EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT, dated as of April 25, 1997, between THE COSMETIC
CENTER, INC., a Delaware corporation (the "Company"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇ (the
"Executive").
The Company wishes to employ the Executive, and the Executive wishes
to accept such employment, on the terms and conditions set forth in this
Agreement.
Accordingly, the Company and the Executive hereby agree as follows:
Employment, Duties and Acceptance.
1.1 Employment, Duties. The Company hereby employs the Executive
for the Term (as defined in Section 2.1), to render exclusive and full-time
services to the Company, as chief executive officer of the Company, or in such
other executive position of an equivalent level consistent with the Executive's
business experience and background as may be assigned by the Board of Directors
of the Company, and to perform such other duties consistent with such position
(including service as a director or officer of any affiliate of the Company, if
elected) as may be assigned by the Board of Directors of the Company. The
Executive's title shall be President and Chief Executive Officer, or such other
titles of at least equivalent level consistent with the Executive's duties from
time to time as may be assigned to the Executive by the Board of Directors.
1.2 Acceptance. The Executive hereby accepts such employment and
agrees to render the services described above. During the Term, the Executive
agrees to serve the Company faithfully and to the best of the Executive's
ability, to devote the Executive's entire business time, energy and skill to
such employment, and to use the Executive's best efforts, skill and ability to
promote the Company's interests.
1.3 Location. The duties to be performed by the Executive
hereunder shall be performed primarily at the office of the Company in
Maryland, subject to reasonable travel requirements consistent with the nature
of the Executive's duties from time to time on behalf of the Company.
2. Term of Employment; Certain Post-Term Benefits.
2.1 The Term. The term of the Executive's employment under this
Agreement (the "Term") shall commence on the date hereof (the "Effective Date")
and shall end on such date as is provided pursuant to Section 2.2.
2.2 End-of-Term Provisions. At any time on or after the second
anniversary of the Effective Date the Company shall have the right to give
written notice of non-renewal of the Term. In the event the Company gives such
notice of non-renewal, the Term automatically shall be extended so that it ends
twelve months after the last day of the month in which the Company gives such
notice. If the Company shall not theretofore have given such notice, from and
after the third anniversary of the Effective Date unless and until the Company
gives written notice of non-renewal as provided in this Section 2.2, the Term
automatically shall be extended day-by-day; upon the giving of such notice by
the Company, the Term automatically shall be extended so that it ends twelve
months after the last day of the month in which the Company gives such notice.
Non-extension of the Term shall not be deemed to be a breach of this Agreement
by the Company for purposes of Section 4.4.
2.3 Special Curtailment. The Term shall end earlier than the date
provided in Section 2.2, if sooner terminated pursuant to Section 4.
3. Compensation; Benefits.
3.1 Salary. As compensation for all services to be rendered
pursuant to this Agreement, the Company agrees to pay the Executive during the
Term a base salary, payable semi-monthly in arrears, at the annual rate of not
less than $ 350,000 during the Term (the "Base Salary"). All payments of Base
Salary or other compensation hereunder shall be less such deductions or
withholdings as are required by applicable law and regulations. In the event
that the Company, in its sole discretion, from time to time determines to
increase the Base Salary, such increased amount shall, from and after the
effective date of the increase, constitute "Base Salary" for purposes of this
Agreement.
3.2 Bonus. In addition to the amounts to be paid to the Executive
pursuant to Section 3.1, the Executive shall receive an annual bonus with a
target award of 50% and a maximum award of 100% of the Executive's Base Salary
at the rate in effect during the calendar year in which bonus is earned, based
upon achievement of objectives set annually not later than February 28 of such
year (and not later than April 30 for the first year of the Term) by the
Compensation Committee of the Board of Directors of the Company. Any such bonus
shall be payable on or before March 30 of the year following the calendar year
in which bonus is earned and shall not be paid unless the Executive is actively
employed by the Company on the date of payment.
3.3 Stock Options. The Executive shall be recommended to the
Compensation Committee or other committee of the Board administering the
Company's 1997 Stock Plan or any plan that may replace it, as from time to time
in effect, to receive an option on the effective date of the merger of Prestige
Fragrance & Cosmetics, Inc., a
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Delaware corporation with and into the Company to purchase 100,000 shares of
the Company's Class C common stock and an option during each subsequent year
during the Term to purchase 50,000 shares of the Company's Class C common
stock, with (i) the initial such grant of options for 100,000 shares to be on
the effective date of merger for a term of 10 years at an option exercise price
equal to the fair market value on the date of grant and with the option not
becoming exercisable until the third anniversary of the date of grant and then
becoming 100% exercisable for the balance of the term of such option, unless
prior thereto the Executive's employment is terminated by the Company otherwise
than for cause pursuant to Section 4.3, in which event the option shall be
exercisable with respect to 25% if termination occurs during the period from
the first to the second anniversaries of the grant date and with respect to 50%
if termination occurs during the period from the second to the third
anniversaries of the grant date and in either case shall remain so exercisable
for one year from the date of such termination and (ii) each subsequent grant
to vest and otherwise be on terms (other than number of shares covered)
substantially the same as other senior executives of the Company generally.
3.4 Business Expenses. The Company shall pay or reimburse the
Executive for all reasonable expenses actually incurred or paid by the
Executive during the Term in the performance of the Executive's services under
this Agreement, subject to and in accordance with the Company's applicable
expense reimbursement and related policies and procedures as in effect from
time to time.
3.5 Vacation. During each year of the Term, the Executive shall be
entitled to a vacation period or periods of four weeks taken in accordance with
the vacation policy of the Company as in effect from time to time.
3.6 Fringe Benefits.
(i) During the Term, the Executive shall be entitled to
participate in those qualified and non-qualified defined benefit, defined
contribution, group insurance, medical, dental, disability and other benefit
plans of the Company as from time to time in effect made available to senior
executives of the Company generally. In addition, during the Term the Executive
shall be entitled to the use of a Company-provided automobile in accordance
with the Company's executive automobile policy and guidelines as from time to
time in effect and to the fringe benefits set forth on Schedule 1.
(ii) During the Term, the Company agrees to make available to the
Executive an additional term life insurance policy with a death benefit of
$1,000,000 from time to time, subject to the insurer's satisfaction with the
results of any required medical examination, to which the Executive hereby
agrees to submit, and shall reimburse the Executive for the premium expense
related thereto and gross the Executive up for the tax
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payable with respect to such reimbursement. Such coverage shall be provided by
the Company and the Executive may designate the beneficiaries of such policy.
4. Termination.
4.1 Death. If the Executive shall die during the Term, the Term
shall terminate and no further amounts or benefits shall be payable hereunder
except pursuant to life insurance provided under Section 3.6.
4.2 Disability. If during the Term the Executive shall become
physically or mentally disabled, whether totally or partially, such that the
Executive is unable to perform the Executive's services hereunder for (i) a
period of six consecutive months or (ii) shorter periods aggregating six months
during any twelve month period, the Company may at any time after the last day
of the six consecutive months of disability or the day on which the shorter
periods of disability shall have equaled an aggregate of six months, by written
notice to the Executive (but before the Executive has returned to active
service following such disability), terminate the Term and no further amounts
or benefits shall be payable hereunder, except that the Executive shall be
entitled to receive until the first to occur of (x) the Executive ceasing to be
disabled or (y) the Executive's attaining the age of 65, continued coverage for
the Executive under the Company paid group life insurance plan (including
supplemental coverage under Section 3.6) and for the Executive and his spouse
and children, if any, under the Company's group medical plan, to the extent
permitted by such plans and to the extent such benefits continue to be provided
to the Company's senior executives generally.
4.3 Cause. In the event of gross neglect by the Executive of the
Executive's duties hereunder, conviction of the Executive of any felony,
conviction of the Executive of any lesser crime or offense involving the
property of the Company or any of its subsidiaries or affiliates, willful
misconduct by the Executive in connection with the performance of the
Executive's duties hereunder or other material breach by the Executive of this
Agreement, or any other conduct on the part of the Executive which would make
the Executive's continued employment by the Company materially prejudicial to
the best interests of the Company, the Company may at any time by written
notice to the Executive terminate the Term and, upon such termination, the
Executive shall be entitled to receive no further amounts or benefits
hereunder, except as required by law.
4.4 Company Breach; Other Termination. In the event of the breach
of any material provision of this Agreement by the Company or the failure of
the Compensation Committee (or other appropriate Committee of the Company's
Board of Directors) to fully implement the Company's recommendation pursuant to
Section 3.3, the Executive shall be entitled to terminate the Term upon 60
days' prior written notice to the Company. In addition, the Company shall be
entitled to terminate the Term at any time and without prior notice otherwise
than pursuant to the provisions of Section 2.2, 4.2 or 4.3. Upon
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such termination by the Executive, or in the event the Company so terminates
the Term otherwise than pursuant to the provisions of Section 2.2, 4.2 or 4.3,
the Company's sole obligation shall be (at the Executive's election by written
notice within 10 days after such termination) either (i) to make payments in
the amounts prescribed by Section 3.1 (less amounts required by law to be
withheld) and to continue the Executive's participation in the group medical
and dental plans of the Company under COBRA at the active employee contribution
rate then in effect, conditioned upon the Executive's execution of a release
and confidentiality agreement satisfactory to the Company in its sole
discretion, in each case until the third anniversary of the date hereof, or
(ii) to pay severance at the Base Salary in effect as of the date of
termination of the Term for a total of twenty-four months (the "Severance
Period") and to continue the Executive's participation in the group medical and
dental plans of the Company under COBRA at the active employee contribution
rate then in effect for the Severance Period conditioned upon the Executive's
execution of a release and confidentiality agreement satisfactory to the
Company in its sole discretion, in each case provided that any compensation
earned by the Executive from other employment or a consultancy shall reduce the
post-employment payments provided for herein and provided further that the
Executive shall cease to be covered by medical and/or dental plans of the
Company at such time as he becomes covered by like plans of another company.
Notwithstanding the foregoing, if during the period that such post-employment
payments are made to the Executive, the Executive undertakes Permanent
Employment (as hereinafter defined), then in lieu of reduction of such payments
as provided in the preceding sentence, within 10 days after the Company
determines that the Executive has undertaken Permanent Employment the Company
shall pay to the Executive a lump sum equal to the lesser of (i) the then
present value (discounted at the rate of 6% per annum from the date of
termination of the Term to the date of such determination) of 50% of the
balance of the payments or (ii) six months' payments at the Base Salary in
effect as of the date of termination of the Term, in either case less amounts
required by law to be withheld, in satisfaction and discharge of any further
obligation pursuant to this Section. For purposes hereof, "Permanent
Employment" shall mean employment undertaken by the Executive (i) pursuant to
an agreement, offer letter or policy which provides for not less than six
months' severance upon termination of such employment otherwise than for cause,
or (ii) which continues with an employer and/or its affiliates for not less
than three months, or (iii) which the Executive elects, by written notice to
the Company, to treat as Permanent Employment for purposes of this Section.
4.5 Litigation Expenses. If the Company and the Executive become
involved in any action, suit or proceeding relating to the alleged breach of
this Agreement by the Company or the Executive, then if and to the extent that
a final judgment in such action, suit or proceeding is rendered in favor of the
Executive, the Company shall reimburse the Executive for all expenses
(including reasonable attorneys' fees) incurred by the Executive in connection
with such action, suit or proceeding or the portion thereof adjudicated in
favor of the Executive. Such costs shall be paid to the Executive promptly upon
presentation of expense statements or other supporting information evidencing
the incurrence of such expenses.
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5. Protection of Confidential Information; Non-Competition.
5.1 The Executive acknowledges that the Executive's work for the
Company will bring the Executive into close contact with many confidential
affairs of the Company not readily available to the public, including trade
secrets and confidential marketing, sales, product development and other data
and plans which it would be impracticable for the Company to effectively
protect and preserve in the absence of this Section 5 and the disclosure or
misappropriation of which could materially adversely affect the Company.
Accordingly, the Executive agrees:
5.1.1 Except in the course of performing the Executive's duties
provided for in Section 1.1, not at any time, whether during or after the
Executive's employment with the Company, to divulge to any other entity or
person any confidential information acquired by the Executive concerning the
Company's or its affiliates' financial affairs or business processes or methods
or their research, development or marketing programs or plans, any other of its
or their trade secrets, any information regarding personal matters of any
directors, officers, employees or agents of the Company or its affiliates or
their respective family members, or any information concerning the
circumstances of the Executive's employment and any termination of the
Executive's employment with the Company or any information regarding
discussions related to any of the foregoing. The foregoing prohibitions shall
include, without limitation, directly or indirectly publishing (or causing,
participating in, assisting or providing any statement, opinion or information
in connection with the publication of) any diary, memoir, letter, story,
photograph, interview, article, essay, account or description (whether
fictionalized or not) concerning any of the foregoing, publication being deemed
to include any presentation or reproduction of any written, verbal or visual
material in any communication medium, including any book, magazine, newspaper,
theatrical production or movie, or television or radio programming or
commercial. In the event that the Executive is requested or required to make
disclosure of information subject to this Section 5.1.1 under any court order,
subpoena or other judicial process, the Executive will promptly notify the
Company, take all reasonable steps requested by the Company to defend against
the compulsory disclosure and permit the Company to control with counsel of its
choice any proceeding relating to the compulsory disclosure. The Executive
acknowledges that all information the disclosure of which is prohibited by this
section is of a confidential and proprietary character and of great value to
the Company.
5.1.2 To deliver promptly to the Company on termination of the
Executive's employment by the Company, or at any time the Company may so
request, all memoranda, notes, records, reports, manuals, drawings, blueprints
and other documents (and all copies thereof) relating to the Company's business
and all property associated therewith, which the Executive may then possess or
have under the Executive's control.
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5.2 The Executive shall in all respects fully comply with the
terms of the attached Employee Agreement as to Confidentiality and
Non-Competition (whether or not the Executive is a signatory thereof) during
the term of this Agreement and for the duration of any payments made under
Sections 2.2 or 4.4 with the same effect as if the same were set forth herein
in full.
5.3 If the Executive commits a breach of any of the provisions of
Sections 5.1 or 5.2 hereof, the Company shall have the following rights and
remedies:
5.3.1 The right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages and disgorgement
of profits will not provide an adequate remedy to the Company; and
5.3.2 The right and remedy to require the Executive to account for
and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits (collectively "Benefits") derived or received by
the Executive as the result of any transactions constituting a breach of any of
the provisions of Sections 5.1 or 5.2 hereof, and the Executive hereby agrees
to account for and pay over such Benefits to the Company. In addition, if the
Executive attempts or threatens to commit a breach of any of the provisions of
Sections 5.1 or 5.2, the Executive consents to the Company obtaining a
preliminary and a permanent injunction in any court having equity jurisdiction
against the Executive committing the attempted or threatened breach. Each of
the rights and remedies enumerated above shall be independent of the other, and
shall be severally enforceable, and all of such rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Company under law or in equity.
5.4 If any of the covenants contained in Sections 5.1, 5.2 or 5.3,
or any part thereof, hereafter are construed to be invalid or unenforceable,
the same shall not affect the remainder of the covenant or covenants, which
shall be given full effect, without regard to the invalid portions.
5.5 If any of the covenants contained in Sections 5.1 or 5.2, or
any part thereof, are held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision so as to be enforceable to the maximum extent permitted by
applicable law and, in its reduced form, said provision shall then be
enforceable.
5.6 The parties hereto intend to and hereby confer jurisdiction to
enforce the
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covenants contained in Sections 5.1, 5.2 and 5.3 upon the courts of any state
within the geographical scope of such covenants. In the event that the courts
of any one or more of such states shall hold such covenants wholly
unenforceable by reason of the breadth of such covenants or otherwise, it is
the intention of the parties hereto that such determination not bar or in any
way affect the Company's right to the relief provided above in the courts of
any other states within the geographical scope of such covenants as to breaches
of such covenants in such other respective jurisdictions, the above covenants
as they relate to each state being for this purpose severable into diverse and
independent covenants.
5.7 Any termination of the Term or this Agreement shall have no
effect on the continuing operation of this Section 5.
6. Inventions and Patents.
6.1 The Executive agrees that all processes, technologies and
inventions (collectively, "Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by him during the Term shall belong to the Company,
provided that such Inventions grew out of the Executive's work with the Company
or any of its subsidiaries or affiliates, are related in any manner to the
business (commercial or experimental) of the Company or any of its subsidiaries
or affiliates or are conceived or made on the Company's time or with the use of
the Company's facilities or materials. The Executive shall further: (a)
promptly disclose such Inventions to the Company; (b) assign to the Company,
without additional compensation, all patent and other rights to such Inventions
for the United States and foreign countries; (c) sign all papers necessary to
carry out the foregoing; and (d) give testimony in support of the Executive's
inventorship.
6.2 If any Invention is described in a patent application or is
disclosed to third parties, directly or indirectly, by the Executive within two
years after the termination of the Executive's employment by the Company, it is
to be presumed that the Invention was conceived or made during the Term.
6.3 The Executive agrees that the Executive will not assert any
rights to any Invention as having been made or acquired by the Executive prior
to the date of this Agreement, except for Inventions, if any, disclosed to the
Company in writing prior to the date hereof.
7. Intellectual Property.
Notwithstanding and without limitation of Section 6, the Company shall
be the sole owner of all the products and proceeds of the Executive's services
hereunder, including, but not limited to, all materials, ideas, concepts,
formats, suggestions, developments, arrangements, packages, programs and other
intellectual properties that the Executive may acquire, obtain, develop or
create in connection with or during the Term, free and clear of
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any claims by the Executive (or anyone claiming under the Executive) of any
kind or character whatsoever (other than the Executive's right to receive
payments hereunder). The Executive shall, at the request of the Company,
execute such assignments, certificates or other instruments as the Company may
from time to time deem necessary or desirable to evidence, establish, maintain,
perfect, protect, enforce or defend its right, title or interest in or to any
such properties.
8. Indemnification.
The Company will indemnify the Executive, to the maximum extent
permitted by applicable law and the Company's by-laws, against all costs,
charges and expenses incurred or sustained by the Executive in connection with
any action, suit or proceeding to which the Executive may be made a party,
brought by any shareholder of the Company directly or derivatively or by any
third party by reason of any act or omission of the Executive as an officer,
director or employee of the Company or of any subsidiary or affiliate of the
Company.
9. Notices.
All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, sent by overnight courier or mailed
first class, postage prepaid, by registered or certified mail (notices mailed
shall be deemed to have been given on the date mailed), as follows (or to such
other address as either party shall designate by notice in writing to the other
in accordance herewith):
If to the Company, to:
The Cosmetic Center, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President - Finance
with copy to:
Revlon Consumer Products Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Vice President and Deputy General Counsel
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If to the Executive, to her principal residence as reflected in the
records of the Company.
10. General.
10.1 This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made between residents thereof and to be performed entirely in New
York. The parties consent and agree to the exclusive jurisdiction of the
federal and state courts sitting in the State of New York for all purposes.
10.2 The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
10.3 This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
10.4 This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may assign its
rights, together with its obligations, hereunder (i) to any affiliate or (ii)
to third parties in connection with any sale, transfer or other disposition of
all or substantially all of any business or assets in which the Executive's
services are then substantially involved. In any event the obligations of the
Company hereunder shall be binding on its successors or assigns, whether by
merger, consolidation or acquisition of all or substantially all of such
business or assets.
10.5 This Agreement may be amended, modified, superseded,
canceled, renewed or extended and the terms or covenants hereof may be waived,
only by a written instrument executed by both of the parties hereto, or in the
case of a waiver, by the party waiving compliance. The failure of either party
at any time or times to require performance of any provision hereof shall in no
manner affect the right at a later time to enforce the same. No waiver by
either party of the breach of any term or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be, or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this Agreement.
10.6 This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
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11. Subsidiaries and Affiliates.
11.1 As used herein, the term "subsidiary" shall mean any
corporation or other business entity controlled directly or indirectly by the
corporation or other business entity in question, and the term "affiliate"
shall mean and include any corporation or other business entity directly or
indirectly controlling, controlled by or under common control with the
corporation or other business entity in question.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE COSMETIC CENTER, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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