, Inc., its agent
By: /s/ B.D. Gorchow
------------------------
Its: Senior Vice President
-6-
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
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0
0
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