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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934, as amended
FINAL AMENDMENT
The Cosmetic Center, Inc.
-------------------------
(Name of Issuer)
Class C Common Stock, par value $.01 per share
----------------------------------------------
(Title of Class of Securities)
221 234 30 5
------------
(CUSIP Number)
Barry F. Schwartz, Esq.
Mafco Holdings Inc.
35 E. 62nd St.
New York, NY 10021
-------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Copies to:
Wade H. Nichols III, Esq.
Revlon Consumer Products Corporation
625 Madison Avenue
New York, New York 10022
December 10, 1998
------------------------------------
(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
statement because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box: [ ]
Page 1 of 9 Pages
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SCHEDULE 13D
CUSIP No. 221 234 30 5
1. Name of Reporting Person
Revlon Consumer Products Corporation
2. Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [ ]
3. SEC Use Only
4. Source of Funds
BK, OO
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware
7. Sole Voting Power
None
Number of
Shares 8. Shared Voting Power
Beneficially None
Owned By
Reporting 9. Sole Dispositive Power
Person None
With
10. Shared Dispositive Power
None
11. Aggregate Amount Beneficially Owned by Each Reporting Person
None
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13. Percent of Class Represented by Amount in Row (11)
0%
14. Type of Reporting Person
CO
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SCHEDULE 13D
CUSIP No. 221 234 30 5
1. Name of Reporting Person
Mafco Holdings Inc.
2. Check the Appropriate Box if a Member of a Group (a) [ ]
(b) [ ]
3. SEC Use Only
4. Source of Funds
BK, OO
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware
7. Sole Voting Power
None
Number of
Shares 8. Shared Voting Power
Beneficially None
Owned By
Reporting 9. Sole Dispositive Power
Person None
With
10. Shared Dispositive Power
None
11. Aggregate Amount Beneficially Owned by Each Reporting Person
None
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares [ ]
13. Percent of Class Represented by Amount in Row (11)
0%
14. Type of Reporting Person
CO
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Revlon Consumer Products Corporation, a Delaware corporation ("Revlon"), and
Mafco Holdings Inc., a Delaware corporation ("Mafco Holdings", and together
with Revlon, the "Reporting Persons"), hereby amend and supplement the
Statement on Schedule 13D filed on May 5, 1997 (the "Schedule 13D") relating to
the beneficial ownership by the Reporting Persons of the Class C common stock,
par value $.01 per share (the "Class C Common Stock"), of The Cosmetic Center,
Inc., a Delaware corporation (the "Company"). This amendment is the final
amendment to the Schedule 13D and, unless otherwise indicated herein, each
capitalized term used and not defined herein shall have the meaning assigned to
such term in the Schedule 13D.
ITEM 1. SECURITY AND ISSUER
The principal executive offices of the Company are located at 8700
Robert Fulton Drive, Columbia, Maryland 21046.
ITEM 2. IDENTITY AND BACKGROUND
The names, business addresses and principal businesses of each of the
current directors and executive officers of Revlon are set forth on Schedule I
hereto and incorporated by reference herein, and the names, business addresses,
and principal businesses of each of the current directors and executive
officers of Mafco Holdings are set forth on Schedule II hereto and incorporated
by reference herein.
ITEM 4. PURPOSE OF TRANSACTION
Revlon, Inc., a Delaware corporation, beneficially owns all of the
outstanding shares of Revlon. Mafco Holdings owns, indirectly through REV
Holdings Inc., shares of Revlon, Inc. common stock representing approximately
83.0% of the outstanding shares of Revlon, Inc. common stock and 97.4% of the
voting power of the outstanding shares of Revlon, Inc. common stock.
On December 10, 1998 Revlon and Prestige Holdings I, L.P., a Delaware
limited partnership (the "Limited Partnership"), executed a Contribution
Agreement (the "Contribution Agreement") pursuant to which Revlon contributed
all of its 8,479,335 shares of the Company's Class C Common Stock, which
constitutes approximately 84.6% of the Company's outstanding Class C Common
Stock, and certain amounts owed by the Company to Revlon for working capital
and inventory, to the Limited Partnership. Revlon received a limited
partnership interest in the Limited Partnership. The Limited Partnership is
comprised of a general partner, Prestige I, L.L.C., a Delaware limited
liability corporation which is controlled by York Management Services, Inc.
("York"), and two limited partners, Revlon and Prestige II, L.L.C., a Delaware
limited liability corporation which is controlled by York. The general partner
controls the management and policies of the Limited Partnership.
Pursuant to the Contribution Agreement, the Company's By-Laws were
amended to require the affirmative vote of at least 85% of the directors
present at a meeting of the Board of Directors (but not at meetings of
committees thereof) where a quorum is present in order to take action and to
provide that a quorum requires that at least 85% of the directors be present
for a meeting of the Board of Directors (but not at meetings of committees
thereof). In addition, pursuant to the Contribution Agreement, two of the three
members of the Executive Committee of the Board of Directors of the Company
(the "Executive Committee") were removed as members of the Executive Committee,
and two individuals designated by the Limited Partnership were elected to the
Board of Directors of the Company and to fill the vacancies on the Executive
Committee.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) None.
(b) None.
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(c) Except as set forth in Item 4, neither of the Reporting Persons
has effected any transactions in shares of the Company's Class C Common Stock
during the past sixty (60) days.
(d) See Item 4.
(e) See Item 4.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
See Item 4.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
6. Contribution Agreement dated as of December 10, 1998 between the
Limited Partnership and Revlon.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: December 11, 1998
REVLON CONSUMER PRODUCTS CORPORATION
By: /s/ Robert K. Kretzman
-------------------------------------
Name: Robert K. Kretzman
Title: Senior Vice President and
Deputy General Counsel
MAFCO HOLDINGS INC.
By: /s/ Glenn Dickes
-------------------------------------
Name: Glenn Dickes
Title: Senior Vice President
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EXHIBIT INDEX
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Exhibit No. Document
- ----------- --------
6. Contribution Agreement dated as of December 10, 1998 between
the Limited Partnership and Revlon.
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
REVLON CONSUMER PRODUCTS CORPORATION
The name, business address, present principal occupation or
employment, and the name, principal business and address of any corporation or
other organization in which such employment is conducted, of each of the
directors and executive officers of Revlon Consumer Products Corporation
("Revlon") is set forth below. If no business address is given, the director's
or officer's address is Revlon Consumer Products Corporation, 625 Madison
Avenue, New York, New York 10022. All of the directors and executive officers
are United States citizens.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, IF OTHER THAN AS
POSITION WITH REVLON CONSUMER PRODUCTS EXECUTIVE OFFICER OF REVLON CONSUMER
NAME & BUSINESS ADDRESS CORPORATION PRODUCTS CORPORATION
- ---------------------------- ------------------------------------- ------------------------------------------
<S> <C> <C>
Ronald O. Perelman Chairman of the Board, Director Chairman of the Board and Chief Executive
35 East 62nd Street Officer of Mafco Holdings Inc.
New York, NY 10021 35 East 62nd Street
New York, NY 10021
Howard Gittis Director Vice Chairman of Mafco Holdings Inc.
35 East 62nd Street 35 East 62nd Street
New York, NY 10021 New York, NY 10021
Irwin Engelman Vice Chairman of the Board,
35 East 62nd Street Chief Administrative Officer,
New York, NY 10021 Director
Donald G. Drapkin Director Vice Chairman of Mafco Holdings Inc.
35 East 62nd Street 35 East 62nd Street
New York, NY 10021 New York, NY 10021
Edward J. Landau Director Attorney and Senior Partner at Wolf, Block,
250 Park Avenue Schorr & Solis Cohen LLP
10th Floor 250 Park Avenue
New York, NY 10177 New York, NY 10177
Jerry W. Levin Director President and Chief Executive Officer
of Sunbeam Corporation
1615 South Congress Avenue, Suite 200
Delray Beach, FL 33445
George Fellows President and Chief Executive Officer
Director
William J. Fox Senior Executive Vice President, Director
Frank J. Gehrmann Executive Vice President and
Chief Financial Officer
Wade H. Nichols III Executive Vice President and
General Counsel
D. Eric Pogue Senior Vice President
M. Katherine Dwyer Senior Vice President
</TABLE>
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SCHEDULE II
DIRECTORS AND EXECUTIVE OFFICERS
OF MAFCO HOLDINGS INC.
The name, business address, present principal occupation or
employment, and the name, principal business and address of any corporation or
other organization in which such employment is conducted, of each of the
directors and executive officers of Mafco Holdings Inc. is set forth below. If
no business address is given, the director's or officer's address is Mafco
Holdings Inc., 35 East 62nd Street, New York, New York 10021. All of the
directors and executive officers are United States citizens.
<TABLE>
<CAPTION>
POSITION WITH MAFCO PRINCIPAL OCCUPATION, IF OTHER THAN AS AN
NAME & BUSINESS ADDRESS HOLDINGS EXECUTIVE OFFICER OF MAFCO HOLDINGS
- ---------------------------- ----------------------------------- ----------------------------------------------------
<S> <C> <C>
Ronald O. Perelman Chairman of the Board and
Chief Executive Officer, Director
Donald G. Drapkin Vice Chairman, Director
Howard Gittis Vice Chairman, Director
James R. Maher President, Director
Irwin Engelman Executive Vice President Vice Chairman of the Board and
and Chief Financial Officer Chief Administrative Officer
of Revlon Consumer Products Corporation
625 Madison Avenue
New York, NY 10022
Barry F. Schwartz Executive Vice President
and General Counsel
</TABLE>
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CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") dated as of December
10, 1998 is made by and between Prestige Holdings I, L.P., a limited
partnership organized under the laws of Delaware ("Transferee") and Revlon
Consumer Products Corporation, a Delaware corporation ("Transferor").
W I T N E S S E T H:
WHEREAS, Transferor is the owner of 8,479,335 shares (the "Shares") of
Class C common stock, par value $.01 per share (the "Common Stock"), of The
Cosmetics Center, Inc. (the "Company"), representing approximately 84.6% of the
issued and outstanding capital stock of the Company; and
WHEREAS, Transferor is the owner of (i) a promissory note of the
Company dated as of April 25, 1997 in the principal amount of $13.255 million
and bearing interest at the rate of 11% per annum, and (ii) an amended and
restated promissory note of the Company dated as of September 26, 1998 in the
principal amount of $7 million and bearing interest at the rate of 9.25% per
annum, in each case, as amended as of the date hereof to, among other things,
have a term of less than one (1) year (the "Intercompany Debt "); and
WHEREAS, Transferor is the owner of certain trade payables owed by the
Company to Transferor for goods sold and delivered and services provided in the
ordinary course of business by Transferor (the "Trade Payables"); and
WHEREAS, Transferor desires to contribute to Transferee, and
Transferee desires to receive such from Transferor as a contribution, the
Shares, the Intercompany Debt and $6 million of the oldest Trade Payables
outstanding (the "Assigned Trade Payables"); Transferor will retain $3.7
million of Trade Payables (the "Retained Trade Payables"), a portion of which
will be paid or offset on or prior to the Closing (as herein defined) in
accordance with Section 4(e) and the remainder of which will be evidenced by
the Promissory Notes (as herein defined) in accordance with Section 4(b), and
the Transferor shall forgive the remainder of the Trade Payables; and
WHEREAS, in consideration of the foregoing, each of the parties to
this Agreement desires to perform its respective obligations upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter contained, the parties hereto do hereby agree as
follows:
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1. Contribution and Receipt of the Shares, the Intercompany Debt and
the Assigned Trade Payables; Closing.
(a) Subject to all of the terms and conditions of this Agreement,
Transferor shall contribute the Shares, the Intercompany Debt and the Assigned
Trade Payables to Transferee, and Transferee shall receive the Shares, the
Intercompany Debt and the Assigned Trade Payables as a contribution from
Transferor, at the Closing (as hereinafter defined). In consideration for the
contribution, Transferor shall be admitted as a limited partner of Transferee
in accordance with the provisions of the Partnership Agreement (as hereinafter
defined).
(b) The closing of the contribution and receipt of the Shares,
the Intercompany Debt and the Assigned Trade Payables (herein called the
"Closing ") shall take place upon execution and delivery of this Agreement at
the offices of Transferor at 625 Madison Avenue, New York, New York 10022, and
shall be effective at the close of business on December 10, 1998, or at such
other location, time or date as may be agreed to in writing by Transferor (such
time and date of the Closing being herein called the "Closing Date").
(c) At the Closing, Transferor shall deliver to Transferee stock
certificates representing the Shares duly endorsed (or accompanied by duly
executed stock powers), the promissory notes representing the Intercompany
Debt, and an assignment of the Assigned Trade Payables, each for transfer to
Transferee. Additionally, at the Closing, Transferor and Transferee shall each
deliver to the other the agreements and documents required of them pursuant to
Schedule I hereto.
2. Representations and Warranties of Transferor. Transferor hereby
represents and warrants to Transferee, except as set forth in the Disclosure
Schedule (as defined below), as follows:
(a) Due Incorporation. Each of Transferor and the Company is a
corporation validly existing and in good standing under the laws of the State
of Delaware. The Company is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character of the properties owned
or held under lease or license or the nature of the Company's business requires
such qualification, except where the failure to be so qualified and in good
standing shall not have a material adverse effect on the financial condition or
results of operations of the Company taken as a whole (a "Material Adverse
Effect").
(b) Due Authorization. Transferor has corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder, and the execution, delivery and performance of this Agreement by
Transferor have been duly authorized by all necessary corporate action on its
part. The Company has full corporate power and authority to own, conduct and
operate its business, assets and properties. Prior to
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Closing, the board of directors of the Company has approved the transaction
contemplated hereby pursuant to which Transferee and any "affiliate" or
"associate" of Transferee becomes an "interested" stockholder of the Company
for purposes of Section 203 of the Delaware General Corporation Law, as each
such term is defined therein.
(c) Binding Obligation. This Agreement has been duly executed and
delivered by Transferor and is the valid and binding obligation of Transferor,
enforceable against Transferor in accordance with its terms (except as such
enforcement may be limited by applicable principles of equity, and by
bankruptcy, insolvency, moratorium, receivership, conservancy, fraudulent
conveyance, liquidation and other laws affecting creditors' rights and remedies
generally).
(d) No Conflict. Except as set forth on Schedule 2(d) of the
disclosure schedule delivered by Transferor to Transferee upon the execution
and delivery of this Agreement (the "Disclosure Schedule"), the execution,
delivery and performance of this Agreement by Transferor and the consummation
by Transferor of the transactions contemplated hereby do not (i) contravene the
certificate of incorporation, bylaws or other organizational documents of
Transferor or the Company, (ii) violate, conflict with or result in a breach of
or default under any agreement, license, instrument, indenture, mortgage,
lease, judgment, decree, order or ruling to which Transferor or the Company is
a party or by which Transferor or the Company or any of their respective assets
or properties is bound, or to which the Shares are subject, or (iii) result in
or permit the creation of any lien, charge or encumbrance upon the Shares,
except, in the case of clause (ii), where such conflict, violation, breach or
default, lien, charge or encumbrance would not result in a Material Adverse
Effect on the Company. Except as set forth in Disclosure Schedule 2(d), no
consents are required in order for Transferor to enter into this Agreement or
consummate the transactions contemplated hereby, except any consent the failure
of which to secure would not result in a Material Adverse Effect on the
Company. The execution, delivery and performance of a financing agreement which
refinances all amounts owed under the Company's existing Credit Agreement with
Bank of America Business Credit, as amended to the date hereof, providing for
revolving credit secured by the Company's inventory, receivables, tangible and
intangible assets would not violate, conflict with or result in a breach or
default under any agreement, license, indenture, mortgage, lease, judgment,
order or ruling to which the Company is a party or by which the Company or any
of its assets is bound, except where such conflict, violation, breach or
defaults would not result in a Material Adverse Effect on the Company.
(e) No Violation of Law; Regulatory Approvals. The execution,
delivery and performance of this Agreement by Transferor and the consummation
by Transferor of the transactions contemplated hereby do not violate any law,
rule, regulation or governmental order or decree applicable to Transferor or
the Company, except any violations which would not have a Material Adverse
Effect on the Company. Neither Transferor nor the Company is required to file,
seek or obtain any governmental notice, filing, authorization, approval, order
or consent ("Governmental Consent") in connection with execution, delivery and
performance
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of this Agreement by Transferor, except for such Governmental Consents the
failure of which to obtain would not result in a Material Adverse Effect on the
Company.
(f) Litigation. Except as set forth on Schedule 2(f) of the
Disclosure Schedule, neither Transferor nor the Company is engaged in or a
party to, or threatened in writing with, any suit, legal action, arbitration or
other proceeding (a "Proceeding") before any court, administrative agency,
arbitration panel or other similar authority that (i) relates to or may affect
the business, assets or properties of the Company, except for Proceedings that
would not result in a Material Adverse Effect on the Company, or (ii)
challenges or seeks to prevent, delay or make illegal the transactions
contemplated by this Agreement.
(g) Shares. At the Closing, Transferor will deliver to Transferee
the Shares, free and clear of any and all liens, rights, interests,
hypothecations, violations, pledges, encumbrances, charges, agreements or
claims, and, upon delivery of the certificates for the Shares at the Closing,
Transferee will acquire valid title to the Shares, free and clear of any
security interests, hypothecations, violations, judgments or encumbrances or
"adverse claims" within the meaning of Section 8-302 of the New York Uniform
Commercial Code. The Shares are fully paid and nonassessable. The Shares are
not registered and may not be transferred except pursuant to registration or an
exemption therefrom.
(h) Capitalization of the Company. The Company's authorized
capital stock consists solely of: (i) 40,000,000 authorized shares of Class C
common stock, par value $.01 per share, of which 10,025,601 shares are issued,
outstanding, fully paid and nonassessable, 80,361 shares are reserved for
issuance under the Company's Amended and Restated 1991 Stock Option Plan (the
"1991 Plan") and 1,000,000 shares are reserved for issuance and 616,250 options
are outstanding under the Company's 1997 Stock Option Plan (the "1997 Plan");
(ii) 5,000,000 shares of Class A common stock, par value $.01 per share, none
of which is issued and outstanding; and (iii) 5,000,000 shares of Class B
common stock, par value $.01 per share, none of which is issued and
outstanding. Except as set forth on Disclosure Schedule 2(h) and except for
this Agreement, the 1991 Plan and the 1997 Plan, there are no outstanding
options, warrants or other rights to acquire, or any outstanding securities or
obligations convertible into or exchangeable for, or any voting agreements with
respect to, any shares of capital stock of the Company. The Company has no
subsidiaries.
(i) Ownership and Condition of Property. Except as set forth on
Disclosure Schedule 2(i), the Company owns or leases all material assets used
in the conduct its business as presently conducted. To Transferor's knowledge,
all of the Company's assets are in all material respects in good operating
condition and repair, ordinary wear and tear excepted.
(j) Trade Payables. At the Closing before the contribution by
Transferor to Transferee of the Assigned Trade Payables, the total amount of
the Trade Payables owed by the Company to Transferor or any of its Affiliates
shall not be less than $11.1 million.
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(k) Employee Benefit Plans and Agreements.
(i) Schedule 2(k) of the Disclosure Schedule contains a true
and complete list of, and the Transferor has delivered a complete and accurate
copy to Transferee of, each material "employee benefit plan" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") of the Company, and each material stock purchase, stock
option, severance, employment, change in control, fringe benefit, bonus,
incentive, deferred compensation and all other material employee benefit plans,
agreements, programs, policies or other arrangements of the Company, whether or
not subject to ERISA, under which any employee or former employee, or the
spouse, beneficiary or dependent of any employee or former employee, of the
Company has any present or future right to benefits or under which the Company
has any present or future liability. All such plans, agreements, programs,
policies and arrangements are hereinafter referred to as "Employee Benefit
Plans."
(ii) With respect to the Employee Benefit Plan intended to
qualify under Code ss.401(a), (1) an application for a determination letter
filed in August 1998 is pending with the Internal Revenue Service, (2) the
Company has not engaged in a transaction prohibited by Code ss.4975 or Section
406 of ERISA, and (3) Transferor has delivered to Transferee the most recent
valuation that was delivered by the third party administrator for such Employee
Benefit Plan.
(iii) Except for any failure to so maintain or to take or
fail to take action as would not result in a Material Adverse Effect on the
Company, the Employee Benefit Plans have been maintained in all material
respects in accordance with their terms, the requirements of ERISA, the Code
(where applicable), and all other applicable laws and no Employee Benefit Plan
has taken, or has failed to take, any action that could result in the
imposition of any excise tax, penalty, judgment or assessment.
(iv) The Company does not sponsor a plan subject to Title IV
of ERISA or Code ss.412, nor does the Company have a current or contingent
obligation to contribute to any multiemployer plan (as defined in Section 3(37)
of ERISA). The Company has not incurred (and no event, transaction or condition
has occurred or exists which will result in the Company incurring) any
withdrawal liability under Section 201 or 4202 of ERISA in respect of any
multiemployer plan.
(v) Except as set forth on Disclosure Schedule 2(k), the
Company has no commitment, whether formal or informal and whether legally
binding or not, to create any additional material Employee Benefit Plan or
modify any existing Employee Benefit Plan in any material respect.
(vi) There are no pending or threatened claims by or on
behalf of any Employee Benefit Plan, or by or on behalf of any individual
participants or beneficiaries
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of any such Employee Benefit Plan, alleging any breach of fiduciary duty on the
part of the Company or any of its officers, directors or employees under ERISA
or any other applicable laws, or claiming benefit payments (other than those
made in the ordinary operation of such plans), nor, to Transferor's knowledge,
is there any basis for such claim, except in the case of this Section 2(k)(vi)
any such claims as would not have a Material Adverse Effect on the Company.
(l) Environment.
(i) For purposes of this Agreement, "Hazardous Substance"
shall mean any material or substance defined or identified as a hazardous
material, hazardous waste, hazardous substance, toxic substance, pollutant or
contaminant, or which is otherwise regulated, under any Environmental Law, or
which is or contains petroleum, gasoline, diesel fuel or another petroleum
hydrocarbon product; "Environmental Laws" shall collectively mean all Federal,
state and local laws, statutes, ordinances, rules, regulations, common law
rules, orders, codes, licenses, permits, decrees, judgments, directives,
guidelines, standards or the equivalent of or by any Governmental Authority and
relating to or addressing the protection of the environment or human health
(including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et
seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C.
Section 1801 et seq.), the Resource Conservation and Recovery Act, as amended
(42 U.S.C. Section 6901 et seq.), and the regulations adopted pursuant
thereto); "Governmental Authority" shall mean the Federal government, any state
or other political subdivision thereof, exercising executive, legislative,
judicial, regulatory or administrative functions.
(ii) Except as set forth in Disclosure Schedule 2(l), to the
knowledge of Transferor (i) there has been no material treatment storage,
disposal, release or threatened release of any Hazardous Substance on or from
any of the premises of the Company in a manner which (a) has caused damage to
persons, property or resources or would result in any material liability to the
Company under any Environmental Law, or (b) is required by Environmental Law to
be investigated, cleaned up or remediated; (ii) except in accordance with
applicable Environmental Laws, during the period of time that Transferor has
owned the Shares the Company has not disposed of any Hazardous Substance and no
third party with which the Company has contracted to dispose of any Hazardous
Substance has so disposed of any such substance at any location; (iii) except
as set forth in Disclosure Schedule 2(l), there are no claims pending or
threatened by any regulatory authority or third party that the Company is in
violation of or non-compliance with any Environmental Law or that the Company
is liable to any party for property damage, personal injury or otherwise as a
result of the presence of Hazardous Substances at or from the Company's
premises or as a result of the Company's operations; and (iv) the Company is in
compliance in all material respects with all Environmental Laws and possesses
all permits required by Environmental Laws and all such permits are currently
in effect, except for any exceptions to (i), (ii), (iii) or (iv) as would not
result in a Material Adverse Effect on the Company.
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(m) Labor Matters. The Company is not a party to any collective
bargaining agreement or other contract or commitment to any labor union or
association representing any employee of the Company. During the period of time
that Transferor has owned the Shares, no such agreement has been requested of
management of the Company by, or is under discussion by management of the
Company with, any group of employees or others not covered by any such
agreement.
(n) Lease Payments. Except as set forth in Disclosure Schedule
2(n), (i) Company has paid any and all amounts due pursuant to all real
property leases under which it is lessee or sublessee, and is not otherwise in
default thereunder, and (ii) the Transferor has no knowledge of any event
(including but not limited to the execution and delivery of this Agreement)
that, with the giving of notice or lapse of time or both, would be a default
under any such lease, except in the case of (i) for any amounts in dispute and
except in the case of (ii) for any defaults that would not have a Material
Adverse Effect on the Company.
(o) Affiliate Agreements. Except as disclosed in Disclosure
Schedule 2(o), Company is not party to any agreement with, or requiring the
performance from and after the Closing Date of any obligations by or for the
benefit of, Transferor or any other Affiliate of the Transferor. For purposes
of this Agreement, "Affiliate" shall mean any person that, directly or
indirectly, controls, is controlled by or is under common control with, the
first mentioned person.
(p) Services Agreement. There are no services provided by
Transferor or any Affiliate of Transferor that are not contemplated by the
Services Agreement dated April 25, 1997 (the "Service Agreement") by and
between the Company and Transferor.
(q) Supply Agreement. The Transferor presently sells inventory to
the Company pursuant to the Supply Agreement dated April 25, 1997 (the "Supply
Agreement") by and between the Company and Transferor, as amended as provided
herein.
(r) Letters of Credit. Other than as set forth on Disclosure
Schedule 2(r), there are no letters of credit or bank guarantees presently used
by the Company in connection with its business.
(s) SEC Documents. To Transferor's knowledge, except as set forth
on Disclosure Schedule 2(s), since April 25, 1997 the Company has filed all
required forms, statements, schedules, exhibits, reports and other documents
with the Securities and Exchange Commission ("SEC") required to be filed by it
pursuant to the Federal securities laws and the SEC rules and regulations
thereunder, other than any such failure to file as would not have a Material
Adverse Effect on the Company (as such documents have since the time of their
filing been amended, the "Company SEC Documents"). To Transferor's knowledge,
as of their respective dates, the Company SEC Documents complied in all
material respects with the
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requirements of the Securities Act of 1933, as amended (the "Securities Act"),
or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the
case may be, and the rules and regulations of the SEC thereunder applicable to
such Company SEC Documents or such other forms, reports or other documents, as
of their respective dates and none of the Company SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, other
than any non-compliance, untrue statements or omissions that would not result
in a Material Adverse Effect on the Company.
(t) Employment Agreements, Consulting Agreements and Severance
Agreements. Except as set forth in Disclosure Schedule 2(t), the Company is not
a party to (i) any written employment or consulting agreements with any
employees or consultants pursuant to which the Company is obligated to pay in
excess of $100,000 after the Closing Date, or (ii) any written severance or
separation agreement with any former employee pursuant to which the Company is
obligated to pay in excess of $100,000 after the Closing Date.
(u) Intercompany Debt and Assigned Trade Payables. The Intercompany
Debt and Assigned Trade Payables have not been sold, pledged, assigned or
transferred by Transferor and as of the date hereof are free and clear of all
liens and encumbrances.
3. Representations and Warranties of Transferee. Transferee hereby
represents and warrants to Transferor as follows:
(a) Due Formation; Non-Contravention. Transferee is a limited
partnership validly existing and in good standing under the laws of the State
of Delaware.
(b) Due Authorization. Transferee has the power and authority as a
limited partnership to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance of this
Agreement by Transferee have been duly authorized by all necessary partnership
action on the part of Transferee.
(c) Binding Obligation. This Agreement has been duly executed and
delivered by Transferee and is the valid and binding obligation of Transferee,
enforceable against it in accordance with its terms (except as such enforcement
may be limited by applicable principles of equity, and by bankruptcy,
insolvency, moratorium, receivership, conservancy, fraudulent conveyance,
liquidation and other laws affecting creditors' rights and remedies generally).
(d) No Conflict. Neither the execution, delivery and performance of
this Agreement by Transferee, nor the consummation by it of the transactions
contemplated hereby (i) contravene the certificate of limited partnership or
other organizational documents of Transferee or (ii) violate, conflict with or
result in a breach of or default under any agreement,
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license, instrument, indenture, mortgage, lease, judgment, decree, order or
ruling to which Transferee is a party or by which Transferee or any of its
assets or properties is bound, except in the case of clause (ii) where such
conflict, violation, breach or default, lien, charge or encumbrance would not
adversely affect the business, assets or properties of Transferee.
(e) No Violation of Law; Regulatory Approvals. Neither the execution,
delivery and performance of this Agreement by Transferee, nor the consummation
of the transactions contemplated hereby, will violate any law, rule or
regulation applicable to Transferee which violation would adversely affect the
business, assets or properties of Transferee. Transferee is not required to
seek any Governmental Consent in connection with the execution, delivery and
performance of this Agreement, except for such Governmental Consents the
failure of which to obtain would not adversely affect the business, assets or
properties of Transferee.
(f) Litigation. Transferee is not engaged in or a party to, or
threatened with, any Proceeding before any court, administrative agency,
arbitration panel or other similar authority that relates to or may adversely
affect the business, assets or properties of Transferee, and Transferee is not
a party to, or threatened with any such Proceeding that may have the effect of
preventing, delaying, making illegal or otherwise interfering with the
transactions contemplated by this Agreement.
(g) Investment Intent. Transferee is and will be acquiring the Shares
for its own account, for investment and not with a view to the distribution
thereof within the meaning of the Securities Act. Transferee has no present
intention of selling, distributing or otherwise disposing of the Shares.
Transferee is an "accredited investor" as such term is defined in Rule 501
promulgated under the Securities Act. Transferee understands that (i) the
Shares have not been registered under the Securities Act and (ii) the Shares
must be held by Transferee indefinitely unless a subsequent disposition thereof
is registered under the Securities Act or is exempt from such registration and
agrees not to dispose of the Shares other than pursuant to such registration or
exemption. Transferee understands that there is a legend on the certificates
delivered hereunder stating that the Shares have not registered under the
Securities Act and, therefore, cannot be offered, sold or transferred unless
they are registered under the Securities Act or an exemption from such
registration is available.
(h) Access to Information. Transferee acknowledges that it and its
representatives have been permitted full and complete access to the filings of
the Company under the Securities Act and the Exchange Act, and that it and its
representatives have had a full opportunity to meet with the officers and
employees of Transferor and the Company to discuss the Company and have had
access to all relevant books, records and documents. Transferee acknowledges
that none of Transferor or any of its Affiliates or any other person has made
any representation or warranty, expressed or implied, as to the accuracy or
completeness of any information regarding the businesses of the Company or the
Shares, except as expressly set forth in this Agreement and the schedules
hereto, and none of
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Transferor or any of its Affiliates shall have or be subject to any liability
to Transferee, its representatives or any other person resulting from the
distribution to Transferee or its representatives, or their use of, any such
information, documents or materials made available to Transferee or its
representatives in any form in expectation of the transactions contemplated
hereby except as and to the extent expressly provided in this Agreement.
4. Covenants of the Parties.
(a) Partnership Agreement. Transferor shall execute and deliver at the
Closing a partnership agreement (the "Partnership Agreement") setting forth the
organization of Transferee and the rights and obligations of its partners in
the form attached hereto as Exhibit A.
(b) Promissory Notes. Transferor shall cause the Company to execute
and deliver to Transferor at the Closing two promissory notes (the "Promissory
Notes"). One Promissory Note shall be payable to Transferor in the amount of
$850,000, representing the obligation of the Company to repay to Transferor
$850,000 of the most current outstanding Retained Trade Payables due from the
Company to Transferor, which are amounts due in the ordinary course under the
Supply Agreement, in the form attached hereto as Part I to Exhibit B. The
Second Promissory Note shall be payable to Transferor in the amount of
$850,000, representing the obligation of the Company to repay to Transferor
$850,000 of the next most current outstanding Retained Trade Payables due from
the Company to Transferor, which are amounts due in the ordinary course under
the Supply Agreement, in the form attached hereto as Part II to Exhibit B.
Transferor will forgive the remainder of the Trade Payables owed by the Company
to Transferor, after giving effect to the payments and offset to be made in
accordance with Section 4(e), on or prior to the Closing. At the Closing,
Transferor will assign the Assigned Trade Payables to the Transferee.
(c) Leases.
(i) At the Closing, Transferor shall cause the Company to transfer and
assign to Transferor the real property lease with respect to the Company store
located on Fifth Avenue, New York City, and, simultaneously therewith,
Transferor, as sublessor, and the Company, as sublessee, shall enter into a
sublease for such store terminating on December 31, 1999, which sublease shall
provide that between the Closing Date and the termination date of the sublease
the Company will operate such store in the ordinary course of business and the
Company will transfer and assign to Transferor all fixtures and inventories
owned by the Company or Transferor located at such store on such termination
date.
(ii) At the Closing, Transferee shall cause the Company to (x) amend
the leases for the Company stores located in Irvington, New Jersey, Phoenix,
Arizona, and Oxford, North Carolina (the "Leases") to provide that each of the
Leases shall terminate on December 31, 1999, time being of the essence (the
"1999 Termination Date"), (y) operate
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such stores in the ordinary course of business until the 1999 Termination Date
and (z) transfer and assign to Transferor all fixtures and inventories owned by
the Company or Transferor located at such store on such 1999 Termination Date.
(iii) It is expressly understood and agreed that the Company will
retain the rights under the lease for the Company store located in Apex, North
Carolina for the balance of the lease term, together with any renewal options
or extensions thereof.
(d) Supply Agreement. The Supply Agreement shall be amended (i) to
provide that it may be terminated by Transferor (x) immediately for non-payment
by the Company of amounts due and payable with respect to goods and services
provided after the Closing Date; and (y) immediately for failure to comply with
covenants relating to wholesaling products; and (ii) to waive, solely in
connection with the consummation of the transactions contemplated by this
Agreement, the change in control provisions in Section 2.02 of the Supply
Agreement to the extent required for such provisions not to be triggered by and
on the occasion of the consummation of the such transactions.
(e) Payment of Balance of Retained Trade Payables. On or prior to the
Closing, Transferee shall cause the Company to pay to Transferor an amount
equal to $1.5 million, by certified check or wire transfer of immediately
available funds, in partial payment of the Retained Trade Payables. On or prior
to the Closing, the Transferor will offset $100,000 owed by it to the Company
against the Trade Payables. From and after the Closing, Transferee shall cause
the Company to pay to Transferor the balance of the Retained Trade Payables
(other than the Retained Trade Payables represented by the Promissory Notes) in
accordance with the payment terms thereof.
(f) Board of Directors. Transferor shall arrange at the Closing for
(i) two (2) designees of Transferee (the "Transferee Designees") to be elected
to the board of directors of the Company (the "Board"), (ii) the Transferee
Designees to be elected to fill two of the seats on the Executive Committee of
the Board, and (iii) the amendment of the by-laws of the Company to provide
that no action of the Board, other than the filling of vacancies on the Board
or its Executive Committee, may be taken without the affirmative vote of 85% of
the full Board.
(g) Non-Competition. Transferor hereby agrees that for three (3) years
after the Closing Date, Transferor will not own or operate a retail outlet
store in the United States that sells cosmetics, fragrances or health and
beauty products. Notwithstanding the foregoing, Transferor may operate (i) full
priced "flagship" stores operating under the "Revlon" name or any other
trademarks or tradenames used by Transferor in its business, (ii) employee
stores located on or near Transferor's premises, (iii) retail stores acquired
through the acquisition of an entity, provided that the purpose of such
acquisition is not to acquire retail stores and that no more than 25% of such
acquired entity's gross sales are derived from retail sales of cosmetics,
fragrances, and/or health and beauty products, (iv) "tent" and warehouse sales
having a duration
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of ten (10) days or less, and (v) stores located in or adjacent to hair, nail
and/or beauty salons owned or operated by Transferor which are incidental to
the business of the salon.
5. Further Agreements and Assurances.
(a) Further Assurances. Transferor and Transferee shall execute and
deliver any and all documents or instruments reasonably necessary or desirable
to effectuate the transactions contemplated by this Agreement or any of the
agreements executed and delivered in connection herewith. Without limitation of
the foregoing, (i) Transferor shall use commercially reasonable efforts to
assist Transferee in discussions with any landlords that are party to lease
agreements with the Company that may be necessary or advisable as a result of
the transactions contemplated by this Agreement; provided, however, that
Transferor does not hereby make any covenant or undertaking that any consents
that may be required will be secured and provided further that Transferor shall
not be required to take any actions that would obligate Transferor to (x) incur
any third party costs or expenses or (y) commence or join any litigation or
similar proceeding; and (ii) after the Closing, Transferee shall and shall
cause the Company to provide Transferor and its agents with access during
normal business hours to the Company's Columbia, Maryland facility, and to any
other property of the Company as is reasonably necessary, in order for
Transferor to remove Transferor's routing equipment located on the Company's
property. Transferor will be responsible for any actual damage to the Company's
property that occurs as a direct result of such removal of Transferor's
equipment by Transferor and its agents.
(b) Post-Closing Access by Transferor and Transferee. Transferee shall
and shall cause the Company to cooperate with Transferor to make available to
Transferor financial, tax and other information (including reasonable access to
books and records of the Company) for periods up to and including the Closing
Date, reasonably required by Transferor in connection with any audit or other
investigation by any taxing authority or for tax compliance or any required
reports or submissions to governmental bodies or judicial authorities with
respect to the Company, or its business and operations or for the purpose of
defending third party claims under Section 7(c) hereof. Transferor shall
cooperate with Transferee and the Company to make available to Transferee and
the Company financial, tax and other information for periods up to and
including the Closing Date, not delivered to the Company or Transferee on the
Closing Date, reasonably required by Transferee and the Company in connection
with any audit or other investigation by any taxing authority or for tax
compliance or any required reports or submissions to governmental bodies or
judicial authorities with respect to the Company, or for the purpose of
defending third party claims under Section 7(c) hereof.
(c) Post-Closing Cooperation. Transferor shall use commercially
reasonable efforts to assist Transferee in the transition to its own service
providers of services provided by Transferor to the Company pursuant to the
Services Agreement prior to the Closing, provided that in no event shall
Transferor be required to perform any such services
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for the Company post-Closing. The Services Agreement shall be terminated as of
the Closing Date.
(d) Directors and Officers. Transferor will indemnify the Company for
any actual losses arising out of matters that occurred up to and including the
Closing Date if the Company is required after the Closing Date pursuant to and
subject to the terms and conditions of Article X of its By-Laws and any
applicable Delaware laws to indemnify any of Harvey Rosenthal, David Dinkins,
Jerry W. Levin, William J. Fox, Donald Drapkin, George Fellows, Richard
Halperin, Wade H. Nichols or Steven Isko by reason of the fact that any such
person was a director or officer of the Company up to and including the Closing
Date. Transferor may secure at its own cost and expense a "runoff" insurance
policy for the Company providing directors and officers liability coverage for
the matters, individuals and periods set forth in the preceding sentence (the
"Runoff Policy"). Transferee acknowledges that prior to Transferor's ownership
of the Company certain insurance policies which included coverage for directors
and officers were purchased by the Company (the "Predecessor Policies").
Transferee agrees that it shall cause the Company to grant Transferor the
authority to file claims with the insurers under the Predecessor Policies and
the Runoff Policy and pursue the benefits of such coverage to the extent that
such Predecessor Policies and the Runoff Policy provide coverage for directors
and officers liability claims for which Transferor has agreed to indemnify the
Company pursuant to this Section 5(d). Transferee agrees that it shall cause
the Company to assign to Transferor all benefits of the insurance under the
Predecessor Policies and the Runoff Policy to the extent such benefits are
actually received for the directors and officers liability claims for which
Transferor has agreed to indemnify the Company pursuant to this Section 5(d).
Transferee agrees to aid and to cause the Company to aid and support Transferor
in pursuit of the insurance under the Predecessor Policies and the Runoff
Policy which shall include, but not be limited to, supplying records,
personnel, and, if necessary, filing lawsuits or claims against insurers to
collect the insurance under the Predecessor Policies and the Runoff Policy and
Transferor shall reimburse Company and Transferee for its third party costs
incurred in connection with such assistance to Transferor. Transferor shall be
entitled to control the proceedings for any such lawsuits or claims. The
indemnification provided under this Section 5(d) shall survive indefinitely.
(e) Publicity. No press releases or filings with respect to this
Agreement and the transactions contemplated hereby shall be made by either
party without the prior approval of the other party (which approval shall not
be unreasonably withheld) except as required by law or the rules of any stock
exchange.
(f) Confidentiality. The Confidentiality Agreement dated September 25,
1998, between the Company and York Management Services, Inc. shall remain in
full force and effect.
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(g) Use of Revlon Name. From and after the Closing date, Transferee
shall cause the Company to cease to use the "Revlon" name as a tradename in any
of its stores, and shall have no right, title or interest in the "Revlon" name
following the Closing.
6. Survival of Representations and Warranties. With the exception of
the representations and warranties set forth in Sections 2(c), 2(g) and 2(u)
hereof and Section 8, which shall survive the Closing forever and the
representations set forth in Section 3 hereof, which shall survive for a period
of six (6) months from the Closing Date, the other representations and
warranties set forth in this Agreement (the "Non-Surviving Reps and
Warranties") shall not survive the Closing Date and after the Closing Date no
party shall have any right to make a claim for indemnification or otherwise
with respect to the breach or inaccuracy of any Non-Surviving Reps and
Warranties.
7. Indemnification.
(a) Indemnification by Transferor. Transferor hereby agrees to
indemnify, defend, save and hold Transferee and its Affiliates and their
respective directors, officers, employees, representatives and agents and each
of the successors and assigns of any of the foregoing (the "Transferee Group")
harmless from and against any and all damage, liability, loss, expense,
assessment, judgment or deficiency of any nature whatsoever (including, without
limitation, attorneys' fees and other costs and expenses incident to any
Proceeding) (together, "losses") incurred or sustained by any member of the
Transferee Group which shall arise out of or result from (1) any breach or
inaccuracy of any representation or warranty set forth in Sections 2(c), 2(g)
and 2(u), and (2) the nonfulfillment or breach of any agreement, obligation or
covenant of Transferor contained herein, in each case after offset by any
related insurance proceeds directly related to the matter for which
indemnification is claimed (net of increased insurance premiums and charges
related directly to such losses) to which any member of the Transferee Group is
entitled under its insurance policies (it being understood that no member of
the Transferee Group has any obligation hereunder to carry insurance coverage
for any particular or general group of risks), or other third party recovery
received by any member of the Transferee Group related to the matter for which
indemnification is claimed (it being understood that no member of the
Transferee Group has any obligation hereunder to institute a Proceeding or take
any other action detrimental to any member of Transferee Group to seek such
recovery).
(b) Indemnification by Transferee. Transferee hereby agrees to
indemnify, defend, save and hold harmless Transferor and its Affiliates and
their respective directors, officers, employees, representatives and agents and
each of the successors and assigns of any of the foregoing (the "Transferor
Group") from and against any and all losses incurred or sustained by any member
of the Transferor Group which shall arise out of or result from (1) any breach
or inaccuracy of any representation or warranty set forth in Section 3 hereof
and (2) the nonfulfillment or breach of any agreement, obligation or covenant
of Transferee under this Agreement, in each case after offset by any related
insurance proceeds directly related to
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the matter for which indemnification is claimed (net of increased insurance
premiums and charges related directly to such losses) to which any member of
the Transferor Group is entitled under its insurance policies (it being
understood that no member of the Transferor Group has any obligation hereunder
to carry insurance coverage for any particular or general group of risks), or
other third party recovery received by any member of the Transferor Group
related to the matter for which indemnification is claimed (it being understood
that no member of the Transferor Group has any obligation hereunder to
institute a Proceeding or to take any other action detrimental to any member of
the Transferor Group to seek such recovery).
(c) Tax Indemnification.
(i) Transferor hereby agrees to indemnify, defend, save and hold
harmless the Transferee Group from and against any and all Federal and state
and local (but only to the extent the Company filed state and local
consolidated or combined income or franchise Tax returns with a group in which
Transferor was a member or would have been included in a state and local
consolidated or combined income or franchise Tax return in which Transferor was
a member if the Shares had been owned by Transferor for all periods prior to
the Closing Date) income Tax liabilities relating to periods ending on or prior
to the Closing Date, including, without limitation, Taxes owed by any other
member of a consolidated group in which the Company and Transferor joined
pursuant to Treasury Regulation ss.1.1502-6 or as a transferee or successor, by
contract or otherwise. For purposes of this Agreement "Tax" or "Taxes" mean all
Federal, state, local or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customer duties, franchise, profits, withholding, social
security, unemployment, disability, real property, personal property,
intangible property, sales, use or transfer, registration, value added,
alternative or add-on minimum, estimated or other taxes of any kind whatsoever,
including any interest, penalty or additions thereto, whether disputed or not.
A claim for indemnification may be made under this Section 7(c) at any time
during the applicable Tax statutory period of limitations with respect to such
Tax claim.
(ii) Tax Matters. The following provisions shall govern the allocation
of responsibility as between Transferee and Transferor for certain tax matters
following the Closing Date:
(A) Filing of Tax Returns. Transferor shall prepare or cause to
be prepared and file or cause to be filed all Tax returns for the Company
for all Tax periods ending on or prior to the Closing Date which are
required to be filed before or after the Closing Date. Transferee shall
prepare and file or cause to be prepared and filed any Tax returns of the
Company for tax periods which begin before the Closing Date and end after
the Closing Date. Transferor shall pay all Federal and state and local (but
only to the extent the Company filed state and local consolidated or
combined income or franchise Tax returns with a group in which Transferor
was a member) Taxes shown to be due on such income Tax returns.
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(B) Cooperation on Tax Matters. Transferee and Transferor shall
cooperate fully, as and to the extent reasonably requested by the other
party, in connection with the filing of Tax Returns pursuant to this
Section and any audit, litigation or other proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon the other
party's reasonable request) the provision of records and information which
are reasonably relevant to any such audit, litigation or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
Transferee and Transferor agree (x) to retain, and cause the Company to
retain, all books and records with respect to Tax matters pertinent to the
Company relating to any taxable period beginning before the Closing Date
until the expiration of the statute of limitations (and, to the extent
notified by Transferee or Transferor, any extensions thereof) of the
respective taxable periods, and to abide, and to cause the Company to
abide, by all record retention agreements entered into with any taxing
authority, and (y) to give the other party reasonable written notice prior
to transferring, destroying or discarding any such books and records and,
if the other party so reasonably requests, Transferee and Transferor, as
the case may be, shall allow, and Transferee shall cause the Company to
allow, the other party to take possession of such books and records.
Transferee and Transferor further agree, upon request, to use their
commercially reasonable efforts to obtain any certificate or other document
from any governmental authority or any person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including, but
not limited to, with respect to the transactions contemplated hereby).
Transferee and Transferor further agree, upon request, to provide the other
party with all information that either party may be required to report
pursuant to Code ss.6043 and all Treasury Department Regulations
promulgated thereunder.
(C) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement (including any New
York State Real Estate Transfer Tax, New York City Transfer Tax and any
similar tax imposed in other states or subdivisions), shall be paid by
Transferor when due, and Transferor will, at its own expense, file all
necessary Tax returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp registration and other Taxes and
fees, and, if required by applicable law, Transferee will, and will cause
its Affiliates to, join in the execution of any such Tax returns and other
documentation.
(D) Tax Sharing Agreements. Notwithstanding the provisions of any
tax sharing agreements, tax powers of attorney or similar agreements in
effect on the date hereof with respect to or involving the Company and
Transferor and its Affiliates relating to Taxes (the "Tax Agreements"),
Transferor shall be responsible for, and shall indemnify the Company for,
any Taxes, as and to the extent provided in Section
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7(c) hereof, and Company shall have no liability with respect to such Taxes
under the Tax Agreements.
(E) Audits. Transferor will conduct any Federal, state or local
(but only to the extent the Company filed state and local consolidated or
combined income or franchise Tax returns with a group in which Transferor
was a member or would have been included in a state and local consolidated
or combined income or franchise Tax return in which Transferor was a member
if the Shares had been owned by Transferor for all periods prior to the
Closing Date) income Tax audits. Transferor agrees not to settle any
Federal income or state or local (but only to the extent the Company filed
state and local consolidated or combined income or franchise Tax returns
with a group in which Transferor was a member or would have been included
in a state and local consolidated or combined income or franchise Tax
return in which Transferor was a member if the Shares had been owned by
Transferor for all periods prior to the Closing Date) income Tax audit in a
manner that would adversely affect the Company after the Closing Date
unless such settlement would be reasonable in the case of a person that
owned the Company both before and after the Closing Date, and Transferor
will advise and consult with Transferee prior to such settlement.
Transferee shall have the sole right to represent the Company in any Tax
audit or administrative or court proceeding for all other taxable periods
and to employ counsel of its choice at its own expense.
(d) ERISA Indemnification. (i) Transferor hereby agrees to indemnify,
defend, save and hold harmless the Transferee Group from and against any and
all losses, including, without limitation, withdrawal or underfunding
liabilities, arising out of any employee benefit plan (other than the Employee
Benefit Plans) maintained or sponsored by any entity affiliated with the
Company prior to the Closing under Section 414(b), (c), (m) or (o) of the Code,
to the extent such losses arise solely as a legal result of such affiliation. A
claim for indemnification may be made under this Section 7(d) at any time
during the applicable ERISA statutory period of limitations with respect to
such claim.
(ii) With respect to the Employee Benefit Plan intended to qualify
under Section 401(a) of the Code, immediately following the Closing, Transferee
agrees to file a Power of Attorney Form 2848 with the Internal Revenue Service
designated Steven H. Sholk as power of attorney in place of Kenneth J. Raphael,
E. Maureen Olson and Therese Michaels-Boyle. Transferee agrees to indemnify the
Company, Transferor, Kenneth J. Raphael, E. Maureen Olson and Therese
Michaels-Boyle for any liability arising out of its failure to comply with this
Section 7(d)(ii).
(e) Third-Party Claims.
(i) Promptly after receipt by an indemnified party under Section
7(a), (b), (c) or (d) hereof of notice of any claim or Proceeding for which
it may seek indemnification hereunder, such indemnified party shall, if a
claim is to be made
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against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such claim or Proceeding, but the
failure to notify the indemnifying party will not relieve the indemnifying
party of any liability that it may have to any indemnified party, except to
the extent that the indemnifying party demonstrates that the defense of
such claim or Proceeding is prejudiced by the indemnifying party's failure
to receive such notice.
(ii) If an indemnified party gives notice to the indemnifying party of
the commencement of such claim or Proceeding pursuant to Section 7(e)(i),
the indemnifying party shall be entitled to participate in such claim or
Proceeding, and, to the extent that it wishes (unless the indemnifying
party is also a party to such claim or Proceeding and the indemnified party
determines in good faith that joint representation would result in a
conflict of interest), to assume the control of the investigation and
defense of such claim or Proceeding with counsel reasonably satisfactory to
the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or
Proceeding, the indemnifying party shall not, as long as it diligently
conducts such defense, be liable to the indemnified party under this
Section 7 for any fees of other counsel or any other expenses with respect
to the defense of such claim or Proceeding. If the indemnifying party
assumes the defense of a claim or Proceeding, (1) no compromise or
settlement of such claim or Proceeding may be effected by the indemnifying
party without the indemnified party's consent unless the sole relief
provided is monetary damages that are paid in full by the indemnifying
party; and (2) the indemnifying party shall have no liability with respect
to any compromise or settlement of such claim or Proceeding effected
without its consent.
(iii) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
claim or Proceeding may adversely affect it or its Affiliates other than as
a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may, by notice
to the indemnifying party, assume the exclusive right to defend,
compromise, or settle such claim or Proceeding, but the indemnifying party
shall not pay defense costs and shall not be bound by or liable for any
determination of a claim or Proceeding so defended or any compromise or
settlement thereof.
(f) Certain Limitations. The indemnification provided for in this
Section 7 shall be the sole and exclusive remedy for damages available to any
party hereto for any breach or alleged breach of any representation, warranty,
covenant or agreement in this Agreement or given pursuant hereto.
Notwithstanding anything to the contrary contained herein, no indemnification
shall be provided under this Section 7 for lost profits or other special,
indirect, incidental, punitive or consequential damages of any kind or nature
whatsoever.
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8. Finder's Fees; Brokers. Each of Transferor and Transferee
represents and warrants to the other that, with the exception of Financo, Inc.
(whose fees shall be paid by Transferor), there are no claims (or any basis for
any claims) for brokerage commissions, finder's fees or like payments in
connection with this Agreement or the transactions contemplated hereby
resulting from any action taken by it or on its behalf. Transferor shall
indemnify and hold Transferee harmless and Transferee shall indemnify and hold
Transferor harmless with respect to the representations and warranties set
forth in this Section 8.
9. Waiver; Requirements of Writing. This Agreement cannot be changed
or any performance, term or condition waived in whole or in part except by a
writing signed by the party against which enforcement of the change or waiver
is sought. Any term or condition of this Agreement may be waived at any time by
the party hereto entitled to the benefit thereof and any such term or condition
may be modified at any time by an agreement in writing executed by the party or
parties hereto affected by such term or condition.
10. Expenses. Each of the parties hereto shall pay all the costs
incurred by it incident to the preparation, execution and delivery of this
Agreement and, except to the extent otherwise provided in this Agreement, the
performance of its obligations hereunder.
11. No Assignment. This Agreement shall be binding upon, and inure to
the benefit of, the parties hereto and their respective successors and
permitted assigns, but may not be assigned by either party without the prior
written consent of the other party.
12. Miscellaneous.
(a) Notices. Any notice, request, consent, waiver or other
communication required or permitted hereunder shall be effective only if it is
in writing and personally delivered or sent by certified or registered mail,
postage prepaid, reputable overnight courier (such as Federal Express) or
facsimile transmissions (with electronic confirmation) addressed or transmitted
as follows:
If to Transferor:
Revlon Consumer Products Corporation
625 Madison Avenue
New York, New York 10022
Attn: Senior Vice President and Deputy General Counsel
Fax No.: (212) 527-5693
with a copy to:
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
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New York, New York 10022
Attn: Thomas E. Constance, Esq.
Fax No.: (212) 715-8000
If to Transferee:
Prestige Holdings I, L.P.
c/o York Management Services, Inc.
764 Easton Avenue
Suite #8
Somerset, New Jersey 08873
Attn: Chairman
Fax No.: (732) 296-6606
with a copy to:
Gibbons, Del Deo, Dolan, Griffinger & Vecchione
One Riverfront Plaza
Newark, New Jersey 07102-5497
Attn: Frank B. Reilly, Esq.
Fax No.: (973) 639-6248
or such other person or address (or Fax No.) as the addressee may have
specified in a notice duly given to the sender as provided herein. Such notice
or communication shall be deemed to have been given as of the date so
personally delivered or mailed.
(b) Integration. This Agreement (including the Schedules and Exhibits
attached hereto) constitutes the entire agreement and understanding of the
parties relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings, whether oral or written,
relating to the subject matter hereof.
(c) Waiver. No delay or failure on the part of any party in exercising
any rights hereunder, and no partial or single exercise thereof, will
constitute a waiver of such rights or of any other rights hereunder.
(d) No Third-Party Beneficiaries. Nothing in this Agreement will be
construed as giving any person, firm, corporation or other entity, other than
the parties hereto and their successors and permitted assigns, any right,
remedy or claim under or in respect of this Agreement or any provision hereof.
(e) Applicable Law. This Agreement will be construed and interpreted
in accordance with and governed by the laws of the State of New York, without
giving effect to the conflict of laws principles thereof.
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(f) Headings; Knowledge. The headings in this Agreement are included
for convenience of reference only and shall not in any way affect the meaning
or interpretation of this Agreement. Any reference in this Agreement to the
"knowledge" of Transferor means the actual knowledge on the date hereof of
Robert K. Kretzman, Esq., Eli Shahmoon, Esq., Beverly O'Toole, Esq., Michael
Goodman and Steven Isko, Esq.
(g) Severability. If any term, provision, covenant or condition of
this Agreement or part thereof, or the application thereof to any person, place
or circumstance, shall be held to be invalid, unenforceable or void by a court
of competent jurisdiction, the remainder of this Agreement and such term,
provision, covenant or condition shall remain in full force and effect, and any
such invalid, unenforceable or void term, provision, covenant or condition
shall be deemed, without further action on the part of the parties hereto,
modified, amended and limited, and the court shall have the power to modify,
amend and limit such term, provision, covenant or condition to the extent
necessary to render the same and the remainder of this Agreement valid,
enforceable and lawful.
(h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
(i) Publicity. Neither Transferor nor Transferee shall make or issue,
or cause to be made or issued, any announcement or written statement concerning
this Agreement, or the transactions contemplated hereby or thereby for
dissemination to the press or general public without the prior written consent
of the other except for any announcement or written statement which is required
to be made by law or the regulations of any governmental entity or any stock
exchange or national market (except that the party required to make such
announcement shall consult with the other party concerning the timing and
content of such announcement before such announcement is made).
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IN WITNESS WHEREOF, the parties hereto have executed, or caused to be
executed by their duly authorized officers, this Agreement as of the date first
above written.
PRESTIGE HOLDINGS I, L.P.
By: Prestige I, L.L.C., its General Partner
By:
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Name:
Title:
REVLON CONSUMER PRODUCTS
CORPORATION
By:
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Name:
Title:
