Cto Employment Agreement

EXHIBIT 10(J)


EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of February , 1997 by and between The Cosmetic Center, Inc., a Delaware corporation qualified to do business in Maryland with its principal place of business located at 8839 Greenwood Place, Savage, Maryland 20763 ("EMPLOYER"), and Mark S. Weinstein, now residing at 8020 Summer Mill Court, Bethesda, Maryland 20817 ("EMPLOYEE").


RECITALS


1. EMPLOYER is engaged in the specialty retail sale and wholesale distribution of a wide range of brand name cosmetic, fragrance, skin care and personal care products.


2. Prior to the date hereof, EMPLOYEE was Chairman and, until July 1995, Chief Executive Officer of EMPLOYER.


3. On the date hereof, Prestige Fragrance & Cosmetics, Inc., a Delaware corporation engaged in the retail distribution of cosmetics, fragrances, skin care and personal care products at discounted prices ("PFC"), was merged into EMPLOYER, with EMPLOYER being the survivor of such merger.


4. From and after the date hereof, EMPLOYER desires to employ and retain the unique experience, ability and services of EMPLOYEE in the position of Vice Chairman of the Board of Directors of EMPLOYER and EMPLOYEE desires and is willing to undertake and continue such employment with EMPLOYER, all upon the terms and conditions hereinafter set forth.


NOW, THEREFORE, in consideration of the recitals, and of the mutual covenants and agreements herein contained, and of other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, EMPLOYER hereby employs EMPLOYEE, and EMPLOYEE hereby accepts employment with EMPLOYER, upon the terms and conditions set forth in this Agreement:


1. EMPLOYMENT


EMPLOYER hereby employs EMPLOYEE and EMPLOYEE hereby accepts employment as Vice Chairman of the Board of EMPLOYER. EMPLOYEE will render such services to the Corporation as are customarily rendered by the Vice Chairman of comparable publicly held companies. EMPLOYER agrees that EMPLOYEE shall have no obligation to provide such services outside of the State of Maryland and its surrounding states (other than any travel required in the ordinary course of providing such services).


Notwithstanding anything herein to the contrary, it is specifically agreed that EMPLOYEE's duties and responsibilities hereunder will be rendered on a part-time basis and nothing in this employment agreement shall prohibit EMPLOYEE from engaging, directly or indirectly, in activities with other companies, ventures, or investments in any capacity whatsoever, provided only that such activities or any of them do not interfere with EMPLOYEE's performance of his duties hereunder.


2. TERM OF EMPLOYMENT


The term of EMPLOYEE's employment hereunder shall commence on the date hereof and continue until the fourth anniversary of the date hereof (the "Term"). On or before the last day of EMPLOYEE's employment hereunder, EMPLOYEE shall execute and deliver to EMPLOYER a letter of resignation from all offices then held by EMPLOYEE with EMPLOYER and with any affiliates effective upon said last day of employment hereunder. This Section 2 is subject to the provisions of Section 9 of this Agreement.


3. COMPENSATION OF EMPLOYEE


A. COMPENSATION. During the Term, EMPLOYER hereby agrees to pay to EMPLOYEE for all services to be rendered by EMPLOYEE in any capacity hereunder (including, but not limited to, services as a Director and officer of EMPLOYER and/or of any affiliate, and with respect to any other offices, positions and/or capacities to which he is elected) an annual salary of Three Hundred Fifteen Thousand ($315,000) ("Salary") and agrees to pay to EMPLOYEE for the non-competition covenant pursuant to Section 13 annual payments of One Hundred Fifty Thousand ($150,000) ("Non-Compete Payments"), in each case, payable bi-weekly.


B. WITHHOLDING. There shall be deducted from each installment of EMPLOYEE's Salary and Non-Compete Payments, and from any other payments to or for the benefit of EMPLOYEE pursuant to this Agreement, all amounts which are at any


time and from time to time by applicable federal, state, county or municipal laws required to be deducted by reason of withholding taxes, Social Security contributions and other requisite governmental imposed deductions from the income of employees.


C. REIMBURSEMENT FOR BUSINESS EXPENSES AND OTHER PERQUISITES. EMPLOYER shall promptly reimburse EMPLOYEE for all reasonable business, travel and miscellaneous expenses incurred by EMPLOYEE during the Term in the furtherance of EMPLOYER's business, upon the submission to EMPLOYER of proper vouchers authenticating such expenditures. In addition, EMPLOYER shall, during the Term, continue to furnish EMPLOYEE an office and suitable office fixtures, telephone service and secretarial assistance, all of which shall be appropriate to his position and status as Vice Chairman of the Board of EMPLOYER.


D. VEHICLE. In order to facilitate EMPLOYEE's performance of his duties under this Agreement, EMPLOYER hereby agrees to furnish EMPLOYEE with the vehicle furnished as of the date hereof to EMPLOYEE by EMPLOYER. For so long as EMPLOYER shall furnish EMPLOYEE with such vehicle pursuant to the preceding sentence, EMPLOYER shall pay directly all properly documented gas, oil, repair, maintenance and insurance expenses associated with such vehicle. Upon the earlier of (i) EMPLOYEE's request prior to the termination of this Agreement for Good Cause or (ii) termination of this Agreement other than for Good Cause, EMPLOYER shall transfer (without cost other than the payment by EMPLOYEE of any withholding or transfer taxes) to EMPLOYEE title to the vehicle furnished hereunder to EMPLOYEE by EMPLOYER.


4. GROUP INSURANCE BENEFITS


While in the employment of EMPLOYER, EMPLOYEE will be made a party insured under any policies of group health, life, accident, disability, medical expense or similar group insurance plans which EMPLOYER may from time to time make available generally to other employees holding comparable senior management positions to that of EMPLOYEE and on the same basis as those so employed. All matters of eligibility for benefits under any plan or plans of group health, life, accident, disability, medical expense or similar group insurance plans which EMPLOYER may at any time and from time to time make available shall be determined in accordance with the provisions of the insurance policies. Upon termination or expiration of the Term, EMPLOYEE shall be entitled to continued medical coverage in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.


5. MEDICAL REIMBURSEMENT. EMPLOYER has established a medical reimbursement plan for certain of its key executive officers including EMPLOYEE. During the Term, EMPLOYER shall maintain such plan and shall pay all premiums in connection with such medical reimbursement plan.


6. SPLIT DOLLAR AND KEY-MAN INSURANCE. At any time during the Term and within 30 days after the expiration of the Term, EMPLOYEE shall be entitled to terminate that certain Split-Dollar Insurance Agreement dated September 22, 1994 between EMPLOYEE and EMPLOYER (the "Split-Dollar Insurance Agreement") relating to that certain life insurance policy (Pacific Mutual Life Insurance Policy No. 1A2285224-0) in the face amount of $1,000,000 (the "Split-Dollar Insurance Policy") in accordance with the terms of the Split-Dollar Insurance Agreement by payment to the EMPLOYER of an amount equal to the premiums paid by EMPLOYER through the time of purchase. Until the earlier of the termination of the Split- Dollar Insurance Agreement as provided in the prior sentence and the termination of the Term, EMPLOYER shall continue to pay premiums in accordance with the terms of the Split-Dollar Insurance Agreement. As of, and for 30 days after, the expiration of the Term, EMPLOYEE shall be entitled to purchase from EMPLOYER that certain life insurance policy (Mass Mutual Life Insurance Policy No. 9655632) in the face amount of $1,000,000 (the "Key Man Insurance Policy") for an amount equal to the premiums paid by EMPLOYER through the time of purchase. Until the earlier of the purchase of the Key Man Insurance Policy as provided in the prior sentence and the termination of the Term, EMPLOYER shall continue in effect the Key Man Insurance Policy. Unless and until purchased by EMPLOYEE as provided herein, EMPLOYER shall continue being the owner of the Key Man Policy and the death benefits under the Key Man Insurance Policy shall be payable to EMPLOYER. Until the earlier of the termination of the Split-Dollar Insurance Agreement as provided above and the termination of the Term, the death benefits under the Split-Dollar Insurance Policy shall be payable (i) to EMPLOYER to the extent of the premiums paid by it and (ii) the balance of the benefit to the beneficiaries designated by EMPLOYEE in accordance with the Split-Dollar Insurance Agreement.


7. PROFIT-SHARING AND PENSION PLANS


To the same extent and on the same basis as EMPLOYER makes available generally to other employees holding comparable senior management positions to that of EMPLOYEE, EMPLOYEE shall have the right to participate in any profit


2


sharing or pension plan established by EMPLOYER under the terms and conditions therein contained (but not including any stock option or bonus plans).


8. VACATIONS


EMPLOYEE shall be entitled each year during the Term to paid vacation time of four (4) weeks. Any part of such vacation time that is not used during any year shall not cumulate and shall be forfeited. Upon termination of EMPLOYEE's employment hereunder, EMPLOYER shall have no obligation to pay EMPLOYEE for any unused vacation days.


9. TERMINATION OF EMPLOYMENT


A. DEFINITION OF GOOD CAUSE. For purpose of this Agreement, the term "Good Cause" shall be construed to mean the following: (i) conviction of a felony or other crime involving moral turpi ...