UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 4)*
The Cosmetic Center, Inc.
(Name of Issuer)
CLASS B COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
221232-10-1
(CUSIP Number)
BRUCE STROHL, VICE PRESIDENT - FINANCE
THE COSMETIC CENTER, INC.
8839 GREENWOOD PLACE, SAVAGE, MD 20763
(Name, Address and Telephone Number
of Person Authorized to Receive
Notices and Communications)
OCTOBER 1, 1996
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Check the following box if a fee is being paid with this statement [ ].
(A fee is not required only if the reporting person: (1) has a
previous statement on file reporting beneficial ownership of more than
five percent of the class of securities described in Item 1; and (2) has
filed no amendment subsequent thereto reporting beneficial ownership of five
percent or less of such class. (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act
of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
CUSIP No.: 221232-10-1 Page 2 of 16 Pages
1. Name of Reporting Person:
S.S. or I.R.S. Identification No. of Above Person:
Anita J. Weinstein
###-##-####
2. Check the Appropriate Box if a Member of a Group*
a. [ ] b. [X]
3. SEC Use Only
4. Source of Funds
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e): [ ]
N/A
6. Citizenship or Place of Organization:
U.S.A.
Number of 7. Sole Voting Power: 605,995
Shares Beneficially
Owned by 8. Shared Voting Power: --
Each Reporting
Person With 9. Sole Dispositive Power: 615,995
10. Shared Dispositive Power: --
11. Aggregate Amount Beneficially Owned by Each Reporting
Person:
615,995
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares* [ ]
N/A
13. Percent of Class Represented by Amount in Row (11)
38.7
14. Type of Reporting Person*
IN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO
ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND
THE SIGNATURE ATTESTATION
<PAGE>
CUSIP No.: 221232-10-1 Page 3 of 16 Pages
1. Name of Reporting Person:
S.S. or I.R.S. Identification No. of Above Person:
Mark S. Weinstein
###-##-####
2. Check the Appropriate Box if a Member of a Group*
a. [ ] b. [X]
3. SEC Use Only
4. Source of Funds:*
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e): [ ]
N/A
6. Citizenship or Place of Organization:
U.S.A.
Number of 7. Sole Voting Power: 95,902
Shares Beneficially
Owned by 8. Shared Voting Power: --
Each Reporting
Person With 9. Sole Dispositive Power: 95,902
10. Shared Dispositive Power: --
11. Aggregate Amount Beneficially Owned by Each Reporting
Person:
95,902
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares* [X]
13. Percent of Class Represented by Amount in Row (11)
6.1
14. Type of Reporting Person*
IN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO
ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND
THE SIGNATURE ATTESTATION
<PAGE>
CUSIP No.: 221232-10-1 Page 4 of 16 Pages
1. Name of Reporting Person:
S.S. or I.R.S. Identification No. of Above Person:
Susan K. Magenheim
###-##-####
2. Check the Appropriate Box if a Member of a Group*
a. [ ] b. [X]
3. SEC Use Only
4. Source of Funds:*
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e): [ ]
N/A
6. Citizenship or Place of Organization:
U.S.A.
Number of 7. Sole Voting Power: 57,758
Shares Beneficially
Owned by 8. Shared Voting Power: --
Each Reporting
Person With 9. Sole Dispositive Power: 57,758
10. Shared Dispositive Power: --
11. Aggregate Amount Beneficially Owned by Each Reporting
Person:
57,758
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares* [X]
13. Percent of Class Represented by Amount in Row (11)
3.6
14. Type of Reporting Person*
IN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO
ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND
THE SIGNATURE ATTESTATION
<PAGE>
CUSIP No.: 221232-10-1 Page 5 of 16 Pages
1. Name of Reporting Person:
S.S. or I.R.S. Identification No. of Above Person:
Michele S. Weinstein
###-##-####
2. Check the Appropriate Box if a Member of a Group*
a. [ ] b. [X]
3. SEC Use Only
4. Source of Funds:*
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e): [ ]
N/A
6. Citizenship or Place of Organization:
U.S.A.
Number of 7. Sole Voting Power: 6,888
Shares Beneficially
Owned by 8. Shared Voting Power: --
Each Reporting
Person With 9. Sole Dispositive Power: 6,888
10. Shared Dispositive Power: --
11. Aggregate Amount Beneficially Owned by Each Reporting
Person:
6,888
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares* [X]
13. Percent of Class Represented by Amount in Row (11)
0.4
14. Type of Reporting Person*
IN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO
ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND
THE SIGNATURE ATTESTATION
<PAGE>
This amendment No. 4 (the "Amendment") amends Items 4, 5, 6 and 7 of
the Schedule 13D filed by Anita J. Weinstein, Mark S. Weinstein, Michele S.
Weinstein and Susan K. Magenheim on February 4, 1991, as subsequently amended by
Amendment No. 1 filed on July 9, 1991, Amendment No. 2 filed on March 31, 1992
and Amendment No. 3 filed on November 20, 1995.
Item 1. Security and Issuer
This Amendment relates to the Class B common stock, par value $0.01 per
share ("Shares"), of The Cosmetic Center, Inc., a Delaware corporation (the
"Company"). The Company's principal executive offices are located at 8839
Greenwood Place, Savage, Maryland 20763.
Item 4. Purpose of Transaction
On October 1, 1996 the Company, Revlon Consumer Products Corporation
("Revlon"), Prestige Fragrance & Cosmetics, Inc. ("PFC") and Anita J. Weinstein,
Mark S. Weinstein and Susan K. Magenheim (collectively, the "Principal
Stockholders") signed a non-binding letter of intent (the "Letter of Intent")
for the merger of Revlon's subsidiary, PFC, into the Company (the "Merger").
Concurrently, the Company, Revlon, PFC and the Principal Stockholders also
signed a letter agreement providing for certain rights in connection with the
negotiation of the Merger (the "Exclusivity Agreement").
The Letter of Intent
The Letter of Intent contemplates that in the Merger PFC would be
merged into the Company or a subsidiary of the Company. In connection with the
Merger, (a) the Company's certificate of incorporation would be amended to
create a new class of voting stock ("Class C common stock"), (b) Revlon would
receive newly issued Class C common stock such that immediately following the
Merger (without giving effect to the Cash Election (defined below)), Revlon
would own at least 65% of the outstanding Class C common stock (on a fully
diluted basis taking into account (x) all shares issuable upon the exercise of
options then outstanding with an exercise price of $7.70 or less, (y) 10,000
shares issuable upon the exercise of options then outstanding with an exercise
price of more than $7.70 and (z) cancellation at or prior to the effective time
of the Merger of outstanding options exercisable for 20,000 shares that have an
expiration date of January 15, 1997), (c) each existing Company stockholder
could elect to receive, in exchange for each share of Class A common stock or
Class B common stock held by such stockholder, either (i) one share of Class C
common stock or (ii) cash in the amount of $7.63 per share (the "Stockholder
Cash Election") and (d) each stock option outstanding immediately prior to the
effective time of the Merger would, after the effective time, be exercisable for
the same number of shares of Class C common stock and with the same exercise
price and expiration date as such option was exercisable immediately prior to
the Merger; provided, however, that each holder of an option that has an
exercise price of less than $7.63 per share could elect, in lieu of retaining
the stock option, to receive in cancellation thereof cash in an amount equal to
the difference between $7.63 and the exercise price of such option (the
"Optionholder Cash Election" and, together with the Stockholder Cash Election,
the "Cash
<PAGE>
Election"). The Cash Election is subject to the limitation that not more than
2,829,065 shares of common stock, including shares of outstanding Class A and
Class B common stock and shares subject to outstanding options, would be
exchangeable for cash pursuant to the Cash Election (the "Limit"). To the extent
that the aggregate shares and options as to which a Cash Election has been made
exceed the Limit, each stockholder's and optionholder's Cash Election would be
reduced pro rata. The Principal Stockholders would agree to elect to make the
Cash Election for all of their shares of Class A and Class B common stock and
options that have an exercise price of less than $7.63. Giving effect to the
Cash Election, Revlon could own up to 83% of the Company's outstanding common
stock upon the completion of the Merger.
The Merger would result in the Company's Class A common stock and Class
B common stock ceasing to be listed or quoted by NASDAQ and becoming eligible
for termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended. The Company expects, however, that the Class C
common stock would be registered under Section 12(g)(4) and that the Company
therefore would continue to file reports and other materials in accordance with
the Securities Exchange Act. The Company also expects that the Class C common
stock would qualify for listing on the NASDAQ National Market as the successor
to the Class A and/or Class B common stock.
The Letter of Intent provides that the Company's bylaw would be amended
to provide that the Company's board of directors (the "Board") would consist of
nine directors, of which there would be two "independent" directors. For three
years from the consummation of the Merger, (a) the Principal Stockholders would
agree to vote all of their Class C common stock in favor of Revlon's nominees
for director so that Revlon would at all times maintain representation on the
Board equal to Revlon's percentage ownership of Class C common stock, but not
less than five Board seats, and Revlon would agree to vote its shares in favor
of the Principal Stockholders' nominees for director equal to their aggregate
percentage ownership of Class C common stock, after giving effect to the Merger
and the Cash Election, but not less than one nor more than two Board seats.
Mr. Jerry Levin, Revlon's Chairman and chief executive officer, would
be elected as a director and chairman of the Board, Mr. Mark Weinstein would be
elected as a vice chairman of the Board and Mr. Howard Diener, the president of
PFC, would be elected as president and chief executive officer of the Company.
Each of Mark Weinstein and Anita Weinstein would enter into an
employment and non-competition agreement with the Company, and Susan Magenheim
would enter into a consulting and non-competition agreement with the Company,
each upon terms and conditions acceptable to the parties.
PFC would enter into lease agreements with Revlon for five stores, each
upon terms and conditions acceptable to the parties.
- 2 -
<PAGE>
The Principal Stockholders would together be entitled to demand on one
occasion that the Company file a registration statement under the Securities Act
of 1933, as amended, for the sale of their Class C common stock and would also
be entitled to include their Class C common stock in certain registration
statements filed for the benefit of the Company. Revlon would be entitled to
demand on three occasions that the Company file a registration statement under
the Securities Act for the sale of its Class C common stock and would also be
entitled to include its Class C common stock in certain registration statements
filed for the benefit of the Company. All such registration statements would be
prepared at the Company's expense.
The Letter of Intent provides that the Merger would be subject to (a)
the Company's and Revlon's satisfaction with complete financial, operations,
tax, legal, real estate, environmental, business and other due diligence, (b)
notice to, filings with and approvals by government agencies (including the
Federal Trade Commission and/or The Department of Justice pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act and the Securities and Exchange
Commission pursuant to the federal securities laws), (c) receipt of material
third party consents, (d) the availability of bank financing for the Company to
finance the Cash Election, refinance existing debt and provide working capital
on terms and conditions acceptable to both the Company and Revlon and (e) the
negotiation and execution of a mutually acceptable merger agreement (the "Merger
Agreement"). In addition, Revlon's obligations would be subject to approval of
the transaction by Revlon's bank group and Revlon's board of directors. The
Company's obligations would be subject to approval of the transaction by the
Board and the Company's stockholders.
It would be a condition of the Merger that, from and after October 1,
1996, that the businesses of PFC and the Company each be operated in the
ordinary course and consistent with past practices pending the Merger.
According to the Letter of Intent, the Merger Agreement would also
provide that (i) until the Merger Agreement is terminated in accordance with its
terms, the Company and the Principal Stockholders would be subject to
exclusivity obligations substantially the same as the Company Exclusivity
Obligations (defined below in the description of the Exclusivity Agreement),
(ii) if any Cosmetic Center Triggering Event (defined below) were to occur prior
to the termination of the Merger Agreement in accordance with its terms or any
Cosmetic Center Alternate Transaction (defined below) were consummated during
the 90-day period immediately following the later of (x) the 110th day after the
date the Merger Agreement is signed and (y) certain events of termination under
the Merger Agreement (the "Cosmetic Center Termination Date"), the Company and
the Principal Stockholders would reimburse Revlon's expenses up to a maximum of
$1 million, (iii) if the Company should consummate any Cosmetic Center Alternate
Transaction prior to the Cosmetic Center Termination Date or during the 90-day
period immediately following the Cosmetic Center Termination Date, the Company
would pay Revlon the Cosmetic Center Break-up Fee (defined below), (iv) if the
Company should consummate any Cosmetic Center Alternate Transaction prior to the
Cosmetic Center Termination Date or during the 90-day period immediately
following the Cosmetic Center Termination Date, the Principal Stockholders would
pay Revlon the Principal Stockholders Break-up Fee (defined below) and (v)
- 3 -
<PAGE>
if at any meeting of Company stockholders held for the purpose of voting on the
Merger, the Principal Stockholders do not vote in favor of the Merger or the
Principal Stockholders vote in favor of a Cosmetic Center Alternate Transaction
prior to the Cosmetic Center Termination Date, the Principal Stockholders would
pay Revlon a fee of $1 million, provided that if the Principal Stockholders
Break-up Fee is payable subsequently, the $1 million payable pursuant to this
clause would be credited against such Principal Stockholders Break-up Fee.
The Merger Agreement would further provide that (i) until the Merger
Agreement is terminated in accordance with its terms, Revlon would be subject to
exclusivity obligations substantially the same as the Revlon Exclusivity
Obligations (defined below), (ii) if any Revlon Triggering Event (defined below)
were to occur prior to the termination of the Merger Agreement in accordance
with its terms or any PFC Alternate Transaction (defined below) were consummated
during the 90-day period immediately following the later of (x) the 110th day
after the date the Merger Agreement is signed and (y) certain events of
termination under the Merger Agreement (the "Revlon Termination Date"), Revlon
would reimburse the Company's expenses up to a maximum of $1 million and (iii)
if Revlon or PFC were to consummate any PFC Alternate Transaction prior to the
Revlon Termination Date or during the 90-day period immediately following the
Revlon Termination Date, Revlon would pay the Company the Revlon Break-up Fee
(defined below).
The Letter of Intent provides that it will terminate upon the earlier
of the execution of the Merger Agreement or November 30, 1996.
The Exclusivity Agreement
The Exclusivity Agreement contemplates that the Company and Revlon will
conduct due diligence with respect to completing the Merger and that the due
diligence activities will require each party to incur significant expenses.
In view of these expenses, Revlon, PFC, the Company and the Principal
Stockholders agreed that until the earlier of (i) November 30, 1996 or (ii)
termination of the Letter of Intent in accordance with its terms (the
"Exclusivity Period"), neither the Company nor any of the Principal Stockholders
nor any of their representatives or agents shall solicit, engage in
negotiations, provide information to or otherwise cooperate with any person or
entity that expresses an interest in acquiring all or a substantial part of the
any class of the securities, business or assets of the Company nor will they
grant any proxy, option or other similar right to any third person or entity in
connection with a transaction inconsistent with the Merger. The Exclusivity
Agreement further provides that nothing contained therein shall prohibit the
Board from furnishing information to, or entering into discussions or
negotiations with, any person or entity that makes an unsolicited bona fide
proposal in writing to acquire the Company or substantially all of its assets on
terms which, in an exercise of their fiduciary duty after the consideration of
advice from the Company's legal and financial advisors, a majority of the
Company's directors determines is likely to be more beneficial to the holders of
the common stock than the Merger. This proviso, however, does not permit the
Company to terminate the
- 4 -
<PAGE>
Exclusivity Agreement or to enter into an agreement with respect to (a) a
Cosmetic Center Alternate Transaction prior to the expiration of the Exclusivity
Period or (b) affect any other obligation under the Exclusivity Agreement. In
addition, the Principal Stockholders agreed that during the Exclusivity Period
they will not sell, pledge, agree to sell or pledge or otherwise dispose of any
of their shares of any class of the Company's securities to any third person,
will vote against any alternate transaction and, if available, will exercise
appraisal rights with respect to any alternate transaction. (The obligations
described in this paragraph are referred to as the "Company Exclusivity
Obligations").
Revlon agreed that during the Exclusivity Period Revlon and its
representatives and agents shall not solicit, engage in negotiations, provide
information to or otherwise cooperate with any person or entity that expresses
an interest in acquiring all or a substantial part of the any class of the
securities, business or assets of the PFC nor will Revlon grant any proxy,
option or other similar right to any third person or entity in connection with a
transaction inconsistent with the Merger. (The obligations described in this
paragraph are referred to as the "Revlon Exclusivity Obligations").
The Company, if (a) the Company shall enter into, or publicly announce
its intent to enter into an agreement in principle, letter of intent or
definitive agreement with anyone other than Revlon with respect to any sale,
merger or other similar transaction involving the Company, any class of its
equity securities or all or substantially all of its assets, (b) (i) the Board
recommends or approves that the Company's stockholders sell shares of any class
of the Company's equity securities or all or substantially all of the Company's
assets to another person or group, (ii) recommends or approves any Cosmetic
Center Alternate Transaction to another person or group or (iii) withdraws or
modifies in a manner adverse to Revlon its support of Revlon's proposal (other
than due to circumstances regarding PFC which could reasonably be expected to
have a material adverse affect on PFC or the Merger) or (c) the Company or the
Principal Stockholders breach any of the Company Exclusivity Obligations; or the
Principal Stockholders, if (d) the Principal Stockholders sell or agree to sell
any shares of any class of the Company's outstanding equity securities to any
group other than Revlon or (e) the Company or the Principal Stockholders breach
any of the Company Exclusivity Obligations, shall pay Revlon an amount equal to
its documented fees and expenses in connection with the due diligence,
preparation and negotiation of documents and preparation of PFC financial
statements related to the Merger, up to a maximum of $500,000, if (x) any
Cosmetic Center Triggering Event occurs during the Exclusivity Period or if (y)
any Cosmetic Center Alternate Transaction is consummated during the 120-day
period immediately following the Exclusivity Period. The foregoing events
described in (a), (b), (c), (d) and (e) are referred to as a "Cosmetic Center
Triggering Event," and the events described in (a), (b)(i) or (ii) and (d) are
referred to as a "Cosmetic Center Alternate Transaction."
Revlon, if (a) Revlon or PFC shall enter into, or publicly announce its
intent to enter into an agreement in principle or definitive agreement with
anyone other than the Company with respect to any sale, merger or other similar
transaction involving PFC, any of its equity securities or all or substantially
all of its assets, (b) (i) Revlon's or PFC's board of directors recommends
- 5 -
<PAGE>
or approves that PFC's stockholders sell shares of PFC's equity securities or
all or substantially all of PFC's assets to another group, (ii) recommends or
approves any PFC Alternate Transaction or (iii) withdraws or modifies in a
manner adverse to the Company its support of the Company's proposal (other than
due to circumstances regarding the Company which could reasonably be expected to
have a material adverse affect on the Company or the Merger), (c) Revlon or PFC
sell or agree to sell any shares of PFC's equity securities to any group other
than the Company, or (d) Revlon breaches any of the Revlon Exclusivity
Obligations, shall pay the Company an amount equal to its documented fees and
expenses in connection with the due diligence, preparation and negotiation of
documents and preparation of financial statements related to the Merger, up to a
maximum of $500,000, if (x) any PFC Triggering Event occurs during the
Exclusivity Period or if (y) any PFC Alternate Transaction is consummated during
the 120-day period immediately following the Exclusivity Period. The foregoing
events described in (a), (b), (c) and (d) are referred to as a "Revlon
Triggering Event," and the events described in (a), (b)(i) and (ii) and (c) are
referred to as a "PFC Alternate Transaction."
In addition to the foregoing expense reimbursement provisions, the
Exclusivity Agreement also provides that if the Company shall consummate any
Cosmetic Center Alternate Transaction at any time during the Exclusivity Period
or during the 120-day period immediately following the Exclusivity Period, the
Company shall pay to Revlon on the date of consummation of such Cosmetic Center
Alternate Transaction a break-up fee of $1 million (the "Cosmetic Center Breakup
Fee").
If the Company shall consummate any Cosmetic Center Alternate
Transaction at any time during the Exclusivity Period or during the 120-day
period immediately following the Exclusivity Period, the Principal Stockholders,
jointly and severally, shall pay to Revlon on the date of consummation of such
Cosmetic Center Alternate Transaction a break-up fee equal to 25% of the
difference between (i) the value of the consideration paid to them in such
Cosmetic Center Alternate Transaction with respect to all of their shares minus
(ii) the product of (A) the number of shares held by the Principal Stockholders
multiplied by (B) $7.63 (the "Principal Stockholder Break-up Fee").
If Revlon or PFC shall consummate any PFC Alternate Transaction at any
time during the Exclusivity Period or during the 120-day period immediately
following the Exclusivity Period, Revlon shall pay to the Company on the date of
consummation of such PFC Alternate Transaction a break-up fee of $1.25 million
(the "Revlon Break-up Fee").
Item 5. Interest in the Securities of the Issuer
The Filing Persons may be deemed, within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended and the rules and
regulations thereunder, to own beneficially in the aggregate 776,543 Shares, or
approximately 48.8% of the outstanding Shares, based on 1,582,780 Shares
outstanding plus currently exercisable options held by the individual Filing
Person.
- 6 -
<PAGE>
The following table sets forth certain information concerning the
Shares owned by the Filing Persons.
Percentage of
Name Amount and Nature Shares Outstanding
Anita J. Weinstein 615,995 (1) 38.7
Mark S. Weinstein 95,902 (2) 6.1
Susan K. Magenheim 57,758 (3) 3.6
Michele S. Weinstein 6,888 (4) (5)
(1) Includes 10,000 Shares issuable upon exercise of currently
exercisable options.
(2) Excludes 6,888 Shares owned by his wife, and excludes 17,722 Shares
held by him in trust for his nephews and niece, over which Shares he disclaims
any beneficial interest.
(3) Excludes 29,085 Shares held by her in trust for her nephew and
niece, over which Shares she disclaims any beneficial interest.
(4) Excludes Shares held by Mark Weinstein, over which Shares she
disclaims any beneficial interest.
(5) Less than 1%.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer
Anita Weinstein, Mark Weinstein and Susan K. Magenheim are members of
the Board and officers of the Company and, as such, continuously consult with
respect to the Company's business.
See Item 4 with respect to the Letter of Intent and the Exclusivity
Agreement.
- 7 -
<PAGE>
Item 7. Materials to be Filed as Exhibits
A. Agreement as to joint filing of this Amendment.
B. Letter of Intent dated October 1, 1996 among Revlon Consumer
Products Corporation, Prestige Fragrance & Cosmetics, Inc.,
The Cosmetic Center, Inc., Anita J. Weinstein, Mark S.
Weinstein and Susan K. Magenheim.
C. Letter Agreement dated October 1, 1996 among Revlon Consumer
Products Corporation, Prestige Fragrance & Cosmetics, Inc.,
The Cosmetic Center, Inc., Anita J. Weinstein, Mark S.
Weinstein and Susan K. Magenheim.
- 8 -
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment is true, complete and
correct.
Dated: October 8, 1996
/s/ Anita J. Weinstein
/s/ Mark S. Weinstein
/s/ Michele S. Weinstein
/s/ Susan K. Magenheim
- 9 -
<PAGE>
EXHIBIT A
JOINT FILING AGREEMENT
The undersigned hereby agree that the attached Amendment to Schedule
13D is filed on behalf of each of us.
Dated: October 8, 1996
/s/ Anita J. Weinstein
/s/ Mark S. Weinstein
/s/ Michele S. Weinstein
/s/ Susan K. Magenheim
<PAGE>
EXHIBIT B
625 Madison Avenue
New York, NY 10022
Phone: (212) 527-4100
Fax: (212) 572-3010
Jerry W. Levin
Chairman and Chief Executive Officer
October 1, 1996
The Cosmetic Center, Inc.
8839 Greenwood Place
Savage, Maryland 20763
Attention: Mark Weinstein
Chairman of the Board
Dear Mark:
This letter sets forth our mutual intention that, subject to the
negotiation of a definitive merger agreement (the "Merger Agreement") covering
the transaction referred to in this Letter of Intent, Revlon Consumer Products
Corporation ("Revlon") would cause its wholly owned subsidiary, Prestige
Fragrance & Cosmetic, Inc. ("PFC"), to be merged with and into The Cosmetic
Center, Inc. ("Cosmetic Center") or a subsidiary thereof upon the terms and
subject to the conditions set forth herein (the "Transaction").
1. Structure
Revlon would cause PFC to be merged into Cosmetic Center or a subsidiary
of Cosmetic Center (the "Merger"). In the Merger (a) the Certificate of
Incorporation of Cosmetic Center would be the Certificate of Incorporation
of the surviving corporation and would be amended to create a new class of
voting common Stock ("Class C Common Stock") of Cosmetic Center; (b) Revlon
would receive newly issued Class C Common Stock such that immediately
following the Merger (without giving effect to the Cash Election (as
hereinafter defined)) Revlon would own at least 65% of the issued and
outstanding Class C Common Stock of Cosmetic Center (on a fully diluted
basis taking into account (x) all shares issuable upon the exercise of
options then outstanding with an exercise price of $7.70 or less, (y)
10,000 shares issuable upon the exercise of options then outstanding with
an exercise price of more than $7.70 and (z) the cancellation at or prior
to the effective time of the Merger of the outstanding options exercisable
for 20,000 shares that have an expiration date of January 15, 1997); (c)
each existing Stockholder of Cosmetic Center could elect to receive, in
exchange for each share of Class A Common Stock or Class B Common Stock
held by such stockholder, either (i) one share of Class C Common Stock or
(ii) cash in the amount of $7.63 per share (the "Stockholder Cash
Election"); and (d) each stock option outstanding immediately prior to the
<PAGE>
effective time of the Merger would, after the effective time of the Merger,
be exercisable for the same number of shares of Class C Common Stock and
with the same exercise price and expiration date as such option was
exercisable for Common Stock immediately prior to the Merger; provided,
however, that each existing holder of a stock option of Cosmetic Center
that has an exercise price of less than $7.63 could elect, in lieu of
retaining such stock option, to receive in cancellation for such option
cash in the amount equal to the difference between (A) $7.63 minus (B) the
exercise price of such option (the "Optionholder Cash Election" and,
together with the "Stockholder Cash Election," the "Cash Election");
provided, further, that not more than 2,829,065 shares of Common Stock and
options as to which a Cash Election has been made (the "Limit") would be
exchangeable for cash pursuant to the Cash Election and, to the extent the
aggregate shares and options as to which a Cash Election is made exceed the
Limit, each stockholder's and optionholder's Cash Election would be reduced
pro rata (which pro rata reduction shall be determined with respect to each
stockholder or option holder, as the case may be, by multiplying the number
of shares of Common Stock or options (treating options with different
exercise prices separately) as to which such stockholder or option holder
has made a Cash Election by a pro ration factor equal to the quotient of
(A) the Limit over (B) the aggregate number of shares and options as to
which a Cash Election has been made). Each of Mark Weinstein, Anita
Weinstein and Susan Magenheim (the "Principal Stockholders") would agree to
elect to receive cash in lieu of Class C Common Stock for all of their
shares and all of their options that have an exercise price of less than
$7.63. The Principal Stockholders together would be entitled to one demand
registration right and certain piggyback registration rights with respect
to their Class C Common Stock and Revlon would be entitled to three demand
registration rights and certain piggyback registration rights with respect
to the Class C Common Stock issuable to Revlon in the Merger, in each case,
upon notice to and at the expense of Cosmetic Center (other than
underwriting fees and discounts relating to the sale of shares by Revlon or
the Principal Stockholders, as the case may be, and fees and expenses of
legal counsel, if any, of Revlon or the Principal Stockholders, as the case
may be).
2. Board of Directors Size and Representation
The by-laws of Cosmetic Center would be amended to provide that the Board
of Directors would consist of nine directors (of which there would be two
"independent" directors). For three years from the consummation of the
Merger, the Principal Stockholders would agree to vote all of their shares
of Class C Common Stock in favor of Revlon's nominees for director for a
number of the Board seats so that Revlon would at all times maintain
representation on the Board equal to Revlon's percentage of ownership of
Class C Common Stock (but not less than five board seats); and Revlon would
agree to vote its shares in favor of the Principal Stockholders' nominees
for director for a number of the Board seats equal to their aggregate
percentage of ownership of Class C Common Stock after giving effect to the
Merger and the Cash Election (but not less than one nor more than two board
seats).
<PAGE>
3. Management; Ancillary Agreements.
Jerry Levin would be elected as a Director and Chairman of the Board of
Cosmetic Center, Mark Weinstein would be elected as a Vice Chairman of the
Board of Directors and Howard Diener would be elected as President and
Chief Executive Officer.
Each of Mark Weinstein and Anita Weinstein would enter into an employment
and non-competition agreement with Cosmetic Center and Susan Magenheim
would enter into a consulting and non-competition agreement with Cosmetic
Center, all upon terms and conditions acceptable to the parties.
PFC would enter into lease agreements with Revlon for the five employee
store located in Edison (two stores) and Irvington, New Jersey, Oxford,
North Carolina and Phoenix, Arizona upon terms and conditions acceptable to
the parties.
4. Conditions
The Transaction would be subject to each of Revlon's and Cosmetic Center's
satisfaction with complete financial, operations, tax, legal, real estate,
environmental, business and other due diligence; notices to, filings with
and approvals of governmental agencies, if any; expiration or termination
of statutory waiting periods, if any; receipt of material third party
consents; the availability of bank financing for Cosmetic Center for
financing the Cash Election, for refinancing existing debt and for working
capital needs from and after the effective date of the Merger in amounts
and on terms and conditions acceptable to both Revlon and Cosmetic Center;
and negotiation, execution and delivery of a mutually acceptable definitive
Merger Agreement (including indemnification from Revlon for liabilities
that result from PFC joining in consolidated or combined income tax returns
from any person before the effective date of the Merger). In addition to
the foregoing, Revlon's obligation to proceed would be subject to approval
of the transaction by Revlon's bank group and its Board of Directors.
Cosmetic Center's obligation to proceed would be subject to approval of the
transaction by Cosmetic Center's Board of Directors and stockholders.
5. Operation of the Business
It would be a condition of the Merger that, from and after the date
hereof, the businesses of PFC and Cosmetic Center would each be operated in
the ordinary course and consistent with past practice pending the Merger.
Neither Cosmetic Center nor PFC would: incur any debt for borrowed money
(other than draw downs under then existing credit arrangements (whether the
credit facility existing on the date hereof or after the date hereof but
before the execution of the Merger Agreement) in the ordinary course);
grant any stock options or amend or reprice any existing options (including
by reason of the Merger); authorize, issue or sell any stock or any other
securities or options, warrants or like rights (other than the issuance of
Cosmetic Center Common Stock upon the exercise of any options in existence
and set forth on Schedule 1 hereto); amend its certificate of incorporation
or by laws; declare or pay dividends; merge, consolidate, purchase or sell
stock or assets or agree to do so (other than purchases and sales of
<PAGE>
inventory in the ordinary course); enter into any transactions with
affiliates or the Principal Stockholders (other than services provided by
Revlon to PFC in the ordinary course); or enter into any other material
agreements or transactions.
6. Due Diligence.
Revlon and its representatives and Cosmetic Center and its representatives
would be entitled to conduct complete due diligence reviews of Cosmetic
Center and PFC, respectively, and each of Cosmetic Center and PFC would
provide full access to their respective managements and other appropriate
personnel, including their respective current and former certified public
accountants and attorneys, and to their respective facilities, other assets
and books and records to permit the other party to complete such due
diligence in a non-disruptive manner; provided that in the case of PFC,
access to federal and consolidated and combined state tax records will be
limited to the PFC pro forma sections of such records.
7. Exclusivity, Break Up Expenses and Fee
(a) In consideration for each party engaging in discussions and
conducting due diligence, Revlon, Cosmetic Center and the Principal
Stockholders have executed an exclusivity and expense reimbursement
agreement as of the date hereof (the "Exclusivity Agreement").
(b) In the Merger Agreement, (1) Cosmetic Center and the Principal
Stockholders would agree that until the Merger Agreement is terminated
in accordance with its terms, they would be subject to exclusive
dealing provisions substantially the same as those set forth in
paragraphs 1(a) and (b) of the Exclusivity Agreement, (2) Cosmetic
Center and the Principal Stockholders would agree that if (A) any
Cosmetic Center Triggering Event (as such term is defined in the
Exclusivity Agreement) occurs prior to the termination of the Merger
Agreement in accordance with its terms or (B) any Cosmetic Center
Alternative Transaction (as such term is defined in the Exclusivity
Agreement) is consummated during the 90-day period immediately
following the later of (x) the 110th day after the date on which the
Merger Agreement is executed (the "Drop Dead Date") and (y) the
termination of the Merger Agreement in accordance with its terms,
unless the Merger Agreement is terminated by Revlon (other than due to
a material breach by Cosmetic Center or the Principal Stockholders) or
as a result of the failure of a condition to either party's obligation
to close under the Merger Agreement (other than due to a material
breach by Cosmetic Center or the Principal Stockholders) (the later of
(x) and (y) being the "Cosmetic Center Termination Date"), they would
pay to Revlon within two (2) business days after such event the Revlon
Expense Reimbursement Fee (as such term is defined in the Exclusivity
Agreement except that the cap on such fees and expenses shall be
increased from $500,000 to $1 million)), (3) Cosmetic Center would
agree that in the event that Cosmetic Center shall consummate any
Cosmetic Center Alternate Transaction at any time prior to the Cosmetic
Center Termination Date or during the 90-day period immediately
following the Cosmetic Center Termination Date, Cosmetic Center shall
pay to Revlon upon the date of consummation of such Cosmetic Center
Alternate Transaction the Cosmetic Center Break-up Fee (as such term is
<PAGE>
defined in the Exclusivity Agreement), (4) the Principal Stockholders
would agree that in the event that Cosmetic Center shall consummate any
Cosmetic Center Alternate Transaction at any time prior to the Cosmetic
Center Termination Date or during the 90-day period immediately
following the Cosmetic Center Termination Date, the Principal
Stockholders would be jointly and severally liable to pay to Revlon
upon the date of consummation of such Cosmetic Center Alternate
Transaction the Principal Stockholders Break-up Fee (as such term is
defined in the Exclusivity Agreement), and (5) the Principal
Stockholders would agree that in the event that (A) at a meeting of the
stockholders of Cosmetic Center held for the purpose of voting on the
Merger, they do not vote in favor of the Merger or (B) they vote in
favor of any Cosmetic Center Alternate Transaction at any time prior to
the Cosmetic Center Termination Date, the Principal Stockholders would
be jointly and severally liable to pay to Revlon within 2 days after
the date of such vote of the stockholders of Cosmetic Center a fee of
$1 million; provided, however, that in the event that the Principal
Stockholders Break-up Fee is payable subsequently, the $1 million fee
payable pursuant to this clause (5) would be credited against such
Principal Stockholders Break-up Fee.
(c) In the Merger Agreement, (1) Revlon would agree that until the
Merger Agreement is terminated in accordance with its terms, it would
be subject to exclusive dealing provisions substantially similar to
those set forth in paragraphs 1(c) of the Exclusivity Agreement, (2)
Revlon would agree that if (A) any Revlon Triggering Event (as such
term is defined in the Exclusivity Agreement) occurs prior to the
termination of the Merger Agreement in accordance with its terms or (B)
any Revlon Alternative Transaction (as such term is defined in the
Exclusivity Agreement) is consummated during the 90-day period
immediately following the later of (x) the Drop Dead Date and (y) the
termination of the Merger Agreement in accordance with its terms,
unless the Merger Agreement is terminated by Cosmetic Center or the
Principal Stockholders (other than due to a material breach by Revlon)
or as a result of the failure of a condition to either party's
obligation to close under the Merger Agreement (other than due to a
material breach by Revlon) (later of (x) and (y) being the "Revlon
Termination Date"), Revlon would pay to Cosmetic Center within two (2)
business days after such event the Cosmetic Center Expense
Reimbursement Fee (as such term is defined in the Exclusivity Agreement
except that the cap on such fees and expenses shall be increased from
$500,000 to $1 million)) and (3) Revlon would agree that in the event
that Revlon or PFC shall consummate any PFC Alternate Transaction at
any time prior to the Revlon Termination Date or during the 90-day
period immediately following the Revlon Termination Date, Revlon would
pay to Cosmetic Center upon the date of consummation of such PFC
Alternate Transaction the Revlon Break-up Fee (as such term is defined
in the Exclusivity Agreement).
<PAGE>
8. Confidentiality and Publicity
The provisions of the Confidentiality Agreement dated May 13, 1996 will
continue in full force and effect. Without limitation of the foregoing,
neither party shall, nor shall permit its representatives to, make any
public disclosure or generate any publicity concerning the subject matter
of this letter including, without limitation, the Merger terms, the
Exclusivity Agreement or the identity of the parties hereto or thereto,
without the prior written approval of the other party except (in the
reasonable opinion of its counsel) as required by law (including any
disclosures (which may include the filing of this letter and/or the
Exclusivity Agreement) required in connection with filings under applicable
securities laws and regulations) after prior notice to the other party and
except that Revlon and Cosmetic Center may issue a joint press release in
the form annexed hereto upon execution of this letter by all of the parties
hereto.
9. Expenses
Except as otherwise provided in the Exclusivity Agreement or the Merger
Agreement, each of Cosmetic Center, the Principal Stockholders and Revlon
and PFC will be responsible for and shall pay all of its, his or her
respective costs and expenses incurred in connection with the Transaction.
10. Non Binding
This letter is not intended to be binding except that the parties intend
that paragraphs 6, 8 and 9 be binding. It does not obligate either party to
proceed with the Merger should either party decide not to proceed for any
reason prior to signing a definitive Merger Agreement. Either party may
terminate discussions at any time. Unless and until a definitive written
Merger Agreement between Cosmetic Center and the Principal Stockholders and
Revlon has been executed and delivered, neither party shall be under any
legal obligation of any kind whatsoever with respect to the Merger other
than the obligations set forth in paragraphs 6, 8 and 9 hereof and those
obligations expressly set forth in the Confidentiality Agreement and in the
Exclusivity Agreement.
11. Termination
This letter shall terminate and be null and void upon the earlier of (a)
the execution and delivery of the Merger Agreement or (b) the expiration of
60 days from the date hereof; provided, however, that in the case of clause
(b), the provisions of paragraphs 8 and 9 hereof shall survive such
termination.
<PAGE>
12. Governing Law and Jurisdiction
This letter, and all questions relating to its validity, interpretation,
performance and enforcement, shall be governed by and construed,
interpreted and enforced in accordance with the law in the State of
Delaware applicable to agreements executed in Delaware by residents of
Delaware and to be wholly performed in that state. The parties hereby
irrevocably and unconditionally consent to submit to the exclusive
jurisdiction of the courts of the State of Delaware and of the United
States of America located in Delaware, for any actions, suits or
proceedings arising out of or relating to this letter or the Transaction
contemplated hereby.
<PAGE>
If the foregoing accurately sets forth the intention of Cosmetic Center
and the Principal Stockholders, please so indicate by signing the duplicate of
this letter. This letter can be signed in counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
Very truly yours,
REVLON CONSUMER PRODUCTS CORPORATION
By: /s/ Jerry W. Levin
-------------------------------------------
Name: Jerry W. Levin
Title: Chairman and Chief Executive Officer
PRESTIGE FRAGRANCE & COSMETICS, INC.
By: /s/ William J. Fox
-------------------------------------------
Name: William J. Fox
Title: Vice President
Agreed and accepted: Agreed and Accepted:
THE COSMETIC CENTER, INC. THE PRINCIPAL STOCKHOLDERS
OF THE COSMETIC CENTER, INC.
By: /s/ Mark Weinstein /s/ Mark Weinstein
-------------------------------- -----------------------------
Name: Mark Weinstein Mark Weinstein, Individually
Title: Chairman of the Board
/s/ Anita Weinstein
-----------------------------
Anita Weinstein, Individually
/s/ Susan Magenheim
-----------------------------
Susan Magenheim, Individually
<PAGE>
EXHIBIT C
STRICTLY CONFIDENTIAL
625 Madison Avenue
New York, NY 10022
Phone: (212) 527-4100
Fax: (212) 572-3010
Jerry W. Levin
Chairman and Chief Executive Officer
October 1, 1996
The Cosmetic Center, Inc.
8839 Greenwood Place
Savage, Maryland 20763
Attention: Mark Weinstein
Dear Mark:
Each of The Cosmetic Center, Inc. ("Cosmetic Center") and Revlon
Consumer Products Corporation ( "Revlon") has expressed an interest, pursuant to
a certain non-binding letter of intent of even date herewith, in exploring a
possible merger (the "Transaction") involving Cosmetic Center and Revlon's
wholly owned subsidiary, Prestige Fragrance & Cosmetic, Inc. ("PFC"). In
connection with the Transaction, Revlon and Cosmetic Center will engage in
discussions and negotiations, Cosmetic Center will furnish information to Revlon
concerning Cosmetic Center's businesses, and Revlon will furnish information to
Cosmetic Center concerning PFC's business. The parties have executed a
Confidentiality Agreement dated May 13, 1996 regarding such discussions.
In order to evaluate the Transaction, Cosmetic Center and Revlon will
conduct due diligence regarding PFC and Cosmetic Center, respectively, which due
diligence will involve considerable effort and expense by each of Cosmetic
Center and Revlon, including significant use of internal and external resources,
including expenses of accountants and counsel.
In order to induce the other party to conduct such due diligence and to
develop and negotiate with respect to a proposal for the Transaction and, in
consideration therefore, the parties agree as follows:
1. Exclusivity Period. Until the earlier of (i) expiration of sixty
(60) days from the date hereof or (ii) termination of the above-mentioned
non-binding letter of intent in accordance with Section 11 thereof (the
"Exclusivity Period"):
(a) None of Cosmetic Center, any of Anita J. Weinstein, Mark
S. Weinstein and Susan K. Magenheim (collectively, the "Principal Stockholders")
or any of their respective
<PAGE>
representatives or agents shall, after the date hereof, directly or indirectly,
solicit or engage in negotiations with, or provide any information to, or
otherwise cooperate with, any person or entity that seeks to acquire or
expresses an interest in acquiring all or any substantial part of any class of
the securities, business or assets of Cosmetic Center or any subsidiary thereof,
or for the purpose of otherwise effecting any transaction or business
combination inconsistent with the Transaction, nor will Cosmetic Center or any
of the Principal Stockholders or any of their respective representatives or
agents enter into any agreement with or grant any proxy, option or other similar
right to any third person or entity in connection with any transaction or
business combination inconsistent with the Transaction; provided, however, that
nothing contained in this paragraph 1 or elsewhere herein shall prohibit the
Board of Directors of Cosmetic Center from furnishing information to, or
entering into discussions or negotiations with, any person or entity that makes
an unsolicited bona fide proposal in writing to acquire Cosmetic Center, whether
by merger, consolidation, or stock acquisition, or substantially all of the
assets of Cosmetic Center on terms which, in the exercise of their fiduciary
duty after the consideration of advice from Cosmetic Center's legal and
financial advisors, a majority of Cosmetic Center's directors determines is
likely to be more beneficial to each of the holders of Cosmetic Center's Common
Stock than the Transaction, and provided further that Cosmetic Center's legal
and financial advisors may engage in discussions regarding such written offer to
clarify the terms of such offer for the purpose of rendering the advice referred
to above to the Board of Directors of Cosmetic Center, in each case, provided
that, Cosmetic Center and its advisors, prior to furnishing such information to,
or entering into discussions or negotiations with, such a person or entity,
shall provide written notice to Revlon to the effect that Cosmetic Center is
furnishing information to, or entering into discussions with, such a person or
entity, and shall keep Revlon informed of the status (including, without
limitation, the identity of such person or entity and the terms of any proposal)
of such discussions or negotiations. Nothing in this paragraph 1 shall (a)
permit Cosmetic Center to terminate this Agreement, (b) permit Cosmetic Center
to enter into any agreement with respect to (a) Cosmetic Center Alternative
Transaction during the Exclusivity Period or (b) affect any other obligation of
any party under the Agreement.
(b) The Principal Stockholders will not sell, pledge, agree to
sell or pledge or otherwise dispose of any of their shares of any class of
securities of Cosmetic Center to any third person and, with respect to any
Cosmetic Center Alternate Transaction, shall vote all of their shares against
any such Cosmetic Center Alternate Transaction and, if available, exercise
appraisal rights with respect to their shares.
(c) Neither Revlon nor any of its representatives or agents
shall, after the date hereof, directly or indirectly, solicit or engage in
negotiations with, or provide any information to, or otherwise cooperate with,
any person or entity that seeks to acquire or expresses an interest in acquiring
all or any substantial part of the securities, business or assets of PFC, or for
the purpose of otherwise effecting any transaction or business combination
inconsistent with the Transaction (including, without limitation, a public
offering of the equity securities of PFC), nor will Revlon or any of such
persons enter into any agreement with or grant any proxy, option or other
similar right to any third person or entity in connection with any transaction
or business combination inconsistent with the Transaction.
<PAGE>
2. Revlon Expense Reimbursement. In addition to the provisions of paragraph
4(a) and (b) below, Cosmetic Center, in the case of the occurrence of either of
the events set forth in (a), (b) and (d) below, or the Principal Stockholders,
in the case of the occurrence of either of the events set forth in (c) and (d)
below (each of 2 (a), (b), (c) and (d) being hereinafter referred to as a
"Cosmetic Center Triggering Event"), agree to pay Revlon promptly, but in no
event later than two (2) business days, after the applicable Cosmetic Center
Triggering Event (or if any Cosmetic Center Alternate Transaction is consummated
during the 120-day period immediately following the Exclusivity Period,
promptly, but in no event later than two (2) business days, after the
consummation of such transaction), an amount in immediately available funds
equal to the documented fees and expenses (up to a maximum of $500,000) incurred
since June 1, 1996 (including after the date hereof) by Revlon and its
representatives and agents in connection with the due diligence, preparation and
negotiation of legal documents, and preparation of financial statements of PFC
related to the Transaction (including without limitation legal, tax and
accounting fees (other than accounting fees to the extent attributable to the
audit of PFC's financial statements) and disbursements) (the "Revlon Expense
Reimbursement Fee") if (1) any Cosmetic Center Triggering Event occurs during
the Exclusivity Period or (2) any Cosmetic Center Alternate Transaction is
consummated during the 120-day period immediately following the Exclusivity
Period. The Cosmetic Center Triggering Events are as follows:
(a) Cosmetic Center shall have entered into, or shall have
publicly announced its intention to enter into, an agreement in principle,
letter of intent, definitive agreement or other similar arrangement, whether
binding or non-binding, with any person other than Revlon and its affiliates
with respect to any sale, merger, consolidation or other similar transaction
involving Cosmetic Center, any class of its equity securities or securities
convertible into equity securities or all or substantially all of its assets;
(b) The Board of Directors of Cosmetic Center shall (i)
recommend or have recommended that stockholders of Cosmetic Center sell shares
of any class of equity securities or securities convertible into equity
securities of Cosmetic Center to another person or group or recommend or approve
any such sales of assets to another person or group; (ii) recommend or have
recommended to stockholders of Cosmetic Center any Cosmetic Center Alternate
Transaction (as defined below) involving such person or group; or (iii) in the
absence of Cosmetic Center learning of circumstances regarding PFC which could
reasonably be expected to have a material adverse affect on PFC or the
Transaction, shall withdraw or have withdrawn or modify or have modified in a
manner adverse to Revlon (including, without limitation, by no longer taking any
position with respect to Revlon's proposal), its support for Revlon's proposal;
(c) The Principal Stockholders sell or agree to sell any
shares of any class of the outstanding equity securities or securities
convertible into equity securities of Cosmetic Center to any person or group
other than Revlon or its affiliates (the events described to in subparagraph
2(a), (b)(i) - (ii) and (c) being referred to herein as "Cosmetic Center
Alternate Transactions"); or
(d) Cosmetic Center or the Principal Stockholders breach any
of their obligations under paragraph 1 hereof.
<PAGE>
During the Exclusivity Period, Cosmetic Center shall advise Revlon of
the receipt of any proposal for a Cosmetic Center Alternate Transaction and the
details thereof within 48 hours of the receipt thereof, and the Board of
Directors of Cosmetic Center shall not act with respect to any such proposal for
three (3) business days after the delivery of such notice to Revlon. Nothing in
paragraphs 2 or 4 shall be deemed to limit in any way any claims Revlon may have
at law or equity with respect to any breach by Cosmetic Center or the Principal
Stockholders of any of their obligations under paragraph 1 hereof.
3. Cosmetic Center Expense Reimbursement. Revlon, in the case of the
occurrence of any of the events set forth in (a), (b), (c) or (d) below (each of
3 (a), (b), (c) and (d) being hereinafter referred to as a "Revlon Triggering
Event"), agrees to pay Cosmetic Center promptly, but in no event later than two
(2) business days, after the applicable Triggering Event (or if any PFC
Alternate Transaction is consummated during the 120-day period immediately
following the Exclusivity Period, promptly, but in no event later than two (2)
business days, after the consummation of such transaction) an amount in
immediately available funds equal to the documented fees and expenses incurred
(up to a maximum of $500,000) incurred since June 1, 1996 (including after the
date hereof) by Cosmetic Center or any of its representatives or agents in
connection with the due diligence, preparation and negotiations of legal
documents and preparation of financial statements related to the Transaction
(including without limitation legal, tax and accounting (other than accounting
fees to the extent attributable to the audit of Cosmetic Center's financial
statements) fees and disbursements) (the "Cosmetic Center Expense Reimbursement
Fee") if (1) any Revlon Triggering Event occurs during the Exclusivity Period or
(2) any PFC Alternate Transaction is consummated during the 120-day period
immediately following the Exclusivity Period. The Revlon Triggering Events are
as follows:
(a) Revlon or PFC shall have entered into, or shall have
publicly announced its intention to enter into, an agreement in principle,
letter of intent, definitive agreement or other similar arrangement, whether
binding or non-binding, with any person other than Cosmetic Center with respect
to any sale, merger, consolidation or other similar transaction involving PFC,
its equity securities or all or substantially all of the assets of PFC
(including, without limitation, a public offering of the equity securities of
PFC);
(b) The Board of Directors of Revlon or PFC shall (i)
recommend or have recommended that stockholders of PFC sell shares of equity
securities of PFC to another person or group or recommend or approve any such
sales of assets to another person or group; (ii) recommend or have recommended
to stockholders of Revlon or PFC any PFC Alternate Transaction (as defined
below) involving such person or group or (iii) in the absence of PFC learning of
circumstances regarding Cosmetic Center which could reasonably be expected to
have a material adverse affect on Cosmetic Center or the Transaction, shall
withdraw or have withdrawn or modify or have modified in a manner adverse to
Cosmetic Center (including, without limitation, by no longer taking any position
with respect to Cosmetic Center's proposal), its support for Cosmetic Center's
proposal;
(c) Revlon or PFC sells or agrees to sell any shares of the
equity securities or securities convertible into equity securities of PFC (other
than sales transfers to any subsidiary or
<PAGE>
affiliate of Revlon) to any person or group other than Cosmetic Center (the
events described in subparagraph 2(a), (b)(i) - (ii) and (c) being referred to
herein as "PFC Alternate Transactions"); or
(d) Revlon breaches any of its obligations under paragraph 1
hereof.
During the Exclusivity Period, Revlon and PFC shall advise Cosmetic
Center of the receipt of any proposal for a PFC Alternate Transaction and the
details thereof within 48 hours of the receipt thereof, and neither Revlon nor
the Board of Directors of PFC shall act with respect to any such proposal for
three (3) business days after the delivery of such notice to Cosmetic Center.
Nothing in paragraphs 3 or 4 shall be deemed to limit in any way any claims
Cosmetic Center or any Principal Stockholder may have at law or equity with
respect to any breach by Revlon or PFC of any of its obligations under paragraph
1 hereof.
4. Break-up Fee. (a) In the event that Cosmetic Center shall consummate
any Cosmetic Center Alternate Transaction at any time during the Exclusivity
Period or during the 120-day period immediately following the Exclusivity
Period, Cosmetic Center agrees that it shall pay to Revlon upon the date of
consummation of such Cosmetic Center Alternate Transaction a break-up fee equal
to $1 million (the "Cosmetic Center Break-up Fee").
(b) In the event that Cosmetic Center shall consummate any Cosmetic
Center Alternate Transaction at any time during the Exclusivity Period or during
the 120-day period immediately following the Exclusivity Period, the Principal
Stockholders agree, jointly and severally, that they shall pay to Revlon upon
the date of consummation of such Cosmetic Center Alternate Transaction a
break-up fee (the "Principal Stockholders Break-up Fee") equal to twenty-five
percent (25%) of the difference between (i) the value of all consideration paid
to them in such Cosmetic Center Alternate Transaction with respect to all of
their shares minus (ii) the product of (A) the number of shares held by the
Principal Stockholders multiplied by (B) $7.63. For purposes of this paragraph
4(b), any non-cash consideration paid to the Principal Stockholders in such
Cosmetic Center Alternate Transaction shall be valued (as of the date of the
consummation of such Cosmetic Center Alternate Transaction) at (x) if such
consideration is in the form of securities listed on a national stock exchange
or qualified for trading on NASDAQ, the closing price of such securities on such
date on the principal national stock exchange on which such securities are
listed or the last trade on NASDAQ on such date, as the case may be and (y) with
respect to all other consideration, at the fair market value thereof (as
determined by a nationally recognized investment banking firm selected by the
Principal Stockholders and reasonably acceptable to Revlon).
(c) In the event that Revlon or PFC shall consummate any PFC Alternate
Transaction at any time during the Exclusivity Period or during the 120-day
period immediately following the Exclusivity Period, Revlon agrees that it shall
pay to Cosmetic Center upon the date of consummation of such PFC Alternate
Transaction a break-up fee equal to $1.25 million (the "Revlon Break-up Fee").
5. Amendments. The agreements set forth in this Agreement may be
modified or waived only by a separate writing by Cosmetic Center, the Principal
Stockholders and Revlon that expressly modifies or waives such agreements.
<PAGE>
6. Securities Laws. Each of Cosmetic Center and Revlon acknowledges
that it is aware, and that it will advise each of its representatives who is
informed as to the matters that are the subject of this Agreement, that the
United States securities laws prohibit persons who are in possession of
material, non-public information concerning an issuer (including Cosmetic Center
and Revlon), including, but not limited to, the matters that are the subject of
this Agreement, from purchasing or selling securities of such issuer and from
communicating such information to any other person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell such
securities, and each of Cosmetic Center and Revlon agree to comply fully with
such laws; Cosmetic Center agrees to indemnify Revlon and its affiliates to the
fullest extent permitted by law from any loss, cost or liability (including
reasonable and documented attorneys' fees) arising from any violation by
Cosmetic Center or any of its representatives of such laws, and Revlon agrees to
indemnify Cosmetic Center and its affiliates to the fullest extent permitted by
law from any loss, cost or liability (including reasonable and documented
attorneys' fees) arising from any violation by Revlon or any of its
representatives of such laws, or, in the event that such indemnification shall
not be permitted by law, each of Cosmetic Center and Revlon agrees to contribute
to the satisfaction of any such loss or liability based upon such party's
relative fault and benefit.
7. Miscellaneous. (a) It is understood and agreed that no failure or
delay by either party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other further exercise thereof or the exercise of any
right, power or privilege hereunder.
(b) Each party acknowledges and agrees that in the event of any breach
of this Agreement by it, the other party would be irreparably and immediately
harmed and could not be made whole by monetary damages. It is accordingly agreed
that each party, in addition to any other remedy to which it may be entitled in
law or equity, shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement, and to compel specific performance of this
Agreement, without the need for proof of actual damages. Each party agrees to
waive, and to cause its Representatives to waive, any requirement for the
securing or posting of any bond or other security in connection with such
remedy. Each party agrees to reimburse the other party for all costs and
expenses, including reasonable and documented attorneys' fees, incurred by such
party in successfully enforcing the other party's and its Representatives'
obligations hereunder.
(c) The term "person" as used in this Agreement shall be broadly
interpreted to include, without limitation, any corporation, company,
partnership and individual.
(d) This letter, and all questions relating to its validity,
interpretation, performance and enforcement, shall be governed by and construed,
interpreted and enforced in accordance with the law in the State of Delaware
applicable to agreements executed in Delaware by residents of Delaware and to be
wholly performed in that state. The parties hereby irrevocably and
unconditionally consent to submit to the exclusive jurisdiction of the courts of
the State of Delaware and of the United States of America located in Delaware,
for any actions, suits or proceedings arising out of or relating to this letter.
<PAGE>
(e) This Agreement and the Confidentiality Agreement express the entire
understanding with respect to the subject matter hereof. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provisions of this Agreement, which
shall remain in full force and effect.
(f) This Agreement may be executed in several counterparts, all of
which together shall constitute one and the same agreement.
<PAGE>
If the foregoing accurately sets forth the intention of Cosmetic Center
and the Principal Stockholders, please so indicate by signing the duplicate of
this letter.
Very truly yours,
REVLON CONSUMER PRODUCTS CORPORATION
By: /s/ Jerry W. Levin
------------------------------------
Name: Jerry W. Levin
Title: Chairman and Chief
Executive Officer
PRESTIGE FRAGRANCE & COSMETICS, INC.
By: /s/ William J. Fox
------------------------------------
Name: William J. Fox
Title: Vice President
Agreed and accepted: Agreed and Accepted:
THE COSMETIC CENTER, INC. THE PRINCIPAL STOCKHOLDERS
OF THE COSMETIC CENTER, INC.
By: /s/ Mark Weinstein /s/ Mark Weinstein
- ------------------------------ ------------------------------------
Name: Mark Weinstein Mark Weinstein, Individually
Title: Chairman of the Board
/s/ Anita Weinstein
------------------------------------
Anita Weinstein, Individually
/s/ Susan Magenheim
------------------------------------
Susan Magenheim, Individually
