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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended June 30, 1996.
Commission file number 33-87280
RENAISSANCE COSMETICS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 06-1396287
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
955 MASSACHUSETTS AVENUE
CAMBRIDGE, MASSACHUSETTS 02139
(Address of principal executive offices) (Zip Code)
(617) 497-5584
(Registrant's telephone number, including area code)
Indicate by check mark whether the issuer (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
As of August 12, 1996, there were outstanding 721,168
shares of the registrant's common stock, $.01 par
value per share.
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<PAGE>
INTRODUCTION
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The purpose of this filing is to correct certain information
regarding the net loss incurred by MEM Company, Inc. for the year ended December
31, 1995, as described in "Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations."
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SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
Certain statements under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and elsewhere in
this Form 10-Q, constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements are
typically identified by their inclusion of phrases such as "the Company
anticipates," "the Company believes" and other phrases of similar meaning. Such
forward-looking statements involve known and unknown risks, uncertainties, and
other factors that may cause the actual results, performance or achievements of
the Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others: general economic and business conditions;
competition; development and operating costs; advertising and promotional
efforts; brand awareness; acceptance of new product offerings; changes in
business strategy or development plans; quality of management; availability,
terms, and development of capital; and other factors referenced in this Form
10-Q.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This discussion and analysis relates to the results of operations of
Renaissance Cosmetics, Inc. (the "Company") and its major operating divisions,
Dana (the Company's domestic "Fragrance" business), Cosmar (the Company's
domestic "Cosmetics" business) and International (the Company's "International"
business) resulting from the following acquisitions consummated by the Company
(collectively, the "Acquisitions"), each of which acquisitions is discussed in
greater detail in Item 1 of the Company's Form 10-K for the year ended March 31,
1996 under the caption "Acquisitions."
1. The Houbigant Acquisition (July and August 1994), in which
the Company entered into various license agreements pursuant to which it
obtained certain exclusive rights to manufacture and distribute Chantilly,
Lutuce, Alyssa Ashley, Raffinee, Demi-Jour, Parfums Parquet French Vanilla, and
other mass market fragrances formerly marketed by Houbigant, Inc. (the
"Houbigant Fragrances").
2. The Cosmar Acquisition (August 1994), in which the Company
acquired its artificial fingernail products and related fingernail care
accessories business.
3. The Dana Acquisition (December 1994), in which the Company
acquired a group of companies engaged in the manufacturing of Tabu, Ambush,
Canoe, Canoe Sport and certain other mass-market fragrance and fragrance
products.
4. The ACB Acquisition (December 1994), in which the Company
acquired the rights to manufacture and market the Houbigant Fragrances in Canada
and which, when combined with the Houbigant Acquisition, gave the Company the
worldwide rights to manufacture and market the Houbigant Fragrances.
OPERATIONS FOR THE PERIOD APRIL 1, 1996 THROUGH
JUNE 30, 1996, AND THE PERIOD APRIL 1, 1995
THROUGH JUNE 30, 1995
NET SALES. The Company's net sales were (in 000's, except %'s):
<TABLE>
<CAPTION>
1996 1995
DIVISION NET SALES % OF TOTAL NET SALES % OF TOTAL
- ---------------------- ------- ------ ------- ------
<S> <C> <C> <C> <C>
Fragrance $10,963 35.7% $12,275 46.1%
Cosmetic 11,751 38.3% 10,233 38.4%
International 7,974 26.0% 4,127 15.5%
------- ------ ------- ------
$30,688 100.0% $26,635 100.0%
</TABLE>
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Total Company sales increased 15.2% or $4,053, from $26,635 to
$30,688. Fragrance sales decreased 10.7% from $12,275 to $10,963 due in large
part to lower than expected sales resulting from the basic Christmas build
programs (sales of basic stock to retailers in addition to Christmas gift sets)
in June 1996. Management attributes this decline to a corresponding significant
increase (compared to last year) in commitments from retailers for the Company's
Christmas gift sets which will begin shipping in August. Cosmetic sales
increased by 14.8% from $10,233 to $11,751. Contributing to this increase are
current year sales of new products such as Ultra-Gel and Nail Fetish which were
launched subsequent to last year's period, and continued strong sales of the
Company's existing products. International sales increased 93.2% from $4,127 to
$7,974 due to the inclusion of sales of Dana's Brazil division which was
acquired during December 1995, and from a 5.1% increase in other International
sales.
GROSS PROFIT. The Company's gross profits were (in 000's, except
%'s):
<TABLE>
<CAPTION>
1996 1995
DIVISION GROSS PROFIT % OF NET SALES GROSS PROFIT % OF NET SALES
- ---------------------- ------- ------ ------- ------
<S> <C> <C> <C> <C>
Fragrance $ 7,512 68.5% $ 8,393 68.4%
Cosmetic 7,011 59.7% 6,464 63.2%
International 4,659 58.4% 2,347 56.9%
------- ------ ------- ------
$19,182 62.5% $17,204 64.6%
</TABLE>
Gross profit margin in the Fragrance businesses remained relatively
stable at 68.5% compared with 68.4%. The decrease in gross profit margin in the
Cosmetic business to 59.7% from 63.2% is the result of lower sales of
higher-margin Pro-Ten Nail Lacquer (launched during the first quarter of 1995)
and an increase in lower-margin promotional sales on the Company's base products
done in conjunction with new product launches. The gross profit margin increase
in the International division to 58.4% from 56.9% is attributable to higher
sales and an increase in the proportion of direct international sales (versus
exports) to total international sales.
SELLING EXPENSE. The Company's selling expenses in the first quarters
of fiscal 1996 and fiscal 1995 were $11,332,000 (36.9% of net sales) and
$9,166,000 (34.4% of net sales), respectively. The increase in selling expenses
as a percentage of sales is principally attributable to increased advertising
and promotional spending relating to the Company's strategy of reinvigoration of
existing brand equities and the introduction of complementary new products.
GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative
expenses in the first quarter of fiscal 1996 and fiscal 1995 were $5,800,000
(18.9% of net sales) and $3,977,000 (14.9% of net sales), respectively. The
increase in general and administrative expenses is attributable to higher legal,
audit and other professional fees and to the addition of key personnel by the
Company to both its corporate and operating divisions in anticipation of future
operating needs.
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AMORTIZATION OF INTANGIBLES AND OTHER ASSETS. Amortization of
intangible and other assets was $1,368,000 (4.5% of net sales) and $1,189,000
(4.5% of net sales) for the first quarter of fiscal 1996 and fiscal 1995,
respectively.
OPERATING INCOME. Operating income for the first quarters of fiscal
1996 and 1995 was $682,000 (2.2% of net sales) and $2,872,000 (10.8% of net
sales), respectively. Management believes an additional measurement; earnings
before interest, taxes, depreciation and amortization ("EBITDA") is useful and
meaningful to an understanding of the operating performance of the Company.
However, EBITDA should not be considered by the reader as an alternative to net
income (loss) as an indicator of the Company's operating performance or to cash
flows as a measurement of liquidity. EBITDA is detailed in the table below:
(in 000's) 1996 1995
------ ------
Operating Income $ 682 $2,872
Add Amortization 1,368 1,189
Add Depreciation 869 525
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EBITDA $2,919 $4,586
EBITDA % of Net sales 9.5% 17.2%
EBITDA declined $1,667 in the first quarter of fiscal 1996 compared
to the first quarter of fiscal 1995 from $4,586 to $2,919 as a result of (i)
lower EBITDA at the Company's Dana division in fiscal 1996 compared to fiscal
1995 due primarily to lower than expected sales resulting from the basic
Christmas build program, which management believes is due to a corresponding
significant increase in commitments from retailers for the Company's Christmas
gift sets which begin shipping in August, and (ii) an increase in general and
administrative expenses in fiscal 1996 compared to fiscal 1995 due to higher
legal, audit and professional fees and from the addition of key personnel at the
Company's corporate and operating divisions in anticipation of future operating
needs.
INTEREST EXPENSE. The Company's total interest expense for the first
quarters of fiscal 1996 and 1995 was $5,201,000 and $4,434,000, respectively;
while cash interest for the periods was $4,152,000 and $3,571,000, respectively.
Interest expense consists of:
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CASH INTEREST PAID OR ACCRUED (IN 000'S) 1996 1995
- --------------------------------------- ------ ------
Interest on Senior Notes $2,234 $2,234
Interest on Sellers Notes (Payable in 2002) 108 100
Interest on Credit Facility 1,791 1,228
Other Interest 19 9
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Total Cash Interest Expense $4,152 $3,571
NON-CASH INTEREST EXPENSES
- --------------------------
Accretion of Senior Notes and Seller Notes $ 81 $ 62
Amortization of Deferred Financing Costs 726 546
Accretion of Interest on Obligations for
Minimum Royalty Payment 242 255
------ ------
Total Non-Cash Interest Expenses $1,049 $ 863
Total Interest Expenses $5,201 $4,434
INCOME TAX (BENEFIT)/EXPENSE
Income tax (benefit)/expense were ($155,500) and $121,429 for the
first quarter of fiscal 1996 and fiscal 1995, respectively. The effective tax
rates differ from the United States federal income tax rate of 35% due to state
and foreign income taxes and limitations on utilization of federal income tax
benefits.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW. Net cash used by the Company in operating activities for
the three months ended June 30, 1996 was $13,305,755, consisting primarily of a
Net Loss of $4,193,058, less the impact of non-cash items impacting Net Loss of
$3,336,043; an increase in operating assets of inventories and prepaid expenses
and other assets of $2,346,723 and $7,744,857, respectively, and a decrease in
accounts payable and accrued expenses of $5,849,519 and $1,529,876,
respectively, less the impact of decrease in accounts receivable of $5,767,689.
Net cash used in investing activities was $696,649, consisting
primarily of capital expenditures. Net cash provided by financing activities was
$20,143,645, consisting primarily of net proceeds from the Company's credit
facility (the "Existing Credit Facility") ($2,000,000) and the issuance of
Series A Preferred Stock ($18,955,000). The net increase in cash and cash
equivalents was $6,141,241. As of June 30, 1996, the Company had outstanding
institutional indebtedness of $126.4 million including $59.0 million under its
Existing Credit Facility, $29.0 million of which is related to the revolving
credit portion. On September 8, 1995, the revolving credit portion of the
Company's Existing Credit Facility was amended to increase the Company's
availability to $30.0 million from $20.0 million. Due to the nature of the
fragrance/cosmetics industry, both the Company's need for working capital and
its income stream are seasonal. The most significant
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liquidity requirements occur prior to the sales surge in connection with the
production of inventory and shipment to customers in advance of the year-end
holiday sales season and other events such as new launches.
On May 29, 1996, the Company entered into a Securities Purchase
Agreement with a Fund, under which the Company issued $20.0 million aggregate
value of Series A Senior Exchangeable Redeemable Preferred Stock (Series A
Preferred). If the Series A Preferred remains outstanding on or after August 31,
1998, it will be exchangeable, at the option of the Company, into an equal
amount of Senior Notes. The Series A Preferred has a dividend of 12% per annum,
payable quarterly in cash or additional preferred stock at the option of the
Company. The Holders of Series A Preferred may exercise an option to purchase
4.6% of the fully diluted outstanding shares of Common Stock of the Company for
$5.0 million.
In addition to the $20.0 million Series A Preferred, on June 14,
1996, the financial institution with which the Company has its Existing Credit
Facility agreed to increase its availability under the revolving credit facility
from $30.0 million to $40.0 million.
The Existing Credit Facility matures in December 1996. The Company is
seeking to secure a new credit facility (the "New Credit Facility") in order to
refinance the Existing Credit Facility which matures in December 1996 and to
provide capital for acquisitions and general corporate purposes. Although the
Company has not received a commitment letter from any financial institution or
entered into a binding agreement with respect to the New Credit Facility as of
the date of this report, the Company has received proposals from and commenced
discussions with prospective lenders. The Company is seeking to obtain a New
Credit Facility with approximately $100 million in maximum available borrowings.
However, the Company has no binding commitment from any financial institution,
and accordingly, there can be no assurance that such additional financing
alternatives will be available to the Company. If the Company is unable to
obtain the financing, it may be required to postpone and/or change significant
elements of its business strategy. In addition, although management believes
that the Company has made significant progress in improving sales and operating
efficiency, there can be no assurance that the Company's future performance will
not be adversely affected by economic, financial, and business factors not
subject to its control.
Proposed Series B Preferred Stock Financing. The Company recently
entered into a securities purchase agreement (the "Securities Purchase
Agreement") with certain investors pursuant to which the Company will issue to
those investors up to 80,000 Units, each of which consists of one share of the
Company's 14.0% Senior Redeemable Preferred Stock, Series B, par value $0.01 per
share (the "Series B Preferred Stock"), and 2.693 Warrants (the "Warrants") to
purchase 2.693 shares of the Company's Common Stock. Annual dividends of $140
per share on the Series B Preferred Stock will be cumulative and payable
quarterly in arrears on February 15, May 15, August 15 and November 15 of each
year, commencing November 15, 1996. Dividends may, at the option of the Company,
be paid in cash or by issuing additional shares of Series B Preferred Stock with
an aggregate liquidation preference equal to the amount of such dividends
through August 31, 2002, and in cash thereafter; provided that in the event that
the Company's existing Senior Notes issued pursuant
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to the Company's existing Indenture are redeemed, dividends shall be paid in
cash on the first dividend payment date following the earlier of one year from
the date of such redemption or August 31, 2002. The Series B Preferred Stock has
a liquidation preference of $1,000 per share, plus accrued and unpaid dividends
thereon.
The net proceeds from the sale of the Units will be used to redeem
the outstanding shares of Series A Preferred Stock, including accrued dividends
thereon, to finance the GAC Acquisition (including repayment of debt and the
payment of fees and expenses related thereto), which acquisition is described
below and is subject to satisfaction of the conditions to closing contained in
the GAC Acquisition Agreement (described below), to consummate the MEM
Acquisition (including the repayment of debt and the payment of fees and
expenses related thereto), which acquisition is described below and is subject
to the satisfaction of the conditions to closing contained in the MEM
Acquisition Agreement (described below) and the Company having entered into the
New Credit Facility, and the remaining net proceeds will be used for general
corporate purposes.
The Offering of the Units is expected to be consummated prior to the
closing of the Acquisitions and the New Credit Facility. There can be no
assurance that the Acquisitions will be completed or that the Company will be
successful in obtaining the New Credit Facility. The GAC Acquisition Agreement
and the MEM Acquisition Agreement are subject to customary closing conditions.
In addition, the Company does not expect to consummate the MEM Acquisition until
it has entered into the New Credit Facility. In the event that the New Credit
Facility is secured, the Company intends to use borrowings thereunder to repay
all indebtedness outstanding under the Existing Credit Facility and for general
corporate purposes. In the event that the GAC Acquisition or the MEM Acquisition
is not completed, the Company expects to use the excess net proceeds from the
above-described offering of Units that would have been used to finance the GAC
Acquisition or the MEM Acquisition to repay indebtedness under the Existing
Credit Facility and to finance additional acquisitions that the Company expects
to make in the future.
Pending Acquisition of Great American Cosmetics, Inc. On June 27,
1996, the Company, through its wholly-owned subsidiary Cosmar, entered into a
stock purchase agreement (the "GAC Acquisition Agreement") with Great American
Cosmetics, Inc. ("GAC"), and Messrs. Larry Pallini and Vincent Carbone, the sole
shareholders of GAC (the "Sellers"), to acquire all of the issued and
outstanding capital stock of GAC (the "GAC Acquisition"), which acquisition if
consummated is to be effective on and as of May 1, 1996.
GAC is a privately-owned company formed in 1990 that outsources,
markets, distributes, advertises, promotes and merchandises mid-priced,
mass-marketed lipsticks, eye make-up, nail polish products and related
accessories sold under the Nat Robbins trademark. According to GAC's audited
financial statements, GAC had revenues of approximately $7.8 million and net
income of approximately $1.1 million for the year ended December 31, 1995.
The purchase price for the GAC Acquisition is $15.25 million in cash,
$14.25 million of which is payable to the Sellers at the closing and the
remaining $1.0 million of which is payable into escrow
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to secure the Sellers' post-closing obligation to indemnify Cosmar for breaches
of the Sellers' representations, warranties and covenants contained in the GAC
Acquisition Agreement. The Company has deposited $600,000 with an escrow agent
(the "Deposit"), which may be applied in full toward the purchase price at the
closing of the GAC Acquisition. If the GAC Acquisition is not consummated on or
before August 31, 1996, the GAC Acquisition Agreement will be terminated and the
Deposit will be returned to the Company unless the failure to complete the GAC
Acquisition by such date was as a result of the Company's failure to obtain
financing for the transaction, in which case the Sellers shall be entitled to
retain the Deposit as liquidated damages. In connection with the closing of the
GAC Acquisition, the Company will repay approximately $1.6 million of GAC
indebtedness (the "GAC Bank Debt") (which estimate is based on indebtedness at
March 31, 1996). Such amount of indebtedness is expected to be lower on the
closing date of such acquisition. Also, in connection with the closing, GAC will
repay to the Sellers the amount outstanding under certain shareholder loans,
which were $181,500 at March 31, 1996.
The GAC Acquisition Agreement contains certain conditions to closing,
including the delivery of legal opinions, the absence of any orders, decrees or
injunctions preventing or delaying the closing, the execution of the consulting
agreements referred to below and the Company having obtained financing on terms
acceptable to it. Although the Company expects such conditions will be
satisfied, there can be no assurance that the GAC Acquisition will be completed.
The Company is entitled to indemnification under the GAC Acquisition for losses
suffered as a result of any breach by the Sellers of any representation,
warranty, covenant or agreement contained in the GAC Acquisition Agreement. The
Company may not seek indemnification until it has claims exceeding 1% of the
purchase price at which point the Sellers shall be responsible for all amounts
in excess of $50,000. Neither Seller is liable for indemnification in an amount
in excess of the amount of consideration received by him.
Cosmar has agreed to retain Messrs. Pallini and Carbone as
consultants to Cosmar and its affiliates upon consummation of the GAC
Acquisition. Mr. Pallini's consulting agreement is for a term of three (3) years
with annual compensation of $200,000 per year, payable in thirty-six (36) equal
monthly installments. Mr. Carbone's consulting agreement is for a term of one
(1) year with annual compensation of $150,000, payable in twelve (12) equal
monthly installments.
Pending Acquisition of MEM Company, Inc. On August 6, 1996, the
Company, its newly-formed wholly owned subsidiary, Renaissance Acquisition, Inc.
("RAI"), and MEM Company, Inc. ("MEM"), entered into an agreement and plan of
merger (the "MEM Acquisition Agreement") pursuant to which RAI will be merged
into MEM and each outstanding share of MEM common stock (the "MEM Stock"), other
than dissenter's shares, will be converted into the right to receive $7.50 per
share in cash (and each share subject to a stock option will be converted into
the right to receive the difference between $7.50 per share and the per share
exercise price of such option) (the "MEM Acquisition"). The aggregate
consideration for the MEM Stock (including the purchase price for the
outstanding MEM stock options that will be cashed out in the MEM Acquisition) is
approximately $33.8 million, including repayment of MEM's indebtedness (which
estimate is based on the balance
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of such indebtedness at June 30, 1996). Such amount of indebtedness is expected
to be higher (and could be materially higher) on the date the MEM Acquisition is
closed.
MEM, a publicly-traded American Stock Exchange company, distributes a
diversified line of fragrances and toiletries in the mass market distribution
channel. MEM's products are marketed under the nationally advertised trademarks
English Leather(R), British Sterling(R), Heaven Sent(R), LOVE's(R),
Tinkerbell(R), Acqua di Selva(R), Timberline(R), Love's Frenzy(R) and Love's
Clean & Natural product lines. Tom Fields, Ltd. ("Tom Fields"), a division of
MEM, manufactures and markets a line of children's cosmetics and accessories
principally under the trademark Tinkerbell(R). A subsidiary, Tom Fields (U.K.)
Ltd., markets this line of children's products in the United Kingdom and
elsewhere in Europe. The principal market for MEM's products is the United
States. According to MEM's audited financial statements, MEM had net sales of
approximately $44.8 million and a net loss of approximately $3.0 million for the
year ended December 31, 1995. According to MEM's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995, one national customer accounted for 13%
of net sales in 1995 and 14% of net sales in 1994 and the loss of such customer
would have a material adverse effect. According to MEM's Form 10-Q for the
quarter ended June 30, 1996, net sales declined to $9.2 million during the six
months ended June 30,1996 from $11.0 million during the prior year's comparable
period and the net loss for the period increased to $4.4 million from $3.2
million in the prior year's comparable period.
The MEM Acquisition Agreement does not provide for indemnification of
the Company for losses suffered as a result of breaches of representations,
warranties, covenants and agreements, and no escrow has been set aside for such
indemnification. The MEM Acquisition Agreement contains standard representations
and warranties for a transaction of this type, all of which will terminate upon
the effectiveness of the MEM Acquisition. Under the terms of the MEM Acquisition
Agreement, at or prior to the closing, the Company is required to establish a
stay bonus program for selected employees of MEM. Also, prior to the closing,
MEM may establish its own stay bonus program, and, if the MEM Acquisition
Agreement is terminated by MEM as a result of the Company's breach of its
obligations thereunder or the MEM Acquisition does not close because the Company
fails to obtain financing, the Company has agreed to reimburse MEM for such stay
bonus program up to an aggregate amount of $500,000. The consummation of the MEM
Acquisition will be subject to customary closing conditions, including the
approval of the stockholders of MEM, the receipt of requisite regulatory and
third party consents and approvals, the absence of an order, decree or
injunction preventing the transaction, the receipt of a fairness opinion from
MEM's independent investment banking firm, the accuracy of all representations
and warranties, the performance of all covenants and agreements, the receipt of
legal opinions, the absence of material adverse changes and the obtaining by the
Company of financing to complete the MEM Acquisition on terms acceptable to it.
The MEM Acquisition Agreement may be terminated by MEM if the MEM
Acquisition is not completed by November 30, 1996 or at any time (i) if required
by MEM's board of directors in the exercise of its fiduciary duties or (ii) if
the Company has defaulted in the performance of the MEM Acquisition Agreement
and such default remains uncured for 30 days after notice thereof.
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If the MEM Acquisition is not consummated because MEM terminates the
MEM Acquisition Agreement as a result of exercising its fiduciary out at a time
when the Company and RAI are in compliance with all of their representations,
warranties, covenants and agreements contained therein and within 12 months from
the date of the MEM Acquisition Agreement, MEM consummates or enters into an
agreement or other arrangement to consummate an acquisition transaction with any
party other than the Company, MEM will be obligated to pay to the Company the
sum of $1.0 million.
If the MEM Acquisition is not consummated because the Company or RAI
terminates the MEM Acquisition Agreement as a result of the failure to close the
financing for the MEM Acquisition, the Company will be obligated to pay MEM the
sum of $1.0 million.
The Company does not intend to effect the MEM Acquisition unless and
until it obtains the New Credit Facility. In addition, consummation of the MEM
Acquisition may require the consent of holders of a majority of the principal
amount of the Senior Notes.
An action (seeking class action certification) was filed on July 31,
1996, on behalf of the shareholders of MEM against MEM and four of its current
and former directors, alleging that the compensation offered to the shareholders
in the MEM Acquisition is inadequate and grossly unfair and that the defendants
violated their fiduciary duties by not seeking additional potential purchasers
for MEM. The actions seeks, among other things, a court order requiring the
defendants to seek other purchasers, or, if the MEM Acquisition is consummated,
damages. MEM has advised the Company that MEM believes that this action is
without merit and that it intends to vigorously defend such action.
Also on August 6, 1996, the Company entered into a definitive
employment agreement with Gay Mayer, the current Chairman, Chief Executive
Officer and President of MEM, pursuant to which the Company will retain Mr.
Mayer as an officer of the Company following the effective time of the MEM
Acquisition. Mr. Mayer's employment agreement will be for a term of 30 months at
an annual salary of $250,000, payable in equal semi-monthly payments. The
Company has agreed to grant an option to Mr. Mayer to acquire 5,000 shares of
the Company's common stock upon the closing of the MEM Acquisition. The per
share exercise price of the option will be equal to $104.00.
There can be no assurance that the Company will complete either the
GAC Acquisition or the MEM Acquisition.
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RENAISSANCE COSMETICS, INC.
Dated: August 26, 1996 By: /s/ Thomas T.S. Kaung
-----------------------
Thomas T.S. Kaung
Group Vice-President, Finance
and Chief Financial Officer
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