EXHIBIT 10(B)
AMENDMENT
THIS AMENDMENT ("Amendment") is entered into as of April 25, 1997
between The Cosmetic Center, Inc., formerly known as Cosmetic & Fragrance
Concepts, Inc., ("EMPLOYER" or "COMPANY") and Xxx X. Xxxxxxxx ("EMPLOYEE" or
"XXXXXXXX").
RECITALS:
R-1. The parties entered into an Employment Agreement dated February
28, 1991 ("Employment Agreement").
R-2. On October 1, 1996 the COMPANY entered into a letter of intent
with Revlon Consumer Products Corporation ("Revlon") to merge its wholly owned
subsidiary, Prestige Fragrance & Cosmetic, Inc. ("PFC") into the COMPANY. After
the merger the COMPANY will consist of two groups -- The Cosmetic Center Group
and the PFC Group.
R-3. In order to ensure a smooth transition after the merger, Revlon
has requested that the COMPANY ensure XXXXXXXX'X continued employment for at
least six (6) months after the merger.
R-4. In consideration of the COMPANY amending the Employment Agreement
as provided for herein XXXXXXXX has agreed to continue his employment for at
least six (6) months after the merger.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby reciprocally acknowledged, the parties agree as
follows:
1. EFFECTIVE DATE. The "Effective Date" of this Amendment shall be the
date PFC is merged into the COMPANY.
2. CONTINUATION OF EMPLOYMENT. Notwithstanding anything in the
Employment Agreement to the contrary, including without limitation, Sections 1,
2 and 10 C, as of the Effective Date XXXXXXXX agrees to assume the newly
created position of President and Chief Operating Officer of The Cosmetic
Center Group, in lieu of his present position as President, Chief Executive and
Chief Operating Officer of the COMPANY, and to continue in such position for a
period of at least six (6) months from the Effective Date of this Amendment
("Minimum Employment Period").
3. COMPENSATION OF EMPLOYEE. As of the Effective Date, Paragraphs 3 A
and B of the Employment Agreement shall no longer be applicable and the
following shall apply in lieu thereof:
"EMPLOYER hereby agrees to pay to EMPLOYEE for all services to be
rendered by EMPLOYEE in his capacity as President and Chief Operation Officer
of The Cosmetic Center Group of EMPLOYER an annual base salary ("Base Salary")
of Two Hundred Twenty Five Thousand Dollars ($225,000.00). In addition,
Employee shall be paid an annual amount of One Hundred Thousand Dollars
($100,000.00), which amount shall be paid, less all amounts required by law to
be withheld, in the same number of installments and at the same time, as the
Base Salary in consideration for the non-competition covenant contained in the
Employment Agreement ("the Non-Competition Payments").
4. TERMINATION PAYMENT. Upon the Effective Date, Section 10 of the
Employment Agreement shall be deemed deleted, and in lieu thereof, the
following shall apply:
A. CANCELLATION OR TERMINATION. In the event EMPLOYER cancels and
terminates this Employment Agreement and discharges EMPLOYEE prior to
the expiration of the term of this Employment Agreement as specified
in Section 2 of this Amendment for any reason other than for Good
Cause or EMPLOYEE terminates his employment with EMPLOYER at any time
after the end of the Minimum Employment Period, then EMPLOYER shall
pay to EMPLOYEE a lump-sum payment equal to the remainder of his Base
Salary and Non-Competition Payments that would be due through the end
of the Term (without giving effect to EMPLOYEE'S termination), which
payment shall be made to EMPLOYEE within thirty (30) days of the date
of such termination. For illustrative purposes only, if the Effective
Date occurs on January 31, 1997 and EMPLOYEE either terminates or is
terminated from his employment with EMPLOYER on September 30, 1997,
EMPLOYEE shall be entitled to a lump-sum payment equal to twenty nine
(29) months of remaining Base Salary and Non-Competition Payments
(i.e. $785,416.65). EMPLOYEE shall not be obligated to mitigate
EMPLOYEE'S damages in the event of termination by EMPLOYER. EMPLOYER
agrees that this provision with respect to a termination by EMPLOYER
represents liquidated damages and not a penalty, and that it
represents a reasonable forecast of EMPLOYEE's anticipated and actual
economic damages as well as including reasonable compensation of
$100,000.00 per year to EMPLOYEE in consideration for the Non-Compete
provision contained in the Employment Agreement. EMPLOYER agrees that
this provision with respect to a termination by EMPLOYEE after the
Minimum Employment Period represents reasonable severance in light of
EMPLOYEE'S prior service to
EMPLOYER as well as including reasonable compensation of $100,000.00
per year to EMPLOYEE in consideration for the Non-Compete provision
contained in the Employment Agreement. In the event EMPLOYER cancels
and terminates this Agreement and discharges EMPLOYEE prior to the
expiration of the term of this Agreement as specified in Section 2 for
Good Cause or EMPLOYEE terminates his employment with EMPLOYER at any
time prior to the end of the Minimum Employment Period, EMPLOYER shall
have no obligation to make any payment or provide any benefits
hereunder for any period subsequent to the date of such termination or
resignation, except as required by law.
B. FAILURE TO PAY SALARY WHEN DUE. In the event EMPLOYER fails to
pay any regular Base Salary and Non-Competition Payments when due as
specified in Section 3 hereof, or to pay accelerated amount due if
such Base Salary and Non-Competition Payments are accelerated as
specified in Section 10A, IN ADDITION TO SUCH AMOUNT WHICH IS DUE TO
EMPLOYEE, EMPLOYEE SHALL BE ENTITLED TO RECEIVE INTEREST ON THE UNPAID
BALANCE THEREOF AT THE RATE OF 15% PER ANNUM.
C. SURVIVAL OF REMEDIES. This Section 10 shall survive any
termination of this Agreement other than for Good Cause.
5. AUTOMOBILE. Upon expiration of the Employment Agreement,
termination by EMPLOYEE after the end of the Minimum Employment Period, or
termination by EMPLOYER at any time during the Term other than for Good Cause,
the COMPANY shall transfer to XXXXXXXX title to the COMPANY'S 1993 Lexus 400
which is presently being used by XXXXXXXX.
6. CONTINUATION OF BENEFITS. For a period of one year following
expiration of the Employment Agreement, termination by EMPLOYEE after the end
of the Minimum Employment Period, or termination by EMPLOYER at any time during
the Term other than for Good Cause, the COMPANY shall continue to provide
and/or pay the Medical Reimbursement and Insurance Reimbursement in accordance
with Paragraphs 5 and 6 of the Employment Agreement to the same extent as if
XXXXXXXX remained employed by the COMPANY. Upon expiration of the Employment
Agreement, termination by EMPLOYEE after the end of the Minimum Employment
Period, or termination by EMPLOYER at any time during the Term other than for
Good Cause, the COMPANY shall pay KOVALKSY the sum of $8,100.00 in
consideration for the Group Insurance Benefits being lost by XXXXXXXX as a
result of such termination.
7. STOCK OPTIONS. Upon the Effective Date, Paragraph 12 of the
Employment Agreement shall be deemed deleted, and in lieu thereof, the
following shall apply:
"Upon expiration of the Employment Agreement, termination by EMPLOYEE
after the end of the Minimum Employment Period, termination by EMPLOYER at any
time during the Term other than for Good Cause or EMPLOYEE'S death, EMPLOYER
shall offer to repurchase all unexpired options (whether vested or not) to
purchase securities of the EMPLOYER ("Options") from EMPLOYEE or his estate or
other successor-in-interest, as the case may be. The price to be paid for each
such option shall be the excess, if any, of (A) the greater of (i) the then
Market Price (as defined below) of EMPLOYER's common stock (or other securities
for which the option is then exercisable) on the date of termination or (ii)
$7.63 over (B) the option exercise price. EMPLOYEE (or his estate or other
successor-in-interest) shall have the right to sell all or a portion of such
Options to EMPLOYER. EMPLOYER shall purchase and pay for all such Options
within sixty (60) days of the date of EMPLOYEE's termination.
For the purpose of this Agreement, "Market Price" shall mean the
closing sale price on the date in question of a share of such stock on the
composite tape for the principal United States securities exchange registered
under the Securities Exchange Act of 1934 (the "Exchange Act") on which such
stock is listed, or, if such stock is not listed on any such exchange, the
closing sale price or bid quotation with respect to a share of such stock on
the date in question on the National Association of Securities Dealers, Inc.
Automated Quotations System or any system then in use, or if no such quotations
are available, or if shares of such stock are not traded on any United States
registered securities exchange or in the over-the-counter market, the fair
market value on the date in question of a share of such stock as determined by
an investment banker selected by a majority of the members of the board of
Directors of EMPLOYER in good faith."
8. DEFERRED COMPENSATION. Upon expiration of the Employment Agreement
or termination, EMPLOYER shall pay to EMPLOYEE, the deferred compensation
liability established by EMPLOYER for EMPLOYEE in accordance with generally
accepted accounting principles less all amounts required by law to be withheld.
In addition, within thirty (30) days of any termination referred to in the
preceding sentence, EMPLOYEE shall have the right to purchase EMPLOYER'S
interest in the Guardian Life Insurance Policy on EMPLOYEE and his wife by
paying to EMPLOYER the amount of premiums paid to date of such policy on the
date of EMPLOYEE'S termination.
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9. CONFIRMATION OF TERMS. All of the terms, covenants and conditions
of the Employment Agreement, except as are herein specifically modified and
amended, shall remain in full force and effect and are hereby adopted and
reaffirmed by the parties hereto. In the event of any conflict between the
terms of this Amendment and the Employment Agreement, the terms of this
Amendment shall control.
IN WITNESS WHEREOF, the COMPANY has caused this Amendment to be
executed and sealed on its behalf by its duly authorized officers, and XXXXXXXX
has hereunto set his hand and seal, all done as of the day and year hereinabove
first written.
EMPLOYER:
ATTEST: THE COSMETIC CENTER, INC.
/s/ Xxxxx X. Xxxxxx /s/ Xxxxxx Xxxxxx (SEAL)
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I. Xxxxxx Xxxxxx
President
WITNESS: EMPLOYEE:
/s/ Xxxxx X. Xxxxxx /s/ Xxx X. Xxxxxxxx (SEAL)
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Xxx X. Xxxxxxxx
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