SEL-LEB MARKETING INC
DEF 14A, 1998-04-29
DRUGS, PROPRIETARIES & DRUGGISTS' SUNDRIES
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<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                            SCHEDULE 14A INFORMATION

                Proxy Statement Pursuant to Section 14(a) of the
                         Securities Exchange Act of 1934

Filed by the Registrant [X]  Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 
    14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials 
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12


                             SEL-LEB MARKETING, INC.
              -----------------------------------------------------
                (Name of Registrant as Specified in Its Charter)


     ----------------------------------------------------------------------
     (Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X]  No fee required.
[ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

     (1)      Title of each class of securities to which transaction applies:
                                           N/A

     (2)      Aggregate number of securities to which transaction applies:
                                           N/A

     (3)      Per unit price or other underlying value of
              transaction computed pursuant to Exchange Act Rule
              0-11 (Set forth the amount on which the filing fee is
              calculated and state how it was determined):
                                           N/A

<PAGE>


     (4)      Proposed maximum aggregate value of transaction:
                                           N/A

     (5)      Total fee paid:

                                           N/A

[ ]  Fee paid previously with preliminary materials.

[ ]  Check box if any part of the fee is offset as provided by Exchange Act Rule
     0-11(a)(2) and identify the filing for which the offsetting fee was paid 
     previously. Identify the previous filing by registration statement number, 
     or the Form or Schedule and the date of its filing.

     (1)      Amount Previously Paid:
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     (2)      Form, Schedule or Registration Statement No.:
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     (3)      Filing Party:
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     (4)      Date Filed:
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<PAGE>
                     S E L - L E B  M A R K E T I N G, I N C.

                                495 River Street
                           Paterson, New Jersey 07524

                         -----------------------------

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                                  May 27, 1998

                         ------------------------------

To the Shareholders:

         NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of
Sel-Leb Marketing, Inc. (the "Company") will be held on May 27, 1998 at 10:00
a.m. (local time) at the Company's principal executive offices located at 495
River Street, Paterson, New Jersey 07524, for the following purposes:

         1. To elect nine members to the Board of Directors to serve until the
next annual meeting of shareholders and until their respective successors are
duly elected and qualified;

         2. To consider and vote upon a proposal to amend the Company's
Certificate of Incorporation in order to effect a reverse stock split of the
Company's Common Stock, par value $.01 per share, of not greater than
one-for-eight;

         3. To consider and vote upon a proposal to amend the Company's
Certificate of Incorporation in order to authorize the issuance of up to
10,000,000 shares of Preferred Stock, par value $.01 per share, to be issued
from time to time in such amounts and designations as may be authorized by the
Board of Directors; and

         4. To transact such other business as may properly come before the
meeting or any adjournment thereof.

         The Board of Directors has fixed April 14, 1998 as the record date for
the determination of the shareholders entitled to notice of and to vote at such
meeting or any adjournment thereof, and only shareholders of record at the close
of business on that date are entitled to notice of and to vote at such meeting.

         A copy of the Company's Annual Report for the fiscal year ended
December 31, 1997 is enclosed herewith.

         You are cordially invited to attend the meeting. Whether or not you
plan to attend, you are urged to complete, date and sign the enclosed proxy and
return it promptly. If you receive more than one form of proxy, it is an
indication that your shares are registered in more than one account, and each
such proxy must be completed and returned if you wish to vote all of your shares
eligible to be voted at the meeting.

                                           By Order of the Board of Directors,


                                                     Jorge Lazaro
                                                     Secretary

Dated:          Paterson, New Jersey
                April 29, 1998


- -------------------------------------------------------------------------------
                            YOUR VOTE IS IMPORTANT.

THE ATTACHED PROXY STATEMENT SHOULD BE READ CAREFULLY. SHAREHOLDERS ARE URGED
TO SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE PAID
ENVELOPE. NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. YOU
MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED BY GIVING WRITTEN NOTICE
TO THE COMPANY. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON THOUGH
YOU HAVE PREVIOUSLY SENT IN YOUR PROXY.

- -------------------------------------------------------------------------------

<PAGE>

                    S E L - L E B  M A R K E T I N G, I N C.

                                495 River Street
                           Paterson, New Jersey 07524

                          --------------------------

                          P R O X Y  S T A T E M E N T

                          ---------------------------

         The enclosed proxy is solicited on behalf of the Board of Directors of
Sel-Leb Marketing, Inc. (the "Company") pursuant to this proxy statement (to be
mailed on or about April 29, 1998) for use at the Annual Meeting of Shareholders
to be held at the time and place shown in the attached notice of annual meeting
and at any adjournment or postponement thereof (the "Annual Meeting"). Shares
represented by properly executed proxies, if returned in time, will be voted at
the Annual Meeting as specified or, if not otherwise specified, in favor of the
election as directors of the nominees named herein, in favor of the proposal to
amend the Certificate of Incorporation in order to effect a reverse stock split
and in favor of the proposal to amend the Certificate of Incorporation in order
to authorize the issuance of up to ten million (10,000,000) shares of Preferred
Stock, par value $.01 per share ("Preferred Stock"), to be issued from time to
time in such amounts and designations as may be authorized by the Board of
Directors. Such proxies are revocable at any time before they are exercised by
written notice to the Secretary of the Company or by your requesting the return
of the proxy at the Annual Meeting. Any later dated proxies will revoke proxies
submitted earlier.

                                  RECORD DATE

         The record date for the determination of holders of common stock, par

value $0.01 per share, of the Company ("Common Stock") who are entitled to
notice of and to vote at the Annual Meeting is April 14, 1998 (the "Record
Date").

                               VOTING SECURITIES

         As of the Record Date, 8,712,727 shares of Common Stock of the Company
were outstanding. Holders of record of Common Stock as of the Record Date will
be entitled to one vote for each share held. A majority of all shares of Common
Stock issued, outstanding and entitled to vote at the Annual Meeting, present in
person or represented by proxy, shall constitute a quorum. Abstentions and
broker non-votes are considered present for purposes of determining whether the
quorum requirement is met. A broker non-vote occurs when a nominee holds shares
for a beneficial owner but cannot vote on a proposal because the nominee does
not have discretionary voting power and has not received instructions from the
beneficial owner as to how to vote the shares.

         With respect to the matters to come before the shareholders at the
Annual Meeting, (i) the election of directors (Proposal No. 1) shall be
determined by a plurality of the voting power present in person or represented
by proxy at the Annual Meeting and entitled to vote and (ii) the proposal to
approve and adopt an amendment to the Company's Certificate of Incorporation to
effect a reverse stock split (Proposal No. 2) and the proposal to approve and
adopt an amendment to the Company's Certificate of Incorporation authorizing the
issuance of up to ten million (10,000,000) shares of Preferred Stock (Proposal
No. 3) shall each be determined by the affirmative vote 

<PAGE>

of a majority of the outstanding Common Stock entitled to vote at the Annual
Meeting. With respect to the election of directors, only shares that are voted
in favor of a particular nominee will be counted towards such nominee's
achievement of a plurality. Shares present at the Annual Meeting that are not
voted for a particular nominee, shares present by proxy where the shareholder
properly withholds authority to vote for such nominee, and broker non-votes
will not be counted towards such nominee's achievement of a plurality. With
respect to Proposals Nos. 2 and 3, shares with respect to which a shareholder
abstains from voting or directs his proxy to abstain from voting and shares
represented by broker non-votes will have the same effect as votes against the
matter since they are not affirmative votes for the matter.


                     PRINCIPAL SHAREHOLDERS OF THE COMPANY

         The following table sets forth, as of the Record Date, the beneficial
ownership of shares of Common Stock by (i) each person who is known by the
Company to own more than 5% of the outstanding shares of Common Stock, (ii) each
director of the Company, each nominee for election as a director of the Company
and each executive officer of the Company listed in the Summary Compensation
Table and (iii) all of the Company's officers and directors as a group:

<TABLE>
<CAPTION>
                                                                Amount and Nature of

Name and Address of Beneficial Owner(1)                        Beneficial Ownership(2)             Percent owned
- ---------------------------------------                        -----------------------             -------------

<S>                                                           <C>                                <C>  
Harold Markowitz                                                       1,480,250(3)                       17.0%

Paul Sharp                                                             1,480,750(4)                       17.0%

Jorge Lazaro                                                           1,480,250(5)                       17.0%

Jan Mirsky                                                               804,939(6)                        8.5%

Jack Koegel                                                              238,250(7)                        2.7%

Stanley R. Goodman                                                        25,000(8)                       *

Edward C. Ross                                                            10,000(9)                       *

L. Douglas Bailey                                                        15,0001(0)                       *

Carl A. Bellini                                                           6,2501(1)                       *

All officers and directors                                             5,530,689(3-11)                    56.5%
  as a group (9 persons)
</TABLE>

- --------------------------

*     Less than 1%

(1)  The address for each such person is c/o Sel-Leb Marketing, Inc., 495 River
     Street, Paterson, New Jersey 07524.

(2)   A person is deemed to be the beneficial owner of securities that can be
      acquired by such person within 60 days from the date of this Proxy
      Statement upon the exercise of options or warrants. Each beneficial
      owner's 

                                      -2-

<PAGE>

     percentage ownership is determined by assuming that options or warrants
     that are held by such person (but not those held by any other person) and
     which are exercisable within 60 days from the date of this Proxy Statement
     have been exercised. Unless otherwise noted, the Company believes that all
     persons named in the table have sole voting and investment power with
     respect to all shares of Common Stock beneficially owned by them.

(3)   Includes 11,250 shares of Common Stock issuable upon exercise of options
      granted to Mr. Markowitz under the Stock Option Plan. Does not include
      11,250 shares of Common Stock issuable upon exercise of options granted to
      Mr. Markowitz under the Stock Option Plan which are not exercisable within
      60 days of the date of this Proxy Statement.


(4)   Includes 11,250 shares of Common Stock issuable upon exercise of options
      granted to Mr. Sharp under the Stock Option Plan. Does not include 11,250
      shares of Common Stock issuable upon exercise of options granted to Mr.
      Sharp under the Stock Option Plan which are not exercisable within 60 days
      of the date of this Proxy Statement.

(5)   Includes 11,250 shares of Common Stock issuable upon exercise of options
      granted to Mr. Lazaro under the Stock Option Plan. Does not include 11,250
      shares of Common Stock issuable upon exercise of options granted to Mr.
      Lazaro under the Stock Option Plan which are not exercisable within 60
      days of the date of this Proxy Statement.

(6)   Includes (i) 381,689 shares of Common Stock issuable upon exercise of a
      warrant granted to Mr. Mirsky by the Company and (ii) 366,250 shares of
      Common Stock issuable upon exercise of options granted to Mr. Mirsky under
      the Stock Option Plan. Does not include 127,750 shares of Common Stock
      issuable upon exercise of options granted to Mr. Mirsky under the Stock
      Option Plan which are not exercisable within 60 days of the date of this
      Proxy Statement.

(7)   Includes 233,250 shares of Common Stock issuable upon the exercise of
      options granted to Mr. Koegel under the Stock Option Plan. Does not
      include 93,750 shares of Common Stock issuable upon exercise of options
      granted to Mr. Koegel under the Stock Option Plan which are not
      exercisable within 60 days of the date of this Proxy Statement.

(8)   Includes 25,000 shares of Common Stock issuable upon exercise of options
      granted to Mr. Goodman under the Company's 1995 Nonemployee Directors'
      Stock Option Plan (the "Nonemployee Directors' Plan").

(9)  Includes 10,000 shares of Common Stock issuable upon exercise of options
     granted to Mr. Ross under the Nonemployee Directors' Plan.

(10)  Includes 15,000 shares of Common Stock issuable upon exercise of options
      granted to Mr. Bailey under the Nonemployee Directors' Plan.

(11)  Includes 5,000 shares of Common Stock issuable upon exercise of options
      granted to Mr. Bellini under the Nonemployee Directors' Plan and 1,250
      shares of Common Stock issuable upon exercise of options granted to Mr.
      Bellini under the Stock Option Plan. Does not include 3,750 shares of
      Common Stock issuable upon exercise of options granted to Mr. Bellini
      under the Stock Option Plan which are not exercisable within 60 days of
      the date of this Proxy Statement.

                                      -3-

<PAGE>

                                 PROPOSAL NO. 1
                             ELECTION OF DIRECTORS

                  The Board of Directors has nominated the nine individuals
whose names are set forth below for election to the Board of Directors, each to

hold office until the next Annual Meeting of Shareholders and until his
successor is duly elected and qualified. Unless otherwise specified, the
enclosed proxy will be voted in favor of the persons named below, all of whom
are now directors of the Company. In the event that any of such nominees for
election at the Annual Meeting should become unavailable for election for any
reason not presently known, it is intended that votes will be cast pursuant to
the accompanying proxy for such substitute nominees as the Board of Directors
may designate unless the Board of Directors reduces the number of directors. The
directors are to be elected by the affirmative vote of the holders of a
plurality of the shares of Common Stock entitled to vote and present in person
or represented by proxy at the Annual Meeting.

Recommendation of Board of Directors

         The Board of Directors recommends a vote FOR election of the nominees
identified below as directors of the Company.

Information Regarding Nominees

         The information set forth below, furnished to the Board of Directors by
the respective individuals, shows as to each nominee for election as a director
of the Company (i) his name and age, (ii) his principal position with the
Company, (iii) his principal occupation or employment, if different, and (iv)
the month and year in which he began to serve as a director.

<TABLE>
<CAPTION>

                                           Principal Occupation 
Name and Age                                  or Employment                                 Director Since
- ------------                                  -------------                                 --------------

<S>                                   <C>                                                  <C> 
Harold Markowitz (57)                  Chairman of the Board of the Company                 September 1993

Paul Sharp (48)                        President and Chief Executive Officer of             December 1994
                                       the Company

Jan S. Mirsky (57)                     Executive Vice President - Finance of the            December 1994
                                       Company

Jorge Lazaro (49)                      Executive Vice President and Secretary of            September 1993
                                       the Company

Jack Koegel (46)                       Vice Chairman of the Board and Chief                 December 1994
                                       Operating Officer of the Company

Stanley R. Goodman (68)                Partner, Goodman & Saperstein (law firm)             December 1994
</TABLE>

                                      -4-

<PAGE>


<TABLE>
<CAPTION>

                                           Principal Occupation 
Name and Age                                  or Employment                                 Director Since
- ------------                                  -------------                                 --------------

<S>                                   <C>                                                  <C> 

Edward C. Ross (54)                    Partner, Finkle, Ross & Rost                         December 1994
                                       (accounting firm)

L. Douglas Bailey (56)                 President, Bailey & Associates, Inc.                   March 1996
                                       (consulting firm); President and Chief
                                       Executive Officer, Precision Fixtures
                                       and Graphics (manufacturing company)

Carl A. Bellini (64)                   Consultant to retail industry                           May 1997

</TABLE>

Biographical Information Regarding Directors

         Harold Markowitz, a co-founder of the Company, has been Chairman of the
Board of the Company since December 1994. Prior to such time, he served as
President and a director of the Company from its inception in September 1993 to
December 1994. Mr. Markowitz was also a co-founder of Linette Cosmetics, Inc.
("Linette Cosmetics") and served as a director of Linette Cosmetics from its
inception in 1985 until the May 1995 merger of Linette Cosmetics with and into
the Company (the "Linette Merger"). In 1986, Mr. Markowitz co-founded Beauty
Labs, Inc. ("Beauty Labs"), a publicly-held company which marketed cosmetics and
other accessories to mass merchandisers, and served as the Chairman of the Board
and a director of Beauty Labs from 1987 to 1991. Since 1979, Mr. Markowitz has
served as a director and President and, together with his wife, as sole
shareholders, of Sela Sales Ltd., a trading company founded by Mr. Markowitz
which engaged in secondary sourcing of merchandise for distribution into major
retail outlets until it ceased conducting such operations in November 1988.

         Paul Sharp has served as Chief Executive Officer of the Company since
May 1995 and as President and a director of the Company since December 1994. Mr.
Sharp also served as Secretary and Treasurer and a director of Linette Cosmetics
from 1990 to December 1994. From 1987 to 1989, Mr. Sharp served as Corporate
Vice President of Zayre Corporation, a mass merchandising retailer, where he was
responsible for the fragrance, cosmetic and health and beauty product lines.
Prior to 1987, Mr. Sharp served in various other capacities at Zayre Corporation
and on the Retail Advisory Board of The Gillette Company, a manufacturer of
personal care products, and was engaged as a retail marketing consultant for
Smith-Kline Beecham Company, a manufacturer of health and beauty aids and
pharmaceuticals.

         Jan Mirsky has served as Executive Vice President-Finance of the
Company since January 1995 and as a director of the Company since December 1994
and, from January 1995 to June 1997 served as the Chief Operating Officer of the
Company. In addition, he acted as a marketing consultant to the Company from

January 1994 to January 1995, at which time he became an employee of the
Company. From 1991 to January 1995, Mr. Mirsky was engaged as an independent
management, marketing and financial consultant. Mr. Mirsky also served as a
director of Builders Transport, Inc., a publicly-held trucking company, from
1992 to 1995, and from 1984 to 1991 served as the Chief Financial Officer and a
director of Angio-Medical Corporation, a publicly-held bio-pharmaceutical
company co-founded by him which ceased conducting business in 1991.

         Jorge Lazaro, a co-founder of the Company, has been Executive Vice
President of the Company since May 1995 and the Secretary and a director of the
Company since its inception in September 1993. Mr. Lazaro also served as the
President of the Company from December 1994 to May 1995 and as Treasurer of the
Company from its 

                                      -5-

<PAGE>

inception to December 1994. Mr. Lazaro was also a co-founder of Linette
Cosmetics and served as President and a director of Linette Cosmetics from its
inception in 1985 until the Linette Merger, and has served as the Secretary and
Treasurer and as a director of Lea Cosmetics, Inc. ("Lea Cosmetics") from its
inception in October 1992 until the merger of Lea Cosmetics with and into the
Company in August 1995. Mr. Lazaro has also served, since 1989, as a director
and President of H. Howlin International Inc., a trading company founded by Mr.
Lazaro and of which he is the sole shareholder which, until it ceased
conducting operations in March 1993, imported and marketed health and beauty
aids to the United States market. In addition, since 1991 Mr. Lazaro has served
as a director and the Secretary and Treasurer of Lazmar Inc., a company
co-founded by him which, until it ceased conducting its day-to-day business
operations in July 1993, acted as a distributor of health and beauty aids and
fragrances.

         Jack Koegel has served as the Vice Chairman of the Company since
September 1995, as the Chief Operating Officer of the Company since June 1997
and as a director of the Company since December 1994. From 1993 until September
1995, Mr. Koegel served as President of Retail Concepts 2000, Inc., a retail
consulting company founded by him. Mr. Koegel served as President of Twin Valu
Stores (a division of Super Valu Inc.) from 1991 to 1993 and as Executive Vice
President of ShopKo Stores/Twin Valu Stores (a division of Super Valu Inc.) from
1989 to 1991.

         Stanley R. Goodman has served as Assistant Secretary of the Company
since May 1995 and as a director of the Company since December 1994. Since 1989,
Mr. Goodman has been a partner at Goodman & Saperstein, a law firm specializing
in statutory and regulatory issues concerning pharmaceuticals, cosmetics and
related consumer products. He also served as a director and General Counsel of
Beauty Labs from 1987 until the time of its merger with Robern Industries, Inc.
in 1992.

         Edward C. Ross has served as a director of the Company since December
1994. Mr. Ross has been a partner in the accounting firm of Finkle, Ross & Rost
since 1975. He has also been involved as a principal in various start-up
companies as well as established operating businesses, ranging in type from

manufacturing to real estate to financial consulting. Mr. Ross is a Certified
Public Accountant in New York and New Jersey, and is a member of the American
Institute of Certified Public Accountants.

         L. Douglas Bailey has served as a director of the Company since March
1996. Beginning in 1996, Mr. Bailey became the President and Chief Executive
Officer of Precision Fixtures and Graphics, a manufacturer of store fixtures,
and since 1995 he has served as President of Bailey & Associates, Inc., a
consulting firm for the retail industry. Mr. Bailey also serves as a developer
for Regent Properties, an industrial property development and management company
founded and operated by Mr. Bailey and his wife. From 1993 to 1995, Mr. Bailey
served as President of Home Shopping Club, Inc., a subsidiary of Home Shopping
Network, Inc. and the operator of Home Shopping Network, a live,
customer-interactive retail sales television network, and from 1970 to 1992
served as the Senior Vice President of Eckerd Drug Company, a retail drug store
chain. Mr. Bailey also serves as a director of 800 Travel Systems, Inc., a
publicly-held discount travel reservations company.

         Carl A. Bellini has served as a director of the Company since May 1997.
Mr. Bellini currently acts as a private consultant to the retail industry. From
October 1993 to June 1997, Mr. Bellini served as Executive Vice President and
Chief Operating Officer and, from August 1992 to October 1993, Mr. Bellini
served as Executive Vice President of Marketing and Stores, of Revco D.S. Inc.
("Revco"), a publicly-held retail drugstore chain which filed a bankruptcy
proceeding in July 1988 and subsequently emerged from bankruptcy in June 1992.
Mr. Bellini also served as a director of Revco from August 1994 to June 1997.
From December 1991 to April 1992, Mr. Bellini served as Acting Chief Operating
Officer of Standard Brands Paint Co., which filed a bankruptcy proceeding in
March 1992 and emerged from bankruptcy during 1993. From June 1989 to June
1991, Mr. Bellini served as President and Chief Executive Officer of Erol's,
Inc., a video and electronics chain based in Washington, D.C., and, from
December 1987 to June 1989, served as Executive Vice President of Store
Operations of Revco. Mr. Bellini also serves as a director of 800 Travel
Systems, Inc. 

                                      -6-

<PAGE>

Meetings and Committees of the Board

         The Board of Directors of the Company held eight meetings during 1997
and acted by written consent on two occasions. All directors attended 75% or
more of the total number of meetings of the Board and of the committees of which
they were members.

         The Executive Committee, the Audit Committee, the Stock Option
Committee and the Compensation Committee are the only standing committees of the
Board. There is no formal nominating committee; the Board of Directors or the
Executive Committee performs this function.

         The Executive Committee, which is currently composed of Mr. Markowitz,
its Chairman, and Messrs. Sharp, Mirsky, Lazaro and Koegel, has all the powers
of the Board of Directors in the management of the business and affairs of the

Company, except as such powers are limited by the New York Business Corporation
Law. During 1997, the Executive Committee held five meetings.

         The Audit Committee, which is currently composed of Mr. Ross, its
Chairman, and Messrs. Goodman and Koegel, consults with the auditors of the
Company and such other persons as the members deem appropriate, reviews the
preparations for and scope of the audit of the Company's annual financial
statements, makes recommendations as to the engagement and fees of the
independent auditors, and performs such other duties relating to the financial
statements of the Company as the Board of Directors may assign from time to
time. The Audit Committee held two meetings during 1997.

         The Stock Option Committee, which is currently composed of Mr. Goodman,
its Chairman, and Mr. Ross, has all of the powers of the Board of Directors,
including the authority to issue stock or other securities of the Company, in
respect of any matters relating to the administration of the Company's stock
option plans (other than the grant of options under the Non-Employee Directors'
Plan). The Stock Option Committee held twelve meetings during 1997.

         The Compensation Committee, which is currently composed of Mr.
Markowitz, its Chairman, and Messrs. Goodman and Ross, reviews with the Board of
Directors on a periodic basis existing and proposed compensation plans, programs
and arrangements for executive officers and other employees. All recommendations
regarding compensation arrangements for Mr. Markowitz are made solely by Messrs.
Goodman and Ross. The Compensation Committee held one meeting during 1997.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

         Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires officers and directors of the Company and holders of
more than 10% of the Common Stock (collectively, "Reporting Persons") to file
reports of ownership and changes in ownership of the Common Stock with the
Securities and Exchange Commission within certain time periods and to furnish
the Company with copies of all such reports. Based solely on its review of the
copies of such reports furnished to the Company by such Reporting Persons or on
the written representations of such Reporting Persons that no reports on Form 5
were required, the Company believes that during the year ended December 31,
1997, all of the Reporting Persons complied with their Section 16(a) filing
requirements.

                                      -7-

<PAGE>

Directors' Compensation

         Each director who is not an employee of the Company was paid $500 for
each meeting of the Board of Directors attended by such director during 1997.
The Company also reimbursed each such director for all reasonable expenses
incurred by him in attending meetings. In addition, non-employee directors of
the Company are eligible to participate in the Nonemployee Director's Plan,
pursuant to which an aggregate of 300,000 shares of Common Stock may be granted
to non-employee directors. Pursuant to such Plan, each non-employee director is
automatically granted (i) upon becoming a director of the Company, an option to

purchase 5,000 shares of Common Stock and (ii) each year, on the day of the
Company's annual meeting of shareholders, an option to purchase 5,000 shares of
Common Stock. To date, the Company has granted to Messrs. Bailey, Bellini,
Goodman and Ross, pursuant to the Nonemployee Directors' Plan, options to
purchase 15,000 shares, 5,000 shares, 25,000 shares and 25,000 shares,
respectively.


                             EXECUTIVE COMPENSATION

Summary Compensation Table

         The following table sets forth certain information regarding the
compensation in each of the last three fiscal years of the person who served as
the Company's Chief Executive Officer during the fiscal year ended December 31,
1997, and the Company's four most highly compensated officers (other than the
Chief Executive Officer) who were serving as officers at December 31, 1997
(collectively, the "Named Officers").


<TABLE>
<CAPTION>

                                                                                         Long Term Compensation
                                                                               -------------------------------------
                                               Annual Compensation (1)                  Awards               Payouts
                                      ------------------------------------     --------------------------    -------
                                                                                              Securities 
                                                             Other Annual     Restricted     Underlying        LTIP     All Other
Name and Principal         Fiscal                    Bonus   Compensation      Stock          Options/         Payouts   Compen-  
     Position               Year       Salary ($)     ($)    ($)               Award(s)($)      SARs (#)        ($)      sation($)
- --------------------       -----      ----------    -------  ------------       -----------    -----------    ---------  ---------

<S>                      <C>          <C>            <C>     <C>               <C>            <C>             <C>         <C>
Paul Sharp                 1997         93,750        -0-         8,766(2)         -0-            22,500(3)      -0-         -0-
 President and             1996         99,159        -0-         8,628(2)         -0-            22,500(3)      -0-         -0-
 Chief Executive           1995        125,000        -0-         9,427(2)         -0-               -0-(4)      -0-         -0-
 Officer

Harold Markowitz           1997        104,766        -0-        12,060(5)         -0-            22,500(3)      -0-         -0-
 Chairman of the           1996         88,143        -0-        12,434(5)         -0-            22,500(3)      -0-         -0-
 Board                     1995        125,000        -0-        13,889(5)         -0-               -0-(4)      -0-         -0-

Jan S. Mirsky              1997         84,923        -0-         5,554(6)         -0-            17,000(3)      -0-         -0-
 Executive Vice            1996         91,226        -0-         5,554(6)         -0-            17,000(3)      -0-         -0-
 President - Finance       1995        108,365        -0-         1,388(6)         -0-           477,000(7)      -0-         -0-
</TABLE>

                                      -8-

<PAGE>

<TABLE>


<S>                      <C>          <C>            <C>        <C>               <C>           <C>             <C>         <C>
Jorge Lazaro               1997         93,750        -0-         9,246(8)         -0-            22,500(3)      -0-         -0-
 Executive Vice            1996         99,159        -0-         9,600(8)         -0-            22,500(3)      -0-         -0-
 President and             1995        125,000        -0-         9,600(8)         -0-               -0-(4)      -0-         -0-
 Secretary

Jack Koegel(9)             1997         77,750        -0-        14,400(10)        -0-            50,000(11)     -0-         -0-
 Vice Chairman of          1996         77,885        -0-        14,400(10)        -0-               -0-         -0-         -0-
 the Board and Chief       1995         25,000(12)    -0-        28,600(10)(13)    -0-           390,000(14)     -0-         -0-
Operating Officer
</TABLE>

- ------------------------------

(1)  Annual compensation figures for Messrs. Sharp, Markowitz and Lazaro for
     1995 include compensation paid to such individuals by the Company and by
     Linette Cosmetics, which was merged with and into the Company pursuant to
     the Linette Merger in May 1995.

(2)  Represents amounts paid by the Company with respect to an automobile for
     use by Mr. Sharp in connection with his services to the Company.

(3)  On August 18, 1997, the Company adjusted the exercise price of 22,500
     outstanding options originally granted to each of Messrs. Sharp, Markowitz
     and Lazaro on December 26, 1996 and 17,000 outstanding options originally
     granted to Mr. Mirsky on December 26, 1996. In connection with such
     repricing, the Company cancelled the outstanding options, each with an
     exercise price of $5.625, and granted a corresponding number of new
     options, each with an exercise price of $0.50 (the fair market value of
     the Common Stock on the date of repricing). See " -- Repricing of Certain
     Options During Fiscal 1997."

(4)  In July 1995, the Company granted to each of Messrs. Sharp, Markowitz and
     Lazaro, pursuant to the Company's Stock Option Plan, options to purchase
     an aggregate of 67,500 shares of Common Stock. In September 1995, each
     such individual agreed to the cancellation of such options by the Company.

(5)  Includes for 1997, 1996 and 1995 (i) $9,900, $10,434 and $10,068,
     respectively, paid by the Company with respect to an automobile for use by
     Mr. Markowitz in connection with his services to the Company and (ii)
     $2,160, $2,000 and $3,821, respectively, for certain membership fees paid
     by the Company on behalf of Mr. Markowitz.

(6)  Represents amounts paid by the Company with respect to an automobile for
     use by Mr. Mirsky in connection with his services to the Company.

(7)  Includes 477,000 shares underlying options granted to Mr. Mirsky by the
     Company in July 1995 pursuant to the Stock Option Plan. In September 1995,
     Mr. Mirsky agreed to the cancellation of additional options to purchase
     63,000 additional shares of Common Stock granted to him in July 1995 under
     the Stock Option Plan.

(8)  Represents amounts paid by the Company with respect to an automobile for
     use by Mr. Lazaro in connection with his services to the Company.


(9)  Mr. Koegel was appointed Vice Chairman of the Board in September 1995, and
     did not serve as an officer or employee of the Company prior to September
     1995.

(10) Includes for 1997, 1996 and 1995 (i) $4,800, $4,800 and $1,200,
     respectively, paid by the Company to Mr. Koegel with respect to medical
     insurance purchased directly by him and (ii) $9,600, $9,600 and $2,400,
     respectively, paid by the Company with respect to an automobile for use by
     Mr. Koegel in connection with his services to the Company. 

                                      -9-

<PAGE>

(11) On July 15, 1997, the Company adjusted the exercise price of 50,000
     outstanding options originally granted to Mr. Koegel on September 27,
     1995. In connection with such repricing, the Company cancelled the
     outstanding options, each with an exercise price of $2.75, and granted a
     corresponding number of new options, each with an exercise price of $1.625
     (the fair market value of the Common Stock on the date of repricing). See
     " -- Repricing of Certain Options During Fiscal 1997."

(12) Represents salary paid to Mr. Koegel pursuant to his employment agreement
     for the period from October 1, 1995 to December 31, 1995 following his
     appointment as Vice Chairman of the Company.

(13) Includes $25,000 paid by the Company for the construction of an office for
     Mr. Koegel in St. Paul, Minnesota.

(14) Includes (i) 15,000 shares underlying an option granted to Mr. Koegel by
     the Company in July 1995, prior to his becoming Vice Chairman of the
     Company, pursuant to the Nonemployee Directors' Plan and (ii) 375,000
     shares underlying an option granted to Mr. Koegel by the Company in
     September 1995 pursuant to the Stock Option Plan.


Option/SAR Grants During Fiscal 1997

                  The following table provides information related to options
granted to the Named Executive Officers during fiscal 1997. No stock
appreciation rights were issued by the Company during fiscal 1997.



                                   % of Total
                    Number of     Options/SARs
                    Securities     Granted to
                    Underlying     Employees
                   Options/SARs    in Fiscal     Exercise or Base   Expiration
      Name          Granted (#)      Year          Price ($/sh)        Date
      ----          -----------      ----          ------------        ----

Paul Sharp           22,500(1)        7.4%           $0.50            12/25/06


Harold Markowitz     22,500(1)        7.4%           $0.50            12/25/06

Jan S. Mirsky        17,000(1)        5.6%           $0.50            12/25/06

Jorge Lazaro         22,500(1)        7.4%           $0.50            12/25/06

Jack Koegel          50,000(2)       16.4%           $1.625            9/26/05


(1)  Reflects the August 18, 1997 repricing of 22,500, 22,500, 17,000 and
     22,500 outstanding options originally granted to Messrs. Sharp, Markowitz,
     Mirsky and Lazaro, respectively, on December 26, 1996. In connection with
     such repricing, the Company cancelled the outstanding options and granted
     a corresponding number of new options. See " -- Repricing of Certain
     Options During Fiscal 1997."

(2)  Reflects the July 15, 1997 repricing of 50,000 outstanding options
     originally granted to Mr. Koegel on September 27, 1995. In connection with
     such repricing, the Company cancelled the outstanding options and granted a
     corresponding number of new options. See " -- Repricing of Certain Options
     During Fiscal 1997."

                                     -10-

<PAGE>

Aggregated Option/SAR Exercises During Fiscal 1997 and Year End Option/SAR
Values

     The following table provides information related to options exercised by
the Named Executive Officers during fiscal 1997 and the number and value of
options and stock appreciation rights held at fiscal year end which are
currently exercisable. No stock appreciation rights were exercised during fiscal
1997.

<TABLE>
<CAPTION>
                                                         Number of Securities               Value of Unexercised
                                                       Underlying Unexercised            In-the-Money Options/SARs
                        Shares                         Options/SARs at FY-End                  at FY-End ($)(1)
                      Acquired on        Value         ----------------------           ----------------------------
    Name              Exercise (#)    Realized($)     Exercisable    Unexercisable      Exercisable    Unexercisable
    ----              ------------    -----------     -----------    -------------      -----------    -------------
<S>                  <C>             <C>              <C>           <C>                <C>            <C>  
Paul Sharp                -0-             -0-           11,250            11,250          4,922             4,922

Harold Markowitz          -0-             -0-           11,250            11,250          4,922             4,922

Jan S. Mirsky             -0-             -0-          366,250           127,750          3,719             3,719

Jorge Lazaro              -0-             -0-           11,250            11,250          4,922             4,922

Jack Koegel              48,000        132,000(2)      233,250            93,750              0                 0
</TABLE>


- ----------------------------

(1)  The values of Unexercised In-the-Money Options/SARs represents the
     aggregate amount of the excess of $.9375, the closing sales price for a
     share of Common Stock on December 31, 1997, over the relevant exercise
     price of all "in-the-money" options.

(2)  The value realized upon the exercise of such options represents the
     aggregate amount of the excess of the closing price for a share of Common
     Stock on the date of such exercise ($5.50 per share), over the exercise
     price of such options ($2.75 per share).


Repricing of Certain Options During Fiscal 1997

         In July 1997, the Company repriced 50,000 options that had originally
been granted to Mr. Koegel, the Vice Chairman of the Board and Chief Operating
Officer of the Company, in September 1995. Pursuant to such repricing, the
Company cancelled the outstanding options, each with an exercise price of $2.75
per share, and granted a corresponding number of new options, each with an
exercise price of $1.625 per share (representing the fair market value of the
Common Stock at the time of the repricing). In August 1997, the Company repriced
22,500, 22,500, 17,000 and 22,500 options, respectively, that had originally
been granted in December 1996 to Mr. Sharp, the President and Chief Executive
Officer of the Company, Mr. Markowitz, the Chairman of the Board of the Company,
Mr. Mirsky, the Executive Vice President - Finance of the Company, and Mr.
Lazaro, the Executive Vice President of the Company. Pursuant to such repricing,
the Company cancelled the outstanding options, each with an exercise price of
$5.625 per share, and granted a corresponding number of new options, each with
an exercise price of $.50 per share (representing the fair market value of the
Common Stock at the time of the repricing). The Board of Directors decided to
reprice the foregoing options as a result of a long-term decline in the market
price of the Company's Common Stock which the Board believed would make it
unlikely that any holder would exercise the options at the then existing
exercise price. The Board also believed that the purpose behind its grant of
such options -- i.e., to act as additional motivation for the Company's officers
- -- would be undermined by the decline in the price of the Common Stock to a
level substantially below the exercise price of the options.

                                     -11-

<PAGE>

Description of Stock Option Plan

         Pursuant to the Stock Option Plan, as amended, stock options covering
an aggregate of 1,850,000 shares of the Company's Common Stock may be granted to
employees (including officers), directors, consultants and other persons who
perform substantial services for or on behalf of the Company. The Stock Option
Plan is administered by the Stock Option Committee (the "Committee"), which is
vested with complete authority to administer and interpret the Stock Option
Plan, to determine the terms upon which options may be granted, to prescribe,
amend and rescind such interpretations and determinations and to grant options.

Under the Stock Option Plan, "incentive stock options" ("Incentive Options")
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), may be granted to employees (including officers), and
non-incentive stock options ("Non-incentive Options") may be granted to
employees and to other persons (including directors) who perform substantial
services for or on behalf of the Company. Incentive Options and Non-incentive
Options are collectively referred to herein as "Options."

         The price at which shares covered by an Option granted under the Stock
Option Plan may be purchased pursuant thereto shall be determined by the
Committee, but shall be no less than the par value of such shares and no less
than the Fair Market Value (as hereinafter defined) of such shares on the date
of grant; provided, however, that in the case of Incentive Options, if the
optionee directly or indirectly beneficially owns more than 10% of the total
combined voting power of all of the outstanding voting stock of the Company (a
"10% Holder"), the purchase price shall not be less than 110% of the Fair Market
Value on the date of grant. As used herein, the term "Fair Market Value" means
the last sale price of a share of Common Stock as reported by the principal
quotation service on which the Common Stock is listed for the date of grant, if
available, or, if the last sale prices are not reported, the mean of the high
bid and low asked prices of a share of Common Stock as reported by such
principal quotation service for the date of grant; provided, however, that if no
such report is available for the date of grant, the Fair Market Value shall be
the last sale price or the mean of the high bid and low asked prices, as the
case may be, on the day next preceding such day for which there was a report;
and provided further, however, that if no such representative quotes are
available, the Fair Market Value shall mean the amount determined by the
Committee to be the fair market value pursuant to any reasonable method in
accordance with applicable regulations of the Internal Revenue Service.

         The purchase price of shares issuable upon exercise of an Option
granted under the Stock Option Plan may be paid in cash or by delivery of shares
of Common Stock having an aggregate Fair Market Value on the date of exercise
equal to the exercise price of the option. The Company may also loan the
purchase price to the optionee, or guarantee third-party loans to the optionee,
on terms and conditions acceptable to the Committee.

         Under the Stock Option Plan, the total number of shares for Common
Stock for which options may be granted to any one person in any given calendar
year may not exceed 150,000. The Stock Option Plan also provides that the
aggregate fair market value of the stock with respect to which Incentive Options
are first exercisable by any employee during any calendar year under the Stock
Option Plan and all other stock option plans of the Company shall not exceed
$100,000. To the extent that the Fair Market Value of the stock with respect to
which Incentive Options are first exercisable by any employee during any
calendar year (under all plans of the Company) exceeds $100,000, such Options
shall be treated as Options which are not Incentive Options. The number of
shares covered by an Option is subject to adjustment for stock dividends, stock
splits, mergers, consolidations, combinations of shares, reorganizations and
recapitalizations.

         The Stock Option Plan provides that Options may be exercised within a
period not exceeding ten years after the date of grant, except that the term of
any Incentive Options granted to a 10% Holder may not exceed five years from the

date of grant. Options are generally non-transferable except by will or by the
laws of descent and distribution, and during a participant's lifetime are
exercisable only by him or her. In addition, pursuant to the Stock Option Plan,
various limitations may apply to the exercise of Options by optionees whose
employment is terminated on retirement, disability or otherwise.

                                     -12-

<PAGE>

Description of Employment Agreements, Severance Arrangements and Change of
Control Arrangements

         Employment Agreements with Messrs. Markowitz, Sharp and Lazaro. On June
30, 1995, the Company entered into identical employment agreements with each of
Messrs. Markowitz, Sharp and Lazaro. Pursuant to such agreements, Messrs.
Markowitz, Sharp and Lazaro are employed as the Chairman of the Board, the
President and Chief Executive Officer, and an Executive Vice President,
respectively, of the Company. The agreements provide that such individuals shall
devote substantially all of their working time and attention to the business of
the Company. Each such agreement has an initial term of five years commencing
July 20, 1995, and shall be automatically renewable for successive one-year
periods unless either the Company or the employee elects not to renew his
employment. Pursuant to the employment agreements, as amended, Messrs.
Markowitz, Sharp and Lazaro received base salaries in 1997 of $104,766, $93,750
and $93,750, respectively, and are each entitled to receive an annual base
salary of $125,000 in each year during the remainder of the term of his
respective agreement, subject to such increases as shall be approved by the
Board of Directors of the Company. The employment agreements also provide that
each of Messrs. Markowitz, Sharp and Lazaro will be eligible to participate in
any medical insurance, pension, profit sharing or other employment benefit
programs generally made available to senior executives of the Company.

         Employment Agreement with Jan Mirsky. On June 30, 1995, the Company
entered into an employment agreement with Mr. Mirsky, pursuant to which Mr.
Mirsky is employed as the Executive Vice President - Finance of the Company and
is to devote substantially all of his working time and attention to the business
of the Company. Such agreement, which became effective July 13, 1995, had an
initial term of eighteen months, was automatically renewed for a one-year period
on each of January 13, 1997 and 1998 and is automatically renewable for
successive one-year periods unless either the Company or Mr. Mirsky elects not
to renew his employment. Pursuant to the employment agreement, as amended, Mr.
Mirsky received a base salary in 1997 of $84,923, and is entitled to receive an
annual base salary of $115,000 in each year during the remainder of the term of
the agreement, subject to such increases as shall be approved by the Board of
Directors of the Company. The agreement further provides that Mr. Mirsky will be
eligible to participate in any medical insurance, pension, profit sharing or
other employment benefit programs generally made available to senior executives
of the Company.

         Employment Agreement with Jack Koegel. Pursuant to the Company's
employment agreement with Mr. Koegel, which became effective September 27, 1995,
Mr. Koegel is employed by the Company as the Vice Chairman of the Company and,
since June 1997, has been employed as the Chief Operating Officer of the

Company. The agreement provides that Mr. Koegel is to devote substantially all
of his working time and attention to the business of the Company. The agreement
provides that services performed by Mr. Koegel shall be rendered in the St.
Paul, Minnesota metropolitan area; however, Mr. Koegel and the Company have
subsequently mutually agreed that his services shall be performed at the
Company's executive offices in Paterson, New Jersey. Such agreement has an
initial term of thirty-six months and is automatically renewable for successive
one-year periods unless either the Company or Mr. Koegel elects not to renew his
employment. Pursuant to the employment agreement, as amended, Mr. Koegel
received a base salary of $77,750 in 1997, and is entitled to receive an annual
base salary of $100,000 in each year during the remainder of the term of the
agreement, subject to such increases as shall be approved by the Board of
Directors of the Company. The agreement further provides that Mr. Koegel will be
eligible to participate in any pension, profit sharing or other employment
benefit programs generally made available to senior executives of the Company
other than medical insurance benefits. However, the agreement provides that the
Company will pay Mr. Koegel $400 per month to cover costs incurred by him in
purchasing medical insurance directly. In addition, pursuant to the agreement,
the Company provides Mr. Koegel with a monthly automobile allowance of $800 and,
in 1995, paid an aggregate of $25,000 for the construction of an office for him
in St. Paul, Minnesota.

         Pursuant to the employment agreement, Mr. Koegel was granted an option
in September 1995 to purchase an aggregate of 375,000 shares of Common Stock at
an exercise price of $2.75 per share. On July 15, 1997, the Company adjusted the
exercise price of 50,000 of such options to $1.625 per share. In addition, the
agreement provides that, in the event the Company grants options, either under
the Stock Option Plan or any other stock option plan adopted by the Company, to
Messrs. Markowitz, Sharp, Mirsky and Lazaro during the term of Mr. Koegel's
employment, Mr. Koegel shall be entitled to receive a proportionate amount of
additional options on such terms as may be established by the Board of
Directors.

                                     -13-

<PAGE>

         Severance Arrangements. Each of the employment agreements with Messrs.
Markowitz, Sharp, Lazaro, Mirsky and Koegel provides that the employee's
employment shall terminate (i) for "cause" (as defined in each of the respective
agreements), (ii) by reason of the employee's disability, resignation or death,
(iii) upon the expiration of the employment agreement in accordance with its
terms or (iv) in the event the employee is no longer employed by the Company
after a "Change of Control" (as defined below). Each of the agreements further
provides that, in the event the employee's employment terminates for any reason
(other than termination without cause or in connection with a Change of
Control), the employee shall be entitled to receive his annual base salary, and
any expense reimbursements, due and owing to him at the time of such
termination. In the event the employee is terminated without cause, the employee
shall be entitled to receive annual base salary and expense reimbursements then
due and owing to him, as well as a lump-sum severance payment in an amount equal
to his then annual base salary for the balance of the term of the employment
agreement.


         Change of Control Arrangements. Each of the employment agreements with
Messrs. Markowitz, Sharp, Lazaro, Mirsky and Koegel provides that, in the event
of a Change of Control of the Company, each such employee will be entitled to
receive a lump-sum severance payment equal to three times his then annual base
salary if he is discharged for any reason (other than for cause) or terminates
his employment for "Good Reason" prior to the first anniversary of such Change
of Control, and shall be entitled to receive a lump-sum payment equal to his
then annual base salary if he voluntarily leaves the employ of the Company for
reasons other than discharge or for Good Reason prior to the first anniversary
of such Change of Control. As used in the employment agreements, the term
"Change of Control" means (a) any transaction or series of transactions
(including, without limitation, a tender offer, merger or consolidation) the
result of which is that any "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Exchange Act), other than Messrs. Markowitz, Sharp,
Mirsky and Lazaro (and, in the case of Mr. Koegel's employment agreement, Mr.
Koegel) or certain related parties and any "person" or "group" solicited by any
of such persons or their related parties, (i) becomes the beneficial owner of
more than 50% of the total aggregate voting power of all classes of the voting
stock of the Company and/or warrants or options to acquire such voting stock,
calculated on a fully diluted basis, (ii) acquires all or substantially all of
the assets of the Company or (iii) enters into a contract with respect to any of
the foregoing, or (b) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Company's Board of Directors
cease for any reason to constitute a majority of the directors then in office,
unless such majority of the directors then in office has been elected or
nominated by Messrs. Markowitz, Sharp, Mirsky and Lazaro (and, in the case of
Mr. Koegel's employment agreement, Mr. Koegel) or certain related parties. In
addition, as used in the agreements, the term "Good Reason" means (i) a change
in the status or position of the employee which reflects a change from the
status and position(s) as were in effect immediately prior to a Change of
Control, (ii) the assignment to the employee of any duties or responsibilities
which, in the employee's reasonable judgment, are inconsistent with his status
or position(s), (iii) the removal of the employee from his current position or
reduction in his pay or requiring him to relocate or (iv) the removal of the
employee, without his consent, to any location outside of the New York/New
Jersey metropolitan area (or, in the case of Mr. Koegel, the St. Paul, Minnesota
metropolitan area) for a continuous period of more than 30 days.


                              CERTAIN TRANSACTIONS

         Immediately prior to the consummation of the Company's initial public
offering (the "IPO") in July 1995, Mr. Markowitz, Mr. Sharp and H. Howlin
International Inc. ("Howlin"), a company founded by Mr. Lazaro and of which he
is currently President and sole shareholder, had outstanding loans to the
Company in the amount of $289,667, $189,667 and $289,667, respectively
(collectively, the "Shareholder Loans"). In connection with the IPO, $100,000 of
each of the Shareholder Loans was converted by the Company into units (the
"Conversion Units"), each Conversion Unit consisting of three shares of Common
Stock and a warrant to purchase three shares of Common Stock, at the rate of
$5.00 per Conversion Unit. The balance of each of the Shareholder Loans was
repaid by the Company in March 1996.

         In July 1995, the Company repaid the entire amount outstanding under

its then existing borrowing arrangement with a bank. All amounts borrowed by the
Company pursuant to this arrangement had been jointly and 

                                     -14-

<PAGE>

severally guaranteed by Messrs. Markowitz, Sharp and Lazaro, who had
subordinated an aggregate principal amount of $700,000 of the Shareholder Loans
to the bank.

         In October 1992, Messrs. Markowitz, Sharp and Lazaro and a fourth
individual founded Lea Cosmetics. Immediately prior to the consummation of the
IPO in July 1995, each of Messrs. Markowitz, Sharp and Lazaro contributed to the
Company his 20% equity interest in Lea Cosmetics, and the Company acquired from
the additional shareholder his 40% interest in Lea Cosmetics (the "Lea
Acquisition"). As a result, Lea Cosmetics became a wholly-owned subsidiary of
the Company and, in August 1995, was merged with and into the Company. During
the period from January 1, 1995 to the date of the Lea Acquisition, the Company
purchased approximately $750,000 of merchandise from Lea Cosmetics, which
purchases were made on an arm's-length basis.

         Prior to the Linette Merger, the Company and Linette Cosmetics were
treated as S Corporations for federal and certain state income tax purposes. As
a result, earnings of such companies during such period were taxed directly to
Messrs. Markowitz, Sharp and Lazaro, who comprised all of the shareholders of
the Company and Linette Cosmetics during such period, rather than to the Company
or Linette Cosmetics, as the case may be. On May 17, 1995, the Company declared
a distribution payable to such shareholders in an amount equal to the taxes
payable on the earnings of the Company during the period from the date of its
formation on September 21, 1993 (and, in the case of Linette Cosmetics, from
January 1, 1994) to the date of the consummation of the Linette Merger (the "S
Corporation Distribution"), such distribution to be payable following the
consummation of the IPO after the amount thereof had been determined. In
September and October 1995, the Company paid the S Corporation Distribution to
Messrs. Markowitz, Sharp and Lazaro in an aggregate amount of approximately
$156,250.

         In March 1993, Howlin ceased conducting operations and, in connection
therewith, transferred its inventory to the Company pursuant to a consignment
arrangement whereby the Company sold the inventory on Howlin's behalf, remitted
to Howlin an amount equal to the original cost to Howlin of the goods sold by
the Company and retained for its own account any profits received from the sale
of such goods. During 1995, the Company purchased from Howlin all inventory then
held by the Company pursuant to such arrangement for a purchase price of
approximately $13,800, which amount represented the original cost to Howlin of
such inventory.

         In March 1993, Lazmar Inc. ("Lazmar"), a company in which Mr. Lazaro
owns 50% of the outstanding stock, delivered inventory to the Company pursuant
to a consignment arrangement similar to the Company's arrangement with Howlin.
During 1995, the Company purchased from Lazmar all inventory then held by it
pursuant to such arrangement for a purchase price of approximately $70,000,
which amount represented the original cost to Lazmar of such inventory.


         During the fiscal years ended December 31, 1995, 1996 and 1997, the
Company sold approximately $59,000, $94,000 and $0, respectively, of merchandise
to Revco. Until June 1997, Carl A. Bellini, a member of the Company's Board of
Directors, served as the Executive Vice President, Chief Operating Officer and a
director of Revco.



                                 PROPOSAL NO. 2
                 AMENDMENT TO THE CERTIFICATE OF INCORPORATION
                       TO AUTHORIZE A REVERSE STOCK SPLIT


General

         The Board of Directors of the Company has unanimously adopted a
resolution approving, and recommending to the Company's shareholders for their
approval, an amendment to Article FOURTH of the Company's Certificate

                                     -15-

<PAGE>

of Incorporation authorizing a reverse stock split of the Common Stock (a
"Reverse Stock Split"). The form of the proposed amendment is annexed to this
Proxy Statement as Annex A (the "Reverse Stock Split Amendment").

Reasons for the Reverse Stock Split Amendment

         The Company's Common Stock is listed on the Nasdaq SmallCap Market
("Nasdaq"). The continued listing requirements of Nasdaq for the Common Stock
require a company to maintain, among other things, a minimum bid price per share
of $1.00. As of the date of this Proxy Statement, the Company is not in
compliance with such requirement. On February 27, 1998, Nasdaq wrote the Company
requiring the Company to regain compliance with the minimum bid price
requirement by May 28, 1998. The Board of Directors believes that the Reverse
Stock Split may have the effect of increasing the market price per share of the
Common Stock and allowing the Common Stock to continue to be included on the
Nasdaq system, although there can be no assurance that the market price of the
Common Stock will rise in proportion to the reduction in the number of
outstanding shares resulting from the Reverse Stock Split or that the
post-Reverse Stock Split market price can be maintained.

         The Board of Directors has determined that continued listing of the
Common Stock on the Nasdaq system is in the best interests of the shareholders.
If the Company were removed from the Nasdaq system, trading, if any, would
thereafter be conducted in the over-the-counter market on an electronic bulletin
board established for securities that do not meet the Nasdaq inclusion
requirements or in what are commonly referred to as the "pink sheets." As a
result, an investor would find it more difficult to dispose of, or to obtain
accurate quotations as to the price of, the Common Stock. In addition, if the
Common Stock were removed from the Nasdaq system, it would be subject to
so-called "penny stock" rules that impose additional sales practice requirements

on broker-dealers who sell such securities. Consequently, removal from the
Nasdaq system, if it were to occur, could adversely affect the ability or
willingness of broker-dealers to sell the Common Stock and the ability of
purchasers to sell the Common Stock in the secondary market.



Certain Effects of the Reverse Stock Split

         Pursuant to the Reverse Stock Split, each holder of a certain number of
shares of Common Stock, par value $.01 per share ("Old Common Stock"),
immediately prior to the effectiveness of the Reverse Stock Split would become
the holder of one share of Common Stock, par value $.01 per share ("New Common
Stock"). The exact number of shares of Old Common Stock required to receive one
share of New Common Stock is called the "Authorized Number" and will be
determined by the Board of Directors following approval of the Reverse Stock
Split based on market conditions, the likely effect of the Reverse Stock Split
on the market price of the Common Stock and other relevant factors. In no event,
however, will the Authorized Number be greater than eight.

         The Company will not issue fractional shares in connection with the
Reverse Stock Split. Instead, holders of Old Common Stock who would otherwise be
entitled to receive a fractional share of New Common Stock because they hold a
number of shares of Old Common Stock that is not evenly divisible by the
Authorized Number will be entitled to receive from the Company a cash payment
equal to the fair market value, as determined by the Board of Directors, of any
fractional share of New Common Stock resulting from the Reverse Stock Split. The
fair market value shall be based on the average of the closing bid prices for
the Old Common Stock as reported by the Nasdaq Stock Market on each of the five
days preceding the date on which the Reverse Stock Split becomes effective.

         The Company is currently authorized to issue a maximum of 40,000,000
shares of Common Stock and, pursuant to Proposal No. 3 set forth in this Proxy
Statement, is seeking to amend the Company's Certificate of Incorporation to
authorized the issuance of up to 10,000,000 shares of Preferred Stock. As of the
date of this Proxy Statement, there were 8,712,727 shares of Common Stock
outstanding. Although the number of authorized shares of Common Stock will not
change as a result of the Reverse Stock Split, the number of outstanding shares
will be reduced to a number that will be approximately equal to (i) the number
of shares of Common Stock outstanding immediately prior to the effectiveness of
the Reverse Stock Split, divided by (ii) the Authorized Number. In addition, the
Company has reserved approximately 1,593,939 shares of Common Stock for issuance
upon exercise 

                                     -16-

<PAGE>

of outstanding options and warrants and, upon the effectiveness of the Reverse
Stock Split, the exercise price and/or conversion rate of such options and
warrants will be proportionately adjusted to give effect to the Reverse Stock
Split.

         With the exception of the number of outstanding shares, the rights and

preferences of the shares of Common Stock prior and subsequent to the Reverse
Stock Split will remain the same. After the effectiveness of the Reverse Stock
Split, it is not anticipated that the financial condition of the Company, the
percentage ownership of management, the number of the Company's shareholders, or
any aspect of the Company's business would materially change as a result of the
Reverse Stock Split.

Certain Federal Income Tax Consequences

         The receipt of New Common Stock solely in exchange for Old Common Stock
will not generally result in recognition of gain or loss to the shareholders.
The adjusted tax basis of a shareholder's New Common Stock will be the same as
the adjusted tax basis of the shares of Old Common Stock exchanged therefor, and
the holding period of the New Common Stock will include the holding period of
the shares of Old Common Stock exchanged therefor. Shareholders who receive cash
in lieu of fractional shares will be treated as if they had received such
fractional shares and then sold them to the Company, and such shareholders will
recognize gain or loss equal to the difference between the amount of cash
received and their basis in the Common Stock exchanged. No gain or loss will be
recognized by the Company as a result of the Reverse Stock Split.

         The foregoing discussion summarizing certain federal income tax
consequences is based on current law and is included for general information
only. Shareholders are urged to consult their own tax advisors as to the
federal, state, local and foreign tax effects of the Reverse Stock Split in
light of their individual circumstances.

Effectiveness of the Reverse Stock Split

         The Reverse Stock Split, if approved by the Company's shareholders,
would become effective upon the filing with the Department of State of the State
of New York of a Certificate of Amendment of the Company's Certificate of
Incorporation in substantially the form of the Reverse Stock Split Amendment
attached to this Proxy Statement as Annex A. The exact timing of the filing of
such Certificate of Amendment will be determined by the Board of Directors based
upon its evaluation as to when such action will be most advantageous to the
Company and its shareholders, and the Board of Directors reserves the right to
delay the Reverse Stock Split Amendment for up to twelve months following
shareholder approval thereof. In addition, the Board of Directors reserves the
right, notwithstanding shareholder approval and without further action by the
shareholders, to elect not to proceed with the Reverse Stock Split Amendment if,
at any time prior to filing such Reverse Stock Split Amendment, the Board of
Directors, in its sole discretion, determines that it is no longer in the best
interests of the Company and its shareholders.

         The proposed Reverse Stock Split will become effective on the effective
date of the filing of the Reverse Stock Split Amendment (the "Effective Date").
Commencing on the Effective Date, each currently outstanding Common Stock
certificate will be deemed for all corporate purposes to evidence ownership of
the reduced number of shares of Common Stock resulting from the Reverse Stock
Split and any cash which may be payable in lieu of fractional shares. As soon as
practicable after the Effective Date, shareholders will be notified as to the
effectiveness of the Reverse Stock Split and instructed as to how to surrender
their certificates representing Old Common Stock in exchange for certificates

representing New Common Stock (and, if applicable, cash in lieu of fractional
shares). The Company intends to use its transfer agent, Continental Stock
Transfer & Trust Company, as its exchange agent in effecting the exchange of
certificates following the effectiveness of the Reverse Stock Split.

Dissenters' Rights

         Pursuant to the New York Business Corporation Law, the Company's
shareholders are not entitled to dissenters' rights of appraisal with respect to
the proposed Reverse Stock Split Amendment.

                                     -17-

<PAGE>

Vote Required for Approval

         The affirmative vote of the holders of a majority of all outstanding
shares of Common Stock entitled to vote at the Annual Meeting, in person or by
proxy, is required for approval of the proposed Reverse Stock Split Amendment.

Recommendation of the Board of Directors

         The Company's Board of Directors recommends a vote FOR Proposal No. 2.




                                 PROPOSAL NO. 3
                 AMENDMENT OF THE CERTIFICATE OF INCORPORATION
                          TO AUTHORIZE PREFERRED STOCK


General

         The Board of Directors of the Company has unanimously adopted a
resolution approving, and recommending to the Company's shareholders for their
approval, an amendment to Article FOURTH of the Company's Certificate of
Incorporation to authorize the issuance of up to ten million (10,000,000) shares
of preferred stock, par value $.01 per share ("Preferred Stock"). The text of
the proposed amendment is annexed to this Proxy Statement as Annex B (the
"Preferred Stock Amendment").

         The Company's Certificate of Incorporation does not currently authorize
the issuance of shares of preferred stock. The Preferred Stock Amendment would
vest in the Board of Directors the authority (without further action by the
shareholders) to issue up to 10,000,000 shares of Preferred Stock in one or more
series, and to fix, by resolution, the voting powers, designations, preferences
and relative, optional or other special rights thereof, including the
liquidation preferences and the dividend, conversion and redemption rights of
each such series.

Reasons for the Preferred Stock Amendment


         The Board of Directors believes that the authorization of the Preferred
Stock is in the best interests of the Company and its shareholders and believes
that it is advisable to authorize such shares and have them available in
connection with possible future transactions, such as financings, strategic
alliances, corporate mergers, acquisitions, possible fundings of new product
programs or businesses and other uses not presently determinable and as may be
deemed to be feasible and in the best interests of the Company. In addition, the
Board of Directors believes that it is desirable that the Company have the
flexibility to issue shares of Preferred Stock without further stockholder
action, except as otherwise provided by law.

Possible Effects of Issuance of Preferred Stock

         It is not possible to determine the actual effect of the Preferred
Stock on the rights of the shareholders of the Company until such time as the
Board of Directors determines the rights of the holders of a series of Preferred
Stock. However, such effects might include (i) restrictions on the payment of
dividends to holders of the Common Stock, (ii) dilution of voting power to the
extent that the holders of shares of Preferred Stock are given voting rights,
(iii) dilution of the equity interests and voting power of holders of Common
Stock if the Preferred Stock is convertible into Common Stock and (iv)
restrictions upon any distribution of assets to the holders of Common Stock

                                     -18-

<PAGE>

upon liquidation or dissolution of the Company and until the satisfaction of
any liquidation preference to the holders of Preferred Stock.

         The Board of Directors will make any determination to issue shares of
Preferred Stock based upon its judgment as to the best interests of the
shareholders of the Company. Although the Board of Directors has no present
intention of doing so, it could issue shares of Preferred Stock (within the
limits imposed by applicable law) that could, depending on the terms of such
series, make more difficult or discourage an attempt to obtain control of the
Company by means of a merger, tender offer, proxy contest or other means. When
in the judgment of the Board of Directors such action would be in the best
interests of the shareholders of the Company, the issuance of shares of
Preferred Stock could be used to create voting or other impediments or to
discourage persons seeking to gain control of the Company, for example, by the
sale of Preferred Stock to purchasers favorable to the Board of Directors. In
addition, the Board of Directors could authorize holders of a series of
Preferred Stock to vote either separately as a class or with the holders of
Common Stock on any merger, sale or exchange of assets by the Company or any
other extraordinary corporate transaction. The existence of the additional
authorized shares could have the effect of discouraging unsolicited takeover
attempts. The issuance of new shares could also be used to dilute the stock
ownership of a person or entity seeking to obtain control of the Company should
the Board of Directors consider the action of such person or entity not to be in
the best interests of the shareholders and the Company. Such issuance of
Preferred Stock could also have the effect of diluting the earnings per share
and book value per share of the Common Stock held by the holders of Common
Stock.


Dissenters' Rights

         Pursuant to the New York Business Corporation Law, the Company's
shareholders are not entitled to dissenters' rights of appraisal with respect to
the proposed Preferred Stock Amendment.

Vote Required for Approval

         The affirmative vote of the holders of a majority of all outstanding
shares of Common Stock entitled to vote at the Annual Meeting, in person or by
proxy, is required for approval of the proposed Preferred Stock Amendment.

Recommendation of the Board of Directors

         The Company's Board of Directors recommends a vote FOR Proposal No. 3.

                                     -19-

<PAGE>

                             STOCKHOLDER PROPOSALS

         Shareholder proposals intended to be presented at the next annual
meeting of shareholders, to be held in 1999, must be received by the Company at
495 River Street, Paterson, New Jersey 07524, Attention: Secretary by December
30, 1998 to be included in the proxy statement and form of proxy relating to
that meeting.


                                    AUDITORS

         Representatives of J.H. Cohn LLP are expected to attend the Annual
Meeting and, while they are not expected to make a statement, they will have an
opportunity to do so if they desire. They will also be available to respond to
appropriate questions.


                               OTHER INFORMATION

         The cost of soliciting proxies will be borne by the Company. Following
the original mailing of proxy soliciting material, regular employees of the
Company may solicit proxies by mail, telephone, telegraph and personal
interview. Arrangements have been made with brokerage houses and other
custodians, nominees and fiduciaries which are record holders of the Company's
stock to forward proxy soliciting material and annual reports to the beneficial
owners of such stock, and the Company will reimburse such record holders for
their reasonable expenses incurred in providing such services. As of the date of
this Proxy Statement, the Company has not retained the services of a proxy
solicitor to assist in the solicitation of proxies.

         A copy of the Company's Annual Report for the fiscal year ended
December 31, 1997 is enclosed.



                                 OTHER MATTERS

         The Board of Directors is aware of no other matters that are to be
presented to shareholders for formal action at the Annual Meeting. If, however,
any other matters properly come before the Annual Meeting or any adjournment
thereof, it is the intention of the persons named in the enclosed form of proxy
to vote such proxy in accordance with their judgment on such matters.

                                 By Order of the Board of Directors,

                                      Jorge Lazaro
                                      Secretary
Dated:     Paterson, New Jersey
           April 29, 1998

                                     -20-

<PAGE>

                                                                        ANNEX A

                     FORM OF REVERSE STOCK SPLIT AMENDMENT

           Article FOURTH shall be deleted in its entirety and the following 
           shall be substituted in lieu thereof:*

                  FOURTH: The total number of shares of capital stock which the
           Corporation shall have authority to issue is Forty Million
           (40,000,000) shares of common stock, par value $0.01 per share
           ("Common Stock"). Upon the filing of this Certificate of Amendment,
           each [Authorized Number] shares of Common Stock issued and
           outstanding immediately prior to the filing of this Certificate of
           Amendment shall be changed and converted into one share of Common
           Stock. No fractional shares shall be issued by reason of this change
           and the Corporation shall pay to holders of Common Stock outstanding
           immediately prior to the filing of this Certificate of Amendment an
           amount of cash equal to the product of the fraction of a share of
           Common Stock to which such holder otherwise would be entitled,
           multiplied by the fair market value, as determined by the Board of
           Directors of the Corporation, of a share of Common Stock immediately
           following the filing of this Certificate of Amendment, which fair
           market value shall be based on the average of the closing bid prices
           for the Common Stock as reported by the Nasdaq Stock Market on each
           of the five days preceding the date on which the Reverse Stock Split
           becomes effective.




*  Note:   If Proposal No. 3 is also adopted, the amendment would be as set 
           forth in Annex B.

                                      A-1

<PAGE>

                                                                        ANNEX B

                       FORM OF PREFERRED STOCK AMENDMENT

           Article FOURTH shall be deleted in its entirety and the following 
           shall be substituted in lieu thereof:**

                  FOURTH: (a) The aggregate number of shares of capital stock
           which the Corporation shall have authority to issue is Fifty Million
           (50,000,000), consisting of Forty Million (40,000,000) shares of
           common stock, par value $0.01 per share ("Common Stock"), and Ten
           Million (10,000,000) shares of preferred stock, par value $0.01 per
           share ("Preferred Stock"). Upon the filing of this Certificate of
           Amendment, each [Authorized Number] shares of Common Stock issued and
           outstanding immediately prior to the filing of this Certificate of
           Amendment shall be changed and converted into one share of Common
           Stock. No fractional shares shall be issued by reason of this change
           and the Corporation shall pay to holders of Common Stock outstanding
           immediately prior to the filing of this Certificate of Amendment an
           amount of cash equal to the product of the fraction of a share of
           Common Stock to which such holder otherwise would be entitled,
           multiplied by the fair market value, as determined by the Board of
           Directors of the Corporation, of a share of Common Stock immediately
           following the filing of this Certificate of Amendment, which fair
           market value shall be based on the average of the closing bid prices
           for the Common Stock as reported by the Nasdaq Stock Market on each
           of the five days preceding the date on which the Reverse Stock Split
           becomes effective.

                  (b) The Board of Directors is expressly authorized to provide
           for the issue of all or any shares of Preferred Stock, without
           shareholder approval unless otherwise required by applicable law, in
           one or more series, and to fix for each such series such voting
           powers, full or limited, and such designations, preferences and
           relative, participating or optional or special rights and such
           qualifications, limitations or restrictions thereof as shall be
           stated and expressed in the resolution or resolutions adopted by the
           Board of Directors providing for the issue of such series and as may
           be permitted by the Business Corporation Law of the State of New
           York.



** Note:   If Proposal No. 2 is also adopted, the italicized language set forth
           above would be included in the Amendment.  If Proposal No. 2 is not 
           adopted, the italicized language set forth above would be deleted
           from the Amendment.

                                      B-1

<PAGE>

                                    [FRONT]
PROXY                       SEL-LEB MARKETING, INC.

                               PROXY SOLICITED BY
               THE BOARD OF DIRECTORS OF SEL-LEB MARKETING, INC.
              FOR THE ANNUAL MEETING OF SHAREHOLDERS--MAY 27, 1998

                  The undersigned hereby appoints HAROLD MARKOWITZ, JAN S.
MIRSKY and JORGE LAZARO, and each of them, as Proxies, each with full power of
substitution and resubstitution, to represent and to vote, as designated below,
all shares of Common Stock of Sel-Leb Marketing, Inc. (the "Company") which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Shareholders of the Company to be held at the Company's offices
located at 495 River Street, Paterson, New Jersey at 10:00 a.m. (local time) on
May 27, 1998, and at any adjournment or postponement thereof.

1.    Election of Directors


              / / FOR all nominees listed below         / /   WITHHOLD
                  (except as marked to                        APPROVAL to vote
                  the contrary below)                         for all nominees
                                                              listed below

                  Harold Markowitz, Paul Sharp, Jan S. Mirsky, Jorge Lazaro, 
                  Jack Koegel, Stanley R. Goodman, Edward C. Ross, L. Douglas 
                  Bailey and Carl A. Bellini

                  (INSTRUCTION:  To withhold authority to vote for any 
                  individual nominee, write that nominee's name in the
                  space provided below)

                           ------------------------------------------

2.   Approval and adoption of an amendment to the Company's Certificate of
     Incorporation to effect a reverse stock split.


             / /  FOR         / /  AGAINST          / /  ABSTAIN

3.    Approval and adoption of an amendment to the Company's Certificate of
      Incorporation to authorize the issuance of up to 10,000,000 shares of
      Preferred Stock, par value $.01 per share.

             / /  FOR         / /  AGAINST          / /  ABSTAIN


      TO BE VALID, THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.

<PAGE>

                                     [BACK]


4.   In their discretion, the proxies are authorized to vote upon such other
     business as may properly come before the annual meeting or any adjournment
     or postponement thereof.

     If no direction is given, this proxy will be voted FOR the election of the
nominees set forth in Proposal No. 1, FOR Proposal No. 2 and FOR Proposal No.
3.

                      THE BOARD OF DIRECTORS RECOMMENDS A
               VOTE FOR THE ELECTION OF THE NOMINEES SET FORTH IN
           PROPOSAL NO. 1, FOR PROPOSAL NO. 2 AND FOR PROPOSAL NO. 3

                                             Please sign exactly as name
                                    appears at left. When shares are held by
                                    joint tenants, both should sign. When
                                    signing as attorney, executor,
                                    administrator, trustee or guardian, please
                                    give your full title as such. If a
                                    corporation, please sign in full corporate
                                    name by president or other authorized
                                    officer. If a partnership, please sign in
                                    partnership name by authorized person.



                                     Dated:
                                           -----------------------------------


                                     -----------------------------------------
                                     Signature


                                     -----------------------------------------
                                     Signature


                                     This Proxy is solicited on behalf of the 
                                     Board of Directors.



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