FOURTH AMENDMENT TO
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LOAN AND SECURITY AGREEMENT
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This Fourth Amendment to Loan and Security Agreement (the "Amendment")
dated September 30, 1998 by and between SUMMIT BANK, a state banking association
organized and existing under the laws of the State of New Jersey (the "Lender")
with an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, and
SEL-LEB MARKETING, INC., a New York corporation ("Sel-Leb"), having its
principal executive office located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ and ALES SIGNATURE LTD., a New York corporation ("ALES"), having its
principal executive office located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ (ALES and SEL-LEB each a "Borrower" and collectively the "Borrowers").
WHEREAS, on October 22, 1997, the Lender provided a certain credit
facility (the "Loan") to the Borrowers pursuant to the terms and conditions of
that certain Loan and Security Agreement dated as of September 12, 1997 (the
"Original Loan Agreement") in the principal amount of Three Million
($3,000,000.00) Dollars as evidenced by that certain Line of Credit Note dated
October 22, 1997 in the principal amount of Two Million ($2,000,000.00) Dollars
(the "Original Line of Credit Note") and by a certain Term Note dated October
22, 1997 in the principal amount of One Million
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($1,000,000.00) Dollars (the "Term Note"); and
WHEREAS, on April 1, 1998 the Original Loan Agreement was amended
pursuant to that certain First Amendment to Loan and Security Agreement (the
"First Amendment") to increase the Line of Credit Loan Maximum to Two
Million Five Hundred Thousand ($2,500,000) Dollars; and
WHEREAS, the Original Line of Credit Note was amended and restated
pursuant to the terms of that certain Restated Line of Credit Note from the
Borrowers to the order of the Lender, dated as of April 1, 1998 (the
"Restated Note"); and
WHEREAS, on May 28, 1998 the Original Loan Agreement was further
amended pursuant to that certain Second Amendment to Loan and Security
Agreement (the "Second Amendment") to extend the Line of Credit Loan
Termination Date to July 30, 1998; and
WHEREAS, on July 30, 1998 the Original Loan Agreement was further
amended pursuant to that certain Third Amendment to Loan and Security
Agreement (the "Third Amendment") to extend the Line of Credit Termination
Date to September 30, 1998 (the Original Loan Agreement as amended by the
First Amendment, Second Amendment and Third Amendment is referred to herein
as the "Loan
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Agreement"); and WHEREAS, the Original Line of Credit Note was further
amended and restated pursuant to the terms of that certain Second Restated
Line of Credit Note dated as of May 28, 1998 (the "Second Restated Note");
and
WHEREAS, the Original Line of Credit Note was further amended and
restated pursuant to the terms of that certain Third Restated Line of Credit
Note dated as of July 30, 1998 (the "Third Restated Note") (the Original
Line of Credit Note as amended and restated by the Restated Note, Second
Restated Note and Third Restated Note is referred to herein as the "Line of
Credit Note"); and
WHEREAS, the Borrower has requested the Lender to extend the Line
of Credit Loan Termination Date to November 30, 1998; and
WHEREAS, the Lender is willing to extend the Line of Credit Loan
Termination Date to November 30, 1998 subject to the terms and conditions
set forth in this Amendment.
NOW, THEREFORE, in consideration of the recitals and the mutual
covenants contained herein, the parties hereto agree as follows:
I. All capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them pursuant
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to the Loan Agreement, Line of Credit Note and Term Note. Notwithstanding
anything to the contrary contained in the Loan Agreement, the Line of Credit
Note or the Term Note, the terms of this Amendment shall control.
2. Section 1.1(y) of the Loan Agreement is hereby stricken and
replaced with the following:
"(y) "Line of Credit Loan Termination Date" shall mean
November 30, 1998."
3. The reference to the "Line of Credit Note" in Section 1.1(z) of
the Loan Agreement shall be deemed to refer to the Line of Credit Note as
amended by that certain Fourth Restated Line of Credit Note attached hereto
as Exhibit "A" (the "Fourth Restated Line of Credit Note"), by this
reference made a part hereof as if fully set forth herein.
4. The Borrowers acknowledge and agree that: (a) as of September 30,
1998 the unpaid principal balance of the Line of Credit Note is Two Million Four
Hundred Eighty Thousand ($2,480,000) Dollars; (b) the obligation of the
Borrowers to repay the Line of Credit Note is absolute and unconditional and is
not subject to any defense, counterclaim, set-off, right of recoupment,
abatement or other claim or determination, and (c) the
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Line of Credit Note is and shall be governed by the terms and provisions of
the Loan Agreement, as set forth in this Amendment.
5. The Lender and the Borrower hereby agree and consent to the
terms and provisions of this Amendment and the transactions contemplated
hereby.
6. The Borrowers shall pay all of the Lender's costs and expenses
incurred in connection with the preparation, execution and delivery of this
Amendment, including, without limitation, reasonable legal fees and
disbursements of Lender's counsel.
7. Except as expressly otherwise provided herein, the terms of the
Loan Agreement shall remain in full force and effect and are incorporated
herein by reference. In the event of a conflict between the terms of this
Amendment and the Loan Agreement, the terms of this Amendment shall control.
8. The Borrowers acknowledge that the Lender has no obligation to
make any further amendments to the Loan Agreement or any other agreement
executed in connection therewith, including but not limited to this
Amendment and the Line of Credit Note.
9. This Amendment shall be construed in accordance with, and shall
be governed by, the laws of the State of New Jersey.
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This Amendment shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the undersigned have caused this Fourth
Amendment to Loan and Security Agreement to be executed by their proper and
duly authorized officers and members as of the date first set forth above.
SUMMIT BANK
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇, VP
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▇▇▇▇▇▇▇ ▇▇▇▇, Vice President
ATTEST: SEL-LEB MARKETING, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇, Executive Vice President
of Finance
ATTEST: ALES SIGNATURE LTD.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇, Chief Financial Officer
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EXHIBIT A
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FOURTH RESTATED LINE OF CREDIT NOTE
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Principal Amount: $2,500,000 Dated: September 30, 1998
FOR VALUE RECEIVED, SEL-LEB MARKETING, INC., a New York
corporation, having its principal place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("SEL-LEB") and ALES SIGNATURE LTD., a New York
corporation, having its principal place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("ALES") (SEL-LEB and ALES each a "Payor" and
collectively the "Payors"), jointly and severally, promise to pay to the order
of SUMMIT BANK, a state banking association organized under the laws of the
State of New Jersey (the "Bank" or "Holder"), its successors and assigns, at its
offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, or at such
other address as Holder shall notify Payors in writing, the principal sum of TWO
MILLION FIVE HUNDRED THOUSAND ($2,500,000) DOLLARS, or so much thereof as shall
have been advanced to the Payors pursuant to the Loan Agreement (as defined
below), together with interest on the unpaid principal balance, payable as
provided below.
1. Subject to Loan Documents.
(a) The obligations of Payors under this Fourth
Restated Line of Credit Note (the "Restated Note") are secured by the
"Collateral", as such term is defined in the Loan and Security Agreement entered
into between the Bank and Payors on September 12, 1997 (the "Original Loan and
Security Agreement"), as amended by that certain First Amendment to Loan and
Security Agreement dated April 1, 1998 (the "First Amendment"), as further
amended by that certain Second Amendment to Loan and Security Agreement dated
May 28, 1998 (the "Second Amendment"), as further amended by that certain Third
Amendment to Loan and Security Agreement dated July 30, 1998 (the "Third
Amendment"), and as further amended by that certain Fourth Amendment to Loan and
Security Agreement dated the date hereof (the "Fourth Amendment") (the Original
Loan and Security Agreement as amended by the First Amendment, the Second
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Amendment, the Third Amendment and the Fourth Amendment is hereinafter
referred to as the "Loan Agreement").
(b) The terms and provisions of the Loan
Agreement and all other documents and instruments referred to therein or
executed and delivered pursuant thereto are incorporated herein by reference
(all of the foregoing are hereinafter collectively referred to as the "Loan
Documents").
2. Rate of Interest. The principal amount outstanding under
this Restated Note shall bear interest at the Bank's Prevailing Base Rate on a
floating basis. The Bank's Prevailing Base Rate of interest is the fluctuating
rate of interest established by the Bank from time to time whether or not such
rate shall be otherwise published. The Prevailing Base Rate is established for
the convenience of the Bank. The Prevailing Base Rate is a means of pricing some
loans to customers of the Bank. The Prevailing Base Rate is not tied to any
external rate of interest and does not necessarily reflect the lowest rate of
interest actually charged at any given time by the Bank to any particular class
or category of customers of the Bank. In the event that there shall be a change
in the Prevailing Base Rate, such change shall be effective on the date of such
change without notice to Payors. Interest shall be computed on the basis of the
actual number of days elapsed over a period of 360 days.
3. Payment of Interest; Repayment of Principal. Principal
and interest shall be paid during the term of this Restated Note in the
following manner:
(a) Payors shall make consecutive monthly
payments of interest at the Bank's Prevailing Base Rate on a floating basis
on the principal balance outstanding under this Restated Note on the first
(1st) day of each and every month through and including November 1, 1998.
(b) Payors shall make a final payment of the
entire unpaid principal balance and accrued interest under this Restated
Note and all other costs, expenses and charges of any nature whatsoever due
or assessable hereunder, on November 30, 1998.
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(c) In addition to the payments required to be
made as set forth in subparagraphs 3(a) and 3(b) above, pursuant to Section
5.20 of the Loan Agreement, during each twelve month period, commencing on
the date of execution of the Original Loan and Security Agreement, Payors
shall reduce the principal amount outstanding under this Restated Note to
zero ($0) dollars for a period of thirty (30) continuous and consecutive
days.
(d) Upon the failure of Payors to make any
payments hereunder within ten (10) days of the date when due, Payors shall,
to the extent permitted by law, pay a late payment charge on all amounts
overdue equal to five (5%) percent of the overdue amount (but in no event
less than twenty five ($25.00) dollars nor more than two thousand five
hundred ($2,500.00) dollars). Any such late charge assessed is immediately
due and payable.
4. Event of Default. Either of the following shall
constitute an Event of Default under this Restated Note:
(a) Failure to make any payments required
hereunder within five (5) days after the date when due; or
(b) The occurrence of any Event of Default
(as defined in the Loan Agreement) under any of the Loan Documents.
5. Acceleration Upon Default. Upon the occurrence of an
Event of Default, the entire unpaid principal balance of this Restated Note,
together with accrued interest, shall, at the option of Holder, immediately
become due and payable without notice or demand. Upon acceleration by Holder
as hereinabove provided, all amounts due hereunder, whether principal,
interest or otherwise, which have not been paid as of the date of such
acceleration, shall bear interest from such date to the date payment in full
is received by Holder at the rate of interest set forth in Paragraph 2 of
this Restated Note plus five (5%) percent per annum, instead of the rate
established in Paragraph 2 of this Restated Note. The Payor acknowledges
that: (i) such additional rate is a material inducement to the Bank to make
the Loan; (ii) the Bank would not have made the Loan in the absence of the
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agreement of the Payor to pay such default rate; (iii) such additional rate
represents compensation for increased risk to the Bank that the Loan will
not be repaid; and (iv) such rate is not a penalty and represents a
reasonable estimate of (a) the cost of the Bank in allocating its resources
(both personnel and financial) to the ongoing review, monitoring,
administration and collection of the Loan and (b) compensation to the Bank
for losses that are difficult to ascertain.
6. Cumulative Remedies; Waivers by Payors. No remedy
referred to herein is intended to be exclusive, but each shall be cumulative
and in addition to any other remedy above or otherwise available to the
Holder under any of the Loan Documents, at law or in equity. Payors hereby
waive presentment, demand for payment, protest and notice of dishonor of
this Restated Note and all other notices and demands.
7. Non-Waiver. Failure to insist on the strict performance
of any or all of the terms, provisions, and covenants contained in this
Restated Note shall not be construed as a waiver or relinquishment of the
future performance of any term, provision or covenant herein.
8. Collection Fees. If suit is brought to collect this
Restated Note or any part hereof, Payors expressly agree to pay all of
Holder's reasonable costs and expenses of collection, including reasonable
attorneys' fees.
9. Prepayment. This Restated Note may be prepaid in full
or in part at any time without premium or penalty.
10. WAIVER OF JURY TRIAL. EACH PAYOR HEREBY WAIVES ALL
RIGHTS IT MAY HAVE TO A JURY TRIAL IN ANY AND ALL ACTIONS OR CONTROVERSIES
ARISING OUT OF OR IN CONNECTION WITH THIS RESTATED NOTE.
11. Usury. All provisions of this Restated Note and the
Loan Documents are expressly subject to the condition that in no event,
whether by reason of acceleration of maturity of the indebtedness evidenced
hereby or otherwise, shall the amount paid or agreed to be paid to the
undersigned hereunder and deemed
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interest under applicable law exceed the maximum rate of interest on the unpaid
principal balance of this Restated Note allowed by applicable law (the "Maximum
Allowable Rate"), which shall mean the law in effect on the date of this
Restated Note, except that if there is a change in such law which results in a
higher Maximum Allowable Rate being applicable to this Restated Note, then this
Restated Note shall be governed by such amended law from and after its effective
date. In the event that fulfillment of any provision of this Restated Note or
the Loan Documents results in the interest rate hereunder being in excess of the
Maximum Allowable Rate, the obligation to be fulfilled shall automatically be
reduced to eliminate such excess. If, notwithstanding the foregoing, the Bank or
any other holder of this Restated Note receives an amount which under applicable
law would cause the interest rate hereunder to exceed the Maximum Allowable
Rate, the portion thereof which would be excessive shall automatically be
applied to and deemed a prepayment of the unpaid principal balance of this
Restated Note and not a payment of interest.
12. Governing Law. This Restated Note shall be governed by
and construed in accordance with the laws of the State of New Jersey.
13. Line of Credit Note. This Fourth Restated Line of
Credit Note dated September 30, 1998 is issued in replacement (but not in
novation of the debt evidenced thereby) of that certain Line of Credit Note
of the Payors dated October 22, 1997, as amended and restated by that
certain Restated Line of Credit Note of the Payors dated April 1, 1998, and
as further amended and restated by that certain Second Restated Line of
Credit Note of the Payors dated May 28, 1998, and as further amended by that
certain Third Restated Line of Credit Note of the Payors dated July 30,
1998.
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IN WITNESS WHEREOF, each Payor has duly executed this
Fourth Restated Note the day and year first above written.
ATTEST: SEL-LEB MARKETING, INC.
By: By:
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▇▇▇▇ ▇▇▇▇▇▇, Vice-Chairman ▇▇▇ ▇▇▇▇▇▇, Executive Vice
of the Board President of Finance
ATTEST: ALES SIGNATURE, LTD.
By: By:
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▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, Chief Financial
Secretary Officer
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