RENAISSANCE COSMETICS INC /DE/, 10-K405, 1997-06-30

RENAISSANCE COSMETICS INC /DE/
10-K405, 1997-06-30
PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED MARCH 31, 1997

Commission file number 33-87820

RENAISSANCE COSMETICS, INC.
(Exact name of registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of incorporation or organization)

06-1396287
(I.R.S. Employer Identification No.)

635 MADISON AVENUE
NEW YORK, NEW YORK 10022
(Address of principal executive office)(Zip Code)

(212) 751-3700
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the registrant: (1) has 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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

As of March 31, 1997, there were outstanding 830,736 shares of
the registrant's common stock, $.01 par value.

Documents Incorporated by Reference: NONE

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INDEX

PART I

Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting
Financial Disclosure

PART III

Item 10. Directors and Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial and Management
Item 13. Certain Relationships and Related Transactions

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K

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SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

CERTAIN STATEMENTS UNDER THE CAPTIONS "BUSINESS," "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND ELSEWHERE IN
THIS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 31, 1997, AND
THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE CONSTITUTE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT AND
SECTION 21E OF THE EXCHANGE ACT. CERTAIN, BUT NOT NECESSARILY ALL, OF SUCH
FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING
TERMINOLOGY SUCH AS "BELIEVES," "EXPECTS," "MAY," "WILL," "SHOULD" OR
"ANTICIPATES" OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR
COMPARABLE TERMINOLOGY, OR BY DISCUSSION OF STRATEGIES THAT INVOLVE RISKS AND
UNCERTAINTIES. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN
RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS,
LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY, OR INDUSTRY
RESULTS, TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, LEVELS OF
ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE, AMONG OTHERS, THE FOLLOWING:
GENERAL ECONOMIC AND BUSINESS CONDITIONS; THE ABILITY OF THE COMPANY TO
IMPLEMENT ITS BUSINESS AND ACQUISITION STRATEGY, INCLUDING THE ABILITY TO
INTEGRATE RECENTLY ACQUIRED BUSINESSES INTO THE COMPANY; THE ABILITY OF THE
COMPANY TO OBTAIN FINANCING FOR FUTURE ACQUISITIONS, INCLUDING OBTAINING
REQUIRED APPROVALS FROM ITS EXISTING LENDERS FOR SUCH ACQUISITIONS; CHANGES IN
THE RETAIL INDUSTRY GENERALLY AND THE FRAGRANCE AND NAIL CARE INDUSTRIES
SPECIFICALLY; CHANGES IN CONSUMER PREFERENCES; COMPETITION; AVAILABILITY OF
KEY PERSONNEL; FOREIGN CURRENCY EXCHANGE RATES; INDUSTRY CAPACITY; DEVELOPMENT
AND OPERATING COSTS; ADVERTISING AND PROMOTIONAL EFFORTS; BRAND AWARENESS;
ACCEPTANCE OF NEW PRODUCT OFFERINGS; AND CHANGES IN, OR THE FAILURE TO COMPLY
WITH, GOVERNMENT REGULATIONS (ESPECIALLY ENVIRONMENTAL LAWS AND REGULATIONS).
AS A RESULT OF THE FOREGOING AND OTHER FACTORS, NO ASSURANCE CAN BE GIVEN TO
FUTURE RESULTS, LEVELS OF ACTIVITY AND ACHIEVEMENTS AND NEITHER THE COMPANY
NOR ANY OTHER PERSON ASSUMES RESPONSIBILITY FOR THE ACCURACY AND COMPLETENESS
OF THESE STATEMENTS.

CHANTILLY-R-, WHITE CHANTILLY-TM-, TABU-R-, DREAMS BY TABU-TM-, LUTECE-R-,
RAFFINEE-R-, DEMI-JOUR-TM-, MONSIEUR MUSK-R-, FRENCH GARDEN FLOWERS-TM-,
ENGLISH WATERLILYS-TM-, FRENCH VANILLA BY DANA-TM-, AMBUSH-R-, CANOE-R-,
CANOE-SPORT-R-, HERBISSIMO-R-, NAVIGATOR-R-, ENGLISH LEATHER-R-, BRITISH
STERLING-R-, LOVE'S-R-, HEAVEN SENT-R-, NAVY-R-, TOUJOURS MOI-R-, NAVY FOR
MEN-TM-, INSIGNIA-R-, CALIFORNIA FOR MEN-R-, LE JARDIN-TM, LAJOIE-R-,
PRO10-R-, PRESS & GO-R-, PETITE PRESS & GO-TM, SPORT PRESS & GO-TM-, QUIK
FIT-R-, SCULPTURE QUIK-TM-, SCULPTURE QUIK II-TM-, ULTRAGEL-TM-, NAIL
FETISH-TM-, WRAP QUIK-R-, QUIKFILE-TM-, QUIKSHINE-R-, FILEPRO-R-, NAT
ROBBINS-R-, LIP LACQUER-TM-, EVER SHEER-TM ,COLORPOWER-R- and COLOR INTENSE
24-R- are trademarks and brands owned by or licensed to the Company. All other
trademarks or service marks referred to in this Prospectus are the property of
their respective owners and are not the property of the Company.

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PART I

ITEM 1. BUSINESS

GENERAL

REFERENCES HEREIN TO "FISCAL 1994," "FISCAL 1995" AND "FISCAL 1996" MEAN
THE FISCAL YEARS ENDED MARCH 31, 1995, MARCH 31, 1996, AND MARCH 31, 1997,
RESPECTIVELY. ALSO, UNLESS CLEARLY INDICATED OTHERWISE HEREIN, ALL
REFERENCES TO THE COMPANY ARE TO RENAISSANCE COSMETICS, INC. AND ITS
SUBSIDIARIES.

Renaissance Cosmetics, Inc. was incorporated in Delaware in 1994. The
Company is a leading manufacturer and marketer of mass-market fragrances,
artificial nail care products, mid-priced lip and eye make-up, nail polish
and related products that are sold by more than 1,000 retailers in
approximately 25,000 locations in the United States and in 61 foreign
countries. The Company sells its products principally through the
mass-market distribution channel which includes drug stores (such as
Walgreens and Revco), mass merchandisers (such as Wal-Mart and Kmart) and
supermarkets and combination supermarket/drug stores (such as Kroger and
Albertson's).

The Company's principal executive offices are located at
635 Madison Ave., New York, New York 10022, and its telephone number is (212)
751-3700.

BACKGROUND

FORMATION. The Company was formed in April 1994 by Kidd Kamm & Company
("Kidd Kamm") and Thomas V. Bonoma, late Chairman and Chief Executive
Officer of the Company. On May 21, 1997, Dr. Bonoma died suddenly. On May
28, the Board of Directors of the Company appointed Norbert Becker, President
of the Company, as Chief Executive Officer and a director of the Company.

FINANCING TRANSACTIONS. In May 1994, Kidd Kamm Equity Partners, L.P.
("KKEP"), an affiliate of Kidd Kamm, invested $22.5 million in the common
equity of the Company. Management and certain other investors invested an
additional $4 million in the common equity of the Company.

In May 1994, the Company received $10 million of proceeds from the
issuance of 10,000 shares of Cumulative Exchangeable Preferred Stock, with
warrants.

In August 1994, the Company completed the sale of $65 million aggregate
principal amount of 13-3/4% Senior Notes, due 2001, Series A and B, and
13-3/4% Senior Notes, due 2002 (collectively, the "Old Senior Notes"), which
were issued pursuant to an Indenture dated August 18, 1994 (the "Old
Indenture").

In December 1994, the Company entered into a note purchase agreement
with Nomura Holding America, Inc., which included a $30 million term facility
and a $20 million revolving credit facility (the "Old Credit Facility"). The
revolving facility was subsequently increased to $30 million and then again
to $40 million.

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In May and June 1996, the Company issued $20 million aggregate value of
Series A Senior Redeemable Exchangeable Preferred Stock ("Series A Preferred
Stock").

In August and September 1996, the Company completed a private placement
of $115 million of Senior Redeemable Preferred Stock, Series B ("Series B
Preferred Stock"), with warrants ("Series B Warrants"). Concurrent
therewith, the Company sold shares of common stock to CIBC WG Argosy Merchant
Fund 2, L.L.C., and to Bastion Capital Fund, L.P. The Company received
aggregate net proceeds from both transactions of $119.1 million. These
transactions are collectively referred to herein as the "Equity Financing."
The Company used the proceeds of the Equity Financing to retire all of the
outstanding Series A Preferred Stock, to finance the GAC Acquisition (as
defined below), to repay a portion of the Old Credit Facility, to purchase a
certificate of deposit set aside to consummate the MEM Acquisition (as
defined below) and for general corporate purposes.

In December 1996, the Company entered into a Senior Secured Credit
Facility, pursuant to which the Company received net proceeds of $113.2
million. The Company used a portion of the proceeds to finance the MEM and
P&G Brands Acquisitions (as defined below) and to repay all outstanding
indebtedness under its Old Credit Facility.

In February 1997, the Company completed the sale of $200 million
aggregate principal amount of 11-3/4% Senior Notes, due 2004 (the "Existing
Notes"), issued pursuant to the Indenture, dated February 7, 1997 (the
"Indenture"). The Company used a portion of the proceeds received from the
sale of the Existing Notes to repay all of the outstanding indebtedness under
the Senior Secured Credit Facility and to repurchase all of its Old Senior
Notes. On June 8, 1997, the Company completed the exchange of all of the
outstanding principal amount of Existing Notes for a like principal amount of
its 11-3/4% Senior Notes due 2004 which were registered under the Securities
Act (the "New Notes").

In March 1997, the Company entered into a new $75 million revolving
credit facility agreement with General Electric Capital Corporation ("GECC")
and other lenders (the "New Revolving Credit Facility").

On April 28, 1997, the Company completed the exchange of all of the
issued and outstanding shares of Series B Preferred Stock for shares of
Senior Redeemable Preferred Stock, Series C ("Series C Preferred Stock") with
substantially the same terms.

ACQUISITIONS. In July and August 1994, the Company entered into
long-term exclusive license agreements with Houbigant, Inc. ("Houbigant") to
manufacture, distribute, use and sell throughout the world (excluding Canada)
12 mass-market fragrances formerly marketed by Houbigant (the "Houbigant
Acquisition"). In December 1994, the Company acquired the assets of ACB
Mercantile, Inc., and related companies (the "ACB Acquisition") through which
the Company acquired certain rights to manufacture, distribute, use and sell
the Houbigant Fragrances in Canada which, when combined with the previous
Houbigant license agreements, gave the Company the exclusive worldwide right
to manufacture and market the Houbigant Fragrances.

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In August 1994, the Company purchased the operations of Cosmar
Corporation ("Cosmar"), the largest manufacturer and marketer in the United
States of artificial fingernails and related nail care products (the "Cosmar
Acquisition").

In December 1994, the Company acquired Les Parfums de Dana, Inc., and
related companies (now known as Dana Perfumes Corp.) ("Dana"), which
manufactured mass-market fragrances and related products sold in the United
States and in 20 foreign countries (the "Dana Acquisition").

In August 1996, the Company acquired Great American Cosmetics, Inc.
("GAC"), a company that markets, distributes, advertises, promotes and
merchandises high-quality, mid-priced lip and eye make-up, nail polish and
related products (the "GAC Acquisition").

In December 1996, the Company acquired MEM Company, Inc. ("MEM"), which
manufactures mass-market fragrances (the "MEM Acquisition"). In connection
with the MEM Acquisition, the Company repaid all of MEM's outstanding
indebtedness. See PART I, ITEM 1. BUSINESS - EMPLOYEES AND - FACILITIES
below.

In December 1996, the Company acquired from the Procter & Gamble Company
("P&G") the worldwide rights to manufacture and distribute certain mass
market fragrances (the "P&G Brands Acquisition"). In addition, the Company
assumed certain trade-related obligations of P&G.

In May 1997, a newly-formed subsidiary of the Company, RCI China, Inc.,
became a joint venturer in RCI/Alexander Joint Venture (the "Joint Venture").
The principal business activity of the Joint Venture is to manufacture,
market, sell and distribute cosmetic products in the People's Republic of
China. The Company is the manager of the Joint Venture pursuant to the terms
of a management agreement.

See PART II, ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - LIQUIDITY AND CAPITAL RESOURCES below
for more information concerning the (i) GAC Acquisition, the MEM Acquisition
and the P&G Brands Acquisition (collectively, the "Acquisitions"), (ii) the
Senior Secured Credit Facility, (iii) the Old Credit Facility and the New
Revolving Credit Facility, (iv) the Old Senior Notes, (v) the Existing Notes
and (vi) the New Notes.

BUSINESS STRATEGY

At inception, the Company's strategic plan was to build a substantial
fragrance and cosmetics company by implementing a growth strategy of
acquiring and successfully integrating underperforming brands or companies
and restoring and expanding brand equities through the initiation or
expansion of focused marketing programs. The Company's current business
strategy is (1) to continue to capitalize on opportunities in the mass-market
segment of the fragrance and cosmetics industry, through both internal growth
and acquisitions, and (2) to maximize sales and earnings before interest,
taxes, depreciation and amortization ("EBITDA") by:

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- - ACQUIRING AND REINVIGORATING UNDERPERFORMING AND/OR UNDER MARKETED BRANDS.
The Company seeks to selectively acquire and then subsequently reinvigorate
underperforming and/or undermarketed established brands and provides
broad-based consumer advertising necessary to support new product
introductions.

- - INTEGRATING ACQUIRED BUSINESSES INTO THE COMPANY'S EXISTING
INFRASTRUCTURE. Following acquisition of brands or companies, the Company
seeks to reduce operating costs of the acquired brands or companies by (1)
eliminating redundant overhead; (2) closing redundant plants; (3) selling
the acquired brands through the Company's existing salesforce; and (4)
using common componentry.

- - FOCUSED FLANKING OF ESTABLISHED FRAGRANCE BRANDS. The Company specializes
in launching new products that leverage off of the strong name recognition
and brand equity of its classic and other established fragrance brands.
These products, known as "focused flankers," draw on the consumer
recognition and heritage of the Company's existing brand equities while
simultaneously enhancing and revitalizing the "parent" products being
flanked.

- - INTRODUCING COMPLEMENTARY PRODUCTS. Similar to its focused flanker
strategy, the Company seeks to introduce complementary new cosmetics
products.

- - USING CATEGORY MANAGEMENT TECHNIQUES TO INCREASE THE COMPANY'S SALES BY
INCREASING ITS ALLOCATION OF SHELF SPACE AND ENHANCING RELATIONSHIPS WITH
RETAILERS. To increase shelf space allocated to the Company's products
and to build stronger relationships with retailers, the Company purchases
consumer sales data derived from in-store checkout scanners in order to
quantify sales results for its own products (as well as those of its
competitors). The Company engages in account-specific category management
by offering to be a retailer's category advisor or "category captain."
The category captain assists the retailer in deciding which products it
will sell within the shelf space dedicated to a specific category.

- - EXPANDING INTO ADDITIONAL RETAIL OUTLETS AND ALTERNATIVE DISTRIBUTION
CHANNELS. The Company continually seeks to expand its sales and
distribution network (currently over 1,000 retailers with approximately
25,000 locations) for its existing and acquired products. The Company
continually explores alternative distribution channels (such as the home
shopping channel QVC) through which to sell its products. In addition,
the Company is increasing its worldwide doors by expanding the number of
foreign countries (61 as of March 31, 1997) in which it sells its products.

The Company intends to continue to capitalize upon the success of its
previous fragrance and cosmetics product acquisitions, market share gains and
close working relationships with mass-market retailers to launch additional
focused flanker fragrance products and new artificial nail care and cosmetics
products.

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See PART II, ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - LIQUIDITY AND CAPITAL RESOURCES for
a discussion of the restriction in the New Revolving Credit Facility on
the Company's ability to make acquisitions without the consent of at least
66-2/3% of the lenders thereunder.

INDUSTRY OVERVIEW

DISTRIBUTION CHANNELS. The fragrance and cosmetics industry relies
on two primary channels of distribution, mass-market retailers and
department and specialty stores. These two channels have materially
different sales and marketing processes because of the contrasting
economic, demographic, demand and usage characteristics of their consumers.

The mass-market distribution channel is characterized by
value-oriented products with emphasis placed on both price and image.
Since mass-market retailers depend on self-selection of products by
consumers and employ only a nominal amount of in-store sales support
personnel, the allocation and placement of retail shelf space is one of
the most important means of gaining consumer awareness in this channel.
Retailers have become more reluctant to allow new products to displace
proven, high-volume products without a guarantee of extensive advertising
support to generate consumer interest. As a result, the introduction of
new products into the mass market is more difficult and relatively more
expensive than in department and specialty stores. These characteristics
of the mass market limit the number of new product offerings, enabling
proven products to retain existing shelf space and creating barriers to
entry. As a result, the mass-market distribution channel for fragrances
and cosmetics is generally characterized by greater brand stability,
consumer loyalty and repeat purchases than the department and specialty
store channel.

In contrast to the mass market, fragrance and cosmetics products sold
through the department and specialty store channel are generally
characterized as "prestige" brands which are primarily sold based upon
perceived image and quality at substantially higher price points than
those sold in the mass-market channel. Consequently, product offerings in
the department and specialty store channel tend to be much more sensitive
to changes in fashion and popular trends than those sold in the mass
market. Such fashion consciousness results in a greater number of product
introductions in this channel than in the mass market. The introduction
of new products in department and specialty stores is facilitated, in
part, by a greater level of personal customer service during the sales
process. In addition, department and specialty retailers generally
reallocate their selling space and product mix several times per year to
accommodate changing fashion trends, whereas mass-market retailers
generally do so only once per year. As a result, manufacturers are able
to introduce new products more easily and frequently in the department and
specialty store channel, as well as depend on in-store direct selling
efforts rather than broad-based consumer advertising to attract consumers.
While such reallocation results in greater flexibility to change product
offerings, it also reduces brand stability and consumer loyalty over time.

FRAGRANCE MARKET. The market for both men's and women's fragrances
is highly fragmented, with the most popular brand in each segment
commanding a share of less than 5% of the total market (although there are
large competitors with significant aggregate market

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shares). The mass-market fragrance industry is relatively
recession-resistant due to its low average price point and more frequent
usage of the product.

Fragrance products sold in the mass market, where the Company
operates, typically have the following characteristics in relation to
prestige brands: (i) more frequent purchase/use; (ii) sales that are less
affected by changing fashions (which results in fewer new product
introductions); (iii) lower packaging costs; (iv) faster inventory
turnover; and (v) lower prices. Management believes that these
characteristics enable the Company's products to achieve, on average,
greater customer loyalty and more stable sales volume than prestige
products.

The Company also competes with alternative designer fragrances
("ADFs"), which are impostors of designer and prestige fragrances. ADFs
began capturing market share from both designer and prestige fragrances
and mass-market products in 1990. Since 1992, however, sales of ADFs and
prestige fragrances in the mass market have been declining.

COSMETICS MARKET. The Company's cosmetics division primarily focuses
on the artificial nail care, lip and eye make-up segments of the mass
market for cosmetics. The Company's cosmetics division has also entered
into other segments of the cosmetics market, including the nail polish
category with the introduction of its line of PRO10 nail lacquers.

NAIL CARE MARKET. The retail nail care mass market is divided into
four major product categories: (i) nail polish; (ii) artificial nail care;
(iii) nail implements; and (iv) nail polish removers. Although the
mass-market artificial nail care market has many participants, the top
three brands generate over 60% of total category sales. During the year
ended December 31, 1996, Cosmar's brands accounted for approximately 33%
(by total sales dollars) of the domestic artificial nail care market.

Repeat purchases by consumers, who typically purchase 10 to 15
packages per year, as well as high inventory turnover, have resulted in
increased retail shelf space allocation and market stability for
artificial nail care products. It is expected that in the future there
will be less opportunity for niche players in the artificial nail care
market, with more shelf space being allocated to market leaders with
sophisticated category management capabilities, such as the Company.

LIP AND EYE MAKE-UP MARKETS. The domestic lip and eye make-up markets
are highly competitive and dependent upon strong brand recognition,
consumer trust in product quality, product selections aligned with current
fashion and color trends and distinct price brackets that meet particular
consumer needs and demographics. The Company has focused on the
mid-priced segment through its acquisition of GAC. In general, the
Company believes that the lip and eye make-up markets have experienced
strong growth over the past year because of enhancements in color
cosmetics technology and formulations coupled with a renewed emphasis on
fashion-conscious color selections.

PRODUCTS

FRAGRANCE. Through its Dana subsidiary, the Company manufactures and
markets a wide variety of men's and women's fragrances, which include some
of the oldest, most recognized

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"classic" brand names in the industry. Classic brands, which generally
have more than 20 years of sales history, are typically characterized by
extensive brand name recognition and strong consumer loyalty. The Company
estimates that less than 1% of all fragrance brands introduced each year
achieve such classic status. The Company currently manufactures nine
classic brands: CHANTILLY, TABU, AMBUSH, TOUJOURS MOI, RAFFINEE, HEAVEN
SENT, CANOE, ENGLISH LEATHER and BRITISH STERLING. In June 1997, the
Company received the Hall of Fame Award for Classic Fragrances for CANOE
from the Fragrance Foundation, the leading trade group in the fragrance
industry. In addition to the Company's classic fragrances, the Company
markets its women's fragrance brands under such names as WHITE CHANTILLY,
DREAMS BY TABU, NAVY, LE JARDIN and LOVE'S and markets its men's fragrance
brands under such names as NAVIGATOR FROM CANOE, NAVY FOR MEN, INSIGNIA,
CALIFORNIA FOR MEN and HERBISSIMO.

The Company focuses principally on reinvigorating its largest and
most recognized brands. For its smaller brands, the Company applies
various cost-reduction methods designed to result in production savings by
utilizing less expensive common componentry and standard packaging.
Additionally, the Company minimizes advertising and promotion costs by
offering these products in the same packaging on a year-round basis. The
Company passes along these cost savings by offering value pricing to
customers with primary advertising occurring only in-store.

Following the four acquisitions completed in 1994, the Company began
supporting its existing product lines and brands with increased
advertising and promotional expenditures, reestablishing efficient
production scheduling and shipping processes, maintaining adequate
inventory levels and creating responsive order fulfillment practices. The
Company also launched several new brands such as CLASSIC GARDENIA, WHITE
CHANTILLY, a flanker product for the core CHANTILLY brand, and DREAMS BY
TABU, a focused flanker of TABU. In February 1997, the Company relaunched
AMBUSH.

The recent acquisitions of the MEM and P&G fragrance brands,
including NAVY, NAVY FOR MEN, CALIFORNIA FOR MEN, ENGLISH LEATHER, BRITISH
STERLING, INSIGNIA, LOVE'S and HEAVEN SENT, further strengthen the
Company's position in the fragrance market. According to information
provided by P&G to the Company, P&G has spent a substantial amount in the
last five years on the marketing of the P&G Brands worldwide. Although
sales of several of the P&G Brands have declined significantly in recent
years under P&G's management, the Company believes that opportunities
exist to reinvigorate the brands. In addition, the Company believes that
it should benefit from the international distribution of the P&G fragrance
brands, especially in the United Kingdom, which, prior to the P&G Brands
Acquisition, was not a significant market for the Company's products.

In men's fragrances, the Company manufactures and markets three
classic brands, CANOE, ENGLISH LEATHER and BRITISH STERLING. The Company
successfully launched NAVIGATOR FROM CANOE, a flanker brand to CANOE, in
September 1996 and recently completed the relaunch of CANOE. The Company
significantly enhanced its position in the men's fragrance mass market
with the acquisition of MEM's and P&G's men's fragrance brands. With the
acquisition of MEM, the Company added ENGLISH LEATHER and BRITISH
STERLING. With the acquisition of the P&G Brands, the Company added NAVY
FOR MEN, and CALIFORNIA FOR MEN.

<PAGE>

NAIL CARE. Through Cosmar, the Company is the largest domestic
manufacturer and marketer of artificial nail care products and related
accessories sold through the mass-market channel. The Company's nail care
products include full-length, artificial press-on or glue-on fingernails,
artificial fingernail tips, fingernail sculpturing kits, nail lacquer,
natural fingernail cuticle treatments and strengtheners and related
accessories. The Company markets its products under such brand names as
LAJOIE (SCULPTURE QUIK, PRESS & GO and QUIK FIT), PRO10, ULTRAGEL and NAIL
FETISH. The LAJOIE line is an easy-to-use line of artificial fingernail
products, acrylic applications and accessories targeted at the consumer who
generally does not visit a professional nail care salon. The Company is in
the process of changing the name under which the LAJOIE line is marketed to
"Cosmar." The PRO10 line has established itself as a leading professional
"salon-standard" nail care line sold through retailers. This line includes
artificial fingernail tips, a selection of nail sculpturing applications,
abrasive and other professional quality nail strengtheners, nail builders,
finish coats and cuticle creams. The Company's PRESS & GO colored nails
dominate the instant pre-colored nail care segment of the mass market.

The Company continues to grow its nail care segment through increased
marketing and improved packaging of existing brands and the introduction
of new products. In Fiscal 1995, the Company targeted new users and
younger women with its NAIL FETISH brand. In February 1996, the Company
launched an innovative new line of products under the ULTRAGEL brand name
that offers a unique two-step gel nail process with built-in color. In
February 1997, the Company launched new nail care products including
COLORPOWER, FRENCH EXPRESS, FILEPRO and NAIL FETISH POLISH.

LIP AND EYE MAKE-UP. As a result of the GAC Acquisition, the Company
is a leading marketer of high quality, mid-priced lip and eye make-up,
make-up brushes and nail polish and related products sold through the
mass-market channel. The Company's lip and eye cosmetics include lipliner
pencils, lipstick, lipgloss, eyeliner pencils, eye shadow, mascara and
assorted accessories. Under previous ownership, the NAT ROBBINS line
successfully achieved a leading position in the mid-priced cosmetics
market by offering high quality, consumer-friendly products, in an
assortment of colors.

See Note 18 to the Consolidated Financial Statements for additional
information concerning the Company's business segments and Note 16 to the
Consolidated Financial Statements for additional information concerning its
major customers.

INTERNATIONAL OPERATIONS

The Company has manufacturing operations in four foreign countries
and sells its products in 61 foreign countries (as of March 31, 1997).

During the last 18 months, the Company has significantly improved the
operations of its wholly-owned foreign subsidiaries in Canada, Spain,
Argentina and Brazil. Information systems have been improved and detailed
performance measurements have been established. Further investments are
planned that are expected to increase capacity, improve productivity and
lead to higher volume growth.

8
<PAGE>

The Company remains committed to actively expanding its sales effort
abroad. The Company will continue to capitalize on its strong brand
equities to tap foreign markets and will consolidate selling efforts
between its fragrance and cosmetics subsidiaries. Accordingly, the
Company is seeking substantial growth in this area.

In connection with the P&G Brands Acquisition, the Company entered
into transition agreements with P&G under which P&G will continue the
foreign marketing of the P&G Brands through June 30, 1997. These
transition agreements cover the majority of the P&G Brands in the Far East
(primarily Japan), the United Kingdom and South Africa. Under the
transition agreements, P&G employees will continue to be responsible for
marketing and distribution of the P&G Brands in the specified
jurisdictions, and the Company will be obligated to reimburse P&G for its
direct costs and will be entitled to receive any gross profit from the
sale of such brands. The Company is currently in the process of
establishing its own marketing and administrative organizations to replace
those of P&G and obtaining any necessary local licenses and permits in the
jurisdictions where it currently does not have its own operations.

See Note 18 to the Consolidated Financial Statements for additional
information concerning the Company's foreign and domestic operations and
export sales.

PRODUCT DEVELOPMENT AND NEW PRODUCT LAUNCHES

In developing new products, the Company seeks to build on its growing
brand values, expanding customer base, increasing allocation of retail
shelf space and point-of-sale consumer access. The Company believes its
existing fragrance and cosmetics businesses will provide a basis for
product extensions into additional segments of the mass market.

The Company's product development activity is primarily conducted
in-house, utilizing feedback from consumer focus groups, tests in nail
care salons for its nail care products and consumer questionnaires. The
cycle of market research, product conceptualization, product design and
development, consumer testing and package design typically requires
approximately six months for the Company. The Company believes that the
average cycle for the industry is approximately 18 months.

Recent fragrance launches by the Company include FRENCH VANILLA BY
DANA in October 1994, CLASSIC GARDENIA in the spring of 1995, WHITE
CHANTILLY in the fall of 1995, DREAMS BY TABU in February 1996 and
NAVIGATOR FROM CANOE in September 1996. The Company relaunched AMBUSH in
February 1997.

Recent nailcare launches by Cosmar include NAIL FETISH and PRO10 in
1995, ULTRAGEL in February 1996, and COLORPOWER, FRENCH EXPRESS, FILEPRO
and NAIL FETISH POLISH in February 1997.

DISTRIBUTION

The Company's products are sold principally through the mass-market
distribution channel and through international subsidiaries and
distributors. The mass-market distribution channel is the largest and
fastest growing distribution channel in the domestic fragrance

9
<PAGE>

and cosmetics market. This channel includes chain drug stores (such as
Revco and Walgreens), mass merchandisers and discount stores (such as
Wal-Mart and Kmart) and supermarkets and combination supermarket/drug
stores (such as Kroger and Albertson's). The Company's brands are sold to
over 1,000 retailers with approximately 25,000 locations. The Company
also sells a limited amount of its artificial nail care products to
professional salon owners.

The Company's products are sold in 61 foreign countries in Europe,
Asia, South America, Central America, the United Kingdom, Australia, New
Zealand, the Middle East and Africa through distributors or licensees.
The Company sells its fragrance products directly in Brazil, Spain,
Argentina and Canada through subsidiary operations. The Company's
artificial nail care products are sold by local distributors in Europe,
Mexico, Puerto Rico, Paraguay and Australia and directly in Canada and
Brazil through subsidiary operations. The Company has been rapidly
expanding its U.S. dollar-denominated export sales. See PART I, ITEM 1.
BUSINESS - INTERNATIONAL OPERATIONS above.

The Company customarily accepts returns of its products that are not
sold by its customers (mass-market retailers), and such customers'
accounts with the Company are credited in amounts equal to the purchase
price paid for these products. The Company believes that its policy
regarding its acceptance of returns is consistent with industry practice.
The amount of returns in any given period is a function of many factors,
including (without limitation) general economic conditions and their
effect on retail businesses; the popularity of the Company's products; the
magnitude and success of the Company's marketing efforts; competition; and
product placement by retailers. Returns in any period may be
significantly more or less than in comparable prior periods. In addition,
the Company is obligated to accept returns of products sold by MEM and P&G
prior to the MEM and P&G Brands Acquisitions. The Company endeavors to
resell products received as returns, although this is not always possible
and may, when possible, require packaging modifications, labor and other
expenses that reduce the Company's profits on such products.

SALES AND MARKETING

To induce consumers' trial and repeat purchases, the Company relies
primarily on price, quality, effective product packaging and distinctive
in-store displays that are generally provided to retailers free-of-charge.
The Company also has instituted significant promotions for the Company's
products through ongoing trade advertising directed toward chain drug
retailers, mass merchandisers and supermarket chains. The Company also
advertises in many national women's magazines including COSMOPOLITAN,
GLAMOUR, HARPER'S BAZAAR, MADEMOISELLE, SEVENTEEN and VOGUE and runs
focused television advertising campaigns during new product launches or
relaunches of existing brands. The Company's national advertising
campaigns for its nail care products represent a significant level of
total category spending, which enhances the Company's trade relationships
and leads to better shelf space allocation and increased distribution.

The Company's domestic fragrance and cosmetics products are sold
primarily through an in-house sales force comprised of a dedicated staff
of 18 people, including three account managers, nine regional managers,
four national account managers and two vice presidents of sales.
Additional sales are generated by a network of over 100 independent sales

10
<PAGE>

representatives, who are compensated solely on a commission basis. These
sales representatives are supervised by the Company's internal sales
personnel.

The Company communicates directly with its domestic nail care product
consumers through its Consumer Assistance Hotline. The Company's
toll-free number for consumer assistance is displayed on each nail care
product package. The Company believes that its toll-free number has
enhanced the Company's consumer loyalty.

COMPETITION

The fragrance and cosmetics business is characterized by vigorous
competition throughout the world. Brand recognition, together with
product quality, performance and price and the extent to which consumers
are educated about specific product attributes, have a marked influence on
consumers' choices among competing products and brands. Advertising,
promotion, merchandising, packaging and the timing of new and focused
flanker product introductions also have a significant impact on buying
decisions. Further, the structure and quality of the manufacturer's sales
force affects product reception, in-store position, permanent display
space and inventory levels in retail outlets. The Company competes in
most of its product categories against a large number of companies, some
of which have substantially greater resources than the Company. In
addition to products sold in the mass-market and department and specialty
store distribution channels, the Company's products also compete with
similar products sold door-to-door or through mail order or telemarketing
by representatives of direct sales companies.

In the fragrance market, the Company competes with numerous companies
domestically and internationally, including more than 500 brands competing
for market share in the mass-market chain drug store segment. The
Company's principal competitors in this market include Benckiser, Revlon,
P&G, Cosmair and Unilever N.V.

The artificial nail care market is dominated by Cosmar with its 33%
market share in the mass market, making it more than twice the size of its
nearest competitor. For the last three years, Cosmar has virtually driven
the category's growth via new product launches and has realized
significant shelf space gains as a result of such launches, category
management expertise and strong in-store promotional support. Cosmar has
made these gains against competitors such as Nailene (Pacific World
Corp.), Jonel (a division of Barristo Ltd.), Kiss Professional Fingernail
Products (Dae Do, a Korean manufacturer), Sally Hansen (Del Laboratories),
Fing'rs (a division of Entrecap Corp.), Lee (Lee Pharmaceutical) and
Kristy Wells in the mass-market distribution channel and several companies
such as International Beauty Distributors and Orly that sell their
professional salon products into the retail market.

The Company's principal competitors in the nail lacquer category
include Revlon, Del Laboratories, L'Oreal S.A., Maybelline, Inc., Estee
Lauder, Inc., Helene Curtis Industries, Inc., Unilever N.V. and P&G.

11
<PAGE>

The Company believes that GAC's products occupy a leading position
within the mid-priced lipstick and eye make-up segments because they offer
superior quality, consumer-friendly products. GAC's competitors include
Lancetti Cosmetics, and Eco Beauty Inc., both marketers of mid-priced
lipstick and eye make-up products. GAC also competes with Revlon, L'Oreal
S.A., Maybelline, Inc., P&G and Pavion, Ltd.

CATEGORY MANAGEMENT

Category management involves strategic partnering with retailers
whereby manufacturers such as the Company utilize state-of-the-art
mathematical modeling tools to understand the sales dynamics of
categories, brands and specific SKUs so that retailers can offer the best
mix of products to boost category sales, profits and customer
satisfaction. Management believes that the Company is the category
captain for eight of its top ten nail care accounts and is category
captain or advisor for most of its major fragrance accounts. As category
captain, the Company works with retailers to define optimum space
allocation for their fragrance and nail care product categories and, as
advisor, the Company validates the analysis provided by the category
captain. The Company commits significant funds each year to Information
Resources, Inc. ("IRI") to track weekly sales data on all products it
sells through mass-market channels.

Category management allows the Company to work with retailers to (i)
assist the retailers in determining the optimal product mix for each
category, (ii) recommend the SKUs in the entire category that the retailer
should carry and (iii) monitor the sales results, both for the Company's
products and its competitors' products, on a weekly basis. These steps,
when combined with the Company's dedicated category management staff,
allow the Company to, whenever possible, replace less profitable
competitors' products with its own brands, leading to better shelf space
allocation and increased sales volume for the Company. The Company's
category management program also enables the Company's marketing
department to perform a variety of functions including (a) real time
understanding of relaunch marketing effectiveness, (b) gauging new product
success rates for the Company's products and its competitors' products and
(c) amassing competitive intelligence about consumer buying patterns.

MANUFACTURING

FRAGRANCE. The Company's fragrance and related products sold in the
United States and in selected export markets (other than the fragrances it
acquired from P&G) are manufactured in the Company's facilities in
Mountaintop, Pennsylvania. The P&G Brands that the Company acquired in
the P&G Brands Acquisition are being manufactured by a contract packer.
Additionally, four facilities in Canada, Spain, Argentina and Brazil
manufacture fragrances and related products for local markets and for
export. The Brazilian facility is being upgraded to become a regional
production and export facility. The Company closed MEM's facilities in
New Jersey and Boucherville, Quebec, in February 1997. The Company plans
to consolidate the Canadian manufacturing operations for Houbigant (1995)
Limited and MEM at a new location.

The Company's strategy for sourcing, producing and distributing its
fragrance products consists of (i) conducting operations in-house that add
significant value to the Company's products and that can be executed
economically based upon volume efficiencies, (ii) sourcing component
materials and products from outside vendors when reliable, ongoing and
multiple

12
<PAGE>

sources can be secured at competitive prices and (iii) least-cost sourcing
for local markets whereby international subsidiary facilities will become
regional producers of products for export to their regional markets.

Key supplies in the manufacturing and packaging of fragrances,
including bottles, scents and packages, are all sourced from a network of
reliable vendors. Final assembly of finished products, warehousing and
shipping of fragrance products to customers is performed at the
Mountaintop and foreign subsidiary facilities.

NAIL CARE. The Company's strategy for contracting, producing and
distributing its nail care products consists of (i) maintaining
centralized coordination of these operations in the Company's Garden
Grove, California facilities, (ii) conducting operations in-house that add
significant value to the Company's products and that can be executed
economically based on volume efficiencies and (iii) sourcing from outside
vendors component materials and products when reliable, ongoing and
multiple sources can be secured at competitive prices. The Company uses
an injection molding process to manufacture all artificial nails and tips
for the LAJOIE product line at its manufacturing facility in Sparks,
Nevada. All glues, hardeners and other chemical compounds are supplied to
the Company by third-party contract manufacturers. Most of the raw
materials and components sourced externally are readily available through
standard industry sources and represent small percentages of unit
manufacturing costs.

LIP AND EYE MAKE-UP. The Company outsources substantially all of its
raw materials, manufacturing and distribution needs for its lip and eye
make-up products. By sourcing from industry-leading color cosmetics
suppliers that also service large manufacturers such as Revlon and Estee
Lauder, management believes it can purchase the latest technologically
advanced components at reasonable prices. The Company currently intends
to continue to outsource the production of its lip and eye make-up
products.

See PART I, ITEM 2. PROPERTIES below for additional information
regarding the Company's manufacturing facilities.

SUPPLIERS AND RAW MATERIAL

The principal raw materials for the Company's fragrance products are
fragrance oils (which are either purchased from third parties or
manufactured by the Company from individual raw materials), bottles, caps,
pumps and sprayers. The principal raw materials used by the Company in
the manufacture of its nail care products are common polymers, waxes,
pigments, dyes and other processing components, such as bottles and
brushes, all of which are readily available. The principal materials that
the Company sources for its NAT ROBBINS line include waxes, pigments and
silicone commonly used to manufacture lip and eye make-up products. While
all raw materials are purchased from outside sources, the Company is not
dependent upon a single supplier in any of its operations for any
materials essential to its business that are not otherwise commercially
available to the Company. Historically, the Company has been able to
obtain an adequate supply of raw materials, and no shortage of such
materials is currently anticipated.

13
<PAGE>

MANAGEMENT INFORMATION SYSTEMS

Since inception, the Company has invested a significant amount of
capital in its MIS infrastructure to install new corporate information
systems, sales/marketing systems, personal computers and communication
systems throughout the Company. The new MIS platform is based on an IBM
AS/400 mini-computer with personal computers on local and wide area networks.
This platform allows the Company to (i) connect more than 200 of its key
employees, (ii) conduct electronic data interchange ("EDI") with its top
customers which enables customers to place orders electronically, (iii)
enable sales force and accounts receivable managers to process and track
orders and returns, (iv) provide sophisticated inventory management and
distribution capabilities and (v) install corporate-wide measurement systems
which yield accurate and timely information regarding sales, costs, profits,
accounting functions, customer service and asset management.

The Company also uses a sales order processing system, along with a
sales order pick management system. The integration of these two systems
allows the Company to closely manage each step of the selling process (i.e.,
from a sales order to the distribution and actual delivery of products).

The Company believes that its MIS provides (i) a strong platform for
both internal growth and growth through acquisitions and (ii) the capacity
base and the ability to integrate acquired companies into its information
management structure, thereby reducing costs and increasing the effectiveness
of the Company's manufacturing and product distribution process.

EMPLOYEES

As of March 31, 1997, the Company employed 1,142 people, of whom 318
were general and administrative personnel and 48 were sales and marketing
personnel. All of the Company's production employees at its Mountaintop,
Pennsylvania, manufacturing facilities, as well as the plants located in
Spain, Argentina and Brazil, are covered by collective bargaining agreements.
The collective bargaining agreements for the Company's production employees
at its Mountaintop, Pennsylvania, and Brazilian manufacturing facilities
expire in February 1999 and November 1997, respectively. There can be no
assurance that the Company will be able to negotiate extensions to such
agreements on terms acceptable to it and the failure to obtain such
extensions could have a material adverse effect on the Company. The Company
considers its relations with its employees to be good.

<PAGE>

the actual quarterly payment amount. The Fund's actuary also informed the
Company that for several years the Fund has not received the minimum annual
level of contributions required by ERISA. The Fund is in the process of
seeking to obtain certain waivers under ERISA and the Internal Revenue Code
so that the participating employers will not have to pay any penalties for
the Fund's failure to receive such minimum levels of contributions. The
Fund's actuary has estimated the Company's liability, if such waivers are not
obtained, to be approximately $1.1 million. Furthermore, the Company's ERISA
withdrawal liability may be recalculated if the Fund terminates within three
years of the Company's withdrawal, which may significantly increase the
amount of the Company's liability. The amount of the additional ERISA
withdrawal liability in the event of the Fund's termination cannot be
estimated at this time.

INTELLECTUAL PROPERTY

The Company believes that the trademarks relating to its brand and
product names and patents are important to both its fragrance and artificial
nail care businesses. In addition to "Cosmar," an unregistered brand name
used in its artificial nail care business, the Company's principal product
trademarks which it owns or licenses are CHANTILLY, WHITE CHANTILLY, LUTECE,
RAFFINEE, TABU, DREAMS BY TABU, AMBUSH, FRENCH VANILLA BY DANA, CLASSIC
GARDENIA, MONSIEUR MUSK, FRENCH GARDEN FLOWERS, ENGLISH WATERLILYS, CANOE,
CANOE SPORT, HERBISSIMO, ENGLISH LEATHER, BRITISH STERLING, LOVE'S, HEAVEN
SENT, NAVY, TOUJOURS MOI, NAVY FOR MEN, INSIGNIA, CALIFORNIA FOR MEN and LE
JARDIN with respect to its fragrance products, COLORPOWER, PRESS & GO, PETITE
PRESS & GO, SPORT PRESS & GO, PRO(10), SCULPTURE QUIK, SCULPTURE QUIK II,
ULTRAGEL, NAIL FETISH, WRAP QUIK, QUIKFILE, QUIKSHINE, FILEPRO, QUIK FIT, and
LAJOIE with respect to its artificial nail care products and NAT ROBBINS, LIP
LACQUER, EVER SHEER, and COLOR INTENSE 24 with respect to its lip and eye
make-up products. The Company's or its licensors' applications to register
DEMI-JOUR, NAVIGATOR, DREAMS BY TABU, FRENCH VANILLA BY DANA, CLASSIC
GARDENIA, ULTRAGEL, NAIL FETISH, WHITE CHANTILLY and EVER SHEER in the United
States are currently pending. The Company's other principal trademarks are
registered in the United States and several are registered in other countries.

In July and August 1994, the Company entered into two long-term license
agreements pursuant to which it obtained certain exclusive rights to
manufacture, sell, use and distribute the Houbigant Fragrances, including
CHANTILLY, LUTECE and RAFFINEE, worldwide (excluding Canada). The Company
acquired similar rights for the Houbigant Fragrances in Canada in December
1994 through the ACB Acquisition and the execution of a new license
agreement with Houbigant in July 1996, which superseded and restated its
prior rights acquired in the ACB Acquisition. Each of these licenses is
with Houbigant and has an initial term ending in 2001 with options for seven
additional five-year terms, or a total extension of 35 years if all of the
options are exercised. Houbigant, which was the subject of a proceeding under
Chapter 11 of the Bankruptcy Code at the time, was authorized and empowered
to enter into each license by the federal bankruptcy court. The Company has
prepaid royalties of $5 million, which will be credited against royalties
payable under these agreements in excess of $500,000 per year after the
Company has paid Houbigant an aggregate of $7.6 million in royalties. In
August 1994, the Company entered into an assumption and assignment agreement
with Houbigant and Harby's

<PAGE>

Corporation NV under which it was granted exclusive Western Hemisphere rights
to the fragrances that are marketed under the ALYSSA ASHLEY and ROBERT ASHLEY
names (including ALYSSA ASHLEY, ALYSSA ASHLEY MUSK and FRENCH GARDEN FLOWERS)
for a total term of 25 years if all options for additional terms are
exercised. The assignment was authorized by the federal bankruptcy court. In
October 1996, the Company purchased the tradename CIAO from Houbigant.

The Company, through Cosmar, has various patent rights and a pending
application in connection with its cosmetics and nail care business,
including (i) an artificial nail sizing ring which allows for manufacturing
efficiencies and ease of measurement and application by women, (ii) a clam
shell package design that displays artificial nails in a unique manner and
(iii) an artificial nail file/buffer that is more comfortable for a woman to
use due to its unique cushion and plastic core. Cosmar also is the exclusive
licensee for two patented artificial nail sculpturing applications.

In connection with the MEM Acquisition, the Company acquired the
exclusive and perpetual rights to manufacture and sell fragrances under the
HEAVEN SENT trademark.

ITEM 2. PROPERTIES

The Company manufactures its fragrances at its 155,000 square-foot
Mountaintop, Pennsylvania facility, and at its facilities in Buenos Aires,
Argentina, Sao Paolo, Brazil, Granollers, Spain and Chomedey (Laval), Canada.
Each of these facilities contains production, warehouse and office
facilities. The Company owns the facilities in Pennsylvania, Argentina,
Brazil and Spain and leases the facility in Canada. In addition, the Company
leases a 105,000 square-foot distribution facility in Mountaintop,
Pennsylvania. As of June 1997, the facility in Argentina was being offered
for sale. The Company also leases facilities in Calumet City, Illinois, which
it uses as its company store and will use as its returns processing center
pursuant to a lease agreement that will expire in 2000.

The Company's artificial nail care business, Cosmar, occupies
approximately 102,000 square feet in two leased facilities in Garden Grove,
California, one of which is pursuant to a sublease that expires on December
31, 1997 and one of which is pursuant to a sublease that expires on June 30,
1997. The Company has signed a new lease, with a commencement date of
January 1, 1998, covering the facility on which the sublease expires on
December 31, 1997 and is currently negotiating with the landlord of the other
facility to lease such facility after the expiration of the sublease. These
facilities house management, sales and marketing, warehouse and production
assembly operations. The Company performs most of its manufacturing for its
artificial nail care business at its 44,000 square-foot Sparks, Nevada,
facility which is leased pursuant to an agreement that expires on December
31, 2002.

The Company leases or subleases facilities in New York City, Cambridge,
Massachusetts and Stamford and Greenwich, Connecticut, at which it conducts
executive and administrative activities.

The Company currently utilizes its facilities fully.

<PAGE>

As a result of the MEM Acquisition, the Company owns a 206,000
square-foot building located on 16.3 acres in Northvale, New Jersey, which
MEM used for its executive offices and main plant. The Tom Fields plant was
located in a 53,000 square-foot building in Northvale, New Jersey, and is
owned by a subsidiary of MEM. Manufacturing facilities in Canada were
located in a 32,000 square-foot plant in Boucherville, Quebec, which is owned
by MEM Company (Canada) Ltd. Tom Fields (U.K.) Ltd. assembles products in
leased facilities in Folkestone, United Kingdom. On February 7, 1997, the
Company closed MEM's facilities in Northvale, New Jersey, and in
Boucherville, Quebec. See PART I, ITEM 1. Employees above.

The following table provides information on each of the Company's
operating facilities:

APPROX.
YEAR LAST SIZE LEASED/
SUBSIDIARY LOCATION OPENED EXPANSION (SQ. FT.) OWNED
- ---------- -------- ------ --------- --------- ------

Dana Mountaintop, PA 1963 1996 155,000 Owned
Dana Mountaintop, PA 1996 1996 105,000 Leased
Dana Chomedey (Laval), 1994 - 43,087 Leased
Canada
Dana Granollers, Spain 1971 - 67,500 Owned
Dana Sao Paolo, Brazil 1954 1984 20,810 Owned
Dana Buenos Aires, 1955 - 24,600 Owned
Argentina
Dana Calumet City, IL 1997 - 42,000 Leased
Cosmar Sparks, NV* 1987 - 43,859 Leased
Cosmar Garden Grove, CA** 1996 - 95,320 Leased
Cosmar Garden Grove, CA** 1996 - 7,000 Leased
MEM Folkestone, United - - 9,500 Leased
Kingdom -------
613,676

- ----------

* Assumed by Cosmar in 1994.
** Sublease.

ITEM 3. LEGAL PROCEEDINGS

LITIGATION

ATLANTIS LITIGATION. The Company is a defendant in a lawsuit filed in
New York State Supreme Court in March 1995 by Atlantis International, Ltd.
("Atlantis") and Brian Appel. The complaint alleges defamation, conspiracy,
unfair competition, intentional interference with

<PAGE>

Atlantis' contractual and business relationships, prima facie tort and breach
of warranty and seeks damages allegedly suffered in the amount of $6 million
and punitive damages in the amount of $1 million. The Company has been given
an indefinite extension of time to answer or move against the complaint but
intends to vigorously defend this lawsuit and believes that it has
substantial and meritorious defenses.

MEM LITIGATION. 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 was inadequate and grossly
unfair and that the defendants had violated their fiduciary duties by not
seeking additional potential purchasers for MEM. The action sought, among
other things, a court order requiring the defendants to seek other
purchasers, or, if the MEM Acquisition was consummated, damages. Although
MEM and the Company believe that the suit is without merit, because of the
expense of continued legal proceedings, MEM has entered into a settlement
agreement with the named plaintiff for settlement of the lawsuit without the
admission of liability or wrongdoing by the defendants. The terms of the
settlement include some additional disclosure to be made to shareholders
through the settlement notice, a payment of up to $25,000 for plaintiffs'
attorneys fees and the exchange of releases by the parties. The settlement
is subject to, among other things, final approval by the court.

OTHER LITIGATION. The Company is involved from time to time in various
legal proceedings arising from the ordinary course of business. The Company
believes that the outcome of all pending legal proceedings in the aggregate
will not have a material effect on the financial condition or results of
operations of the Company.

ENVIRONMENTAL AND OTHER REGULATION

Due to the nature of the Company's business, its operations are subject
to a variety of environmental laws relating to the storage, discharge,
handling, emission, generation, manufacture, use and disposal of chemicals,
solid and hazardous waste and other toxic and hazardous materials used to
manufacture the Company's products. The Company believes that it has been
operating its facilities in substantial compliance in all material respects
with existing laws and regulations.

Compliance with federal, state and local laws and regulations pertaining
to the discharge of materials into the environment, or otherwise relating to
the protection of the environment, is not anticipated to have a material
effect upon the operations of the Company.

The Company is subject to regulation by the United States Food and Drug
Administration. The Company's advertising and sales practices are subject to
the jurisdiction of the Federal Trade Commission. In addition, the Company
is subject to numerous federal, state and local laws relating to marketing
and to the content, labeling and packaging of its products.

<PAGE>

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On December 4, 1996, the Company commenced an offer to repurchase all of
the Old Senior Notes at a price of $1,165 per $1,000 principal amount thereof
(plus accrued interest thereon) (the "Old Senior Notes Offer"). In connection
with the Old Senior Notes Offer, the Company solicited and obtained consents
from the holders of the then-outstanding Old Senior Notes to amend the Old
Indenture. The amendments eliminated substantially all of the restrictive
covenants contained in the Old Indenture.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

There is no established public trading market for the Company's Common
Stock. As of March 31, 1997, there were 23 holders of the Company's
Common Stock. No cash dividends have been declared on the Company's Common
Stock nor is it anticipated that any dividends will be declared in the
foreseeable future because the Company intends to retain its earnings to
finance the expansion of its business and for general corporate purposes. Any
payment of future dividends will be at the discretion of the Company's Board
of Directors and will depend upon, among other things, the Company's
earnings, financial condition, capital requirements, level of indebtedness,
contractual restrictions with respect to the payment of dividends and other
relevant factors. The Company's New Revolving Credit Facility prohibits the
distribution of dividends on the Company's Common Stock without the prior
consent of the lenders under the New Revolving Credit Facility, and the
Existing and New Notes and the Indenture prohibit the Company from paying
a dividend which would cause a default under the New Indenture or which
would cause the Company to fail to comply with certain financial covenants
therein.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The selected historical financial data of Cosmar (Predecessor) and the
Company set forth below has been derived from and should be read in conjunction
with the Company's (and its predecessor's) consolidated financial statements
and the notes thereto included elsewhere herein and PART II, ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS below. The statement of operations data for Fiscal 1996 includes
the results of GAC, MEM and the P&G Brands from the dates of their
acquisitions through the end of Fiscal 1996.

<PAGE>
<TABLE>
COSMAR (PREDECESSOR) COMPANY
-------------------- -----------------------------------------
JANUARY 1
TO
YEAR ENDED DECEMBER 31, AUGUST 17, FISCAL FISCAL FISCAL
----------------------- ---------- ------ ------ ------
1992 1993 1994 1994 1995 1996
---- ---- ---- ---- ---- ----
(dollars in thousands, except share data)
<S> C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales $17,926 $25,844 $18,301 $ 57,714 $131,286 $174,612
Operating income 3,899 5,063 3,326 2,744 8,451 4,524
Interest expense 37 132 61 8,694 19,458 24,417
Income (loss) before
extraordinary item 3,768 4,801 3,364 (5,459) (12,057) (19,380)
Net income (loss) 3,768 4,801 3,364 (5,459) (12,057) (41,818)
Net income (loss) applicable
to common stockholders(c) 3,768 4,801 3,364 (6,174) (13,390) (55,886)
Income (loss) applicable to
common stockholders per
common share -- -- -- $ (8.50) $ (18.62) $ (71.63)

BALANCE SHEET DATA (END
OF PERIOD):
Total assets $ 7,216 $ 8,489 -- $162,253 $184,619 $361,383
Intangible assets - net -- -- -- 82,499 76,895 174,177
Long-term debt, excluding
current maturities 181 294 -- 97,032(a) 67,323(a) 203,877(a)
Senior Redeemable
Preferred Stock -
Series B(d) -- -- -- -- -- 86,660
Redeemable Preferred Stock(d) -- -- -- 10,365 11,698 13,167
Common stockholders'
equity (deficit)(b) 4,278 5,390 -- 20,189 6,451 (8,181)
</TABLE>

- ----------

(a) Excludes (i) outstanding indebtedness under the Old Credit Facility
of $57,000 at March 31, 1996 which is classified within current
liabilities and (ii) long-term minimum royalty obligations of $3,768
and $4,686 at March 31, 1997 and 1996, respectively.

(b) No cash dividends have been paid since April 15, 1994 (Inception).

(d) The carrying values of the Senior Redeemable Preferred Stock -
Series B and the Redeemable Preferred Stock have been reduced by an
allocation of proceeds to the respective common stock warrants and
have been increased by the accumulated dividends and accretion through
the respective balance sheet date.

20
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the
historical financial statements of the Company and the notes thereto included
elsewhere herein.

This discussion and analysis relates to the consolidated results of
operations of the Company, which includes the Company's major operating
divisions (the "Fragrance Division," the "Cosmetics Division" and the
"International Division," which includes both fragrance and cosmetics sales),
resulting from the following acquisitions that have been consummated by the
Company from the date of such acquisitions.

1. The Houbigant Acquisition in July and August 1994, the Cosmar
Acquisition in August 1994, the Dana Acquisition in December 1994
and the ACB Acquisition in December 1994;

2. The GAC Acquisition in August 1996 (see "--LIQUIDITY AND CAPITAL
RESOURCES" below), the operations of which have been integrated into
Cosmar;

3. The MEM Acquisition in December 1996 (see "--LIQUIDITY AND CAPITAL
RESOURCES" below), the domestic operations of which have been
integrated into Dana; and

4. The P&G Brands Acquisition in December 1996 (see "--LIQUIDITY AND
CAPITAL RESOURCES" below), the domestic operations of which have been
integrated into Dana.

OPERATIONS FOR THE FISCAL YEAR ENDED MARCH 31, 1997 ("FISCAL 1996") AS COMPARED
TO OPERATIONS FOR THE FISCAL YEAR ENDED MARCH 31, 1996 ("FISCAL 1995")

NET SALES. The Company's net sales were as follows (dollars in thousands):

FISCAL 1996 FISCAL 1995
------------------------ --------------------------
DIVISION NET SALES % OF TOTAL NET SALES % OF TOTAL
-------- --------- ---------- ----------- ----------
Fragrance $ 75,081 43.0% $ 63,864 48.6%
Cosmetics 59,175 33.9 44,511 33.9
International 40,356 23.1 22,911 17.5
-------- ----- -------- -----
$174,612 100.0% $131,286 100.0%

Total net sales increased by 33.0% to $174,612,000.

Fragrance Division net sales increased 17.6% to $75,081,000. Approximately
three-quarters of this increase resulted from new launches, primarily Navigator
and Ambush, and the revitalization of existing brands. The remaining sales
increase was attributable to the brands acquired during Fiscal 1996.

<PAGE>

Cosmetics Division net sales increased 32.9% to $59,175,000. Approximately
two-thirds of this increase was attributable to NAT ROBBINS, acquired as part
of the GAC Acquisition. The remaining increase was attributable to NAIL
FETISH and other new product introductions.

International Division net sales increased 76.1% to $40,356,000.
Approximately two-thirds of this increase was attributable to the subsidiary in
Brazil which was acquired in December 1995. The remaining increase was equally
attributable to existing brands, new launches and brands acquired during Fiscal
1996.

GROSS PROFIT. The Company's gross profit was as follows (dollars in
thousands):
FISCAL 1996 FISCAL 1995
--------------------- ----------------------
GROSS % OF NET GROSS % OF NET
DIVISION PROFIT SALES PROFIT SALES
-------- -------- --------- ------- ---------

Fragrance $ 46,603 62.1% $39,338 61.6%
Cosmetics 35,016 59.2 28,501 64.0
International 23,270 57.7 12,130 52.9
-------- ---- ------- ----
$104,889 60.1% $79,969 60.9%

The gross profit margin decrease from 60.9% to 60.1% was due primarily to
the changing sales mix among the Fragrance, Cosmetics and International
Divisions. The gross profit margin increase in the Fragrance Division was
attributable to a change in sales mix between men's and women's brands.

The gross profit margin increase in the International Division was more
than offset by the gross profit margin decrease in the Cosmetics Division.
Such decrease resulted primarily from the acquisition of the Nat Robbins line
which carried a lower gross profit margin.

SELLING EXPENSES. The Company's selling expenses for Fiscal 1996 and
Fiscal 1995 were $64,847,000 (37.1% of Net Sales) and $52,302,000 (39.8% of
Net Sales), respectively. The increase in selling expenses was principally
attributable to increased advertising and promotional expenses, reflecting
the Company's strategy of reinvigorating existing brand equities. As
discussed above, net sales increased during Fiscal 1996 due to new launches,
revitalizing existing brands and new brand acquisitions. The decrease in
selling expenses as a percentage of net sales is principally attributable to
net sales increasing at a faster rate than selling expenses.

GENERAL AND ADMINISTRATIVE EXPENSES. The Company's general and
administrative expenses for Fiscal 1996 and Fiscal 1995 were $25,705,000
(14.7% of Net Sales) and $14,009,000 (10.7% of Net Sales), respectively. The
increase in general and administrative expenses was attributable to the
addition of key personnel at both the Company's corporate and operating
levels in connection with the GAC, MEM and P&G Brands Acquisitions.

AMORTIZATION OF INTANGIBLE AND OTHER ASSETS. Amortization of intangible
and other assets for Fiscal 1996 and Fiscal 1995 was $9,813,000 (5.6% of Net
Sales) and $5,207,000 (4.0% of

<PAGE>

Net Sales), respectively. This increase is principally due to an increase in
intangible assets resulting from the GAC, MEM and P&G Brands Acquisitions.

OPERATING INCOME. Operating income for Fiscal 1996 and Fiscal 1995 was
$4,524,000 (2.6% of Net Sales) and $8,451,000 (6.4% of Net Sales),
respectively. Management believes that, as an additional measurement, EBITDA
is useful and meaningful to an understanding of the operating performance of
the Company. However, EBITDA should not be considered 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. The computation of EBITDA is
set forth in the table below (dollars in thousands):

FISCAL 1996 FISCAL 1995
----------- -----------
Operating Income $ 4,524 $ 8,451
Add Amortization 9,813 5,207
Add Depreciation 4,896 2,844
------- -------
EBITDA $19,233 $16,502
EBITDA % of Net Sales 11.0% 12.6%

INTEREST EXPENSE. The Company's total interest expense for Fiscal 1996
and Fiscal 1995 was $24,417,000 and $19,458,000, respectively. Cash interest
for these periods was $19,239,000 and $15,524,000, respectively. Interest
expense consisted of:

FISCAL 1996 FISCAL 1995
----------- -----------
CASH INTEREST PAID OR ACCRUED:
Interest on Existing Notes $ 3,427 $ -
Interest on Old Senior Notes 7,624 8,943
Interest on Seller Notes (payable in 2002) 453 420
Interest on Senior Secured Credit
Facility 2,442 -
Interest on Old Credit Facility 4,912 5,948
Other Interest 381 213
------- -------
Total Cash Interest Expense $19,239 $15,524

NON-CASH INTEREST EXPENSE:
Accretion of Interest on Old
Senior Notes and Seller Notes $ 330 $ 290
Amortization of Deferred Financing Costs 3,202 2,623
Accretion of Interest on Obligations for
Minimum Royalty Payment 1,646 1,021
------- -------
Total Non-Cash Interest Expense $ 5,178 $ 3,934
Total Interest Expense $24,417 $19,458

<PAGE>

INCOME TAX PROVISION. Income tax provision for Fiscal 1996 and Fiscal
1995 was $1,322,000 and $1,305,000, respectively. The effective tax rates
differ from the United States federal income tax rate due to the effects of
filing separate income tax returns in certain state and foreign jurisdictions,
and limitations on utilization of federal income tax benefits.

OPERATIONS FOR FISCAL 1995 AS COMPARED TO THE PERIOD FROM APRIL 15, 1994
(INCEPTION) THROUGH MARCH 31, 1995 ("FISCAL 1994")

NET SALES. The Company's net sales were as follows (dollars in thousands):

FISCAL 1995 FISCAL 1994
----------------------- ----------------------
DIVISION NET SALES % OF TOTAL NET SALES % OF TOTAL
- -------- --------- ---------- --------- ----------
Fragrance $ 63,864 48.6% $31,931 55.3%
Cosmetics 44,511 33.9 19,514 33.8
International 22,911 17.5 6,269 10.9
-------- ----- ------- -----
$131,286 100.0% $57,714 100.0%

Total net sales increased by 127.5% to $131,286,000. Approximately
$32,700,000 of this increase was attributable to internal growth through the
implementation of focused sales and marketing programs. The remaining increase
was a result of including a full year of operations in Fiscal 1995 compared to
a partial year of operations for Fiscal 1994.

GROSS PROFIT. The Company's gross profit was as follows (dollars in
thousands):

FISCAL 1995 FISCAL 1994
------------------ ------------------
GROSS % OF NET GROSS % OF NET
DIVISION PROFIT SALES PROFIT SALES
- -------- ------- -------- ------- --------
Fragrance $39,338 61.6% $18,681 58.5%
Cosmetics 28,501 64.0 10,998 56.4
International 12,130 52.9 3,482 55.5
------- ---- ------- ----
$79,969 60.9% $33,161 57.5%

The gross profit margin improvements in the Fragrance Division and
Cosmetics Division were the result of the consolidation of manufacturing
operations in the Company's Mountaintop facility at the Fragrance Division and
the introduction of new, higher-margin products such as PRO10 NAIL LACQUER,
along with cost containment efforts in the Cosmetics Division. The gross
profit margin decrease in the International Division was attributable to an
increase in export sales and sales of fragrance products that typically carry
a lower gross margin than direct international

24
<PAGE>

sales and sales of cosmetics products, respectively, resulting in a lower
total International Division gross profit margin.

SELLING EXPENSE. The Company's selling expenses for Fiscal 1995 and
Fiscal 1994 were $52,302,000 (39.8% of Net Sales) and $18,246,000 (31.6% of
Net Sales), respectively. The increase in selling expenses as a percentage of
sales was principally attributable to increased advertising and promotional
spending relating to the Company's strategy of reinvigorating existing brand
equities and introducing complementary new products.

GENERAL AND ADMINISTRATIVE EXPENSES. The Company's general and
administrative expenses for Fiscal 1995 and Fiscal 1994 were $14,009,000
(10.7% of Net Sales) and $10,127,000 (17.5% of Net Sales), respectively. The
decline in general and administrative expenses as a percentage of sales was
attributable to what management believed was a high fixed component for such
expenses and management's ability to control the increase in such expenses as
sales increased.

AMORTIZATION OF INTANGIBLE AND OTHER ASSETS. Amortization of intangible
and other assets for Fiscal 1995 and Fiscal 1994 was $5,207,000 (4.0% of Net
Sales) and $2,044,000 (3.5% of Net Sales), respectively. The increased
amortization in Fiscal 1995 included a full year of amortization resulting
from acquisitions. Fiscal 1994 included goodwill amortization only as of the
effective date of the respective acquisitions closed during such year. In
addition, Fiscal 1995 included a full year of amortization of the minimum
royalty obligation.

OPERATING INCOME. Operating Income for Fiscal 1995 and Fiscal 1994 was
$8,451,000 (6.4% of Net Sales) and $2,744,000 (4.8% of Net Sales),
respectively. Management believes that, as an additional measurement, EBITDA
is useful and meaningful to an understanding of the operating performance of
the Company. However, EBITDA should not be considered as an alternative
either to net income (loss) as an indicator of the Company's operating
performance or to cash flow as a measurement of liquidity. The computation of
EBITDA is set forth below (dollars in thousands):

FISCAL 1995 FISCAL 1994
----------- -----------
Operating Income $ 8,451 $2,744
Plus: Amortization 5,207 2,044
Plus: Depreciation 2,844 788
------- ------
EBITDA $16,502 $5,576
EBITDA as a % of Net Sales 12.6% 9.7%

INTEREST EXPENSE. The Company's total interest expense for Fiscal 1995
and Fiscal 1994 was $19,458,000 and $8,694,000, respectively. Cash interest
for the periods was $15,524,000 and $6,834,000, respectively. Interest
expense consisted of the following (dollars in thousands):

25
<PAGE>

Fiscal Fiscal
1995 1994
------ ------

CASH INTEREST PAID OR ACCRUED:
Interest on Old Senior Notes $ 8,943 $5,577
Interest on Seller Notes (payable in 2002) 420 247
Interest on Old Credit Facility 5,948 971
Other Interest 213 39
------- ------
Total Cash Interest Expense $15,524 $6,834
------- ------

NON-CASH INTEREST EXPENSE:
Accretion of Seller
Notes $ 290 $ 154
Amortization of Deferred Financing Costs 2,623 993
Accretion of Interest on Obligations for
Minimum Royalty Payment 1,021 713
------- ------
Total Non-Cash Interest Expense 3,934 1,860
------- ------
Total Interest Expense $19,458 $8,694

INCOME TAX PROVISION (BENEFIT). Income tax provision (benefit) for Fiscal
1995 and Fiscal 1994 was $1,305,000 and ($35,000), respectively. The effective
tax rates differ from the United States federal income tax rate due to state
and foreign income taxes and limitations on utilization of federal income tax
benefits.

NEW ACCOUNTING PRONOUNCEMENT

In March 1997, the Financial Accounting Standards Board issued SFAS
No. 128, Earnings Per Share ("SFAS 128"), effective for financial
statements issued for periods ending after December 15, 1997. SFAS 128 will
eliminate the required disclosure of primary earnings per share which
includes the dilutive effect of stock options, warrants and other
convertible securities ("common stock equivalents") and instead require
reporting of "basic" earnings per share, which will exclude common stock
equivalents. Additionally, SFAS 128 changes the methodology for fully
diluted earnings per share. The Company anticipates that the adoption of
this pronouncement will not have a material effect on the Company's
financial condition or results of operations.

LIQUIDITY AND CAPITAL RESOURCES

NET CASH (USED IN)/PROVIDED BY OPERATING, INVESTING AND FINANCING
ACTIVITIES. Net cash used by the Company in operating activities for Fiscal
1996 was $35,443,000, consisting primarily of a net loss of $41,818,000, less
(i) non-cash items impacting the net loss of $42,083,000, (ii) increases in
inventories and prepaid expenses of $11,070,000 and $4,209,000, respectively,
(iii) increases in accounts receivable of $8,655,000 and (iv) decreases in
accounts payable, accrued expenses, other current liabilities and other of
$1,663,000, $6,240,000, $2,700,000 and $1,171,000, respectively.

26
<PAGE>

Net cash used by the Company in investing activities in Fiscal 1996 was
$128,555,000, consisting primarily of amounts paid for acquisitions of
$95,392,000 (net of cash acquired of $1,691,000) which consisted of cash paid
for (1) the GAC Acquisition of $16,058,000, (2) the MEM Acquisition of
$37,762,000 and (3) the P&G Brands Acquisition of $43,263,000. Capital
expenditures for Fiscal 1996 were $9,330,000. Marketable securities
purchased during the year were $22,625,000, which consisted primarily of the
purchase of US Treasury Strips to invest the $17,500,000 deposited into the
Escrow Account. Net cash provided to the Company from financing activities
was $163,285,000, consisting primarily of net proceeds from the Company's
placement of equity and debt securities, net of retirements thereof. The net
decrease in cash and cash equivalents during Fiscal 1996 was $713,000.

ACQUISITIONS. On August 21, 1996, Cosmar acquired all of the issued and
outstanding stock of GAC for an aggregate cash purchase price of $15,250,000.
Additionally, Cosmar repaid $808,000 of GAC indebtedness.

On December 4, 1996, the Company acquired all of the issued and
outstanding stock of MEM for $19,787,000. In addition, in connection with the
MEM Acquisition, the Company repaid all of MEM's outstanding indebtedness in
the amount of $17,975,000.

On February 7, 1997, the Company closed the Northvale, New Jersey, and
Boucherville, Quebec facilities of MEM and Tom Fields (a division of MEM) and
terminated substantially all of the employees working at such facilities.
The union employees in the Northvale facilities had been covered by a
collective bargaining arrangement which included participation in the local
union pension fund (the "Fund"). Closure of such plants and termination of
the employees triggered an automatic withdrawal from the Fund. In connection
with such withdrawal, the Company will incur an ERISA withdrawal liability
which has been estimated by the Fund's actuary at approximately $3,800,000.
The actual payments may be made either in a lump-sum, or in equal quarterly
installments over a period not to exceed twenty years, as calculated under a
statutory formula. The Fund's actuary has not completed the final
calculations to determine the actual quarterly payment amount. The Fund's
actuary also informed the Company that for several years the Fund has not
received the minimum annual level of contributions required by ERISA. The
Fund is in the process of seeking to obtain certain waivers under ERISA and
the Internal Revenue Code so that the participating employers will not have
to pay any penalties for the Fund's failure to receive such minimum levels of
contributions. The Fund's actuary has estimated the Company's liability, if
such waivers are not obtained, to be approximately $1,100,000. Furthermore,
the Company's ERISA withdrawal liability may be recalculated if the Fund
terminates within three years of the Company's withdrawal, which may
significantly increase the amount of the Company's liability. The amount of
the additional ERISA withdrawal liability in the event of the Fund's
termination cannot be estimated at this time. See PART I, ITEM 1. BUSINESS
- -- EMPLOYEES above.

On December 6, 1996, the Company acquired from P&G the worldwide rights
to manufacture and market the P&G Brands. The cash portion of the purchase
price paid was $43,263,000. In addition, the Company assumed certain
specified trade-related obligations of P&G, including the liability for
returns of products under the P&G Brands sold prior to the closing and
liabilities under certain advertising and business development commitments.

Concurrent with the P&G Brands Acquisition, the Company entered into
transition services agreements, under which P&G will continue the foreign
marketing of the P&G Brands through June 30, 1997. P&G will remit to the
Company, within 45 days of the midpoint of a calendar month, the net amount
of revenues earned from product sales, less allowances for sales returns,
discounts, bad debts, any applicable sales and marketing costs and less any
costs of goods in excess of inventories already purchased by the Company.

EQUITY AND DEBT FINANCING TRANSACTIONS. On December 4, 1996, Cosmar
entered into a Senior Secured Credit Facility pursuant to which Cosmar
borrowed $117,500,000 and received net proceeds of $113,200,000. The net
proceeds were used (i) to finance the MEM

<PAGE>

Acquisition (after the application of a $33.8 million certificate of
deposit, plus approximately $537,000 of interest thereon), (ii) to finance
the P&G Brands Acquisition, (iii) to repay all outstanding indebtedness
under the Old Credit Facility (which was terminated on such date) and (iv)
the remainder was used or to be available for general corporate purposes.
The indebtedness under the Senior Secured Credit Facility was repaid in
full on February 7, 1997 and all liens thereunder were released at such
time.

On February 7, 1997, the Company completed the sale of $200 million
aggregate principal amount of Existing Notes. The net proceeds from such
sale, together with approximately $23.8 million of the Company's available
cash, were used (i) to purchase all of the Old Senior Notes at a price of
$1,165 for each $1,000 principal amount, plus accrued and unpaid interest,
(ii) to repay all outstanding indebtedness under the Senior Secured Credit
Facility and (iii) to fund an escrow account (the "Escrow Account") which
will be used to pay a portion of the interest expense on the Existing
Notes for two years.

Interest on the Existing Notes is payable at the rate of 11-3/4% per
year in cash. The Existing Notes mature on February 15, 2004. In
connection with the sale of the Existing Notes, the Company transferred
$17.5 million to the Escrow Account maintained by a newly-formed
single-purpose subsidiary, Renaissance Guarantor, Inc. (the "Guarantor"),
in exchange for a limited guarantee by the Guarantor of the Company's
obligations under the Existing Notes. The Existing Notes are general
unsecured obligations of the Company except to the extent that they are
collateralized by a first priority security interest in the Escrow
Account. On June 8, 1997, the Company completed the exchange of all of
the outstanding principle amount of the Existing Notes for a like
principal amount of New Notes.

LIQUIDITY REQUIREMENTS. Because of the nature of the
fragrance/cosmetics industry, both the Company's need for working capital
and its income streams are seasonal. The most significant liquidity
requirements occur in connection with the production of inventory prior to
the sales surge and related shipments to customers in advance of the
calendar year-end holiday sales season and other events such as new
product launches.

As a result of the repayment of all outstanding indebtedness under,
and the termination of, the Old Credit Facility on December 4, 1996, until
March 12, 1997, the Company did not have a revolving credit facility to
fund working capital needs.

The completion of the Acquisitions has resulted in a significant
increase in the Company's working capital needs. In order to address
these needs, on March 12, 1997, the Company entered into its New Revolving
Credit Facility with GECC pursuant to which GECC and other lenders (the
"Lenders") agreed to provide Dana, a wholly-owned subsidiary of the
Company, with a revolving credit facility with a maximum committed amount
of $75 million subject to a borrowing base calculation based upon eligible
inventory and accounts receivable.

Amounts borrowed under the New Revolving Credit Facility bear
interest, at the option of Dana, at either (i) the Index Rate (i.e., the
higher of the prime rate or the overnight Federal funds rate plus 0.50%)
plus 1.00% or (ii) absent a default, the LIBOR rate plus 2.25%. The
interest rate will be subject to adjustment, on a quarterly basis, based
on the Company's interest coverage ratio during each fiscal quarter.

<PAGE>

The New Revolving Credit Facility is guaranteed by substantially all
of the Company's domestic and Canadian subsidiaries. The Company and its
principal domestic subsidiaries also pledged 66% of the stock of their
principal operating foreign subsidiaries.

The New Revolving Credit Facility contains a number of covenants that
restrict the operation of the Company, including restrictions on, among
other things, (i) certain mergers, acquisitions or sales of the Company's
assets or stock (other than the stock of the Company), (ii) cash dividends
and other distributions to equity holders and to the Company, (iii)
payments in respect of subordinated debt, (iv) transactions with
affiliates, (iv) payments in respect of subordinated debt and (v)
indebtedness and liens. The New Revolving Credit Facility prohibits the
Company from making any acquisitions without the consent of 66-2/3% of the
Lenders. The New Revolving Credit Facility also limits the amount of
dividends and similar payments that Dana and other subsidiary guarantors
can make to the Company to the amount required to pay interest on the New
Notes (after application of amounts held in the Escrow Account), taxes,
holding company operating expense and certain other matters specified in
the New Revolving Credit Facility.

As of March 31, 1997, no amounts had been drawn under the New Revolving
Credit Facility. At March 31, 1997, the Company was not in compliance with
certain covenants contained in the New Revolving Credit Facility. On June 27,
1997, the Company and the Lenders amended the agreement, thus eliminating any
covenant violations.

The Company believes the New Revolving Credit Facility along with the
Company's working capital management efforts should be sufficient for at
least the next two years to fund existing operations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary financial data required by
this ITEM 8. are set forth in ITEM 14. of this Form 10-K. All information
which has been omitted is either inapplicable or not required.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

29
<PAGE>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS AND OFFICERS

The following table sets forth certain information concerning the
executive officers, directors and certain key employees of the Company as
of May 1, 1997:

NAME AGE POSITION
Thomas V. Bonoma 50 Late Chairman, Chief Executive Officer,
and Director
Norbert Becker 48 President and Chief Operating Officer
Ronald D. Bowen 53 Group Vice President, Corporate Production
and Operations
Albert E. DeChellis 47 Group Vice President and President,
Fragrance
Sean E. Greene 56 Group Vice President and President
Renaissance, Sales
John R. Jackson 38 Group Vice President and Secretary
Thomas T. S. Kaung 59 Group Vice President and Chief Financial
Officer
Anne E. Leets 45 General Manager, Cosmar
Gay A. Mayer 54 Group Vice President, Market Development
Lynne Myers 44 Group Vice President and General Manager,
Dana
Marc L. Rovner 45 Group Vice President and President,
International
Eric R. Hamburg 34 Director
Kurt L. Kamm 54 Director
William J. Kidd 55 Director
John H. Lynch 44 Director
E. Mark Noonan 44 Director
Terry M. Theodore 33 Director
Daniel D. Villanueva 59 Director

THOMAS V. BONOMA, late Chairman, Chief Executive Officer and a director,
was responsible for the overall administration and direction of the Company.
Dr. Bonoma died suddenly on May 21, 1997. From 1987 to 1993, Dr. Bonoma was
employed by Benckiser, GmbH, a $3 billion privately-held international
manufacturer of fragrances, cosmetics and cleaning products, as the chief
executive officer of its business in the United States, Canada and Latin
America. In this capacity, Dr. Bonoma directed the acquisition of seven
businesses with

<PAGE>

aggregate annual gross revenues in excess of $800 million. Products under
his management while at Benckiser, GmbH included COTY, JOVAN and
Quintessence brands in the fragrance and cosmetics business and CALGON
BUBBLE BATH, CLING FREE FABRIC SOFTENER, ELECTRASOL and JET-DRY, in the
cleaning products business. Since 1987, Dr. Bonoma was a partner of BGI,
a consulting firm. From 1979 to 1990, he was Professor of Business
Administration at the Harvard Business School. Dr. Bonoma was a director
of Griffin Corp., an agricultural chemicals company..

NORBERT BECKER, President and Chief Operating Officer (through May
27, 1997), joined the Company in July 1996. At a special meeting of the
Board of Directors of the Company held on May 28, 1997, Mr. Becker was
appointed as Chief Executive Officer and a director effective May 28,
1997. From April 1981 to 1996, Mr. Becker held a number of positions with
Benckiser, GmbH in different countries. His last position was as President
and Chief Executive Officer of Lancaster Group USA, the American
subsidiary of Benckiser, GmbH, selling and marketing prestige fragrances
in the United States. Previously, Mr. Becker was Chief Operating Officer
of Lancaster Group USA and Executive Vice President for Finance and
Administration for Lancaster Worldwide, a division of Benckiser, GmbH. Mr.
Becker is a graduate of Frankfurt University, in Frankfurt, Germany.

RONALD D. BOWEN, Group Vice President, Corporate Production and
Operations, joined the Company in June 1994. From 1988 to 1994, Mr. Bowen
served as Benckiser, GmbH's Vice President of Operations. In this capacity
Mr. Bowen supervised all of Benckiser, GmbH's North American production
activities, including manufacturing, logistics and distribution and was
actively involved in acquiring and restructuring facilities and
implementing production policies for certain businesses acquired by
Benckiser, GmbH. Mr. Bowen worked closely with Dr. Bonoma on the
acquisition and integration of Beecham Household Products (Calgon),
Germaine Monteil (Revlon), Quintessence, Inc. and Coty, Inc. For 17 years
prior to joining Benckiser, GmbH, Mr. Bowen was employed by General Foods
Corporation in manufacturing, logistics, marketing and MIS positions and
as a Vice President of Culinova Group, a General Foods Corporation
subsidiary. Mr. Bowen is a graduate of Harvard University's Program for
Management Development and the United States Military Academy.

ALBERT E. DECHELLIS, Group Vice President and President, Fragrance,
joined the Company in June 1994. From 1992 to 1994, Mr. DeChellis was the
President and Chief Operating Officer of Benckiser, GmbH Consumer
Products. Previously, Mr. DeChellis was Benckiser, GmbH's Vice President
of Sales. Mr. DeChellis was integrally involved with Dr. Bonoma in the
acquisition and restructuring of several companies while at Benckiser,
GmbH. Mr. DeChellis helped orchestrate the acquisition and restructuring
of Calgon, Inc., Quintessence, Inc. and Coty, Inc., and was directly
responsible for the restructuring of the sales organizations for each of
those acquired companies. Prior to 1987, Mr. DeChellis was employed by
Ecolab in various sales capacities for almost 15 years, where he held
positions such as District Manager, Assistant Vice President of Regional
Sales and Vice President of Eastern Area Sales. Mr. DeChellis is a
graduate of Kent State University.

SEAN E. GREENE, Group Vice President and President, Renaissance,
Sales, joined the Company in June 1994. From 1991 to 1994, Mr. Greene
served as Vice President of Sales of Quintessence, Inc., which was
acquired by Benckiser, GmbH in 1991. In 1994, Mr. Greene became Senior
Vice President of Sales for Coty, Inc., another Benckiser, GmbH
subsidiary.

<PAGE>

Prior to joining Benckiser, GmbH, Mr. Greene was Senior Vice President of
the Fine Fragrance Division of Faberge, Inc. and a Vice President of Mary
Quant Cosmetics, an international cosmetics and fragrance company. Mr.
Greene is a graduate of Belvedere College in Dublin, Ireland.

JOHN R. JACKSON, Group Vice President and Secretary, joined the
Company in June 1995. From 1994 to 1995, Mr. Jackson was the Vice
President of Acquisitions and General Counsel and Secretary for Brothers
Gourmet Coffees, Inc. From 1983 to 1988, he was engaged in the practice
of law at the Denver office of Kirkland and Ellis. From 1988 to 1994, Mr.
Jackson was engaged in the practice of law at the Denver office of the
firm of Ballard Spahr Andrews & Ingersoll, where he became a partner in
1990. While engaged in private practice, Mr. Jackson focused on merger
and acquisition transactions and private and public financing. Mr. Jackson
taught Business Planning as an adjunct professor of law at the University
of Denver Law School. He holds a B.A. degree from Davidson College and a
J.D. degree from Vanderbilt Law School.

THOMAS T.S. KAUNG, Group Vice President and Chief Financial Officer,
joined the Company in July 1995. From 1991 to 1995, Mr. Kaung was
President of River International, Inc., a consulting firm. From 1990 to
1991 he was the Executive Vice President and Chief Financial Officer for
Zale Corporation, which operates a large national chain of fine jewelry
stores. Prior thereto, he spent 12 years at Cole National Corporation, a
leading specialty retailer, where he served as Executive Vice President,
Administration and Chief Financial Officer. In addition, Mr. Kaung rose to
the position of Divisional Vice President for Finance for the Dayton
Hudson Corporation after ten years of service. Mr. Kaung holds a B.S.
degree from Southwestern University and an M.S. degree from the University
of Iowa.

ANNE E. LEETS, General Manager, Cosmar Corporation, joined the Company
in October 1995 as Vice President, Sales of Cosmar. Previously, she held
senior sales and marketing positions with Revlon, L'Oreal, Almay and
1-800-FLOWERS. These positions included Vice President, Retail Sales and
Marketing at 1-800-FLOWERS (from 1994 to 1995), Vice President, National
Account Sales at Revlon (from 1992 to 1994), Director, National Account Sales
at L'Oreal (from 1986 to 1987) and Director, New Product Marketing at Almay
(from 1982 to 1984). In addition, Ms. Leets founded, built and sold a
business in California.

GAY A. MAYER, Group Vice President, Market Development, joined the
Company on December 4, 1996. From 1990 to 1996, Mr. Mayer was President,
Chief Executive Officer and Chairman of the Board of Directors of MEM.

LYNNE MYERS, Group Vice President and General Manager, Dana Perfumes
Corp., joined the Company in February 1995. From February 1995 to October
1996, Ms. Myers served as the General Manager of the Company's Canadian
subsidiary, Houbigant (1995) Limited. Beginning in November 1996, Ms.
Myers served as the General Manager of the Company's international
subsidiaries in Canada, Brazil, Argentina, Spain and the U.K. Prior to
joining the Company, Ms. Myers worked for a number of fragrance and
cosmetics companies in the U.S., Canada and South America, including
Yardley, Beecham Cosmetics, Maybelline and J.B. Williams in men's personal
care. Ms. Myers came through her career in the field of marketing and has
17 years experience in the fragrance and cosmetics industry. Ms. Myers
has an

<PAGE>

Economics degree from The London School of Economics and a Postgraduate
degree in Marketing.

MARC L. ROVNER, Group Vice President and President, International,
joined the Company in May 1995. Mr. Rovner's background spans 16 years of
international sales and marketing experience with Fortune 500 companies
such as International Paper, Unilever and Benckiser, GmbH. From 1992 to
1995, he served as U.K. General Manager at Benckiser, GmbH. From 1981 to
1992, Mr. Rovner served as Divisional Category Manager at Unilever, where
he directed the launch of ten major detergent and personal care products,
both in the United States and Japan. From 1978 to 1980, he served as
Product Manager at International Paper, where he was responsible for the
introduction of its first consumer products ad campaign. Mr. Rovner holds
a B.A. degree from the University of Pennsylvania and an M.A. degree from
the University of Chicago.

ERIC R. HAMBURG, Director, was elected as a director in October 1994.
Mr. Hamburg is the founder and President of Industrial Renaissance Inc.,
which was founded in September 1996 and has been active since November
1996. In 1993, he joined Kidd, Kamm & Company as a partner after serving
as a senior manager with Andersen Consulting from 1985 to 1993. While at
Andersen Consulting, Mr. Hamburg led the design and implementation of
numerous business turnarounds and profit improvement initiatives in a wide
variety of industries. He has extensive experience in just-in-time
manufacturing, distribution, management information systems and plant
start-ups.

KURT L. KAMM, Director, was elected as a director in October 1994. In
1979, Mr. Kamm joined Lineberger Kidd Kamm & Company. He helped to
establish Kidd, Kamm & Company in 1987. Mr. Kamm is a director of Wright
Medical Technology, Inc., a manufacturer and marketer of orthopedic
implant devices. In January 1997, Mr. Kamm formed a separate entity for
future investments, Kamm Theodore, LLC.

WILLIAM J. KIDD, Director, was elected as a director in May 1994. In
1974, Mr. Kidd helped to form and became a principal of Lineberger, Kidd &
Company which, in turn, became Lineberger Kidd Kamm & Company in 1979. In
1987, Mr. Kidd helped to establish Kidd, Kamm & Company. Mr. Kidd is a
director of Wright Medical Technology, Inc., a manufacturer and marketer
of orthopedic implant devices. In January 1997, Mr. Kidd formed a separate
entity for future investments, Kidd & Company, LLC.

JOHN H. LYNCH, Director, was elected as a director in March 1995. Mr.
Lynch has been the Vice Chairman and President since 1994 of Knoll Inc., a
firm engaged in the manufacture of office furniture. He has been a partner
since 1987 of BGI, a consulting firm. From 1982 to 1990, Mr. Lynch was
employed by the Harvard Business School, as Assistant Dean and Director of
the MBA program from 1982 to 1986 and as Associate Dean from 1988 to 1990.
Mr. Lynch has been elected to the Board of Directors pursuant to the right
of Dr. Bonoma, under his employment agreement, to designate one additional
director.

E. MARK NOONAN, Director, was elected as a director in May 1994. Mr.
Noonan has been a Managing Director since 1990 of Triumph Capital Group,
Inc., a firm engaged in investment banking and investment management. He
served as Vice President and then a

<PAGE>

Managing Director of Drexel Burnham Lambert from 1984 to 1990. Mr. Noonan
has been elected to the Board of Directors pursuant to the right of the
holders of the Company's Cumulative Exchangeable Preferred Stock to elect
one director under the Company's restated certificate of incorporation.

TERRY M. THEODORE, Director, was elected as a director in May 1994.
Mr. Theodore, a partner at Kidd Kamm & Company, joined Kidd, Kamm &
Company in 1989 after serving in the Financial Institutions Group of Bear,
Stearns & Co. from 1988 to 1989. In January 1997, Mr. Theodore formed a
separate entity for future investments, Kamm Theodore, LLC.

DANIEL D. VILLANUEVA, Director, was elected as a director in
September 1996. Mr. Villanueva has been the Chairman and Managing Director
since 1990 of Bastion Capital Corporation, a minority-controlled private
equity investment firm specializing in management-led buyouts of leading
middle market companies and related transactions. He has served since
April 1996 on the Board of Directors of Telemundo Group, Inc., a publicly
traded Spanish-language television company and Seven-Up/RC Bottling
Company of Southern California, Inc., a manufacturer and distributor of
beverage products. Mr. Villanueva has been elected to the board of
directors as the designee selected by the holders of a majority of the
shares of Senior Redeemable Preferred Stock.

DIRECTORS

Directors of the Company are elected annually and hold office until
the next annual meeting of shareholders or until their successors are duly
elected and qualified. Officers of the Company are appointed by and serve
at the discretion of the Board of Directors of the Company. Under the
Company's restated certificate of incorporation, the holders of the
outstanding shares of the Company's Cumulative Exchangeable Preferred Stock
have the right to elect one member of the Company's Board of Directors.
Mr. Noonan has been elected to the Board of Directors pursuant to this
right. Pursuant to Dr. Bonoma's employment agreement with the Company,
Dr. Bonoma was elected a director and had the right to designate one
additional director. Mr Lynch was elected to the Board of Directors
pursuant to this right. Holders of the Series C Preferred Stock (acting
together with the holders of the Series B Preferred Stock, as a single
class) have the right to nominate three candidates for consideration for
the Company's Board of Directors. The Company is obligated to use all
reasonable commercial efforts to cause the election of one of such
nominees selected by the holders of the Series C Preferred Stock (the
"Series C Preferred Nominee"). Mr. Villanueva has been elected to the
Board of Directors pursuant to this right. Pursuant to the Securities
Purchase Agreement, dated as of September 27, 1996, between the Company and
Bastion Capital Fund, L.P. ("Bastion"), the Company has agreed in the
event that Bastion is not entitled to designate the Series C Preferred
Nominee, the Company will include one person selected by Bastion in its
nominations for the Company's Board of Directors and to use all reasonable
commercial efforts to cause the election of such person to the Board, so
long as Bastion owns 75% (in value) of (i) the shares of common stock
purchased by Bastion and (ii) the units purchased by Bastion pursuant to
the Series B Preferred Stock offering (the "Minimum Share Amount").
Pursuant to a Voting Agreement of September 27, 1996, KKEP agreed that, in
the event that Bastion is not entitled to designate the Series C Preferred
Nominee, KKEP will vote its shares of common stock in favor of a nominee

34
<PAGE>

designated by Bastion for election to the Company's Board of Directors
provided that Bastion has the Minimum Share Amount.

Directors of the Company generally are not compensated for their
services as directors. All non-employee directors of the Company are
reimbursed for ordinary and necessary expenses incurred in attending board or
committee meetings.

At its February 1997 meeting, the Board of Directors created a Financial
Affairs Committee of the Board of Directors and appointed Messrs. Kidd,
Noonan and Theodore to such committee. The principal function of the
Financial Affairs Committee is to consider matters pertaining to the
Company's financing and business strategies; however, the Board of Directors
has not yet determined the extent of the authority to be delegated to such
committee. The Company also has a Compensation Committee, Stock Option
Committee, Nominating Committee and Audit Committee of the Board of Directors.

ITEM 11. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

The following table sets forth certain information with respect to the
annual and long-term compensation for services rendered in all capacities
earned by the Company's Chief Executive Officer and the four other most
highly compensated executive officers (collectively, the "Named Executive
Officers") during Fiscal 1994, Fiscal 1995 and Fiscal 1996.

SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
SHARES
NAME AND UNDERLYING
PRINCIPAL FISCAL OPTIONS ALL OTHER
POSITION PERIOD SALARY BONUS GRANTED COMPENSATION

Thomas V. 1996 $470,592 $150,000 -
Bonoma, late 1995 400,000 - -
Chairman and 1994 233,338 - $93,182 - (1)
Chief Executive
Officer

Sean E. Greene, 1996 $275,000 $125,000 - -
Group Vice 1995 250,000 - - -
President, 1994 145,836 175,000 9,318 62,500(2)
President,
Renaissance Sales

<PAGE>

ANNUAL LONG-TERM
COMPENSATION COMPENSATION
SHARES
NAME AND UNDERLYING
PRINCIPAL FISCAL OPTIONS ALL OTHER
POSITION PERIOD SALARY BONUS GRANTED COMPENSATION

Albert E. 1996 $244,094 $ 80,000 - -
DeChellis, Group 1995 225,000 - - -
Vice President 1994 131,250 125,000 9,318 37,500(2)
and President,
Fragrance

Thomas T. S. 1996 $254,115 $100,000 - -
Kaung, Group 1995 177,385 - 9,318 -
Vice President 1994(3) - - - -
and Chief
Financial Officer

Ronald D. 1996 $206,960 $120,000 - -
Bowen, Group 1995 166,667 - - -
Vice President, 1994 93,333 125,000 9,318 40,000(2)
Corporate
Production and
Operations

(1) Does not include $85,000 paid to a company controlled by Dr. Bonoma during
May through July 1994 for consulting services.

(2) Represents amounts paid in respect of services rendered as a consultant
prior to the individual's employment by the Company.

(3) Mr. Kaung joined the Company during the fiscal year ended March 31, 1996.

STOCK OPTION GRANTS

No stock options were granted (or exercised) during Fiscal 1996 to (by)
the named Executive Officers.

STOCK OPTION PLAN

The Company's Stock Option Plan (the "Plan") was approved by the
Company's Board of Directors and stockholders in January 1995. In February
1997, the Board of Directors approved an amendment to the Plan increasing the
number of shares of common stock, par value $.01 per share of the Company
("Common Stock"), eligible for stock option grants under the Plan (and the
number of shares of Common Stock reserved for issuance upon the exercise of

<PAGE>

stock options granted under the Plan) to 136,320. Options granted under the
Plan may include those qualified as incentive stock options under Section 422
of the Internal Revenue Code of 1986, as amended, and non-qualified stock
options. The Plan is administered by a Stock Option Committee of the Board
of Directors (the "Stock Option Committee") consisting (through May 21, 1997)
of Dr. Bonoma and Mr. Kidd. The Stock Option Committee has wide latitude in
determining the recipients of options and numerous other terms and conditions
of the options. All regular employees and all directors may be chosen by the
Stock Option Committee to participate in the Plan. Non-employees may receive
only nonqualified options. Options become exercisable in such amounts and at
such intervals as the Stock Option Committee provides for in the applicable
option agreement. At March 31, 1997, there were outstanding options under
the Plan with respect to 106,305 shares of Common Stock. These options
generally become exercisable with respect to 25% of their shares in each of
the four years 1995 through 1998, and expire in January 2005.

The exercise price for the shares purchased upon exercise of all options
granted under the Plan is determined by the Stock Option Committee. The
exercise price of an incentive stock option must be at least equal to the
fair market value of the Common Stock on the date such option is granted
(110% of the fair market value for stockholders who, at the time the option
is granted, own more than 10% of the total combined classes of stock of the
Company or any subsidiary).

No option may have a term of more than ten years (five years for
incentive stock options granted to 10% or greater stockholders). Options
generally may be exercised only if the option holder remains continuously
associated with the Company or a subsidiary from the date of grant to the
date of exercise. However, options may be exercised within certain specified
periods following termination of employment or ceasing to be a director by
reason of death, disability or retirement of the optionee or any reason other
than termination of employment for cause or without the consent of the
Company. The Stock Option Committee may cancel, by giving an optionee written
notice, any option that remains unexercised upon the date of the consummation
of a merger, consolidated reorganization, liquidation or dissolution in which
the Company does not survive or a sale, lease exchange or other disposition
of all or substantially all of the property and assets of the Company.

EMPLOYMENT AND NON-COMPETE AGREEMENTS

The Company entered into an employment agreement (the "Bonoma Employment
Agreement"), dated as of August 6, 1996, with Dr. Bonoma, which agreement
superseded his prior employment agreement with the Company. Pursuant to the
Bonoma Employment Agreement, Dr. Bonoma was employed as the Chief Executive
Officer of the Company and each of its present and future subsidiaries and
was responsible for managing the day-to-day affairs of the Company and its
subsidiaries.

Dr. Bonoma received a base salary of $500,000 per year and was eligible
to receive an additional annual bonus of 100% of his annual base salary if
certain objectives, established by the Board of Directors of the Company,
were met. Upon Dr. Bonoma's death, his estate is entitled to receive his
unpaid salary through the date of his death and a bonus of 75% of his base
salary pro rated for the part of the year to the date of his death.

<PAGE>

The Company and Mr. Gay A. Mayer, the former Chief Executive Officer and
President of MEM, entered into an employment agreement dated August 6, 1996,
pursuant to which Mr. Mayer is employed as Group Vice President of Market
Development of the Company. Mr. Mayer will receive an annual gross salary of
$250,000 and will be eligible to participate in all bonus programs for
executives of the Company, on the same terms and conditions as such
executives. The Company also granted Mr. Mayer an option to purchase 5,000
shares of Common Stock under the Company's stock option plan at a per share
exercise price of $104.00. Mr. Mayer's employment will terminate 30 months
after consummation of the MEM Acquisition, which was completed on December 4,
1996.

The Company is negotiating the terms of an employment agreement and
stock option agreement with Norbert Becker who was appointed Chief Executive
Officer and a director effective May 28, 1997.

BONUS PLANS

The Company and each of its principal divisions - the Fragrance
Division, Cosmetics Division and International Division - have adopted an
incentive bonus plan for Fiscal 1996 (the "1996 Bonus Plan") under which
eligible employees of the Company (including the Named Executive Officers) or
such Division, as the case may be, who are actively employed on the day the
bonus is paid, will be entitled to receive cash bonuses as a percentage of
such employee's base salary depending upon whether target levels of EBITDA
established by the Company's Board of Directors are met or exceeded. Five
percent of a target award amount is paid if 90% of the established EBITDA
target is met and 10% of a target award is paid if 91% of the established
EBITDA target is met. Thereafter increasing percentages of the target award
are paid until 100% of the established EBITDA target is met (at which point
100% of the target award is paid). In the event that the established EBITDA
target is exceeded, bonus levels will increase above 100% of the target award
by one percentage point for each full percentage point by which the
applicable EBITDA target is exceeded. Employees who are actively employed for
less than one full year will have the award pro-rated for each full month of
employment. Final award payments are subject to the approval of the Chairman.

In October 1996, the Board of Directors elected to pay to certain
employees of the Company approximately $1.5 million as a non-returnable
advance against incentive bonuses that may be earned under the 1996 Bonus
Plan. Amounts advanced will offset on a dollar-for-dollar basis the bonuses
actually earned, but such advances are not required to be returned even if
not ultimately earned. The Named Executive Officers received advances as
follows: Thomas V. Bonoma - $150,000; Sean E. Greene - $125,000; Albert E.
DeChellis - $80,000; Thomas T.S. Kaung - $100,000; and Ronald D. Bowen -
$120,000.

In connection with the MEM Acquisition, the Company established the MEM
Employee Stay Bonus Program for twenty-nine employees of MEM in order to
encourage the selected employees to remain in the employ of the Company
following the closing. On the closing date of the MEM Acquisition, $207,932
was deposited in an escrow account. As of March 31, 1997, approximately
$154,000 had been paid and an additional $47,000 is expected to be paid
pursuant to the MEM Employee Stay Bonus Program.

38
<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Through May 21, 1997, Dr. Bonoma and Mr. Kidd constituted the Company's
Compensation Committee. Dr. Bonoma's salary was established by his employment
agreement with the Company. Through May 21, 1997, Dr. Bonoma and Mr. Kidd
constituted the Stock Option Committee and the Nominating Committee (which
was formed on May 7, 1997) of the Board of Directors. Messrs. Kidd, Lynch and
Noonan constitute the Audit Committee of the Board of Directors. Mr. Kidd,
Mr. Noonan and Mr. Theodore constitute the Financial Affairs Committee. There
are no other committees of the Board of Directors.

CERTAIN OTHER MATTERS

From March 1994 to August 1995, Dr. Bonoma was a director (including
chairman of the board from September 1994 to August 1995) of Brothers Gourmet
Coffees, Inc. ("Brothers"). During September and October 1995, three
shareholder suits were commenced against Brothers, naming, among others, Dr.
Bonoma as a defendant. These suits alleged, among other things, that Brothers
and the individual defendants violated federal securities laws in connection
with the initial public offering of Brothers's common stock in December 1993
(prior to the time Dr. Bonoma became a director) and certain public
statements made by Brothers through May 1995. Dr. Bonoma believed that the
allegations made in the suits as they concern him are without merit. The
parties to the suits have entered into a stipulation of settlement under
which the plaintiffs will receive a total of approximately $8 million in cash
and Brothers common stock, although there is no admission of wrongdoing. Dr.
Bonoma was not required to contribute any amounts in respect of the
settlement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of March 31, 1997, information with
respect to the beneficial ownership of shares of the Company's Common Stock
by (i) each stockholder known by the Company to be the beneficial owner of
more than 5% of such shares, (ii) each director of the Company, the Company's
Chief Executive Officer and each of the other named executive officers in the
Summary Compensation Table contained herein and (iii) directors and executive
officers of the Company as a group.

Percent on a
Number of Fully Diluted
Name of Stockholder Shares Percent* Basis
- ------------------- --------- -------- -------------
Kidd Kamm Equity Partners(1) 605,286 73.4% 39.3%
c/o Kidd, Kamm & Company
Three Pickwick Plaza
Greenwich, CT 06830

Thomas V. Bonoma(2) 26,902 3.3% 1.7%

Ronald D. Bowen 3,632 ** **

39
<PAGE>

Percent on a
Number of Fully Diluted
Name of Stockholder Shares Percent* Basis
- ------------------- --------- -------- -------------
Albert E. DeChellis 6,053 ** **

Sean E. Greene 8,070 1.0% **

Thomas T.S. Kaung 2,690 ** **

John H. Lynch 2,690 ** **

E. Mark Noonan(3) 59,825 6.8% 3.9%

Triumph-Connecticut Limited
Partnership(3) 59,825 6.8% 3.9%
60 State Street, 21st Flr
Boston, MA 02109

Daniel D. Villanueva(4) 95,766 11.0% 6.2%
Bastion Capital Corporation
Suite 2960
1999 Avenue of the Stars
Los Angeles, CA 90067

CIBC WG Argosy Merchant Fund
2, L.L.C.(5) 51,959 6.3% 3.4%
c/o CIBC Wood Gundy Securities
Corp.
425 Lexington Avenue
New York, NY 10017

All Directors and Executive
Officers as a group 810,914 87.3% 52.7%

- -------------------

* The percentages in this column have been calculated pursuant to Rule
13d-3(d)(1) of the Exchange Act and do not give effect to options and
warrants, except for options and warrants of the person for whom the
percentage is being calculated that are exercisable within 60 days.

** Less than 1%.

(1) William J. Kidd, Kurt L. Kamm, Terry M. Theodore and Eric R. Hamburg are
affiliates of Kidd, Kamm Equity Partners, L.P., and for purposes of this
report may be deemed to beneficially own the shares owned of record by Kidd,
Kamm Equity Partners, L.P.

(2) Includes 26,902 shares held by a trust for the benefit of Dr. Bonoma, but
excludes 93,182 shares of Common Stock issuable to Dr. Bonoma under a stock
option which is not currently exercisable but, once it becomes exercisable
under the terms of the agreement governing the stock option, may be
exercised by Dr. Bonoma's estate, personal representative or beneficiary at
any time until August 18, 2002.

40
<PAGE>

(3) Represents shares issuable upon exercise of Common Stock purchase warrants
acquired by Triumph-Connecticut Limited Partnership ("Triumph-Connecticut")
in connection with the purchase by that entity of shares of the Company's
Cumulative Exchangeable Preferred Stock. Does not include 175 shares
issuable upon exercise of warrants held by Jeffrey Lane and Meri Lane
(collectively, the "Lanes"), as trustees of a trust that is not
affiliated with Triumph-Connecticut. Jeffrey Lane is affiliated with
Triumph-Connecticut. Mr. Noonan is a Managing Director of Triumph Capital
Group Inc., a general partner of Triumph-Connecticut Capital Advisors,
Limited Partnership, the general partner of Triumph-Connecticut, and for
purposes of this table Mr. Noonan may be considered to be the owner of
these shares. As of March 31, 1997, Triumph-Connecticut and the Lanes
also held approximately 12,753 shares and approximately 45 shares,
respectively, of the Cumulative Exchangeable Preferred Stock.

(4) Represents 51,959 shares of Common Stock acquired by Bastion in the Equity
Financing in August and September 1996 and includes 43,807 shares of
Common Stock issuable upon exercise of Common Stock warrants acquired by
Bastion in the Series B Preferred Stock Offering. Mr. Villanueva is the
Chairman and Managing Director of Bastion and for purposes of this table
Mr. Villanueva may be considered to be the owner of such shares.

(5) The Initial Purchaser (as defined below under the caption "Financing Fees"),
an affiliate of the CIBC Fund, may from time to time hold a position in the
Company's Series B Warrants.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

MANAGEMENT OWNERSHIP AND COMPENSATION

In August 1994, Dr. Bonoma, together with other members of senior
management, acquired 68,922 shares of Common Stock in consideration of the
payment of approximately $3 million. In addition, the Company has granted
options to officers and other employees under the Plan referred to above
under the caption "Stock Option Plan" and additional options may be granted
under the Plan to directors, officers and other employees.

MANAGEMENT AGREEMENT

On August 16, 1994 the Company entered into a Management Agreement (the
"Management Agreement") with Kidd Kamm. Pursuant to the Management Agreement,
Kidd Kamm received a fee of $675,000 upon the closing of the Cosmar
Acquisition and, subject to certain restrictions contained in the Indenture
governing the Company's Senior Notes, is entitled to receive an annual
management fee of $675,000 subject to increases as determined by the Board of
Directors of the Company, plus out-of-pocket expenses incurred for
management, consulting and related services to be rendered to the Company. At
the closing of the offering of the Existing Notes, Kidd Kamm received
fees equal to $1.35 million. Principals of Kidd Kamm organized KKEP which
is the owner of 73.4% of the currently outstanding Common Stock.

41
<PAGE>

In November 1996, the partners of Kidd Kamm agreed to a division of the
firm and its operations in relation to future investments. The firm's two
founding partners, William J. Kidd and Kurt L. Kamm, formed separate entities
for future investments, including the formation of two firms, Kidd & Company,
LLC and Kamm Theodore, LLC in January, 1997. The ongoing support and
management provided to the Company under the Management Agreement will not be
affected by the aforementioned changes in Kidd Kamm. Members of the investment
firms to be formed by the founding partners of Kidd Kamm who were primarily
responsible for providing support and assistance to the Company as employees of
Kidd Kamm will continue to provide such services throughout the term of the
Management Agreement.

STOCKHOLDERS AGREEMENT

Management, Kidd Kamm and certain other equity holders have entered into
a stockholders agreement dated August 18, 1994 with the Company (the
"Stockholders Agreement"), whereby such equity holders of the Company are
restricted in the transfer of their shares of Common Stock of the Company for
a period of eight years from that date unless such transfer is made in
accordance with the Stockholders Agreement.

FINANCING FEES

In May 1996, the Company paid the CIBC Fund a $2.1 million commitment fee
for committing to purchase the Series A Preferred Stock, $1.1 million of
which was refunded to the Company in connection with the closing of the
Existing Notes. In addition, CIBC Wood Gundy Securities Corp. (the "Initial
Purchaser"), an affiliate of the CIBC Fund, has from time to time provided
investment banking services to the Company in connection with various
transactions and proposed transactions for which it has received customary
compensation. The Initial Purchaser acted as initial purchaser of the Series B
Preferred Stock, provided the initial commitment in connection with the Senior
Secured Credit Facility, purchased a portion of the notes issued in the
initial funding under the Senior Secured Credit Facility, and acted as initial
purchaser of the Existing Notes in each case in return for customary fees and
reimbursement of expenses. In connection with the Equity Financing and the
closing of the Senior Secured Credit Facility, Triumph-Connecticut, a
partnership in which E. Mark Noonan serves as a general partner of the general
partnership, received a referral fee of $600,000 from the Initial Purchaser.
In addition, Triumph-Connecticut received a referral fee of $1 million from
the Initial Purchaser in connection with the offer by the Company to exchange
the New Notes for the Existing Notes and may receive additional fees from the
Initial Purchaser from time to time.

BASTION SECURITIES PURCHASE AGREEMENT

On September 27, 1996, the Company entered into a Securities Purchase
Agreement (the "Bastion Securities Purchase Agreement") with Bastion pursuant
to which it sold 51,959 shares of Common Stock to Bastion for an aggregate
purchase price of $5 million. Pursuant to the terms of the Bastion Securities
Purchase Agreement, the Company has agreed to include one person selected by
Bastion in its nominations for the Company's Board of Directors and to use all
reasonable commercial efforts to cause the election of such person to the
Board, so long as Bastion owns 75% (in value) of the shares of Common Stock
purchased thereunder and of the Units purchased by Bastion pursuant to the
Series B Preferred Stock Offering. Bastion agreed

<PAGE>

that the Common Stock purchased thereunder shall be subject to the terms of
the Stockholders Agreement.

In addition, pursuant to a Voting Agreement, dated as of September 27,
1996, KKEP agreed that, in the event that Bastion is not entitled to designate
the Series C Preferred Nominee, KKEP will vote its shares of Common Stock in
favor of a nominee designated by Bastion for election to the Company's Board
of Directors provided that Bastion has the Minimum Share Amount.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) AND (d) FINANCIAL STATEMENTS AND SCHEDULE

Information called for by this item is set forth in the financial
statements on pages F-1 through F-28 hereof.

(b) REPORTS ON FORM 8-K

Form 8-K with respect to restatement of operating results, including
Condensed Consolidated Statements of Operations (as Restated) for the six
months ended September 30, 1996 and the six months ended September 30,
1995, filed with the SEC on January 14, 1997.

Form 8-K with respect to Senior Notes Offer, filed with the SEC on
January 15, 1997.

Form 8-K with respect to extension of expiration date for offer to
purchase and consent solicitation for the Company's 13-3/4% Senior Notes
Due 2001, Series B, filed with the SEC on January 28, 1997.

Form 8-K with respect to completion of Senior Notes Offer, filed with the
SEC on February 13, 1997.

Form 8-K with respect to the filing of certain exhibits including the
Purchase Agreement, dated February 3, 1997, between the Company as issuer
and CIBC Wood Gundy Securities Corp., as initial purchaser and related
documents, filed with the SEC on February 20, 1997.

Form 8-K with respect to Dr. Bonoma's death, filed with the SEC on May
22, 1997.

See the Exhibit Index on pages 44 through 54 hereof.

43
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EXHIBIT INDEX

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2.1 (6) Stock Purchase Agreement among Cosmar Corporation, a Delaware
corporation ("Cosmar Corporation"), Larry Pallini,
Vincent Carbone and Great American Cosmetics, Inc., a New
York corporation ("GAC"), entered into on June 27, 1996,
providing for the acquisition by Cosmar Corporation of
all of the capital stock of GAC.

2.2 (6) Agreement and Plan of Merger, among Renaissance Cosmetics,
Inc., a Delaware corporation ("RCI" or the "Company"),
Renaissance Acquisition, Inc., a New York corporation
("RAI") and MEM Company, Inc., a New York corporation
("MEM"), dated as of August 6, 1996.

2.3 (13) Asset Sale and Purchase by and among the Procter & Gamble
Company (as Seller) and Dana Perfumes Corp. ("Dana") (as
Buyer) and solely for purposes of Sections 4.6, 6.6 and
6.12 hereof of Renaissance Cosmetics, Inc. and Cosmar
Corporation dated as of October 25, 1996.

2.4 (13) Form of Asset Sale and Purchase Agreement among P&G foreign
affiliate sellers and Dana, dated as of October 29, 1996.

3.1 (1) Restated certificate of incorporation of RCI filed with the
Secretary of State of the State of Delaware on August 17, 1994.

3.1.2 (8) Certificate of Designation of Preferences and Rights of Senior
Exchangeable Redeemable Preferred stock, Series A, of
RCI, filed with the Secretary of State of the State of
Delaware on May 29, 1996.

3.1.3 (7) Certificate of Designation of Preferences and Rights of Senior
Redeemable Preferred Stock, Series B, of RCI, filed with
the Secretary of State of the State of Delaware on August 15,
1996.

3.1.4 (14) Certificate of Increase of Certificate of Designation of
Preferences and Rights of Senior Redeemable Preferred
Stock, Series B, of RCI, filed with the Secretary of
State of the State of Delaware on September 27, 1996.

3.1.5 (14) Certificate of Designation of Preferences and Rights of Senior
Redeemable Preferred Stock, Series C, par value $.01 per
share, of RCI, filed with the Secretary of State of the
State of Delaware on August 15, 1996.

3.1.6 (14) Certificate of Increase of Certificate of Designation of
Preferences and Rights of Senior Redeemable Preferred
Stock, Series C, of RCI, filed with the Secretary of
State of the State of Delaware on September 27, 1996.

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3.2 Amended and Restated By-laws of RCI

3.3 (16) Certificate of Incorporation of Renaissance Guarantor, Inc.
("RGI") filed with the Secretary of State of the State of
Delaware on February 6, 1997.

3.4 (16) By-laws of RGI.

4.1 (15) Indenture, dated February 7, 1997, among RCI, as issuer, RGI,
as guarantor, and United States Trust Company of New York,
as trustee.

4.2 (15) Escrow and Disbursement Agreement, dated February 7, 1997, among
RCI, as issuer, RGI, as guarantor, United States Trust
Company of New York, as trustee, and United States Trust
Company of New York, as escrow agent.

4.3 (15) Notes Registration Rights Agreement, dated February 7, 1997,
between RCI, as issuer, and CIBC Wood Gundy Securities Corp.,
as initial purchaser.

10.1 (1) License agreement (the "Houbigant U.S. License Agreement"), dated
May 1994, between Houbigant Inc., a Delaware corporation
("Houbigant") and Parfums Parquet Incorporated (f.k.a.
New Fragrance License Corp.) ("Parfums Parquet").

10.2 (2) Amendment to the Houbigant U.S. License Agreement, dated May 12,
1994.

10.3 (2) Amendment to the Houbigant U.S. License Agreement, dated June 1,
1994.

10.4 (1) Amendment to the Houbigant U.S. License Agreement, dated June 24,
1994.

10.5 (1) Three letter agreements relating to the Houbigant U.S. License
Agreement, each dated July 1, 1994.

10.6 (1) Letter of Agreement dated July 1, 1994, between Houbigant and
Parfums Parquet relating to the Houbigant U.S. License Agreement.

10.7 (10) Right of Last Refusal Agreement dated July 1, 1994 among
Houbigant, Luigi Massironi, Michael Sherman and Parfums
Parquet relating to the Houbigant U.S. License Agreement.

10.8 (1) Guaranty, dated July 1, 1994, by Cosmar in favor of Houbigant of
all obligations of Parfums Parquet under the Houbigant U.S.
License Agreement.

10.9 (10) Security Agreement - Trademarks, dated July 1, 1994, among
Houbigant, Parfums Parquet, Chemical Bank New Jersey N.A.
and National Westminster Bank, U.S.A.

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10.10 (10) Assignment for Security, dated July 1, 1994, between Houbigant
and Parfums Parquet.

10.11 (1) Letter agreement, dated August 18, 1994, between Parfums Parquet
and Houbigant, with respect to Assumption and Assignment
Agreement.

10.12 (2) Restated and Amended License Agreement (the "Harby's License
Agreement"), dated August 16, 1994, between Harby's
Corporation NV ("Harby's") and Houbigant.

10.13 (1) Assumption and assignment agreement (the "Assumption and
Assignment Agreement"), dated August 18, 1994, among
Houbigant, Harby's and Parfums Parquet.

10.14 (1) Amendment, dated September 19, 1994, to the Assumption and
Assignment Agreement.

10.15 (1) Letter Agreement, dated August 18, 1994, among Harby's,
Houbigant and Parfums Parquet, regarding certain rights
under the Harby's License Agreement.

10.16 (2) License Agreement (the "Worldwide License Agreement"), dated
August 10, 1994, by and between Houbigant, Houbigant GmbH
and Parfums Parquet.

10.17 (2) Amendment dated August 16, 1994 to the License Agreement dated
August 10, 1994 between Houbigant, Houbigant GmbH and Parfums
Parquet.

10.18 (2) Amendment dated September 16, 1994 to the License Agreement
dated August 10, 1994, between Houbigant, Houbigant GmbH and
Parfums Parquet Incorporated.

10.19 (10) Letter Agreement, dated February 14, 1995, relating to the
License Agreement dated August 10, 1994 between Houbigant and
Parfums Parquet.

10.20 (10) Right of Last Refusal Agreement, dated February 14, 1995, among
Houbigant, Luigi Massironi, Michael Sherman and Parfums
Parquet relating to the Worldwide License Agreement.

10.21 (10) Guaranty, dated February 28, 1995, by Cosmar in favor of
Houbigant of all obligations of Parfums Parquet under the
License Agreement dated August 10, 1994 between
Houbigant, Houbigant GmbH and Parfums Parquet.

10.22 (10) Security Agreement - Trademarks, dated February 28, 1995,
among Houbigant, Parfums Parquet, Chemical Bank New
Jersey N.A. and National Westminster Bank, USA.

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10.22.1 (10) Assignment for Security Agreement, dated February 14, 1995,
between Houbigant and Parfums Parquet.

10.23 (2) Letter Agreement dated September 21, 1994 amending the
Worldwide License Agreement, the Houbigant U.S. License
Agreement and the Harby's License Agreement by and
between Parfums Parquet Incorporated, Harby's, Houbigant,
and Houbigant GmbH.

10.24 (2) Purchase Agreement dated December 12, 1994 by and among
Houbigant (1995) Limitee (formerly 3088766 Canada
Limited), ACB Fragrances and Cosmetics, Inc., ACB
Mercantile, Inc., Houbigant Limitee, Augustine Celaya,
Giacomo Giuliano, and Gilles Pellerin.

10.24.1 (3) Escrow Agreement, dated December 12, 1994, between ACB
Fragrances and Cosmetics, Inc., ACB Mercantile, Inc.,
Houbigant Limitee, Augustine Celaya, Giacomo Giuliano,
Gilles Pellerin, Houbigant (1995) Limited and Lavery de
Billis.

10.25 (11) Amendment, Modification and Settlement Agreement, dated
July 31, 1996, among Houbigant, Dana Perfumes Corp.
(f.k.a. Parfums Parquet) ("Dana") and Houbigant (1995)
Limitee amending the Worldwide License Agreement and the
Houbigant U.S. License Agreement and providing for the
execution of a new license agreement for Canada.

10.26 (11) License Agreement (the "Canadian License"), dated July 31,
1996, between Houbigant and Houbigant (1995) Limitee.

10.27 (11) Letter Agreement, dated July 1996, among Houbigant, Dana and
Houbigant (1995) Limitee, amending the provisions for
royalty payments under the Worldwide License Agreement,
the Houbigant U.S. License Agreement and the Canadian
License Agreement.

10.28 (11) Amendment No. I to License Agreements, dated July 31, 1996,
among Houbigant, Dana and Houbigant (1995) Limitee,
amending the Worldwide License Agreement, the Houbigant
U.S. License Agreement and the Canadian License Agreement.

10.29 (14) Amendment No. I to Security Agreement - Trademarks, dated
July 31, 1996, among Houbigant, Parfums Parquet, Chemical
Bank New Jersey N.A. and NatWest Bank NA.

10.30 (10) License Agreement, dated August 18, 1994, between Cosmar
Corporation and RCI.

10.31 (1) Letter agreement, dated August 18, 1994, between RCI and
Dr. Thomas V. Bonoma, granting Dr. Bonoma stock options.

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10.32 (6) Employment agreement, dated August 6, 1996, between RCI and
Dr. Thomas V. Bonoma.

10.33 (1) Stockholders agreement, dated August 18, 1994, among RCI
and the stockholders listed in schedule 1 thereto.

10.34 (10) Management Services Agreement, dated August 16, 1994, between
Kidd, Kamm & Company and RCI.

10.35 (1) Industrial building lease between Sparks Industrial Joint
Venture and Precision Molded Plastics, Inc., dated
November 20, 1991, and a consent to assignment of that
lease, dated June 7, 1994, executed by Precision Molded
Plastics, Inc. and Sparks Industrial Joint Venture.

10.36 (1) Various subleases for office space at 635 Madison Avenue, New
York, New York, between Saatchi & Saatchi Holdings (USA)
as sublessor, and Dana, as sublessee.

10.37 (8) Standard Industrial Lease (the "Lease") relating to property
known as 11700 Monarch Street, Garden Grove, California,
between Bixby Western Properties as Lessor and A.H.
Robins Company, Incorporated as Lessee (the "Lessee"),
dated June 25, 1979.

10.38 (8) First Amendment to the Lease, between Trust Company of the West
as Trustee for TCW Realty Fund IV as successor Lessor
(the "Lessor") and the Lessee, dated November 10, 1989.

10.39 (8) Second Amendment to the Lease, between the Lessor and the
Lessee, dated as of January 1, 1993.

10.40 (8) Sublease of the Lessee's rights under the Lease to Cosmar
Corporation, dated as of March 1, 1996 (the "Sublease").

10.41 (8) Consent of the Lessor to the Sublease, dated as of March 1, 1996.

10.42 (10) Agreement of Lease between Groupe Gestion Luger as Lessor and
Houbigant Ltee as Lessee (the "Lessee"), relating to the
immovable property situated at 1593 to 1645 Cunard
Street, City of Chomedey (Laval), Province of Quebec,
dated June 25, 1979 and assignment of that lease, dated
December 12, 1994, by the Lessee in favor of 3088766
Canada Limited.

10.42.1 (10) Standard Form Commercial Lease, between Sally A. Starr and Lisa
A. Brown as Trustees of Massachusetts 955 Realty trust
for the Benefit of 955 Massachusetts Avenue Associates
(as lessor) and Renaissance Cosmetics, Inc. relating to
the property located in Cambridge, Massachusetts.

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10.42.2 (10) Lease Agreement Between Ghent Limited Partnership (as lessor)
and RCI (as tenant) relating to the property situated in
Greenwich, Connecticut.

10.43 (2) Management Services Agreement, dated December 22, 1994, between
New Dana Acquisition Corp. and Perfumes Dana do Brasil, S.A.

10.44 (4) Aircraft lease agreement dated February 13, 1995 between the
Company and General Electric Capital Corporation.

10.45 (8) Securities Purchase Agreement between the Company and CIBC WG
Argosy Merchant Fund 2, L.L.C. (the "Fund"), dated as of
May 29, 1996. Amendment No. 1, dated as of June 21, 1996,
to Securities Purchase Agreement, dated as of May 29,
1996, between Renaissance Cosmetics, Inc. and CIBC WG
Argosy Merchant Fund 2, L.L.C.

10.46 (8) Common Stock Registration Rights Agreement between RCI and the
Fund, dated as of May 29, 1996.

10.47 (7) Securities Purchase Agreement, dated as of August 8, 1996,
between RCI and CIBC Wood Gundy Securities Corp.

10.48 (7) Registration Rights Agreement, dated as of August 15, 1996,
between RCI and CIBC Wood Gundy Securities Corp.

10.49 (7) Common Stock Registration Rights Agreement, dated as of
August 15, 1996, between RCI and CIBC Wood Gundy Securities
Corp.

10.50 (10) Subscription Agreement, dated August 15, 1996, between RCI and
CIBC WG Argosy Merchant Fund 2, L.L.C.

10.51 (10) Warrant Agreement, dated as of August 18, 1994, between RCI and
American Bank National Association.

10.52 (7) Warrant Agreement, dated as of August 15 1996, between RCI and
Firstar Trust Company.

10.53 (1) Indenture, dated as of August 18, 1994, among RCI, as Issuer,
the guarantors identified therein (the "Guarantors"), and
American Bank National Association, as trustee, relating to the
Old Senior Notes.

10.53.1 (2) First supplemental indenture, dated as of November 15, 1994,
among RCI, as issuer, New Dana Acquisition Corp., as guarantor,
and American Bank National Association, as trustee, relating to
the Old Senior Notes.

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10.53.2 (2) Second supplemental indenture, dated as of December 15, 1994,
among RCI, as issuer, Houbigant (1995) Limitee, as
guarantor, and American Bank National Association, as
trustee, relating to the Old Senior Notes.

10.53.3 (2) Third supplemental indenture, dated as of December 23, 1994,
among RCI, as issuer, certain subsidiaries of the
Company, as guarantors, and American National Bank
Association, as trustee, relating to the Old Senior Notes.

10.53.4 (8) Fourth supplemental indenture, dated as of February 27, 1996,
among RCI, as issuer, SH 149 S.A.R.L., as guarantor, and
American Bank National Association, as trustee, relating
to the Old Senior Notes.

10.53.5 (10) Fifth supplemental Indenture, dated as of August 21, 1996, among
RCI, as the issuer, GAC, as guarantor, and American Bank
National Association, as trustee, relating to the Old
Senior Notes.

10.53.6 (14) Sixth supplemental Indenture, dated as of December 4, 1996,
between RCI, Certain Guarantors and Firstar Bank of
Minnesota, successor to American Bank National
Association, as trustee, relating to the Old Senior Notes.

10.53.7 (16) Seventh supplemental Indenture, dated as of February 7, 1997,
among RCI, certain guarantors and Firstar Bank of
Minnesota, successor to American Bank National
Association, as trustee, relating to the Old Senior Notes.

10.54 (10) Waiver, dated as of August 12, 1996.

10.55 (10) Closing Escrow Agreement, dated as of June 21, 1996, by and
among Cosmar Corporation, Larry Pallini, Vincent Carbone
and the law firm of Todtman, Young, Tunick, Nachamie,
Hendler & Spizz, P.C.

10.56 (10) Consulting Agreement, dated August 21, 1996, by and among
Hilltop Sales, Inc., Cosmar Corporation and RCI.

10.57 (10) Consulting Agreement, dated August 21, 1996, by and among
Pageant Group, Ltd., Cosmar Corporation and RCI.

10.58 (6) Employment Agreement, dated August 6, 1996, by and between
Gay A. Mayer and RCI.

10.59 (10) Letter Agreement, dated September 6, 1996, amending the
Securities Purchase Agreement, dated as of August 8,
1996, between CIBC Wood Gundy Securities Corp. and RCI.

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10.60 (10) First Amendment to the Warrant Agreement, dated as of
September 27, 1996, between RCI and Firstar Trust Company
as warrant agent.

10.61 (10) First Amendment to the Registration Rights Agreement, dated
as of September 27, 1996, between RCI and CIBC Wood Gundy
Securities Corp.

10.62 (10) First Amendment to the Common Stock Registration Rights
Agreement, dated as of September 27, 1996, between RCI
and CIBC Wood Gundy Securities Corp.

10.63 (14) Securities Purchase Agreement, dated as of September 27, 1996,
between RCI and Bastion Capital Fund, L.P.

10.64 (14) Common Stock Registration Rights Agreement, dated as of
September 27, 1996, between RCI and Bastion Capital Fund, L.P.

10.65 (14) Voting Agreement, dated as of September 27, 1996, between Kidd,
Kamm Equity Partners, L.P. and Bastion Capital Fund, L.P.

10.66 (14) License and Consultant Agreement dated January 25, 1991 between
Cosmar and The Nail Consultants, Ltd., as amended by
letter agreements dated May 29, 1991 and January 5, 1993.

10.67 (14) License Agreement, dated October 1, 1995, between The Nail
Consultants, Ltd. and Cosmar.

10.68 (14) RCI Employee Bonus Plan.

10.69 (14) Agreement dated as of July 1, 1995 between MEM as licensor and
Filo America, Inc. as licensee for the license of the
"English Leather" trademark for shaving equipment.

10.70 (14) Agreement dated as of January 1, 1995 between MEM as licensor
and M.Z. Berger as licensee for the license of the
"Tinkerbell" trademark for watches, clocks and plastic
jewelry.

10.71 (14) License granted under the License Agreement dated August 1, 1978
between G. Visconti di Modrone, S.p.A. and V.O.M. Ltd.
for the use of certain trademarks by Victor of Milano,
Ltd. in connection with its sale of men's toiletries.

10.72 (14) License Agreement dated as of April 1, 1977 between MEM as
licensor and Welling International as licensee for the
license of the "English Leather" trademark for eyeglass
frames and sunglasses, as amended by letter agreement
dated November 6, 1996.

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10.73 (14) Trademark Agreement dated as of July 3, 1985 between MEM as
licensor and Willow Hosiery Co., Inc. as licensee for the
license of the "English Leather" trademark for men's
hosiery, as amended by letter agreements dated January
29, 1996, and January 25, 1993.

10.74 (14) Trademark License Agreement dated as of July 1, 1991 between
English Leather, Inc. as licensor and Bag Bazaar, Ltd. as
licensee for the license of the "English Leather"
trademark for men's and women's handbags and personal
(small) leather goods, as amended by letter agreement
dated May 19, 1995.

10.75 (14) License Agreement dated as of July 14, 1987 between Coscelebra,
Inc. as licensor and MEM as licensee for the license of
the "Heaven Sent" trademark for cosmetic products.

10.76 (14) Agreement dated as of January 1, 1981 between Helena Rubenstein,
Inc. as licensor and Alliance Trading Company
Incorporated as licensee for the license of the "Heaven
Sent" trademark for cosmetic products, as amended by
agreement dated June 15, 1981.

10.77 (14) Agreement dated as of March 12, 1982 between Alleghany Pharmacal
Corporation as licensor and MEM as licensee for the
sub-license of the "Heaven Sent" trademark for cosmetic
products.

10.78 (14) Collective Bargaining Agreement between Dana Perfumes Corp. and
Oil, Chemical & Atomic Workers International Union
AFL-CIO and its Local Union No. 8-782.

10.79 (16) Collective Labor Agreement of the Union of Workers in the
Chemical, Pharmaceutical, Plastic and Related Industries
of Sao Paulo and the Region and other Unions of Workers
and the Federation of Industries of the State of Sao
Paulo and Industry Unions affiliated therewith (English
translation) (with Officer's Certificate certifying
accuracy of translation from Portuguese into English).

10.80 (15) Purchase Agreement, dated February 3, 1997, between Renaissance
Cosmetics, Inc., as issuer, and CIBC Wood Gundy Securities
Corp., as initial purchaser.

10.81 (16) Industrial Building Lease, dated January 1997, between Dana
Perfumes Corp., as Lessee, and First National Bank of
Illinois, as Trustee, under trust 2871, as Lessor.

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10.82 (16) Credit Agreement, dated as of March 12, 1997, among Dana
Perfumes Corp., as borrower, the other credit parties
signatory thereto, as credit parties, the lenders
signatory thereto from time to time, as lenders, and
General Electric Capital Corporation, as agent and lender.

10.83 (16) Pledge Agreement, dated as of March 12, 1997, between General
Electric Capital Corporation, as agent and lender, and the
pledgors thereto.

10.84 (16) Security Agreement, dated as of March 12, 1997, among General
Electric Capital Corporation, as agent and lender, and the
grantors thereto.

10.85 (16) Guaranty, dated as of March 12, 1997, between General Electric
Capital Corporation, as agent and lender, and the guarantors
thereto.

10.86 First Amended and Restated Stock Option Plan of RCI.

10.87 Form of Indemnification Agreement.

10.88 Form of Stockholder Agreement, as amended.

10.89 Waiver and Amendment dated as of June 27, 1997, among Dana
Perfumes Corp., as borrower, the other Credit Parties to the
Credit Agreement, General Electric Capital Corporation, as
agent and lender and the other Lenders party to the Credit
Agreement.

10.90 Letter Agreement, dated as of June 27, 1997, among Dana
Perfumes Corp., as borrower, General Electric Capital
Corporation, as agent and lender, and the other Lenders party
to the Credit Agreement.

21.1 List of Subsidiaries.

27.1 Financial Data Schedule
</TABLE>

- -----------------------
Notes to Exhibit Index:

(1) Filed with RCI's Registration Statement on Form S-4 filed with the
Securities and Exchange Commission ("SEC") on December 12, 1994,
Registration No. 33-87280, and incorporated herein by reference thereto.

(2) Filed with Amendment No. I to RCI's Registration Statement on Form S-4
filed with the SEC on January 27, 1995, Registration No. 33-87280, and
incorporated herein by reference thereto.

(3) Filed with Amendment No. 2 to RCI's Registration Statement on Form S-4
filed with the SEC on February 9, 1995, Registration No. 33-87280, and
incorporated herein by reference thereto.

(4) Filed with RCI's Quarterly Report on Form 10-Q filed with the SEC on March
27, 1995, and incorporated herein by reference thereto.

(5) Intentionally omitted.

<PAGE>

(6) Filed with RCI's Quarterly Report on Form 10-Q filed with the SEC on
August 14, 1996, and incorporated herein by reference thereto.

(7) Filed with RCI's Form 8-K filed with the SEC on August 8, 1996, and
incorporated herein by reference thereto.

(8) Filed with RCI's Annual Report on Form 10-K filed with the SEC for the
fiscal year ended March 3 1, 1996, and incorporated herein by reference
thereto.

(9) Intentionally omitted.

(10) Filed with RCI's Registration Statement on Form S-4 filed with the SEC on
October 1, 1996, Registration No. 333-13171, and incorporated herein by
reference thereto.

(11) Filed with RCI's Quarterly Report on Form 10-Q filed with the SEC on
November 14, 1996, and incorporated herein by reference thereto.

(12) Intentionally omitted.

(13) Filed with RCI's Form 8-K filed with the SEC on December 20, 1996, and
incorporated herein by reference thereto.

(14) Filed with Amendment No. 1 to RCI's Registration Statement on Form S4
filed with the SEC on January 31, 1997, Registration No. 333-13171, and
incorporated herein by reference thereto.

(15) Filed with RCI's Form 8-K filed with the SEC on February 20, 1997 and
incorporated herein by reference thereto.

(16) Filed with RCI's Registration Statement on Form S4 filed with the SEC on
March 24, 1997, Registration No. 333-23847, and with Amendment No. 1
thereto, as filed with the SEC on May 2, 1997, and incorporated herein by
reference thereto.

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereto duly authorized.

RENAISSANCE COSMETICS, INC.

By: /s/Norbert Becker
-----------------------------------
Norbert Becker
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the date(s) indicated below.

Signature Title Date
--------- ----- ----

/s/ NORBERT BECKER Chief Executive Officer (principal June 30, 1997
- ------------------------ executive officer) and Director
NORBERT BECKER

/s/ THOMAS T.S. KAUNG Group Vice President and Chief June 30, 1997
- ------------------------ Financial Officer (principal
THOMAS T.S. KAUNG financial officer and principal
accounting officer)

Director June , 1997
- ------------------------
ERIC R. HAMBURG

Director June , 1997
- ------------------------
KURT L. KAMM

/s/ WILLIAM J. KIDD Director June 30, 1997
- ------------------------
WILLIAM J. KIDD

<PAGE>

/s/ JOHN H. LYNCH Director June 30, 1997
- ------------------------
JOHN H. LYNCH

/s/ E. MARK NOONAN Director June 30, 1997
- ------------------------
E. MARK NOONAN

Director June , 1997
- ------------------------
TERRY M. THEODORE

/s/ DANIEL D. VILLANUEVA Director June 30, 1997
- ------------------------
DANIEL D. VILLANUEVA

<PAGE>

RENAISSANCE COSMETICS, INC. AND SUBSIDIARIES
INDEX OF FINANCIAL STATEMENTS AND SCHEDULE
- ------------------------------------------------------------------------------

PAGE

INDEPENDENT AUDITORS' REPORT F-2

CONSOLIDATED FINANCIAL STATEMENTS AS OF
MARCH 31, 1997 AND 1996 AND FOR THE YEARS THEN ENDED;
AND FOR THE PERIOD FROM
APRIL 15, 1994 (INCEPTION) TO MARCH 31, 1995:

Consolidated Balance Sheets F-3

Consolidated Statements of Operations F-4

Consolidated Statements of Stockholders' Equity F-5

Consolidated Statements of Cash Flows F-6

Notes to Consolidated Financial Statements F-7--F-27

ITEM 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Schedule II - Valuation and Qualifying Accounts F-28

All other schedules are not required

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Renaissance Cosmetics, Inc.:

We have audited the accompanying consolidated balance sheets of Renaissance
Cosmetics, Inc. and subsidiaries as of March 31, 1997 and 1996, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the two years ended March 31, 1997 and for the period from April
15, 1994 (Inception) to March 31, 1995. Our audits also included the
financial statement schedule for Renaissance Cosmetics, Inc. listed in the
Index at Item 14. These financial statements and financial statement
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Renaissance Cosmetics, Inc. and
subsidiaries as of March 31, 1997 and l996, and the results of their
operations and their cash flows for the two years ended March 31, 1997 and
the period from April 15, 1994 (Inception) to March 31, 1995 in conformity
with generally accepted accounting principles. Also, in our opinion, such
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects, the information set forth therein.

Deloitte & Touche LLP
New York, New York
June 27, 1997

F-2
<PAGE>

RENAISSANCE COSMETICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND 1996
(in thousands except share data)
- ------------------------------------------------------------------------------

<TABLE>
ASSETS 1997 1996
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents 719 $ 1,432
Marketable securities 22,799 174
Accounts receivable - net 48,837 34,557
Inventories 55,554 30,237
Prepaid expenses and other current assets 7,827 6,540
------------ ------------

Total current assets 135,736 72,940

PROPERTY, PLANT AND EQUIPMENT - Net 26,581 14,535

DEFERRED FINANCING COSTS - Net 12,748 8,007

OTHER ASSETS - Net 12,141 12,242

INTANGIBLE ASSETS - Net 174,177 76,895
------------ ------------

TOTAL ASSETS $ 361,383 $ 184,619
------------ ------------
------------ ------------

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Notes payable - $ 57,000
Accounts payable 21,612 19,463
Accrued expenses 40,322 15,157
Other current liabilities - 2,700
------------ ------------

Total current liabilities 61,934 94,320
------------ ------------

LONG-TERM LIABILITIES:
Long-term debt 203,877 67,323
Minimum royalty obligation 3,768 4,686
Deferred tax liability 158 141
------------ ------------

Total long-term liabilities 207,803 72,150
------------ ------------

TOTAL LIABILITIES 269,737 166,470
------------ ------------

COMMITMENTS AND CONTINGENCIES

SENIOR REDEEMABLE PREFERRED STOCK
Par value $.01 - authorized, 350,000 shares;
issued, 123,381 shares
(Liquidation value-$127,041) 86,660 -

REDEEMABLE PREFERRED STOCK:
Par value $.01 - authorized, 40,000 shares;
issued, 12,798 shares at March 31, 1997;
11,594 shares at March 31, 1996
(Liquidation value at March 31, 1997, $13,517) 13,167 11,698

COMMON STOCKHOLDERS' (DEFICIT) EQUITY:
Common stock, par value $.01 - authorized, 3,000,000 shares;
issued 830,736 shares at March 31, 1997; 726,818 shares
at March 31, 1996 8 7
Notes receivable from sale of common stock (518) (518)
Additional paid-in capital 69,403 26,787
Treasury stock, at cost (5,650 shares) (210) (210)
Deficit (75,450) (19,564)
Cumulative translation adjustment (1,414) (51)
------------ ------------

Total common stockholders' (deficit) equity (8,181) 6,451
------------ ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 361,383 $ 184,619
------------ ------------
------------ ------------

See notes to consolidated financial statements.
</TABLE>
F-3
<PAGE>

RENAISSANCE COSMETICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
- --------------------------------------------------------------------------------

PERIOD FROM
APRIL 15,
1994
(INCEPTION)
TO
YEAR ENDED MARCH 31, MARCH 31,
1997 1996 1995

NET SALES 174,612 $131,286 $57,714

COST OF GOODS SOLD 69,723 51,317 24,553
-------- -------- -------

GROSS PROFIT 104,889 79,969 33,161
-------- -------- -------

OPERATING EXPENSES:
Selling 64,847 52,302 18,246
General and administrative 25,705 14,009 10,127
Amortization of intangible and
other assets 9,813 5,207 2,044
-------- -------- -------

Total operating expenses 100,365 71,518 30,417
-------- -------- -------

OPERATING INCOME 4,524 8,451 2,744

OTHER EXPENSE (INCOME):
Interest expense 24,417 19,458 8,694
Interest and other income (1,835) (255) (456)
-------- -------- -------
Total other expense 22,582 19,203 8,238

LOSS BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM (18,058) (10,752) (5,494)

INCOME TAX PROVISION (BENEFIT) 1,322 1,305 (35)
-------- -------- -------

LOSS BEFORE EXTRAORDINARY ITEM (19,380) (12,057) (5,459)

EXTRAORDINARY ITEM 22,438 - -
-------- -------- -------

NET LOSS (41,818) (12,057) (5,459)

PREFERRED STOCK DIVIDENDS 14,068 1,333 715
-------- -------- -------

NET LOSS APPLICABLE TO COMMON STOCKHOLDERS $(55,886) $(13,390) $(6,174)
-------- -------- -------
-------- -------- -------
NET LOSS PER COMMON SHARE $ (71.63) $ (18.62) $ (8.50)
-------- -------- -------
-------- -------- -------

WEIGHTED AVERAGE SHARES OUTSTANDING 780,203 719,138 726,374
-------- -------- -------
-------- -------- -------

See notes to consolidated financial statements.

F-4
<PAGE>

RENAISSANCE COSMETICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
- -------------------------------------------------------------------------------
<TABLE>

NOTES TOTAL
RECEIVABLE COMMON
FROM SALE ADDITIONAL CUMULATIVE STOCKHOLDERS'
COMMON STOCK OF COMMON PAID-IN TREASURY STOCK TRANSLATION (DEFICIT)
SHARES AMOUNT STOCK CAPITAL SHARES AMOUNT DEFICIT ADJUSTMENT EQUITY
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Issuance of common stock 726,818 $7 $(518) $27,011 - $ - $ - $ - $ 26,500
Issuance of warrants in
conjunction with senior
notes and redeemable
preferred stock - - - 1,260 - - - - 1,260

Accrued dividends and
accretion on redeemable
preferred stock - - - - - - (715) - (715)

Predecessor basis
accounting adjustment - - - (1,484) - - - - (1,484)

Purchase of treasury stock - - - - 6,725 (250) - - (250)

Cumulative translation
adjustment - - - - - - - 337 337

Net loss - - - - - - (5,459) - (5,459)
------- -- ----- ------- ----- ----- -------- ------- --------

BALANCE, MARCH 31, 1995 726,818 7 (518) 26,787 6,725 (250) (6,174) 337 20,189

Accrued dividends and
accretion on redeemable
preferred stock - - - - - - (1,333) - (1,333)

Purchase of treasury stock - - - - 3,632 (135) - - (135)

Sale of treasury stock - - - - (4,707) 175 - - 175

Cumulative translation
adjustment - - - - - - - (388) (388)

Net loss - - - - - - (12,057) - (12,057)
------- -- ----- ------- ----- ----- -------- ------- --------

BALANCE, MARCH 31, 1996 726,818 7 (518) 26,787 5,650 (210) (19,564) (51) 6,451

Issuance of Common Stock 103,918 1 9,749 9,750

Issuance of warrants in
conjunction with
redeemable preferred
stock 32,867 32,867

Accrued dividends and
accretion on redeemable
preferred stocks (14,068) (14,068)

Cumulative translation
adjustment (1,363) (1,363)

Net loss (41,818) (41,818)
------- -- ----- ------- ----- ----- -------- ------- --------
BALANCE, MARCH 31, 1997 830,736 $8 $(518) $69,403 5,650 $(210) $(75,450) $(1,414) $ (8,181)
------- -- ----- ------- ----- ----- -------- ------- --------
------- -- ----- ------- ----- ----- -------- ------- --------
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE>

RENAISSANCE COSMETICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
- ------------------------------------------------------------------------------
<TABLE>
Period from
April 15,
1994
(Inception)
Year Ended Year Ended to
March 31, March 31, March 31,
1997 1996 1995
<S> <C> <C> <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (41,818) $ (12,057) $ (5,459)
Adjustments to reconcile net loss to net cash used
in operating activities:
Extraordinary item 22,438 - -
Deferred taxes (86) 41 (97)
Depreciation 4,896 2,844 788
Amortization of intangible assets 5,528 3,208 1,860
Amortization of minimum royalty and other assets 4,285 1,999 184
Amortization of deferred financing costs 3,202 2,616 993
Accrued interest on senior notes, subordinated
seller notes and minimum royalty obligation 1,820 1,312 867

Changes in operating assets and liabilities, net of
effects of acquisitions:
Accounts receivable (8,655) (16,636) (8,521)
Inventories (11,070) (7,561) (6,802)
Prepaid expenses, other current assets and other assets (4,209) (2,550) (1,504)
Accounts payable (1,663) 6,284 2,135
Accrued expenses (6,240) (3,288) 5,605
Other current liabilities (2,700) - (1,882)
Other (1,171) (388) 305
---------- ---------- ----------
Net cash used in operating activities (35,443) (24,176) (11,528)
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of businesses, net of cash acquired (95,392) 1,384 (100,707)
Other Investing Payments (1,208) - -
Purchase of marketable securities (22,625)
Sale of marketable securities - 641 134
Capital expenditures (9,330) (8,166) (629)
---------- ---------- ----------
Net cash used in investing activities (128,555) (6,141) (101,202)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of Senior Secured Credit Facility 117,500
Repayment of Senior Secured Credit Facility (117,500)
Issuance of Existing Notes 200,000
Issuance of common stock 9,750 - 26,500
Issuance of Old Senior Notes - - 63,379
Redemption of Old Senior Notes (65,000)
Early retirement of debt (10,725)
Notes payable (57,000) 27,000 30,000
Payment of minimum royalty obligation (2,148) (1,259) (225)
Issuance of Series A Preferred Stock 18,955
Redemption of Series A preferred stock (20,434)
Issuance of Series B Preferred Stock 75,451
Issuance of redeemable preferred stock - - 9,650
Issuance of warrants 32,867 - 1,260
Payment of deferred financing costs (18,431) (1,033) (10,583)
Purchase of treasury stock - (135) (250)
Sale of treasury stock - 175 -
---------- ---------- ----------
Net cash provided by financing activities 163,285 24,748 119,731
---------- ---------- ----------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (713) (5,569) 7,001

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,432 7,001 -
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 719 $ 1,432 $ 7,001
---------- ---------- ----------
---------- ---------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 12,800 $ 14,604 $ 5,112
---------- ---------- ----------
---------- ---------- ----------
Income taxes 1,825 $ 880 $ 93
---------- ---------- ----------
---------- ---------- ----------
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING
TRANSACTIONS:
Accrued dividends and accretion on redeemable preferred
stock $ 14,068 $ 1,333 $ 715
Sale of common stock for notes $ - $ - $ 518
Issuance of seller notes $ - $ - $ 3,500
Other current liability - installment obligation for purchase
of inventory and accounts receivable from Houbigant, Inc. $ - $ - $ 2,700
Other liability - present value of minimum royalties $ 1,348 $ 1,398 $ 6,623
</TABLE>

See notes to consolidated financial statements.

F-6

<PAGE>

RENAISSANCE COSMETICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION - The consolidated financial statements of
Renaissance Cosmetics, Inc. (the "Company") include the accounts of the
Company and its wholly-owned subsidiaries from the dates of their
respective acquisitions. All significant intercompany balances and
transactions have been eliminated.

NATURE OF BUSINESS - The Company manufactures and sells its fragrance and
cosmetic products principally through the mass-market or self-select
distribution channel which includes drug stores, mass merchandisers,
discount stores, supermarkets and combination supermarket/drug stores,
throughout the United States, Canada, Latin America, Europe, Africa and the
Far East.

USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, and the disclosures of contingent assets and liabilities at
the date of the financial statements. Actual results could differ from
those estimates.

CASH AND CASH EQUIVALENTS - For the purposes of the statement of cash
flows, the Company considers all highly liquid debt instruments with an
original maturity of three months or less to be cash equivalents.

MARKETABLE SECURITIES - The Company classifies its investments in debt
and equity securities as available for sale. Unrealized holding gains
and losses were not material in any period presented.

INVENTORIES - Inventories are stated at the lower of cost (on the first-in,
first-out (FIFO) and last-in, first-out (LIFO) methods) or market.

PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is stated
at cost, and depreciation is computed by the straight-line and the
declining-balance methods over estimated service lives. Property, plant
and equipment acquired through business combinations is stated at the
estimated fair value at the date of purchase.

LONG-LIVED ASSETS - During the year ended March 31, 1997, the Company
adopted SFAS No. 121, "Accounting for Impairment of Long Lived Assets
and for Long Lived Assets to be Disposed Of. The Company's long-lived
assets consist of property, plant and equipment and intangible assets,
including goodwill. The Company evaluates whether there has been a
permanent impairment of any of its long-lived assets. An impairment in
value will be considered to have occurred when it is determined that the
undiscounted future operating cash flows generated by the operating unit
are not sufficient to recover the carrying values of such long-lived. If
it has been determined that an impairment in value has occurred, the
long-lived assets would be written down to an amount equivalent to the
present value of the future operating cash flows to be generated by the
operating unit. Adoption of SFAS 121 did not have a material effect on
the Company's financial position and results of operations.

F-7
<PAGE>

DEFERRED FINANCING COSTS - Deferred financing costs represent direct
costs relating to closing on outstanding long-term debt. These costs
are being amortized over the life of the related debt.

FOREIGN CURRENCY TRANSLATION - For the Company's international
operations, assets and liabilities are translated at year-end exchange
rates and income statement amounts are translated at average exchange
rates prevailing during the year. The cumulative translation adjustment
represents principally the effect of changes in the rate of exchange at
the beginning and end of each year in translating net assets excluding
certain intercompany liabilities. Foreign currency transaction gains and
losses are included in results of operations and were not material for
any year presented.

REVENUE RECOGNITION - Sales are recognized when goods are shipped to a
third-party. The Company establishes reserves for estimated returns and
allowances at the time of shipment.

INCOME TAXES - The Company uses an asset and liability approach to the
computation of income taxes. Under the asset and liability method,
deferred tax assets and liabilities are recognized for the estimated
future tax consequences of temporary differences between the financial
reporting and tax bases of assets and liabilities based upon enacted tax
rates in effect when such amounts are expected to be realized or settled.
The effects of changes in tax laws or rates on deferred tax assets and
liabilities are recognized in the period that includes the enactment date.

EARNINGS PER COMMON SHARE - Earnings per common share is based on the
weighted average number of common shares outstanding during the year.
The effect of shares issuable under exercise of warrants and stock
options is anti-dilutive.

RECLASSIFICATIONS - Certain reclassifications were made to the March 31,
1996 and 1995 financial statements to conform to the current year's
presentation.

2. ACQUISITIONS

A. HOUBIGANT FRAGRANCES - The Company, Houbigant, Inc. ("Houbigant") and
other parties entered into license and sub-license agreements (the
"Agreements"), the first of which became effective as of July 1, 1994,
whereby the Company has obtained certain exclusive rights to manufacture
and sell on a worldwide basis (excluding Canada) certain fragrance
products owned and licensed by Houbigant (the "Houbigant Fragrances"),
for initial periods of five and seven years. The Company agreed to pay
royalties at the rate of six to seven percent of net sales (decreasing to
five percent based on sales volume). Total minimum royalty payments for
the initial terms of the Agreements are $15,360,000, including the
$5,000,000 prepayment. The Company has the option to renew the
Agreements for up to seven successive five-year periods. During each
renewal period, annual minimum royalties are adjusted based on increases
in the Consumer Price Index.

Additionally, under the terms of the Agreements, the Company also agreed
to pay $6,000,000, in installments, for existing inventories, certain
trade accounts receivable and all product returns received subsequent to
the closing date of the Agreements.

On December 13, 1994, the Company, through its newly-formed indirect
wholly-owned subsidiary, Houbigant (1995) Ltee, acquired substantially
all of the assets of the ACB Companies for an aggregate purchase price
of (Cdn)$8,000,000. The ACB Companies included three companies engaged
in the manufacture and sales of Houbigant Fragrances in Canada. This
acquisition extended the Company's rights to manufacture and market the
Houbigant Fragrances into Canada. Pursuant to this agreement, Houbigant
Ltee would pay royalties to Houbigant based on volume of products sold.

F-8
<PAGE>

In July 1996, the Company modified the above existing royalty
agreements in order to consolidate the worldwide rights to manufacture
and distribute the Houbigant Fragrances.

B. COSMAR - On August 18, 1994, the Company, through its wholly-owned
subsidiary, Cosmar Corporation ("Cosmar"), purchased certain assets and
assumed certain liabilities of Cosmar Corporation and its affiliate,
Precision Molded Plastics, Inc. ("Old Cosmar") for $64,827,978.
Consideration consisted of $61,327,978 in cash and subordinated sellers
notes with a face value of $5,000,000 and an estimated market value of
$3,500,000 based on an effective interest rate of 14.48%. Because the
acquisition qualified as a highly-leveraged transaction and certain
shareholders of Old Cosmar have or had a continuing interest as
shareholders of the Company, application of leveraged buyout accounting
resulted in a predecessor basis adjustment to common stockholders' equity
of $1,483,609.

C. DANA - On December 23, 1994, the Company, through its indirect
wholly-owned subsidiary, Dana Perfumes Corporation ("Dana") purchased the
assets and business of a group of companies that manufactured and
marketed the Dana line of fragrance products, for aggregate cash
consideration of $21,900,000. Such transaction was financed through term
loan borrowings from a financial institution (the "Old Credit Facility"),
of $30,000,000.

For the period April 15, 1994 (Inception) to March 31, 1995, pro forma
net sales, pro forma net loss, and pro forma net loss per share assuming
that the above acquisitions occurred on April 15, 1994 were $99,941,000,
$(18,208,000), and $(25.07), respectively. Such pro forma results are
not necessarily indicative of the operating results that would have
occurred had the acquisitions taken place as of April 15, 1994, nor
necessarily indicative of results that may be achieved in the future.

D. On December 31, 1995, Dana exercised its option to purchase the
assets and liabilities of Perfumes Dana do Brasil for $100,000.

For the year ended March 31, 1996, pro forma net sales, pro forma net
loss, and pro forma net loss per share was $140,741,000, $(12,645,000),
and $(17.58), respectively, assuming that the acquisition of Dana Brazil
occurred on April 1, 1995. For the period April 15, 1994 (Inception) to
March 31, 1995, pro forma net sales, pro forma net loss, and pro forma
net loss per share was $109,912,000, $(17,313,000), and $(23.83),
respectively assuming that the acquisition of Dana Brazil occurred on
April 15, 1994. Such pro forma results are not necessarily indicative of
the operating results that would have occurred had the acquisitions taken
place as of the beginning of each period presented, nor necessarily
indicative of results that may be achieved in the future.

E. GREAT AMERICAN COSMETICS COMPANY - On August 21, 1996, Cosmar
completed its acquisition of all of the issued and outstanding capital
stock of Great American Cosmetics Company ("GAC"). GAC 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. The cash consideration
for the GAC acquisition was $15,250,000. Concurrent with the closing,
Cosmar repaid $808,000 of GAC indebtedness. In connection with the
closing, Cosmar agreed to fund up to $141,000 (with up to $100,000 of its
own funds and up to $41,000 of the purchase price held back from the
Sellers for this purpose) of possible post-closing severance bonuses to
certain GAC employees, if earned.

F-9
<PAGE>

F. MEM COMPANY, INC. - On December 4, 1996, the Company, through its
wholly-owned subsidiary, Renaissance Acquisition, Inc. ("RAI"), completed
its acquisition (the "MEM Acquisition") of MEM Company, Inc ("MEM"). MEM
distributes a diversified line of fragrances and toiletries in the
mass-market distribution channel principally in the United States. 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. A subsidiary, Tom Fields (UK) Ltd., markets this
line of children's products in the United Kingdom and elsewhere in
Europe. The aggregate cash consideration paid to the equity holders of
MEM in connection with the MEM Acquisition was $19,787,000. In addition,
in connection with the MEM Acquisition, the Company repaid all of MEM's
outstanding indebtedness in an amount equal to $17,975,000.

G. ACQUISITION OF P&G BRANDS - On December 6, 1996, the Company completed
its acquisition from The Procter & Gamble Company ("P&G") of the
worldwide rights to manufacture and market certain mass-market fragrances
(the "P&G Brands Acquisition"). The cash consideration paid was
$43,263,000. In addition, the Company assumed certain specified
trade-related obligations of the P&G Brands, including liability for
returns of products under the P&G Brands sold prior to the closing and
liabilities under certain advertising and business development
commitments. Concurrent with the P&G Brand Acquisition, the Company
entered into transition service agreements under which P&G will continue
the foreign marketing of the P&G Brands through June 30, 1997.

The above acquisitions have been accounted for by the purchase method.
The preliminary cost of allocations for the above mentioned acquisitions
are subject to adjustment when additional information regarding asset and
liability valuations is obtained. The final asset and liability fair
values may differ from those set forth in the accompanying consolidated
balance sheet at March 31, 1997. The consolidated financial statements
include the results of operations of these acquisitions subsequent to
their respective dates of acquisition.

The GAC, MEM and P&G Brand acquisitions, if they had occurred at the
beginning of each period, would have pro forma results as follows:

PRO FORMA
-----------------------
YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31,
1997 1996
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
(UNAUDITED)
---------- ----------
Net sales $245,796 $240,774
======== ========
Loss before extraordinary item
applicable to common stockholders $(42,620) $(36,318)
======== ========

Loss before extraordinary item
applicable to common stockholders $ (51.66) $ (44.13)
======== ========
F-10
<PAGE>

The above pro forma results are not necessarily indicative of the
operating results that would have occurred had the acquisitions taken
place as of the beginning of each period, nor necessarily indicative of
results that may be achieved in the future.

3. MARKETABLE SECURITIES

Marketable securities consist of the following:

MARCH 31,
1997 1996
(IN THOUSANDS)
------- ----
U.S. Treasury Notes $17,799 $ -
Certificate of deposit 5,000 -
Mutual funds - 174
------- ----
$22,799 $174
======= ====

As discussed in Note 8, marketable securities of $17,799,000 at March
31, 1997 are held in an escrow account to finance a portion of the
interest payments on the Existing Notes over the next two years.

4. INVENTORIES

The components of inventories are as follows:

MARCH 31,
1997 1996
(IN THOUSANDS)
------- -------
Raw materials and advertising supplies $30,453 $16,957
Work in process 2,413 2,860
Finished goods 22,688 10,420
------- -------
$55,554 $30,237
======= =======

The above components are shown net of excess and obsolete inventory
reserves of $2,719,000 and $1,540,000 at March 31, 1997 and 1996,
respectively. At March 31, 1997 and 1996, approximately 61.8% and 60.7%,
respectively, of the Company's inventories are stated at the lower of
LIFO cost or market. The excess of current replacement cost over the
stated LIFO value was $-0- at March 31, 1997 and 1996.

F-11

<PAGE>

5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

MARCH 31,
1997 1996
(IN THOUSANDS)

Land $ 531 $ 477
Buildings 15,571 4,896
Machinery and equipment 10,170 7,452
Computer equipment 7,484 4,881
Leasehold improvements 1,352 460
------- -------

35,108 18,166

Accumulated depreciation 8,527 3,631
------- -------

$26,581 $14,535
------- -------
------- -------

6. INTANGIBLE ASSETS
Intangible assets consist of the following:

MARCH 31,
1997 1996
(IN THOUSANDS)
Trademarks $ 60,817 $42,144
Goodwill 123,957 39,820
-------- -------

184,744 81,964

Accumulated amortization 10,597 5,069
-------- -------

$174,177 $76,895
-------- -------
-------- -------

Trademarks, which consist primarily of those acquired through business
combinations, are being amortized on a straight-line basis, over their
estimated useful lives, which range from 20 to 40 years. Goodwill, which
represents the excess of the cost of purchased businesses over the fair value
of their net assets at date of their acquisition, is being amortized on a
straight-line basis, over various periods ranging from 5 to 25 years.

F-12

<PAGE>

7. ACCRUED EXPENSES

Accrued expenses consist of the following:

MARCH 31,
1997 1996
(IN THOUSANDS)
Current portion of minimum royalty obligation $ 4,006 $ 3,598
Accrued interest payable 4,562 2,380
Acquired plant consolidation and restructuring costs 14,893 244
Accrued marketing and advertising expenses 6,129 2,493
Other 10,732 6,442
------- -------
$40,322 $15,157
------- -------
------- -------

8. NOTES PAYABLE AND LONG-TERM DEBT

Notes payable and long-term debt consist of the following:

MARCH 31,
1997 1996
(IN THOUSANDS)
Notes payable $ - $57,000
-------- -------
-------- -------
Long term debt:
Existing notes $200,000 $ -
Old senior notes - 63,623
Subordinared sellers notes 3,877 3,700
-------- -------
Total long-term debt $203,877 $67,323
-------- -------
-------- -------

a. EXISTING NOTES: On February 7, 1997, the Company completed the sale
of $200,000,000 aggregate principal amount of its 11-3/4% Senior Notes due
2004 (the "Existing Notes"). Interest is payable semi-annually on August
15 and February 15. The Existing Notes may be redeemed at the option of
the Company on or after February 15, 2002, initially at 103.358,
declining to 101.679 on or after February 15, 2003, together with accrued
interest. Under certain circumstances as defined in the indenture
agreement (the "New Indenture"), the Existing Notes may be redeemed
earlier at the option of the Company. These Existing Notes were issued in
an offering not registered or required to be

F-13

<PAGE>

registered under the Securities Act of 1933 (the "Act"). On March 24,
1997, the Company filed a Registration Statement on Form S-4 in order to
register New Notes under the provisions of the act, to be issued in
exchange for the Existing Notes. The proceeds from the Existing Notes
were used to repay the amounts outstanding under the Senior Secured
Credit Facility (see below) and to redeem the Old Senior Notes.

In connection with the sale of the Existing Notes, the Company
transferred $17,500,000 to a newly-formed, single-purpose wholly-owned
subsidiary, Renaissance Guarantor, Inc., a Delaware corporation ("RGI"),
in exchange for a limited guarantee by RGI of the Company's obligations
under the Existing Notes. RGI placed such amount into an escrow account
(the "Escrow Account") which will be used to finance a portion of first
four interest payments. The Existing Notes are general unsecured
obligations of the Company except to the extent that they are
collateralized by a first priority security interest in the Escrow
Account. There are no sinking fund requirements relating to the Existing
Notes.

b. OLD SENIOR NOTES: On February 7, 1997, the Company completed its
offer to purchase and purchased all of the outstanding $65,000,000
aggregate principal amount of the Old Senior Notes for $79,995,000
(including accrued interest). The Old Senior Notes were senior unsecured
obligations of the Company at a stated interest rate of 13.75%. Interest
was payable semi-annually beginning February 15, 1995 and due August 15,
2001. The Old Senior Notes were issued with an original discount of
$711,000 and were further discounted as a result of an allocation of
$910,000 to common stock warrants issued with the Notes. The effective
interest rate on the Old Senior Notes was 14.33%.

c. SUBORDINATED SELLER NOTES: The subordinated seller notes are
subordinated promissory notes of the Company with an aggregate principal
amount of $5,000,000 and accruing interest at 8% initially and escalating
to 11% over an eight-year period with a balloon payment of principal and
accrued interest on August 15, 2002. These notes were recorded at a
discount of $1,500,000, yielding an effective interest rate of 14.48%.

d. NEW REVOLVING CREDIT FACILITY: On March 12, 1997, the Company
(through one of its domestic subsidiaries) entered into a senior secured
revolving credit facility which expires on March 12, 2002 (the "New
Revolving Credit Facility"). Under the New Revolving Credit Facility,
the Company may borrow up to $75,000,000 based upon a borrowing base,
consisting of a percentage of gross eligible accounts receivable and
gross eligible inventories, less reserves, if any. Amounts borrowed under
the New Revolving Credit Facility will bear interest at the option of the
Company at either (I) the Index Rate (i.e. the higher of the prime rate
or the overnight Federal funds rate plus 0.50%) plus 1.00% or (II) absent
default, the LIBOR rate plus 2.25%. The interest rate is subject to
adjustment, on a quarterly basis, based on the Company's interest
coverage ratio during each fiscal quarter. The New Revolving Credit
Facility provides for an annual facility fee of 0.00375%.

Borrowings under the New Revolving Credit Facility will be guaranteed by
the Company and all of its domestic and Canadian subsidiaries, and is
secured by a first priority perfected security interest in all of the
tangible and intangible assets of the Company and its domestic and
Canadian subsidiaries, other than the Escrow Account. As of March 31,
1997, no borrowings were made on the New Revolving Credit Facility.

e. OLD CREDIT FACILITY: The Company's Old Credit Facility was repaid on
December 4, 1996. Such facility had provided for revolving credit in an
aggregate principal amount of $40,000,000, and term loans in an aggregate
principal amount of $30,000,000. Such loans bore interest at the bank
base rate (8.25% at March 31, 1996) plus 3% until June 30, 1995, 3.5%
thereafter until December 31, 1995, 4% thereafter until June 30, 1996 and
4.5% thereafter. The weighted average interest rates on the notes

F-14

<PAGE>

payable were 12.19% and 11.66% for the year ended March 31, 1996 and for
the period from December 23, 1994 to March 31, 1995, respectively.
Borrowings under the revolving credit portion were subject to a borrowing
base availability consisting of eligible inventory and accounts
receivable. The Old Credit Facility was collateralized by substantially
all of the assets of the Company.

f. SENIOR SECURED CREDIT FACILITY- On December 4, 1996, the Company,
through one of its domestic subsidiaries, entered into a Senior Secured
Credit Facility, pursuant to which the Company borrowed $117,500,000.
The proceeds of such facility were used to (1) finance a portion of the
MEM acquisition; (2) finance the P&G Brand Acquisition (3) to repay the
outstanding indebtedness under the Old Credit Facility (4) and for
general corporate purposes. The Senior Secured Credit Facility was
repaid on February 7, 1997, from the proceeds of the Existing Notes.

g. RESTRICTIVE COVENANTS: The New Revolving Credit Facility and the New
Indenture contain provisions that restrict the operation of the Company.
Such provisions restrict (1) certain mergers, acquisitions, or sales of
the Company's assets or stock (2) cash dividends and other distributions
to equity holders and to the Company (3) payments in respect of
subordinated debt (4) transactions with affiliates and (5) indebtedness
and liens. At March 31, 1997, the Company was not in compliance with
certain covenants contained in the New Revolving Credit Facility. On
June 27, 1997, the Company and the Lender amended the agreement, thus
eliminating any covenant violations.

9. REDEEMABLE PREFERRED STOCKS

a. REDEEMABLE PREFERRED STOCK-The Company issued for $10,000,000, 10,000
shares of cumulative exchangeable preferred stock (the "Redeemable
Preferred Stock") with a par value of $.01 per share. The Redeemable
Preferred Stock has an initial dividend of 10% per annum. Commencing
August 16, 1999 the dividend rate changes to 15% per annum. Dividends are
payable in cash, additional shares of redeemable preferred stock or any
combination thereof, at the option of the Company, up to and including
the August 15, 1997 dividend, and in cash thereafter. The effective
dividend rate on the preferred stock is approximately 12.01%, resulting
from an allocation of $350,000 to warrants issued with the preferred
stock.

The redeemable preferred stock must be redeemed on August 15, 2002 for
$10,000,000, plus all accumulated and unpaid dividends. The redeemable
preferred stock is exchangeable for Old Senior Notes under certain
circumstances by the holders of the redeemable preferred stock on or
after August 15, 1997.

b. SENIOR REDEEMABLE PREFERRED STOCK, SERIES B- In August and September
1996, the Company completed a private placement of 115,000 shares of the
Company's 14.0% Senior Redeemable Preferred Stock, Series B par value
$0.01 per share (the "Series B Preferred Stock"), and 115,000 of warrants
to purchase 341,550 shares of the Company's common stock. The proceeds
from issuance of the Series B Preferred Stock were reduced by an
allocation of $32,867,000 to the common stock warrants, and by the
payment of approximately $7,451,000 of financing fees. The warrants are
exercisable at any time and expire on August 15, 2001. These warrants
have an exercise price of $.01 per share. On January 31, 1997, the
Company filed Amendment No. 1 to the Company's Registration Statement on
Form S-4 (the "Registration Statement") for its 14.0% Senior Redeemable
Preferred Stock, Series C (the "Series C Preferred Stock"), filed on
October 1, 1996. Pursuant to the terms of the Registration Rights
Agreement for the Series B Preferred Stock, the annual dividend rate for
the Series B Preferred Stock increased by 0.5% per annum on January 11,
1997, to 14.5% per annum and increased by an additional 0.25% per annum
from March 11, 1997 through March 28, 1997 when the Registration
Statement was declared effective. On March 12,

F-15

<PAGE>

1997, the dividend rate on the Series B Preferred Stock increased by an
additional 0.5% per annum through April 28, 1997, which was the date that
the outstanding shares of Series B Preferred Stock were exchanged for
shares of Series C Preferred Stock.

c. SERIES A PREFERRED STOCK- In May and June 1996, the Company issued
$20,000,000 aggregate value of Series A Senior Redeemable Exchangeable
Preferred Stock ("Series A Preferred Stock"). Such Series A Preferred
Stock was retired on December 4, 1996, using the proceeds from the Senior
Secured Credit Facility.

10. CAPITAL STOCK

a. SERIAL PREFERRED STOCK - The Board of Directors has the authority to
issue up to 1,000,000 shares of Preferred Stock in one or more series.
40,000 shares have been designated as Redeemable Preferred Stock, and
350,000 shares have been designated as Series B Preferred Stock.

b. STOCK OPTION PLAN - The 1994 Stock Option Plan was approved by the
Company's Board of Directors and Stockholders in January 1995. At March
31, 1997, the Company had reserved 136,320 shares of Common Stock under
the plan (of which 25,000 shares are subject to shareholder approval).
The plan provides for incentive and non-qualified stock options for
employees. All options have been granted at exercise prices at or above
fair market value at the date of grant and vest ratably over a four year
period. The Company has adopted the disclosure only provisions of
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock Based Compensation" ("SFAS 123"). Accordingly, no compensation
cost has been recognized for the stock option plans. Determining
compensation cost for the Company's stock option plan based on the fair
value at the grant date for awards during the years ended March 31, 1997
and 1996 consistent with the provisions of SFAS 123, would not have had a
material effect on the Company's net loss and net loss per share.

At March 31, 1997, 30,015 shares were available for future grants under
the stock option plan.

F-16

<PAGE>

The following table summarizes the activity of options in the stock option plan:

SHARES EXERCISE PRICE

Granted 75,181 $ 37.17
Canceled (9,318) $ 37.17
-------

Options oustanding, March 31, 1995 65,863

Granted 23,877 $ 37.17
Canceled (13,512) $ 37.17
-------

Options oustanding, March 31, 1996 76,228 $ 37.17

Granted 40,736 $ 55.52
Canceled (10,659) $ 37.17
-------

Options oustanding, March 31, 1997 106,305 $ 44.20
-------
-------

Options exercisable, March 31, 1995 - $ 37.17
-------
-------
Options exercisable, March 31, 1996 14,832 $ 37.17
-------
-------
Options exercisable, March 31, 1997 25,571 $ 37.17
-------
-------

The following table summarizes information about the Company's stock
options outstanding as of March 31, 1997.

<TABLE>
OPTIONS OUTSTANDING
-------------------
OUTSTANDING WEIGHTED AVERAGE WEIGHTED AVERAGE
EXERCISE PRICE SHARES REMAINING CONTRACTUAL LIFE REMAINING EXERCISE PRICE

<S> <C> <C> <C>
$ 37.17 94,305 2.42 years $ 37.17
$ 96.23 7,000 3.92 years $ 96.23
$ 104.00 5,000 3.75 years $ 104.00
-------
Total 106,305
-------
-------
OPTIONS EXERCISABLE
-------------------
OUTSTANDING WEIGHTED AVERAGE WEIGHTED AVERAGE
EXERCISE PRICE SHARES REMAINING CONTRACTUAL LIFE REMAINING EXERCISE PRICE

$ 37.17 25,571 2.10 years $ 37.17
</TABLE>

c. STOCK PURCHASE WARRANTS- In 1994, the Company issued 130,000 warrants in
connection with its Old Senior Notes and 50,000 warrants in connection with
its Redeemable Preferred Stock. Such warrants were detached in December
1994. The value allocated to the warrants aggregated $1,260,000. The
warrants are exercisable and outstanding and expire on August 15, 2001. The

F-17
<PAGE>

exercise price of the warrants is $.01 per share. Additionally, in
connection with the issuance of the Senior Redeemable Preferred Stock, the
Company issued additional warrants.

11. INCOME TAXES

The Company records deferred tax liabilities and assets for estimated
future tax consequences attributable to temporary differences. Such
temporary differences exist when the tax basis differs from the financial
reporting amount of assets or liabilities. A valuation allowance is
recorded to reduce deferred tax assets to amounts, which, in management's
judgment, are more likely than not to be realized.

The income tax provision (benefit) is composed of the following:

PERIOD FROM
APRIL 15,
(INCEPTION)
YEAR ENDED YEAR ENDED TO
MARCH 31, MARCH 31, MARCH 31,
1997 1996 1995

Current:
Federal $ - $ (279) $(200)
State 269 412 252
Foreign 1,139 1,112 10
------ ------- -----
1,408 1,245 62
------ ------- ------
Deferred:
Federal - - (175)
State - (100) 78
Foreign (86) 160 -
------ ------- -----
(86) 60 (97)
------ ------- -----
Total income tax
provision (benefit) $1,322 $ 1,305 $ (35)
------ ------- -----
------ ------- -----

F-18
<PAGE>

There is no Federal tax liability as a result of Federal tax operating
losses in the amount of approximately $59,571,000. Such losses expire
in accordance with provisions of applicable tax law and expire beginning
in 2006 as follows:

EXPIRATION
AMOUNT DATE
(dollars in thousands)
$ 679 2006
3,834 2007
1,703 2008
625 2009
6,400 2010
15,494 2011
30,836 2012

The future utilization of the net operating loss carryforwards is subject
to the provisions of Section 382 of the Internal Revenue Code in connection
with changes in ownership. Net operating loss carryforwards of
approximately $23,000,000 are subject to an annual Section 382 limitation
of $5,600,000 and approximately $13,000,000 of net operating loss
carryforwards are subject to an annual Section 382 limitation of
$1,100,000.

The following reconciles the income tax provision (benefit) computed at
the Federal statutory income tax rate to the benefit recorded in the
statement of operations:

<TABLE>
PERIOD FROM
APRIL 15,
1994
(INCEPTION)
YEAR ENDED YEAR ENDED TO
MARCH 31, MARCH 31, MARCH 31,
1997 1996 1995
(dollars in thousands)

<S> <C> <C> <C>
Federal benefit at statutory rate $ (13,768) $ (3,656) $ (1,923)
Limitation of utilization of tax benefits 14,328 5,166 1,528
Benefit of carryback not previously recorded - (279) -
State income taxes 269 311 330
Foreign income (593) (1,508)
Foreign taxes 1,053 1,271 10
Other 33 20
---------- --------- ---------
$ 1,322 $ 1,305 $ (35)
---------- --------- ---------
---------- --------- ---------
</TABLE>

F-19

<PAGE>

The significant components of the Company's deferred tax liabilities and
assets are as follows:

<TABLE>
MARCH 31,
1997 1996
(dollars in thousands)
<S> <C> <C>
Current deferred income tax assets (liabilities):
Allowance for sales returns $ 4,962 $ 2,195
Inventory reserves 5,924 697
Other non-deductible reserves 13,567 1,997
Royalties 1,302 867
Other, net 42 47
---------- ----------
25,797 5,803
Less valuation allowance (25,797) (5,803)
---------- ----------

- -
---------- ----------

Non-current deferred income tax assets (liabilities): -
Depreciation (1,967) (1,092)
Amortization of intangible assets (1,555) (1,059)
Federal net operating loss carryforwards 20,255 4,650
State net operating loss carryforwards 2,524 1,277
Foreign tax credit carryforwards 1,860 790

21,117 4,566

Less valuation allowance (21,117) (4,566)
---------- ----------
$ - $ -
---------- ----------
---------- ----------
Deferred foreign tax liability $ 158 $ 141
---------- ----------
---------- ----------
</TABLE>

Foreign pretax income (loss) was $1,746,000, $4,447,000 and $(551,000) for
the years ended March 31, 1997 and 1996 and for the period from April 15,
1994 (inception) to March 31, 1995.

12. COMMITMENTS AND CONTINGENCIES

a. LEASES - The Company leases certain warehouses, office facilities,
and automobiles, under operating lease agreements, certain of which
are subject to escalation, expiring at various dates.

F-20
<PAGE>

Future minimum lease payments under noncancelable operating leases as of
March 31, 1997 are as follows:

YEAR ENDING
MARCH 31, AMOUNT
(dollars in thousands)
1998 $1,687
1999 1,290
2000 1,103
2001 998
2002 502
Thereafter 1,174
------
$6,754
------
------

Rent expense associated with operating leases for the years ended March 31,
1997 and 1996 and for the period from April 15, 1994 (Inception) to March
31, 1995 was $2,007,000, $1,999,000 and $337,000, respectively.

b. ROYALTIES - Future minimum royalty payments at March 31, 1997, together
with the present value of minimum royalty payments, are as follows:

YEAR ENDING
MARCH 31, AMOUNT
(dollars in thousands)
1998 $3,065
1999 1,423
2000 1,160
2001 2,555
2002 662

-
------
Total minimum royalty payments 8,865
Less: Amounts representing interest 1,091
------
Present value of minimum royalty payments 7,774

Current portion 4,006
------

Long-term portion $3,768
------
------

Royalty expense pursuant to minimum royalty agreements totaled $2,848,000,
$1,931,000 and $1,489,000 for the years ended March 31, 1997 and 1996 and
the period from April 15, 1994 (inception) to March 31, 1995, respectively.

c. EMPLOYMENT AGREEMENT WITH DR. BONOMA - As of August 6, 1996 the Company
entered into an employment agreement with Dr. Thomas V. Bonoma, Chairman
and Chief Executive Officer of the Company from inception through his
untimely death on May 21, 1997. Pursuant to such agreement, Dr. Bonoma
received a base salary of $500,000 per year and was eligible to receive an
additional annual bonus of 100% of his annual salary if certain objectives
were met. Upon Dr. Bonoma's death his estate is entitled to receive his
unpaid salary through the date of his death and a bonus of 75% of his
annual base salary pro rated for the part of the year to the date of his
death.

F-21
<PAGE>

d. OTHER EMPLOYEE STOCK OPTIONS - Dr. Bonoma had been granted stock options
whereby he had the right to acquire a total of 93,182 shares of common
stock of the Company. The earliest date on which these options can become
exercisable generally is August 18, 1997, based on the value of the
Company's equity reaching certain thresholds; however, the valuation date
is accelerated prior to that date (and if the thresholds are reached the
options become exercisable) upon a sale or merger of the Company or a
public offering of the Company's common Stock. Notwithstanding whether the
earnings of the Company meet any of the tests enunciated in the stock
option agreement, Dr. Bonoma's estate will be entitled to exercise these
options commencing on August 18, 2000. The above stock options had been
authorized by the Board of Directors and granted outside of the Company's
stock option plan. The exercise price for each purchasable share under
this stock option is $37.17237.

e. TERMINATED PENSION PLAN - On February 7, 1997, the Company closed the
Northvale, New Jersey and Boucherville, Quebec facilities of MEM and Tom
Fields Ltd. (a division of MEM) and terminated substantially all of the
employees working at such facilities. The union employees in the Northvale
facilities had been covered by a collective bargaining arrangement which
included participation in the local union pension fund (the "Fund").
Closure of such plants and termination of the employees triggered an
automatic withdrawal from the Fund. In connection with such withdrawal the
Company will incur an ERISA withdrawal liability, which has been estimated
by the Fund's actuary at approximately $3,800,000. The actual payments may
be made either in a lump-sum, or in equal quarterly installments over a
period not to exceed twenty years, as calculated under a statutory formula.
The Fund's actuary has not completed the final calculations to determine
the actual quarterly payment amount. The Fund's actuary also informed the
Company that for several years the Fund has not received the minimum annual
level of contributions required by ERISA. The Fund is in the process of
seeking to obtain certain waivers under ERISA and the Internal Revenue Code
so that the participating employers will not have to pay any penalties for
the Fund's failure to receive such minimum levels of contributions. The
Fund's actuary has estimated the Company's liability, if such waivers are
not obtained, to be approximately $1,100,000. Furthermore, the Company's
ERISA withdrawal liability may be recalculated if the Fund terminates
within three years of the Company's withdrawal, which may significantly
increase the amount of the liability. The amount of the additional ERISA
withdrawal liability in the event of the Fund's termination cannot be
estimated at this time. A liability of $4,900,000 has been recorded as a
liability purchased in conjunction with the MEM acquisition.

13. LEGAL PROCEEDINGS

The Company is a defendant in a lawsuit where the plaintiff alleges
defamation and interference with business relationships, and is seeking
$7,000,000 in damages. The Company intends to vigorously defend this
lawsuit and believes it has substantial and meritorious defenses.
Management believes that the outcome of this litigation will not have a
material effect on the results of operations or financial condition of the
Company. Additionally, MEM had been a defendant in a lawsuit which had
been settled for $25,000.

14. RETIREMENT PROGRAMS

In May 1995, the Company established a 401(k) Pension Plan for all U.S.
employees, with the exception of Dana union members for which the Company
maintains a separate 401(k) plan. The Plan

F-22
<PAGE>

covering Dana non-union members was merged into the new Company Plan. The
Plans are available to all employees who have been employed continuously
for at least six months. The participants contribution ceiling is 20% of
their annual compensation, as defined, and a matching contribution is
provided by the Company at 50% of the first 6% of the participants' salary
for the non-union members and 12 1/2% of the first 6% of the participants'
salary for the union plan. The participants become fully vested after
four years of service. The contributions made by the Company during the
year ended March 31, 1997 and 1996 and the three months ended March 31,
1995 (for the Dana Plans) were $393,000, $166,000 and $12,000,
respectively. Certain of the administrative expenses are paid by the
Company, the Plans' sponsor.

MEM Company had a defined benefit pension plan covering substantially all
of its non-union employees. The plan had been terminated prior to the
acquisition. The plan is being settled during fiscal 1997. The impact of
such settlement on the financial statements of the Company is not material.

15. FAIR VALUE OF FINANCIAL INSTRUMENTS:

The following estimated fair value amounts have been determined using
available market information and appropriate valuation methodologies.
However, considerable judgement is required to interpret market data and to
develop the estimates of fair value. Accordingly the estimates presented
herein are not necessarily indicative of the amounts that the Company could
realize in a current market exchange.

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to
estimate that value. The carrying values of cash and cash equivalents,
accounts receivable and current liabilities approximate fair value because
of the short-term maturities of those instruments. The fair values of the
Company's Existing Notes, Old Senior Notes and Series B Preferred Stock and
outstanding warrants, are estimated based upon quoted market prices. The
fair values of the subordinated sellers notes and the Redeemable Preferred
Stock are estimated based on rates currently available to the Company for
debt with similar terms and remaining maturities. At March 31, 1996, the
fair value of the Old Credit Facility approximated cost.

<TABLE>
1997 1996
Fair Value Carrying Amount Fair Value Carrying Amount
(dollars in thousands)
<S> <C> <C> <C> <C>
Cash & Cash Equivalents 719 719 1,432 1,432
Marketable Securities 22,799 22,799 174 174
Accounts Receivable 48,837 48,837 34,557 34,557
Accounts Payable 21,612 21,612 19,463 19,463
Accrued Expenses 40,322 40,322 15,157 15,157
Old Credit Facility - - 57,000 57,000
Existing Notes 201,000 200,000 - -
Old Senior Notes - - 65,000 63,623
Subordinated Seller Notes 4,353 3,877 4,617 3,700
Redeemable Preferred Stock 11,539 13,167 10,907 11,698
Senior Redeemable Preferred Stock 94,037 86,660 - -
Warrants issued in 1994 17,321 1,260 6,691 1,260
Warrants issued in 1996 32,867 32,867 - -
</TABLE>

F-23
<PAGE>

16. CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and trade
accounts receivable.

Credit risk with respect to trade accounts receivable is generally
diversified due to the large number of entities comprising the Company's
customer base and their dispersion throughout the United States. The
Company generally does not require collateral, and the majority of its
trade receivables are unsecured. The Company does, however, perform
ongoing credit evaluations of its customers' financial condition.

The Company sells a significant portion of its products through third-party
drug store and discount retailers and as a result, maintains individually
significant accounts receivable balances with major retailers. If the
financial condition and operation of these retailers deteriorate below
critical levels, the Company's operating results could be adversely
affected. An allowance for doubtful accounts and sales returns is
maintained at a level which management believes is sufficient to cover
potential credit losses. The ten largest accounts receivable balances
collectively represented 66% and 54% of total accounts receivable at
March 31, 1997 and 1996, respectively. Sales to the top ten customers
represented 46%, 50% and 46% of gross revenues during the years ended
March 31, 1997 and 1996 and the period April 15, 1994 (Inception) to
March 31, 1995. One customer accounted for 12% of the Company's gross
revenues for the year ended March 31, 1997. No single customer accounted
for greater than 10% of the Company's gross revenues for the year ended
1996 or for the period April 15, 1994 (inception) to March 31, 1995.

17. RELATED PARTIES

Pursuant to a management agreement, the Company pays management fees to
Kidd, Kamm & Company ("Kidd Kamm"), a related party, subject to certain
operating and financial ratios being met, and subject to certain
restrictions in the Company's Indenture relating to the New Senior Notes.
During the years ended March 31, 1997 and 1996 and the period April 15,
1994 (Inception) to March 31, 1995, the Company paid $-0-, $-0-, and
$225,000, respectively, in management fees to Kidd Kamm. In connection
with the closing of the Cosmar acquisition, the Company paid a fee of
$675,000 to Kidd Kamm. In connection with the closing of the Existing
Notes, the Company paid a fee of $1,350,000 to Kidd Kamm which was
reflected as deferred financing costs.

In December 1995, the holders of the subordinated sellers notes sold such
notes to a third party who is a holder of a substantial portion of the
Company's redeemable preferred stock (the "Holder"). In a related
transaction, the Company signed an agreement with the Holder, whereby in
exchange for $225,000, the Company agreed not to pursue any claims against
the Holder relating to the acquisition of Cosmar. All other terms and
provisions of the sellers' note remained the same.

F-24
<PAGE>

18. INFORMATION CONCERNING FINANCIAL REPORTING FOR SEGMENTS AND OPERATIONS
IN GEOGRAPHIC AREAS

The Company is engaged in two main businesses, the manufacturing and
marketing of fragrances and associated products and the manufacturing and
marketing of cosmetic products.

Year ended March 31, 1997:
<TABLE>
FRAGRANCES COSMETIC CORPORATE ELIMINATIONS CONSOLIDATED
<S> <C> <C> <C> <C> <C>

Sales to unaffiliated customers $110,662 $ 63,950 $ - $ - $174,612
Intercompany sales 2,536 322 - (2,858) -
-------- -------- -------- ------- --------
Net Sales $113,198 $ 64,272 $(2,858) $174,612
-------- -------- ------- --------
-------- -------- ------- --------

Operating income (loss) $ 5,360 $ 9,803 $(10,639) $ - $ 4,524
-------- -------- -------- ------- --------
-------- -------- -------- ------- --------

Identifiable assets $217,077 $108,229 $ 36,077 $ - $361,383
-------- -------- -------- ------- --------
-------- -------- -------- ------- --------

Depreciation and amortization $ 9,307 $ 4,841 $ 561 $ - $ 14,709
-------- -------- -------- ------- --------
-------- -------- -------- ------- --------

Capital expenditures $ 6,715 $ 2,141 $ 474 $ - $ 9,330
-------- -------- -------- ------- --------
-------- -------- -------- ------- --------

Year ended March 31, 1996:

FRAGRANCES COSMETIC CORPORATE CONSOLIDATED

Net sales (A) $ 83,153 $ 48,133 $ - $131,286
-------- -------- -------- --------
-------- -------- -------- --------

Operating income (loss) $ 7,609 $ 9,160 $ (8,318) $ 8,451
-------- -------- -------- --------
-------- -------- -------- --------

Identifiable assets $ 90,709 $ 83,074 $ 10,836 $184,619
-------- -------- -------- --------
-------- -------- -------- --------

Depreciation and amortization $ 4,535 $ 3,305 $ 211 $ 8,051
-------- -------- -------- --------
-------- -------- -------- --------

Capital expenditures $ 4,339 $ 1,942 $ 1,885 $ 8,166
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>

F-25
<PAGE>

Period April 15, 1994 (Inception) to March 31, 1995:

<TABLE>
FRAGRANCES COSMETIC CORPORATE CONSOLIDATED

<S> <C> <C> <C> <C>
Net Sales (A) $ 33,602 $ 24,112 $ - $ 57,714
--------- --------- --------- ---------
--------- --------- --------- ---------

Operating income (loss) $ 2,890 $ 4,387 $ (4,533) $ 2,744
--------- --------- --------- ---------
--------- --------- --------- ---------

Identifiable assets $ 71,092 $ 74,731 $ 16,430 $ 162,253
--------- --------- --------- ---------
--------- --------- --------- ---------

Depreciation and
amortization $ 878 $ 1,954 $ - $ 2,832
--------- --------- --------- ---------
--------- --------- --------- ---------

Capital expenditures $ 33 $ 478 $ 118 $ 629
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

(A) There were no material intersegment sales during the year ended
March 31, 1996 and the period from April 15, 1994 (Inception) to
March 31, 1995.

Information related to the Company's operations in different geographic
areas is shown below:

Year ended March 31, 1997:

<TABLE>
UNITED LATIN EUROPE, AFRICA
STATES CANADA AMERICA AND THE FAR EAST ELIMINATIONS CONSOLIDATED

<S> <C> <C> <C> <C> <C> <C>
Sales to Unaffiliated Customers $ 139,174 $ 10,609 $ 17,888 $ 6,941 $ - $ 174,612
Intercompany Sales 2,236 591 - 31 (2,858) -
--------- ---------- --------- --------- --------- ---------
Net sales $ 141,410 $ 11,200 $ 17,888 $ 6,972 $ (2,858) $ 174,612
--------- ---------- --------- --------- --------- ---------
--------- ---------- --------- --------- --------- ---------

Net income (loss) $ (42,428) $ 192 $ 1,600 $ (1,182) $ (41,818)
--------- ---------- --------- --------- ---------
--------- ---------- --------- --------- ---------

Identifiable assets $ 306,186 $ 15,759 $ 10,600 $ 28,838 $ 361,383
--------- ---------- --------- --------- ---------
--------- ---------- --------- --------- ---------
</TABLE>

Year ended March 31, 1996:

<TABLE>
UNITED LATIN EUROPE, AFRICA
STATES CANADA AMERICA AND THE FAR EAST CONSOLIDATED

<S> <C> <C> <C> <C> <C>
Net sales (A) $ 115,300 $ 8,026 $ 4,825 $ 3,135 $ 131,286
--------- --------- --------- -------- ---------
--------- --------- --------- -------- ---------
Net income (loss) $ (15,333) $ 260 $ 1,436 $ 1,580 $ (12,057)
--------- --------- --------- -------- ---------
--------- --------- --------- -------- ---------
Identifiable assets $ 156,951 $ 9,675 $ 7,107 $ 10,886 $ 184,619
--------- --------- --------- -------- ---------
--------- --------- --------- -------- ---------
</TABLE>

F-26
<PAGE>

Period April 15, 1994 (Inception) to March 31, 1995:

UNITED LATIN EUROPE, AFRICA
STATES CANADA AMERICA AND THE FAR EAST CONSOLIDATED

Net sales(A) $56,153 $ 633 $ 385 $ 543 $ 57,714
======== ===== ====== ====== ========
Net income (loss) $(5,146) $(277) $ (186) $ 150 $ (5,459)
======== ===== ====== ====== ========
Identifiable assets $155,389 $ 609 $1,892 $4,363 $162,253
======== ===== ====== ====== ========

(A) There were no material Intercompany sales between geographic areas during
the year ended March 31, 1996 and the period from April 15, 1994
(Inception) to March 31, 1995.

19. EXTRAORDINARY ITEM

During the fourth quarter of Fiscal 1996, the Company recorded an
extraordinary loss of $22,438,000, or $28.76 per share, relating to the
early extinguishment of debt. The loss was composed of the redemption
premiums on the Old Senior Notes of $10,725,000, the write-off of
deferred financing fees relating to the debt that was extinguished of
$10,489,000, and the write-off of the remaining unamortized discount on
the Old Senior Notes of $1,224,000. No tax benefit was recognized for
the extraordinary item.

20. SUBSEQUENT EVENTS

a. On April 28, 1997, the Company exchanged shares of Senior Redeemable
Preferred Stock, Series C for all of the issued and outstanding
shares of Senior Redeemable Preferred Stock, Series B. Effective
April 29, 1997, the dividend rate on the Series C Preferred Stock
became 14.0%.

b. On May 8, 1997 the Company's Registration Statement on Form S-4 became
effective. On June 8, 1997, the Company completed the exchange of all
of its outstanding principal amount of Existing Notes for a like amount
of its 11 3/4% Senior Notes due 2004, which were registered under the
Act (the "New Notes").

c. On May 9, 1997, the Company invested approximately $580,000 in a
joint venture partnership in order to manufacture and market cosmetic
and fragrance products in the People's Republic of China. Such
investment was the first payment pursuant to an agreement dated March
31, 1997.

d. On May 21, 1997, Dr. Bonoma, Former Chairman and Chief Executive
Officer of the Company died suddenly. The Company is the beneficiary
on a key-man life insurance policy equaling $5,000,000

******

F-27
<PAGE>

RENAISSANCE COSMETICS, INC. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
- -------------------------------------------------------------------------------

<TABLE>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
ADDITIONS
-----------------------
CHARGED CHARGED
BALANCE AT TO PROFIT TO OTHER BALANCE
BEGINNING AND LOSS ACCOUNTS DEDUCTIONS AT END
OF PERIOD OR INCOME (DESCRIBE)(1) (DESCRIBE)(2) OF PERIOD
<S> <C> <C> <C> <C> <C>
Year ended March 31, 1997
Accounts receivable allowances(A) $4,154 $33,706 $31,485 $6,375
====== ======= ======= ======
Inventory reserves $1,540 $ 2,033 $ $ 854 $2,719
====== ======= ====== ======= ======
Year ended March 31, 1996
Accounts receivable allowances(A) $1,775 21,208 -- 18,829 $4,154
====== ======= ====== ======= ======
Inventory reserves $3,449 $ 5 $ $ 1,914 $1,540
====== ======= ====== ======= ======
Period from April 15, 1994
(inception) to March 31, 1995
Accounts receivable Allowances(A) $ - $ 6,478 $ 49 $4,752 $1,775
====== ======= ====== ======= ======
Inventory reserves $ $ 23 $3,426(3) $ $3,449
====== ======= ====== ======= ======
</TABLE>

(A) Represents allowances for sales returns, doubtful accounts and discounts.
(1) Represents translation adjusments.
(2) Represents write-offs applied against reserve balances
(3) Represents reserves created at dates of acquisitions of companies.

F-28

<PAGE>

AMENDED AND RESTATED

BY-LAWS

RENAISSANCE COSMETICS, INC.

__________________________

ARTICLE I

OFFICES

SECTION 1. REGISTERED OFFICE. The corporation's registered office in the
state of Delaware shall be established and maintained at the office of The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, in the
city of Wilmington, in the county of New Castle, in the state of Delaware, and
The Corporation Trust Company shall be the registered agent of this corporation
in charge of the corporation's registered office in the state of Delaware.

SECTION 2. OTHER OFFICES. The corporation may have other offices, either
within or without the state of Delaware, at such place or places as the board of
directors may from time to time appoint or the business of the corporation may
require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders for the
election of directors and for such other business as may be stated in the notice
of the meeting, shall be held at such place, either within or without the state
of Delaware, and at such time and date as the board of directors, by resolution,
shall determine and as set forth in the notice of the meeting.

If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a board of directors and
they may transact such other corporate business as shall be stated in the notice
of the meeting.

SECTION 2. OTHER MEETINGS. Meetings of stockholders for any purpose other
than the election of directors may be held at such time and place, within or
without the state of Delaware, as shall be stated in the notice of the meeting.
<PAGE>

SECTION 3. VOTING. Each stockholder entitled to vote in accordance with
the terms of the corporation's certificate of incorporation and these Amended
and Restated By-Laws (these "By-Laws") shall be entitled to one vote, in person
or by proxy, for each share of stock entitled to vote held by that stockholder,
but no proxy shall be voted after three years from its date unless that proxy
provides for a longer period. The vote for directors and, upon the demand of
any stockholder, the vote upon any other question before the meeting, shall be
by ballot. All elections for directors shall be decided by plurality vote; all
other questions shall be decided by majority vote except as otherwise provided
by the corporation's certificate of incorporation or the laws of the state of
Delaware.

A complete list of the stockholders entitled to vote at the ensuing
election, arranged in alphabetical order, with the address of each, and the
number of shares held by each, shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.

SECTION 4. QUORUM. Except as otherwise required by law, by the
corporation's certificate of incorporation or by these By-Laws, the presence, in
person or by proxy, of stockholders holding a majority of the stock of the
corporation entitled to vote shall constitute a quorum at all meetings of the
stockholders. In case a quorum shall not be present at any meeting, a majority
in interest of the stockholders entitled to vote thereat, present in person or
by proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until the requisite amount of
stock entitled to vote shall be present. At any such adjourned meeting at which
the requisite amount of stock entitled to vote shall be represented, any
business may be transacted that might have been transacted at the meeting as
originally noticed. Unless the adjournment is for more than thirty (30) days or
unless a new record date is set for the adjourned meeting, no notice of the
adjourned meeting need be given to any stockholder provided that the time and
place of the adjourned meeting were announced at the meeting at which the
adjournment was taken.

SECTION 5. SPECIAL MEETINGS. Special meetings of the stockholders for any
purpose or purposes may be called by the Chairman, Vice-Chairman, Chief
Executive Officer, President or Secretary, or by resolution of the majority of
the board of directors or by vote of the stockholders holding 25% or more of the
outstanding stock of the corporation.

SECTION 6. NOTICE OF MEETINGS. Written notice, stating the place, date
and time of the meeting, and the purpose or purposes for which the meeting is
called, shall be given to each stockholder entitled to vote thereat at his
address as it appears on the records of the corporation, not less than ten nor
more than 60 days before the date of the meeting. No business other than that
stated in the notice shall be transacted at any meeting without the unanimous
consent of all the stockholders entitled to vote thereat.

2
<PAGE>

SECTION 7. ACTION WITHOUT MEETING. Unless otherwise provided by the
corporation's certificate of incorporation, any action required to be taken at
any annual or special meeting of stockholders, or any action that may be taken
at any annual or special meeting, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take that
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.

ARTICLE III

DIRECTORS

SECTION 1. NUMBER AND TERM. The number of directors constituting the
board of directors shall be not more than nine nor less than one, as fixed from
time to time in these By-Laws or by action of the board of directors. The
initial number of directors shall be three. The directors shall be elected at
the annual meeting of the stockholders and each director shall be elected to
serve until his or her successor shall be elected and shall qualify. Directors
need not be stockholders.

SECTION 2. RESIGNATIONS. Any director or member of a committee may resign
at any time from his position as a director and/or member of a committee. That
resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the president or secretary. The acceptance of a resignation shall not be
necessary to make it effective.

SECTION 3. VACANCIES. If the office of any director or member of a
committee becomes vacant, the remaining directors in office, though less than a
quorum by a majority vote, may appoint any qualified person to fill the vacancy
and that person shall hold office for the unexpired term and until his successor
shall be duly elected and qualified, provided, however, that if there are no
directors then in office due to a vacancy, the stockholders may elect a
successor who shall hold office for the unexpired term and until his successor
shall be duly elected and qualified.

SECTION 4. REMOVAL. Except as hereinafter provided, any director or
directors may be removed either for or without cause at any time by the
affirmative vote of the holders of a majority of all the shares of stock
outstanding and entitled to vote, at a special meeting of the stockholders
called for the purpose, and the vacancies thus created may be filled, at the
meeting held for the purpose of removal, by the affirmative vote of a majority
in interest of the stockholders entitled to vote.

Unless the corporation's certificate of incorporation otherwise provides,
stockholders may effect removal of a director who is a member of a classified
board of directors only for cause. If the corporation's certificate of
incorporation provides for cumulative voting and if less than

3
<PAGE>

the entire board is to be removed, no director may be removed without cause
if the votes cast against his removal would be sufficient to elect him if
then cumulatively voted at an election of the entire board of directors, or,
if there be classes of directors, at an election of the class of directors of
which he is a part.

If the holders of any class or series are entitled to elect one or more
directors by the provisions of the corporation's certificate of incorporation,
these provisions shall apply, with respect to the removal without cause of a
director or directors so elected, to the vote of the holders of the outstanding
shares of that class or series and not to the vote of the outstanding shares as
a whole.

SECTION 5. INCREASE OF NUMBER. The number of directors may be increased
by the affirmative vote of a majority of the directors, though less than a
quorum, or by the affirmative vote of a majority in interest of the
stockholders, at the annual meeting or at a special meeting called for that
purpose, and by like vote the additional directors may be chosen at that meeting
to hold office until the next annual election and until their successors are
elected and qualify.

SECTION 6. POWERS. The board of directors shall exercise all of the
powers of the corporation except such powers as are by law, or by the
corporation's certificate of incorporation or by these By-Laws, conferred upon
or reserved to the stockholders.

SECTION 7. COMMITTEES. The board of directors may, by resolution or
resolutions passed by a majority of the whole board, designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The presence of at least a majority of the members of a committee
shall be necessary to constitute a quorum. The vote of a majority of committee
members present at a committee meeting at which a quorum is present shall be the
act of the committee. The board may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of
any member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the board of directors to act at the
meeting in the place of the absent or disqualified member or members.

Any committee, to the extent provided in the resolution of the board of
directors, or in these By-Laws, shall have and may exercise all the powers and
authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers that may require it; but no committee shall have the power
or authority in reference to amending the corporation's certificate of
incorporation, adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
By-Laws of the corporation; and, unless the resolution, these By-Laws or the
corporation's certificate of incorporation expressly so provide, no committee
shall have the power or authority to declare a dividend or to authorize the
issuance of stock.

4
<PAGE>

SECTION 8. MEETINGS. The directors elected upon any annual meeting of
the stockholders may hold their first meeting for the purpose of organization
and the transaction of business, if a quorum be present, immediately after the
annual meeting of the stockholders; or the time and place of that meeting may be
fixed by consent in writing of all the directors.

Regular meetings of the directors may be held without notice at such places
and times as shall be determined from time to time by resolution of the
directors.

Special meetings of the board may be called by the chairman, vice chairman,
chief executive officer or the president on at least twenty-four hours notice to
each director, either personally, by telephone, mail, overnight delivery service
or by facsimile transmission; in like manner and on like notice, the chairman,
vice chairman, chief executive officer or the president must call a special
meeting on the written request of a majority of directors.

Unless otherwise restricted by the corporation's certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and that participation in a meeting shall
constitute presence in person at the meeting.

SECTION 9. QUORUM. A majority of the directors shall constitute a quorum
for the transaction of business. The vote of a majority of directors present at
a meeting at which a quorum is present shall be the act of the board of
directors; provided, however, that in the case of any proposed action or matter
presented to the board of directors for its approval which is described in, or
subject to, subsection (a) of Section 144 of the Delaware General Corporation
Law ("DGCL"), in order to be the act of the board of directors, such proposed
action or matter must be approved by (1) a majority of the directors present at
a meeting at which a quorum is present AND (2) a majority of the disinterested
directors (within the meaning of Section 144 of the DGCL), without regard to
whether such disinterested directors are or are not present at such meeting. If
at any meeting of the board there shall be less than a quorum present, a
majority of those present may adjourn the meeting from time to time until a
quorum is obtained, and no further notice thereof need be given other than by
announcement at the meeting that is so adjourned.

SECTION 10. COMPENSATION. Directors shall not receive any stated salary
for their services as directors or as members of committees, but by resolution
of the board a fixed fee and expenses of attendance may be allowed for
attendance at each meeting. Nothing in these By-Laws shall be construed to
preclude any director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.

SECTION 11. ACTION WITHOUT MEETING. Any action required or permitted to
be taken at any meeting of the board of directors, or of any committee thereof,
may be taken without a meeting, if a written consent thereto is signed by all
members of the board or

5
<PAGE>

committee, as the case may be, and that written consent is filed with the
minutes of proceedings of the board or committee.

SECTION 12. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the board of directors or any committee designated by
the board at which action on any corporate matter is taken shall be deemed to
have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.

ARTICLE IV

OFFICERS

SECTION 1. OFFICERS. The officers of the corporation shall be a
president, a treasurer, and a secretary, all of whom shall be elected by the
board of directors and who shall hold office until their successors are elected
and qualified. In addition, the board of directors may elect a chairman, a
vice-chairman, a chief executive officer, a chief operating officer, one or more
vice-presidents and such assistant secretaries and assistant treasurers as they
may deem proper. None of the officers of the corporation need be directors.

Each of the foregoing officers shall have the power and authority to sign
instruments and stock certificates in accordance with section 103(a)(2) of the
Delaware General Corporation Law and to sign agreements on behalf of the
corporation. The officers shall be elected at the first meeting of the board of
directors after each annual meeting of the stockholders. Any two or more
offices may be held at the same time by the same person. Any officer may be
removed, with or without cause, by the board of directors. Any vacancy may be
filled by the board of directors.

SECTION 2. OTHER OFFICERS AND AGENTS. The board of directors may appoint
such other officers and agents as it may deem advisable, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the board of directors.

SECTION 3. CHAIRMAN. The chairman, if one be elected, shall preside at
all meetings of the stockholders and at all meetings of the board of directors,
and shall have such other power and authority and perform such other duties as
may be prescribed by these By-Laws or as may be assigned from time to time by
the board of directors.

SECTION 4. VICE-CHAIRMAN. The vice-chairman, if one be elected, shall, in
the absence or disability of the chairman, preside at all meetings of the
stockholders and at all meetings of the board of directors, and shall have such
other power and authority and perform

6
<PAGE>

such other duties as may be prescribed by these By-Laws or as may be assigned
from time to time by the board of directors or the chairman.

SECTION 5. CHIEF EXECUTIVE OFFICER. The chief executive officer, if one
be elected, shall, in the absence or disability of the chairman and vice-
chairman, preside at all meetings of the stockholders and at all meetings of the
board of directors, and shall have general supervision, direction and control of
the business and affairs of the corporation subject to the authorization and
control of the board of directors, and shall have such other power and authority
and perform such other duties as may be prescribed by these By-Laws or as may be
assigned from time to time by the board of directors.

In the absence or disability of the chief executive officer, the president,
if available, and if the president is not available the chief operating officer,
if available, shall have the authority, and shall perform the duties, of the
chief executive officer.

SECTION 6. PRESIDENT. The president shall, in the absence or disability
of the chairman, vice-chairman and chief executive officer, preside at all
meetings of the stockholders and at all meetings of the board of directors, and
shall have such other power and authority and perform such other duties as may
be prescribed by these By-Laws or as may be assigned from time to time by the
board of directors or the chief executive officer.

In the absence or disability of the chief executive officer, the president,
if available, shall have the authority, and shall perform the duties, of the
chief executive officer.

SECTION 7. CHIEF OPERATING OFFICER. The chief operating officer, if one
be elected, shall have such power and authority and perform such duties as may
be prescribed by these By-Laws or as may be assigned from time to time by the
board of directors or the chief executive officer.

In the absence or disability of the president, the chief operating officer,
if available, shall have the authority, and shall perform the duties, of the
president. In addition, in the absence or disability of the chief executive
officer and the president, the chief operating officer, if available, shall have
the authority and perform the duties of the chief executive officer.

SECTION 8. VICE PRESIDENT. Each vice president shall have such power and
authority and perform such duties as may be prescribed by these By-Laws or as
may be assigned from time to time by the board of directors or the chief
executive officer.

The board of directors may designate one or more vice presidents, in such
order of priority as shall be specified by the board of directors, to have the
authority, and to perform the duties, of the chief executive officer in the
absence or disability of the chief executive officer, the president and the
chief operating officer; provided, however, that no vice president shall have
such authority or perform such duties unless specifically designated for that
purpose by the board of directors.

7
<PAGE>

SECTION 9. TREASURER. The treasurer shall have the custody of the
corporate funds and securities, shall keep full and accurate account of receipts
and disbursements in books belonging to the corporation and shall deposit all
moneys and other valuables in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.

The Treasurer shall disburse the funds of the corporation as may be ordered
by the board of directors, or the chief executive officer, taking proper
vouchers for such disbursements. He shall render to the chief executive officer
and board of directors at the regular meetings of the board of directors, or
whenever they may request it, an account of all his transactions as treasurer
and of the financial condition of the corporation. If required by the board of
directors, he shall give the corporation a bond for the faithful discharge of
his duties in such amount and with such surety as the board of directors shall
prescribe.

SECTION 10. SECRETARY. The secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors, and all other notices
required by law or by these bylaws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the chief executive officer, the president, the chairman, the vice-chairman
or by the board of directors or stockholders, upon whose requisition the meeting
is called as provided in these By-Laws.

The secretary shall record all the proceedings of the meetings of the
corporation and of the directors in a book to be kept for that purpose, and
shall perform such other duties as may be assigned to him by the chief executive
officer or the board of directors. He shall have custody of the seal of the
corporation and shall affix the same to all instruments requiring it, when
authorized by the chief executive officer or the board of directors, and attest
the same.

SECTION 11. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant
treasurers, if any shall be elected, shall, in the absence of the treasurer,
have the authority, and perform the duties, of the treasurer, and shall have
such other power and authority and perform such other duties as may be
prescribed by these By-Laws or as may be assigned from time to time by the board
of directors or the chief executive officer.

Assistant secretaries, if any shall be elected, shall, in the absence of
the treasurer, have the authority, and perform the duties, of the secretary, and
shall have such other power and authority and perform such other duties as may
be prescribed by these By-Laws or as may be assigned from time to time by the
board of directors or the chief executive officer.

ARTICLE V

MISCELLANEOUS

SECTION 1. CERTIFICATES OF STOCK. Certificates of stock, signed by the
chairman or vice chairman of the board of directors, if they be elected,
president or vice-president, and the treasurer or an assistant treasurer, or
secretary or an assistant secretary, shall

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<PAGE>

be issued to each stockholder certifying the number of shares owned by him in
the corporation. Any or all the signatures may be facsimiles.

Section 2. LOST CERTIFICATES. A new certificate of stock may be issued in
the place of any certificate theretofore issued by the corporation, alleged to
have been lost or destroyed, and the directors may, in their discretion, require
the owner of the lost or destroyed certificate, or his legal representatives, to
give the corporation a bond, in such sum as they may direct, not exceeding
double the value of the stock, to indemnify the corporation against any claim
that may be made against it on account of the alleged loss of the certificate,
or the issuance of the new certificate.

SECTION 3. TRANSFER OF SHARES. The shares of stock of the corporation
shall be transferable only upon its books by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon transfer the
old certificates shall be surrendered to the corporation by the delivery thereof
to the person in charge of the stock and transfer books and ledgers, or to such
other person as the directors may designate, by whom they shall be cancelled,
and new certificates shall thereupon be issued. A record shall be made of each
transfer and whenever a transfer shall be made for collateral security, and not
absolutely, it shall be so expressed in the entry of the transfer.

SECTION 4. STOCKHOLDERS RECORD DATE. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the board of directors may fix, in
advance, a record date, which shall not be more than 60 nor less than ten days
before the date of the meeting, nor more than 60 days before any other action.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.

SECTION 5. REGISTERED STOCKHOLDERS. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of the other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of the State of Delaware.

SECTION 6. DIVIDENDS. Subject to the provisions of the corporation's
certificate of incorporation, the board of directors may, out of funds legally
available therefor at any regular or special meeting, declare dividends upon the
capital stock of the corporation as and when they deem expedient. Before
declaring any dividend there may be set apart out of any funds of the
corporation available for dividends, such sum or sums as the directors from time

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<PAGE>

to time in their discretion deem proper for working capital or as a reserve fund
to meet contingencies or for equalizing dividends or for such other purposes as
the directors shall deem conducive to the interests of the corporation.

SECTION 7. SEAL. The corporate seal shall be circular in form and shall
contain the name of the corporation, the year of its creation and the words
"CORPORATE SEAL DELAWARE." The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.

SECTION 8. FISCAL YEAR. The fiscal year of the corporation shall be
determined by resolution of the board of directors.

SECTION 9. CHECKS. All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers, agent or agents of the
corporation, and in such manner, as shall be determined from time to time by
resolution of the board of directors.

SECTION 10. NOTICE AND WAIVER OF NOTICE. Whenever any notice is required
by these By-Laws to be given, personal notice is not meant unless expressly so
stated, and any notice so required shall be deemed to be sufficient if given by
depositing the same in the United States mail, postage prepaid, addressed to the
person entitled thereto at his address as it appears on the records of the
corporation, and that notice shall be deemed to have been given on the day of
the mailing. Stockholders not entitled to vote shall not be entitled to receive
notice of any meetings except as otherwise provided by statute.

Whenever any notice whatsoever is required to be given under the provisions
of any law, or under the provisions of the corporation's certificate of
incorporation or these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to that notice, whether before or after the time
stated therein, shall be deemed equivalent to that notice.

ARTICLE VI

AMENDMENTS

These By-Laws may be altered or repealed and by-laws may be made at any
annual meeting of the stockholders or at any special meeting thereof if notice
of the proposed alteration or repeal of the by-law or by-laws to be made be
contained in the notice of that special meeting, by the affirmative vote of a
majority of the stock issued and outstanding and entitled to vote thereat, or by
the affirmative vote of a majority of the board of directors, at any regular
meeting of the board of directors, or at any special meeting of the board of
directors, if notice of the proposed alteration or repeal, or of the by-law or
by-laws to be made, be contained in the notice of that special meeting.

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<PAGE>

ARTICLE VII

EFFECTIVE DATE

These By-Laws are effective on or as of May 7, 1997, and supersede in
their entirety the By-Laws of C.P. Holding Corp., a Delaware corporation.

<PAGE>
DATED - 04/04/97

FIRST AMENDED AND RESTATED

STOCK OPTION PLAN OF

RENAISSANCE COSMETICS, INC.

1. PURPOSE. The purpose of this First Amended and Restated Stock Option
Plan (the "Plan") of Renaissance Cosmetics, Inc., a Delaware corporation (the
"Company"), is to advance the interests of the Company by providing an
additional incentive to attract and retain qualified and competent persons who
provide management or other services or upon whose efforts and judgment the
success of the Company is largely dependent, through the encouragement of stock
ownership in the Company by such persons.

2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:

(a) "Board" shall mean the Company's Board of Directors.

(b) "Code" shall mean the Internal Revenue Code of 1986, as the same
may be amended from time to time.

(c) "Committee" shall mean the stock option committee appointed by
the Board pursuant to Section 13 hereof or, if not appointed, the Board.

(d) "Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Company.

(e) "Director" shall mean a member of the Board.

(f) "Fair Market Value" of the Common Stock on any date of reference
shall be the Closing Price on the business day immediately preceding such date,
unless the Committee in its sole discretion shall determine otherwise. For this
purpose, the Closing Price of the Common Stock on any business day shall be (i)
if the Common Stock is listed or admitted for trading on any United States
national securities exchange, or if actual transactions are otherwise reported
on a consolidated transaction reporting system, the last reported sale price of
the Common Stock on such exchange or reporting system, as reported in any
newspaper of general circulation, (ii) if clause (i) is not applicable, if the
Common Stock is quoted on the National Association of Securities Dealers
Automated Quotations System, or any similar system of

<PAGE>

automated dissemination of quotations of securities prices in common use, the
mean between the closing high bid and low asked quotations for such day of
the Common Stock on such system, (iii) if neither of clauses (i) or (ii) is
applicable, the mean between the high bid and low asked quotations for the
Common Stock as reported by the National Quotation Bureau, Incorporated or
other comparable service if at least two securities dealers have inserted
both bid and asked quotations for the Common Stock on at least 5 of the 10
preceding days, or (iv) if none of clauses (i), (ii) or (iii) is applicable,
the fair value of the Common Stock as determined by the Committee.

(g) "Option Agreement" means the agreement between the Company and
the Optionee to evidence the grant of an Option in the form attached hereto as
Exhibit A, or such other form of Option as the Committee may from time to time
approve.

(h) "Option" shall mean any stock option granted under this Plan.

(i) "Optionee" shall mean a person to whom an Option is granted or
any person who succeeds to the rights of such person under this Plan by reason
of the death of such person.

(j) "Share(s)" shall mean a share (or shares) of the Common Stock.

3. SHARES AND OPTIONS. Subject to Section 10 hereof, the Company may
grant to Optionees from time to time Options to purchase an aggregate of up to
111,320 Shares of Common Stock (136,320 Shares of Common Stock from and after
February __, 1997). If any Option shall terminate, expire, or be canceled or
surrendered unexercised as to any Shares, or cease for any reason to be
exercisable, new Options may thereafter be granted covering such Shares.
Options granted hereunder may be either "Incentive Stock Options" (as defined in
Section 422 of the Code) or "Nonstatutory Stock Options" (I.E., an option that
is not an Incentive Stock Option), as determined by the Committee at the time of
grant and as specified in the applicable Option Agreement.

4. DOLLAR LIMITATION FOR INCENTIVE STOCK OPTIONS. Anything to the
contrary notwithstanding, the Committee shall not grant and no Optionee may
exercise Incentive Stock Options to the extent that the aggregate fair market
value (determined at the time the Option is granted) of the Shares with respect
to which Incentive Stock Options are exercisable for the first time by any
individual during any calendar year (under all plans of the Company and its
parent and subsidiary corporations as defined in Code Section 424) exceeds
$100,000. Any option (or portion thereof) granted in excess of that amount
shall be treated as a Nonstatutory Stock Option.

5. CONDITIONS FOR GRANT OF OPTIONS.

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<PAGE>

(a) Upon the grant of each Option, the Company and the Optionee shall
enter into an Option Agreement, which shall specify the grant date and the
exercise price and shall include or incorporate by reference the substance of
this Plan and such other provisions not inconsistent with this Plan as the
Committee may determine. Optionees shall be those persons selected by the
Committee from the class of all regular employees of the Company (including
officers) and all directors (whether or not employees); provided, however, that
no Incentive Stock Option may be granted to a director who is not also an
employee of the Company.

(b) In granting Options, the Committee shall take into consideration
the contribution the person has made to the success of the Company and such
other factors as the Committee shall determine. The Committee shall also have
the authority to consult with and receive recommendations from officers and
other personnel of the Company with regard to these matters.

The Committee may from time to time in granting Options prescribe such other
terms and conditions concerning such Options as it deems appropriate, including,
without limitation, (i) prescribing the date or dates on which the Option
becomes exercisable, (ii) providing that the Option rights accrue or become
exercisable in installments over a period of years, or upon the attainment of
stated goals or both, or (iii) relating an Option to the continued employment of
the Optionee for a specified period of time.

(c) The Options granted to Optionees shall be in addition to regular
salaries, pension, life insurance or other benefits related to their employment
or other relationship with the Company. Neither this Plan nor any Option shall
confer upon any person any right to employment or continuance of employment or
other relationship by the Company.

6. EXERCISE PRICE. The exercise price per Share of any Option shall be
the price determined by the Committee.

7. EXERCISE OF OPTIONS.

(a) An Option shall be deemed exercised when (i) the Company has
received written notice of such exercise in accordance with the terms of the
Option, (ii) full payment of the aggregate exercise price of the Shares as to
which the Option is exercised has been received by the Company, (iii) the
Optionee has delivered to the Company executed copies of each agreement
(including but not limited to any stockholders agreement and any undertaking or
representation pursuant to applicable securities laws), document or instrument
required to be signed by the Optionee in connection with the issuance of Shares
pursuant to the Option, and (iv) arrangements that are satisfactory to the
Committee in its sole discretion have been made for the Optionee's payment to
the Company of the amount that is necessary for the Company to withhold in
accordance with applicable withholding requirements. To the extent permitted by
the Committee in any Option and in accordance with the terms of the applicable
Option

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<PAGE>

Agreement, the exercise price of any Shares purchased may be paid in whole or
in part in cash, by certified or official bank check or personal check, by
money order, by promissory note, with Shares (valued at their Fair Market
Value on the date the Option is exercised) or by a combination of the above.
The Company in its sole discretion may, on an individual basis or pursuant to
a general program established in connection with this Plan, lend money to an
Optionee, guarantee a loan to an Optionee, or otherwise assist an Optionee to
obtain the cash necessary to exercise all or a portion of an Option granted
hereunder or to pay any tax liability of the Optionee attributable to such
exercise. If the exercise price is paid in whole or part with the Optionee's
promissory note, such note shall, at the Committee's option, (i) provide for
full recourse to the maker, (ii) be collateralized by the pledge of the
Shares that the Optionee purchases upon exercise of such Option, (iii) bear
interest at the prime or equivalent rate of the Company's principal lender or
such other rate as the Committee shall determine, and (iv) contain such other
terms as the Committee in its sole discretion shall reasonably require. No
Optionee shall be deemed to be a holder of any Shares subject to an Option
unless and until a stock certificate or certificates for such Shares are
issued to such person(s) under the terms of this Plan; provided, however,
that, until such stock certificate is issued, any Optionee using previously
acquired Shares in payment of all or part of the exercise price of an Option
shall continue to have the rights of a stockholder with respect to such
previously acquired Shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash securities or other property) or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as expressly provided in Section 10
hereof.

(b) Each Option shall be exercisable during the Optionee's lifetime
only by the Optionee. As a condition of exercise of any Option, the Committee
may, in its sole discretion, require the Optionee to agree to become bound by,
and a party to, any stockholder agreements affecting the Common Stock, including
but not limited to the stockholders agreement attached to the Option Agreement.
These agreements will restrict the Optionee's disposition of the Shares, permit
the Company to repurchase the Shares upon certain events and/or require the
Optionee to sell his Shares upon certain events. These agreements may include,
without limitation, provisions (i) restricting transfers of Shares, (ii)
requiring the Optionee to sell his Shares on the same terms and conditions as
agreed to by a percentage of the Company's stockholders and/or (iii) granting
the Company an option to repurchase the Optionee's Shares upon termination of
the Optionee's employment or association with the Company or upon an involuntary
transfer of such Shares pursuant to divorce, creditors' lien, and other events.

8. EXERCISABILITY OF OPTIONS.

(a) An Option becomes exercisable in such amounts, at such intervals
and upon such terms as the Committee shall provide in the Option Agreement,
except as otherwise provided in this Section 8,

<PAGE>

(b) The expiration date of an Option shall be determined by the
Committee at the time of grant and stated in the Option Agreement, but in no
event shall an Option be exercisable after the expiration of ten years from the
date of grant of the Option.

9. TERMINATION OF OPTION PERIOD.

(a) The unexercised portion of any Option shall automatically and
without notice terminate and become null and void at the earliest to occur of
the following:

(i) the date on which the Optionee's employment is voluntarily
terminated without the written consent of the Company;

(ii) the date on which the Optionee's employment is terminated
for cause;

(iii) 60 days after the date of termination of the
Optionee's employment (or, in the case of a nonemployee director, the date the
Optionee ceases to be a director) by reason of death, disability or retirement
of the Optionee or any reason other than as set forth in items (i) and (ii) of
this Section 9(a); or

(iv) upon the expiration date specified in the Option Agreement,
but in any event no later than ten years after the date of grant of the Option.

(b) The Committee, in its sole discretion, may, by giving the
Optionee written notice (a "Cancellation Notice"), cancel, effective upon the
date of the consummation of any merger, consolidation, reorganization,
liquidation or dissolution in which the Company does not survive or sale,
lease, exchange or other disposition of all or substantially all of the
property and assets of the Company, any Option that remains unexercised on
such date. Any Cancellation Notice shall be given a reasonable period of
time prior to the proposed date of such cancellation and may be given either
before or after stockholder approval of such corporate transaction.

10. ADJUSTMENT OF SHARES.

(a) If at any time while this Plan is in effect or unexercised
Options are outstanding there shall be any increase or decrease in the number of
issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or
exchange of Shares, then and in such event:

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<PAGE>

(i) appropriate adjustment shall be made in the maximum number
of Shares available for grant hereunder, so that the same percentage of the
Company's issued and outstanding Shares shall continue to be subject to being so
optioned; and

(ii) appropriate adjustment shall be made in the number of Shares
and the exercise price per Share thereof then subject to any outstanding Option,
so that the same percentage of the Company's issued and outstanding Shares shall
remain subject to purchase at the same aggregate exercise price.

(b) Subject to the specific terms of any Option, the Committee may
change the terms of outstanding Options, with respect to the exercise price or
the number of Shares subject to the Options, or both, when, in the Committee's
sole discretion, such adjustments become appropriate by reason of a corporate
transaction.

(c) The issuance by the Company of Shares of its capital stock of any
class, or securities convertible into Shares of capital stock of any class,
either in connection with a direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon the conversion of Shares or obligations
of the Company convertible into such Shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or exercise price of the Shares then subject to the outstanding Options.

(d) Without limiting the generality of the foregoing, the existence
of outstanding Options shall not affect in any manner the right or power of the
Company to make, authorize or consummate (i) any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business; (ii) any merger or consolidation of the Company;
(iii) any issue by the Company of debt securities, or preferred or preference
stock that would rank above or equal with the Shares subject to outstanding
Options, (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.

11. TRANSFERABILITY OF OPTIONS. No Option shall be transferable by the
Optionee otherwise than by will or the laws of descent and distribution, nor
shall any Option be pledged or in any way encumbered.

12. ISSUANCE OF SHARES. As a condition of exercise of any Option, the
Committee may require such agreements or undertakings, if any, as the
Committee may deem necessary or advisable to assure compliance with any such
law or regulation including, but not limited to, the following:

6
<PAGE>

(a) a representation and warranty by the Optionee to the Company,
at the time any option is exercised, that he is acquiring the Shares to be
issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and

(b) a representation, warranty and/or agreement to be bound by any
legends that are, in the opinion of the Committee, necessary or appropriate
to comply with the provisions of any securities law deemed by the Committee
to be applicable to the issuance of the Shares and endorsed upon the Share
certificates and that any subsequent resale or distribution of the Shares by
the Optionee will be made only pursuant to a registration statement under the
Securities Act of 1933 or an exemption from the registration requirements of
that act and that in claiming the applicability of any such exemption, the
Optionee shall prior to any offer or sale of the Shares provide the Company
with a favorable written opinion of counsel, in form and substance
satisfactory to the Company, as to the applicability of the exemption.

13. ADMINISTRATION OF THE PLAN.

(a) The Plan shall be administered by a Committee of the Board,
which shall consist of not less than two Directors. The Committee shall have
all of the powers of the Board with respect to this Plan. Any member of the
Committee may be removed at any time, with or without cause, by resolution of
the Board and any vacancy occurring in the membership of the Committee may be
filled by appointment by the Board. The Committee, from time to time, may
adopt rules and regulations for carrying out the purposes of this Plan and
shall have no liability of any kind for any action taken in good faith.

(b) Any and all decisions or determinations of the Committee shall
be made either (i) by a majority vote of the members of the Committee at a
meeting or (ii) without a meeting by the unanimous written consent of the
members of the Committee.

14. OPTIONS FOR 10% STOCKHOLDERS. Notwithstanding any other provisions
of this Plan to the contrary, no Incentive Stock Option shall be granted
hereunder to any person owning directly or indirectly at the date of grant,
stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company (or of its parent or subsidiary corporation
(as defined in Section 424 of the Code) at the date of grant) unless the
exercise price of such Option is at least 110% of the Fair Market Value of
the Shares subject to such Option on the date the Option is granted, and such
Option by its terms is not exercisable after the expiration of five years
from the date such Option is granted.

15. INTERPRETATION. This Plan shall be administered and interpreted so
that all Options granted hereunder as Incentive Stock Options will qualify as
such under Section 422 of the Code. If any provision of this Plan should be
held invalid for the granting of Incentive Stock Options or illegal for any
reason, such determination shall not affect the remaining provisions hereof,
but instead this Plan shall be construed and enforced as if such provision
had never been

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<PAGE>

included herein. The determinations and the interpretation and construction
of any provision of this Plan by the Committee shall be final and conclusive.
This Plan shall be governed by the laws of the state of Delaware. Headings
contained in this Plan are for convenience only and shall in no manner be
construed as part of this Plan. Any reference to the masculine, feminine, or
neuter gender shall be a reference to such other gender as is appropriate.

16. TERM OF PLAN, AMENDMENT AND TERMINATION OF THE PLAN.

(a) The Board adopted this Plan for the first time on January __,
1995 and the Company's stockholders subsequently approved the adoption of the
Plan. The Board amended the Plan in April 1995. The Plan, as so amended, is
referred to herein as the "Original Plan". The Original Plan, as amended
from time to time, became effective on January __, 1995 (the date of its
adoption by the Board), and shall continue in effect until all Options
granted hereunder have expired or been exercised, unless sooner terminated
under the provisions relating thereto.

(b) The Original Plan covered an aggregate of up to 111,320 Shares
of Common Stock. On February 6, 1997, the Board adopted an amendment to the
Original Plan to increase the number of Shares of Common Stock subject to the
Plan to an aggregate of up to 136,320 and instructed Company's legal counsel
to prepare the First Amended and Restated Stock Option Plan to reflect such
amendment and such other changes as were necessary or desirable in connection
therewith to effect such amendment (the "Restated Plan"). The Board intends
to submit the Restated Plan to the Company's stockholders for approval at the
first regularly scheduled or special meeting of Company stockholders to be
held on or before February 6, 1998. Options may be granted covering in
excess 111,320 Shares of Common Stock (up to an aggregate of 136,320 Shares
of Common Stock) prior to the stockholders approving the Restated Plan
("Excess Options"), but such Excess Options shall be contingent upon such
stockholder approval being obtained and may not be exercised prior to such
approval, provided that the date of grant of any Options granted hereunder
shall be determined as if the Restated Plan had not been subject to such
approval.

(c) All references herein to the Plan prior to February 6, 1997,
shall mean the Original Plan. All references herein to the Plan on and after
February 6, 1997, shall mean the Restated Plan, as amended from time to time.

(d) The Board may from time to time amend this Plan or any Option;
PROVIDED, HOWEVER, that, except to the extent provided in Section 10, no such
amendment may (i) without approval by the Company's stockholders, increase
the number of Shares covered by this Plan (i.e., reserved for the grant of
Options hereunder) or change the class of persons eligible to receive
Options, or involve any other change or modification requiring stockholder
approval pursuant to Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, but only if and to the extent such section is applicable,
(ii) permit the granting of Options that expire

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<PAGE>

beyond the maximum ten-year period described in Section 8(a), or (iii) extend
the termination date of this Plan as set forth in Section 16(a); and,
PROVIDED, FURTHER, that, except to the extent specifically provided otherwise
in Section 9, no amendment of this Plan or any Option issued hereunder shall
materially impair any Option previously granted to any Optionee without the
consent of such Optionee.

(e) The Board may at any time terminate or suspend this Plan. Any
such termination or suspension shall not affect Options already granted and
such Options shall remain in full force and effect as if this Plan had not
been terminated or suspended. No Option may be granted while this Plan is
suspended or after it is terminated. The rights and obligations under any
Option granted to any Optionee while this Plan is in effect shall not be
altered or impaired by the suspension or termination of this Plan without the
consent of such Optionee.

17. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available a number of Shares as shall be
sufficient to satisfy the requirements of this Plan.

<PAGE>
FORM OF INDEMNIFICATION AGREEMENT

This Agreement is made and entered into this ____ day of __________,
199_ ("Agreement"), by and between Renaissance Cosmetics, Inc., a Delaware
corporation (the "Company"), and [NAME OF OFFICER/DIRECTOR] ("Indemnitee").

WHEREAS, highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors and/or officers unless they are
provided with adequate protection through insurance or adequate
indemnification against inordinate risks of claims and actions against them
arising out of their service to, and activities on behalf of, the corporation;

WHEREAS, the cost of obtaining adequate insurance and the uncertainties
relating to indemnification have increased the difficulty of attracting and
retaining such persons;

WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and the Company's
stockholders to assure such persons that there will be increased certainty of
such protection in the future;

WHEREAS, it is reasonable, prudent and necessary for the Company to
obligate itself contractually to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company;

WHEREAS, Indemnitee is willing to serve, continue to serve and to take
on additional service for or on behalf of the Company on the condition that
he be so indemnified; and

WHEREAS, the Board has determined that it is in the best interests of
the Company to adopt certain indemnification arrangements in addition to the
indemnification provisions in the Company's Restated Certificate of
Incorporation, as amended (the "Certificate").

NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
set forth below.

Section 1. SERVICES BY INDEMNITEE. Indemnitee agrees to serve as a
[DIRECTOR/OFFICER] of the Company and/or of such Other Entity (as defined in
Section 12(b)) as the Company may, at any time and from time to time,
request.

Section 2. INDEMNIFICATION - GENERAL. The Company shall indemnify,
and advance Expenses (as defined in Section 18) to, Indemnitee (a) as
provided in this Agreement, and (b) to the fullest extent permitted by
applicable law in effect on the date hereof and as amended from time to time
("Applicable Law"). The rights of Indemnitee provided under the preceding
sentence shall include, but shall not be limited to, the rights set forth in
the other Sections.

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<PAGE>

Section 3. PROCEEDINGS OTHER THAN PROCEEDINGS BY OR IN THE RIGHT OF
THE COMPANY. Indemnitee shall be entitled to the rights of indemnification
provided in this Section 3 if, by reason of his Corporate Status (as defined
in Section 18), he is, or is threatened to be made, a party to any
threatened, pending, or completed Proceeding (as defined in Section 18),
other than a Proceeding by or in the right of the Company. Pursuant to this
Section 3, Indemnitee shall be indemnified against all Expenses, judgments,
penalties, fines and amounts paid in settlement actually and reasonably
incurred by him or on his behalf in connection with such Proceeding or any
claim, issue or matter therein, if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Company and, with respect to any criminal Proceeding, had no reasonable cause
to believe his conduct was unlawful.

Section 4. PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. Subject
to the condition set forth in this Section 4, Indemnitee shall be entitled to
the rights of indemnification provided in this Section 4 if, by reason of his
Corporate Status, he is, or is threatened to be made, a party to any
threatened, pending or completed Proceeding brought by or in the right of the
Company to procure a judgment in its favor. Pursuant to this Section 4,
Indemnitee shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection with such Proceeding if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Company; PROVIDED, however, that, if
Applicable Law so provides, no indemnification against such Expenses shall be
made in respect of any claim, issue or matter in such Proceeding as to which
Indemnitee shall have been adjudged to be liable to the Company, unless and
to the extent that the Court of Chancery of the State of Delaware (the
"Chancery Court"), or the court in which such Proceeding shall have been
brought or is pending, shall determine that such indemnification may be made.

Section 5. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR
PARTLY SUCCESSFUL. Notwithstanding any other provision of this Agreement, to
the extent that Indemnitee is, by reason of his Corporate Status, a party to,
and is wholly successful in resolving, any Proceeding, he shall be
indemnified against all Expenses actually and reasonably incurred by him or
on his behalf in connection therewith. If Indemnitee is not wholly
successful in resolving such Proceeding but is successful as to one or more
but less than all claims, issues or matters in such Proceeding, the Company
shall indemnify Indemnitee against all Expenses actually and reasonably
incurred by him or on his behalf in connection with each successfully
resolved claim, issue or matter. For purposes of this Section 5 and without
limitation, the dismissal (with or without prejudice) of any claim, issue or
matter in a Proceeding shall be deemed to be a wholly successful result as to
such claim, issue or matter.

Section 6. INDEMNIFICATION FOR CERTAIN TAXES. Indemnitee shall be
entitled to indemnification for all federal, state and local income taxes
imposed with respect to any income imputed or credited to Indemnitee with
respect to any costs and/or expenses (including reasonable attorneys' fees
and disbursements) incurred by Indemnitee at the request of the Company and
reimbursed by the Company to such Indemnitee as a reasonable and necessary

2
<PAGE>

deductible business expense, whether or not the Company is able to
successfully sustain the characterization of such expense in connection with
any tax audit of the Company.

Section 7. INDEMNIFICATION FOR EXPENSES OF A WITNESS.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding
to which Indemnitee is not a party, he shall be indemnified against all
Expenses actually and reasonably incurred by him, or on his behalf, in
connection therewith.

Section 8. ADVANCEMENT OF EXPENSES. Notwithstanding any other
provision of this Agreement, the Company shall advance all reasonable
Expenses incurred by or on behalf of Indemnitee in connection with any
Proceeding within ten (10) days after the receipt by the Company of a
statement or statements from Indemnitee requesting such advance or advances,
whether prior to or after final disposition of such Proceeding, unless it has
already been determined that Indemnitee is not entitled to be indemnified
against such Expenses. Such statement or statements shall reasonably
evidence the Expenses incurred by Indemnitee and shall include an undertaking
by, or on behalf of, Indemnitee to repay any Expenses advanced if it shall
ultimately be determined that Indemnitee is not entitled to be indemnified
against such Expenses.

Section 9. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO
INDEMNIFICATION.

(a) To obtain indemnification under this Agreement, Indemnitee
shall submit to the Company a written request, including documentation and
information as is reasonably available to Indemnitee and is reasonably
necessary to determine whether and to what extent Indemnitee is entitled to
indemnification. The Secretary of the Company shall, promptly upon receipt of
such a request for indemnification, advise the Board in writing that
Indemnitee has requested indemnification.

(b) Upon written request by Indemnitee for indemnification
pursuant to Section 9(a), a determination with respect to Indemnitee's
entitlement thereto shall be made by the following person, persons or entity
(the "Decisionmaker") in the following cases: (i) if a Change in Control (as
defined in Section 18) shall have occurred, by Independent Counsel (as
defined in Section 18) in a written opinion to the Board, a copy of which
shall be delivered to Indemnitee upon request; or (ii) if a Change of Control
shall not have occurred, (A) by the Board by a majority vote of all of the
Disinterested Directors (as defined in Section 18), or (B) if there are no
Disinterested Director or if a majority of Disinterested Directors so
directs, by Independent Counsel in a written opinion to the Board, a copy of
which shall be delivered to Indemnitee, upon request; or (C) if so directed
by the Board, by the stockholders of the Company; and, if it is so determined
that Indemnitee is entitled to indemnification, payment to Indemnitee (or on
behalf of Indemnitee) shall be made within ten (10) days after such
determination. Indemnitee shall cooperate with the Decisionmaker, including
providing to the Decisionmaker upon reasonable advance request any
documentation or information which is not

3
<PAGE>

privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including attorneys' fees and disbursements) incurred by
Indemnitee in so cooperating with the Decisionmaker shall be borne by the
Company (irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.

(c) For purposes of this Section 9, the Independent Counsel shall
be selected by the Board. If, within twenty (20) days after submission by
Indemnitee of a written request for indemnification pursuant to Section 9(a),
no Independent Counsel shall have been selected by the Board, Indemnitee may
petition the Chancery Court or other court of competent jurisdiction for
appointment of an Independent Counsel, and the person so appointed shall act
as Independent Counsel under Section 9(b). The Company shall pay any and all
reasonable fees expenses incurred by Independent Counsel in connection with
acting pursuant to Section 9(b), and the Company shall pay all reasonable
fees and expenses incident to the procedures of this Section 9(c), regardless
of the manner in which such Independent Counsel was selected or appointed.
Upon the due commencement of any judicial proceeding or arbitration pursuant
to Section 11(a)(iii), Independent Counsel shall be discharged and relieved
of any further responsibility in such capacity.

(d) The Company shall not be required to obtain the consent of the
Indemnitee to the settlement of any Proceeding which the Company has
undertaken to defend if the Company assumes full and sole responsibility for
such settlement and the settlement grants the Indemnitee a complete and
unqualified release in respect of the potential liability. The Company shall
not be liable for any amount paid by the Indemnitee in settlement of any
Proceeding that is not defended by the Company, unless the Company has
consented to such settlement, which consent shall not be unreasonably
withheld.

Section 10. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.

(a) If a Change of Control shall have occurred, the Decisionmaker
shall presume that Indemnitee is entitled to indemnification under this
Agreement if Indemnitee has submitted a request for indemnification in
accordance with Section 9(a), and the Company shall have the burden of proof
to overcome that presumption in connection with any determination by the
Decisionmaker contrary to that presumption.

(b) If the Decisionmaker shall not have made a determination
within sixty (60) days after receipt by the Company of the request therefor,
the requisite determination of entitlement shall be deemed to have been made
and the Indemnitee shall be entitled to such indemnification, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material
fact necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of
such indemnification

4
<PAGE>

under Applicable Law; provided, however, that the sixty (60) day period may
be extended for up to an additional thirty (30) days (a total of ninety (90)
days) if the Decisionmaker in good faith requires such additional time in
rendering his/its decision; and provided further that the foregoing
provisions of this Section 10(b) shall not apply if (i) the determination of
entitlement to indemnification is to be made by the stockholders and if (A)
within fifteen (15) days after receipt by the Company of the request for
indemnification, the Board has resolved to submit such determination to the
stockholders for their consideration at an annual meeting of stockholders to
be held within seventy-five (75) days thereafter or (B) a special meeting of
stockholders is called within fifteen days (15) after such receipt for the
purpose of making such determination, such meeting is held within sixty (60)
days after being called and such determination is made at such meeting or
(ii) if the determination of entitlement to indemnification is to made by
Independent Counsel pursuant to Section 9(b).

(c) The termination of any Proceeding or of any claim, issue or
matter therein, by judgment, order, settlement or conviction, or upon a plea
of NOLO CONTENDERE or its equivalent, shall not (except as otherwise
expressly provided in this Agreement) of itself adversely affect the right of
Indemnitee to indemnification or create a presumption that Indemnitee did not
act in good faith and in a manner which he reasonably believed to be in, or
not opposed to, the best interests of the Company or, with respect to any
criminal Proceeding, that Indemnitee had reasonable cause to believe that his
conduct was unlawful.

(d) Indemnitee shall be deemed to have acted in good faith if
Indemnitee's action is based on the records or books of account of the
Company, including financial statements, or on information supplied to
Indemnitee by the officers of the Company in the course of their duties, or
on the advice of legal counsel for the Company or on information or records
given or reports made to the Company by an independent certified public
accountant, an appraiser or other expert selected with reasonable care by the
Company. The provisions of this Section 10(d) shall not be deemed to be
exclusive or to limit in any way the circumstances in which the Indemnitee
may be deemed to have met the applicable standard of conduct set forth in
this Agreement.

Section 11. REMEDIES OF INDEMNITEE.

(a) In the event that (i) a determination is made pursuant to
Section 9 that Indemnitee is not entitled to indemnification hereunder, (ii)
advancement of Expenses is not timely made pursuant to Section 8, (iii) no
determination of entitlement to indemnification shall have been made pursuant
to Section 9(b) within ninety days after receipt by the Company of the
request for indemnification, (iv) payment of indemnification is not made
pursuant to Sections 5 or 7 or the last sentence of Section 9(b) within ten
(10) days after receipt by the Company of a written request therefor, or (v)
payment of indemnification pursuant to Sections 3 or 4 is not made within ten
(10) days after a determination has been made that Indemnitee is entitled to
indemnification, Indemnitee shall be entitled to an adjudication by the
Chancery Court of his

5
<PAGE>

entitlement to such indemnification or advancement of Expenses.
Alternatively, Indemnitee, at his option, may seek an award in arbitration to
be conducted by a single arbitrator pursuant to the Commercial Arbitration
Rules of the American Arbitration Association. Indemnitee shall commence
such proceeding seeking an adjudication or an award in arbitration within
ninety (90) days following the date on which Indemnitee first has the right
to commence such proceeding pursuant to this Section 11(a); provided,
however, that the foregoing clause shall not apply in respect of a proceeding
brought by Indemnitee to enforce his rights under Section 5.

(b) In the event that a determination shall have been made
pursuant to Section 9(b) that Indemnitee is not entitled to indemnification,
any judicial proceeding or arbitration commenced pursuant to this Section 11
shall be conducted in all respects as a DE NOVO trial, or arbitration, on the
merits, and Indemnitee shall not be prejudiced by reason of that adverse
determination.

(c) If a determination shall have been made pursuant to Section
9(b) that Indemnitee is entitled to indemnification, the Company shall be
bound by such determination in any judicial proceeding or arbitration
commenced pursuant to this Section 11, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such indemnification
under Applicable Law.

(d) In the event that Indemnitee, pursuant to this Section 11,
seeks a judicial adjudication of or an award in arbitration to enforce his
rights under, or to recover damages for breach of, this Agreement, Indemnitee
shall be entitled to recover from the Company, and shall be indemnified by
the Company against, any and all expenses (of the types described in the
definition of Expenses in Section 18) actually and reasonably incurred by him
in such judicial adjudication or arbitration, but only if he prevails
therein. If it shall be determined in said judicial adjudication or
arbitration that Indemnitee is entitled to receive part but not all of the
indemnification or advancement of Expenses sought, the expenses incurred by
Indemnitee in connection with such judicial adjudication or arbitration shall
be appropriately prorated.

Section 12. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.

(a) The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under Applicable
Law, the Certificate, any agreement, a vote of stockholders, a resolution of the
Board or otherwise. No amendment, alteration or repeal of this Agreement or of
any provision hereof shall limit or restrict any right of Indemnitee under this
Agreement in respect of any action taken or omitted by such Indemnitee in his
Corporate Status prior to such amendment, alteration or repeal. To the extent
that a change in the General Corporation Law of the State of Delaware, whether
by statute or caselaw, permits greater indemnification or advancement of
Expenses than would be permitted currently under

6
<PAGE>

the Company's Certificate or this Agreement, it is the intent of the parties
hereto that Indemnitee shall enjoy by this Agreement the greater benefits so
afforded. No right or remedy herein conferred is intended to be exclusive of
any other right or remedy, and every other right and remedy shall be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity. The assertion or employment
of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other right or remedy.

(b) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors and/or officers of the
Company or of any other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise which such person serves at the request of the
Company ("Other Entity"), Indemnitee shall be covered by such policy or policies
in accordance with its or their terms to the maximum extent of the coverage
maintained for any such director/officer under such policy or policies.

(c) In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights.

(d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.

(e) The Company's obligation to indemnify or advance Expenses
hereunder to Indemnitee who is or was serving at the request of the Company as a
director, officer, employee or agent of any Other Entity shall be reduced by any
amount the Indemnitee actually receives as indemnification or advancement of
Expenses from such Other Entity.

Section 13. DURATION OF AGREEMENT. This Agreement shall continue until
and terminate upon the later of: (a) ten (10) years after the date that
Indemnitee shall have ceased to serve as a director, officer, employee, or agent
of the Company or of any Other Entity which Indemnitee served at the request of
the Company; or (b) the final termination of any Proceeding then pending in
respect of which Indemnitee is granted rights of indemnification or advancement
of expenses hereunder and of any arbitration commenced by Indemnitee pursuant to
Section 11 relating thereto. This Agreement shall be binding upon the Company
and its successors and assigns and shall inure to the benefit of Indemnitee and
his heirs, executors and administrators.

Section 14. SEVERABILITY. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable: (a) the
validity, legality and enforceability of the

7
<PAGE>

remaining provisions of this Agreement (including each portion of any Section
containing any such provision held to be invalid, illegal or unenforceable,
that is not itself invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby; and (b) to the fullest extent possible, the
provisions of this Agreement (including each portion of any Section
containing any such provision held to be invalid, illegal or unenforceable,
that is not itself invalid, illegal or unenforceable) shall be construed so
as to give effect to the intent manifested thereby.

Section 15. EXCEPTION TO RIGHT OF INDEMNIFICATION OR ADVANCEMENT OF
EXPENSES. Notwithstanding any other provision of this Agreement, but subject to
Section 11(d), Indemnitee shall not be entitled to indemnification or
advancement of Expenses under this Agreement with respect to any Proceeding
brought by Indemnitee, or any claim therein, unless such Proceeding or such
claim shall have been approved by the Board.

Section 16. IDENTICAL COUNTERPARTS. This Agreement may be executed
in one or more counterparts, each of which shall for all purposes be deemed
to be an original but all of which together shall constitute one and the same
Agreement.

Section 17. HEADINGS. The headings here are inserted for convenience
only and shall not be deemed to affect the construction thereof.

Section 18. DEFINITIONS. For purposes of this Agreement:

(a) "Change in Control" means a "change in control" as defined in
that certain Indenture, dated as of February 7, 1997, by and between the
Company and United States Trust Company of New York, as trustee, whether or
not such Indenture is in effect at the time of the Change of Control.

(b) "Corporate Status" means the status of a person who is or was
a director or officer of the Company or of any Other Entity to the extent
such person is or was serving in such position at the request of the Company.

(c) "Disinterested Director" means a director of the Company who
is not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.

(d) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, and all other disbursements or
expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, or being or
preparing to be a witness in a Proceeding.

8
<PAGE>

(e) "Independent Counsel" means a law firm, or a member of a law
firm, that is experienced in matters of corporation law and neither presently
is, nor in the past five years has been, retained to represent: (i) the Company
or Indemnitee, (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder or (iii) any other person who, under the applicable
standards of professional conduct then prevailing, would have a conflict of
interest in representing either the Company or Indemnitee in an action to
determine Indemnitee's rights under this Agreement.

(f) "Proceeding" includes any action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative, except one
initiated by an Indemnitee pursuant to Section 11 to enforce his rights under
this Agreement.

(g) "Section" means a section of this Agreement, unless clearly
indicated otherwise.

Section 19. MODIFICATION AND WAIVER. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

Section 20. NOTICE BY INDEMNITEE. Indemnitee agrees promptly to notify
the Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder. The failure of Indemnitee to so notify the Company shall not
relieve the Company of any obligation which it may have to the Indemnitee
hereunder or otherwise, except to the extent the Company is materially
prejudiced by such failure.

Section 21. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed or (iii) received by reputable overnight
delivery/courier service on the second day after the date on which it is
delivered to the delivery/courier service:

9
<PAGE>

(a) If to Indemnitee, to:

_________________________
_________________________
_________________________
_________________________

(b) If to the Company to:

Renaissance Cosmetics, Inc.
635 Madison Avenue
New York, New York 10022
Attention: General Counsel

with a copy to:

John L. Ruppert, Esq.
Brownstein Hyatt Farber & Strickland, P.C.
410 17th Street, 22nd Floor
Denver, Colorado 80202

or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.

Section 22. GOVERNING LAW. The parties agree that this Agreement shall
be governed by, and construed and enforced in accordance with, the laws of the
State of Delaware, without regard to its conflicts of laws rules. Except with
respect to arbitration commenced by the Indemnitee pursuant to Section 11(a),
the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that
any action brought or proceeding arising out of or in connection with this
Agreement shall be brought only in the Chancery Court and not in any other
federal or state court, (ii) consent to submit to the exclusive jurisdiction of
the Chancery Court for purposes of any action or proceeding arising out of or in
connection with this Agreement, (iii) appoint, to the extent such party is not a
resident of the State of Delaware, irrevocably RL&F Service Corp., One Rodney
Square, 10th Floor, 10th and King Streets, Wilmington, Delaware 19801, as such
party's agent in the State of Delaware for acceptance of service of process in
connection with any such action or proceeding against such party with the same
legal force and effect as if served upon such party personally within the State
of Delaware, (iv) waive any objection to the laying of venue of any such action
or proceeding in the Chancery Court and (v) waive, and agree not to plead or to
make, any claim that any such action or proceeding brought

10
<PAGE>

in the Chancery Court has been brought in an improper or otherwise
inconvenient forum.

SECTION 23. CONTRIBUTION. To the fullest extent permissible under
Applicable Law, if the indemnification provided for in this Agreement is
unavailable for any reason, the Company, in lieu of indemnifying Indemnitee,
shall contribute to the amount incurred by Indemnitee, whether for judgment,
fines, penalties, excise taxes, amounts paid or to be paid in settlement
and/or Expenses, in connection with any claim relating to an indemnifiable
event under this Agreement, in such proportion as is deemed fair and
reasonable in light of all of the circumstances of such Proceeding in order
to reflect (i) the relative benefits received by the Company and Indemnitee
as a result of the event(s) and/or transaction(s) giving rise to such
Proceeding, and/or (ii) the relative fault of the Company (and its directors,
officers, employees and agents) and Indemnitee in connection with such
event(s) and/or transaction(s).

Section 24. MISCELLANEOUS. Use of the masculine pronoun shall be
deemed to include the feminine pronoun, where appropriate.

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<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.

COMPANY

RENAISSANCE COSMETICS, INC.

By:
--------------------------------
Name:
--------------------------
Title:
--------------------------

[INSERT INDEMNITEE NAME]

------------------------------------

Address: Renaissance Cosmetics, Inc.
635 Madison Avenue
New York, New York 10022

<PAGE>

FORM OF STOCKHOLDER AGREEMENT

The parties to this Stockholder Agreement (this "Agreement") are
Renaissance Cosmetics, Inc., a Delaware corporation (the "Company"), and
[INSERT NAME OF THE STOCKHOLDER] (the "Stockholder").

The Stockholder has been granted an option (the "Option") to purchase
shares ("Shares") of the common stock, par value $.01 per share (the "Common
Stock"), of the Company and may in the future, pursuant to the exercise of the
Option, acquire Shares (any such Shares, together with all other Shares acquired
by the Stockholder in the future pursuant to an additional Option or Options
granted by the Company, the "Option Shares").

The Company and the Stockholder desire to promote their mutual interests
and the interests of the Company by imposing certain restrictions on the
transfer of the Option Shares and any other shares of any class of capital stock
of the Company, including but not limited to the Common Stock, now owned or
hereafter acquired by the Stockholder (collectively, the "Shares") and to set
forth their agreement with respect to certain other matters, all upon the terms
and conditions set forth below.

It is therefore agreed as follows:

1. ISSUANCE OF SHARES. In accordance with the Option Agreement between
the Stockholder and the Company (the "Option Agreement"), the Stockholder may
purchase Option Shares from the Company and will pay to the Company the exercise
price for those Shares in accordance with the terms of that Option Agreement.

2. CERTAIN RIGHTS AND RESTRICTIONS OF THE STOCKHOLDER. For a period of
fifteen years after the date of this Agreement, the Stockholder may not sell,
assign, transfer, pledge, hypothecate, mortgage, encumber, dispose of by gift,
bequest or otherwise transfer or dispose of (collectively, "Transfer") any
right, title or interest in any or all of his or her Shares except as follows:

(a) The Stockholder may Transfer (inter vivos or testamentary) all or
part of his or her Shares to his or her spouse, children, parents, brothers or
sisters, nieces and nephews or to a trust for the benefit of any such persons,
or to any affiliate (as defined below) of the Stockholder, or to a corporation
or limited or general partnership, the shareholders or partners of which consist
entirely of the Stockholder and/or his permitted transferees or to a guardian
for a disabled stockholder, provided that such Shares shall remain subject to
this Agreement. Such Shares also may be transferred back to the transferor. As
used in this Agreement, an "affiliate" of any person means any other person
controlled by, controlling or under "common control" (as that term is defined in
the Securities Act of 1933 (the "Securities Act")) with that person.

<PAGE>

(b) The Stockholder may sell any or all of his or her Shares in a
public offering of shares of the Company pursuant to a registration statement
under the Securities Act or in connection with a merger, consolidation or other
reclassification of the capital stock of the Company.

3. INVOLUNTARY TRANSFERS OF SHARES. In the event of any Involuntary
Transfer (as hereinafter defined) by the Stockholder of any Shares, the
following procedures shall apply:

(a) If the Stockholder is deprived or divested of Shares by an
Involuntary Transfer, he or she shall promptly give written notice of such
Transfer in reasonable detail to the other stockholder[s] of the Company who
have entered into a Stockholder Agreement or similar instrument with the Company
for the purpose of imposing upon those stockholders Share transfer restrictions,
or providing those stockholders with rights similar to those provided herein,
and each of their permitted transferees (collectively, the "Other Stockholders"
and together with the Stockholder, the "Stockholders"), and the person or
persons who take or propose to take any interest in such Shares (the "Subject
Shares") as a result of such Involuntary Transfer (the "Transferee") shall hold
such interest subject to the rights of the Other Stockholders as set forth
below.

(b) Upon receipt of the notice referred to in Section 3(a) above or
upon discovery of such Involuntary Transfer, the Other Stockholders shall have
the irrevocable option, exercisable by written notice (specifying the number of
Subject Shares to be purchased) to the Transferor within 60 days following the
receipt of such notice (or other discovery), but not the obligation, to purchase
the Subject Shares, subject to the terms set forth herein. Each Other
Stockholder may exercise the option for a number of Subject Shares that bears
the same relation to the total number of Subject Shares as (x) the number of
shares held by that Other Stockholder bears to (y) the aggregate number of
shares then held by all of the Other Stockholders exercising such option, or for
such other number of Subject Shares as all of the Other Stockholders exercising
such option may agree. Upon the termination of that 60-day period, the
Stockholder shall notify the Company in writing of the number of Subject Shares
that Other Stockholders have elected to purchase in accordance with this
provision; the Company shall then have an option, exercisable within 15 days
after the Stockholder gives the Company the notice referred to in the first
clause of this sentence, but not the obligation, to purchase any Subject Shares
the Other Stockholders have not elected to purchase.

(c) The closing of any such sale of Subject Shares to one or more
Other Stockholders or, if applicable, the Company, shall be at the offices of
the Company not later than 30 days after the Stockholder provides the Company
with the written notice referred to in the first clause of the last sentence of
(b) above. The purchase price per Share of any Subject Shares purchased
pursuant to this Section 3 shall be the amount that is equal to the fair market
value (determined without giving effect to the fact that the Subject Shares may
represent a

2
<PAGE>

minority interest in the Company), as of the Valuation Date (as defined
below), of the Subject Shares as such fair market value is determined by an
independent appraiser selected by the Company and reasonably acceptable to
the Transferee, payable in immediately available funds. The "Valuation Date"
shall be the last day of the calendar quarter immediately preceding the
Involuntary Transfer.

(d) In the event that the Other Stockholders and the Company do not
purchase all of the Subject Shares involved in an Involuntary Transfer pursuant
to this Section 3, the Transferee shall take and hold all rights and interests
in any Subject Shares not so purchased and shall execute a copy of this
Agreement and be bound by the provisions hereof with the same rights and
obligations as the Stockholders.

(e) For purposes of this Agreement, the term "Involuntary Transfer"
shall mean any involuntary transfer by or in which the Stockholder shall be
deprived or divested of any right, title or interest in or to any Shares,
including, without limitation, any levy of execution, transfer in connection
with bankruptcy, reorganization, insolvency or similar proceedings or any
Transfer to a public officer or agency pursuant to any abandoned property or
escheat law.

4. CERTAIN RIGHTS TO CAUSE SALE OF COMPANY.

(a) If, at any time, the holders of a majority in interest of the
outstanding shares of Common Stock determine to sell all of their Shares of
Common Stock in an arms-length transaction to any unaffiliated third person
pursuant to a bona fide written offer for all of the Shares of the Common Stock,
and the Stockholder receives written notice thereof not fewer than 20 days
before the proposed date of the sale, the Stockholder shall also sell, and the
Stockholder shall be entitled to sell, all of his or her Shares in the same
transaction at the closing thereof (and shall deliver certificates for all of
his or her Shares at such closing, free and clear of all claims, liens and
encumbrances), provided that the Stockholder shall receive the same
consideration per Share upon such sale as the Other Stockholders. It is
expressly acknowledged that the foregoing provisions are an integral part of
this Agreement and in the event that the Stockholder shall fail to comply
herewith, in addition to all other rights and remedies available, the Other
Stockholders (who shall for this purpose be deemed to be intended third party
beneficiaries of this Agreement) shall have the right to obtain equitable relief
to compel the Stockholder to perform his or her obligations hereunder. By
execution of this Agreement, the Stockholder hereby irrevocably appoints each of
the Company's Chairman, Vice Chairman, President, Chief Executive Officer, Chief
Operating Officer, Vice President, Secretary and any Assistant Secretary, acting
singly, as his or her attorney-in-fact to execute and deliver all documents
necessary to effect the sale of his or her Shares in accordance with the
foregoing.

(b) In the event of a proposed sale of stock of the Company as
described in Section 4(a), the Stockholder shall in all events be required to
deliver his or her Shares of Common Stock to the buyer at the closing of the
sale regardless of whether there is any dispute

3
<PAGE>

between the Company and the Stockholder. Any such dispute shall be resolved
after the closing and shall in no event delay the closing.

5. TAG-ALONG RIGHTS.

(a) With respect to any proposed Transfer of Shares other than as
provided in Sections 2(a), 2(b), 3, 4 and 6, for a period of fifteen years after
the date of this Agreement, the Stockholder may not transfer any Shares unless
prior to such sale or disposition the Company and each Other Stockholder shall
have been given notice of the proposed transaction and each Other Stockholder
shall have been provided a firm irrevocable right, which right shall be
exercisable by written notice (which shall specify the number of Shares (up to
the total number of Shares held by the Other Stockholders, as applicable) that
the Stockholder desires to sell) within 60 days after giving notice to each
Other Stockholder, and which shall be acknowledged by the proposed transferee
(the "Purchaser"), to sell to the Purchaser, at the same time and upon the same
terms and conditions offered to the Stockholder by the Purchaser, the number of
Shares of Common Stock that bears the same ratio to the total number of Shares
of Common Stock proposed to be sold by the Stockholder to the Purchaser as the
total number of Shares of Common Stock owned by the Other Stockholder bears to
the total number of outstanding Shares of Common Stock, provided that in order
to be entitled to exercise its right to sell shares to the Purchaser pursuant to
this Section 5, the Other Stockholder must agree to make substantially the same
representations, warranties, covenants and indemnities and other similar
agreements as the Stockholder agrees to make in connection with the proposed
transfer of the Shares of the Stockholder.

(b) To the extent that the Other Stockholders exercise the foregoing
option, the number of Shares of Common Stock to be sold by the Stockholder shall
be reduced by the aggregate number of shares that the Other Stockholders are
entitled to include in the sale of shares of Common Stock to the Purchaser and
shares of Other Stockholders shall be substituted therefor.

(c) Any Purchaser of Shares of Common Stock pursuant to this
provision shall execute a copy of this Agreement and be bound by the provisions
hereof with the same rights and obligations as the Stockholder.

(d) The rights provided in this provision may be exercised in whole
or in part by the Other Stockholders.

6. REPURCHASE OF STOCK OF THE STOCKHOLDER.

(a) In the event that the employment of the Stockholder with the
Company is terminated for whatever reason (or, in the case of a non-employee
director, such director ceases to be a director), the Company shall have the
right, but not the obligation, to repurchase all of the Shares of the
Stockholder (including, but not limited to, the Option Shares) and any other
securities of the Company (as applicable) received in respect of the Shares,
which right shall be

<PAGE>

exercised by written notice to the Stockholder within 60 days of termination
of employment (or termination of the directorship) of the Stockholder.

(b) If the employment of the Stockholder with the Company is
terminated by the Company for cause (as reasonably defined by the Company) (or
if the directorship of a non-employee director is terminated for cause under
applicable Delaware law), or if the Stockholder voluntarily terminates his
employment without the written consent of the Company, the purchase price for
all of the Stockholders' Shares and other securities (as applicable) pursuant to
Section 6(a) shall be the actual cost thereof to the Stockholder.

(c) If the employment (or directorship) of the Stockholder is
terminated for any reason other than as set forth in Section 6(b), including due
to death, disability or retirement (on or after reaching the retirement age
established by Company policy) of the Stockholder, the purchase price for the
Shares and other securities (as applicable) pursuant to Section 6(a) shall be
the fair market value of the Shares and other securities (as applicable) as of
the date of termination. The fair market value shall be either (x) the average
for the bid and asked prices for the 60-day period prior to the date of
termination if the Common Stock is then traded in the over-the-counter market,
(y) the price on the date of termination if the Common Stock is then traded on a
national securities exchange, or (z) if there is no public market, as fair
market value shall be determined by an independent appraiser selected by mutual
agreement of the attorneys for the Company and the Stockholder (and failing such
agreement by the American Arbitration Association in New York, New York). The
cost of such appraiser shall be borne equally by the Company and the
Stockholder.

(d) In the event the Company elects to purchase the Shares and other
securities (as applicable) of the Stockholder as provided above, the parties
shall close the sale on the 30th day (or next business day if the 30th day is a
holiday) after the date of written notice to the Stockholder from the Company
under (a) above, or after the date of determination of the appraiser as provided
in (c) above, at 10:00 a.m. at the then offices of the Company. At the closing,
the Company will deliver the purchase price of the Shares and other securities
(as applicable) in cash or, at the Company's option, one-third in cash and two-
thirds in the form of a promissory note payable over a three-year period bearing
simple annual interest at 8% and subordinated (pursuant to subordination terms
in substantially the form set forth in Attachment A hereto) to all indebtedness
of the Company, and the Stockholder shall deliver the certificates for all of
his Shares and other securities (as applicable), duly endorsed with payment of
all stock transfer taxes, if any, and free and clear of any and all claims,
liens or encumbrances.

(e) Wherever pursuant to this Section 6 the Company has the right to
repurchase the Shares or other securities (as applicable) from the Stockholder
but is prevented from doing so either because (i) such purchase would violate
any law or statute or any order, writ, injunction, decree, judgment, rule or
regulation promulgated, or judgment entered, by any federal, state, local or
foreign court or governmental authority or (ii) if the Company were to purchase
the Shares or other securities of the Company (as applicable) the Company is, or
after giving effect thereto would be, in default or in violation of the terms
of, or subject to a ceiling

5
<PAGE>

in the availability of credit advances under, any loan or credit agreements,
indentures or promissory notes or other similar documents, the board of
directors of the Company may appoint one or more existing stockholders of the
Company as its designee(s) to purchase the Shares or other securities (as
applicable) in such order of priority and in such amounts as the board shall
determine.

7. RECLASSIFICATION. In the event that any Shares should, as a result of
a stock split or stock dividend or combination of shares or any other change or
exchange for other securities by reclassification, reorganization,
redesignation, merger. consolidation, recapitalization, split-up, spinoff,
partial or complete liquidation, sale of assets, distribution to stockholders,
combination of shares or otherwise, be increased or decreased or changed into or
exchanged for a different number or kind of shares of capital stock or other
securities of the Company or of another corporation, the number of Shares held
by the Stockholder shall be appropriately and proportionately adjusted to
reflect such action and the terms and provisions of this Agreement shall apply
to all of the capital stock of any class of the Company now owned or that may be
issued hereafter to the Stockholder in consequence of any such event.

8. PURCHASE FOR INVESTMENT, LEGEND ON CERTIFICATE. The Stockholder
acknowledges and agrees that all of his or her Shares subject hereto are being,
have been and will be acquired for investment and not with a view to the
distribution thereof and that no Transfer of the Shares may be made except in
compliance with applicable federal and state securities laws. All the stock
certificates for Shares of capital stock of the Company hereafter owned by the
Stockholder and subject to the terms of this Agreement shall have endorsed in
writing, stamped or printed, upon the back thereof, the following legend (or a
legend of similar effect):

THIS CERTIFICATE AND THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO
AND TRANSFERABLE ONLY IN ACCORDANCE WITH THE PROVISION OF A
STOCKHOLDER AGREEMENT DATED _________ __, 199_. A COPY OF THAT
AGREEMENT, AS IT MAY BE AMENDED FROM TIME TO TIME, IS MAINTAINED WITH
THE CORPORATE RECORDS OF THE COMPANY AND IS AVAILABLE FOR INSPECTION
AT THE OFFICE OF THE COMPANY, 955 MASSACHUSETTS AVENUE, CAMBRIDGE,
MASSACHUSETTS 02139.

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY STATE SECURITIES OR BLUE
SKY LAWS AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR UNDER SUCH
STATE SECURITIES OR BLUE SKY LAWS.

9. TERMINATION. This Agreement shall automatically and without further
action terminate at such time as the Company shall close an underwritten public
offering of the Company's shares the gross proceeds to the Company of which are
at least $10 million pursuant

6
<PAGE>

to a registration statement that has been filed under the Securities Act and
declared effective by the Securities and Exchange Commission.

10. SPECIFIC PERFORMANCE. Inasmuch as the Shares cannot be readily
purchased or sold in the open market and the parties hereto desire to impose
certain restrictions on transfers of Shares, irreparable damage will result in
the event that this Agreement is not specifically enforced and the parties
hereto agree that any damages available at law for a breach of this Agreement
would not be an adequate remedy. Therefore, the provisions hereof and the
obligations of the parties hereunder shall be enforceable in a court of equity,
or other tribunal having jurisdiction, by a decree of specific performance and
appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies and all other remedies provided for in this Agreement
shall, however, be cumulative and not exclusive and shall be in addition to any
other remedies which any party may have under this Agreement or otherwise.

11. EFFECTIVENESS OF TRANSFERS. No Shares shall be transferred on the
Company's books and records, and no Transfer of Shares shall be otherwise
effective, unless any such Transfer is made in accordance with the term and
conditions of this Agreement. In the event of any purported Transfer of any
Shares in violation of the provisions of this Agreement, such purported Transfer
shall be void and of no effect, and no dividend of any kind whatsoever nor any
distribution pursuant to liquidation or otherwise shall be paid by the Company
to the purported transferee in respect of such Shares (all such dividends and
distributions being deemed waived), and the voting rights of such Shares, if
any, on any matter whatsoever shall remain vested in the transferor, and the
transferor shall not be relieved of any of its obligations hereunder as the
holder of such Shares, during the period commencing with the violation and
ending when compliance shall have occurred.

12. ADDITIONAL STOCKHOLDERS. Subject to the restrictions on transfers of
Shares contained herein, any person or entity required to become a party to this
Agreement in connection with the acquisition of Shares from the Stockholder or a
successor thereto, shall, on or before the transfer or issuance to it of Shares,
sign the signature page hereto and shall thereby become a party to this
Agreement. As a party to this Agreement, each holder of Shares shall be bound
by this Agreement and shall hold such Shares with all rights conferred, and
subject to all of the obligations and restrictions imposed, hereunder.

13. CERTAIN DEFINITIONS. As used in this Agreement "person" shall mean
any individual, group, partnership, corporation, business trust, joint stock
company, trust, unincorporated association, joint venture or other entity of
whatever nature.

14. ACTION NECESSARY TO EFFECTUATE THE AGREEMENT. The parties hereto
agree to take or cause to be taken all such corporate and other action as may be
necessary to effect the intent and purposes of this Agreement.

<PAGE>

15. MISCELLANEOUS.

(a) NOTICES. All notices, instructions and other communications
in connection with this Agreement shall be in writing and may be given by
personal delivery or mailed, certified mail, return receipt requested,
postage prepaid or by a nationally recognized overnight courier to the
parties at the address of the Company as follows, and at the address of the
Stockholder as set forth on the signature page to this Agreement (or at such
other address as the Company or the Stockholder may specify in a notice to
the Company or Stockholder, as the case may be):

If to the Company: Dr. Thomas V. Bonoma
President and Chief Executive Officer
Renaissance Cosmetics, Inc.
955 Massachusetts Avenue
Cambridge, Massachusetts 02139

and

Dr. Thomas V. Bonoma
President and Chief Executive Officer
Renaissance Cosmetics, Inc.
635 Madison Avenue
New York, New York 10022

With a copy to: Brownstein Hyatt Farber & Strickland
410 Seventeenth Street Suite 2200
Denver, Colorado 80204
Attention: John L. Ruppert, Esq.

Notices shall be deemed to have been given (i) when actually delivered
personally, (ii) the next business day if sent by overnight courier (with
proof of delivery) and (iii) on the fifth day after mailing by certified mail.

(b) NO WAIVER. No course of dealing and no delay on the part of
any party hereto in exercising any right, power or remedy conferred by this
Agreement shall operate as a waiver thereof or otherwise prejudice such
party's rights, powers and remedies conferred by this Agreement or shall
preclude any other or further exercise thereof or the exercise of any other
right, power and remedy.

(c) BINDING EFFECT; ASSIGNABILITY. This Agreement shall be
binding upon and, except as otherwise provided herein, shall inure to the
benefit of the respective parties and their permitted successors and assigns.
This Agreement shall not be assignable except as otherwise provided herein.

8
<PAGE>

(d) SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
To the extent permitted by applicable law, the parties hereby waive any
provision of law which renders any provisions hereof prohibited or
unenforceable in any respect.

(e) MODIFICATION. No term or provision of this Agreement may be
amended, altered, modified, rescinded or terminated except upon the express
written consent of the party against whom the same is sought to be enforced.

(f) LEGAL FEES. In the event that it becomes necessary for the
Company to retain legal counsel to enforce the Company's rights under this
Agreement, all costs, fees and expenses associated with the retention of such
counsel shall be borne by the Stockholder.

(g) LAW GOVERNING. This Agreement shall be construed both as to
validity and performance in accordance with, and governed by, the laws of the
state of Delaware, without giving effect to its choice of law rules.

(h) COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original but all of which
together shall constitute one and the same instrument, and all signatures
need not appear on any one counterpart.

(i) HEADINGS. All headings and captions in this Agreement are for
purposes of reference only and shall not be construed to limit or affect the
substance of this Agreement.

(j) AGREEMENT GOVERNS IN EVENT OF CONFLICT. In the event the
provisions of the Company's certificate of incorporation or by-laws conflict
with or are inconsistent with the provisions of this Agreement, this
Agreement shall govern.

9
<PAGE>

(k) ENTIRE AGREEMENT. This Agreement contains, and is intended
as, a complete statement of all the terms of the arrangements between the
parties with respect to the matters provided for, supersedes any previous
agreements and understandings between the parties with respect to those
matters and cannot be changed or terminated orally.

RENAISSANCE COSMETICS, INC.

By:
------------------------------

Name:
------------------------

Title:
-----------------------

Dated: , 199
---------------- ---

- ------------------------------
[INSERT NAME OF STOCKHOLDER]

Address of the Stockholder for Notices:

- ------------------------------

10
<PAGE>

DATED - 04/04/97

ATTACHMENT A

TO STOCKHOLDER AGREEMENT

FORM OF SUBORDINATION PROVISIONS TO BE INCLUDED
(ATTACHED)
<PAGE>

FORM OF SUBORDINATION PROVISIONS TO BE INCLUDED
IN PROMISSORY NOTES ISSUABLE PURSUANT
TO SECTION 6(D) OF THE STOCKHOLDER AGREEMENT

1. This note is subordinate and junior in right of payment, as provided
below, to all indebtedness other than trade debt of the Company including, but
not limited to, principal, interest, fees, penalties, indemnities, "post-
petition" interest in bankruptcy (whether or not allowed by law) of the Company,
letters of credit, interest rate caps and collars and the like, and any and all
renewals, extensions, restatements or refinancings thereof, to any lender which
is a bank, insurance company, financing institution, finance company or other
institutional lender (all such lenders together with any other holder of
Superior Indebtedness (as defined below), hereinafter called the "Lenders"),
whether now existing or hereafter created, and the direct or contingent
obligations of the Company to any lender who provides the Company with a
revolving credit and/or term debt facility (all of said indebtedness hereinafter
called "Superior Indebtedness").

2. (a) The payment of all amounts (including principal, interest, fees,
penalties and indemnities) owing in respect of this note are hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, to the
prior payment in full of all Superior Indebtedness. The provisions of this
Section 2 shall constitute a continuing offer to all persons who, in reliance
upon such provisions, become holders of, or continue to hold, Superior
Indebtedness, and such provisions are made for the benefit of the holders of
Superior Indebtedness, and such holders are hereby made obligees hereunder the
same as if their names were written herein as such, and they and/or each of them
may proceed to enforce such provisions.

(b) Upon the maturity of any Superior Indebtedness, whether at stated
maturity, by acceleration or otherwise, all amounts owing in respect thereof
shall first be paid in full, or such payment duty provided for in cash, or in a
manner satisfactory to the holder or holders of such Superior Indebtedness,
before any payment is made on account of the principal of, or interest on, or
any amount otherwise owing in respect of, this note.

(c) Upon the happening of any default or event of default under the
documents evidencing the Superior Indebtedness, unless and until such default
shall have been cured or waived in writing, no payment shall be made with
respect to this note.

(d) In the event that, notwithstanding the preceding provisions, the
Company shall make any payment on account of the principal of, or interest on,
or amounts otherwise owing in respect of, this note, at a time when payment is
not permitted by said provisions, such payment shall be held by the Payee in
trust for the benefit of, and shall be paid forthwith over and delivered to, the
holders of Superior Indebtedness or their representative or representatives
under the agreements pursuant to which the Superior Indebtedness may have been
issued, as their respective interests may appear, for application pro rata to
the payment of all Superior

<PAGE>

Indebtedness remaining unpaid to the extent necessary to pay all Superior
Indebtedness in full in accordance with terms of such Superior Indebtedness,
after giving effect to any concurrent payment or distribution to or for the
holders of Superior Indebtedness.

(e) Upon any distribution of assets of the Company upon any
dissolution, winding up or liquidation of the Company (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise):

(i) the holders of all Superior Indebtedness shall first be
entitled to receive payment in full of all amounts due thereon in cash before
the Payee is entitled to receive any payment on account of the principal of, or
interest on, or any other amount owing in respect of, this note;

(ii) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to which.the Payee
would be entitled except for the provisions hereof, shall be paid by the
liquidating trustee or agent or other person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee
or other trustee or agent, directly to the holders of Superior Indebtedness or
their representative or representatives under the agreements pursuant to which
the Superior Indebtedness may have been issued, to the extent necessary to make
payment in full in cash of all Superior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of such
Superior Indebtedness; and

(iii) in the event that, notwithstanding the foregoing
provisions, any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, shall be received by
the Payee on account of principal of, or interest on, or other amounts due
on, this note before all Superior Indebtedness is paid in cash in full, such
payment or distribution shall be received and held in trust for and shall be
paid over to the holders of the Superior Indebtedness remaining unpaid or
unprovided for or their representative or representatives under the
agreements pursuant to which the Superior Indebtedness may have been issued,
for application to the payment of such Superior Indebtedness until all such
Superior Indebtedness shall have been paid in full in cash, after giving
effect to any concurrent payment or distribution to the holders of such
Superior Indebtedness.

Without in any way modifying the provisions hereof or affecting the
sub-ordination effected hereby if such notice is not given, the Company shall
give prompt written notice to the Payee of any dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit
of creditors or otherwise).

(f) Subject to the prior payment in full of all Superior
Indebtedness, the Payee shall be subrogated to the rights of the holders of
Superior Indebtedness to receive payments or distributions of assets of the
Company applicable to the Superior Indebtedness until all amounts owing on
this note shall be paid in full, and for the purpose of such subrogation no
payments

2
<PAGE>

or distributions to the holders of the Superior Indebtedness by or on behalf
of the Company or by or on behalf of the Payee by virtue of the provisions
hereof which otherwise would have been made to the Payee shall, as between
the Company, its creditors other than the holders of Superior Indebtedness,
and the Payee, be deemed to be payment by the Company to or on account of the
Superior Indebtedness, it being understood that the provisions hereof are,
and are intended solely for the purpose of defining the relative rights of
the Payee, on the one hand, and the holders of the Superior Indebtedness, on
the other hand.

(g) Nothing contained in this Section 2 is intended to or shall
impair, as between the Company and the Payee, the obligation of the Company to
pay to the Payee the principal of and interest on this note as and when the same
shall become due and payable in accordance with its terms, or is intended to or
shall affect the relative rights of the Payee and creditors of the Company other
than the holders of the Superior Indebtedness, nor except as provided herein
shall anything herein prevent the Payee from exercising all remedies otherwise
permitted by applicable law, subject to the rights, if any, under the provisions
hereof of the holders of Superior Indebtedness in respect of cash property, or
securities of the Company received upon the exercise of any such remedy. Upon
any distribution of assets of the Company referred to in the provisions hereof
the Payee shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending or a certificate of the liquidating
trustee or agent or other person making any distribution to the Payee, for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Superior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to the
provisions hereof.

(h) No right of any present or future holders of any Superior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act in good faith by any such holders,
or by any noncompliance by the Company with the terms and provisions of this
note, regardless of any knowledge thereof with which any such holders may have
or be otherwise charged. The holders of the Superior Indebtedness may, without
in any way affecting the obligations of the Payee with respect thereto, at any
time or from time to time in their absolute discretion, change the manner, place
or terms of payment of, change or extend the time of payment of, or renew,
replace or alter, any Superior Indebtedness, or amend, modify or supplement any
agreement or instrument governing or evidencing such Superior Indebtedness or
any other document referred to therein, or exercise or refrain from exercising
any other of their rights under the Superior indebtedness, including, without
limitation, the waiver of default thereunder and the release of any collateral
securing such Superior Indebtedness, all without notice to or assent from the
Payee.

(i) Without in any way modifying the provisions of this Section 2 or
affecting the subordination effected hereby if such notice is not given (other
than Section 2 (d)), the Company shall give the Payee prompt written notice of
any maturity or event of default of Superior Indebtedness after which such
Superior Indebtedness remains unsatisfied.

3
<PAGE>

(j) In case any one or more Events of Default shall occur and be
continuing, the Payee, subject to the subordination provisions of this note
(including without limitation, Sections 1 and 2), may proceed to protect and
enforce his, her or its rights by an action at law, suit in equity or other
appropriate proceeding.

(k) The holder of this note acknowledges and agrees that the Lenders
have relied upon and will continue to rely upon, and are third-party
beneficiaries of, the subordination provisions set forth herein in purchasing
the debt and other priorities of the Company and in making loans and otherwise
extending credit to the Company and any subsidiary or successor thereto.

(l) The Lenders shall not be prejudiced in their right to enforce the
subordination provisions contained herein in accordance with the terms hereof by
any act or failure to act on the part of the Company, except as provided in
Section 2 (d)(ii).

(m) The subordination provisions contained herein are for the benefit
of the Lenders and may not be rescinded, canceled, amended or modified in any
way without the prior written consent thereto of such Lenders as shall then be
holding Superior Indebtedness.

(n) Notwithstanding any inconsistent term of this note, no holder of
this note shall, prior to the Maturity Date, unless the holder hereof is
entitled to accelerate the indebtedness hereunder, have any right to institute
any proceeding to enforce any indebtedness evidenced by this note or to
institute any bankruptcy, insolvency, reorganization or similar proceeding with
respect to the Company.

<PAGE>

WAIVER AND AMENDMENT

WAIVER AND AMENDMENT, dated as of June 27, 1997, among Dana Perfumes Corp.
("BORROWER"), the other Credit Parties to the Credit Agreement referred to
below, General Electric Capital Corporation, for itself, as Lender, and as Agent
for Lenders, and the other Lenders party to the Credit Agreement.

W I T N E S S E T H

WHEREAS, Borrower, Credit Parties, Agent and Lenders are parties to that
certain Credit Agreement dated as of March 12, 1997 (as from time to time
amended, restated, supplemented or otherwise modified, the "CREDIT AGREEMENT",
and unless the context otherwise requires or unless otherwise defined herein,
capitalized terms used herein shall have the meanings assigned to them in the
Credit Agreement); and

WHEREAS, an Event of Default under Section 8.1(c) of the Credit Agreement,
arising as a result of Borrower's failure to deliver to Agent and Lenders the
quarterly financial information required to be delivered in respect of the
Fiscal Quarter ending March 31, 1997 pursuant to paragraph (b) of ANNEX E to
the Credit Agreement, has occurred and is continuing on the date hereof (the
"Existing Events of Default"); and

WHEREAS, Borrower has requested that Agent and Lenders waive the Existing
Event of Default and amend the Credit Agreement as hereinafter set forth; and

WHEREAS, Agent and Lenders have agreed to waive the Existing Event of
Default and amend the Credit Agreement as hereinafter set forth;

NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:

SECTION 1. WAIVER. Agent and Lenders hereby waive the Existing Event of
Default effective as of the Effective Date (as defined herein).

SECTION 2. AMENDMENTS TO CREDIT AGREEMENT. The

1
<PAGE>

Credit Agreement is hereby amended effective as of March 31, 1997, as follows:

(a) MINIMUM EBITDA. Paragraph (b) of ANNEX G to the Credit Agreement
is amended (i) by deleting "$20,000,000" as the amount of minimum EBITDA for the
12-month period ended March 31, 1997, and substituting therefor the amount of
"$18,000,000" and (ii) by deleting "20,000,000" as the amount of minimum EBITDA
for the 12-month period ended June 30, 1997, and substituting therefor the
amount of "18,000,000".

(b) MINIMUM INTEREST COVERAGE RATIO. Paragraph (d) of ANNEX G to the
Credit Agreement is amended (i) by deleting "1.10" as the minimum Interest
Coverage Ratio for the Fiscal Quarter ending March 31, 1997, and substituting
therefor the ratio of "0.94" and (ii) by deleting "1.10" as the minimum Interest
Coverage Ratio for the Fiscal Quarter ending June 30, 1997, and substituting
therefor the ratio of "0.85".

SECTION 3. REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES. The Credit
Parties represent and warrant to Agent and each Lender as follows:

(a) The execution, delivery and performance by each Credit Party of
this Waiver and Amendment: (1) are within such Person's corporate power; (2)
have been duly authorized by all necessary or proper corporate and shareholder
action; (3) do not contravene any provision of such Person's charter or bylaws;
(4) do not violate any law or regulation, or any order or decree of any
Governmental Authority; (5) do not conflict with or result in the breach or
termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any indenture, mortgage, deed of
trust, lease, agreement or other instrument to which such Person is a party or
by which such Person or any of its property is bound; (6) do not result in the
creation or imposition of any Lien upon any of the property of such Person other
than those in favor of Agent, on behalf of itself and Lenders, pursuant to the
Loan Documents; and (7) do not require the consent or approval of any
Governmental Authority or any other Person.

(b) This Waiver and Amendment has been duly executed and delivered by
each Credit Party and constitutes a legal, valid and binding obligation of such
Credit Party

2
<PAGE>

enforceable against it in accordance with its terms.

(c) After giving effect to that certain letter agreement dated the date
hereof among Borrower, Agent and Lenders and to the waivers and amendments
contained in this Waiver and Amendment, each of the representations and
warranties of the Credit Parties contained in Credit Agreement and each of
the other Loan Documents shall be true and correct on and as of the Effective
Date as if made on warranty expressly relates to an earlier date and except
for changes therein expressly permitted or expressly contemplated by such
agreements.

(d) After giving effect to that certain letter agreement dated the date
hereof among Borrower, Agent and Lenders and to the waivers and amendments
contained in this Waiver and Amendment, no Default or Event of Default shall
be continuing.

SECTION 4. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS WAIVER AND
AMENDMENT. This Waiver and Amendment shall become effective as of the first
date on which each of the following conditions shall have been satisfied or
provided for in a manner satisfactory to Agent, or waived by Agent and
Requisite Lenders (such date is referred to herein as the "Effective Date"):

(a) Agent shall have executed this Waiver and Amendment.

(b) Agent shall have received, in form and substance satisfactory to
Agent, this Waiver and Amendment, duly executed and delivered by Borrower,
the other Credit Parties and Requisite Lenders.

SECTION 5. LIMITATION ON WAIVERS AND AMENDMENTS. The waivers,
amendments, and agreements set forth herein are limited precisely as written
and shall not be deemed (a) to be a consent under, waiver or amendment of or
with respect to any other term or condition in, or any other Default or Event
of Default under, the Credit Agreement or any other Loan Document or a
consent under, waiver or amendment of or with respect to any further action
of Borrower of the other Credit Parties which would require a consent, waiver
or amendment by any Lenders, and (b) to prejudice any right or rights which
any Lenders now have or may have in the future

3
<PAGE>

under or in connection with the Credit Agreement or any other Loan Document,
except as expressly provided herein.

SECTION 6. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. (a) On and
after the Effective Date, each reference in the Credit Agreement to "this
Agreement", "herein", "hereof", "hereunder" or words of similar import, and
each reference in the other Loan Documents to the Credit Agreement, shall
mean and be a reference to the Credit Agreement as amended hereby and after
giving effect to the waivers provided herein.

(b) Except as specifically amended above, the Credit Agreement, the
Notes and all other Loan Documents shall remain in full force and effect and
are hereby ratified and confirmed.

(c) The execution, delivery and effectiveness of this Waiver and
Amendment shall not, except as expressly provided herein, operate as a waiver
of any right, power or remedy of Lenders under any other Loan Documents, nor
constitute a waiver of any provision of any of the Loan Documents.

SECTION 7. FEES AND EXPENSES. Borrower agrees to reimburse Agent for
all reasonable out-of-pocket fees, costs and expenses, including the
reasonable fees, costs and expenses of counsel or other advisors in
connection with the preparation, execution, and delivery of this Waiver and
Amendment.

SECTION 8. GOVERNING LAW. THIS WAIVER AND AMENDMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.

SECTION 9. SECTION TITLES. Section titles contained in this Waiver and
Amendment are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.

SECTION 10. COUNTERPARTS. This Waiver and Amendment may be executed in
any number of separate counterparts, each of which shall collectively and

4
<PAGE>

separately constitute one agreement.

SECTION 11. NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Waiver and Amendment. In the
event an ambiguity or question of intent or interpretation arises, this Waiver
and Amendment shall be construed as if drafted jointly by the parties hereto and
no presumption or burden of proof shall arise favoring or disfavoring any party
by virtue of the authorship of any provisions of this Waiver and Amendment.

5
<PAGE>

IN WITNESS WHEREOF, this Waiver and Amendment has been duly executed as of
the date first written above.

DANA PERFUMES CORP.

By: /s/ JOHN R. JACKSON
-------------------------------
Name: John R. Jackson
Title: Vice President and
Secretary

GENERAL ELECTRIC CAPITAL
CORPORATION,
as Agent and Lender

By: /s/ MARSHALL N. DUDLEY
-------------------------------
Name: Marshall N. Dudley, Jr.
Title: Duly Authorized Signatory

NATIONAL CITY COMMERCIAL
FINANCE, INC.
as Lender

By: /s/ CHRISTINA M. LUCAS
-------------------------------
Name: Christina M. Lucas
Title: Vice President

PNC BANK, N.A.,
as Lender

By: /s/ FRANK PHILLIPS
-------------------------------
Name: Frank Phillips
Title: Vice President

6
<PAGE>
Other Credit Parties:

RENAISSANCE COSMETICS, INC.
COSMAR CORPORATION
GREAT AMERICAN COSMETICS, INC.
HOUBIGANT (1995) LIMITED
MEM COMPANY, INC.*
TINKERBELL, INC.
(f/k/a Marton Freres, Inc.)
MEM COMPANY (CANADA) LIMITED

By: /s/ JOHN R. JACKSON
-------------------------------
Name: John R. Jackson
Title: Vice President and
Secretary

* Aristocrat Leather Products, Inc. and English Leather, Inc. both former
Credit Parties, were merged into MEM Company, Inc., after March 12, 1997
and prior to the Effective Date.

<PAGE>

DANA PERFUMES CORP.
C/O RENAISSANCE COSMETICS, INC.
635 MADISON AVENUE
NEW YORK, NEW YORK 10022

June 27, 1997

General Electric Capital Corporation
for itself, as Lender, and as Agent
201 High Ridge Road
Stamford, Connecticut 06927-5100

National City Commercial Finance, Inc.
1965 E. 6th Street, Suite 400
Cleveland, Ohio 44114

PNC Bank N.A.
1600 Market Street, 31st Floor
Philadelphia, Pennsylvania 19103

Re: CREDIT AGREEMENT

Ladies and Gentlemen:

Reference is hereby made to that certain Credit Agreement, dated as of
March 12, 1997 (the "Credit Agreement"), by and among Dana Perfumes Corp.
("Borrower"), the other Credit Parties signatory thereto, General Electric
Capital Corporation, as Lender, and as Agent for Lenders (in such capacity
"Agent"), and the other Lenders signatory thereto from time to time.

Capitalized terms used herein and not otherwise defined have the meanings
assigned to them in the Credit Agreement.

Borrower, for and on behalf of itself and the other Credit Parties,
Agent and Lenders hereby agree that, notwithstanding anything to the contrary
in the Credit Agreement and other Loan Documents, (1) none of the
transaction/matters described on Schedule A hereto, individually (a "Schedule
A Matter") or in the aggregate (the "Schedule A Matters"), shall constitute a
Default or Event of Default under the Credit Agreement and other Loan
Documents on or before July 31, 1997, and (2) thereafter, each Schedule A
Matter shall constitute a Default or Event of Default only if such Schedule A
Matter has not previously been satisfied or provided for in a manner
satisfactory to Agent or waived by Agent and the Requisite Lenders.

<PAGE>

To the extent the Credit Agreement provides a cure period with respect
to any of the Schedule A Matters, the Borrower, for and on behalf of itself
and the other Credit Parties, hereby waives such cure period(s).

[The Remainder of This Page Left Blank Intentionally]

<PAGE>

Please acknowledge your agreement with the foregoing by signing and
returning the enclosed copy of this letter.

Very truly yours,

DANA PERFUMES CORP.

By: /s/ JOHN R. JACKSON
---------------------------
Name: John R. Jackson
Title: Group Vice President

Acknowledged, Agreed to and Accepted by:

GENERAL ELECTRIC CAPITAL CORPORATION

By: /s/ MARSHALL N. DUDLEY
------------------------------------
Name: Marshall N. Dudley, Jr.
Title: Duly Authorized Signatory

NATIONAL CITY COMMERCIAL FINANCE, INC.

By: /s/ CHRISTINA M. LUCAS
------------------------------------
Name: Christina Lucas
Title: Vice President
---------------------------------

PNC BANK N.A.

By: /s/ FRANK PHILLIPS
------------------------------------
Name: Frank Phillips
Title: Vice President
---------------------------------

<PAGE>

SCHEDULE A

1. The following transactions:

a. the merger of Rosemint Cosmetics Company, Inc. (an inactive
Subsidiary), with and into MEM Company, Inc. ("MEM") (a Credit Party);

b. the merger of MEM International, Inc. (an active Subsidiary),
with and into MEM;

c. the merger of Victor of Milano, Ltd. (an inactive Subsidiary), with
and into MEM;

d. the formation of RCI China, Inc., a newly-formed, wholly-owned
Delaware subsidiary of Parent ("RCI China");

e. the investment of funds by Parent in RCI China an amount sufficient
to permit RCI China to meet its obligations under the Joint Venture
Agreement between itself, Jerome Alexander Beauty Products (H.K.)
Limited and, for certain limited purposes, Jerome Axelrod, dated as of
March 31, 1997; and

f. the (i) contribution by the Borrower of all of the United Kingdom
inventory and molds acquired by Borrower from Procter & Gamble and
in existence on and as of December 31, 1996 (the "UK Assets"), which
were valued at approximately $4.4 million, to the capital of Dana U.K.
Limited, a wholly-owned subsidiary of Borrower ("Dana UK") (the "UK
Assets Transfer"), and (ii) delivery by Dana UK of its own promissory
note in the principal amount of $1 million to Borrower as partial
payment for the UK Assets (the "Dana UK Note").

2. The following matters, all of which are referenced in the April 4, 1997
post-closing letter:

a. delivery to Agent of a tri-party pledged account agreement (in form
satisfactory to Agent) for the Chase Manhattan Bank (Delaware Account)
by July 11, 1997 or, if such agreement is not delivered by such date,
closing of the Delaware Account by July 31, 1997; and

b. perfection of the pledge of shares of Dana S.A., Tinkerbell U.K.
Limited and Perfumes Dana do Brasil, S.A., under the applicable laws
of Spain, the United Kingdom and Brazil, respectively.

<PAGE>

EXHIBIT 21.1

All subsidiaries listed below were in existence as of June 15, 1997

Direct Subsidiaries of the Company (Delaware)

1. Cosmar Corporation (Delaware)
2. Renaissance Guarantor, Inc. (Delaware)
3. RCI China, Inc.

Direct Subsidiaries of Cosmar Corporation

1. Dana Perfumes Corp. (Delaware)
2. Great American Cosmetics, Inc. (New York)

Direct Subsidiaries of Dana Perfumes Corp.

1. Marcafin S.A. (Switzerland)
2. Estalvi S.A. (Switzerland)
3. Financiera de Perfumeria S.A. (Panama)
4. Perfumes Dana S.A.I.C. (Argentina)
5. Perfumes Dana do Brasil, S.A. (Brazil)
6. Dana S.A. (Spain)
7. Dana Perfumes (Pty), Ltd. (South Africa)
8. Dana U.K. Limited (U.K.)
9. MEM Company, Inc. (New York)
10. Houbigant (1995) Limited (Canada)
11. RSH 149 S.A.R.L. (France)

Direct Subsidiaries of Estalvi S.A.

1. C.O.M.I.N.S.A. (Panama)
2. Parfums Dana Export Corp. (New York)

Direct Subsidiary of C.O.M.I.N.S.A.

1. Perfumes and Cosmetics Importers, Inc. (Puerto Rico)

Direct Subsidiary of Financiera de Perfumeria S.A.

1. Dana Perfumes (Canada) Limited (Canada)

<PAGE>

Direct Subsidiaries of MEM Company, Inc.

1. Tinkerbell, Inc. (New York)
2. MEM Company (Canada) Ltd. (Canada)
3. St. Thomas Leatherworks Limited (Jamaica)
4. Alliance Trading Co., Inc. (Puerto Rico)
5. Tom Fields (U.K.) Ltd. (U.K.)
6. St. Thomas Holdings Inc. (Delaware)

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF RENAISSANCE COSMETICS INC. FOR THE YEAR
ENDED MARCH 31, 1997 AND 1996 AND THE PERIOD FROM APRIL 15, 1994 (INCEPTION) TO
MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 719
<SECURITIES> 22,799
<RECEIVABLES> 48,837
<ALLOWANCES> 0
<INVENTORY> 55,554
<CURRENT-ASSETS> 135,736
<PP&E> 35,108
<DEPRECIATION> 8,527
<TOTAL-ASSETS> 361,383
<CURRENT-LIABILITIES> 61,934
<BONDS> 203,877
99,827
0
<COMMON> 8
<OTHER-SE> (8,189)
<TOTAL-LIABILITY-AND-EQUITY> 361,383
<SALES> 174,612
<TOTAL-REVENUES> 174,612
<CGS> 69,723
<TOTAL-COSTS> 69,723
<OTHER-EXPENSES> 100,365
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,417
<INCOME-PRETAX> (18,058)
<INCOME-TAX> 1,322
<INCOME-CONTINUING> (19,380)
<DISCONTINUED> 0
<EXTRAORDINARY> 22,438
<CHANGES> 0
<NET-INCOME> (41,818)<F1>
<EPS-PRIMARY> (71.63)
<EPS-DILUTED> (71.63)
<FN>
<F1>NET LOSS APPLICABLE TO COMMON STOCKHOLDERS WAS $(55,886)
</FN>

</TABLE>