1
Exhibit 10.119
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made this 21st
day of August 1996, by and between HILLTOP SALES, INC., a New York corporation
("Hilltop") which is owned 100% by XXXXXXX XXXXXXX ("Xxxxxxx") (Hilltop and
Carbone are collectively known as the "Consultant"), whose mailing address is
19150 Cloister Xxxx Xxxx, Xxxx Xxxxx , Xxxxxxx 00000, COSMAR CORPORATION, a
Delaware corporation (the "Company"), whose mailing address is c/o Renaissance
Cosmetics, Inc. ("RCI"), 000 Xxxxxxx Xxxxxx, Xxx Xxxx , Xxx Xxxx 00000 and RCI,
a Delaware corporation.
WITNESSETH:
WHEREAS, simultaneously with the execution of this Agreement, the
Company is purchasing from Carbone and Xxxxx Xxxxxxx all of the issued and
outstanding common stock of Great American Cosmetics, Inc. ("GACI") on the terms
and conditions set forth in that certain Stock Purchase Agreement (the "Purchase
Agreement"), dated as of June 27, 1996, by and among the Company (as Buyer),
Xxxxxxx and Xxxxx Xxxxxxx (as Sellers) and GACI (the "Acquisition"), and that
certain Closing Escrow Agreement, dated as of even date herewith, by and among
the Company, Carbone, Xxxxx Xxxxxxx and the Escrow Agent (as defined therein)
(the "Closing Escrow Agreement");
WHEREAS, the Company is a wholly-owned subsidiary of RCI;
WHEREAS, GACI is engaged in the business of producing,
outsourcing, packaging, marketing, distributing, advertising, promoting,
merchandising and selling cosmetic products to the mass markets, including, but
not limited to, nail polish, lipstick, eyeliners, mascara, make-up and related
accessories, sold under the brand name "XXX XXXXXXX" (collectively refereed to
herein as the "Business");
WHEREAS, GACI possesses trade secrets, confidential business
relationships and other confidential and proprietary property and information in
connection with the Business and GACI's operations which are essential and
integral components of GACI's success, profitability and competitive advantage;
WHEREAS, prior to the Acquisition, Carbone was a principal
shareholder of GACI and was actively involved in the business of GACI as an
employee and, as a result, possesses Confidential Information (as defined in
Section 7 below) relating to the Business;
WHEREAS, the Company desires to hire Hilltop/Xxxxxxx to provide,
and Hilltop/Carbone desire to be engaged to provide, consulting services for the
Company and its affiliates as provided herein , all in accordance with the terms
and conditions set forth in this
1
2
Agreement, and with the express understanding that Carbone will be the sole and
exclusive provider of consulting services hereunder on behalf of Hilltop.
NOW, ThEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. Consulting Agreement. The Company hereby engages Consultant as
a consultant to the Company and each of its affiliated entities and businesses
and Consultant hereby accepts such engagement for a term extending from the date
hereof until the first anniversary of the date hereof (the "Consulting Term").
2. Consulting Duties; Acknowledgment. During the Consulting Term,
Consultant will provide such advisory and consulting services to the Company
and its affiliates as may be designated from time to time by the Company
(consistent with the Consultant's duties, responsibilities and title(s) with
GACI immediately prior to the closing of the transactions contemplated by the
Purchase Agreement). It is understood and agreed by the parties hereto that
Consultant shall perform such consulting services as may be requested by
Consultant at any time and from time to time by the Board of Directors of the
Company and/or the President and/or Chief Executive Officer of the Company.
Such services shall include, but not be limited to, (a) the launch of new
products, (b)the support of existing products, (c) assisting with key accounts,
key customers, key suppliers, key vendors and (d) carrying out other related
assignments consistent with serving as a consultant (taking into account the
Consultant's duties, responsibilities and title(s) with GACI immediately prior
to the closing of the transactions contemplated by the Purchase Agreement).
Consultant shall give the Company and its affiliates the benefit of
Consultant's expertise in related businesses and Consultant's familiarity with
marketing of such products as well as Consultant's good relationships with
potential customers. In this connection, the Company acknowledges the
Consultant has operated and managed the Business as an owner for many years and
Consultant will not be required to adhere to rigid personal schedules but will
be afforded appropriate latitude in performing Consultant's consulting
services. Consultant shall report to the senior management of the Company and
RCI and shall perform Consultant's consulting duties consistent with the best
interest of the Company, to the best of Consultant's ability, in a diligent
manner and consistent with the policies and guidelines of the Company as in
effect at any time and from time to time.
During the Consulting Term, Consultant will devote the following
amounts of time to providing the consulting services described in this Section
2: (a) thirty (30) hours, on average, per month during each of the first four
(4) months of the Consulting Term; (b)twenty (20) hours, on average, per month
during each of the second four months of the Consulting Term; and (c) ten (10)
hours, on average, per month during each of the last four (4) months of the
Consulting Term. The Company acknowledges that Consultant shall not be required
or expected (i) to relocate Consultant's office/residence to provide the
consulting services described in this Section 2. and/or (ii) to travel away from
Consultant's office/residence with any
2
3
frequency or regularity to provide the consulting services described in this
Section 2. In the event that Consultant is required to travel on behalf of the
Company, then Consultant shall be provided with at least five (5) business days
prior notice and the Company shall arrange and pay for Consultant's travel and
accommodations, which shall at least be on a level consistent with past
practices. The Company and Consultant also agree that the Consultant shall be
permitted to perform substantially all of the consulting services described in
this Section 2. by telephone, telecopy, electronic mall, letter or other written
correspondence or telecommunication.
Consultant acknowledges that this Agreement is non-exclusive and
that the Company may engage the services of other parties to pursue the
objectives stated herein on the same or different terms, as determined by the
Company in its sole and absolute discretion.
3. Consulting Fee. During the Consulting Term, the Company agrees
to pay (or cause to be paid) to Consultant a consulting fee (the "Consulting
Fee") in the amount of One Hundred Fifty Thousand Dollars ($150,000) annually,
to be paid monthly in arrears in twelve (12) equal payments of $12,500.00 each.
The Company will reimburse Consultant for Consultant's reasonable expenses which
are incurred during the Consulting Term in connection with Consultant's
engagement with the Company, provided that (a) any expense in excess of Five
Hundred Dollars ($500.00) is pre-approved by an authorized officer of the
Company and (b)standard documentation and/or receipts are submitted to the
Company by Consultant at the time reimbursement is requested. All dollar
references herein are to United States dollars.
4. Independent Contractor. The parties hereby acknowledge,
understand and agree that Consultant is an independent contractor and shall not
be considered an employee or agent of the Company or any of its affiliates
pursuant to the terms of this Agreement for any purposes whatsoever and
Consultant shall have no right or authority to assume or create any obligation
or liability, express or implied, on behalf of the Company or any of its
affiliates, or to bind the Company or such affiliates in any manner or thing
whatsoever, without the Company's express prior written consent. Consultant
shall be responsible for all income taxes , Social Security and other tax
liabilities with respect to payment of the Consulting Fee(s) to Consultant
hereunder.
5. Termination.
(a) Anything herein to the contrary notwithstanding, upon
the happening of any one of the following events, the Company may terminate this
Agreement by giving Consultant written notice of such termination: (i) an act or
omission of Consultant constituting Cause (as defined below); or (ii) a
violation by Consultant of any of the provisions of Section 6., 7. or 8. hereof.
For the purpose of clause (i) of this subsection 5(a), "Cause" shall mean (A)
conviction in a court of law of any crime or offense involving money or other
property of the Company or any of its affiliates, or (B) the determination by
the Board of Directors of RCI, acting in good faith, that the Consultant has
willfully committed an act of fraud with respect to money or other property of
the Company or an affiliate of the Company.
3
4
(b) The Company's right of termination shall be in addition
to and shall not affect its rights and remedies under Sections 6., 7., 8. and 9.
of this Agreement, and such rights and remedies under such sections shall
survive termination of this Agreement.
(c) In the event of termination of this Agreement pursuant
to the terms hereof, Consultant shall have no right to receive any compensation
for any period subsequent to the date of such termination, except for any
pro-rated amounts earned prior to such termination, and all rights of the
Consultant to receive compensation for any period subsequent to the date of such
termination shall terminate in their entirety effective on and as of the
termination date.
6. Non-Competition Agreement. Consultant hereby agrees that, for
a period extending from the date hereof until the second anniversary of the date
hereof, Consultant will not engage or participate, directly or indirectly,
either as principal, agent, employee, employer, consultant, director, partner,
shareholder, officer, equity owner, lender with an equity "kicker" interest or
in any other individual or representative capacity whatsoever, in the conduct or
management of any business engaged in the distribution or sale of fragrances,
and/or cosmetics in Xxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxxx Xxxxxxx or Europe (a
"Competing Business"), nor own, legally or beneficially, directly or indirectly,
or have the right or option, legally or beneficially, directly or indirectly, to
acquire or own any stock or other proprietary or equity interest in any
Competing Business; provided, however, that nothing contained in this Agreement
shall prohibit Consultant from acquiring not more than five percent (5%) of the
outstanding shares of any equity security of an issuer, the ownership of whose
shares would otherwise be prohibited by this Agreement, of a Competing Business
listed for trading on the New York Stock Exchange, the American Stock
Exchange, or quoted on the National Association of Securities Dealers Automated
Quotation System.
7. Confidentiality Agreement. Consultant acknowledges that
Confidential Information (as defined below) is a valuable, special and unique
asset of the Company and its affiliates. Consultant agrees that Consultant shall
not disclose, for a period extending from the date hereof until the fifth
anniversary of the date hereof, any Confidential Information to which Consultant
becomes privy to any person, firm, corporation, association, partnership or
other entity for any reason or purpose whatsoever, other than employees of the
Company and its affiliates who have a need to know such information in
connection with the performance of their duties on behalf of the Company and its
affiliates, or use any Confidential Information for any purpose not expressly
authorized in writing by the Company. For purposes of this Agreement,
"Confidential Information" means any information, whether disclosed
electronically, in writing or orally, heretofore or hereafter designated or
otherwise treated as "confidential" by the Company, including, but not limited
to, all financial statements, corporate records and other information and data
relating to the operations, assets, liabilities, financial condition, future
prospects, employees, vendors, financing and litigation of any business unit of
the Company, all technical and business information, know-how or trade secrets,
or any other information relating to the Company or any unit thereof, which is
of a confidential or proprietary nature.
4
5
However, the term "Confidential Information" does not include information that
(a) is or becomes generally available to the public other than as a result of a
disclosure by Consultant or anyone to whom Consultant transmits the Confidential
Information to in accordance with this Agreement, or (b) becomes available to
Consultant on a non-confidential basis from a source other than the Company.
8. Nonsolicitation of Employees. Consultant hereby agrees that
Consultant will not, directly or indirectly, for a period extending from the
date hereof until the fifth anniversary of the date hereof, solicit, interfere
with, employ or retain in any other capacity any employee of the Company or any
of its affiliates, nor permit, encourage or allow any entity in which the
Consultant owns, directly or indirectly, more than a five percent (5%) equity or
proprietary interest or the right or option, legally or beneficially, directly
or indirectly, to acquire or own any stock or other proprietary or equity
interest to solicit, interfere with, employ or retain in any other capacity any
employee of the Company or any of its affiliates.
9. Remedies. Consultant specifically acknowledges and agrees that
(a) the covenants contained in Sections 6., 7. and 8. above are reasonable in
content and scope, are entered into by Consultant in partial consideration for
the compensation to be paid to Consultant hereunder and are a necessary and
material inducement to the Company to go forward with the engagement
contemplated by this Agreement and the consummation of the Acquisition, on the
terms and conditions set forth in the Purchase Agreement, and (b) the services
and agreements to be performed hereunder by Consultant are of a unique, special
and extraordinary character , and that a breach by Consultant of any of the
covenants contained in Sections 6., 7. and 8. above would result in irreparable
damage to the Company and its affiliates which may be unascertainable, and,
with respect to such covenants may involve the wrongful use or disclosure of
Confidential Information. Accordingly, Consultant agrees that, in the event of
any breach or threatened breach of any of the agreements contained in Sections
6., 7. or 8. above, the Company and its affiliates shall be entitled, in
addition to money damages and reasonable attorneys' fees and the right, on the
part of the Company, in its sole and absolute discretion, to terminate this
Agreement, to seek an injunction or other appropriate equitable relief to
prevent such breach or any continuation thereof in any court of competent
jurisdiction.
Notwithstanding anything to the contrary herein, in the Purchase
Agreement or in the Closing Escrow Agreement, the Consultant acknowledges and
agrees that the Company shall have the right, in its sole and absolute
discretion, at any time after the first six months of the Consulting Term, to
offset against any Consulting Fees remaining to be paid to Consultant hereunder
any Claimed Amount (as defined in Section 3.1 of the Closing Escrow Agreement)
if and to the extent that there are insufficient funds in the Escrow (as defined
in the Closing Escrow Agreement) to cover all or any portion of such Claimed
Amount; provided, however , that the amount of the offset permitted hereunder
shall not exceed $75,000 in the aggregate; and provided, further, that the
Company shall comply with the notice provisions in Section 3.1 of the Closing
Escrow Agreement before availing itself of the offset right afforded to it under
this paragraph.
5
6
10. Guarantee. RCI hereby absolutely and unconditionally
guarantees payment of any and all amounts due to Consultant under this Agreement
and covenants that it will promptly perform and observe each and every
obligation of the Company hereunder. This Guarantee shall be a continuing
guarantee and Consultant may act in reliance hereon.
11. General Provisions. Except to the extent inconsistent with
the express language of the foregoing provisions of this Agreement, the
following provisions shall govern the interpretation, application, construction
and enforcement of this Agreement:
(a) Notices. Any notice to any party under this Agreement
shall be in writing and shall be effective in accordance with Section 10.3 of
the Purchase Agreement, a copy of which is attached as Exhibit A to this
Agreement.
(b) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, and their respective
successors in interest and assigns, but in no event shall any party be relieved
of its obligations hereunder without the express written consent of the other
party.
(c) Entire Agreement. This Agreement, together with the
instruments and agreements contemplated hereby, represents the entire agreement
of the parties with respect to the subject brought hereof, and all agreements
entered into prior hereto with respect to the subject matter hereof are revoked
and superseded by this Agreement, and no representations, warranties,
inducements or oral agreements have been made by any of the parties except as
expressly set forth herein, or in other contemporaneous written agreements. This
Agreement may not be changed, modified or rescinded except in writing, signed
by all parties hereto, and any attempt at oral modification of this Agreement
shall be void and of no effect.
(d) Captions. Captions and paragraph headings used herein
are for convenience only, are not a part of this Agreement and shall not be
deemed to limit or alter any provisions hereof or to be relevant in construing
this Agreement.
(e) Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York, excluding its
laws regarding choice of law.
(f) Attorneys' Fees. In the event of any litigation or
arbitration arising out of this Agreement, the cost of such litigation or
arbitration, including reasonable attorneys' fees and expenses (whether incurred
at or before trial, on appeal or at or before the arbitration), of the
prevailing party shall be paid by the non-prevailing party.
(g) Counterparts; Facsimile Signatures. This Agreement may
be executed simultaneously 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. Each party hereto agrees
6
7
to be bound by its own facsimile signature and to accept the facsimile signature
of the parties to this Agreement.
(h) No Third Party Beneficiaries. This Agreement shall not
confer any rights, benefits or remedies upon any person other than the parties
hereto and their respective successors and assigns.
(i) Severability. If any provisions of this Agreement shall
be held to be excessively broad as to duration, geographical scope, activity or
subject, such provisions shall be construed by limiting or reducing the same so
as to render such provision enforceable to the extent compatible with applicable
law.
(j) Sole Provider of Consulting Services. Notwithstanding
anything in this Agreement to the contrary, Carbone and Hilltop agree that
Carbone shall be the sole provider of consulting services on behalf of Hilltop
and that Hilltop shall not have the right, without the prior written permission
of the Company to substitute any person, or designate or appoint any person,
other than Xxxxxxx as the sole provider of consulting services hereunder on
behalf of Hilltop.
(k) Waiver. Failure on the part of the Company to exercise
any right or option arising out of a breach of this Agreement shall not be
deemed a waiver of any right or option with respect to any subsequent or
different breach, or the continuance of any existing breach.
7
8
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the date first above written.
CONSULTANT:
HILLTOP SALES, INC.
By: /s/ Xxxxxxx Xxxxxxx, V. Pres.
-------------------------------
Xxxxxxx Xxxxxxx, President
/s/ Xxxxxxx Xxxxxxx, V. Pres.
-------------------------------
Name: Xxxxxxx Xxxxxxx
COMPANY:
COSMAR CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-------------------------------
Name:
-----------------------------
Title:
----------------------------
RCI:
RENAISSANCE COSMETICS, INC.
(with respect to Section 10)
By: /s/ Xxxx X. Xxxxxxx
-------------------------------
Name:
-----------------------------
Title:
----------------------------
8
