Exhibit 10.1
[LETTERHEAD OF MERRILL
LYNCH]
March 11, 2005
Dreams Products, Inc.
2 South University Drive
Suite 325
Re: Amendment to Loan
Documents
Ladies & Gentlemen:
This Letter Agreement will serve to confirm
certain agreements of Merrill Lynch Business Financial Services
Inc. (“MLBFS”), Dreams Products, Inc.
(“Customer”), Dreams, Inc. (“Dreams”), and
Dreams Franchise Corporation (“Franchise”) with respect
to: (I) that certain FORBEARANCE AGREEMENT dated as of
December 30, 2004 between MLBFS on the one hand, and Customer,
Dreams and Franchise (collectively, Customer, Dreams and Franchise,
the “Obligors” or the “Parties”) on the
other hand (including any previous amendments and extensions
thereof), and (ii) all other agreements between MLBFS and Obligors
including without limitation the Loan Documents. Capitalized terms
used herein and not defined herein shall have the meaning set forth
in the Forbearance Agreement, or if not defined in the Forbearance
Agreement, the Loan Documents.
Subject to the last sentence of this Letter
Agreement, effective as of today, the Loan Documents are hereby
amended as follows:
(a) Section 4(e)(i) of the Forbearance Agreement
is hereby amended and restated in its entirety as follows: The term
“Maximum WCMA Line of Credit” shall mean, (i) as of the
Effective Date (as hereinafter defined) through and including the
calendar day immediately preceding the “Change Date”
(as hereinafter defined), $4,500,000.00 and (iii) effective the
Change Date through April 29, 2005, $3,500,000.00. For purposes
hereof, the term “Change Date” shall mean the earlier
to occur of (a) the date of the closing of any transaction
involving the sale of $2,200,000.00, or any other sum, in equity by
the Customer or any Obligor through a “rights offering”
or any other equity offering consummated by Customer or any
Oblig
