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[LETTERHEAD OF MERRILL LYNCH]
August 3, 2000
Sel-Leb Marketing, Inc.
495 River Street
Paterson, NJ 07524
Re: Temporary WCMA Line of Credit Increase
Ladies & Gentlemen:
This Letter Agreement will serve to confirm certain agreements of Merrill Lynch
Business Financial Services Inc. ("MLBFS") and Sel-Leb Marketing, Inc.
("Customer") with respect to: (i) that certain WCMA AND TERM LOAN AND SECURITY
AGREEMENT No. 9811551601 between MLBFS and Customer (including any previous
amendments and extensions thereof), and (ii) all other agreements between MLBFS
and Customer or any party who has guaranteed or provided collateral for
Customer's obligations to MLBFS ("Guarantor") in connection therewith
(collectively, the "Loan Documents"). Capitalized terms used herein and not
defined herein shall have the meaning set forth in the Loan Documents.
Subject to the terms hereof, effective as of the "Effective Date" (as defined
below) the Loan Documents are hereby amended as follows:
(a) During the period between the Effective Date and September 30, 2000 (the
"Initial Increase Period"), the term "Maximum WCMA Line of Credit" shall mean an
amount equal to the lesser of: (A) $4,550,000.00, or (B) 80% of Customer's
domestic Accounts and Chattel Paper, as shown on its regular books and records
(excluding Accounts over 90 days old, Chattel Paper with installments or other
sums more than 90 days past due, and Accounts and Chattel Paper directly or
indirectly due from any person or entity not domiciled in the continental United
States, Alaska or Hawaii, or from any shareholder, officer or employee of
Customer or any affiliated entity) plus 50% of Customer's Inventory, as shown on
its regular books and records, up to a maximum of $3,250,000.00, and less the
aggregate outstanding balance of Customer's Term Loan Nos. 9811551601 and
9911550701 and issued Letters of Credit
(b) Commencing on the first Business Day immediately following the Initial
Increase Period, and continuing thereafter to and including October 31, 2000
(the "Increase End Date"), the "Maximum WCMA Line of Credit" shall mean an
amount equal to the lesser of: (A) $4,550,000.00, or (B) 80% of Customer's
domestic Accounts and Chattel Paper, as shown on its regular books and records
(excluding Accounts over 90 days old, Chattel Paper with installments or other
sums more than 90 days past due, and Accounts and Chattel Paper directly or
indirectly due from any person or entity not domiciled in the continental United
States, Alaska or Hawaii, or from any shareholder, officer or employee of
Customer or any affiliated entity) plus 50% of Customer's Inventory, as shown on
its regular books and records, up to a maximum of $2,750,000.00, and less the
aggregate outstanding balance of Customer's Term Loan Nos. 9811551601 and
9911550701 and issued Letters of Credit. PRIOR TO THE CLOSE OF BUSINESS ON THE
LAST DAY OF THE INITIAL INCREASE
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Sel-Leb Marketing, Inc.
August 3, 2000
Page No. 2
PERIOD, CUSTOMER SHALL REPAY ANY AMOUNT OUTSTANDING IN EXCESS OF SUCH REDUCED
Maximum WCMA LINE OF CREDIT.
(c) Commencing on the first Business Day immediately following the Increase End
Date, and continuing thereafter to and including the Maturity Date, the "Maximum
WCMA Line of Credit" shall be reduced to an amount equal to the lesser of: (A)
$3,800,000.00, or (B) 80% of Customer's domestic Accounts and Chattel Paper, as
shown on its regular books and records (excluding Accounts over 90 days old,
Chattel Paper with installments or other sums more than 90 days past due, and
Accounts and Chattel Paper directly or indirectly due from any person or entity
not domiciled in the continental United States, Alaska or Hawaii, or from any
shareholder, officer or employee of Customer or any affiliated entity) plus 50%
of Customer's Inventory, as shown on its regular books and records, up to a
maximum of $2,750,000.00, and less the aggregate outstanding balance of
Customer's Term Loan Nos. 9811551601 and 9911550701 and issued Letters of
Credit. PRIOR TO THE CLOSE OF BUSINESS ON THE INCREASE END DATE, CUSTOMER SHALL
REPAY ANY AMOUNT OUTSTANDING IN EXCESS OF SUCH REDUCED Maximum WCMA LINE OF
CREDIT.
(d) In connection with said temporary increase, Customer agrees to pay MLBFS a
fee of $20,000.00. Customer hereby authorizes and directs MLBFS to charge the
said fee to WCMA Account No. 885-07E38 on or at any time after the Effective
Date.
(e) The "Net Cash Flow" of Customer as of the end of its semi-annual fiscal
period dated June 30 shall not be less than $0.00. As used herein, "Net Cash
Flow" shall mean the (i) the sum of Customer's annual net after-tax income, any
non-recurring expenses and depreciation and similar non-cash charges, less (ii)
the sum of 50% of the current portion of Customer's long term debt, any
non-recurring income and any dividends or other distributions to its owners; all
as set forth on Customer's regular semi-annual financial statements prepared in
a manner consistent with the terms hereof.
(f) The "Net Cash Flow" of Customer as of the end of each of its fiscal years
shall not be less than $100,000.00. As used herein, "Net Cash Flow" shall mean
the (i) the sum of Customer's annual net after-tax income, any non-recurring
expenses and depreciation and similar non-cash charges, less (ii) the sum of the
current portion of Customer's long term debt, any non-recurring income and any
dividends or other distributions to its owners; all as set forth on Customer's
regular annual financial statements prepared in a manner consistent with the
terms hereof.
Except as expressly amended hereby, the Loan Documents shall continue in full
force and effect upon all of their terms and conditions.
By their execution of this Letter Agreement, the below-named Guarantors hereby
consent to the foregoing modifications to the Loan Documents, and hereby agree
that the "Obligations" under their respective Unconditional Guaranty and/or
agreements providing collateral shall extend to and include the Obligations of
Customer under the Loan Documents, as amended hereby.
Customer and said Guarantors acknowledge, warrant and agree, as a primary
inducement to MLBFS to enter into this Agreement, that: (a) no Default or Event
of Default has occurred and is continuing under the Loan Documents; (b) each of
the warranties of Customer in the Loan Documents are true and correct as of the
date hereof and shall be deemed remade as of the date
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Sel-Leb Marketing, Inc.
August 3, 2000
Page No. 3
hereof; (c) neither Customer nor any of said Guarantors have any claim against
MLBFS or any of its affiliates arising out of or in connection with the Loan
Documents or any other matter whatsoever; and (d) neither Customer nor any of
said Guarantors have any defense to payment of any amounts owing, or any right
of counterclaim for any reason under, the Loan Documents.
The obligations of MLBFS under this Letter Agreement are subject to its receipt
(where applicable) and satisfaction with the following:
All late fees and payments due in connection with Term Loan No.
9811551601 and Term Loan No. 9911550701 each in the name of Customer.
Provided that no Event of Default, or event which with the giving of notice,
passage of time, or both, would constitute an Event of Default, shall then have
occurred and be continuing under the terms of the Loan Documents, and the
condition specified above shall have been met to our satisfaction, the
amendments and agreements in this Letter Agreement will become effective on the
date (the "Effective Date") upon which: (a) Customer and the Guarantors shall
have executed and returned the duplicate copy of this Letter Agreement and the
other document enclosed herewith; and (b) an officer of MLBFS shall have
reviewed and approved this Letter Agreement and said other document as being
consistent in all respects with the original internal authorization hereof.
Notwithstanding the foregoing, if Customer and the Guarantors do not execute and
return the duplicate copy of this Letter Agreement and said other document
within 14 days from the date hereof, or if for any other reason (other than the
sole fault of MLBFS) the Effective Date shall not occur within said 14-day
period, then all of said amendments and agreements will, at the sole option of
MLBFS, be void.
Very truly yours,
Merrill Lynch Business Financial Services Inc.
By: /s/ Tony Lau TRP
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Tony Lau
Senior Relationship Manager
Accepted:
Sel-Leb Marketing, Inc.
By: /s/ Jan S. Mirsky
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Printed Name: /s/ Jan S. Mirsky
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Title: Executive Vice President
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Sel-Leb Marketing, Inc.
August 3, 2000
Page No. 4
Approved:
Ales Signature Ltd.
By: /s/ Jan S. Mirsky
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Printed Name: /s/ Jan S. Mirsky
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Title: Executive Vice President
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