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Cosmetic Group U.S.A., Inc.
10318 Norris Street
Pacoima, California 90212-3480
September 23, 1997
CGUSA, L.L.C.
11312 Penrose Street
Sun Valley, California 91352
Ladies and Gentlemen:
Reference is made to that certain Asset Purchase Agreement, dated July
24, 1997, between Cosmetic Group U.S.A., Inc. ("Seller") and CGUSA, L.L.C.
("Purchaser") (the "Agreement"). Seller and Purchaser hereby agree to amend the
Agreement as follows:
1. Section 1.04(b)(i) of the Agreement is amended by adding the following
language as the last sentence:
"Within two weeks of the Closing Date, Seller shall deliver to Purchaser
a revised Closing Adjustment Worksheet (the "Revised Closing Adjustment
Worksheet") which shall set forth the TNA based on Sellers' calculation
of the Assets and Assumed Liabilities as of the Closing Date using the
same accounting procedures and policies used by Seller in preparing
Seller's audited balance sheet included in its financial statements at
and for the year ended December 31, 1996 (included in Seller's Annual
Report on Form 10-KSB for the year ended December 31, 1996). For all
purposes under this Agreement (other than for determinations of the
Purchase Price or any adjustments thereto), Seller's Revised Closing
Adjustment Worksheet shall be deemed to be the Closing Adjustment
Worksheet."
2. Section 1.04(b)(ii) of the Agreement is amended in its entirety by
deleting it and replacing it with the following language:
"(ii)" Between 60 and 75 days following the Closing Date, Purchaser
shall prepare and deliver to Seller a Post-Closing Adjustment Worksheet
(the "Post-closing Adjustment Worksheet"), which shall set forth the TNA
based on the results of Purchaser's calculation of the Assets and
Assumed Liabilities as of the Closing Date (except that the amount of
Tangible Personal Property used by Purchaser in such calculation shall
be equal to $1,964,785). If the Post-Closing Adjustment Worksheet
indicates that the TNA (as defined below) is higher or lower than
$4,000,000, then the Purchase Price, as adjusted pursuant to Section
1.04(b)(i), shall be further adjusted upward or downward, respectively,
on a dollar-for-dollar basis. If the Post-Closing
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on a dollar-for-dollar basis. If the Post-Closing Adjustment Worksheet
indicates that the TNA is $4,000,000 or more, then there shall be a
prompt release of the Escrow Fund to Seller. Any other adjustment upward
shall be satisfied upon delivery of the Post-Closing Adjustment
Worksheet to Seller by (A) first, Purchaser's cash payment to Seller of
an amount equal to the difference between the amount of TNA set forth on
the Post-Closing Adjustment Worksheet and $4,000,000, up to a total
of $500,000 and (B) second, an immediate increase in the principal
amount of the Seller Note in an amount equal to the amount, if any, by
which the difference between the amount of TNA set forth on the
Post-Closing Adjustment Worksheet and $4,000,000 exceeds $500,000 with
such increase applied evenly to each annual principal repayment amount
set forth in the Seller Note. Any adjustment downward shall be equal to
the difference between $4,000,000 and the amount of TNA set forth on the
Post-Closing Adjustment Worksheet and such adjustment shall be satisfied
upon delivery of the Post-Closing Adjustment Worksheet to Seller (x)
first, by the prompt release and payment from the Escrow Fund to the
Purchaser of all adjustment amounts up to, but not exceeding the total
amount in, the Escrow Fund and (y) second, all adjustment amounts in
excess of the amount in the Escrow Fund shall be immediately deducted
from the principal amount of the Seller Note, with such reduction
applied evenly to each annual principal repayment amount set forth in
the Seller Note; provided that with respect to (y), if the amount of the
inventory set forth on the Post-Closing Adjustment Worksheet is less
than $1,165,043 (which is the result of $350,000 deducted from
$1,515,043), then the difference between $1,165,043 and the amount of
the inventory set forth on the Post-Closing Adjustment Worksheet shall
be paid in cash by Seller to Purchaser in lieu of adjusting the
principal amount of the Seller Note. Seller and Purchaser agree that all
cash amounts owed by Seller to Purchaser pursuant to the proviso in
subclause (y) of the preceding sentence shall be satisfied by offsetting
interest payments under the Seller Note."
3. The definition of "Operative Agreements" in the Agreement is amended in
its entirety by deleting it and replacing it with the following language:
""Operative Agreements" means, collectively, the General
Assignment and the other Assignment Instruments, the Assumption Agreement and
the other Assumption Instruments, and the Escrow Agreement."
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[Signature Page for Asset Purchase Agreement Amendment]
Please confirm your acceptance of these amendments by signing below.
COSMETIC GROUP U.S.A., INC.
By: /s/ ALFRED E. BOOTH, JR.
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Name: Alfred E. Booth, Jr.
Title: Chief Executive Officer
Agreed and Acknowledged as of the
date listed above:
CGUSA, L.L.C.
By: /s/ MARLA S. SMITH
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Name: Marla S. Smith
Title: Senior Vice President