THIRD AMENDMENT TO
LOAN AND SECURITY AGREEMENT
This Third Amendment to Loan and Security Agreement (the Third
"Amendment") dated July 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 000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxx, Xxx
Xxxxxx 00000 and SEL-LEB MARKETING, INC., a New York corporation ("Sel-Leb"),
having its principal executive office located at 000 Xxxxx Xxxxxx, Xxxxxxxx, Xxx
Xxxxxx 00000 and ALES SIGNATURE LTD., a New York corporation ("ALES"), having
its principal executive office located at 000 Xxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx
00000 (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 a
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 a 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 ($1,000,000.00) Dollars (the
"Term Note"); and
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WHEREAS, on April 1, 1998 the Original Loan Agreement loan was amended
pursuant to a 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 a Second Amendment to Loan and Security Agreement (the
"Second Amendment") to extend the Line of Credit Loan Termination Date to July
30, 1998 (the Original Loan Agreement as amended by the First Amendment and
Second Amendment is referred to herein as the "Loan 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") (the Original Line of
Credit Note as amended and restated by the Restated Note and Second Restated
Note is referred to herein as the "Line of Credit Note"); and
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WHEREAS, the Borrower has requested the Lender to extend the Line of
Credit Loan Termination Date to September 30, 1998; and
WHEREAS, the Lender is willing to extend the Line of Credit Loan
Termination Date to September 30, 1998 subject to the terms and conditions set
forth in this Third 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 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
Third 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 September 30, 1998."
3. The reference to the "Line of Credit Note" in Section
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1.1(z) of the Loan Agreement shall be deemed to refer to the Line
of Credit Note as amended by that certain Third Restated Line of
Credit Note attached hereto as Exhibit "A" (the "Third Restated
Line of Credit Note") and by this reference made a part hereof as
if fully set forth herein.
4. The Borrowers acknowledge and agree that: (a) as of July 30, 1998
the unpaid principal balance of the Line of Credit Note is Two Million Two
Hundred Thousand ($2,200,000) 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 Line of Credit Note is and shall be governed
by the terms and provisions of the Loan Agreement, and as set forth in this
Third Amendment.
5. The Lender and the Borrower hereby agree and consent to the terms
and provisions of this Third 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,
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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 Third Amendment
and the Loan Agreement, the terms of this Third 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 Third Amendment and the
Line of Credit Note.
9. This Third Amendment shall be construed in accordance with, and
shall be governed by, the laws of the State of New Jersey. This Third Amendment
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
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IN WITNESS WHEREOF, the undersigned have caused this Third 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:___________________________________
XXXXXXX XXXX, Vice President
ATTEST: SEL-LEB MARKETING, INC.
______________________ By:___________________________________
XXX XXXXXX, Executive Vice President
of Finance
ATTEST: ALES SIGNATURE LTD.
______________________ By:___________________________________
XXX XXXXXX, Chief Financial Officer
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EXHIBIT A
THIRD RESTATED LINE OF CREDIT NOTE
Principal Amount: $2,500,000 Dated: July 30, 1998
FOR VALUE RECEIVED, SEL-LEB MARKETING, INC., a New York
corporation, having its principal place of business at 000 Xxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxxxx 00000 ("SEL-LEB") and ALES SIGNATURE LTD., a New York
corporation, having its principal place of business at 000 Xxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxxxx 00000 ("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 000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000, 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 Third
Restated Line of Credit Note ("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 ("Original Loan and
Security Agreement"), as amended by that certain First Amendment to Loan and
Security Agreement dated April 1, 1998 ("First Amendment"), as further amended
by that certain Second Amendment to Loan and Security Agreement dated May 28,
1998 ("Second Amendment"), and as further amended by that certain Third
Amendment to Loan and Security Agreement dated as of the date hereof ("Third
Amendment") (the Original Loan and Security Agreement as amended by the First
Amendment, the Second Amendment and the Third Amendment is hereinafter referred
to as the "Loan Agreement").
(b) The terms and provisions of the Loan
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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 September 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 September 30, 1998.
(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 Loan 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.
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(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.
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
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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 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
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governed by and construed in accordance with the laws of the State of New
Jersey.
13. Line of Credit Note. This Third Restated Line of Credit
Note dated as of July 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 as of October 22, 1997, as amended and restated by that certain Restated
Line of Credit Note of the Payors dated as of April 1, 1998, and as further
amended and restated by that certain Second Restated Line of Credit Note of the
Payors dated as of May 28, 1998.
IN WITNESS WHEREOF, each Payor has duly executed this Third
Restated Note the day and year first above written.
ATTEST: SEL-LEB MARKETING, INC.
By: By:
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XXXX XXXXXX, Vice-Chairman XXX XXXXXX, Executive Vice
of the Board President of Finance
ATTEST: ALES SIGNATURE, LTD.
By: By:
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XXXX XXXXXX, Secretary XXX XXXXXX, Chief Financial
Officer
