U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended June 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission File No. 0-9836
COSMETIC SCIENCES, INC.
(Exact name of small business issuer as specified in its charter)
New York 22-2210547
(State of Incorporation) (I.R.S. Employer Identification No.)
One Old Country Road, Suite 335, Carle Place, New York 11514
(Address of Principal Executive Office) (Zip Code)
(516) 248-2273
(Issuer's telephone number, including area code)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes No X
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING
DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes _____ No X
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date: 19,000,226 common shares,
$.01 par value, as of August 14, 1996.
Transitional Small Business Disclosure Format (check one): Yes _____ No X
<PAGE>
COSMETIC SCIENCES, INC.
SECOND QUARTER REPORT ON FORM 10 - QSB
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Part I - Financial Information
Item 1 Page
Condensed Consolidated Balance Sheets as of June 30, 1996
and December 31, 1995 (Unaudited).....................................3
Condensed Consolidated Statements of Operations (Unaudited)
for the three months and six months ended June 30, 1996 and 1995......4
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the six months ended June 30, 1996 and 19955......................5
Notes to Condensed Consolidated Financial Statements (Unaudited)........6
Item 2
Management's Discussion and Analysis of Financial
Condition and Results of Operations....................................7
Part II - Other Information............................................11
Signatures.............................................................12
Exhibit Index..........................................................13
<PAGE>
COSMETIC SCIENCES, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
Assets
<S> <C> <C>
Current assets:
Cash $ 303,669 $ 511,563
Accounts receivable, net of allowance for
doubtful accounts of $100,000 1,057,061 895,131
Prepaid expenses 99,541 146,809
Total current assets 1,460,271 1,553,503
Property and equipment, net 266,305 118,591
Other assets:
Deferred taxes 279,000 259,000
License, net 495,993 515,832
Other 29,410 11,197
Total assets $ 2,530,979 $ 2,458,123
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 764,180 $ 766,651
Payroll taxes payable 335,307 280,584
Notes payable 148,449 148,449
Other current liabilities 81,412 71,991
Total current liabilities 1,329,348 1,267,675
Non-current liabilities:
Long-term debt 45,500 54,500
Obligations under capital leases 93,707 40,010
Total non-current liabilities 139,207 94,510
Total liabilities 1,468,555 1,362,185
Commitments and contingencies
Minority interest in subsidiary 134,617 140,008
Shareholders' equity:
Common stock, $.01 par value, 20,000,000
shares authorized, 19,000,226 and 19,300,229
shares issued and outstanding, respectively 190,002 194,506
Additional paid-in-capital 643,348 638,844
Retained earnings 94,457 122,580
Total shareholders' equity 927,807 955,930
Total liabilities and shareholders' equity $ 2,530,979 $ 2,458,123
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
COSMETIC SCIENCES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net patient service revenue $ 2,218,113 $ 1,807,922 $ 4,203,005 $ 3,452,377
Cost of services 1,398,508 1,148,307 2,644,772 2,191,067
Gross profit 819,605 659,615 1,558,233 1,261,310
Selling, general and administrative
expenses 769,975 452,113 1,608,487 911,797
Provision for doubtful accounts - 4,857 - 4,857
Income (loss) from operations 49,630 202,645 (50,254) 344,656
Interest Expense 918 828 3,261 1,656
Income (loss) before provision
(benefit) for income taxes and
minority interest 48,712 201,817 (53,515) 343,000
Provision (benefit) for income taxes 18,500 88,500 (20,000) 150,501
Net income (loss) before
minority interest 30,212 113,317 (33,515) 192,499
Minority interest in subsidiary net
income (loss) 5,289 19,417 (5,391) 33,172
Net income (loss) $ 24,923 $ 93,900 $ (28,124) $ 159,327
Primary earnings (loss) per share $ 0.0008 $ 0.0049 $ (0.0015) $ 0.0083
Fully diluted earnings (loss) per
share $ 0.0008 $ 0.0049 $ (0.0015) $ 0.0083
Weighted average number of shares
outstanding:
Primary $29,551,207 $19,300,229 $19,200,228 $19,300,229
Fully diluted $29,551,207 $19,300,229 $19,200,228 $19,300,229
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
COSMETIC SCIENCES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Cash flow from operating activities:
Net (loss) income $ (28,124) $ 159,327
Adjustments to reconcile net (loss) income to net
cash used in operating activities:
Depreciation and amortization 28,774 6,469
Amortization of intangible assets 19,840 19,840
(Benefit) provision for income taxes (20,000) 150,501
Minority interest in subsidiary (loss) income (5,391) 33,172
Change in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (161,930) (403)
Prepaid expenses 47,268 45,060
Other assets (18,213) (1,324)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (2,471) (168,491)
Payroll taxes payable 54,723 6,711
Other liabilities (65) (1,607)
Net cash (used in) provided by operating activities (85,589) 249,255
Cash flow from investing activities:
Purchase of property and equipment (106,265) (30,568)
Net cash used in investing activity (106,265) (30,568)
Cash flow from financing activities:
Payment of obligations under capital leases (7,040) -
Repayment of loans (9,000) (45,000)
Net cash used in financing activities (16,040) (45,000)
Net (decrease) increase in cash (207,894) 173,687
Cash at beginning of period 511,563 97,190
Cash at end of period $ 303,669 $ 270,877
Supplemental disclosures:
Equipment acquired under capital lease obligation $ 70,223 $ -
Cash paid during the period for:
Interest $ 1,608 $ 3,317
Income taxes $ 1,333 $ 529
<FN>
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
COSMETIC SCIENCES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements of Cosmetic Sciences, Inc. (the "Company") have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-QSB from Regulation S-B. Accordingly,
these financial statements do not include all of the information
and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments necessary for a fair presentation (consisting of normal
recurring accruals) have been included. The results of operations
for the three and six months ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the
year ended December 31, 1996. For further information, refer to
the audited consolidated financial statements and notes thereto for
the year ended December 31, 1995.
Note 2 - Net Income (Loss) Per Share
Net income (loss) per share is computed by dividing net income
(loss) by the weighted average number of common stock and common
stock equivalents outstanding during each period. Common stock
equivalents represent the dilutive effect of the assumed exercise
of outstanding stock options.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Except for the historical information and statements contained
in this Report, the matters and items set forth in this Report are
forward looking statements that involve uncertainties and risks
some of which are discussed at appropriate points in the Report and
are also summarized below at "Forward Looking Statements,
Cautionary Factors."
The following discussion and analysis provides information which
the Company's management believes is relevant to an assessment and
understanding of the Company's results of operations and financial
condition. This discussion should be read in conjunction with the
attached unaudited consolidated financial statements and related
notes, and with the Company's audited consolidated financial
statements and notes thereto for the year ended December 31, 1995.
Overview
The Company's revenues are derived from providing home health
care services to individuals, in New York and New Jersey, through
various contracts with government agencies (under the Medicaid
program) and to a lesser extent hospitals, insurance companies,
private pay and other third party payers.
Results of Operations
Second Quarter Ended June 30, 1996 Compared to Second Quarter Ended
June 30, 1995
Net Patient Service Revenue: Net patient service revenue increased
$410,191 or 23% to $2,218,113 for the second quarter ended June 30,
1996 compared to $1,807,922 for the second quarter ended June 30,
1995. Net patient service revenue increased $345,043 or 19% due to
the opening of two satellite branches in July of 1995 and March of
1996. The pre-existing branches' net patient service revenue
increased $65,148 or 4% due to an overall increase in patient
referrals offset by an overall general decrease in authorized
Medicaid reimbursable hours by New York State (See "Forward
Looking Statements - Cautionary Factors").
Cost of Services: Cost of services increased $250,201 or 22% to
$1,398,508 for the second quarter ended June 30, 1996 compared to
$1,148,307 for the second quarter ended June 30, 1995. The increase
in cost of services is primarily due to increases in field staff
payroll costs resulting from the increase in net patient service
revenue. The Company's growth in the number of cases serviced
increased the need for additional field staff to service these
cases.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses increased $317,862 or 70% to $769,975 for
the second quarter ended June 30, 1996 compared to $452,113 for the
second quarter ended June 30, 1995. Selling, general and
administrative expenses as a percentage of net revenues increased
to 35% for the second quarter ended June 30, 1996 from 25% for the
second quarter ended June 30, 1995. This increase reflects higher
administrative salaries, marketing and facility expenses associated
with the additional branch locations, and the Company's investment
in the corporate infrastructure necessary to achieve its business
<PAGE>
strategy. In addition, professional fees increased due to the
Company's commitment to resume filing the reports required under
the Securities Exchange Act of 1934. The Company anticipates
selling, general and administrative expenses as a percentage of net
revenue to decline throughout the remainder of the year.
Provision For Income Taxes: The income tax provision for the second
quarter ended June 30, 1996 is based on a 38% effective tax rate
compared to an effective tax rate of 44% for the second quarter
ended June 30, 1995. The decrease in the Company's effective tax
rate was primarily due to the reduction of certain permanent
taxable differences.
Six Months Ended June 30, 1996 Compared to Six Months Ended June
30, 1995
Net Patient Service Revenue: Net patient service revenue increased
$750,628 or 22% to $4,203,005 for the six months ended June 30,
1996 compared to $3,452,377 for the six months ended June 30, 1995.
The opening of two satellite branches in July of 1995 and March of
1996 increased net patient service revenue by $600,966 or 18%. The
pre-existing branches net patient service revenue increased
$149,662 or 4% due to an overall increase in patient referrals
offset by an overall general decrease in authorized Medicaid
reimbursable hours by New York State (See "Forward Looking
Statements - Cautionary Factors").
Cost of Services: Cost of services increased $453,705 or 21% to
$2,644,772 for the six months ended June 30, 1996 compared to
$2,191,067 for the six months ended June 30, 1995. The increase in
cost of services is primarily due to increases in field staff
payroll costs resulting from the increase in net patient service
revenue. The Company's growth in the number of cases serviced
increased the need for additional field staff to service these
cases.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses increased $696,690 or 76% to $1,608,487 for
the six months ended June 30, 1996 compared to $911,797 for the six
months ended June 30, 1995. Selling, general and administrative
expenses as a percentage of net revenues increased to 38% for the
six months ended June 30, 1996 from 26% for the six months ended
June 30, 1995. This increase reflects higher administrative
salaries, marketing and facility expenses associated with the
additional branch locations, and the Company's investment in the
corporate infrastructure necessary to achieve its business
strategy. In addition, professional fees increased due to the
Company's commitment to resume filing the reports required under
the Securities Exchange Act of 1934.
(Benefit) Provision For Income taxes: The income tax benefit
derived from the six months ended June 30, 1996 loss from
operations is based on a 38% effective tax rate compared to an
income tax provision derived from the six months ended June 30,
1995 income from operations which was based on a 44% effective tax
rate. The decrease in the Company's effective tax rate was
primarily due to the reduction of certain permanent taxable
differences.
<PAGE>
Inflation and Seasonality
Medicaid reimbursements, which represent the Company's
principal source of revenue, have historically been adjusted to
keep pace with inflation. There can be no assurance that future
Medicaid reimbursement will keep pace with inflation.
The Company's business is generally not subject to seasonal
trends.
Liquidity and Capital Resources
The nature of the Company's business requires weekly payments
of wages to its personnel as they render services, while the
Company receives payments for services rendered over an extended
period of time (30 to 90 days). At June 30, 1996 the Company's
accounts receivable balance increased $161,930 to $1,057,061 from
$895,131 at December 31, 1995. The increase in accounts receivable
was due to increased net patient service revenue and an increase in
days sales in accounts receivable from approximately 49 to 50 days.
At June 30, 1996, the Company had working capital of $130,923.
Historically, the Company's cash requirements have been met
internally from operations. The Company currently has no
outstanding bank debt nor does it have any agreements for a line of
credit.
For the six months ended June 30, 1996 the Company used cash
from operating activities of $85,589 and for the six months ended
June 30, 1995 the Company generated cash from operating activities
of $249,255. The decrease in cash provided by operating activities
was a result of increased selling, general and administrative
expenses and accounts receivable associated with the additional
branch locations, and increased financial reporting requirements.
During the six months ended June 30, 1996 the Company invested
$106,265 in property and equipment primarily for purchases of
computers, telecommunication equipment, and furniture and equipment
associated with the relocation of two branches and the opening of
one additional branch.
Forward Looking Statements - Cautionary Factors
1. The Company derives most of its revenues from Medicaid
reimbursements. To the extent Medicaid reimbursements are reduced
the Company's revenues may be adversely impacted. Reductions in
Medicaid budgetary dollars are being discussed at the federal and
state executive and legislative levels, including the states of New
York and New Jersey.
On July 9, 1996, the state of New Jersey met to discuss the
reduction of Medicaid reimbursement rates for the year July 1, 1996
to July 1, 1997. Only certain minimal reductions in Medicaid
reimbursement rates were imposed as a result of this meeting, and
these reductions did not have a material adverse effect on the
Company's results of operations.
During the quarter ended March 31, 1996, a reduction in
authorized Medicaid reimbursable hours per case was imposed by New
York State. The results of this reduction did not have a material
<PAGE>
adverse effect on the Company's results of operations for the three
and six months ended June 30, 1996. However, if a similar Medicaid
reduction is imposed by the state of New Jersey, the results of
this reduction would have a material adverse effect on the
Company's results of operations, as the Company currently derives
a majority of its revenues from New Jersey Medicaid reimbursements.
The Company cannot predict the magnitude of future reductions,
if any, in Medicaid reimbursement rates or reimbursable hours.
2. The Company believes that its liquidity and capital
resources are adequate for its current level of operations.
However, due to its anticipated geographical expansion, addition
of new products and services and potential acquisitions and joint
ventures of other home care businesses (See "Business Strategy"
1995 10-KSB), the Company expects its future capital needs to
increase. Should Arbor Home Healthcare Holdings, LLC ("Arbor")
exercise its option in full to purchase common stock of the Company
in 1996 (See "Certain Relationships and Related Transactions" in
the Company's 1995 10-KSB and Part II, Item 5. Other Information,
of this filing) it will contribute $1.3 million in cash to the
Company. The Company believes that the proceeds from the exercise
of the Arbor option will be sufficient to meet the Company's
expansion related and working capital requirements over the next
twelve months. Should Arbor not exercise its option to purchase the
Company's shares, the Company will seek alternative financing to
fund its business expansion. The Company's inability to obtain
alternative financing could have a material adverse effect on the
Company's business expansion plans.
<PAGE>
Part II: OTHER INFORMATION
Item 5. Other information:
On April 26, 1996 the employees at one branch location voted in
favor of the employees unionizing the branch. The Company has
commenced negotiations with the union but no contract between the
Company and the union have been agreed upon. However, the Company
does not anticipate the union contract to have a material adverse
effect on the Company's operations or financial condition. The
Company does not know at this time whether efforts will be made to
unionize the Company's other branches, whether those efforts would
be successful, and whether if successful, there would be a material
effect upon the Company's operations or financial condition.
On June 20, 1996, Arbor's option to purchase 6.5 million shares of
the Company's common stock at $.10 per share was extended from June
21, 1996 to August 21, 1996 as per the Form 8-K/A referred to in
item 6b below.
On June 30, 1996, the Company entered into an agreement with Arbor
detailing certain procedural aspects of the exercise of Arbor's
option to purchase shares of the Company's common stock.
In July of 1996, COSS Holding Corp. placed its holdings of the
Company's common stock in a voting trust, providing Arbor the right
to direct the voting of such shares.
Item 6. Exhibits and reports on Form 8-K.
a. Exhibits
See accompanying index to Exhibits.
b. The Company filed one report on Form 8-K/A on June 20,
1996 regarding an amendment to the original option agreement dated
October 31, 1995 between Arbor, the Company, COSS Holding Corp. and
its shareholders.
All other items required in Part II are not applicable for
the quarter ended June 30, 1996.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
(Registrant) COSMETIC SCIENCES, INC.
Date: August 14, 1996 By: \s\ Mary Anne Page
Mary Anne Page
Acting Chief Executive
Officer and Director
Date: August 14, 1996 By: \s\ Paul Elenio
Paul Elenio
Vice President, Controller
and Principal Financial
Officer
<PAGE>
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 29
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 303,669
<SECURITIES> 0
<RECEIVABLES> 1,157,061
<ALLOWANCES> 100,000
<INVENTORY> 0
<CURRENT-ASSETS> 1,460,271
<PP&E> 423,759
<DEPRECIATION> 157,454
<TOTAL-ASSETS> 2,530,979
<CURRENT-LIABILITIES> 1,329,348
<BONDS> 0
0
0
<COMMON> 190,002
<OTHER-SE> 737,805
<TOTAL-LIABILITY-AND-EQUITY> 2,530,979
<SALES> 4,203,005
<TOTAL-REVENUES> 4,203,005
<CGS> 2,644,772
<TOTAL-COSTS> 2,644,772
<OTHER-EXPENSES> 1,608,487
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,261
<INCOME-PRETAX> (53,515)
<INCOME-TAX> (20,000)
<INCOME-CONTINUING> (28,124)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (28,124)
<EPS-PRIMARY> (.002)
<EPS-DILUTED> (.002)
</TABLE>
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
<PAGE>
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:
<PAGE>
(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.
<PAGE>
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
<PAGE>
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 issuedsecurities 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
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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: _______________________________
VOTING TRUST AGREEMENT
THIS VOTING TRUST AGREEMENT (the "Agreement") is entered into as of June
21, 1996, by and among COSMETIC SCIENCES, INC., a New York corporation (the
"Company"), COSS HOLDING CORP., a New York corporation (the "Shareholder"), a
shareholder of the Company, ARBOR HOME HEALTHCARE HOLDING, LLC, a New
York limited liability company ("Arbor Health"), and GARY MELIUS, as Voting
Trustee (together with any successors or assigns, the "Voting Trustee").
W I T N E S S E T H:
WHEREAS, the Shareholder is the owner of 12,749,658 shares (the "Shares")
of the Company's common stock, $.01 par value (the "Common Stock"), all of which
are to be deposited in trust with the Voting Trustee under this Agreement; and
WHEREAS, the Shareholder has agreed, pursuant to that certain Amended and
Restated Option Agreement dated October 31, 1995 (the "Option Agreement"), to
place the Shares in trust, to grant Arbor Health the right to determine the
manner in which the Shares in trust shall be voted and to otherwise require that
a transfer of such Shares shall be made only as permitted in the Option
Agreement, which, in certain circumstances, requires that Shares sold or
transferred remain subject to this Agreement notwithstanding such sale or
transfer; and
WHEREAS, in order to secure continuity and stability of the Company's
policies and management and in accordance with the terms of the Option
Agreement, the Shareholder desires to confer the right to vote the Shares to the
Voting Trustee in accordance with the terms and conditions set forth herein and
to otherwise restrict the transfer of the Shares of the Company as set forth
herein; and
WHEREAS, the Company has agreed that it will not permit any transfer of
the Shares or voting trust certificates therefor in violation of the terms
hereof; and
WHEREAS, the Voting Trustee has consented to act under this Agreement for
the purposes and upon the terms and conditions herein stated.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement 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:
<PAGE>
1. Creation of Voting Trust.
1.1. Deposit of Shares. The Shareholder hereby assigns and
transfers, and agrees to assign and transfer, to the Voting Trustee 12,749,658
Shares of Common Stock, being all of the shares of the Company's Common Stock
currently owned by the Shareholder. Simultaneously with the execution hereof,
the Shareholder hereby deposits with the Voting Trustee the certificates for
such Shares, duly endorsed in blank, or accompanied by a proper instrument of
assignment duly executed in blank, together with any requisite transfer tax
stamps attached thereto or an amount sufficient to pay all federal, state and
local taxes or other governmental charges, if any, then payable in respect of
such deposit or transfer, receipt of all of which is hereby acknowledged. The
Shareholder represents and warrants to Arbor Health and the Trustee that it owns
all right, title and interest in the Shares free of any liens, claims or
encumbrances, except as specified in the Option Agreement and herein. As used
hereinafter in this Agreement, "Shares" shall include any other or additional
shares of Common Stock or other securities delivered to and held by the Trustee
pursuant to the provisions of this Agreement.
1.2. Delivery of Voting Trust Certificates. Upon receipt by the
Voting Trustee of the certificates for any Shares, the Voting Trustee shall hold
such shares subject to the terms and conditions of this Agreement and shall
deliver or cause to be delivered to the Shareholder voting trust certificates
("Voting Trust Certificates") representing the Shares so deposited by the
Shareholder, in the form provided for in Section 2.1 hereof.
1.3. Issue of Stock Certificates to Voting Trustee. All
certificates for Shares transferred and delivered to the Voting Trustee pursuant
to this Agreement shall be surrendered by the Voting Trustee to the Company and
cancelled, and new certificates therefor, fully paid and non-assessable, shall
be issued by the Company to and in the name of the Voting Trustee. Such new
certificates and any other certificates for Shares issued by the Company to the
Voting Trustee pursuant to Section 2.2 hereof shall be endorsed by the Company
with a legend to the effect that they are issued by the Company pursuant to this
Agreement and a similar notation shall appear in the appropriate place in the
transfer books of the Company.
1.4. Acceptance of Trust. The Shareholder appoints Gary Melius,
as Voting Trustee, and Arbor Health hereby accepts such appointment. The Voting
Trustee accepts the voting trust created hereby (the "Voting Trust") in
accordance with all of the terms and conditions contained in this Agreement.
1.5 Irrevocable Proxy. Until the actual delivery to the Voting
Trustee of the certificates for the Shares registered in the name of the Voting
Trustee, the Shareholder hereby grants an Irrevocable Proxy (the "Proxy") to the
Voting Trustee. Subject to Arbor Health's direction as provided in paragraph
4.1, the Voting Trustee shall have the right to vote the Shares pursuant to the
Proxy. The Shareholder also agrees to take such other action and to execute
such other documents as may be necessary to effectuate the purpose and intent of
this Agreement. The Proxy is coupled with the interest of Arbor Health
represented by the
<PAGE>
provisions of the Option Agreement and this Agreement in Arbor Health's favor as
to the voting of the Shares, and accordingly may not be revoked, but shall
expire upon delivery to the Voting Trustee of the certificates for the Shares
as aforesaid.
2. Voting Trust Certificates.
2.1. Form; Legend. The Voting Trust Certificates to be issued
and delivered by the Voting Trustee under this Agreement in respect of any
Shares shall be substantially in the form of Exhibit A attached hereto, with
such changes therein consistent with the provisions of this Agreement as the
Voting Trustee, the Shareholder and Arbor Health may from time to time deem
appropriate. Each Voting Trust Certificate shall have the following legend
stamped, typed or otherwise legibly placed on the face side thereof:
The shares represented by this Certificate are subject to various
restrictions on transferability set forth in that certain Amended and Restated
Option Agreement dated October 31, 1995 by and among Cosmetic Sciences, Inc.
(the "Company"),
Coss Holding Corp., various shareholders of Coss Holding Corp. and Arbor
Home HealthCare Holding, LLC. This voting trust certificate and the
shares of the Company represented hereby are also subject to a Voting Trust
Agreement dated as of June __, 1996, as the same may be amended or supplemented
from time to time, by and among the Company, Coss Holding Corp., Arbor Home
Health Care Holding, LLC, and the Voting Trustee named therein.
2.2. Transfer; Registered Holders; Transfer Books.
(a) Subject to Section 2.3 below, the Voting Trust Certificates shall be
transferable only on the books of the Voting Trustee upon surrender of such
Voting Trust Certificates (duly endorsed in blank or accompanied by a proper
instrument of assignment duly executed in blank), by the registered holder in
person or by such holder's duly authorized attorney. Upon the surrender of any
Voting Trust Certificates for transfer, the Voting Trustee shall cancel such
Voting Trust Certificates and issue to the transferee new Voting Trust
Certificates in the same form and representing the same number of shares of
Common Stock as the Voting Trust Certificates presented for cancellation.
(b) The Shareholder represents and warrants that he is
acquiring the Voting Trust Certificates for investment purposes and not with a
view to their resale or distribution. The Voting Trustee shall not be required
to transfer any Voting Trust Certificate unless it shall receive an opinion of
counsel satisfactory to it that no violation of United States federal or state
securities laws would result from the transfer.
(c) The Voting Trustee may treat the registered holder of each
Voting Trust Certificate as the absolute owner thereof for all purposes
whatsoever, and accordingly shall not be required to recognize any legal,
equitable or other claim or interest in such Voting Trust
<PAGE>
Certificate on the part of any other person, whether or not it shall have
express or other notice thereof.
2.3 Restrictions on Transfer. As provided in Paragraph 1(b)
of the Option Agreement ("Paragraph 1(b)"), the Voting Trust Certificates, as
well as the Shares held by the Voting Trustee, may not be sold, assigned,
transferred, pledged or encumbered (collectively a "Transfer") except in
accordance with the terms of Paragraph 1(b), which terms, inter alia, require
the consent of Arbor Health to the Transfer, except under certain circumstances
specified therein. In order to effect a Transfer, the Shareholder shall deliver
a written request for approval of the Transfer (a "Request") to the Voting
Trustee, with a copy transmitted at the same time to Arbor Health. The Request
shall (i) set forth the number of Shares to be Transferred, (ii) the nature and
terms of the Transfer, (iii) the particular provisions of Paragraph 1(b)
pursuant to which the Transfer is being made, and (iv) whether pursuant to
paragraph 1(b)the Transferee is required to be bound by the Voting Trust. In
the event that the Voting Trustee shall receive from Arbor Health, within
a period of thirty (30) days after Arbor Health's receipt
of the Request, the written authorization of Arbor Health to proceed to
effect the Transfer on the specific terms and conditions set forth in the
Request, then the Voting Trustee will proceed promptly to effect such
Transfer, as provided below. If such authorization by Arbor Health is
not received within the specified period, then the Voting Trustee shall
not effect the Transfer, and shall continue to hold the applicable Voting
Trust Certificates and the Shares pursuant to this Agreement until it has
received either (a) written instructions signed jointly by the Shareholder
and Arbor Health, or (b) an order of a court of competent jurisdiction which
is final and not subject to further judicial review. Notwithstanding the
foregoing, it is explicitly understood and agreed that under no circumstances
will Arbor Health refuse to consent to a Transfer which is authorized under
Section 1(b) of the Option Agreement. Arbor Health will indemnify the
Shareholder for any damages it suffers resulting from Arbor Health's refusal to
consent to a Transfer which is authorized under paragraph 1(b) of the Option
Agreement.
If a Transfer is to be effected as provided above, free of
the Voting Trust, then the Voting Trustee, upon receipt of the Voting Trust
Certificate for the Shares being Transferred, duly endorsed for transfer or
with a proper instrument of assignment duly executed in blank, will deliver
the certificate or certificates for the Shares being Transferred to the
transfer agent of the Company (or if there shall be no transfer agent, to the
Company), with express written instructions to deliver the Shares in accordance
with the approved Request, or the joint instructions or final court order
specified above, and will cancel the Voting Trust Certificate for such
Shares. If a Transfer is to be effected as provided above, and the terms of
this Voting Trust Agreement and Paragraph 1(b) shall continue to be applicable
to said Shares, then the Voting Trustee, upon receipt of the Voting Trust
Certificate being Transferred, shall issue new Voting Trust Certificates to
the Transferee of the Shares being transferred and will cancel the prior
Voting Certificate; and all of the rights and obligations provided for in this
Agreement pertaining to the Shareholder prior to the Transfer shall remain in
effect as to, and be binding upon, the Transferee.
<PAGE>
In the event at any time the Voting Trustee shall hold a
Voting Trust Certificate or Share certificate to be Transferred as provided
above which is in a denomination greater than the number of Shares being
Transferred, the Voting Trustee shall make delivery of
the applicable certificate, to the transfer agent or other party entitled
thereto, only upon receipt by the voting Trustee of a new certificate issued
by the Company for the number of Shares not being Transferred, which shall
then be held by the Voting Trustee pursuant to the terms of this
Agreement.
3. Dividends etc.
3.1. Cash Dividends. The Voting Trustee shall receive and hold,
subject to the terms of this Agreement, any dividends or distributions declared
and paid on the Shares deposited hereunder in cash or property other than Voting
Securities (defined below), and shall immediately distribute all such
dividends or distributions to holders of Voting Trust Certificates
in proportion to their respective interests therein as shown on the
records of the Voting Trustee, such distribution to be equivalent to the
dividends or distributions which each respective holder
would have been entitled to receive had its Shares not been deposited
hereunder and such dividends or distributions had been paid directly to
such holder.
3.2. Money Need Not Be Segregated. No monies received by
the Voting Trustee need be segregated in any manner except to the extent
required by law and the Voting
Trustee shall not be liable for any interest thereon.
3.3. Stock Dividends. The Voting Trustee shall receive and
hold, subject to the terms of this Agreement, any voting securities (or
securities convertible or exercisable for such voting securities) of the
Company ("Voting Securities") issued by reason of any capital
reorganization, stock split, combination, stock dividend or the like and,
in the case of such Voting Securities, shall issue and deliver Voting Trust
Certificates therefor to the holders of the Voting Trust Certificates in
proportion to their respective interests therein as shown on the books
of the Voting Trustee.
3.4. Dissolution. In the event of the dissolution or
liquidation of the Company during the term of this Agreement in such manner
as to entitle the holders of shares of Common Stock to liquidating
dividends in respect thereof, the Voting Trustee shall cause all such
liquidating dividends in respect of Shares received by it pursuant to
this Agreement to be distributed directly to the Shareholders depositing
shares hereunder in proportion to their respective interests therein as
shown on the records of the Voting Trustee.
3.5. Merger, Etc. Upon any merger, consolidation, reorganization
or dissolution of the Company, or the sale of all or substantially all of the
assets of the Company, pursuant to which shares of capital stock or other
voting securities of another corporation (collectively, the
"Securities") are to be issued in payment of, or in exchange for, Shares,
the Securities shall
<PAGE>
automatically become subject to the terms of this Agreement and shall be held
by the Voting Trustee hereunder in the same manner and as nearly as possible
upon the same terms as the Shares, the Voting Trustee shall transfer all
Shares held in trust hereunder in exchange for the
Securities of such other corporation, and in such event the Voting Trustee
shall issue to each holder new Voting Trust Certificates representing the
appropriate number of Securities of such other corporation and each holder
agrees to surrender to the Voting Trustee its original Voting
Trust Certificates to implement same.
4. The Voting Trustee; Voting.
4.1. Voting of Shares. At all times prior to the termination
of this Agreement, the Voting Trustee shall be bound by the direction of
Arbor Health as to the exercise of any voting rights with respect to the
Shares held in trust hereunder, including without limitation, the right to
vote for the election of directors, and in favor of or against any resolution
or proposed action of any character whatsoever, which may be presented at
any meeting of the Company's shareholders or as to which the consent of the
Company's shareholders may be required or solicited. Without limiting
such general right, it is understood and agreed that such action, resolution,
consent or vote may include, without limitation (upon terms satisfactory to
Arbor Health, which may then direct the Voting Trustee to act as provided in
Section 4.2), mortgaging, creating a security interest in, and
pledging of all or any part of the Company's property, the lease or
sale of all or any part of its property, for cash, securities, or other
property, the dissolution of the Company, or its consolidation, merger,
reorganization or recapitalization. No holder of Voting Trust Certificates or
any person other than the Voting Trustee shall in such capacity have any
rights or powers to exercise voting rights as to the Shares or to give
consents with respect to or otherwise take part in any corporate action.
The Voting Trustee may vote the Shares as provided herein by means of a
proxy granted to Arbor Health.
4.2. Voting Trustee; Freedom From Shareholder Control. In
voting the Shares in connection with all matters, the Voting Trustee shall
be free of any control by the Shareholder, and shall in all instances follow
the written directions of Arbor Health in connection with any
proposed vote of the Company's shareholders. In the event the Voting Trustee
does not receive adequate written directions from Arbor Health, the Voting
Trustee shall not (i) cast any vote or grant any consent or (ii) attend any
meeting or otherwise take any action that would cause a quorum
to be present at any meeting of the shareholders of the Company.
4.3. Trustee May Rely. The Voting Trustee shall not incur any
liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper reasonably and in good
faith believed by it to be genuine and signed by the proper party or parties
thereto. The Voting Trustee may accept a copy of a resolution of the board of
directors of any corporate party, certified by the secretary, an assistant
secretary or any other officer of the said party as duly adopted and in
full force and effect, as conclusive evidence that such resolution has
been adopted by said board and is in full force and
<PAGE>
effect. As to any fact or matter the manner of ascertainment of which is not
specifically described herein, the Voting Trustee may for all purposes hereof
rely on a certificate, signed by or on behalf of the party executing such
certificate, as to such fact or matter, and such certificate shall constitute
full protection of the Voting Trustee for any action taken or omitted to be
taken by it in good faith in reliance thereon. In the administration of the
Voting Trust, the Voting Trustee may seek advice of counsel, accountants and
other skilled persons to be selected and employed by it, and the Voting
Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the actions, advice or opinion of
any such counsel, agents, accountants or other skilled persons.
The Voting Trustee may rely upon any order, judgment, certification,
demand or other writing delivered to the Voting Trustee without being
required to determine the propriety or validity of the
service thereof or the jurisdiction of any court.
4.4. Voting Trustee Acts as Trustee. In accepting the Voting
Trust, the Voting Trustee act solely as trustee hereunder and not in any
individual capacity, and all persons having any claim against the Voting
Trustee by reason of the transactions contemplated hereby shall not
have any recourse to the Voting Trustee in its individual capacity,
except in the case of gross negligence or willful misconduct of the
Voting Trustee provided that the Voting Trustee will be
liable to Arbor Health and/or the Shareholder for any action or inaction
which is inconsistent with its obligations hereunder to Arbor Health and/or
the Shareholder or which is contrary to Arbor Health's written direction as
provided in this Agreement.
4.5. Fees and Expenses of the Trustee. The Voting Trustee shall
be entitled to payment of (i) fees for its services hereunder at rates which
have been set forth in a separate written agreement among the Voting Trustee,
the Company and the Shareholder or, in the event the Voting
Trustee shall be an attorney, at its normal rates from time to time
prevailing for legal services rendered, and (ii) reimbursements of its
costs, expenses and disbursements in performance of its functions hereunder.
Such fees and disbursements shall be paid by the Company, and such payment
is hereby guaranteed by the Shareholder. No provision of this Agreement
shall be deemed to impose any duty on the Voting Trustee to take any action
if the Voting Trustee shall have been advised by counsel that such action
would expose it to personal liability, is contrary to the terms
hereof or is contrary to law.
4.6 Resignation of Trustee; Appointment of Successor. The
Voting Trustee may at any time resign from its position upon 60 days written
notice to all parties. In such event or in the event of the death or
inability of the Voting Trustee to act, the procedure for appointment of
the Voting Trust set forth in Paragraph 1(b) shall be adhered to for the
purpose of appointing a successor Trustee. If a successor Trustee shall
not be appointed within such 60-day period, the Voting Trustee shall
deposit all of the Trust properties then held by the Voting Trustee in the
Supreme Court of the State of New York, County of Nassau, and it shall
thereby be discharged of its duties and responsibilities hereunder.
The Voting Trustee may be replaced upon the written direction of Arbor Health
and the Shareholder. Any successor Trustee appointed as provided herein
shall be empowered to have any Shares previously registered in the name
of the prior Voting Trustee transferred to and registered in the name of such
successor Voting Trustee.
4.7 Indemnification. Arbor Health and the Shareholder hereby
agree to save harmless, defend and indemnify the Voting Trustee against any
and all losses, judgments, liabilities, claims, costs, damages,
attorneys' fees, expenses, obligations, taxes, assessments, actions, suits or
charges made against the Voting Trustee or which it may incur or sustain in
carrying out its responsibilities hereunder, otherwise than as a result of its
gross negligence or willful misconduct, or as otherwise set forth in
Section 4.4.
5. Holders of Voting Trust Certificates Bound; Waiver of Claims
Against Voting Trustee.
5.1 Assent of Registered Holders. Every registered holder of
a Voting Trust Certificate, and every bearer of a Voting Trust Certificate
properly endorsed in blank or properly assigned by the acceptance or holding
thereof shall be deemed conclusively for all purposes to have assented to
this Agreement and to all of its terms, conditions and provisions and shall be
bound thereby with the same force and effect as if such holder or bearer had
executed this Agreement.
5.2 Obligations of the Company. The Company agrees, and shall
instruct its transfer agent accordingly, to prevent the Transfer of Shares or
Voting Trust Certificates in any manner which is prohibited by or
inconsistent with the terms hereof.
6. Termination.
6.1. Termination Date. The voting trust created by this
Agreement shall terminate (a) without any notice or other action of the
Voting Trustee on June __, 2006, unless extended as provided by law, or
(b) on the earliest to occur of the following: (i) on such date as there are
no Shares or Voting Trust Certificates subject to the terms of this Agreement;
(ii) on the date specified in Section 6.2, (iii) on the date specified in a
written termination notice executed by the Shareholder,and Arbor Health, or
(iv) on such other date as it shall be terminated under the provisions of
the Option Agreement.
6.2 Termination as of May 1, 1997. Unless otherwise terminated
sooner pursuant to the terms hereof, this Voting Trust shall be terminated by
the Voting Trustee on or after May 1, 1997, pursuant to Paragraph 1(b), in the
event that (i) the Voting Trustee and Arbor Health shall have received a
written notice from the Shareholder (the "Shareholder's Notice"), which shall
state that (a) Arbor Health has not exercised the Second Option (as defined
in the Option Agreement) as of May 1, 1997, (b) on May 1, 1997, the
difference between the Shareholder's ownership percentage of the
outstanding capital stock of the Company and Arbor Health's ownership
percentage (including stock represented by Voting Trust Certificates)
is more than 10% (as more fully described in Paragraph 1(b)), and
(c) as a result, the Voting Trust shall terminate forthwith as
provided in Paragraph 1(b), and (ii) the Voting Trustee shall not have
received from Arbor Health, within ten (10) days after receipt of the
Shareholder's Notice, a written notice which shall state that
(a) Arbor Health disputes the conclusions reached in the Shareholder's
Notice, and (b) the Voting Trust shall not be terminated as provided in
the Shareholder's Notice. In the event the Voting
<PAGE>
Trustee shall have received such written notice from Arbor Health within such
10-day period, it shall continue the Voting Trust in force until it has
received either (x) written instructions signed jointly by the Shareholder
and Arbor Health, or (y) an order of a court of competent jurisdiction
which is final and not subject to further judicial review. Arbor Health
will not attempt to impede the termination of the Voting Trust unless
termination is not authorized under this Agreement under
the circumstances then existing and shall indemnify the Shareholder for
any damages it suffers as a result of Arbor Health's failure to honor this
obligation.
6.3. Exchange of Shares and Voting Trust Certificates. Upon
termination of this Agreement, the Voting Trustee, in exchange for or upon
surrender of any Voting Trust Certificates then outstanding, shall deliver
to the holders of Voting Trust Certificates certificates endorsed in
blank for Shares representing the same number of Shares as are represented
by such Voting Trust Certificates and thereupon all liability of the Voting
Trustee for delivery of Shares shall terminate.
7. Notices. All notices in connection with this Agreement shall be
in writing and shall be given by registered mail, overnight courier, personal
delivery, cable, telex or telefax, addressed as follows:
If to Voting Trustee: Gary Melius
One Old Country Road
Suite 335
Carle Place, New York 11514
With copies to: Meltzer, Lippe, Goldstein, Wolf &
Schlissel, P.C.
190 Willis Avenue
Mineola, New York 11501
Attention: Allan Grauberd, Esq.
and: Certilman, Balin, Adler & Hyman, LLP
90 Merrick Avenue
East Meadow, New York 11554
Attention: Steven J. Kuperschmid, Esq.
If to Arbor Health: Arbor Home Health Care Holding, LLC
333 Earle Ovington Blvd.
Uniondale, New York 11553
Attention: Joe Heller
With copies to: Meltzer, Lippe, Goldstein, Wolf &
Schlissel, P.C.
190 Willis Avenue
Mineola, New York 11501
Attention: Allan Grauberd, Esq.
If to the Shareholder: Coss Holding, Corp.
One Old Country Road
Suite 335
Carle Place, New York 11514
With copies to: Certilman, Balin, Adler & Hyman, LLP
90 Merrick Avenue
East Meadow, New York 11554
Attention: Steven J. Kuperschmid, Esq.
If to the Company: Cosmetic Sciences, Inc.
One Old Country Road
Suite 335
Carle Place, New York 11514
With copies to: Certilman, Balin, Adler & Hyman, LLP
90 Merrick Avenue
East Meadow, New York 11554
Attention: Steven J. Kuperschmid, Esq.
and: Meltzer, Lippe, Goldstein, Wolf &
Schlissel, P.C.
190 Willis Avenue
Mineola, New York 11501
Attention: Allan Grauberd, Esq.
or, as to any party, to such other address as such party shall from time to
time designate by written notice to the other parties. The effective date
of any notice given in connection with this Agreement
shall be the date on which it is received by the addressee.
8. Miscellaneous. The terms of this Agreement shall be binding
upon and inure to the benefit of and shall be enforceable by Shareholder,
Arbor Health and the Voting Trustee and their respective successors and
assigns. This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of New York without giving effect
to the conflict of law principles thereof. In case any provision of this
Agreement shall be held to be invalid or unenforceable in whole or in part,
neither the validity nor the enforceability of the remainder of this
Agreement shall in any way be affected. This Agreement shall not be amended
except with the prior written consent of each of the Voting Trustee, the
Shareholder and Arbor Health. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the provisions hereof. Copies of this Agreement and of every
agreement amending or
<PAGE>
supplementing this Agreement shall be kept by the Voting Trustee, and by the
Company on file in its offices designated in Section 7, each of which shall
be open to inspection in accordance with the requirements of law.
9. Consent to Jurisdiction; Waiver of Immunities. The Voting Trustee,
Arbor Health, the Company and the Shareholder hereby irrevocably submit to the
exclusive jurisdiction of the Courts of the State of New York, in Nassau County,
or the United States Federal Courts sitting therein, in any action or proceeding
brought to enforce or otherwise arising out of or relating to this
Agreement. The Voting Trustee, Arbor Health, the Company and the
Shareholder irrevocably consent to the service of any and all process
in any such action or proceeding by the mailing of copies of such process
to the Voting Trustee, Arbor Health, the Company and the Shareholder by
registered or certified mail at their respective addresses designated in
Section 7. In addition, the Shareholder, Arbor Health, the Company and the
Voting Trustee hereby irrevocably waive to the fullest extent permitted by
law any objection which they may now or hereafter have to the laying of
venue in any such action or proceeding in the Courts of the State of New
York, in Nassau County, or the United States Federal Courts sitting therein,
and hereby further irrevocably waive any claim that any such forum is an
inconvenient forum. The Shareholder, Arbor Health, the Company and
the Voting Trustee agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in any other jurisdiction
by suit on the judgment or in any other manner provided by law.
10. Counterparts. This Voting Trust Agreement may be executed in
counterparts, each of which may be deemed to be an original instrument but
all of which together shall constitute but one instrument and only one set
of rights and obligations shall arise therefrom and it shall not be
necessary in making proof of this Agreement to produce or account for
more than one such counterpart.
11. Due Authority. Each of the parties represents and warrants that
the execution and delivery of this Agreement, as well as the performance of
the transactions contemplated hereby, have been duly authorized by each of
the parties and that each of them has full requisite power and
authority to execute and deliver the Agreement and perform the transactions
contemplated hereby; further, each party represents and warrants that the
execution and delivery of this Agreement and the performance of the
transactions contemplated hereby, will not violate any agreement, instrument
or court order by which any of the parties or their assets are bound or
result in the creation or imposition of any material lien, claim or
encumbrance.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Voting Trust Agreement
to be executed as of the date first above written.
Arbor Home Healthcare Holding, LLC
By:/s/ Joseph Heller
Joseph Heller
Coss Holding Corp.
By:/s/Pamela M. Robb
Pamela M. Robb
Cosmetic Sciences, Inc.
By:/s/Mary Ann Page
Mary Ann Page
/s/ Gary Melius
Gary Melius, as Voting Trustee
<PAGE>
STATE OF NEW YORK )
ss:
COUNTY OF NASSAU )
On this, the 21 day of June, 1996, before me, before me personally
came Joseph Heller,to me known, who, being by me duly sworn, did depose and say
that he resides at 600-4-3B Pine Hollow Road, E. Norwich, NY 11731; that he
is the Vice President of Arbor Home Healthcare Holding, LLC, the New York
limited liability company described in and which executed
the foregoing instrument; that he knows the seal of said limited liability
company; that the seal affixed to said instrument is such seal; that it was
so affixed by order of the board of directors of said limited liability
company and that he signed his name thereto by like order.
/s/ Walter Horn
(NOTARIAL) Notary Public
STATE OF NEW YORK )
ss:
COUNTY OF NASSAU )
On this, the 10th day of June, 1996, before me, before me
personally came Pamela M. Robb, to me known, who, being by me duly sworn,
did depose and say that she resides at Old Brookvile, NY; that she is the
President of Coss Holding Corp., the corporation described in and
which executed the foregoing instrument; that she knows the seal of
said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the board of
directors of said and that she signed her name thereto by like order.
/s/ Elise M. Olson
Notary Public
(NOTARIAL)
<PAGE>
STATE OF NEW YORK )
ss:
COUNTY OF NASSAU )
On this, the 12th day of June, 1996, before me, before me
personally came Mary Ann Page, to me known, who, being by me duly sworn,
did depose and say that she resides at 4223 Marathon Parkway, Little Neck,
NY; that she is the Vice-President of Cosmetic Sciences, Inc., the
corporation described in and which executed the foregoing instrument;
that she knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed
by order of the board of directors of said and that she signed
her name thereto by like order.
/s/ Richard S. Lane
Notary Public
(NOTARIAL)
STATE OF NEW YORK )
ss:
COUNTY OF NASSAU )
On this, the 10th day of June, 1996, before me, before me
personally came Gary Melius, to me known, who, being by me duly sworn, did
depose and say that he resides at 174 Hegmans Lane, Old Brookville, NY
11545; that he is the Voting Trustee described in and who
executed the foregoing instrument.
/s/ Richard S. Lane
Notary Public
(NOTARIAL)
<PAGE>
EXHIBIT A
to
VOTING TRUST AGREEMENT
The shares represented by this Certificate are subject to various
restrictions on transferability set forth in that certain Amended and Restated
Option Agreement dated October 31, 1995, as the same may be amended or
supplemented from time to time, by and among Cosmetic Sciences, Inc., a
New York corporation (the "Company"), Coss Holding Corp., various
shareholders of Coss Holding Corp. and Arbor Home Healthcare Holding, LLC.
This Voting Trust Certificate and the shares of stock of the Company
represented hereby, are also subject to a Voting Agreement dated as of
June __, 1996, as the same may be amended or supplemented from time to
time, by and among the Company, Coss Holding Corp., Arbor Home Healthcare
Holding, LLC and the Voting Trustee named therein.
COSMETIC SCIENCES, INC.
No. 1 ___ Shares
VOTING TRUST CERTIFICATE
THIS IS TO CERTIFY THAT:
1. This Certificate is issued pursuant to, and the rights of
the holder hereof are subject to, the terms and conditions of a Voting Trust
Agreement, dated as of June ___, 1996, as the same may be amended or
supplemented from time to time (the "Voting Trust Agreement"), by and
among COSS HOLDING CORP. (the "Shareholder"), COSMETIC SCIENCES, INC.,
(the "Company"), ARBOR HOME HEALTH CARE HOLDING, LLC, ("Arbor Health") and
_____________________, as voting trustee (the "Voting Trustee"). Copies of
the Voting Trust Agreement are kept on file by the Voting Trustee and by the
Company in its office at One Old Country Road, Suite 335, Carle Place, New
York 11514, and are open to inspection in accordance
with the requirements of law.
2. By delivery of this certificate, the holder hereof and
every transferee agree to be bound by the terms of this Certificate and the
Voting Trust Agreement, including the restrictions on
transfer provided therein.
3. On June __, 2006, or such later date to which the Voting
Trust Agreement may be extended, or upon the earlier termination of the
Voting Trust Agreement as provided therein, the holder shall be entitled
to receive a certificate or certificates endorsed in blank, for an aggregate
of ___ shares of the Company's common stock, $.01 par value (the "Common
Stock"), and in the meantime from time to time to receive payment of cash
dividends, if any, collected by or for the account of the Voting Trustee
upon a like number of such shares standing in its name. If the Voting
Trustee shall receive any certificates for shares of Common Stock issued
by way of dividend upon or in exchange for the certificates for shares
represented by this Certificate, the Voting Trustee shall
hold such certificates in accordance with the terms of the Voting Trust
Agreement and shall issue Voting Trust Certificates therefor.
4. Until the retransfer to the holder hereof of certificates for
the shares of Common Stock represented by this Certificate, the Voting
Trustee shall possess and be entitled in its discretion to exercise all
rights and powers to vote such shares as provided in the Voting Trust
Agreement, and to give consents with respect to any lawful corporate
action, and no holder of this Certificate shall in such capacity have
any rights or powers to vote such shares or to give consents
with respect to or otherwise take part in any corporate action;
provided, further, that all such rights and powers to vote such
shares and give consents with respect to actions are subject to the
limitations and restrictions on the Voting Trustee which are specified
in the Voting Trust Agreement.
5. This Certificate is transferable only on the books of the
Voting Trustee to be kept by it or its agents upon surrender hereof (duly
endorsed in blank or accompanied by a proper instrument of assignment duly
executed in blank) by the registered holder in person or by such
holder's duly authorized attorney. Until this Certificate is transferred
as set forth above, the Voting Trustee may treat the registered holder
hereof as the absolute owner hereof for all purposes whatsoever.
6. This Certificate is not valid unless signed by the
Voting Trustee.
IN WITNESS WHEREOF, the undersigned Voting Trustee has signed
this Certificate as of this _____ day of June, 1996.
[Name of Voting Trustee:]
By:_______________________
Name:
Title:
