<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 10, 1997
REGISTRATION NO. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SEL-LEB MARKETING, INC.
(Exact name of Registrant as specified in its charter)
NEW YORK 11-3180295
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1435 51 STREET, NORTH BERGEN, NEW JERSEY 07047
(Address of Principal Executive Offices) (Zip Code)
1995 STOCK OPTION PLAN
1995 NONEMPLOYEE DIRECTORS' STOCK OPTION PLAN
NON-PLAN WARRANTS
(Full title of the plans)
JAN S. MIRSKY
SEL-LEB MARKETING, INC.
1435 51 STREET
NORTH BERGEN, NEW JERSEY 07047
(Name and address of agent for service)
(201) 864-3316
(Telephone number, including area code, of agent for service)
COPY TO:
James Martin Kaplan, Esq.
Zimet, Haines, Friedman & Kaplan
460 Park Avenue
New York, New York 10022
(212) 486-1700
----------------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed maximum
offering Proposed maximum Amount of
Title of securities to be registered Amount to be registered(1) price per share(2) aggregate offering price(2) registration fee
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per
share 2,140,689 shares $2.676736 $5,730,059.25 $1,146.01
</TABLE>
(1) Includes 999,689 shares of Common Stock offered pursuant to the reoffer
prospectus filed herewith (the "Reoffer Prospectus"). Of the shares of
Common Stock being registered hereunder, (i) 490,689 shares are reserved
for issuance pursuant to a Warrant and Registration Agreement (the "Warrant
Agreement") by and between the Registrant and an affiliate of the
Registrant and are included in the Reoffer Prospectus, (ii) 1,635,000
shares are reserved for issuance pursuant to options granted or available
for future grant under the Registrant's 1995 Stock Option Plan and the
Registrant's 1995 Nonemployee Directors' Stock Option Plan (collectively,
the "Plans"), including options to acquire an aggregate of 494,000 shares
of Common Stock granted to such affiliate of the Registrant, which
shares are included in the Reoffer Prospectus, and (iii) 15,000 shares were
previously issued to a former affiliate of the Registrant upon exercise of
options granted to him under the Registrant's 1995 Nonemployee Directors'
Stock Option Plan and are included in the Reoffer Prospectus. Pursuant to
Rule 416 of the Securities Act of 1933, as amended (the "Act"), this
Registration Statement also covers such number of additional shares of
Common Stock as may become available for issuance pursuant to the Plans and
the Warrant Agreement in the event of certain changes in outstanding
shares, including reorganizations, recapitalizations, stock splits, stock
dividends, reverse stock splits and similar transactions.
(2) Estimated solely for the purpose of calculating the registration fee. The
registration fee has been calculated in accordance with: (i) Rule 457(c)
of the Act with respect to the 15,000 shares held by the above-mentioned
former affiliate of the Registrant, based on the average of the high and
low prices of the Common Stock on January 7, 1997, which was $5.4375; and
(ii) Rule 457(h) of the Act, as follows: (I) in the case of 416,500 shares
underlying options that remained available for grant under the Plans on the
date of filing of this Registration Statement, based on the average of the
high and low prices of the Common Stock on January 7, 1997, which was
$5.4375 and (II) in the case of 1,218,500 shares underlying options
outstanding under the Plans and 490,689 shares underlying the warrants
issued pursuant to the Warrant Agreement, based on the aggregate exercise
price of $3,383,778, the aggregate price at which the options and warrants
may be exercised, which averages $1.98 per share.
<PAGE>
EXPLANATORY NOTE:
The document containing the information called for in Part I of Form S-8
will be provided to participants in the Plans. Such information is not being
filed with or included in this Registration Statement in accordance with the
rules and regulations of the Securities and Exchange Commission (the
"Commission"). There is also included as part of Part I of this Registration
Statement a reoffer prospectus relating to the reoffer and resale of (i)
490,689 shares of Common Stock underlying warrants issued pursuant to the
Warrant Agreement, (ii) 494,000 shares of Common Stock underlying options
issued pursuant to the Registrant's 1995 Stock Option Plan, and (iii) 15,000
shares of Common Stock previously issued to a former affiliate of the
Registrant upon exercise by him of options granted under the Registrant's 1995
Nonemployee Directors' Stock Option Plan, in each case as permitted by General
Instruction C for Form S-8.
<PAGE>
SEL-LEB MARKETING, INC.
CROSS REFERENCE SHEET
ITEM
NUMBER ITEM HEADING IN PROSPECTUS
1. Forepart of Registration Statement and .
Outside Front Cover Page of Prospectus . Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus. . . .. . . . . . . . . . Table of Contents;
Available Information;
Documents Incorporated by
Reference
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges. . . . . . Prospectus Summary; Risk
Factors
4. Use of Proceeds. . .. . . . . . . . . . Use of Proceeds
5. Determination of Offering Price. . . . . Not applicable
6. Dilution. . . . . .. . . . . . . . . . Not applicable
7. Selling Security Holders. . . . . . . . Selling Securityholders
8. Plan of Distribution. . . . . . . . . . Plan of Distribution
9. Description of Securities to be Registered Not applicable
10. Interests of Named Experts and Counsel . Not applicable
11. Material Changes . .. . . . . . . . . . Not applicable
12. Incorporation of Certain Information by
Reference . . . . .. . . . . . . . . . Documents Incorporated by
Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities. . . . .. . . . . . . . . . Not applicable
<PAGE>
PROSPECTUS
999,689 Shares
SEL-LEB MARKETING, INC.
Common Stock
(Par Value $.01 Per Share)
This Prospectus relates to up to 999,689 shares (the "Shares") of Common
Stock, par value $.01 per share (the "Common Stock"), of Sel-Leb Marketing,
Inc. (the "Company" or "Sel-Leb"). The Shares registered hereby include (i)
490,689 Shares issuable upon exercise of warrants (the "Warrants") issued to
an affiliate of the Company pursuant to a Warrant and Registration Agreement
between such affiliate and the Company, (ii) 494,000 Shares issuable upon
exercise by such affiliate of the Company of options (the "Options") granted
to such affiliate under the Company's 1995 Stock Option Plan (the "Stock
Option Plan"), and (iii) 15,000 Shares previously issued to a former
affiliate of the Company upon exercise by him of options granted under the
Company's 1995 Nonemployee Directors' Stock Option Plan (the "Nonemployee
Directors' Plan" and, together with the Stock Option Plan, the "Plans"). It
is anticipated that the Shares will be offered and sold by such individuals
(the "Selling Securityholders") from time to time, subject to any applicable
contractual transfer restrictions referred to below, in the over-the-counter
market, or otherwise, at prices and terms then prevailing or in negotiated
transactions. One of such Selling Stockholders, who holds all of the
Warrants as well as Options to acquire 494,000 shares, has agreed to extend
until January 12, 1998 certain contractual transfer restrictions in favor of
Duke & Co., Inc., the Underwriter of the Company's 1995 initial public
offering of securities (the "Underwriter"), with respect to 90% of the shares
of Common Stock held by him (including shares which may be subsequently
acquired through the exercise of warrants and options), or an aggregate of
886,220 shares of Common Stock. All proceeds from any sales of the Shares by
any of the Selling Securityholders will inure to the benefit of such Selling
Securityholders. The Company will receive none of the proceeds from the sale
of Shares by the Selling Securityholders hereunder. All expenses of
registration incurred in connection herewith are being borne by the Company,
but all selling and other expenses incurred by the Selling Securityholders
will be borne by the Selling Securityholders.
The proceeds received by the Company upon exercise of Warrants and Options
will be approximately $1,205,300, assuming that all of such Warrants and Options
are exercised. However, there can be no assurance as to the number of Warrants
and/or Options, if any, which will be exercised.
The sale of the Shares by the Selling Securityholders may be effected from
time to time in transactions (which may include block transactions) on the
Nasdaq Small-Cap Market ("Nasdaq"), the over-the-counter market, the Boston
Stock Exchange ("BSE"), in negotiated transactions, through the writing of
options on Shares, or a combination of such methods of sale, at fixed prices
which may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, or at negotiated prices. See "Selling
Securityholders" and "Plan of Distribution".
The Common Stock is listed on Nasdaq and the BSE under the symbols "SELB"
and "SLL," respectively. The last closing sale price per share of the Common
Stock on Nasdaq on January 7, 1997 was $5.25.
The address of the principal executive offices of the Company is 1435 51
Street, North Bergen, New Jersey 07047, and its telephone number at that address
is (201) 864-3316.
THE SHARES OFFERED HEREBY ARE SUBJECT TO CERTAIN RISKS WHICH SHOULD BE
CAREFULLY CONSIDERED BY POTENTIAL INVESTORS. SEE "RISK FACTORS".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is January 10, 1997
<PAGE>
AVAILABLE INFORMATION
Pursuant to the Securities Act of 1933, as amended (the "Securities Act"),
the Company has filed with the Commission a Registration Statement on Form S-8
(together with all amendments and exhibits thereto, the "Registration
Statement") of which this Prospectus is a part. This Prospectus does not
contain all the information set forth in the Registration Statement, to which
reference is hereby made for further information. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is hereby made to the exhibit for a more complete description of the
matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
The Company is subject to the requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and in accordance therewith is
required to file reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed with the
Commission by the Company can be inspected at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
or at the Regional Offices of the Commission located at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7 World Trade
Center, Suite 1300, New York, New York 10048. Copies of such materials can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission are incorporated into
this Registration Statement by reference:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1995;
(b) The Company's Quarterly Reports on Form 10-QSB for the periods ended
March 31, 1996, June 30, 1996 and September 30, 1996;
(c) The description of the Company's Common Stock, par value $.01 per
share, contained in the Company's Registration Statement on Form 8-A filed with
the Commission on June 1, 1995, as amended; and
(d) All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since December 31, 1995.
All documents filed by the Company after the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the sale of all of the securities offered hereunder or the deregistration of all
such securities then remaining unsold, shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner of any of the Common Stock, to whom a copy of this Prospectus
has been delivered, upon the written or oral request of such person, a copy of
any and all of the documents referred to above which have been or may be
incorporated by reference in this Prospectus. Requests for such copies of any
document should be directed to Jorge Lazaro, Secretary, Sel-Leb Marketing, Inc.,
1435 51 Street, North Bergen, New Jersey 07047, telephone number (201) 864-3316.
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<PAGE>
PROSPECTUS SUMMARY
UNLESS OTHERWISE INDICATED, THE INFORMATION SET FORTH IN THIS PROSPECTUS
GIVES EFFECT TO A THREE-FOR-ONE STOCK SPLIT OF THE COMPANY'S COMMON STOCK, PAR
VALUE $.01 PER SHARE ("COMMON STOCK"), WHICH WAS EFFECTED IN THE FORM OF A SHARE
DISTRIBUTION ON FEBRUARY 29, 1996 (THE "SHARE DISTRIBUTION"). PURSUANT TO THE
SHARE DISTRIBUTION, EACH HOLDER OF RECORD OF COMMON STOCK ON FEBRUARY 2, 1996
RECEIVED TWO ADDITIONAL SHARES OF COMMON STOCK FOR EACH SHARE HELD ON SUCH DATE.
IN CONNECTION WITH THE SHARE DISTRIBUTION, THE COMPANY ADJUSTED THE TERMS OF THE
REDEEMABLE WARRANTS (THE "PUBLIC WARRANTS") ISSUED BY THE COMPANY IN ITS JULY
1995 INITIAL PUBLIC OFFERING OF SECURITIES (THE "IPO"), WHICH PUBLIC WARRANTS
ORIGINALLY REPRESENTED THE RIGHT TO PURCHASE ONE SHARE OF COMMON STOCK AT AN
EXERCISE PRICE OF $6.00 PER SHARE, TO PROVIDE THAT, AS A RESULT OF THE SHARE
DISTRIBUTION, EACH PUBLIC WARRANT REPRESENTED THE RIGHT TO PURCHASE THREE SHARES
OF COMMON STOCK AT AN EXERCISE PRICE OF $2.00 PER SHARE. ON JUNE 6, 1996, THE
COMPANY ELECTED TO ADJUST THE NUMBER OF PUBLIC WARRANTS OUTSTANDING (THE
"WARRANT ADJUSTMENT"). AS A RESULT OF THE WARRANT ADJUSTMENT, EFFECTIVE JUNE
20, 1996, EACH HOLDER OF A PUBLIC WARRANT ON JUNE 17, 1996 HELD, IN LIEU OF ONE
PUBLIC WARRANT TO PURCHASE THREE SHARES OF COMMON STOCK AT AN EXERCISE PRICE OF
$2.00 PER SHARE, THREE PUBLIC WARRANTS, EACH TO PURCHASE ONE SHARE OF COMMON
STOCK AT AN EXERCISE PRICE OF $2.00 PER SHARE. UNLESS OTHERWISE INDICATED, THE
INFORMATION SET FORTH IN THIS PROSPECTUS GIVES EFFECT TO THE WARRANT ADJUSTMENT.
THE COMPANY
The Company is primarily engaged in the distribution and marketing of
consumer merchandise to retail sellers such as mass merchandisers, discount
chain stores and food, drug and electronic retailers. The Company's business
presently consists of the following activities: (i) opportunistic purchasing
and secondary sourcing (I.E., distributing merchandise on a wholesale basis
outside of normal distribution channels to retail merchants) of a broad range of
name-brand and off-brand products such as health and beauty aids, cosmetics,
fragrances, kitchen items and other household items, (ii) developing, marketing
and selling the Company's own proprietary brands of budget-line health, beauty
aid and cosmetic products, which are manufactured for the Company by contract
manufacturers, (iii) representing manufacturers and distributors as a sales
agent, on a commission basis, in connection with the sale to mass merchandise
retailers of merchandise manufactured and distributed by such third parties and
(iv) developing, marketing and selling, or otherwise facilitating the
development, marketing or sale of, products to be promoted by celebrity
spokespersons and sold to mass merchandise retailers, as well as products which
will "tie in" to specific television shows and be sold by the Company either on
television in connection with those shows, with the intent to thereafter sell
such products to mass merchandise retailers, or directly to mass merchandise
retailers. The Company's strategy is to capitalize on increased consumer demand
for value and convenience resulting from the increased acceptance by consumers
of mass merchandisers, electronic retailers and other mass marketing retail
outlets, as well as on the popularity of consumer products endorsed by celebrity
spokespersons.
The Company, which was incorporated under the laws of the State of New York
on September 21, 1993, consummated in July 1995 the IPO pursuant to which the
Company issued units (the "IPO Units"), each IPO Unit consisting of three shares
of Common Stock and three Public Warrants. Immediately following the issuance
of the IPO Units, the Common Stock and Public Warrants became separately
tradeable and transferable. On May 18, 1995, Linette Cosmetics, Inc. ("Linette
Cosmetics"), a corporation founded in 1985 by Harold Markowitz, the Chairman of
the Board of the Company, and Jorge Lazaro, the Executive Vice President and
Secretary of the Company, was merged with and into the Company, with the Company
as the surviving corporation (the "Linette Merger"). Prior to the Linette
Merger, all of the outstanding capital stock of Linette Cosmetics was owned by
Mr. Markowitz, Mr. Lazaro and Paul Sharp, the President and Chief Executive
Officer of the Company, who together comprised the shareholders of the Company
until the IPO. In addition, immediately prior to the consummation of the IPO,
each of Messrs. Markowitz, Sharp and Lazaro contributed to the Company his 20%
equity interest in Lea Cosmetics, Inc. ("Lea Cosmetics") and the Company
acquired from the remaining shareholder his 40% equity interest in Lea Cosmetics
(the "Lea Acquisition"). As a result, Lea Cosmetics became a wholly-owned
subsidiary of the Company and, on August 3, 1995, Lea Cosmetics was merged with
and into the Company, with the Company as the surviving corporation.
The Company's principal executive offices are located at 1435 51 Street,
North Bergen, New Jersey 07047, and its telephone number is (201) 864-3316.
-3-
<PAGE>
THE OFFERING
Common Stock offered by the
Selling Securityholders . . . . . . 999,689 shares
Common Stock to be outstanding
after the Offering . . . . . . . . 9,258,166 shares (1)
Nasdaq symbol. . . . . . . . . . . SELB
BSE symbol . . . . . . . . . . . . SLL
Use of proceeds . . . . . . . . . . Any and all Shares which may be
sold pursuant to this Prospectus
will be sold by the Selling
Securityholders for their own
accounts. The Company will receive
none of the proceeds from the sale
of Shares. The proceeds received
by the Company upon exercise by
the Selling Securityholder who
holds the Warrants and Options of
such Warrants and Options will be
approximately $1,205,300, assuming
that all of such Warrants and
Options are exercised. However,
there can be no assurance as to the
number of Warrants and/or Options,
if any, which will be exercised.
Management anticipates that the net
proceeds of Warrant and/or Option
exercises, if any, will be
allocated to working capital and
general corporate purposes, which
will be applied, to the extent
necessary, to the Company's
operations.
- ----------------------
(1) Based on 8,273,477 shares of Common Stock outstanding as of January 7,
1997. Excludes (i) 724,500 shares of Common Stock issuable upon the
exercise of stock options (other than the Options) outstanding under the
Plans at the date of this Prospectus, (ii) 416,500 shares of Common
Stock reserved for issuance upon exercise of stock options available for
future grant under the Plans and (iii) 5,620,523 shares of Common Stock
issuable upon the exercise of 5,620,523 Public Warrants outstanding as of
January 7, 1997.
-4-
<PAGE>
RISK FACTORS
PRIOR TO INVESTING IN THE COMMON STOCK BEING OFFERED HEREBY, PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER THE FACTORS SET FORTH BELOW, TOGETHER WITH
THE OTHER INFORMATION SET FORTH IN THIS PROSPECTUS.
THIS PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS. ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING
STATEMENTS AS A RESULT OF THE RISK FACTORS SET FORTH BELOW, INCLUDING BUT NOT
LIMITED TO GENERAL TRENDS IN THE RETAIL INDUSTRY, THE ABILITY OF THE COMPANY TO
SUCCESSFULLY IMPLEMENT ITS EXPANSION PLANS, CONSUMER ACCEPTANCE OF ANY PRODUCTS
DEVELOPED AND SOLD BY THE COMPANY, AND THE ABILITY OF THE COMPANY TO DEVELOP ITS
"CELEBRITY" PRODUCT BUSINESS.
DEPENDENCE ON CERTAIN CUSTOMERS
The Company's ten largest customers accounted for approximately 72% and
69% of the Company's net sales during the nine-month period ended September
30, 1996 and the year ended December 31, 1995, respectively. During the
nine-month period ended September 30, 1996, BJ's Wholesale Club and McCrory's
Stores accounted for approximately 31% and 11%, respectively, of the
Company's sales, and during the year ended December 31, 1995, BJ's Wholesale
Club and Ames Department Stores accounted for approximately 26% and 11%,
respectively, of the Company's sales. The Company believes that it has good
relationships with its customers, and that, as a consequence of its strong
and, in many instances, long-term relationships with many of such customers,
they will continue to do business with the Company. However, the Company has
no long-term contracts with any of its customers, all of which purchase
products from the Company pursuant to individually placed purchase orders.
Therefore, there can be no assurance that the Company's customers, including
any of its largest customers, will continue to purchase merchandise from the
Company, and the loss of a significant volume of purchases from a number of
its customers could have a material adverse effect on the Company's business
and results of operations. In addition, although the Company has sold
substantially all merchandise acquired by it through opportunistic purchases
in each of the last three fiscal years, there can be no assurance that the
Company, which typically purchases merchandise before it has arranged for
customers for such merchandise, will be able to obtain customers for all such
merchandise acquired by it in the future, or that if it is able to secure
such customers, sales to such customers will yield acceptable profit margins.
DEPENDENCE ON THIRD-PARTY MANUFACTURERS AND SUPPLIERS
The Company makes opportunistic purchases of merchandise from manufacturers
as well as from secondary sources such as wholesalers, retailers, financially
distressed businesses and duty-free distributors. The Company purchases such
merchandise through individually placed purchase orders and does not have any
contracts with any such suppliers, depending, instead, on its ongoing
relationships and prior dealings with such suppliers to obtain merchandise at
favorable prices when it becomes available for sale to secondary suppliers.
Although the Company believes that its relationships with its suppliers are good
and that it would be able to locate other sources of merchandise in the event of
the loss of one or more of such suppliers, there can be no assurance that the
Company will not experience delays or other difficulties in obtaining
merchandise, which could have a material adverse effect on the Company's
business and results of operations.
To date, all of the Company's proprietary brand name budget-line health,
beauty aid and cosmetic products sold under the Linette-Registered Trademark-,
Vea-Registered Trademark-, Zia-Registered Trademark- and Loud Music-TM- brand
names and all packaging therefor have been manufactured and supplied by third
parties in accordance with the Company's specifications. The Company purchases
all materials for its products (including raw materials and packaging) through
individually placed purchase orders to various suppliers, who deliver the
products to LPD Packaging, Inc., a manufacturer engaged by the Company; such
manufacturer, in turn, provides filling and packaging services, performs quality
control, distributes the finished products and, if necessary, warehouses such
products. During the year ended December 31, 1995 and the nine-month period
ended September 30, 1996, the Company paid $616,640 and $741,270,
respectively, to this manufacturer for such services. Although the Company
believes that its manufacturer has the capacity to produce volumes of products
sufficient to meet the Company's
-5-
<PAGE>
foreseeable needs, there can be no assurance of such. Furthermore, although the
Company believes that it has a good relationship with this manufacturer and that
the Company will continue to obtain its finished products to be sold under the
Linette-Registered Trademark-, Vea-Registered Trademark-, Zia-Registered
Trademark- and Loud Music-TM- brand names from such manufacturer in the
foreseeable future, the Company does not have a written contract with this
manufacturer and there can therefore be no assurance of such. In the event the
Company were to experience difficulties with or the loss of services of its
present manufacturer, the Company believes that it would be able to retain the
services of other manufacturers; however, there can be no assurance that such
services could be retained on a timely basis or on terms as favorable as those
with its present manufacturer. Likewise, although the Company has experienced
no difficulty in obtaining necessary products, supplies and packaging from its
suppliers and believes that it could obtain items of the same quantity and
quality from other suppliers, in the event the Company were to experience
difficulties with any of its present suppliers, the Company might be unable to
obtain such items on a timely basis. The loss of either the Company's present
manufacturer or any of its present suppliers, or any significant delays in
obtaining another manufacturer or other suppliers in the event of any such loss,
could have an adverse effect on the Company's business and results of
operations.
To date, all merchandise sold by the Company in connection with the "Jackie
Collins" line of products has been purchased by the Company from third-party
manufacturers and distributors, both in the United States and abroad. In
addition, the Company currently anticipates that all products developed by it as
television program "tie-in" products (including, without limitation, the "Jabot"
line of products to be marketed by the Company pursuant to its agreement with
Direct Access Group/Television Production Partners ("TPP Direct Access") and the
CLUELESS line of products to be marketed by the Company pursuant to its
agreement with Viacom Consumer Products, Inc. ("VCP")), as well as other
celebrity-endorsed products, if any, developed by the Company, will be purchased
from third-party manufacturers. Typically, the Company develops or will develop
(i) the design of the celebrity-endorsed products in conjunction with the
celebrity who is to promote such products and (ii) the design of any television
"tie-in" products in conjunction with TPP Direct Access or VCP, as the case may
be. Once the product has been developed in accordance with applicable design
and quality specifications, the Company will arrange for the manufacture of the
product by a third-party manufacturer according to the Company's design
specifications; however, the Company does not enter into long-term contracts
with such third parties, but instead purchases (and currently anticipates that
it will in the future continue to purchase) such merchandise through
individually placed purchase orders. Accordingly, the Company is dependent on
the ability of its manufacturers to meet applicable design and quality
specifications. Although the Company believes that, in the event it were to
experience difficulties with or the loss of services of any of such
manufacturers, it would be able to engage other manufacturers who could be
retained by the Company and meet its production requirements on a timely basis,
there can be no assurance of such. The loss of any of such manufacturers, or
any significant delays in obtaining other manufacturers in the event of any such
loss, could have an adverse effect on the Company's business and results of
operations.
RISKS ASSOCIATED WITH PUBLIC TRENDS IN THE RETAIL INDUSTRY
The retail industry is significantly affected by many factors, including
changes in the national economy or in regional and local economies, changes in
consumer preferences and confidence in the overall economy, increases in the
number of retail operations and intense competition in the retail industry
generally. In addition, factors such as inflation may have a greater effect on
the retail industry than on other industries. Furthermore, several retail
firms, including retail customers of the Company, have filed for bankruptcy
protection and there can be no assurance of their continued existence or of the
continued existence of any of the Company's retail customers. During the past
three years, the Company has written off an immaterial amount of receivables as
a result of these bankruptcies. The loss of any of the Company's substantial
customers could have a material adverse effect on the business and results of
operations of the Company.
RISK OF LOSS OF CERTAIN PRODUCTS
The Company currently warehouses all of the raw materials used in
connection with its proprietary brand name health, beauty aid and cosmetics
products, as well as the finished products, at LPD
-6-
<PAGE>
Packaging, Inc.'s warehouses. Accordingly, the Company is subject to the risk
of the loss of all or a portion of such inventory, either as a result of theft,
fire or otherwise. Although the Company maintains insurance which would cover
any such losses (including losses associated with business interruptions) and
believes that, in the event of a complete or significant loss, it would be able
to replace such inventory (I.E., by purchasing materials from other sources and,
if necessary, retaining the services of another manufacturer) within a period of
approximately two to three months, the Company is subject to the risk of loss of
customers during such period.
RISKS ASSOCIATED WITH EXPANSION PLANS; DEPENDENCE ON NEW PRODUCT INTRODUCTIONS
AND MARKET ACCEPTANCE TO IMPLEMENT EXPANSION PLANS
As part of the Company's strategy of taking advantage of the growth in mass
merchandising and value retailing, the Company will seek to continue introducing
its own brand name health, beauty aid and cosmetic products, thereby providing
the Company with an ongoing supply of products and making the Company less
reliant on third party and/or opportunistic sources of merchandise. The success
of the Company's expansion plan is dependent upon its ability to identify and
develop products that can be successfully sold to retail chains and other mass
merchandisers at acceptable profit margins. There can be no assurance that the
Company will be able to successfully develop and introduce new products under
its own brand names, that any such products will meet with consumer acceptance
in the marketplace or that any such products will be sold at acceptable profit
margins. In addition, the Company may seek to obtain rights to additional
proprietary lines either by acquisition or through licensing or other
arrangements. However, there can be no assurance that any such acquisition
opportunities will become available, that the Company would be successful in
acquiring any such rights on favorable terms, or that the Company would be
successful in marketing and selling any product lines so acquired by it.
The Company is also seeking to expand the "celebrity" product area of its
business, including by marketing and distributing in the traditional retail
market celebrity merchandise which is originally offered for sale on television
or by developing products to be promoted by celebrities and sold directly in
such traditional markets. The success of the Company's expansion plan is
dependent on the Company's ability to retain the services of celebrities and to
develop products to be endorsed by such celebrities which will meet with
consumer acceptance. In 1996, the Company entered into an arrangement with
Regis Philbin, co-host of the television program LIVE WITH REGIS AND KATHY LEE,
and Beau Brummel, a leading New York City clothier, involving a line of menswear
accessories to be promoted by Mr. Philbin. Pursuant to such arrangement, the
Company provided a portion of the financing required in connection with Mr.
Philbin's initial live television appearance on QVC Network in December 1996. A
second appearance by Mr. Philbin on QVC Network has been tentatively scheduled
for March 1997 and, in connection therewith, the Company is seeking to formalize
and extend the terms of its arrangement with such parties. In addition, the
Company has previously developed a line of products endorsed by best-selling
author Jackie Collins which were sold on Home Shopping Network in 1994 and 1995,
and, in 1996, the Company sold directly into the traditional retail market a
line of "Jackie Collins Wild" fragrances. There can be no assurance that the
Company will be able to market additional amounts of celebrity-endorsed products
in the future, that it will be able to successfully participate in the
development and/or promotion of any other products for Mr. Philbin, Ms. Collins
or any other celebrities, that the Company will be able to retain the services
of any celebrities in the future or that the Company will be able to
successfully develop and/or promote any products for any celebrities. There can
be no assurance that any such products so developed for Mr. Philbin, Ms. Collins
or any other celebrities will meet with consumer acceptance or generate any
significant revenues.
Pursuant to its agreement with TPP Direct Access, the Company has been
granted the exclusive right to develop and sell cosmetics, fragrances and spa
items in connection with "tie-in" product programs developed by TPP Direct
Access for television networks and producers. Such product programs are
expected to involve the development of products which "tie in" to characters,
activities and/or themes of a specific television show. The agreement with TPP
Direct Access also provides that the Company will be entitled to sell any
merchandise developed by it for any of such television shows through other
retail distribution channels, provided that the Company pays a royalty in
connection therewith at a negotiated amount. As of the date hereof,
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the Company has been authorized to develop and act as the exclusive manufacturer
and distributor of a cosmetic, fragrance and skin care line under the name
"Jabot", which was inspired by the fictional name of a cosmetics company
featured on a leading daytime television drama. However, as of the date hereof,
TPP Direct Access has not secured air time for the promotion and sale of such
products, and there can be no assurance that it will be successful in doing so
or that, if such air time is secured, the products will meet with consumer
acceptance. There can also be no assurance that TPP Direct Access will be able
to successfully negotiate with any other television networks or producers for
the development of other program product "tie-ins" or that TPP Direct Access
will be able to secure air time during which any such products can be marketed
and sold.
In October 1996, the Company entered into an agreement with VCP pursuant to
which VCP has granted to the Company a license to use the designs, trademarks,
service marks, logos, visual representations, characters and characterizations
of the television series CLUELESS in connection with the manufacture and
distribution in the United States of a CLUELESS line of cosmetics (including
nail care products, lip stick products, cologne fragrances, mass market gift
sets, signature gift sets and children's gift sets). Pursuant to the agreement,
the Company has the exclusive right to sell such items in mass market stores,
grocery stores, drug stores, beauty outlets, discount chain stores and wholesale
clubs, and the non-exclusive right to sell such items in toy stores and
department stores; provided, however, that under certain conditions (including
failure to make a timely royalty payment or failure to meet certain sales
targets), the Company's exclusive rights shall become non-exclusive. The
Company is required under the agreement to pay to VCP a specified royalty fee on
all items sold by the Company pursuant to the agreement, and has paid to VCP a
non-returnable advance of $90,000 (subject to reduction in the event certain
episodes of the show are not picked up for broadcast) to be applied against the
Company's royalty payments. In addition, to the extent not already paid to VCP
through royalty payments, the Company shall be required to pay to VCP on March
31, 1998 a guarantee of $225,000. Furthermore, the Company is also required
under the agreement to spend a designated amount each year on advertising for
the CLUELESS cosmetics line. The agreement commenced on October 15, 1996 and
will continue, subject to certain conditions, until October 31, 1999; provided,
however, that in the event the Company shall have met certain royalty targets
during the initial term, the Company shall have the right to extend the
agreement for an additional two-year period, subject to payment of an additional
advance and an additional guarantee; and provided further that, in the event
CLUELESS is not picked up for broadcast under certain circumstances, the Company
shall have the option to terminate the agreement. As of the date hereof, the
Company has commenced manufacturing a line of CLUELESS lipsticks, nail polishes
and mascaras, which the Company currently anticipates will be launched in
February 1997. However, there can be no assurance that these products will meet
with consumer acceptance or that the CLUELESS show will continue to be broadcast
during the anticipated term of the agreement.
BROAD DISCRETION IN APPLICATION OF PROCEEDS.
The proceeds to the Company from the exercise by the Selling
Securityholder who holds the Warrants and Options of such Warrants and
Options will be approximately $1,205,300 assuming that all such Warrants and
Options are exercised. However, there can be no assurance as to the number
of Warrants and/or Options, if any, which will be exercised. Management
anticipates that the proceeds of Warrant and/or Option exercises, if any,
will be allocated to working capital and general corporate purposes.
Accordingly, the Company's management will have broad discretion as to the
application of such proceeds.
COMPETITION
The areas of business in which the Company engages are highly competitive
businesses. The secondary sourcing business is characterized by intense
competition, both in the products sold and in the retaining of relationships
with suppliers and customers. With respect to its ability to obtain
merchandise, the Company competes with other secondary sources, as well as with
wholesale distributors and retailers. The Company believes that its ability to
purchase a broad array of merchandise at competitive prices is critical to its
success. With respect to sales to its customers, the Company competes with
other secondary suppliers of merchandise, as well as with manufacturers who sell
directly to retail merchandisers. In addition, with respect to products sold
under the Company's Linette-Registered Trademark-, Vea-Registered Trademark-,
Zia-Registered Trademark- and Loud Music-TM- brand names, the Company
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<PAGE>
competes with other manufacturers at the retail store level for shelf space and
promotional space. Many of the Company's existing or potential competitors are
well established companies and have or will have substantially greater
financial, marketing and other resources than the Company. The Company believes
that it competes on the basis of value, product assortment and availability,
service to customers and reputation, as well as on the basis of its
long-standing and well-established relationships with both its suppliers and
customers. Although the Company believes that it will be able to compete
effectively on the basis of such factors, there can be no assurance of such.
In connection with its "celebrity" products business, the Company competes
or will compete with manufacturers and marketing organizations that seek out
celebrities to endorse products and assist in marketing programs for their
merchandise. In addition, the Company believes that virtually all celebrities
have agents who can negotiate directly with retailers in order to secure
marketing contracts on their behalf. The Company believes that it competes on
the basis of its ability to design products which are consistent with the
celebrities' respective preferences and characters and to provide such products
to retailers at competitive prices. Furthermore, although the Company is not
aware of any other entities which currently manufacture, market or develop
television "tie-in" products to be sold on television during the airing of the
related program, the Company believes that any such products developed by the
Company will compete with other products sold in the electronic retailing market
(including through television infomercials and interactive television shopping
networks), and that these products, as well as the CLUELESS line of cosmetics
expected to be sold by the Company, will compete with other products sold in
the traditional retail market which relate to characters or themes of
television shows or movies. The Company believes that it will compete on the
basis of the unique nature of such television "tie-in" products, as well as
on its ability to provide such products at competitive prices.
DEPENDENCE ON MANAGEMENT AND KEY PERSONNEL
The success of the Company is largely dependent on the personal efforts
of Harold Markowitz, its Chairman of the Board, Paul Sharp, its President and
Chief Executive Officer, Jan Mirsky, a Selling Securityholder hereunder who
serves as the Company's Executive Vice President Finance and Chief
Operating Officer, Jack Koegel, its Vice Chairman, and Jorge Lazaro, its
Executive Vice President. In particular, the future success of the Company's
celebrity products line of business is dependent on the efforts of Mr.
Markowitz. Although the Company has entered into an employment agreement
with each of Messrs. Markowitz, Sharp, Mirsky, Koegel and Lazaro, each of
which agreements provides that the employee shall devote substantially all of
such employee's working time and attention to the Company, the loss of
services of any of such individuals could have a material adverse effect on
the Company's business and prospects.
CONTROL BY MANAGEMENT AND CURRENT SHAREHOLDERS
As of the date of this Prospectus, Messrs. Markowitz, Sharp, Mirsky, Koegel
and Lazaro, each of whom is an officer and director of the Company, beneficially
own, in the aggregate, approximately 59.1% of the outstanding Common Stock
(assuming no exercise of options or warrants held by persons other than Messrs.
Markowitz, Sharp, Mirsky, Koegel and Lazaro). Accordingly, in the event such
shareholders were to act in concert with respect to the Company's operations,
they would be in a position to cause an increase in the authorized capital or
cause the dilution, merger or sale of assets of the Company, and generally
control the affairs of the Company.
INSURANCE AND POTENTIAL LIABILITY
While no material product liability claims have been made against the
Company in the past, as a distributor of merchandise, including health and
beauty aids, cosmetics, fragrances and household items, the Company could be
exposed to possible liability claims from others for personal injury or property
damage due to design or manufacturing defects or otherwise. The Company
maintains a product liability insurance policy that has a $1,000,000 per
occurrence limit and a $2,000,000 aggregate limit, and a $3,000,000 umbrella
liability
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<PAGE>
insurance policy to cover claims in excess of the limits of its products
liability insurance. In addition, the Company believes that the suppliers from
whom it purchases such merchandise, including the manufacturers thereof,
maintain adequate levels of product liability insurance. Although the Company
believes that its product liability insurance coverage is adequate in light of
prior experience and future expectations, there can be no assurance of such. In
addition, the Company maintains other insurance, including insurance relating to
property and personal injury, similar, the Company believes, to that maintained
by comparable retail businesses and in amounts which the Company currently
considers adequate. Nevertheless, a partially or completely uninsured claim
against the Company, if successful and of sufficient magnitude, could have a
material adverse effect on the Company.
RISK OF ELIMINATION OF SUPPLY OF PRESTIGE FRAGRANCES
The Company believes that a portion of the prestige fragrances purchased by
it may include trademarked products manufactured in foreign countries and
trademarked products manufactured in the United States that may have been sold
to foreign distributors. From time to time, United States trademark owners and
their licensees and trade associations have initiated litigation or
administrative agency proceedings seeking to halt the importation into the
United States of such foreign manufactured or previously exported trademarked
products. Although the Company is not currently the subject of any such legal
or administrative actions, and is not aware of any such threatened legal or
administrative actions, there can be no assurance that the Company's business
activities will not become the subject of such actions in the future, or that
future judicial, legislative or administrative agency action will not limit or
eliminate some or all of the secondary sources of supply of prestige fragrances
used by the Company. However, the Company believes that any future limitation
on or elimination of its sources of supply of prestige fragrances for sale to
its customers would not have a material adverse effect on the Company, although
there can be no assurance of such.
NO DIVIDENDS
The Company has not paid any dividends to date, other than a dividend paid
in 1995 to those individuals who constituted the Company's shareholders prior to
the IPO, which dividend was paid in connection with the termination of the
Company's status as an S Corporation. It is the Company's intention to retain
earnings, if any, to finance the operation and expansion of its business and,
therefore, it does not expect to pay cash dividends in the foreseeable future.
ELIMINATION OF LIABILITY OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation eliminates the liability of a
director of the Company for monetary damages for breach of duty as a director,
subject to certain exceptions. In addition, the Certificate of Incorporation
provides for the Company to indemnify, under certain conditions, directors and
officers of the Company against all expenses, liabilities and losses reasonably
incurred by such persons in connection therewith. The foregoing provisions may
reduce the likelihood of derivative litigation against directors and may
discourage or deter shareholders or management from suing directors for breaches
of their duty of care, even though such an action, if successful, might
otherwise benefit the Company and its shareholders.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
Upon the consummation of this offering, the Company will have 9,258,166
shares of Common Stock outstanding (assuming no exercise of outstanding options
or warrants (other than the Options and Warrants held by one of the Selling
Securityholders), of which 4,578,166 shares of Common Stock will be freely
tradeable without restriction or further registration under the Securities Act
of 1933, as amended (the "Securities Act"). All of the remaining 4,680,000
shares of Common Stock outstanding are "restricted securities," as that term is
defined under Rule 144 promulgated under the Securities Act, and in the future
may only be sold pursuant to a registration statement under the Securities Act,
in compliance with the exemption provisions of Rule 144 or pursuant to another
exemption under the Securities Act. Commencing in October 1995, an
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<PAGE>
aggregate of 4,500,000 restricted shares became eligible for sale under Rule
144, subject to certain volume limitations prescribed by Rule 144 and to the
contractual restrictions described below. The balance of the restricted shares
will become eligible for sale under Rule 144, subject to the volume limitations
prescribed by Rule 144, at various times commencing in July 1997. The Company
has granted Mr. Mirsky certain demand and "piggyback" registration rights
(subject to certain limitations) with respect to the shares of Common Stock
issuable upon exercise of the Warrants. The Company also granted the
Underwriter demand and piggyback registration rights with respect to
Underwriter's warrants issued in connection with the IPO and, in July 1996, the
480,000 shares of Common Stock underlying the Underwriter's warrants were
registered by the Company under the Securities Act. No prediction can be made
as to the effect, if any, that sales of shares of Common Stock or even the
availability of such shares for sale will have on the market prices prevailing
from time to time. While Messrs. Markowitz, Sharp, Lazaro and Mirsky have
agreed to extend until January 12, 1998 certain contractual transfer
restrictions in favor of the Underwriter, pursuant to which restrictions each of
such persons has agreed not to sell or otherwise dispose of 90% of the shares of
Common Stock held by him (including, without limitation, shares which may be
acquired upon exercise of options and warrants) without the prior written
consent of the Underwriter (other than pursuant to private transfers in which
the transferee agrees to abide by the same restriction), the possibility that
substantial amounts of Common Stock may be sold in the public market may
adversely affect prevailing market prices for the Common Stock and the Warrants
and could impair the Company's ability to raise capital through the sale of its
equity securities.
POTENTIAL ADVERSE EFFECT OF REDEMPTION OF PUBLIC WARRANTS
The Public Warrants may be redeemed by the Company at any time, upon notice
of not less than 30 days, at a price of $.0167 per Public Warrant, provided the
closing bid quotation of the Common Stock on Nasdaq has exceeded $3.33 (subject
to adjustment) for a period of 20 consecutive trading days during the period in
which the Public Warrants are exercisable. Redemption of the Public Warrants
could force the holders to exercise the Public Warrants and pay the exercise
price at a time when it may be disadvantageous for the holders to do so, to sell
the Public Warrants at the then-current market price when they might otherwise
wish to hold the Public Warrants, or to accept the redemption price, which is
likely to be substantially less than the market value of the Public Warrants at
the time of redemption.
POSSIBLE DELISTING OF SECURITIES FROM NASDAQ SYSTEM; RISKS RELATING TO
LOW-PRICED STOCKS
The Company's Common Stock and Public Warrants are listed on Nasdaq. In
order to continue to be listed on Nasdaq, however, the Company must maintain
$2,000,000 in total assets, a $200,000 market value of the public float and
$1,000,000 in total capital and surplus. In addition, continued inclusion
requires two market-makers and a minimum bid price of $1.00 per share; provided,
however, that if the Company falls below such minimum bid price, it will remain
eligible for continued inclusion in Nasdaq if the market value of the public
float is at least $1,000,000 and the Company has $2,000,000 in capital and
surplus. Nasdaq has recently proposed new maintenance criteria which, if
implemented, would eliminate the exception to the $1.00 per share minimum bid
price and require, among other things, $2,000,000 in net tangible assets,
$1,000,000 market value of the public float and adherence to certain corporate
governance provisions. The failure to meet these maintenance criteria in the
future may result in the delisting of the Company's securities from Nasdaq. In
such event, trading, if any, in the securities of the Company would thereafter
be conducted in the over-the-counter markets through the so-called "pink sheets"
or the NASD's "Electronic Bulletin Board." Consequently, the liquidity of the
Company's securities could be impaired, not only in the number of securities
which could be bought and sold, but also through delays in the timing of
transactions, difficulty in obtaining accurate quotations as to the market value
of the securities and reductions in the security analysts' and the news media's
coverage of the Company. Delisting of the Company's securities may result in
lower prices for the Company's securities than might otherwise prevail.
In addition, if the Common Stock were to become delisted from trading on
Nasdaq and the trading price of the Common Stock were to fall below $5.00 per
share, trading in the Common Stock would also be subject to the requirements of
certain rules promulgated under the Exchange Act which require additional
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<PAGE>
disclosure by broker-dealers in connection with any trades involving a stock
defined as a penny stock (generally, any non-Nasdaq equity security that has a
market price of less than $5.00 per share, subject to certain exceptions). Such
rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks associated
therewith, and impose various sales practice requirements on broker-dealers who
sell penny stocks to persons other than established customers and accredited
investors (generally institutions). For these types of transactions, the
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
sale. The additional burdens imposed upon broker-dealers by such requirements
may discourage broker-dealers from effecting transactions in the Common Stock
and Public Warrants, which could severely limit the market liquidity of the
Common Stock and Public Warrants, the ability of purchasers in this offering to
sell the Common Stock in the secondary market and the Company's ability to
obtain additional financing.
USE OF PROCEEDS
The proceeds received by the Company upon exercise by the Selling
Securityholder who holds the Warrants and Options of such Warrants and
Options will be approximately $1,205,300, assuming that all of such Warrants
and Options are exercised. However, there can be no assurance as to the
number of Warrants and/or Options, if any, which will be exercised.
Management anticipates that the net proceeds of Warrant and/or Option
exercises, if any, will be allocated to working capital and general corporate
purposes, which will be applied, to the extent necessary, to the Company's
operations. Any and all of the Shares which may be sold pursuant to this
Prospectus will be sold by the Selling Securityholders for their own
accounts. The Company will receive none of the proceeds from the sale of the
Shares.
SELLING SECURITYHOLDERS
The Shares offered hereby will be sold by Jan S. Mirsky and
Michael Stemen, the Selling Securityholders. Mr. Mirsky is Executive Vice
President - Finance and Chief Operating Officer of the Company. In January
1994, the Company issued and sold to Mr. Mirsky, then a consultant to the
Company, the Warrants to purchase 490,689 shares of Common Stock in
consideration for a $21,000 non-interest bearing promissory note payable to
the Company, due March 31, 1995, and the performance by him of services as a
marketing consultant to the Company. The Company subsequently agreed to
extend until May 17, 1995 the due date of the promissory note, and on May 17,
1995 Mr. Mirsky paid the entire $21,000 principal amount thereof. The
Warrants are exercisable at any time through March 31, 2000 at an aggregate
exercise price of $315,000. Pursuant to the Warrant Agreement, Mr. Mirsky
has been granted certain demand and piggyback registration rights (subject to
certain limitations) with respect to the Shares issuable upon exercise of the
Warrants. The Company has also granted to Mr. Mirsky Options to purchase
494,000 shares of Common Stock, including Options to purchase 477,000 shares
at an exercise price of $1.67 per share and Options to purchase 17,000 shares
at an exercise price of $5.625 per share. In connection with the IPO and at
the request of the Underwriter, Mr. Mirsky agreed not to sell during a period
of eighteen-months commencing July 13, 1995 any shares of Common Stock held
by him (including shares issuable upon exercise of Warrants and/or Options)
other than in connection with certain transactions. On December 5, 1996, Mr.
Mirsky agreed to extend until January 12, 1998 such contractual transfer
restrictions with respect to 90% of the shares of Common Stock held by him
(including shares which may be subsequently acquired through the exercise of
warrants and/or options), or an aggregate of 870,920 shares of Common Stock.
Mr. Stemen served as a director of the Company from May 1995 until May
1996. Mr. Stemen holds 15,000 shares of Common Stock which he acquired at a
price of $1.67 per share upon exercise of Options granted to him under the
Company's Nonemployee Directors' Plan.
The number of shares of the Company's Common Stock owned beneficially by
each of the Selling Securityholders as of the date of this Prospectus, the
number of shares of the Company's Common Stock which may be offered by each of
the Selling Securityholders pursuant to this Prospectus and the amount and
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percentage of shares to be owned by each of the Selling Securityholders assuming
the sale of all such shares are as follows:
<TABLE>
<CAPTION>
SHARES TO BE OWNED AFTER
SALE OF SHARES REGISTERED FOR RESALE
SHARES ------------------------------------
BENEFICIALLY SHARES BEING PERCENT OF
NAME OF SELLING SECURITYHOLDER OWNED REGISTERED FOR RESALE AMOUNT OUTSTANDING (1)
- ------------------------------ ----- --------------------- ------ ---------------
<S> <C> <C> <C> <C>
Jan S. Mirsky 733,439(2) 984,689 -- --
Michael Stemen 15,000 15,000 -- --
</TABLE>
- ------------------------
(1) Based on 9,258,166 shares of Common Stock outstanding.
(2) Includes 242,750 shares of Common Stock issuable upon exercise of Options
held by Mr. Mirsky. Does not include 251,250 shares of Common Stock
issuable upon exercise of Options which are not exercisable within 60 days
of the date of this Prospectus.
PLAN OF DISTRIBUTION
The Shares are being registered in order to facilitate their sale from time
to time by the Selling Securityholders should the Selling Securityholders
determine to make such sales. The Company is unable to predict whether or when
the Selling Securityholders will determine to proceed with sales of the Shares,
as such determination will be made by the Selling Securityholders. The Selling
Securityholders may effect such transactions by selling Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Securityholders and/or
the purchasers of Shares for whom such broker-dealers may act as agent or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
The Selling Securityholders and any broker-dealers that act in connection
with the sale of the Shares hereunder might be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act and any commissions
received by them and any profit on the resale of Shares as principal might be
deemed to be underwriting discounts and commissions under the Securities Act.
EXPERTS
The financial statements of the Company as of December 31, 1995 and for the
two years in the period ended December 31, 1995 included in the Company's Annual
Report on Form 10-KSB and incorporated by reference in this Prospectus have been
included in reliance upon the reports of Goldstein Golub Kessler & Company,
P.C., independent certified public accountants, given upon the authority of said
firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the Shares has been passed upon by Zimet, Haines, Friedman
& Kaplan, 460 Park Avenue, New York, New York 10022.
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======================================== =====================================
NO PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH 999,689 SHARES
INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SEL-LEB MARKETING, INC.
SECURITIES OTHER THAN THE SECURITIES
TO WHICH IT RELATES OR AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER
TO BUY SUCH SECURITIES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR COMMON STOCK
ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT
TO ITS DATE.
-------------- --------
TABLE OF CONTENTS PROSPECTUS
--------
PAGE
AVAILABLE INFORMATION . . . . . . 2
DOCUMENTS INCORPORATED BY
REFERENCE . . . .. . . . . . . . 2
PROSPECTUS SUMMARY.. . . . . . . . 3
RISK FACTORS. . . .. . . . . . . . 5
USE OF PROCEEDS . .. . . . . . . .12
SELLING SECURITYHOLDERS. . . . . .12
PLAN OF DISTRIBUTION . . . . . . .13
EXPERTS. . . . . .. . . . . . . .13
LEGAL MATTERS . . .. . . . . . . .13
January 10, 1997
======================================== =====================================
<PAGE>
PART II
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange
Commission (the "Commission") are incorporated into this Registration Statement
by reference:
(a) The Registrant's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1995;
(b) The Registrant's Quarterly Reports on Form 10-QSB for the periods
ended March 31, 1996, June 30, 1996 and September 30, 1996;
(c) The description of the Registrant's Common Stock, par value $0.01
per share, contained in the Registrant's Registration Statement on Form 8-A
filed with the Commission on June 1, 1995, as amended; and
(d) All other reports filed by the Registrant pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since December 31, 1995.
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing of such documents.
Item 4. DESCRIPTION OF SECURITIES
Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 402(b) of the New York Business Corporation Law ("New
York Law") permits a provision in the certificate of incorporation of each
corporation organized thereunder eliminating or limiting, with certain
exceptions, the personal liability of a director to the corporation or its
stockholders for monetary damages for certain breaches of fiduciary duty as a
director. The Certificate of Incorporation of the Registrant eliminates the
personal liability of directors to the fullest extent permitted by New York Law.
Section 722 of New York Law ("Section 722"), in summary, empowers
a New York corporation, within certain limitations, to indemnify its officers
and directors against judgments, fines, amounts paid in settlement and
reasonable expenses (including attorneys' fees) actually and necessarily
incurred by them in connection with any nonderivative suit or proceeding if they
acted, in good faith, for a purpose they reasonably believed to be in or not
opposed to the best interest of the corporation, and, with respect to a criminal
action or proceeding, had no reasonable cause to believe their conduct was
unlawful.
<PAGE>
With respect to derivative actions, Section 722 permits a
corporation to indemnify its officers and directors against amounts paid in
settlement and reasonable expenses (including attorneys' fees) actually and
necessarily incurred in connection with the defense or settlement of such
action, or in connection with an appeal therein, provided such person meets the
standard of conduct described in the preceding paragraph, except that no
indemnification is permitted in respect of (i) a threatened action, or a pending
action which is settled or otherwise disposed of or (ii) any claim where such
person has been found liable to the corporation, unless the court in which the
action was brought approves such indemnification and determines that such person
is fairly and reasonably entitled to be indemnified.
Reference is made to Article Seventh of the Certificate of
Incorporation, as amended, of the Registrant for the provisions which the
Registrant has adopted relating to indemnification of officers and directors.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
Item 8. EXHIBITS
EXHIBIT DESCRIPTION
4.1 1995 Stock Option Plan of the Registrant (incorporated by
reference to Exhibit 10.2 to the Registrant's Quarterly Report on
Form 10-QSB for the period ended June 30, 1995).
4.2 1995 Nonemployee Directors' Stock Option Plan of the Registrant
(incorporated by reference to Exhibit 10.3 to the Registrant's
Quarterly Report on Form 10-QSB for the period ended June 30,
1995).
4.3 Form of Stock Option Agreements under the 1995 Stock Option
Plan.
4.4 Form of Stock Option Agreement under the 1995 Nonemployee
Directors' Stock Option Plan.
4.5 Warrant and Registration Agreement dated as of July 20, 1995 by
and between the Registrant and Jan S. Mirsky (incorporated by
reference to Exhibit 4.5 to the Registrant's Annual Report on
Form 10-KSB for the period ended December 31, 1995).
4.6 Certificate of Incorporation of the Registrant, as amended
(incorporated by reference to Exhibit 3.1 to the Registrant's
Annual Report on Form 10-KSB for the fiscal year ended December
31, 1995).
4.7 Amended and Restated By-laws of the Registrant (incorporated by
reference to Exhibit 3.2 to the Registrant's Quarterly Report on
Form 10-QSB for the period ended June 30, 1995).
II-2
<PAGE>
5.1 Opinion of Zimet, Haines, Friedman & Kaplan, filed herewith.
23.1 Consent of Goldstein Golub Kessler & Company, P.C., filed
herewith.
23.2 Consent of counsel, contained in the opinion filed as Exhibit 5.1
hereto.
24.1 Power of Attorney (see page II-5 of this Registration Statement).
99. Letter Agreements dated June 11, 1995 and December 5, 1996,
respectively, by Jan Mirsky, setting forth transfer restrictions
in respect of certain securities.
Item 9. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of North Bergen, New Jersey, on this 10th day of
January, 1997.
SEL-LEB MARKETING, INC.
By: /s/ Harold Markowitz
---------------------------------
Harold Markowitz
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints each of Harold Markowitz and Jan S.
Mirsky and each of them, as his true and lawful attorneys-in-fact and agents
with full power of substitution and resubstitution, for him and his name, place
and stead, in any and all capacities, to sign any and all amendments, including
post-effective amendments, to this registration statement, and to file the same,
with all exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Harold Markowitz Chairman of the Board and Director January 10, 1997
- ----------------------
Harold Markowitz
/s/ Paul Sharp President, Chief Executive Officer January 10, 1997
- ---------------------- and Director (Principal Executive Officer)
Paul Sharp
/s/ Jan S. Mirsky Executive Vice President - Finance, January 10, 1997
- ---------------------- Chief Operating Officer and Director
Jan S. Mirsky (Principal Financial and Accounting Officer)
/s/ Jack Koegel Vice Chairman and Director January 10, 1997
- ----------------------
Jack Koegel
/s/ Jorge Lazaro Executive Vice President, Secretary January 10, 1997
- ---------------------- and Director
Jorge Lazaro
/s/ Stanley R. Goodman Director January 10, 1997
- -----------------------
Stanley R. Goodman
/s/ Edward C. Ross Director January 10, 1997
- -----------------------
Edward C. Ross
/s/ Douglas L. Bailey Director January 10, 1997
- -----------------------
Douglas L. Bailey
</TABLE>
II-5
<PAGE>
SEL-LEB MARKETING, INC.
STOCK OPTION AGREEMENT
[For Employees]
Pursuant to the 1995 Stock Option Plan
Option granted in North Bergen, New Jersey on ___________________ (the
"Date of Grant") by Sel-Leb Marketing, Inc. (the "Corporation") to
__________________ ("Grantee", which term includes any person entitled to
exercise the Option):
1. THE OPTION. The Corporation grants to the Grantee, effective on
the Date of Grant, a stock option (the "Option") to purchase, on the terms
and conditions herein set forth, up to ______ of the Corporation's fully
paid, nonassessable shares of Common Stock, par value $.01 per share (the
"Shares"), at the purchase price for the Shares set forth in Paragraph 2
below. The Option is granted pursuant to the Corporation's 1995 Stock Option
Plan, adopted by the Board of Directors of the Corporation on May 17, 1995,
and adopted by the Stockholders of the Corporation on May 17, 1995 (the
"Plan"). The Option is subject in its entirety to all the applicable
provisions of the Plan which are incorporated herein by reference as if set
forth at length herein, and is a non-incentive option granted pursuant to
Section 7 of the Plan.
2. THE PURCHASE PRICE. The purchase price of the Shares shall be
$_______ per share (the "Option Price").
3. EXERCISE OF OPTION.
(a) Except as otherwise provided in the Plan, the Option is
exercisable over a period beginning on the Date of Grant and ending ten years
from the Date of Grant (the "Option Period") in accordance with the following
schedule:
PERCENT OF SHARES SUBJECT TO
DATE OPTION PURCHASABLE
---- ------------------
Commencing on the Date of Grant
until (but not including) the
first anniversary of the Date of
Grant. 25.00%
<PAGE>
PERCENT OF SHARES SUBJECT TO
DATE OPTION PURCHASABLE
---- ------------------
Commencing on the first
anniversary of the Date of Grant
until (but not including) the
second anniversary of the Date
of Grant. 50.00%
Commencing on the second
anniversary of the Date of Grant
until (but not including) the
third anniversary of the Date of
Grant. 75.00%
Commencing on the third
anniversary of the Date of Grant
until (but not including) the
expiration of the Option. 100.00%
Subject to the terms hereof, the Option may be exercised from time to time
during the Option Period as to the total number of Shares allowable under this
Paragraph 3(a), or any lesser amount thereof.
(b) At such time as the Grantee desires to exercise the Option
granted hereby, in whole or in part, the Grantee's signature at the place
provided on the Exercise Form attached hereto will evidence the Grantee's
election to purchase Shares of Common Stock pursuant to the terms and subject
to the conditions and limitations contained in the Plan, in this Agreement
and in said Exercise Form. The Option shall be considered exercised (in full
or part, as the case may be) on the date such Exercise Form is mailed to the
Chief Financial Officer of the Corporation, postage prepaid, or delivered in
person to the Chief Financial Officer, together with payment of the Option
Price for the Shares to be purchased plus any withholding tax required under
any federal, state and local statutes.
(c) The Option Price shall be paid in full in United States dollars
at the time of purchase or with stock of the Corporation having fair market
value (as determined pursuant to Section 6(a) of the Plan) equal to the
Option Price. If the Option is exercised in accordance with the provisions
of the Plan and this Agreement, the Corporation shall deliver to such person
a certificate or certificates representing the number of Shares in respect to
which the Option is being exercised, which Shares shall be registered in his
or her name.
(d) If this Option shall extend to 100 or more Shares, then this
Option may not be exercised for less than 100 Shares at any one time, and if
this Option shall extend to less
-2-
<PAGE>
than 100 Shares, then this Option must be exercised for all such Shares at one
time.
(e) In addition to the procedures set forth herein, if Regulation T
of the Securities Exchange Act of 1934, as amended, or such future laws or
regulations with respect to the same subject matter ("Regulation T") is
applicable to the exercise of the Option and so permits, the person entitled
to exercise the Option may direct the Corporation in the Exercise Form to
deliver all or any part of the number of Shares to which he is entitled upon
exercise of the Option directly to a broker specified in the Exercise Form.
In such event, the Corporation shall accept payment of the Option Price in
cash or by check from such broker on behalf of the person entitled to
exercise the Option and shall take all action necessary to effect the prompt
delivery of such Shares to such broker in accordance with the provisions of
Regulation T and in accordance with such additional rules and regulations as
may be specified by such broker. Notwithstanding the foregoing, the
Corporation shall not be required to comply with the provisions of this
Section 3(e) if, as a result of a change in the accounting rules and
regulations applicable to the Corporation, or the interpretation thereof,
compliance with the provisions of this Section 3(e) will result in the
imposition of substantial adverse financial reporting requirements on the
Corporation.
4. SALE OF SHARES. The Grantee shall not be entitled to sell,
transfer, or distribute the Shares except pursuant to (i) an effective
registration statement under the Securities Act of 1933, as amended, and any
applicable state securities or "Blue Sky" laws, or (ii) if there be no
registration statement in effect, pursuant to a specific exemption from
registration under the Securities Act of 1933, as amended, and any applicable
state securities or "Blue Sky" laws. Prior to offering or selling the Shares
upon claim of exemption, the Grantee shall obtain a written opinion from
counsel reasonably satisfactory to the Corporation who may be counsel for the
Corporation to the effect that such exemptions are available or shall deliver
"no-action" letters from the Securities and Exchange Commission and any
applicable state securities commission with respect to the proposed sale,
transfer or distribution of the Shares. The certificate or certificates
representing the Shares shall have an appropriate legend referring to the
terms of this Option.
5. TERMINATION OF EMPLOYMENT. Subject to Paragraph 8 hereof, in the
event the employment of Grantee shall terminate for any reason other than
death or for cause, the Grantee shall have the right to exercise this Option
but only in respect of Shares which he or she was entitled to purchase under
this Option at the date of termination of his or her employment, at any time
up to and including the earlier of three months after the date of such
termination of employment or the expiration of the Option
-3-
<PAGE>
Period. In the event that the Grantee's employment is terminated for cause, the
Grantee shall have the right to exercise this Option, but only in respect of
Shares which he or she was entitled to purchase under this Option at the date of
termination of his or her employment, at any time up to and including the
earlier of thirty days after the date of such termination of employment or the
expiration of the Option Period. This Option shall not be affected by any
change of employment so long as the Grantee continues to be an employee of the
Corporation or any of its Subsidiaries (as such term is defined in Section 1 of
the Plan).
6. SUCCESSORS AND ASSIGNS. The Agreement shall be binding upon and
shall inure to the benefit of any successor or assign of the Corporation and,
to the extent herein provided, shall be binding upon and inure to the benefit
of the Grantee's legal representatives.
7. EXERCISE AND TRANSFERABILITY OF OPTION. During the lifetime of the
Grantee, this Option is exercisable only by him or her and shall not be
assignable or transferable by him or her and no other person shall acquire
any rights therein. In the event of the death of the Grantee, this Option or
any unexercised portion thereof shall be exercisable at any time prior to the
expiration of one year after the date of such death (but in no event later
than the date of the expiration of the Option) only by his or her executors
or administrators or the person or persons to whom such deceased Grantee's
rights under this Option shall pass by such deceased Grantee's will or by the
laws of descent and distribution of the state of his or her domicile at the
time of his or her death. The person or persons so exercising this Option
after the deceased Grantee's death shall, simultaneously with the delivery of
the Exercise Form and the payment for the Shares purchased, deliver to the
Company such proof of the right of such person or persons to exercise this
Option as may reasonably be required by the Corporation and its counsel.
8. EXPIRATION OF OPTION. This Option is not exercisable after the
expiration of ten years from the Date of Grant.
9. ADJUSTMENT OF OPTIONS.
(a) The number of Shares issuable upon exercise of this Option, or
the amount and kind of other securities issuable in addition thereto or in
lieu thereof upon the occurrence of the events specified in Section 9 of the
Plan, shall be determined and subject to adjustment, as the case may be, in
accordance with the procedures therein specified.
-4-
<PAGE>
(b) Fractional shares resulting from any adjustment in options
pursuant to this Paragraph may be settled in cash or otherwise as the
Corporation shall determine. Notice of any adjustment in this Option shall
be given by the Corporation to the holder of this Option and such adjustment
(whether or not such notice is given) shall be effective and binding for all
purposes of the Plan and this Agreement.
10. RIGHTS.
(a) The granting of this Option shall not confer upon the Grantee
any right to be continued in the employ of the Corporation or any of its
Subsidiaries, nor shall the Corporation or any of its Subsidiaries be limited
by reasons thereof, or for any other reason, in its discretion and at any
time from changing the status or position of his or her employment, or from
terminating the employment of such Grantee, or from reducing or changing his
or her compensation at any time and from time to time, subject, however, to
any employment or other agreement between the Grantee and the Corporation.
(b) The Grantee shall not, by reason of the granting to him or her
of this Option, have or thereby acquire any rights of a stockholder of the
Corporation with respect to any Shares unless and until he or she has
tendered full payment of the Option Price for such Shares and such Shares
have been duly issued or transferred and delivered to the Grantee in
accordance with the terms hereof.
11. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New Jersey applicable to contracts
entered into and to be performed wholly with such state.
If the foregoing is in accordance with the Grantee's understanding
and approved by him or her, he or she may so confirm by signing and returning
the duplicate of this Agreement delivered for that purpose.
SEL-LEB MARKETING, INC.
By:
--------------------------
[Corporate Seal]
The foregoing is in accordance with my understanding and is hereby confirmed and
agreed to as of the Date of the Grant.
-----------------------------
Name of Grantee:
Dated:
-------------------
-5-
<PAGE>
EXERCISE FORM
The undersigned hereby irrevocably exercises, pursuant to the Stock Option
Agreement (the "Option"), by and between Sel-Leb Marketing, Inc.
(the "Corporation") and the undersigned, the option to purchase shares
of common stock (the "Subject Shares") of the Corporation at the exercise price
of $ per Subject Share and encloses herewith the requisite payment for the
Subject Shares. The undersigned requests that the Corporation deliver to the
undersigned at the address set forth below a certificate or certificates
representing the Subject Shares issued in the name of the undersigned. The
undersigned hereby acknowledges and agrees to the terms and conditions
applicable to the undersigned and the Subject Shares set forth in the Option,
including without limitation, the covenants and transfer restrictions set forth
therein. The undersigned further agrees to pay to the Corporation any
withholding tax required under any federal, state and local statutes and
regulations.
Dated:
-----------------
---------------------------
(Name of Option Grantee --
Please Type or Print)
---------------------------
(Signature of Option Grantee)
---------------------------
(Address)
STATE OF )
: ss.:
COUNTY OF )
On the day of , 19 before me personally came
, to me known to be the person described in and who executed
the foregoing instrument, and acknowledged that (s)he executed the same.
---------------------------
Notary Public
-6-
<PAGE>
SEL-LEB MARKETING, INC.
STOCK OPTION AGREEMENT
[For Senior Executives]
Pursuant to the 1995 Stock Option Plan
Option granted in North Bergen, New Jersey on ___________________ (the
"Date of Grant") by Sel-Leb Marketing, Inc. (the "Corporation") to
__________________ ("Grantee", which term includes any person entitled to
exercise the Option):
1. THE OPTION. The Corporation grants to the Grantee, effective on
the Date of Grant, a stock option (the "Option") to purchase, on the terms
and conditions herein set forth, up to ______ of the Corporation's fully
paid, nonassessable shares of Common Stock, par value $.01 per share (the
"Shares"), at the purchase price for the Shares set forth in Paragraph 2
below. The Option is granted pursuant to the Corporation's 1995 Stock Option
Plan, adopted by the Board of Directors of the Corporation on May 17, 1995,
and adopted by the Stockholders of the Corporation on May 17, 1995 (the
"Plan"). The Option is subject in its entirety to all the applicable
provisions of the Plan which are incorporated herein by reference as if set
forth at length herein, and is a non-incentive option granted pursuant to
Section 7 of the Plan.
2. THE PURCHASE PRICE. The purchase price of the Shares shall be
$_______ per share (the "Option Price").
3. EXERCISE OF OPTION.
(a) Except as otherwise provided in the Plan, the Option is
exercisable over a period beginning on the Date of Grant and ending ten years
from the Date of Grant (the "Option Period") in accordance with the following
schedule:
PERCENT OF SHARES SUBJECT TO
DATE OPTION PURCHASABLE
---- ------------------
Commencing on the Date of Grant
until (but not including) the
first anniversary of the Date of
Grant. 25.00%
<PAGE>
PERCENT OF SHARES SUBJECT TO
DATE OPTION PURCHASABLE
---- ------------------
Commencing on the first
anniversary of the Date of Grant
until (but not including) the
second anniversary of the Date
of Grant. 50.00%
Commencing on the second
anniversary of the Date of Grant
until (but not including) the
third anniversary of the Date of
Grant. 75.00%
Commencing on the third
anniversary of the Date of Grant
until (but not including) the
expiration of the Option. 100.00%
Subject to the terms hereof, the Option may be exercised from time to time
during the Option Period as to the total number of Shares allowable under this
Paragraph 3(a), or any lesser amount thereof.
(b) At such time as the Grantee desires to exercise the Option
granted hereby, in whole or in part, the Grantee's signature at the place
provided on the Exercise Form attached hereto will evidence the Grantee's
election to purchase Shares of Common Stock pursuant to the terms and subject
to the conditions and limitations contained in the Plan, in this Agreement
and in said Exercise Form. The Option shall be considered exercised (in full
or part, as the case may be) on the date such Exercise Form is mailed to the
Chief Financial Officer of the Corporation, postage prepaid, or delivered in
person to the Chief Financial Officer, together with payment of the Option
Price for the Shares to be purchased plus any withholding tax required under
any federal, state and local statutes.
(c) The Option Price shall be paid in full in United States dollars
at the time of purchase or with stock of the Corporation having fair market
value (as determined pursuant to Section 6(a) of the Plan) equal to the
Option Price. If the Option is exercised in accordance with the provisions
of the Plan and this Agreement, the Corporation shall deliver to such person
a certificate or certificates representing the number of Shares in respect to
which the Option is being exercised, which Shares shall be registered in his
or her name.
(d) If this Option shall extend to 100 or more Shares, then this
Option may not be exercised for less than 100 Shares at any one time, and if
this Option shall extend to less
-2-
<PAGE>
than 100 Shares, then this Option must be exercised for all such Shares at one
time.
(e) In addition to the procedures set forth herein, if Regulation T
of the Securities Exchange Act of 1934, as amended, or such future laws or
regulations with respect to the same subject matter ("Regulation T") is
applicable to the exercise of the Option and so permits, the person entitled
to exercise the Option may direct the Corporation in the Exercise Form to
deliver all or any part of the number of Shares to which he is entitled upon
exercise of the Option directly to a broker specified in the Exercise Form.
In such event, the Corporation shall accept payment of the Option Price in
cash or by check from such broker on behalf of the person entitled to
exercise the Option and shall take all action necessary to effect the prompt
delivery of such Shares to such broker in accordance with the provisions of
Regulation T and in accordance with such additional rules and regulations as
may be specified by such broker. Notwithstanding the foregoing, the
Corporation shall not be required to comply with the provisions of this
Section 3(e) if, as a result of a change in the accounting rules and
regulations applicable to the Corporation, or the interpretation thereof,
compliance with the provisions of this Section 3(e) will result in the
imposition of substantial adverse financial reporting requirements on the
Corporation.
4. SALE OF SHARES. The Grantee shall not be entitled to sell,
transfer, or distribute the Shares except pursuant to (i) an effective
registration statement under the Securities Act of 1933, as amended, and any
applicable state securities or "Blue Sky" laws, or (ii) if there be no
registration statement in effect, pursuant to a specific exemption from
registration under the Securities Act of 1933, as amended, and any applicable
state securities or "Blue Sky" laws. Prior to offering or selling the Shares
upon claim of exemption, the Grantee shall obtain a written opinion from
counsel reasonably satisfactory to the Corporation who may be counsel for the
Corporation to the effect that such exemptions are available or shall deliver
"no-action" letters from the Securities and Exchange Commission and any
applicable state securities commission with respect to the proposed sale,
transfer or distribution of the Shares. The certificate or certificates
representing the Shares shall have an appropriate legend referring to the
terms of this Option.
5. TERMINATION OF EMPLOYMENT. Subject to Paragraph 8 hereof, in the
event the employment of Grantee shall terminate for any reason other than
death or for cause, the Grantee shall have the right to exercise this Option
but only in respect of Shares which he or she was entitled to purchase under
this Option at the date of termination of his or her employment, at any time
up to and including the earlier of three months after the date of such
termination of employment or the expiration of the Option
-3-
<PAGE>
Period. In the event that the Grantee's employment is terminated for cause, the
Grantee shall have the right to exercise this Option, but only in respect of
Shares which he or she was entitled to purchase under this Option at the date of
termination of his or her employment, at any time up to and including the
earlier of thirty days after the date of such termination of employment or the
expiration of the Option Period. This Option shall not be affected by any
change of employment so long as the Grantee continues to be an employee of the
Corporation or any of its Subsidiaries (as such term is defined in Section 1 of
the Plan).
6. SUCCESSORS AND ASSIGNS. The Agreement shall be binding upon and
shall inure to the benefit of any successor or assign of the Corporation and,
to the extent herein provided, shall be binding upon and inure to the benefit
of the Grantee's legal representatives.
7. EXERCISE AND TRANSFERABILITY OF OPTION. During the lifetime of the
Grantee, this Option is exercisable only by him or her and shall not be
assignable or transferable by him or her and no other person shall acquire
any rights therein. In the event of the death of the Grantee, this Option or
any unexercised portion thereof shall be exercisable at any time prior to the
expiration of one year after the date of such death (but in no event later
than the date of the expiration of the Option) only by his or her executors
or administrators or the person or persons to whom such deceased Grantee's
rights under this Option shall pass by such deceased Grantee's will or by the
laws of descent and distribution of the state of his or her domicile at the
time of his or her death. The person or persons so exercising this Option
after the deceased Grantee's death shall, simultaneously with the delivery of
the Exercise Form and the payment for the Shares purchased, deliver to the
Company such proof of the right of such person or persons to exercise this
Option as may reasonably be required by the Corporation and its counsel.
8. EXPIRATION OF OPTION. This Option is not exercisable after the
expiration of ten years from the Date of Grant.
9. ADJUSTMENT OF OPTIONS.
(a) The number of Shares issuable upon exercise of this Option, or
the amount and kind of other securities issuable in addition thereto or in
lieu thereof upon the occurrence of the events specified in Section 9 of the
Plan, shall be determined and subject to adjustment, as the case may be, in
accordance with the procedures therein specified.
-4-
<PAGE>
(b) Fractional shares resulting from any adjustment in options
pursuant to this Paragraph may be settled in cash or otherwise as the
Corporation shall determine. Notice of any adjustment in this Option shall
be given by the Corporation to the holder of this Option and such adjustment
(whether or not such notice is given) shall be effective and binding for all
purposes of the Plan and this Agreement.
10. RIGHTS.
(a) The granting of this Option shall not confer upon the Grantee
any right to be continued in the employ of the Corporation or any of its
Subsidiaries, nor shall the Corporation or any of its Subsidiaries be limited
by reasons thereof, or for any other reason, in its discretion and at any
time from changing the status or position of his or her employment, or from
terminating the employment of such Grantee, or from reducing or changing his
or her compensation at any time and from time to time, subject, however, to
any employment or other agreement between the Grantee and the Corporation.
(b) The Grantee shall not, by reason of the granting to him or her
of this Option, have or thereby acquire any rights of a stockholder of the
Corporation with respect to any Shares unless and until he or she has
tendered full payment of the Option Price for such Shares and such Shares
have been duly issued or transferred and delivered to the Grantee in
accordance with the terms hereof.
11. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New Jersey applicable to contracts
entered into and to be performed wholly with such state.
If the foregoing is in accordance with the Grantee's understanding
and approved by him or her, he or she may so confirm by signing and returning
the duplicate of this Agreement delivered for that purpose.
SEL-LEB MARKETING, INC.
By:
--------------------------
[Corporate Seal]
The foregoing is in accordance with my understanding and is hereby confirmed and
agreed to as of the Date of the Grant.
-----------------------------
Name of Grantee:
Dated:
-------------------
-5-
<PAGE>
EXERCISE FORM
The undersigned hereby irrevocably exercises, pursuant to the Stock Option
Agreement _____________ (the "Option"), by and between Sel-Leb Marketing, Inc.
(the "Corporation") and the undersigned, the option to purchase ________ shares
of common stock (the "Subject Shares") of the Corporation at the exercise price
of $_____ per Subject Share and encloses herewith the requisite payment for the
Subject Shares. The undersigned requests that the Corporation deliver to the
undersigned at the address set forth below a certificate or certificates
representing the Subject Shares issued in the name of the undersigned. The
undersigned hereby acknowledges and agrees to the terms and conditions
applicable to the undersigned and the Subject Shares set forth in the Option,
including without limitation, the covenants and transfer restrictions set forth
therein. The undersigned further agrees to pay to the Corporation any
withholding tax required under any federal, state and local statutes and
regulations.
Dated:
-----------------
---------------------------
(Name of Option Grantee --
Please Type or Print)
---------------------------
(Signature of Option Grantee)
---------------------------
(Address)
STATE OF )
: ss.:
COUNTY OF )
On the _______ day of _______________ , 19__ before me personally came
__________________, to me known to be the person described in and who executed
the foregoing instrument, and acknowledged that (s)he executed the same.
---------------------------
Notary Public
-6-
<PAGE>
SEL-LEB MARKETING, INC.
AGREEMENT RELATING TO STOCK OPTIONS
WHICH ARE NOT "INCENTIVE OPTIONS"
PURSUANT TO THE 1995 NONEMPLOYEE DIRECTORS' STOCK OPTION PLAN
Option granted in North Bergen, New Jersey, as of , 199_
(hereinafter referred to as the "Date of Grant") by SEL-LEB MARKETING, INC. (the
"Corporation") to (the "Grantee"):
1. THE OPTION. The Corporation hereby grants to the Grantee, effective
on the Date of Grant, a stock option (the "Option") to purchase, on the terms
and conditions herein set forth, up to 5,000 fully paid, non-assessable shares
of the Corporation's Common Stock, par value $0.01 per share (the "Shares"), at
the option price set forth in Section 2 below.
The Option is granted pursuant to the Corporation's 1995 Nonemployee
Directors' Stock Option Plan, as amended (the "Plan"), a copy of which is
delivered herewith by the Corporation and receipt thereof is acknowledged by the
Grantee. The Option is subject in its entirety to all the applicable provisions
of the Plan which are incorporated herein by reference. The Option is not an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
2. THE PURCHASE PRICE. The purchase price of the Shares shall be $
per share (the "Option Price").
3. EXERCISE OF OPTION.
(a) Except as otherwise provided in the Plan and this Agreement, this
Option is exercisable over a period commencing on the date hereof and ending at
the close of business ten years from the Date of Grant (the "Expiration Date").
Subject to the terms hereof, this Option may be exercised from time to time
during such period as to the total number of Shares allowable under this Section
3(a), or any lesser amount thereof, but only during the continuation of the
Grantee's service as a director of the Corporation. In the event the Grantee
shall cease to be a director of the Corporation for any reason other than death
or disability, this Option shall terminate on the earlier to occur of (i) the
later of ninety (90) days after the date of termination of service or six months
and ten days after the Grantee's last purchase or sale of shares of Common Stock
prior to his termination of service as a director and (ii) the expiration date
of this Option. If the
<PAGE>
Grantee shall die or become disabled within the meaning of Section 22(e)(3) of
the Code, while still serving as a director or prior to the termination of this
Option in accordance with the preceding sentence, this Option shall terminate on
the earlier of (i) the first anniversary of the Grantee's death or disability,
as the case may be, and (ii) the Expiration Date. In the event of the death of
the Grantee, this Option may be exercised by the person or persons entitled to
do so under the Grantee's will (a "legatee"), or, if the Grantee shall fail to
make testamentary disposition of this Option, or shall die intestate, by the
Grantee's legal representative (a "legal representative"). If this Option shall
extend to 100 or more Shares, then this Option may not be exercised for less
than 100 Shares at any one time, and if this Option shall extend to less than
100 Shares, then this Option must be exercised for all such Shares at one time.
(b) Not less than five days nor more than thirty days prior to the
date upon which all or any portion of this Option is to be exercised, the person
entitled to exercise this Option shall deliver to the Corporation written notice
(the "Notice") of his election to exercise all or a part of this Option, which
Notice shall specify the date for the exercise of this Option and the number of
Shares in respect of which this Option is to be exercised. The date specified
in the Notice shall be a business day of the Corporation.
(c) On the date specified in the Notice, the person entitled to
exercise this Option shall pay to the Corporation the Option Price of the Shares
in respect of which this Option is exercised and the minimum amount of any
Federal and state withholding tax and any employment tax. The Option Price
shall be paid in full at the time of purchase, in cash or by check or with
Common Stock of the Corporation which has been owned by the Grantee for at least
six months prior to the exercise of this Option, the value of which shall be
determined in the same manner as provided for determining the fair market value
of a share of Common Stock as set forth in Section 7(a) of the Plan. If this
Option is exercised in accordance with the provisions of the Plan and this
Agreement, the Corporation shall deliver to such person certificates
representing the number of Shares or other securities in respect of which this
Option is being exercised which Shares or other securities shall be registered
in his name.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) The Grantee represents and warrants that he is acquiring this
Option and, in the event this Option is exercised, the Shares, for investment,
for his own account and not with a view to the distribution thereof, and that he
has no present intention of disposing of this Option or the Shares or any
interest therein or sharing ownership thereof with any other person or entity.
-2-
<PAGE>
(b) The Grantee agrees that he will not offer, sell, hypothecate,
transfer or otherwise dispose of any of the Shares unless either:
(i) A registration statement covering the Shares which are to be so
offered has been filed with the Securities and Exchange Commission pursuant
to the Securities Act of 1933 (the "Securities Act") and such sale,
transfer or other disposition is accompanied by a prospectus relating to a
registration statement which is in effect under the Securities Act covering
the Shares which are to be sold, transferred or otherwise disposed of and
meeting the requirements of Section 10 of the Securities Act; or
(ii) Counsel satisfactory to the Corporation renders a reasoned
opinion in writing and addressed to the Corporation, satisfactory in form
and substance to the Corporation and its counsel, that in the opinion of
such counsel such proposed sale, offer, transfer or other disposition of
the Shares is exempt from the provisions of Section 5 of the Securities Act
in view of the circumstances of such proposed offer, sale, transfer or
other disposition.
(c) The Grantee acknowledges that (i) the Shares and this Option
constitute "securities" under the Securities Act and/or the Securities Exchange
Act of 1934 and/or the Rules and Regulations promulgated under said acts; (ii)
the Shares must be held indefinitely unless subsequently registered under the
Securities Act or an exemption from such registration is available; and (iii)
the Corporation shall not be obligated to issue or deliver any shares upon
exercise of this Option if to do so would violate the Securities Act or any
state securities law and the Corporation shall have no obligation to file any
registration statement or take any other action required or permitted by any
such law.
(d) The certificate or certificates representing the Shares shall
have an appropriate legend referring to the terms of this Option.
(e) The Grantee is advised that he or his legatee or legal
representative, as the case may be and as defined above, may be required to make
an appropriate representation at the time of any exercise of this Option in form
and substance similar to the representations contained herein, relating to the
Shares then being purchased.
(f) The Grantee acknowledges that, in the event of termination of his
or her service as a director of the Corporation, his or her rights to exercise
this Option are restricted as set
-3-
<PAGE>
forth in Section 3(a) above.
5. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of any successor or assign of the Corporation and, to
the extent herein provided, shall be binding upon and inure to the benefit of
the Grantee's legatee or legal representative, as defined above.
6. ADJUSTMENT OF OPTIONS.
(a) The number of Shares issuable upon exercise of this Option, or
the amount and kind of other securities issuable in addition thereto or in lieu
thereof upon the occurrence of the events specified in Section 8 of the Plan,
and any changes to the Option Price or other terms contemplated thereby, shall
be determined and subject to adjustment, as the case may be, in accordance with
the procedures therein specified.
(b) Fractional shares resulting from any adjustment in options
pursuant to this Section may be settled in cash or otherwise as the Stock Option
and Compensation Committee shall determine. Notice of any adjustment in this
Option shall be given by the Corporation to the holder of this Option and such
adjustment (whether or not such notice is given) shall be effective and binding
for all purposes of the Plan.
7. EXERCISE AND TRANSFERABILITY OF OPTION. During the lifetime of the
Grantee, this Option is exercisable only by him and shall not be assignable or
transferable by him and no other person shall acquire any rights therein, except
by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order. If the Grantee, while still serving as a director of
the Corporation, shall die within the Option Period, his or her legatee or legal
representative shall have the rights provided in Section 3(a) above.
If the foregoing is in accordance with the Grantee's understanding and
approved by him, he may so confirm by signing and returning the duplicate of
this Agreement delivered for that purpose.
SEL-LEB MARKETING, INC.
By
--------------------------
Title:
The foregoing is in accordance with my understanding and is hereby confirmed and
agreed to as of the Date of Grant.
---------------------------
-4-
<PAGE>
January 10, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D. C. 20549-1004
Re: Sel-Leb Marketing, Inc.
-----------------------
Gentlemen:
We have acted as counsel to Sel-Leb Marketing, Inc., a New York
corporation (the "Company"), in connection with the preparation and filing of
a Registration Statement on Form S-8 (the "Registration Statement") relating
to the registration under the Securities Act of 1933, as amended, and the
rules and regulations thereunder, of 2,140,689 shares of Common Stock, par
value $.01 per share ("Common Stock"), of the Company, of which 999,689
shares (the "Reoffer Shares") are to be offered for resale pursuant to the
reoffer prospectus (the "Reoffer Prospectus") included as part of the
Registration Statement. Of the shares of Common Stock being registered
pursuant to the Registration Statement, (i) 490,689 shares (the "Warrant
Shares") are issuable upon exercise of warrants (the "Warrants") granted to
an affiliate pursuant to a Warrant and Registration Agreement (the "Warrant
Agreement") between the Company and such affiliate, which shares constitute a
portion of the Reoffer Shares included in the Reoffer Prospectus, (ii)
1,635,000 shares (the "Option Shares") are reserved for issuance pursuant to
options (the "Options") granted or available for future grant under the
Company's 1995 Stock Option Plan (the "Stock Option Plan") and 1995
Nonemployee Directors' Stock Option Plan (the "Nonemployee Directors' Plan"
and, together with the Stock Option Plan, the "Plans"), including options to
acquire an aggregate of 494,000 shares granted to an affiliate of the
Company, which shares constitute a portion of the
<PAGE>
- 2 -
Reoffer Shares included in the Reoffer Prospectus, and (iii) 15,000 shares were
previously issued to a former affiliate of the Company upon exercise of options
granted to him under the Nonemployee Directors' Plan, which shares constitute a
portion of the Reoffer Shares included in the Reoffer Prospectus.
In connection with this opinion, we have examined originals, or
copies certified or otherwise identified to our satisfaction, of the
Certificate of Incorporation of the Company, the By-Laws of the Company, each
as amended to date, the minutes and other records of the proceedings of the
Board of Directors and of the stockholders of the Company, the Stock Option
Plan, Nonemployee Directors' Plan, the Warrant Agreement and such other
documents, corporate and public records, agreements, and certificates of
officers of the Company and of public and other officials, and we have
considered such questions of law, as we have deemed necessary as a basis for
the opinions hereinafter expressed. In such examination we have assumed the
genuineness of all signatures and the authenticity of all documents submitted
to us as originals and the conformity to original documents of all documents
submitted to us as certified or photostatic copies. As to any facts material
to this opinion, we have relied upon statements and representations of
officers and other representatives of the Company.
Based on and subject to the foregoing, we hereby advise you that, in
our opinion, (i) the issuance and sale of the Option Shares and Warrant
Shares upon exercise of any Options and Warrants in accordance with the terms
and subject to the conditions set forth in the agreements pursuant to which
the Options were or will be granted (the "Option Agreements") and the Warrant
Agreement, as the case may be, have been duly authorized and, when the
consideration for any such Option Shares or Warrant Shares shall have been
received by the Company and shares are issued pursuant to such Options or
Warrants in accordance with the terms and subject to the conditions set forth
in the respective Option Agreements or Warrant Agreement, as the case may be,
such shares of Common Stock will be validly issued, fully paid and
nonassessable; and (ii) the issuance and sale of the Reoffer Shares has been
duly authorized and such shares are validly issued, fully paid and
nonassessable.
We are lawyers admitted to practice only in the State of New York.
Accordingly, the foregoing opinion is limited solely to the effect of the
laws of the State of New York and of the federal laws of the United States of
America.
<PAGE>
- 3 -
We hereby consent to the reference to our firm in the Company's
Registration Statement on Form S-8.
Very truly yours,
/s/ Zimet, Haines, Friedman & Kaplan
------------------------------------
ZIMET, HAINES, FRIEDMAN & KAPLAN
<PAGE>
INDEPENDENT AUDITOR'S CONSENT
To the Board of Directors
Sel-Leb Marketing, Inc.
We hereby consent to the incorporation by reference in the accompanying
Prospectus constituting part of the Registration Statement on Form S-8 of our
report dated March 3, 1996, except for the first paragraph of Note 9, as to
which the date is March 12, 1996, on the financial statements of Sel-Leb
Marketing, Inc. as of December 31, 1995 and for each of the two years in the
period ended December 31, 1995 included in the Sel-Leb Marketing, Inc. Annual
Report on Form 10-KSB for the year ended December 31, 1995.
GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.
New York, New York
January 10, 1997
<PAGE>
July 11, 1995
Duke & Co., Inc.
909 Third Avenue
New York, New York 10022
Re: Sel-Leb Marketing, Inc.
-----------------------
Dear Sir or Madame:
The undersigned, a beneficial owner of the common stock of Sel-Leb
Marketing, Inc. (the "Company"), par value $0.01 per share (the "Common
Stock"), and/or warrants, options or rights to purchase, or securities
convertible into, Common Stock, understands that the Company has filed with
the Securities and Exchange Commission (the "SEC") a registration statement
on Form SB-2 (No. 33-88134) for the registration of units (the "Units")
consisting of Common Stock and redeemable warrants (the "Redeemable
Warrants") of the Company (the "Registration Statement") in connection with a
public offering of such Units. The undersigned further understands that upon
the effectiveness of the Registration Statement, the Company and Duke & Co.,
Inc. (the "Underwriter") intend to enter into an underwriting agreement (the
"Underwriting Agreement") in connection with such public offering.
In order to induce the Underwriter to proceed with such public
offering, the undersigned agrees, for the benefit of the Company and the
Underwriter, that should such public offering be effectuated, he/she will
not, without the prior written consent of the Underwriter, sell, assign,
pledge, hypothecate or otherwise dispose of, directly or indirectly, other
than in private transfers in which the transferee agrees to be bound by the
provisions of this letter agreement, any shares of Common Stock of the
Company owned by him/her, or subsequently acquired through the exercise of
any options, warrants or rights, split or other distribution of stock, or
grant of options, rights or warrants with respect to any such shares of
Common Stock, during the eighteen (18) month period commencing on the date
that the SEC declares the Registration Statement effective. Furthermore, the
undersigned will permit all
<PAGE>
Duke & Co., Inc.
July 11, 1995
Page 2
certificates evidencing his/her shares of Common Stock to be endorsed with the
appropriate restrictive legends, and will consent to the placement of
appropriate stop transfer orders with the transfer agent for the Company.
In the event that the Registration Statement becomes effective, the
undersigned agrees to be bound by the provisions of this Agreement.
Very truly yours,
/s/ Jan S. Mirsky
----------------------------------
Signature
Jan S. Mirsky
----------------------------------
Printed Name
- ---------------------
Please indicate number of
shares of Common Stock owned.
Please list any options, warrants,
rights or convertible securities
owned and the number of shares of
Common Stock issuable upon the
exercise or conversion of such
securities:
<PAGE>
SEL-LEB MARKETING, INC.
1435 51 Street
North Bergen, New Jersey 07047
(201) 864-3316
Fax (201) 864-3586
December 5, 1996
Duke & Co., Inc.
909 Third Avenue
New York, N.Y. 10022
Re: Sel-Leb Marketing, Inc.
-----------------------
Dear Sir or Madame:
This is to confirm that, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned
hereby agrees to be bound by the provisions of the attached letter agreement
dated June 11, 1995 for an additional period of twelve months following the
expiration of the eighteen-month period described therein; provided, however,
that such provisions shall apply only to ninety percent (90%) of any shares
of Common Stock held by the undersigned as of the date hereof (including,
without limitation, any shares subsequently acquired either through the
exercise of any options, warrants or rights held by the undersigned as of the
date hereof, or through any split or other distribution of stock, or grant of
options, rights or warrants with respect to any such shares of Common Stock).
Very truly yours,
/s/ Jan Mirsky
Jan Mirsky
