EXHIBIT 10.2
CONFORMED COPY
CONSULTING AGREEMENT
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This CONSULTING AGREEMENT, dated as of April 30, 1998 (the
"Agreement"), by and among CDRJ Investments (Lux) S.A., a Luxembourg societe
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anonyme ("Lux SA"), Jafra Cosmetics International, Inc., a Delaware corporation
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("JCI") and Jafra Cosmetics International, S.A. de C.V., a sociedad anonima de
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capital variable ("JCISA" and collectively with Lux SA and JCI, the "Company
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Group"), and ▇▇▇▇▇▇▇, Dubilier & Rice, Inc., a Delaware corporation ("CD&R").
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W I T N E S S E T H:
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WHEREAS, the Company Group has acquired the Jafra cosmetics business
of ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ pursuant to the Acquisition Agreement, dated as of
January 26, 1998, as amended (the "Acquisition Agreement") between The ▇▇▇▇▇▇▇▇
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Company and Lux SA and CDRJ Holding Company, an affiliate of Lux SA ("Cayman
Co"), and the other parties thereto (such transaction being hereinafter referred
to as the "Acquisition");
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WHEREAS, CD&R has performed financial, management advisory and other
services for the Company Group, including but not limited to assistance in
connection with (i) the preparation, negotiation, execution and delivery of the
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Acquisition Agreement, (ii) the retention of legal, accounting, insurance,
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investment banking, financial and other advisors and consultants in connection
with the Acquisition, (iii) the preparation, negotiation, execution and delivery
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of the commitment, fee and engagement letters, registration rights and purchase
agreements, credit agreements, guarantees, mortgages, pledge agreements and
other security agreements, subscription, management equity agreements, and other
agreements, instruments and documents, relating to the Acquisition, the
financing of the Acquisition and (iv) the structuring, implementation and
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consummation of the Acquisition (such services collectively, the "Acquisition
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Services");
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WHEREAS, the Company Group desires, following the Acquisition, to
receive financial and managerial advisory services from CD&R, and CD&R desires
to provide such services to the Company Group;
NOW, THEREFORE, in consideration of the premises and the respective
agreements hereinafter set forth and the mutual benefits to be derived herefrom,
the parties hereto hereby agree as follows:
1. Engagement. The Company Group hereby engages CD&R as a
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consultant, and CD&R hereby agrees to provide financial and managerial advisory
ser vices to the Company Group, all on the terms and subject to the conditions
set forth below.
2. Services, etc. (a) CD&R hereby agrees during the term of this
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Agreement to assist, advise and consult with the respective Boards of Directors
and management of each member of the Company Group and their respective
subsidiaries in such manner and on such business, management and financial
matters, and provide such other financial and managerial advisory services
(collectively, the "Continuing Services"), as may be reasonably requested from
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time to time by the Boards of Directors of each member of the Company Group,
including but not limited to assistance in:
(i) establishing and maintaining banking, legal and other business
relationships for each such member and its subsidiaries;
(ii) developing and implementing corporate and business strategy and
planning for each such member and its subsidiaries, including plans and
programs for improving operating, marketing and financial performance,
budgeting of future corporate investments, acquisition and divestiture
strategies, and reorganizational programs;
(iii) arranging future debt and equity financings and refinancings; and
(iv) providing professional employees to serve as directors or officers
of each member of the Company Group.
(b) Each member of the Company Group will furnish CD&R with such
information as CD&R believes appropriate to its engagement hereunder (all such
information so furnished being referred to herein as the "Information"). Each
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member of the Company Group recognizes and confirms that (i) CD&R will use and
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rely primarily on the Information and on information available from generally
recognized public sources in performing the services to be performed hereunder
and (ii) CD&R does not assume responsibility for the accuracy or completeness of
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the Information and such other information.
3. Compensation; Payment of Expenses. (a) The Company Group jointly
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and severally agree to pay CD&R, concurrent with the execution of this
Agreement, as compensation for the Acquisition Services, a fee of $2,700,000.
(b) The Company Group jointly and severally agree to pay to CD&R, as
compensation for Continuing Services rendered and to be rendered by CD&R
hereunder, a fee of $500,000 per year (the "Continuing Services Fee"), one-
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twelfth of which shall be payable on the first day of each month commencing on
the first day of the month following the date of the closing of the Acquisition.
Such Continuing
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Services Fee may, in the sole discretion of a majority of the members of the
Company's Board of Directors who are not affiliated with CD&R, be increased but
may not be decreased without the prior written consent of CD&R. If any employee
of CD&R shall be elected to serve on the Board of Directors of any member of the
Acquisition Group or any of their affiliates (a "Designated Director"),
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in consideration of the Continuing Services Fee being paid to CD&R, CD&R shall
cause such Designated Director to waive any and all fees to which such director
would otherwise be entitled as a director for any period for which the Fee or
any installment thereof is paid.
(c) The Company Group jointly and severally agree to reimburse CD&R
for such reasonable travel and other out-of-pocket expenses ("Expenses") as may
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be incurred by CD&R and its employees and agents in the course or on account of
rendering any Acquisition Services or Continuing Services including but not
limited to any fees and expenses of any legal, accounting or other professional
advisors to CD&R engaged in connection with Acquisition Services or Continuing
Services previously provided or being provided hereunder and any expenses
incurred by any Designated Director in connection with the performance of his
duties. CD&R may submit monthly expense statements, which shall be payable
within thirty days.
4. Term, etc. (a) This Agreement shall be in effect until, and
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shall terminate upon, the earlier to occur of (x) the tenth anniversary of the
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date hereof and (y) the date on which ▇▇▇▇▇▇▇, Dubilier & Rice Fund V Limited
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Partnership ("CD&R Fund") no longer owns any shares of the capital stock of Lux
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SA, and may be earlier terminated by either party hereto upon 30 days' prior
written notice to the other party hereto. The provisions of this Agreement
shall survive any termination of this Agreement, except for the provisions of
Section 1, Section 2(a), the first sentence of Section 2(b) and (solely as to
any portion of the Continuing Services Fee or any Expense not paid or reimbursed
prior to such termination and not required to be paid or reimbursed thereafter
pursuant to Section 4(c) hereof) Section 3 hereof.
(b) Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of JCI or JCISA as an entirety,
the successor corporation formed by such consolidation or into which JCI or
JCISA, as the case may be, is merged or to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, JCI or JCISA, as the
case may be, under this Agreement with the same effect as if such successor
corporation had been a party thereto. No such consolidation, merger or
conveyance, transfer or lease of all or substantially all of the assets of JCI
or JCISA shall have the effect of terminating this Agreement or of releasing JCI
or JCISA or any such successor corporation from its obligations hereunder.
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(c) Upon any termination of this Agreement, any accrued and unpaid
installment of the Continuing Services Fee or portion thereof (pro rated, with
respect to the month in which such termination occurs, for the portion of such
month that precedes such termination), and any unpaid and unreimbursed Expenses
that shall have been incurred prior to such termination (whether or not such
Expenses shall then have become payable), shall be immediately paid or
reimbursed, as the case may be, by the Company Group. In the event of the
liquidation of any member of the Company Group, all amounts due CD&R hereunder
shall be paid to CD&R before any liquidating distributions or similar payments
are made to stockholders of such member of the Company Group.
5. Indemnification. (a) Each member of the Company Group confirms
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and reaffirms its obligations pursuant to the Indemnification Agreement, dated
as of the date hereof, (the "Indemnification Agreement"), among Lux SA, JCI,
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JCISA, Cayman Co., CD&R and CD&R Fund, as the same may be amended, waived,
modified or supplemented from time to time. Without limiting the generality of
the foregoing, each member of the Company Group confirms and agrees that (a) it
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shall indemnify, defend and hold harmless CD&R, CD&R Fund, CD&R Associates, CD&R
Associates Inc. (each as defined in the Indemnification Agreement), and CD&R
Investment Associates II, Inc. and each of the respective directors, officers,
partners, members, employees, agents, advisors, representatives and controlling
persons (within the meaning of the Securities Act of 1933, as amended) of CD&R,
CD&R Fund and CD&R Associates (collectively, "Indemnitees") from and against any
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and all claims, obligations, liabilities, causes of action, actions, suits,
proceedings, investigations, judgments, decrees, losses, damages, fees, costs
and expenses (including without limitation interest, penalties and fees and
disbursements of attorneys, accountants, investment bankers and other
professional advisors) (collectively, "Obligations"), whether incurred with
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respect to third parties or otherwise, in any way resulting from, arising out of
or in connection with, based upon or relating to, the performance of the
Acquisition Services or the Continuing Services contemplated hereby, except to
the extent that any such Obligation is found in a final judgment by a court
having jurisdiction to have resulted from the gross negligence or intentional
misconduct of CD&R, (b) no Indemnitee shall have any liability (whether direct
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or indirect, in contract or tort or otherwise) to a member of the Company Group
or their respective security holders or creditors with respect to any Obligation
in any way resulting from, arising out of or in connection with, based upon or
relating to, the performance of the Acquisition Services or the Continuing
Services contemplated hereby, except to the extent that any such Obligation is
found in a final judgment by a court having jurisdiction to have resulted from
the gross negligence or intentional misconduct of CD&R, and (c) the rights of
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each Indemnitee to be indemnified under any agreement, document, certificate or
instrument or applicable law are independent of and in addition
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to any rights of such Indemnitee under any other agreement, document,
certificate or instrument or applicable law.
(b) The Company hereby agrees to advance costs and expenses,
including attorneys' fees, incurred by CD&R (acting on its own behalf or, if
requested by any such Indemnitee other than itself, on behalf of such
Indemnitee) or any Indemnitee in defending any claim relating to any Obligation
in advance of the final disposition of such claim within 30 days of receipt from
CD&R of (i) a notice setting forth the amount of such costs and expenses (a
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"Payment Notice") and (ii) an undertaking by or on behalf of CD&R or such
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Indemnitee to repay amounts so advanced if it shall ultimately be determined
that CD&R or such Indemnitee is not entitled to be indemnified by the Company as
authorized by this Agreement. CD&R may submit Payment Notices to the Company
monthly.
6. Independent Contractor Status. The parties agree that CD&R shall
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perform services hereunder as an independent contractor, retaining control over
and responsibility for its own operations and personnel. Neither CD&R nor any
of its employees or agents shall, solely by virtue of this Agreement or the
arrangements hereunder, be considered employees or agents of any member of the
Company Group nor shall any of them have authority to contract in the name of a
member of or bind any member of the Company Group, except (a) to the extent that
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any professional employee of CD&R may be serving as a director or an officer of
a member of the Company Group pursuant to Section 2(a)(iv) hereof or (b) as
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expressly agreed to in writing by a member of the Company Group. Each member of
the Company Group hereby acknowledges and agrees that any agreements,
arrangements or understandings entered into by CD&R on behalf of any member of
the Company Group prior to the date hereof in connection with the Acquisition
(including, but not limited to, any confidentiality agreements, agreements with
brokers or finders and any arrangements relating to the financing of the
Acquisition) shall be obligations of the members of the Company Group binding on
them to the same extent as such obligations may be binding on CD&R, and the
Company Group shall fully perform, and shall indemnify and hold harmless CD&R
from and against, all such obligations. Any duties of CD&R arising out of its
engagement to perform services hereunder shall be owed solely to the Company
Group.
7. Notices. Any notice or other communication required or permitted
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to be given or made under this Agreement by one party to the other parties shall
be in writing and shall be deemed to have been duly given and effective (i) on
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the date of delivery if delivered personally or (ii) when sent if sent by
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prepaid telegram, or mailed first-class, postage prepaid, registered or
certified mail, or facsimile transmission as follows (or to such other address
as shall be given in writing by one party to the other parties in accordance
herewith):
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If to Lux SA, JCI or JCISA to:
Jafra Cosmetics International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (805) 449-
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, III, Esq.
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If to CD&R, to:
▇▇▇▇▇▇▇, Dubilier & Rice, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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With a copy to:
Debevoise & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
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8. Entire Agreement. This Agreement, together with the
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Indemnification Agreement, (a) contains the complete and entire understanding
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and agreement of CD&R and each member of the Company Group with respect to the
subject matter hereof and (b) supersedes all prior and contemporaneous
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understandings, conditions and agreements, oral or written, express or implied,
in respect of the subject matter hereof, including but not limited to in respect
of the engagement of CD&R in connection with the subject matter hereof. There
are no representations or warranties of CD&R in connection with this Agreement
or the services to be provided hereunder, except as expressly made and contained
in this Agreement.
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9. Headings. The headings contained in this Agreement are for
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purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
10. Counterparts. This Agreement may be executed in several
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counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
11. Binding Effect; Assignment. This Agreement shall be binding upon
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and inure to the benefit of the parties to this Agreement and their respective
successors and assigns and to each Indemnitee, provided that none of CD&R or any
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member of the Company Group may assign any of its rights or obligations under
this Agreement without the express written consent of the other party hereto.
This Agreement is not intended to confer any right or remedy hereunder upon any
person other than the parties to this Agreement and their respective successors
and permitted assigns and each Indemnitee.
12. Governing Law. This Agreement shall be deemed to be a contract
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made under, and is to be governed and construed in accordance with, the laws of
the State of New York, without regard to the conflict of laws principles or
rules thereof. Each member of the Company Group and CD&R hereby irrevocably
submit to the jurisdiction of the courts of the State of New York and the
Federal courts of the United States of America, in each case located in the
State, City and County of New York, solely in respect of the interpretation and
enforcement of the provisions of this Agreement, and hereby waive, and agree not
to assert, as a defense in any action, suit or proceeding for the interpretation
or enforcement hereof, that it is not subject thereto or that such action, suit
or proceeding may not be brought or is not maintainable in such courts or that
the venue thereof may not be appropriate or that this Agreement may not enforced
in or by such courts, and the parties hereto irrevocably agree that all claims
with respect to such action or proceeding shall be heard and determined in such
a New York State or Federal court. Each member of the Company Group and CD&R
hereby consent to and grant any such court jurisdiction over the person of such
parties and over the subject matter of any such dispute and agree that mailing
of process or other papers in connection with any such action or proceeding in
the manner provided in Section 7, or in such other manner as may be permitted by
law, shall be valid and sufficient service thereof.
13. Waiver of Jury Trial. Each party hereto acknowledges and agrees
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that any controversy that may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore it hereby irrevocably and
unconditionally waives any right it may have to a trial by jury in respect of
any litigation directly or indirectly arising out of or relating to this
Agreement, or the breach, termination or
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validity of this Agreement, or the transactions contemplated by this Agreement.
Each party certifies and acknowledges that (a) no representative, agent or
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attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
waiver, (b) it understands and has considered the implications of this waiver,
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(c) it makes this waiver voluntarily, and (d) it has been induced to enter into
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this Agreement by, among other things, the mutual waivers and certifications
contained in this Section 13.
14. Amendment; Waivers. No amendment, modification, supplement or
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discharge of this Agreement, and no waiver hereunder, shall be valid or binding
unless set forth in writing and duly executed by the party or Indemnitee against
whom enforcement of the amendment, modification, supplement, discharge or waiver
is sought (and in the case of a member of the Company Group, approved by
resolution of the Board of Directors or the sole stockholder of such member of
the Company Group). Any such waiver shall constitute a waiver only with respect
to the specific matter described in such writing and shall in no way impair the
rights of the party or Indemnitee granting such waiver in any other respect or
at any other time. Neither the waiver by any of the parties hereto or any
Indemnitee of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any party hereto or any Indemnitee on one or more
occasions, to enforce any of the provisions of this Agreement or to exercise any
right, powers or privilege hereunder, shall be construed as a waiver of any
other breach or default of a similar nature, or as a waiver of any of such
provisions, rights, power or privileges hereunder. The rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
that any party or Indemnitee may otherwise have at law or in equity or
otherwise.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
▇▇▇▇▇▇▇, DUBILIER & RICE, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
CDRJ INVESTMENTS (LUX) S.A.
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary
JAFRA COSMETICS INTERNATIONAL, INC.
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary
JAFRA COSMETICS INTERNATIONAL,
S.A. de C.V.
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
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