File No. 09836
__________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-QSB/A
FOR PERIOD ENDED JUNE 30, 1996
AMENDMENT TO APPLICATION OR REPORT FILED
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
______________________
COSMETIC SCIENCES, INC.
(Exact name of registrant as specified in its charter)
______________________
AMENDMENT NO. 1
______________________
______________________
A. The undersigned registrant hereby amends the exhibits of its
Form 10-QSB for the quarter ended June 30, 1996, to include (i) an
exhibit to Exhibit 10 which was inadvertently not included; and
(ii) to renumber the page on which Exhibit 9 appears.
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INDEX TO EXHIBITS
Exhibits Page Number
EX-27. Exhibit 27 Financial Data Schedule 14
EX-10. Stock Purchase Agreement dated June 30, 1996 15
EX-9. Voting Trust Agreement dated June 21, 1996 38
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SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this Amendment to be
signed on its behalf by the undersigned, thereunto duly authorized.
COSMETIC SCIENCES, INC.
Date: August 15, 1996 By: \s\ Mary Anne Page
Mary Anne Page
Acting Chief Executive
Officer and Director
Date: August 15, 1996 By: \s\ Paul Elenio
Paul Elenio
Vice President, Controller
and Principal Financial
Officer
This STOCK PURCHASE AGREEMENT, dated as of June 30, 1996
(this "Agreement"), by and among COSMETIC SCIENCES, INC., a New York
corporation, with its principal place of business at One Old Country
Road, Carle Place, New York 11514 (the "Company") and ARBOR HOME
HEALTH CARE HOLDING, LLC, a New York limited liability company, with
its principal place of business at 333 Earle Ovington Boulevard,
Uniondale, New York 11553 (the "Purchaser"), and Meltzer, Lippe,
Goldstein, Wolf & Schlissel, P.C. ("MLG"), as Escrow Agent ("Escrow
Agent"), solely with respect to MLG's duties as Escrow Agent
pursuant to Article VII.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Amended and Restated
Option Agreement dated October 31, 1995 ("Option Agreement"), the
Company has granted to Purchaser the First Option, as defined
therein ("First Option"), which entitles the Purchaser to purchase
6,500,000 shares of the Company's common stock, $.01 par value, as
adjusted for stock splits, stock dividends, capital reorganizations
and similar events ("First Option Shares"); and
WHEREAS, pursuant to the Option Agreement, Purchaser has the
right to compel the Company to enter into a stock purchase agreement
pursuant to which Purchaser may exercise the First Option and the
Company will make various representations and warranties as
specified in the Option Agreement;
NOW, THEREFORE, in reliance upon the representations,
warranties and agreements made herein and in consideration of the
premises and mutual promises herein contained and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE I
MATTERS RELATING TO THE EXERCISE OF THE FIRST OPTION
Section 1.01. Exercise of the First Option. Upon the
Purchaser's compliance with Section 1.03(i) herein, which provides
for (i) the delivery by Purchaser to the Company of a notice of
exercise of the First Option and (ii) delivery by Purchaser of a
certified check to Escrow Agent in the amount of Six Hundred
Fifty Thousand ($650,000.00) Dollars representing the purchase price
of the First Option Shares ("Purchase Price"), the Company shall be
obligated to issue to Purchaser the First Option Shares, subject to
the terms and provisions hereof.
The Company's obligation to issue the First Option Shares to
Purchaser shall be subject to the sole condition that on or prior
to October 15, 1996, (i) a shareholders' meeting shall occur at
which, inter alia, the shareholders of the Company shall approve an
amendment to the Company's Certificate of Incorporation to provide
for a reverse stock split (the "Reverse Stock
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Split") of not less than 1:10 and not more than 1:30, as described
in the preliminary proxy statement filed with the Securities and
Exchange Commission
on April 13, 1996 (which statement, with certain amendments, is
attached hereto as Exhibit A); and (ii) that the Reverse Split
Amendment (as defined below) shall be filed with and accepted by
the New York Secretary of State.
At the First Closing, as defined in Section 1.03 below, funds
in the amount of the Purchase Price shall be deposited with, and
held in escrow by, Escrow Agent, pursuant to Article VII. As
further specified in Article VII and Section 1.04 below, and other
than in case of a failure of the condition described in Section
6.01, such funds shall be released to the Company upon (i) approval
by the Company's shareholders of an amendment to the Company's
Certificate of Incorporation effecting the Reverse Stock Split (the
"Reverse Split Amendment") and acceptance by the New York Secretary
of State of the filing of the Reverse Split Amendment; and (ii) the
issuance of the First Option Shares to Purchaser in accordance with
this Agreement. The Purchase Price shall be returned to Purchaser
by Escrow Agent if the two events in the preceding sentence do not
occur on or before October 15, 1996, other than through an act of
Purchaser which is not justified under this Agreement.
The Reverse Stock Split shall have the effect of reducing the
total number of outstanding shares of the Company's common stock
from 19,000,226 to between 1,900,023 shares (if a 1:10 Reverse Stock
Split is effected) and 633,341 shares (if a 1:30 Reverse Stock
Split is effected). The Reverse Stock Split, once effected, will
result in the decrease of the number of shares constituting the
First Option Shares to between 650,000 shares (if a 1:10 reverse
split is effected) and 216,667 shares (if a 1:30 reverse split is
effected).
Section 1.02. Effecting the Reverse Stock Split and Other
Matters to be Acted Upon in a Shareholders' Meeting. The Company,
pursuant to the Option Agreement, obligated itself to effect a
shareholders' meeting to approve an amendment to the Company's
Certificate of Incorporation to provide the necessary authorized
capital for Purchaser to exercise the First Option and Second
Option, as defined under the Option Agreement. In order to provide
sufficient authorized but unissued shares for Purchaser to exercise
the First Option and Second Option, the parties have agreed to
submit the Reverse Stock Split to the Company's shareholders for
their approval. This method has been chosen because it will also
promote the ability of the Company to have its common stock listed
on the Nasdaq Stock Market (Small Cap). The Company and Purchaser
have also agreed that various other matters should be submitted for
approval to the Company's shareholders. The Company therefore agrees
that it will, after the First Closing has occurred and within ten
(10) days of Purchaser's request, (i) issue notice of a
shareholders' meeting (the "Shareholders' Meeting") to be held
within 60 days of said notice and (ii) circulate a proxy statement
substantially in the form annexed hereto as Exhibit A, for the
purposes of:
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(i) approving the Reverse Split Amendment, with the
magnitude of the Reverse Stock Split to be determined by the
Company's Board of Directors;
(ii) approving an amendment to the Company's
Certificate of Incorporation to provide for the creation of a
new class of authorized preferred stock, to be issued subject
to such rights, preferences and privileges as shall be
determined by the Company's Board of Directors;
(iii) approving an amendment to the Company's
Certificate of Incorporation to provide for the Company to
engage in the home health care business;
(iv) approving an amendment to the Company's
Certificate of Incorporation to change the name of the Company
to Extended Family Care Corporation;
(v) approving an amendment to the Company's
Certificate of Incorporation to eliminate certain liabilities
of the Company's directors pursuant to Section 402(b) of the
New York Business Corporation Law;
(vi) electing three directors to serve on the Company's
Board of Directors until the next annual meeting of
shareholders;
(vii) ratifying the appointment of Carpenter & Onorato,
P.C., as the independent auditors of the Company and its
subsidiaries for the 1996 calendar year; and
(viii) transacting such other business as may
properly come before the meeting and any adjournment thereof.
Purchaser has previously been granted the right under a
certain Voting Trust Agreement dated June 10, 1996 (the "Voting
Trust Agreement"), to direct the voting of 12,749,658 shares of the
Company's Common Stock deposited in a voting trust (the "Voting
Trust") by Coss Holding Corp. ("Coss"). Purchaser agrees that it
will direct the voting trustee of the Voting Trust to vote all
shares in the Voting Trust in favor of all of the items specified in
Section 1.02(i) - (viii) above.
Within three (3) business days of the approval of the various
Certificate of Incorporation amendments specified above, the Company
will file an amendment of its Certificate of Incorporation with the
New York Secretary of State to reflect the various amendments so
approved.
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Section 1.03. The First Closing. The closing of the exercise
of the First Option (the "First Closing") shall be held at the
offices of Meltzer, Lippe, Goldstein, Wolf & Schlissel, P.C., 190
Willis Avenue, Mineola, New York 11501 or at such other place or
places as the parties may agree upon, at 11:00 o'clock A.M., New
York time, on August 19, 1996 or such other time and date as may be
mutually approved by the parties in writing, but not later than
August 21, 1996 (the "First Closing Date"). At the First Closing,
the following shall occur:
(i) Purchaser will deposit with the Escrow Agent, the
Purchase Price, by certified check for $650,000 payable to the
Escrow Agent, along with a notice of exercise as required
under the Option Agreement, in the form annexed hereto as
Exhibit B.
(ii) If Purchaser has complied with subparagraph
1.03(i), the Company will issue an Acknowledgement of Exercise
of Option, in the form annexed hereto as Exhibit C.
Section 1.04. The Second Closing. The second closing under
this Stock Purchase Agreement ("Second Closing") shall consist of
the delivery of a certificate representing the First Option Shares
to Purchaser by the Company and the release of the Purchase Price to
the Company by the Escrow Agent. The Second Closing shall occur at
the offices of MLG no later than five business days after the
Reverse Split Amendment has been filed with, and accepted by, the
New York Secretary of State, or such earlier time after these
occurrences as the parties may agree, provided the conditions
specified in Article VI have been complied with or have been
otherwise waived by Purchaser.
Section 1.05. Failure to Timely Close. If, other than
through fault of Purchaser, the First or Second Closing does not
occur in the time periods provided for above, then Purchaser may, in
its discretion, extend the time periods for performance specified
above for so long as it may deem appropriate. Such extension shall
not be in derogation of any other rights of Purchaser under this
Agreement or the Option Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser, as of
the date hereof, and as of each of the First and Second Closing, as
follows:
Section 2.01. Title. The First Option Shares, when issued
and delivered to Purchaser in accordance with Section 1.01 hereof,
shall be duly and validly authorized, issued and
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outstanding, fully paid and non-assessable. The First Option Shares
are being sold to Purchaser free and clear of any and all liens,
claims and encumbrances.
Section 2.02. Due Incorporation. The Company is a
corporation duly incorporated, validly existing and in good standing
under the laws of the State of New York and has full corporate and
other power and authority to conduct its business and own its
properties as now conducted and owned. The Company is qualified as
a foreign corporation in all jurisdictions in which the nature of
its properties and business requires such qualification and in which
noncompliance with such qualification would materially affect the
business of the Company.
Section 2.03. Capital Structure. The Company's current
capital structure is as follows: 20,000,000 shares of common stock
authorized, of which 19,000,226 shares are outstanding. There are
no agreements to issue any of the Company's securities, including,
but not limited to, subscriptions, warrants, options, convertible
securities or the rights to purchase or otherwise acquire the
Company's securities. There are no voting trusts or agreements,
pledge agreements, buy-sell agreements, rights of first refusal,
preemptive rights or proxies relating to any of Coss' shares of the
Company except as provided in the Voting Trust Agreement. All
issued securities of the Company are validly issued and fully paid,
non-assessable (subject to the provisions of Section 630 of the
Business Corporation Law of the State of New York), are owned free
and clear of any liens, pledges or encumbrances (except as
specifically noted herein), and all issued securities have been
issued in compliance with all applicable Federal and state
securities laws.
Section 2.04. Power and Authority; No Defaults. The Company
has full power and authority and has taken all required corporate
and other action necessary to permit the Company to execute and
deliver this Agreement, and otherwise to carry out the terms of this
Agreement and all other documents, instruments or transactions
required or contemplated by this Agreement. None of such actions
will violate any provision of the Certificate of Incorporation or
By-laws of the Company (subject to the Company's Board or Directors'
and shareholders' approval of the Reverse Stock Split and the filing
of the Reverse Split Amendment with the New York Secretary of
State), or result in the breach of or constitute a default under any
agreement or instrument or court order to which the Company is a
party or by which it is bound or result in the creation or
imposition of any material lien, claim or encumbrance on any asset
of the Company. No event has occurred and no conditions exist which
would constitute violations of this Agreement or the Option
Agreement.
Section 2.05. Enforceability. This Agreement has been duly
executed and delivered by the Company and constitutes the valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally, and except that no representation or
warranty is made as to the availability of the
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remedy of specific performance or other equitable remedies. No
agreement to which the Company is a party gives any rights to any
person to terminate any agreements with the Company or otherwise to
exercise rights against the Company, as a result of the execution of
this Agreement or the performance of the transactions hereby
contemplated.
Section 2.06. Litigation. There are no suits, proceedings or
investigations pending or threatened against or affecting the
Company, its assets or any officer or director of the Company, which
has or could have a material adverse effect on the business, assets
or financial condition of the Company, or which concern in any way
the transactions contemplated by this Agreement.
Section 2.07. Title to Assets. The Company has good and
sufficient title to all of the properties and assets which it
currently deems necessary for the conduct of its business. The
Company owns not less than 80% of the outstanding stock of TPC Home
Care Services, Inc., its operating subsidiary.
Section 2.08. Permits, Licenses, etc. The Company has all
franchises, permits, licenses, and other rights which it currently
deems necessary for the conduct of its business (including, but not
limited to, the license of the New York State Department of Health
to operate TPC as a home care services agency) and it knows of no
basis for the denial of such rights in the future. The Company is
not in violation of any order or decree of any court, or of the
provisions of any contract or agreement to which it is a party or by
which it may be bound, or, to the best of its knowledge, of any law,
order or regulation of any governmental authority, and neither the
execution of this Agreement nor the transactions contemplated hereby
will result in any such violation.
Section 2.09. Order and Consents. Except for (i) an
amendment of the Company's Certificate of Incorporation to provide
for sufficient authorized but unissued shares of the Company to
permit the issuance of the First Option Shares to Purchaser
hereunder; and (ii) Federal or State securities law requirements, if
any, the Company is not required to obtain any order, consent,
approval or authorization of, or presently required to make any
declaration or filing with, any United States federal, state or
local governmental authority in connection with the execution and
delivery of this Agreement or its performance of the transactions
contemplated herein.
Section 2.10. Financial Information. The Company has
furnished to Purchaser the audited Consolidated Balance Sheet of the
Company as at December 31, 1995 and 1994 and the related statements
of income, shareholders' equity and cash flows of the Company for
the years then ended. The Company has also furnished to Purchaser
its unaudited Balance Sheet as at March 31, 1996, and related
statement of income, stockholder's equity and cash flow for the
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three months then ended. All such financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the financial position of
the Company, as at the dates and for the periods to which they
relate. Since the date of the Company's Balance Sheet as at March
31, 1996 (i) there has been no change in the assets, liabilities or
financial condition of the Company from that reflected in said
Balance Sheet except for changes in the ordinary course of business
which in the aggregate have not been materially adverse and (ii)
none of the business, prospects, financial condition, operations,
property or affairs of the Company has been materially adversely
affected by any occurrence or development, individually or in the
aggregate, whether or not insured against.
The Company will be liable to Purchaser for any damages to
Purchaser resulting from breach or inaccuracy of any of the above
representations and warranties.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Purchaser hereby represents and warrants to the Company as
follows:
(a) Purchaser is a limited liability company duly
organized and validly subsisting under the laws of the State
of New York.
(b) This Agreement and the transactions contemplated
hereby have been duly authorized by Purchaser and the person
executing this Agreement on behalf of Purchaser has all the
required power and authority necessary to permit Purchaser to
execute and deliver this Agreement.
(c) Neither the execution of this Agreement nor the
performance of the transactions contemplated hereby will
violate the governing operating agreement of Purchaser or
result in the breach of or constitute a default under any
agreement or instrument to which Purchaser is a party or by
which it is bound.
(d) Neither Purchaser nor Ivan Kaufman has been engaged
in any of the events described in Item 401(f) of Regulation S-
K, as promulgated under the Securities Exchange Act of 1934,
as amended.
(e) Ivan Kaufman owns not less than a 90% interest in
Purchaser.
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ARTICLE IV
SURVIVAL OF VARIOUS AGREEMENTS
The Registration Rights and Conditional Put Option Agreement
dated October 31, 1995 between Coss and the Company, the Financial
Services Agreement dated October 31, 1995 between the Company and
Arbor Management, LLC and the Voting Trust Agreement dated June 10,
1996 between Coss, the Purchaser and the Company shall all remain in
full force and effect. The Option Agreement shall also remain in
full force and effect, including but not limited to those provisions
pertaining to the grant to Purchaser of the Second Option, as
defined therein.
ARTICLE V
FURTHER ASSURANCES
The parties hereto agree that they will cooperate with each
other and will execute and deliver, or cause to be executed and
delivered, all such other instruments and will take all such other
actions, as either party hereto may reasonably request from time to
time in order to effectuate the provisions hereof.
ARTICLE VI
CONDITIONS TO THE PURCHASER'S OBLIGATIONS
The obligations of Purchaser to purchase the First Option
Shares pursuant to this Agreement shall be subject to the
satisfaction of the following conditions:
Section 6.01. Representations and Warranties. The
representations and warranties of the Company contained in this
Agreement shall be true in all material respects at the execution of
this Agreement, and as of each of the First and Second Closing
Dates.
Section 6.02. Amendment to the Company's Certificate of
Incorporation. The Reverse Split Amendment shall have been filed
with, and accepted by, the New York Secretary of State on or before
the Second Closing Date.
Section 6.03. Making of Required Deliveries under Section
1.03(i). Purchaser shall make the deliveries specified in Section
1.03(i), it being understood that nothing in this Agreement shall
require that such deliveries be made and the Purchaser will have no
liability of any kind if it chooses not to make such deliveries.
<PAGE>
ARTICLE VII
DUTIES OF THE ESCROW AGENT
Section 7.01. Escrow Agent Acts Solely in the Capacity of
Escrow Agent. It is agreed by Purchaser and the Company that Escrow
Agent's sole capacity herein is as escrow agent and it shall have no
other duties or liabilities other than as explicitly set forth in
this Article VII.
Section 7.02. Escrow of the Purchase Price. Upon delivery of
the Purchase Price to Escrow Agent, Escrow Agent shall hold the
Purchase Price in a segregated account, which account shall bear
interest at the rates generally available for comparable accounts
maintained by Escrow Agent as escrow accounts. Such interest shall
be for the credit of the Company unless the Purchase Price is
returned to the Purchaser, in which case interest shall be for the
credit of the Purchaser.
Section 7.03. Release of Purchase Price From Escrow.
Provided that (i) the Reverse Split Amendment is filed with, and
accepted by, the New York Secretary of State and (ii) the Second
Closing occurs, all within the time period specified in Section 1.01
above, the Escrow Agent shall deliver the Purchase Price to the
Company. In order to release the Purchase Price to the Company, the
Escrow Agent shall require and shall rely upon (i) the furnishing by
the Company of a filing receipt of the New York Secretary of State
evidencing the filing with, and acceptance of, the New York
Secretary of State of the Reverse Split Amendment and (ii) the
delivery to Purchaser at the Second Closing of a stock certificate
representing the First Option Shares. If the requirements specified
in this Section 7.03 are not met on or before the time period
specified in Section 1.01 for their occurrence, the Escrow Agent
shall promptly return the Purchase Price to Purchaser, except if the
requirements are not met due to an act of Purchaser which is not
justified under this Agreement.
Section 7.04. Fees of the Escrow Agent. The Escrow Agent
shall not be entitled to any payment in connection with its duties
hereunder, except that the Escrow Agent shall be reimbursed by both
Purchaser and the Company, jointly and severally, for any legal fees
it incurs in connection with a dispute hereunder.
Section 7.05. Indemnification. Each of the Purchaser and the
Company, jointly and severally, agrees to indemnify and hold
harmless the Escrow Agent from any and all liabilities in connection
with its duties hereunder, except if the Escrow Agent has acted in
bad faith, has been grossly negligent in the performance of its
duties or has willfully violated its duties.
Section 7.06. Disputes. In the event of any dispute as to
the propriety of any action taken or to be taken by the Escrow Agent
hereunder, the parties agree that said dispute will be subject to
Section 8.04 hereunder. If, and only if, the Escrow Agent receives
notifications from both parties (which will be copied to all
parties) prior to releasing the Purchase Price from escrow which
notices conflict with respect to the manner of release of the
Purchase Price from escrow, the parties agree that the Escrow Agent
shall not release the Purchase Price to either
<PAGE>
Purchaser or the Company, but rather shall deposit the money into
court, with the disposition of the funds to be decided by said court
as provided in Section 8.04. Upon such deposit, the Escrow Agent
shall be released from any of its duties hereunder. The Escrow
Agent's duties shall otherwise terminate upon a release to either
Purchaser or the Company of the Purchase Price.
Section 7.07. Waiver of Conflict. The Company acknowledges
that the function of MLG as Escrow Agent hereunder shall not be
deemed to prevent MLG from continuing to act as counsel for the
Purchaser, either generally or with respect to matters or disputes
relating to this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Representations and Warranties. The
representations and warranties made in this Agreement shall survive
the execution of this Agreement and each of the First and Second
Closing Dates.
Section 8.02. Governing Law. This Agreement shall be
construed and enforced in accordance with the internal, substantive
laws of the State of New York, without giving effect to the conflict
of law rules thereof.
Section 8.03. Notices. All notices, consents, requests,
instructions, approvals and other communications provided for herein
shall be deemed validly given, made or served if in writing and
delivered personally (as of such delivery) or sent by certified mail
(as of two days after deposit in a United States post office),
postage prepaid:
(a) if to Purchaser, addressed to:
Arbor Home Health Care Holding, LLC
333 Earle Ovington Boulevard
Uniondale, New York 11553
Attention: Joe Heller
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with a copy to:
Meltzer, Lippe, Goldstein,
Wolf & Schlissel, P.C.
190 Willis Avenue
Mineola, New York 11501
Attention: Allan Grauberd, Esq.
(b) if to Company, addressed to:
Cosmetic Sciences, Inc.
333 Earle Ovington Boulevard
Uniondale, New York 11553
Attention: Mary Ann Page
with a copy to:
Richard Lane, Esq.
One Old Country Road
Carle Place, New York 11514
(c) if to Escrow Agent, addressed to:
Meltzer, Lippe, Goldstein,
Wolf & Schlissel, P.C.
190 Willis Avenue
Mineola, New York 11501
Attention: Allan Grauberd, Esq.
or such other address as shall be furnished in writing by either
party to the other.
Section 8.04 Jurisdiction. Legal proceedings commenced
by the parties arising out of any of the transactions or obligations
contemplated by this Agreement shall be brought exclusively in the
state courts of the State of New York or if properly removed, to the
federal courts, in either case in Nassau County, New York. The
parties irrevocably and unconditionally submit to the jurisdiction
of such courts and agree to take any and all future action necessary
to submit to the jurisdiction of such courts. Each of the parties
irrevocably waives any objection which it may now or hereafter have
to the laying of venue of any suit, action or proceeding brought in
any federal or state court in Nassau County, New York and further
irrevocably
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waives any claims that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum.
Section 8.05. Assignment; Amendments, Waivers. Neither
the Company nor the Purchaser shall assign any of its rights or
obligations under this Agreement without the prior written consent
of the other, except Purchaser may assign rights or delegate duties
hereunder as long as the majority in interest of the entity entitled
to the rights and subject to the duties under this Agreement is
owned by Ivan Kaufman, subject to Article 36 of the New York Public
Health Law. No provision of this Agreement may be amended, modified
or waived except by written agreement duly executed by each of the
parties.
Section 8.06. Entire Agreement. This Agreement
represents the entire agreement between the parties related to the
exercise of the First Option and supersedes and cancels any prior
oral or written agreement, letter of intent or understanding related
to that subject matter.
Section 8.07. Binding Agreement. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto
and their respective successors and, to the extent permitted
hereunder, their respective assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement.
Section 8.08. Counterparts. This Agreement may be
executed in one or more counterparts, and shall become effective
when one or more counterparts have been signed by each of the
parties.
<PAGE>
IN WITNESS WHEREOF, this Stock Purchase Agreement has
been duly executed by the parties hereto on the day and year first
above written.
COSMETIC SCIENCES, INC.
By: /s/ Mary Ann Page
Name: Mary Ann Page
Title: President
ARBOR HOME HEALTH CARE
HOLDING, LLC
By:/s/ Joseph Heller
Name: Joseph Heller
Title: Vice President
MELTZER, LIPPE, GOLDSTEIN,
WOLF & SCHLISSEL, P.C., as
Escrow Agent,
solely with respect to Article
VIII
By:/s/ David I. Schaffer
Name: David I. Schaffer
Title: Partner
<PAGE>
STATE OF NEW YORK)
) ss.:
COUNTY OF NASSAU )
On the 27 day of July, 1996 before me personally came Joseph
Heller, to me known to be the Vice President of ARBOR HOME HEALTH
CARE HOLDING, LLC, in and who executed the foregoing Stock Purchase
Agreement, and he acknowledged to me that he executed the same on
behalf of Arbor Home Health Care Holdings LLC.
(notarial) /s/Walter K. Horn
NOTARY PUBLIC
STATE OF NEW YORK)
) ss.:
COUNTY OF NASSAU )
On the 9th day of July, 1996 before me personally came Mary Ann
Page, to me known to be the President of COSMETIC SCIENCES, INC.,
in and who executed the foregoing Stock Purchase Agreement, and he
acknowledged to me that he executed the same on behalf of Cosmetic
Sciences, Inc.
(notarial) /s/Elsie M. Olson
NOTARY PUBLIC
STATE OF NEW YORK)
) ss.:
COUNTY OF NASSAU )
On the 15th day of July, 1996 before me personally
came David Schaffer, to me known to be a Partner of MELTZER, LIPPE,
GOLDSTEIN, WOLF & SCHLISSEL, P.C., as Escrow Agent, in and who
executed the foregoing Stock Purchase Agreement, and he
acknowledged to me that he executed the same on behalf of Meltzer,
Lippe, Goldstein, Wolf & Schlissel, P.C.
(notarial) /s/Linda Fritsch
NOTARY PUBLIC
<PAGE>
EXHIBIT B
NOTICE OF EXERCISE OF OPTION
All defined terms used herein have the same meaning as specified in
the Stock Purchase Agreement as to which this Notice of Exercise
constitutes Exhibit B.
Pursuant to Section 1(e) of the Option Agreement, the
undersigned Purchaser hereby notifies the Company of the exercise of
the First Option.
As provided in Section 8(a) of the Option Agreement, the
undersigned hereby represents to you that the First Option Shares
are being acquired by the undersigned for investment and not with a
view to the distribution thereof.
ARBOR HOME HEALTH CARE HOLDING, LLC
By: _______________________________
<PAGE>
EXHIBIT C
ACKNOWLEDGMENT OF EXERCISE OF OPTION
All defined terms used herein have the same meaning as specified in
the Stock Purchase Agreement as to which this Acknowledgment
constitutes Exhibit C.
The Company hereby acknowledges the Purchaser's exercise of
the First Option as in conformity with the requirements specified
for such exercise in the Option Agreement. The Company hereby
acknowledges that Purchaser's obligations specified in Section
1.03(i) have been complied with by Purchaser.
COSMETIC SCIENCES, INC.
By: _______________________________
<PAGE>
EXHIBIT A
COSMETIC SCIENCES, INC.
_______________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
_______________________
___________, 1996
The Annual Meeting of Shareholders of Cosmetic Sciences, Inc.
(the "Company") will be held at the offices of the Company at 333
Earle Ovington Blvd., Suite 900, Uniondale, New York, 11553 on
____________, _____________, 1996, at 10:00 a.m., for the following
purposes:
(1) To elect three directors to serve on the Board of
Directors until the next annual meeting of shareholders;
(2) To approve amendments to the Company's Certificate of
Incorporation (i) to effect a reverse split of the
Company's Common Stock of between 1:10 and 1:30; (ii) to
create a new class of authorized preferred stock which
may be issued subject to such rights, preferences and
limitations as shall be determined by the Board of
Directors; (iii) to provide for the Company to engage in
the home health care business; (iv) to change the name
of the Company to Extended Family Care Corporation; and
(v) to eliminate personal liability of the Company's
directors to the extent permitted by Section 402(b) of
the New York Business Corporation Law.
(3) To ratify the appointment of Carpenter & Onorato, P.C.
as the independent auditors to audit the financial
statements of the Company and its subsidiaries for the
year ending December 31, 1996; and
(4) To transact such other business as may properly come
before the meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on June
___, 1996 as the record date for determining shareholders entitled
to notice of and to vote at the meeting.
If you will be unable to attend the meeting and vote in
person, kindly mark, sign, date and return the enclosed proxy
promptly so that your shares will be represented. Sending in your
proxy will not prevent you from voting in person at the meeting.
By Order of the Board of Directors
Robert Kohlmeyer, Secretary
<PAGE>
COSMETIC SCIENCES, INC.
[ADDRESS]
The Annual Report to Shareholders for the year ended December
31, 1995, including financial statements, is being mailed to
shareholders together with these proxy materials on or about June
__, 1996. The Annual Report contains various cautionary statements
concerning the Company as to which reference is hereby made.
_________________________
PROXY STATEMENT
_________________________
This statement is furnished in connection with a solicitation of
proxies by the Board of Directors of Cosmetic Sciences, Inc. (the
"Company") to be used at the Annual Meeting of Shareholders of the
Company (the "Meeting"), to be held on _____________,
______________, 1996, at 10:00 A.M. at the offices of the Company at
333 Earle Ovington Blvd., Suite 900, Uniondale, New York, 11553.
Voting Procedure
Shareholders of record at the close of business on June __,
1996 will be entitled to vote at the Meeting. On the record date,
there were 19,000,226 shares of Common Stock, par value $.01 per
share ("Common Stock"), outstanding, each of which is entitled to
one vote at the Meeting. Holders of the Common Stock will vote as
a single class as to all matters to come before the Meeting. Of the
Common Stock outstanding, Coss Holding Corporation ("Coss") owns
12,749,658 shares of Common Stock, representing in the aggregate 66%
of the votes entitled to be cast at the Meeting. Such shares are
held in a voting trust and will be voted FOR the election of each
director, FOR the approval of the various amendments to the
Company's Certificate of Incorporation set forth in Proposal 2
below, and FOR the ratification of the appointment of auditors. See
"Certain Relationships and Related Transactions."
The By-Laws of the Company (the "By-Laws") provide that the
holders of a majority of the Common Stock issued and outstanding and
entitled to vote at the Meeting, present in person or represented by
proxy, shall constitute a quorum at the Meeting. The By-Laws
further provide that directors of the Company shall be elected by a
plurality vote and that, except as otherwise provided by statute,
the Certificate of Incorporation of the Company, or the By-Laws, all
other matters coming before the Meeting shall be decided by the vote
of a majority of the number of shares of Common Stock present in
person or represented by proxy at the Meeting and entitled to vote.
Votes cast at the Meeting will be counted by the persons
appointed by the Company to act as inspectors of election for the
Meeting. The inspectors of election will treat Common Stock
represented by a properly executed and returned proxy as present at
the Meeting for purposes of determining a quorum. Abstentions and
broker non-votes with respect to particular proposals will not
affect the determination of a quorum.
<PAGE>
Three directors will be elected by a plurality vote of the
Common Stock present, in person or by proxy, and entitled to vote at
the Meeting. Accordingly, abstentions and broker non-votes as to
the election of directors will have no effect. All other matters to
come before the Meeting require the approval of a majority of the
Common Stock present and entitled to vote; therefore, abstentions as
to particular proposals will have the same effect as votes against
such proposals. Broker non-votes as to particular proposals will
not, however, be deemed to be a part of the voting power present
with respect to such proposals and will not therefore count as votes
for or against such proposals and will not be included in
calculating the number of votes necessary for approval of such
proposals.
Proxies in the enclosed form are solicited by the Board of
Directors to provide an opportunity to every shareholder to vote on
all matters scheduled to come before the Meeting, whether or not he
or she attends in person. If proxies in the enclosed form are
properly executed and returned, the Common Stock represented will be
voted at the Meeting in accordance with shareholder direction.
Proxies in the enclosed form will be voted FOR the election of each
director, FOR the approval of the specified amendments to the
Certificate of Incorporation and FOR the ratification of the
appointment of auditors unless contrary specification is made. Any
shareholder executing a proxy may revoke that proxy or submit a
revised one at any time before it is voted. A shareholder may also
attend the Meeting in person and vote by ballot, thereby canceling
any proxy previously given. Except for the election of directors,
approval of the amendments to the Certificate of Incorporation and
the ratification of the appointment of auditors, management expects
no other matters to be presented for action at the Meeting. If,
however, any other matters properly come before the Meeting, the
persons named as proxies in the enclosed form of proxy intend to
vote in accordance with their judgment on the matters presented.
Proxy Solicitation
The cost of soliciting proxies will be borne by the Company.
In addition to solicitations by mail, arrangements have been made
for brokers and nominees to send proxy material to their principals,
and the Company will reimburse them for their reasonable expenses in
doing so. The Company's transfer agent, American Stock Transfer and
Trust Company, will assist in the solicitation of proxies from
brokers and nominees. The fees for the services of the transfer
agent are included in the monthly fees paid by the Company; however,
the Company will reimburse the transfer agent for its reasonable
out-of-pocket expenses incurred in connection with providing
solicitation services. Certain employees of the Company, who will
receive no compensation for their services other than their regular
remuneration, may also solicit proxies by telephone, telegram,
telex, telecopy, or personal interview.
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
At the Meeting, three directors are to be elected to a one-
year term and to hold office until his or her successor is elected
and qualified. The Board of Directors consists of one class, which
serves for a one-year term. The persons named in the enclosed form
of proxy intend to vote such proxy, unless otherwise directed, FOR
the election of each of the directors nominated to serve on the
Board to serve until the fiscal 1997 Annual Meeting of Shareholders.
If, contrary to present expectation, any of the nominees should
become unavailable for any reason, votes may be cast pursuant to the
accompanying form of proxy for a substitute nominee designated by
the Board.
Information Concerning Directors and Director Nominees
Set forth below is certain information concerning directors
and director nominees.
<TABLE>
<CAPTION>
Year First
Elected A
Name of Nominee Age Position Director
<S> <C> <C> <C>
Joseph Martello 40 Director Nominee (1)
Joseph Heller 32 Director Nominee (1)
Mary Ann Page 54 Vice President/
Director/Director
Nominee 1994
</TABLE>
The biographies of each of the above individuals are set forth
below at "Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act."
(1) Mr. Martello and Mr. Heller are nominated for election as
directors for the first time at this Meeting.
Corporate Governance
Directors are elected at the annual meeting of shareholders
and hold office until their successors have been duly elected and
qualified, or until their earlier death, resignation or removal.
The Board of Directors has primary responsibility for
directing the management of the business and affairs of the Company.
The Board currently consists of three members.
The Company intends to form an Audit Committee after the
conclusion of the Meeting. The Audit Committee's function will
include recommending to the Board of Directors the engagement of the
Company's independent certified public accountants, reviewing with
such accountants the plan and results of their examination of the
consolidated financial statements and determining the independence
of such accountants. The Audit Committee will also have primary
responsibility for reviewing all related party transactions.
<PAGE>
Executive officers serve at the discretion of the Board of
Directors, subject to any employment agreement between the executive
officer and the Company.
The Board of Directors voted by unanimous written consent in
lieu of formal meetings with respect to all actions taken in the
year ended December 31, 1995, except for one formal meeting which
all directors attended.
Compensation of Directors
Directors and committee members who are part of management
serve as such without compensation but are reimbursed for their
reasonable out-of-pocket expenses in attending meetings of the Board
and its committees.
Recommendation and Vote
The Board of Directors recommends a vote "FOR" the election of
the nominees listed above as directors of the Company to hold office
until the next annual meeting or until their successors are elected
and qualified.
PROPOSAL 2(i). PROPOSED AMENDMENT TO THE CERTIFICATE OF
INCORPORATION TO EFFECT A REVERSE STOCK SPLIT
General
On _____________, 1996, the Board of Directors adopted a
resolution proposing that the Certificate of Incorporation of the
Company (the "Certificate") be amended to effect a reverse stock
split of the presently issued and outstanding shares of the
Company's Common Stock of not less than 1:10 nor more than 1:30 (the
"Reverse Split"). If the Reverse Split is approved by the requisite
vote of the Company's shareholders, upon the filing of an amendment
to the Certificate with the New York Secretary of State (the
"Amendment"), the Reverse Split will be deemed effective, and each
certificate representing shares of Common Stock outstanding
immediately prior to the Reverse Split (the "Old Shares") will be
deemed automatically, without any action on the part of these
shareholders, to represent between 1/10 and 1/30 (depending upon the
magnitude of the Reverse Split, which will be determined by the
Board of Directors) of the number of shares of Common Stock after
the Reverse Split (the "New Shares"); provided, however, that no
fractional New Shares will be issued as a result of the Reverse
Split. All fractional shares of one-half share or more will be
increased to the next higher whole number of shares, and all
fractional shares of less than one-half share will be decreased to
the next lower whole number of shares, respectively; provided,
however, that rounding down will not occur if it would cause a
shareholder to be left with no shares, in which cases all such
shareholders will be rounded up to the next higher whole number of
shares. After the Reverse Split becomes effective, shareholders
will be asked to surrender certificates representing Old Shares in
accordance with the procedures set forth in the letter of
transmittal to be sent by the Company. Upon such surrender, a
certificate representing the new Shares will be issued and forwarded
to the shareholders. However, each certificate representing Old
Shares will continue to be valid and
<PAGE>
represent New Shares equal to between 1/10 and 1/30 (depending on
the magnitude of the Reverse Split) of the number of Old Shares
(subject to rounding up or down as described above).
The number of shares of Common Stock authorized by the
Certificate, and the par value of each such share, will not be
altered as a result of the proposed Reverse Split. The Common Stock
issued pursuant to the Reverse Split will be fully paid and
nonassessable. The voting and other rights that presently
characterize the Common Stock will not be altered by the Reverse
Split.
Purposes of the Proposed Reverse Split
The Board of Directors believes the Reverse Split is desirable
for several reasons. Currently, the Company's shares of Common
Stock are traded on the NASD Electronic Bulletin Board, and prices
for its Common Stock are quoted in what is commonly referred to as
the "pink sheets." The Board of Directors believes that the Reverse
Split is an important step in the Company's effort to meet the
initial listing application requirements maintained by NASDAQ for
its small capitalization market (the "Small Cap Market"). The
Reverse Split is expected to allow the Company to have its Common
Stock listed on the Small Cap Market by allowing the bid price of
the Common Stock to exceed the $3.00 minimum bid price required for
such listing. The Common Stock traded at an average closing price
of $.43 over the January 1 - March 31, 1996 quarter. The Company
believes it can meet the other listing requirements of the Small Cap
Market after the implementation of the Reverse Split. There can be
no assurance, however, that the Company will achieve the listing of
its Common Stock on the NASDAQ Small Cap Market. The Company
believes that vesting the Board with authority to determine the
magnitude of the Reverse Split within the range noted above is
necessary and advisable so the Board can react to the existing
market conditions affecting the trading price of the Common Stock at
the time the Reverse Split is effected.
The Reverse Split should also enhance the acceptability and
marketability of the Common Stock by the financial community and
investing public. The reduction in the number of issued and
outstanding shares of Common Stock caused by the Reverse Split is
expected to result in a broader market for the Common Stock than
that which currently exists. In addition, the structure of trading
commissions also tends to have an adverse impact upon holders of
lower priced stock because the brokerage commission on a sale of
lower priced stock generally represents a higher percentage of the
sales price than the commission on a relatively higher priced issue.
The Board of Directors believes that the proposed Reverse Split
should result in a price level for the Common Stock that will
reduce, to some extent, the effect of the above-referenced policies
and practices of brokerage firms and diminish the adverse impact of
trading commissions on the market for the Common Stock. (Any
reduction in brokerage commissions resulting from a Reverse Split
may be offset, however, in whole or in part, by increased brokerage
commissions required to be paid by shareholders selling "odd lots"
created by the Reverse Split.) The expected increased price level
may also encourage interest and trading in the Common Stock and
possibly promote greater liquidity for the Company's shareholders.
<PAGE>
However, no assurance can be given that any or all of these
effects will occur, including, without limitation, that the market
price per New Share of Common Stock after the Reverse Split will
approximate the market price per Old Share of Common Stock before
the Reverse Split multiplied by the magnitude of the Reverse Split
effected (between 10 and 30, as the case may be), or that such price
will either exceed or remain in excess of the current market price.
Further, no assurance can be given that the market for the Common
Stock will be improved. Shareholders should note that the Board of
Directors cannot predict what effect the Reverse Split will have on
the market price of the Common Stock.
Changes Affecting Capital Stock
The authorized number of shares of Common Stock and the par
value of the Common Stock will be unchanged following the Reverse
Split. The number of shares of Common Stock outstanding will be
reduced from 19,000,226 to between 1,900,023 (if a 1:10 Reverse
Split is effected) to 633,341 (if a 1:30 Reverse Split is effected).
The par value of the Common Stock of $.01 per share will not
change as a result of the Reverse Split. As a result, the Company's
stated capital (defined generally under New York law as the
aggregate sum of the par value of all shares with par value that
have been issued) will be reduced from approximately $194,506, based
upon the Company's stated capital as of the Record Date, to between
approximately $19,451 (if a 1:10 Reverse Split is effected) and
$6,484 (if a 1:30 Reverse Split is effected). A reduction in stated
capital will, under the New York Business Corporation Law (the
"BCL"), result in a corresponding increase in capital surplus.
Another effect of the Reverse Split is that the Company will
not need to increase its authorized capital in order for Arbor Home
Health Care, LLC ("Arbor Health") to exercise its First and Second
Option. Coss, in its capacity as the Company's majority
shareholder, had previously agreed to approve such an increase
pursuant to the Option Agreement. See "Certain Relationships and
Related Transactions." The Reverse Split, while reducing the number
of outstanding shares of Common Stock, will not affect the
authorized Common Stock, which will remain at 20,000,000 shares.
The exercise of the First and Second Option will, after giving
effect to the Reverse Split, result in the issuance of between an
additional 1,300,000 (if a 1:10 Reverse Split is effected) and
433,333 (if a 1:30 Reverse Split is effected) shares of Common
Stock. The Company will, therefore, after giving effect to the
Reverse Split and the exercise of Arbor Health's First and Second
Option, have between 16,799,977 (if a 1:10 Reverse Split is
effected) and 18,933,326 (if a 1:30 Reverse Split is effected)
unissued shares of Common Stock..
The Common Stock is currently registered under Section 12(g)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, as a result the Corporation is subject to the periodic
reporting and other requirements of the Exchange Act. The Reverse
Split will not affect the registration of the Common Stock under the
Exchange Act.
<PAGE>
Shareholders, have no right under New York law, the Company's
Certificate of Incorporation or its By-Laws to dissent from the
Reverse Split or the rounding to the nearest whole share of any
fractional share resulting from the Reverse Split in lieu of issuing
fractional shares.
Implementation of Reverse Split
The Reverse Split will be effected by filing the Amendment
with the New York Secretary of State. Assuming approval of the
Reverse Split by the requisite vote of the shareholders, the
Amendment to the Certificate will thereafter be filed with the New
York Secretary of State as promptly as practicable and the Reverse
Split will become effective on the date of such filing (the "Reverse
Split Effective Date"). Without any further action on the part of
the Company or the shareholders, after the Reverse Split Effective
Date, the certificates representing Old Shares will be deemed to
represent between 1/10 and 1/30 (depending on the magnitude of the
Reverse Split) of the number of New Shares subject to rounding up or
down of fractional shares.
The Amendment will be in the following form.
"Effective upon the filing of this Certificate, all
outstanding shares of Common Stock held by each holder
of record on such date shall be automatically
reclassified as and changed into between one-tenth and
one-thirtieth (depending on the determination of the
Board) of a share of Common Stock without any further
action on the part of the holders thereof or this
Company. No fractional shares shall be issued. All
fractional shares for one-half share or more shall be
increased to the next higher whole number of shares and
all fractional shares of less than one-half share will
be decreased to the next lower whole number of shares,
respectively, except rounding down will not occur if it
would cause a shareholder to be left with no shares, in
which cases all such shareholders will be rounded up to
the next higher whole number of shares."
As soon as practicable after the Reverse Split Effective Date,
the Company will send a letter of transmittal to each holder of
record of Old Shares of Common Stock outstanding on the Reverse
Split Effective Date. The letter of transmittal will contain
instructions for the surrender of certificate(s) representing such
Old Shares to American Stock Transfer & Trust Company, the Company's
exchange agent (the "Transfer Agent"). Upon proper completion and
execution of the letter of transmittal and return to the Transfer
Agent, together with the certificate(s) representing Old Shares, a
shareholder will be entitled to receive a certificate representing
the number of New Shares of Common Stock into which his Old Shares
have been reclassified and changed as result of the Reverse Split.
Shareholders should not submit any certificates until
requested to do so. No new certificate will be issued to a
shareholder until he has surrendered his outstanding certificate(s)
together with the properly completed and executed letter of
transmittal to the Transfer Agent.
<PAGE>
Federal Income Tax Consequences of the Reverse Split
The Company has not sought and will not seek an opinion of
counsel or a ruling from the Internal Revenue Service regarding the
federal income tax consequences of the Reverse Split. The Company,
however, believes that because the Reverse Split is not part of a
plan to periodically increase a shareholder's proportionate interest
in the assets or earnings and profits of the Company, the Reverse
Split will have the following federal income tax effects:
1. A shareholder will not recognize gain or loss on the
exchange. In the aggregate, the shareholder's basis in
the New Shares will equal his basis in the Old Shares.
2. A shareholder's holding period for the New Shares will
be the same as the holding period of the Old Shares
exchanged therefor.
3. The Reverse Split will constitute a reorganization
within the meaning of Section 368(a)(1)(E) of the
Internal Revenue Code of 1986, as amended, and the
Company will not recognize any gain or loss as a result
of the Reverse Split.
The discussion is based upon the federal income tax laws as in
effect on the date hereof; there can be no assurance that future
legislation, regulations, administrative rulings or court decisions
will not adversely affect the accuracy of the statements contained
herein.
Miscellaneous
The Board of Directors may abandon the proposed Reverse Split
at any time prior to the Reverse Split Effective Date if for any
reason the Board of Directors deems it advisable to abandon the
proposal. The Board of Directors may consider abandoning the
proposed Reverse Split if it determines, in its sole discretion,
that the Reverse Split would adversely affect the ability of the
Company to raise capital or the liquidity of the Common Stock, among
other things. The Board of Directors may make any and all changes
to the Amendment to the Certificate that it deems necessary to file
the Amendment to the Certificate with the New York Secretary of
State and give effect to the Reverse 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 Reverse Split.
Recommendation and Vote
THE BOARD OF DIRECTORS IS OF THE OPINION THAT THE REVERSE
SPLIT IS ADVISABLE AND IN THE BEST INTERESTS OF THE COMPANY AND
RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE REVERSE SPLIT.
<PAGE>
PROPOSAL 2(ii). PROPOSED AMENDMENT TO THE
CERTIFICATE OF INCORPORATION TO AUTHORIZE UP TO
10,000,000 SHARES OF PREFERRED STOCK
The Board of Directors has unanimously adopted and submitted
to the shareholders for approval an amendment to the Certificate of
Incorporation (the "Preferred Stock Amendment") to increase the
number of total authorized shares to 30,000,000 and to authorize the
issuance by the Company of up to 10,000,000 shares of preferred
stock (the "Preferred Stock"). The text of the Preferred Stock
Amendment is attached hereto as Exhibit __ and is incorporated by
reference.
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 funding 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 shareholder action, except as otherwise provided by
law.
The Preferred Stock will have such designations, preferences,
conversion rights, cumulative, relative, participating, optional or
other rights, including voting rights, qualifications, limitations
or restrictions thereof as are determined by the Board of Directors.
Thus, if the Preferred Stock Amendment is approved, the Board of
Directors would be entitled to authorize the creation and issuance
of up to 10,000,000 shares of Preferred Stock in one or more series
with such limitations and restrictions as may be determined in the
Board's sole discretion, without further authorization by the
Company's shareholders. Shareholders will not have preemptive
rights to subscribe for shares 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 the Board of Directors determines the rights of the holders of
a series of the 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 if the
Preferred stock is convertible into Common Stock; and (iv)
restrictions upon any distribution of assets to the holders of the
Common Stock upon liquidation or dissolution and until the
satisfaction of any liquidation preference granted to the holders of
Preferred Stock.
The Board of Directors is required by New York law to make any
determination to issue shares of Preferred Stock based upon its
judgment as to the best interests of the shareholders and 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
<PAGE>
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 and 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 entity or person not to be in
the best interests of these 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.
While the Company may consider effecting an equity offering of
Preferred Stock in the future for the purposes of raising additional
working capital or otherwise, the Company, as of the date hereof,
has no agreements or understandings with any third party to effect
any such offering and no assurances are given that any offering will
in fact be effected.
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 Preferred Stock Amendment.
Recommendation and Vote
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE PREFERRED STOCK AMENDMENT.
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF
COSMETIC SCIENCES, INC.
Section 4 of the Certificate of Incorporation of the Company
shall be amended to read as follows:
"4. Number of Shares. The total number of shares of
stock that the Company shall have authority to issue is:
Thirty million (30,000,000), consisting of twenty
million (20,000,000) shares of common stock (the "Common
Stock") of the par value of one cent ($.01) each and ten
million (10,000,000) shares of preferred stock (the
"Preferred Stock") of the par value of one cent ($.01)
each.
<PAGE>
"Designation of Classes; Relative Rights, etc..
The designation, relative rights, preferences and
limitations of the shares of each class are as follows:
"The shares of Preferred Stock may be issued from
time to time in one or more series of any number of
shares, provided that the aggregate number of shares
issued and not canceled of any and all such series shall
not exceed the total number of shares of Preferred Stock
hereinabove authorized, and with distinctive serial
designations, all as shall hereafter be stated and
expressed in the resolution or resolutions providing for
the issue of such shares of Preferred Stock from time to
time adopted by the Board of Directors pursuant to
authority so to do which is hereby vested in the Board
of Directors. Each series of shares of Preferred Stock
(a) may have such voting powers, full or limited, or may
be without voting powers; (b) may be subject to
redemption at such time or times and at such prices; (c)
may be entitled to receive dividends (which may be
cumulative or non-cumulative) at such rate or rates, on
such conditions and at such times, and payable in
preference to, or in such relation to, the dividends
payable on any other class or classes or series of
stock; (d) may have such rights upon the dissolution of,
or upon any distribution of the assets of, the Company;
(e) may be made convertible into or exchangeable for,
shares of any other class or classes or of any other
series of the same or any other class or classes of
shares of the Company at such price or prices or at such
rates of exchange and with such adjustments; (f) may be
entitled to the benefit of a sinking fund to be applied
to the purchase or redemption of shares of such series
in such amount or amounts; (g) may be entitled to the
benefit of conditions and restrictions upon the creation
of indebtedness of the Company or any subsidiary, upon
the issue of any additional shares (including additional
shares of such series or of any other series) and upon
the payment of dividends or the making of other
distributions on, and the purchase, redemption or other
acquisition by the Company or any subsidiary of, any
outstanding shares of the Company and (h) may have such
other relative, participating, optional or other special
rights, qualifications, limitations or restrictions
thereof; all as shall be stated in said resolution or
resolutions providing for the issue of such shares of
Preferred Stock. Shares of Preferred Stock of any
series that have been redeemed (whether through the
operation of a sinking fund or otherwise) or that if
convertible or exchangeable, have been converted into or
exchanged for shares of any other class or classes shall
have the status of authorized and unissued shares of
Preferred Stock of the same series and may be reissued
as a part of the series of which they were originally a
part or may be reclassified and reissued as part of a
new series of shares of Preferred Stock to be created by
resolution or resolutions of the
<PAGE>
Board of Directors or as part of any other series of shares of
Preferred Stock, all subject to the conditions or restrictions on
issuance set forth in the resolution or resolutions adopted by the
Board of Directors providing for the issue of any series of shares
of Preferred Stock.
"Subject to the provisions of any applicable law or of
the By-laws of the Company as from time to time amended,
with respect to the closing of the transfer books or the
fixing of a record date for the determination of
shareholders entitled to vote and except as otherwise
provided by law or by the resolution or resolutions
providing for the issue of any series of shares of
Preferred Stock, the holders of outstanding shares of
Common Stock shall exclusively possess voting power for
the election of directors and for all other purposes,
each holder of record of shares of Common Stock being
entitled to one vote for each share of Common Stock
standing in his or her name on the books of the Company.
Except as otherwise provided by the resolution or
resolutions providing for the issue of any series of
shares of Preferred Stock, the holders of shares of
Common Stock shall be entitled, to the exclusion of the
holders of shares of Preferred Stock of any and all
series, to receive such dividends as from time to time
may be declared by the Board of Directors. In the event
of any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, after payment
shall have been made to the holders of shares of
Preferred Stock of the full amount to which they shall
be entitled pursuant to the resolution or resolutions
providing for the issue of any series of shares of
Preferred Stock, the holders of shares of Common Stock
shall be entitled, to the exclusion of the holders of
shares of Preferred Stock of any and all series, to
share, ratably according to the number of shares of
Common Stock held by them, in all remaining assets of
the Company available for distribution to its
shareholders.
"Subject to the provisions of this Certificate of
Incorporation and except as otherwise provided by law,
the stock of the Company, regardless of class, may be
issued for such consideration and for such corporate
purposes as the Board of Directors may from time to time
determine."
PROPOSAL 2(iii). PROPOSED AMENDMENT TO THE CERTIFICATE OF
INCORPORATION TO PROVIDE THAT THE COMPANY IS AUTHORIZED
TO ENGAGE IN PROVIDING HOME HEALTH CARE SERVICES
The Board of Directors has unanimously adopted and submitted
to the shareholders for approval an amendment to the Certificate of
Incorporation (the "Corporate Purpose Amendment") which will delete
the current reference in the Certificate of Incorporation to the
Company's involvement in the business of selling cosmetics and to
clarify that the Company's business is providing home
<PAGE>
health care services. The Board of Directors believes that such
clarification is necessary to accurately reflect the Company's
business and to delete any references to the business in which the
Company is no longer engaged.
Therefore, Paragraph 2 of the Certificate of Incorporation is
proposed to be amended by deleting the first four lines thereof and
replacing them as follows:
"The Company shall be authorized to engage in the
business of providing home health care services
including both professional and paraprofessional care
and such other services necessary or desirable in
relation thereof."
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 Corporate Purpose Amendment.
Recommendation and Vote
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE CORPORATE PURPOSE AMENDMENT.
PROPOSAL 2(iv). PROPOSED AMENDMENT TO THE CERTIFICATE OF
INCORPORATION TO EFFECT A CHANGE IN THE COMPANY'S NAME
The Board of Directors has unanimously adopted and submitted
to the shareholders for approval an amendment to the Certificate of
Incorporation (the "Name Change Amendment") to authorize changing
the Company's name to Extended Family Care Corporation. The purpose
of the change is to accurately reflect the Company's current
business.
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 Name Change Amendment.
Recommendation and Vote
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE NAME CHANGE AMENDMENT.
PROPOSAL 2(v). PROPOSED AMENDMENT TO THE CERTIFICATE OF
INCORPORATION TO LIMIT LIABILITY OF DIRECTORS
The Board of Directors is presenting a proposal for action by
the shareholders, consistent with Section 402(b) of the New York
Business Corporation Law ("New York BCL"). Item 2(v) is a proposal
to amend the Company's Certificate of Incorporation by adding a
provision which, in certain cases, would eliminate the personal
liability of directors of the Company for monetary damages arising
from breach of fiduciary duty as a director (the "402(b)
Amendment").
<PAGE>
The Board of Directors believes that the proposal will assist
the Company in attracting and retaining qualified individuals to
serve as directors and officers of the Company. The proposal allows
the Company to adopt certain provisions of the New York BCL which
were authorized by the state legislature with the intention of
enabling New York corporations to take measures to respond to the
threat of litigation which directors of public companies face in
carrying out their responsibilities and to the limited availability
of directors' and officers' liability insurance. Since directors
and officers of the Company may benefit from this proposal, the
Board of Directors has an interest in the passage thereof by the
shareholders. The Board of Directors believes, however, that
adoption of the proposal is in the best interests of the Company and
its shareholders.
Background
Since 1986, many states have enacted statutes to reduce the
exposure of corporate directors to litigation seeking to impose upon
them heavy monetary liability for their acts or inaction in such
capacity. As noted in the legislative memorandum accompanying the
Act amending Section 402(b) of the New York BCL with respect to
directors' liability, the purpose of the New York legislation was
"to assure that qualified and experienced persons continue to be
willing to serve as...directors of New York corporations by
relieving them of the threat of monetary liability in connection
with their duties...." Such liability is not eliminated or limited
if the acts or omissions of directors are in bad faith, involve
intentional misconduct or knowing violations of law, violate certain
statutory prohibitions, or result in a profit or other advantage to
the director to which he is not legally entitled. Section 402(b) of
the New York BCL is an enabling provisions only. Shareholder
approval of an amendment to the Certificate of Incorporation is
required to effect the limitation on monetary liability authorized
by the statute.
Text of Proposed Amendment
The text of the proposed amendment to be added to the
Company's Certificate of Incorporation is as follows:
"To the fullest extent permitted by the New
York Business Corporation Law as presently
in effect or hereafter amended, a director
of the Corporation shall not be personally
liable to the Corporation or its
shareholders for damages for any breach of
duty as a director. Any repeal or
modification of this Article by the
shareholders of the Corporation shall not
adversely affect any right or protection of
a director of the Corporation existing
hereunder with respect to any act or
omission occurring prior to such repeal or
modification."
Reasons for the Proposed Amendment
Directors of New York corporations are required, under the New
York BCL, to perform their duties in such capacity in good
<PAGE>
faith and with that degree of care which an ordinarily prudent
person in a like position would use under similar circumstances. A
director may rely upon information, opinions, reports or statements
(including financial statements) prepared by certain officers or
employees, professional advisors or committees of the Board on which
such director does not serve. Decisions made on that basis are
protected by the "business judgment rule" and should not be
questioned by a court in the event of a lawsuit challenging such
decisions. The expense of defending such lawsuits, the frequency of
unwarranted litigation and the inevitable uncertainties of applying
the business judgment rule to particular facts and circumstances
mean, as a practical matter, that directors must rely on
indemnification arrangements and directors' and officers' liability
insurance in the event of such expenses or unforeseen liability.
Effect of the Proposed Amendment
The proposed amendment would protect each of the Company's
directors against personal liability to the Company or its
shareholders for any breach of duty unless a judgment or other final
adjudication adverse to the directors establishes that (i) his acts
or omissions were in bad faith, or (ii) involved intentional
misconduct or a knowing violation of the law, or (iii) he personally
gained in fact a financial profit or other advantage to which he was
not legally entitled, or (iv) his acts violated the prohibitions
contained in Section 719 of the New York BCL against certain
declarations of dividends, certain purchases or redemptions of its
shares by the Company, certain distributions of assets after
dissolution of the Company without adequately providing for its
liabilities and the making of certain loans to directors. In the
past, there has been no claim of the type which would be affected by
the proposed amendment and none is presently pending or, to the
knowledge of management of the Company, threatened. Since the
amendment provides that the liability of the Company's directors is
limited to the fullest extent permitted by the New York BCL "as
presently in effect or hereafter amended", the amendment will
further protect directors to the extent provided in any amendment to
the statute, without further approval of the shareholders.
The amendment does not reduce the fiduciary duty of a
director; it only eliminates monetary damage awards to the Company
and its shareholders occasioned by a breach of that duty. It does
not affect equitable remedies, such as to enjoin or rescind a
transaction involving a breach of fiduciary duty, although such
remedies may be unavailable or ineffective with respect to a
particular challenged action of the Board of Directors. The
amendment does not affect a director's liability for acts taken or
omitted prior to the time the amendment becomes effective (i.e.,
after shareholder approval and filing with the New York Secretary of
State), nor does it affect the liabilities of directors who are also
officers for acts taken or omitted in their capacity as officers.
The limitation of liability afforded by the amendment affects only
actions brought by the Company or its shareholders, and does not
preclude or limit recovery of damages by third parties, nor does it
affect the responsibility of directors under other laws, such as the
federal securities laws. The amendment provides that any repeal or
modification thereof would not affect any right or protection of a
director thereunder with respect to
<PAGE>
any act or omission occurring prior to such repeal or modification.
The Company's directors acknowledge that they and future
directors may personally benefit from adoption of the proposed
amendment at the potential expense of the Company's shareholders,
whose right to bring claims for monetary damages against directors
will be limited thereby, and that they may thus have a conflict of
interest in recommending approval of the amendment. The Board of
Directors believes, however, that the diligence exercised by
directors stems primarily from their desire to act in the best
interests of the Company, and not from a fear of monetary damage
awards. Accordingly, the Board believes that the level of scrutiny
and care exercised by directors will not be lessened by adoption of
the proposed amendment. The Board believes that such adoption will
enhance the Company's ability to attract and retain qualified
individuals to serve as directors of the Company.
Approval of the proposed amendment to the Certificate of
Incorporation requires the affirmative vote of the holders of at
least a majority of the issued and outstanding shares 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 402(b) Amendment.
Recommendation and Vote
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE 402(b) AMENDMENT.
PROPOSAL 3. RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors of the Company seeks ratification by
the shareholders of the Board's appointment of Carpenter & Onorato,
P.C. to act as the independent auditors of the financial statements
of the Company and its subsidiaries for the fiscal year ending
December 31, 1996. One or more representatives of the auditors are
expected to be available at the Meeting to respond to appropriate
questions and will be given an opportunity to make a statement at
the Meeting.
Effective February 19, 1996, the Company dismissed Rose,
Michlin, Karpf & Co. ("Rose, Michlin") as its independent auditor of
its financial statements. The new independent auditor to be engaged
by the Company to audit the Company's financial statements,
effective February 19, 1996, is Carpenter & Onorato, P.C.
Rose, Michlin did not complete the audit of the Company's
financial statements for the two most recent fiscal years 1994 and
1995. However, during these years there were no disagreements with
Rose, Michlin on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope of procedure.
Further, the Company was not advised by Rose, Michlin
<PAGE>
during this period of the existence of any of the events described
in Item 304(a)(1)(B) of Regulation S-B.
The financial statements of the Company as of and for the
fiscal years ended December 31, 1994 and December 31, 1995 were
audited by Carpenter & Onorato, P.C. Said reports did not contain
an adverse opinion or a disclaimer of an opinion, and was not
qualified or modified as to uncertainty, audit scope or accounting
principles.
OTHER BUSINESS
Management knows of no other business which is to be presented
for action at the Meeting. Should any other matters properly come
before the Meeting, the persons named in the accompanying proxy will
have discretionary authority to vote all proxies in accordance with
their judgment.
It is important that proxies be returned promptly. Therefore,
shareholders who do not expect to attend in person are urged to
execute and return the enclosed proxy to which no postage need be
affixed if mailed in the United States.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Mary Ann Page 54 Acting Chief Executive
Officer/Vice-President/
Director/Director Nominee
Patricia Cantalupo 36 Vice-President/Director
Peter P. Jackson 45 Chief Executive Officer
of TPC
Paul Elenio 28 Vice President, Controller
Robert Kohlmeyer 41 Secretary, Treasurer/Director
Steven Gorenstein 52 Former President and
Chief Executive Officer/
Director
Joseph Martello 40 Director Nominee
Joseph Heller 32 Director Nominee
</TABLE>
Mary Ann Page
Acting Chief Executive Officer since January 1996; Vice
President and Director of the Company since June 1994. Ms. Page is
also President and a Director of TPC Home Care Services, Inc.,
<PAGE>
the Company's majority-owned subsidiary ("TPC"). From 1991 to 1993,
Ms Page held the position of Director of Training for Health Force,
a national home health care agency, where she was responsible for
training new franchisees in all aspects of home care personnel
services. From 1988 to 1991, she held the position of Director of
Franchising for Winston Franchising Corp. Ms. Page will be standing
for reelection as a director at the Meeting.
Patricia Cantalupo
Vice President and Director since 1992. Dr. Cantalupo is also
a Vice President and Secretary of TPC. Dr. Cantalupo has been the
principal owner of Cantalupo Chiropractic Associates, a full service
multi-disciplinary Chiropractic Health Care Facility, since 1985.
Dr. Cantalupo will not be standing for reelection at the Meeting.
Peter P. Jackson
Managing Director of Business Development since January 1996.
Mr. Jackson was Chief Executive Officer of TPC from July 1993 to
December 1995. From 1975 to 1984 Mr. Jackson was President of
International Real Estate Computer Company, a software development
company for real estate advisory and appraisal services. From 1972
to 1992 Mr. Jackson was President of Jackson Associates, a national
commercial real estate appraisal firm which also specialized in
nursing home cost evaluation for medical reimbursement rates.
Paul Elenio
Vice President and Controller of the Company since January
1996. From 1993 to 1995 Mr. Elenio held the position of Financial
Reporting and Tax Supervisor for BankAmerica Mortgage, FSB, formally
Arbor National Mortgage, Inc., a mortgage banking company which
originated, sold and serviced residential and commercial mortgages.
From 1991 to 1993, Mr. Elenio held the position of Senior Accountant
for Arbor National Mortgage, Inc.
Robert Kohlmeyer
Secretary, Treasurer and Director of the Company since 1992.
Mr. Kohlmeyer is also Secretary/Treasurer and Director of TPC. Mr.
Kohlmeyer has been President and Chief Operating Officer of CRK
Contracting, a regional large scale electrical contracting company,
since 1987. Mr. Kohlmeyer will not be standing for reelection as a
director at the Meeting.
Steve Gorenstein
President, Chief Executive Officer and Director of the Company
since 1992. Mr. Gorenstein resigned as an officer and director in
January 1996. From 1991 to present, Mr. Gorenstein has been
President of Career Placements, Inc., a temporary employment agency.
Joseph Martello
From August 1995 to present Mr. Martello has been Senior Vice
President and Chief Financial Officer of Arbor Home
<PAGE>
Healthcare Holding, LLC, a holding company which holds the option to
purchase up to 40% of the currently outstanding shares of the
Company. See "Certain Relationships and Related Transactions." Mr.
Martello, from 1993 to the present, has been Senior Vice President
and Chief Financial Officer of Arbor National Commercial Mortgage,
LLC (and its predecessor), a nationwide provider of debt and equity
financing to multifamily borrowers. From August 1995 to present, Mr.
Martello has been Senior Vice President and Chief Financial Officer
of Arbor Management, LLC, a company which is active in the
marketing, financing and management of growth oriented businesses.
See "Certain Relationships and Related Transactions." From 1990 to
1995, Mr. Martello was Senior Vice President and Chief Financial
Officer of Arbor National Mortgage, Inc. (and its successor), a
mortgage banking company which originated, sold and serviced
residential mortgages. In 1995 Arbor National Mortgage, Inc. was
sold to BankAmerica Mortgage, FSB. From 1979 to 1990, Mr. Martello
was a Senior Manager for Ernst & Young, LLP, an international
accounting and consulting firm. Mr. Martello is a Certified Public
Accountant.
Joseph Heller
From August 1995 to the present, Mr. Heller has been a Vice
President of Arbor Home Healthcare Holding, LLC. From June 1995 to
the present, Mr. Heller has also been Vice President of Corporate
Planning for Arbor Management, LLC. From 1991 to May 1995, Mr.
Heller has held the positions of Vice President of Financial
Analysis and Budgeting and Director of Shareholder Relations for
Arbor National Mortgage, Inc. and its successor. From 1990 to 1991,
Mr. Heller was an Acquisition Associate for WinStar Services, Inc.,
a merchant and investment banking firm. From 1987 to 1990, Mr.
Heller was a Senior Analyst for Morgan Stanley & Co., a leading
investment banking firm, and from 1985 to 1987, Mr. Heller was a
Senior Accountant for Ernst & Young, LLP, an international
accounting and consulting firm. Mr. Heller is a Certified Public
Accountant; in 1991, he received a Masters degree in Business
Administration from Fordham University.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
(a) (b) (c) (d) (e)
Name and
Principal Other
Position Year Salary($) Bonus($) Compensation($)
<S> <C> <C> <C> <C>
Steve Gorenstein 1995 $0 $0 $0
Chief Executive Officer 1994 $0 $0 $0
President and Director 1993 $0 $0 $0
Mary Ann Page 1995 $82,210 $6,250 $
Acting Chief Executive 1994 $66,221 $0 $
Officer 1993 $ 9,231 $0 $
</TABLE>
No officer of the Company received compensation in excess of
$100,000. Members of the Board of Directors received no
compensation of any kind for services provided as a director.
There are no employment agreements with any officer or
director of the Company or its subsidiaries.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of certain beneficial owners.
The following sets forth the holdings of any person known by
the issuer to be the beneficial owner of more than five percent of
the Company's Common Stock:
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of of Beneficial Percent
Title of Class Beneficial Owner Ownership of Class
<S> <C> <C> <C>
Common Stock COSS Holding Corp. 12,749,658 66.1
1 Old Country Road
Suite 500
Carle Place, NY. 11514
Common Stock Arbor Home Healthcare 25,749,658 (1) 79.7
Holding, LLC
333 Earle Ovington Blvd.
Uniondale, NY. 11553
Common Stock Ivan Kaufman 25,749,658 (1)(2) 79.7
c/o Arbor Home
Healthcare Holding, LLC
333 Earle Ovington Blvd.
Uniondale, NY. 11553
</TABLE>
_______________________________________
<PAGE>
(1) Includes and gives effect to the exercise in full of options
held by Arbor to purchase up to 13 million newly issued
shares from the Company. Includes voting power over
12,749,658 shares owned by COSS Holding Corp. pursuant to a
voting trust. (See "Certain Relationships and Related
Transactions"). The number of shares noted above will be
proportionately reduced based on the Reverse Split described
in Proposal 2(i) in this Proxy Statement. See "Proposal
2(i). Proposed Amendment to the Certificate of
Incorporation to effect a Reverse Stock Split".
(2) Ivan Kaufman owns a 99 percent interest in Arbor Home
Healthcare Holding LLC. and is its controlling member.
(b) Security Ownership of Management.
The following sets forth the holdings of all of the
Company's directors, executive officers and director nominees, as
well as all directors and officers as a group:
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of of Beneficial Percent
Title of Class Beneficial Owner Ownership of Class
<S> <C> <C> <C>
Common Stock Steven Gorenstein 0 0
16 Barrington Place
Dix Hills, NY 11747
Common Stock Robert Kohlmeyer (1) 0 0
86 Hilltop Drive
Smithtown, NY 11787
Common Stock Mary Ann Page 0 0
c/o Cosmetic Sciences, Inc.
1 Old Country Road
Carle Place, NY 11514
Common Stock Patricia Cantalupo 0 0
50 Harvard Drive
Westbury, NY 11590
Common Stock Peter P. Jackson 110,000 (1) *
c/o Cosmetic Sciences, Inc.
1 Old Country Road
Carle Place, NY 11514
Common Stock Paul Elenio 0 0
c/o Cosmetic Sciences, Inc.
1 Old Country Road
Carle Place, NY 11514
Common Stock Joseph Martello 0 0
c/o Arbor Management, LLC
333 Earle Ovington Blvd.
Uniondale, NY 11553
Common Stock Joseph Heller 0 0
c/o Arbor Management, LLC
333 Earle Ovington Blvd.
Uniondale, NY 11553
<PAGE>
Common Stock All directors and
executive officers
as a group 110,000 *
_____________________________________
</TABLE>
*Less than 1%
(1) Owned by son Steven Jackson. Peter Jackson disclaims
beneficial ownership of these shares.
(c) Changes in control
COSS has placed all of its 12,749,658 shares of the
Company's Common Stock (the "COSS Shares"), representing
approximately 66 percent of the currently outstanding Company
Common Stock, in a voting trust. Arbor will have the right under
this voting trust to direct the voting of all of the COSS Shares
and to nominate a majority of the Company's Board of Directors.
(See "Certain Relationships and Related Transactions".)
In addition, pursuant to a certain Amended and Restated
Option Agreement (the "Option Agreement"), dated as of October 31,
1995, by and among Arbor, COSS, COSS' shareholders, the Company,
and TPC, Arbor acquired from the Company an option to purchase 13
million shares of the Company's Common Stock. Should this option
be exercised in full, Arbor will have beneficial ownership and
voting rights to 79.7 percent of the outstanding Common Stock of
the Company. (See "Certain Relationships and Related
Transactions".)
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to a certain Amended and Restated Option Agreement
(the "Option Agreement"), dated as of October 31, 1995, by and
among Arbor, COSS, COSS' shareholders, the Company, and TPC, Arbor
acquired from the Company an option to purchase up to 13 million
shares of the Company's Common Stock as follows: (a) Arbor has an
irrevocable option (the "First Option") to purchase, by June 21,
1996, 6.5 million shares of the Company's Common Stock at an
exercise price of $.10 per share; (b) subject to Arbor's timely
exercise of the First Option, Arbor will be given the option (the
"Second Option") to purchase, by November 1, 1996, up to an
additional 6.5 million shares of the Company's Common Stock at an
exercise price of $.10 per share. The First and Second Options are
subject to adjustment in the event of stock splits and similar
events. The number of shares noted above will be proportionately
reduced, and the exercise price proportionately increased, based
on the Reverse Split described in Proposal 2(i) in this Proxy
Statement. See "Proposal 2(i). Proposed Amendment to the
Certificate of Incorporation to effect a Reverse Stock Split".
COSS has placed all of its 12,749,658 shares of the
Company's Common Stock (the "COSS Shares"), representing
<PAGE>
approximately 66 percent of the currently outstanding Company
Common Stock, in a voting trust. Arbor will have the right under
this voting trust to direct the voting of all of the COSS Shares
and to nominate a majority of the Company's Board of Directors.
In addition, under certain circumstances, the trustee of the
voting trust is required to observe certain restrictions in the
event COSS wishes to effect a sale, transfer or encumbrance of the
COSS Shares. COSS will retain all economic rights in the COSS
Shares, including, but not limited to, its right to dividends.
The Option Agreement also provides for various negative covenants
in favor of Arbor with respect to actions that may be taken by
COSS, its shareholders, the Company and TPC.
Pursuant to a Registration Rights and Conditional Put Option
Agreement (the "Registration Rights Agreement"), dated as of
October 31, 1995, between COSS and the Company, the Company has
agreed to register the COSS Shares for resale under the Securities
Act of 1933, as amended (the "Securities Act"), upon the written
demand of COSS made at any time commencing one year after the date
on which the Company's Common Stock is listed on the Nasdaq Stock
Market (whether as a SmallCap Market security or a National Market
System security, or any equivalent or successor of the foregoing).
Pursuant to the Registration Rights Agreement, the Company will be
obligated to file up to three registration statements over a
three-year period, with one-third of the COSS Shares (subject to
certain adjustments) to be registered in each year of such three
year period. Notwithstanding the foregoing, the Company has the
right to reject the demand by COSS, following which COSS may
require that the Company redeem the COSS Shares at a price equal
to 75 percent of the average bid price in effect during the thirty
trading days prior to the demand for registration. Upon the
Company's rejection of the demand, COSS, at its option, may sell
the COSS Shares to a party other than the Company, subject to the
Company's right of first refusal on such sale. Arbor has the
right to purchase the COSS Shares in lieu of the Company on the
same terms and conditions granted the Company as described the two
preceding sentences. In addition, COSS has been granted certain
registration rights in the event the Company shall register any
shares for sale under the Securities Act.
On October 31, 1995, the Company entered into a two year
Financial Services Agreement with Arbor Management LLC ("Arbor
Mgt."). This Agreement requires Arbor Mgt. to provide consulting
services in the areas of finance, information systems, accounting
and marketing. Arbor Mgt. receives a fee of $7,500 per month for
these services. This agreement is subject to early termination if
Arbor Health's First Option is not exercised or upon the listing
of the Company's Common Stock on the NASDAQ Stock Market.
ANNUAL REPORT
The Annual Report on Form 10K-SB to Shareholders of the
Company for the fiscal year ended December 31, 1995, which
includes audited financial statements, has been mailed to
shareholders contemporaneously herewith, but such Report is not
incorporated in this Proxy Statement and is not deemed to be a
part of the proxy solicitation material; except, however, that the
financial statements included in said annual report shall be
deemed proxy solicitation material and are hereby incorporated by
reference.
<PAGE>
FORM 10K-SB
The Company will furnish without charge to each person whose
Proxy is being solicited, upon request of any such person, a copy
of the Annual Report of the Company on Form 10K-SB for the fiscal
year ended December 31, 1995, as filed with the Securities and
Exchange Commission, including the financial statement schedules.
Written requests for copies of such report should be directed to
Paul Elenio, Shareholder Relations, Cosmetic Sciences, Inc., 333
Earle Ovington Blvd., Uniondale, New York, 11553.
SHAREHOLDER PROPOSALS
If any shareholder desires to present a proposal for action
at the Company's fiscal 1997 annual meeting, such proposal must be
in compliance with applicable laws and Securities and Exchange
Commission regulations and must be received by the Company on or
prior to ________________, 1996.
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's directors and officers, and
persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership
and reports of changes in ownership with the Securities and
Exchange Commission ("SEC"). Such persons are required by SEC
regulation to furnish the Company with copies of all Section 16(a)
reports they file.
Based solely on its review of the copies of such reports
received by it with respect to fiscal 1995, or written
representations from certain reporting persons, the Company
believes that all filing requirements applicable to its directors,
officers and persons who own more than 10% of a registered class
of the Company's equity securities have been timely complied with,
except that COSS, Steven Gorenstein, Mary Ann Page, Patricia
Cantalupo, Robert Kohlmeyer, Peter Jackson and Paul Elenio failed
to file a Form 3 - Initial Statement of Beneficial Ownership.
By Order of the Board of Directors
