EXECUTION COPY
EXHIBIT 10.24
SECOND AMENDED AND RESTATED CONSULTING AGREEMENT
This SECOND AMENDED AND RESTATED CONSULTING AGREEMENT, dated as of May
___, 2003 (as the same may be amended, restated or supplemented the
"Agreement"), by and among CDRJ Investments (Lux) S.A., a Luxembourg societe
anonyme ("CDRJ"), CDRJ North Atlantic (Lux) S.ar.l, a Luxembourg societe a
responsabilite limitee ("North Atlantic"), Jafra Worldwide Holdings (Lux)
S.ar.l, a Luxembourg societe a responsabilite limitee ("Jafra Worldwide"), Jafra
Cosmetics International, Inc., a Delaware corporation ("Jafra US") Distribuidora
Comercial Jafra, S.A. de C.V. a sociedad anonima de capital variable ("Jafra
Distribution (Mexico)") Jafra Cosmetics International, S.A. de C.V., a sociedad
anonima de capital variable ("Jafra Mexico" and collectively with CDRJ, North
Atlantic, Jafra Worldwide, Jafra Distribution (Mexico) and Jafra US, the
"Company Group"), and ▇▇▇▇▇▇▇, Dubilier & Rice, Inc., a Delaware corporation
("CD&R").
Recitals.
A. Since 1998, CD&R has been providing CDRJ, Jafra US and Jafra
Mexico financial and managerial advisory services pursuant to a Consulting
Agreement, dated as of April 30, 1998 which was subsequently amended and
restated as of January 1, 2001 (the "Original Amended and Restated Agreement").
B. In connection with a restructuring that CDRJ initiated, Jafra
Distribution (Mexico) was organized to conduct certain business previously
conducted by Jafra Mexico and its subsidiaries, Jafra Worldwide was organized to
act as parent guarantor under new debt financing entered into by Jafra US, Jafra
Mexico and Jafra Distribution (Mexico), and CDRJ will be liquidated.
C. In accordance with a resolution adopted by the Boards of
Directors of CDRJ, North Atlantic, Jafra Worldwide, Jafra US, Jafra Distribution
(Mexico) and Jafra Mexico on May 14, 2003, in connection with the restructuring,
the parties to the Original Amended and Restated Agreement wish to amend certain
provisions of the Original Amended and Restated Agreement to, among other
things, add Jafra Worldwide and Jafra Distribution (Mexico) as parties to the
Original Amended and Restated Agreement and, in connection therewith, to amend
and restate such agreement in its entirety.
D. The members of the Company Group, CD&R and certain affiliates
of CD&R have entered into the Amended and Restated Indemnification Agreement,
dated as of May 20, 2003 (as the same may be amended, restated, supplemented or
waived from time to time, the "Indemnification Agreement"). Capitalized terms
used in this Agreement without definition are used as they are defined in the
Indemnification Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Engagement. The Company Group hereby engages CD&R as a
consultant, and CD&R hereby agrees to provide, financial and managerial advisory
services 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
Agreement to assist, advise and consult with the respective Boards of Directors
and management of each member of the Company Group and its 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 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 and budgeting of future corporate
investments;
(iii) arranging future debt and equity financings and
refinancings; and
(iv) providing professional employees to serve as
directors of members of the Company Group.
(b) CD&R hereby agrees during the term of this engagement to
provide each member of the Company Group and its subsidiaries financial
advisory, investment banking and other similar services (the "Transaction
Services") with respect to any proposal for an acquisition, merger,
recapitalization or any other similar transaction directly or indirectly
involving such member of the Company Group and its subsidiaries and any other
person or entity (collectively, "Add-on Transactions").
(c) 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
member of the Company Group recognizes and confirms that (i) CD&R will use and
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
the Information and such other information.
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3. Compensation; Payment of Expenses.
(a) Jafra US, Jafra Distribution (Mexico), and Jafra Mexico,
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 $1,000,000 per
year (the "Continuing Services Fee"), one quarter of which shall be payable
quarterly in advance on the first day of each of January, April, July and
October commencing on January 1, 2001. Any Continuing Services Fees due that
have not been paid shall be payable on the date hereof. Such Continuing Services
Fee may be increased with the approval of a majority of the members of the Board
of Directors of Jafra Worldwide, Jafra US, Jafra Distribution (Mexico) and Jafra
Mexico who are not employees of any member of the Company Group, CD&R or any
affiliate of CD&R (the "Disinterested Directors") but may not be decreased
without the prior written consent of CD&R. If any employee of CD&R or of any
CD&R Subsidiary shall be elected to serve on the Board of Directors of any
member of the Company Group or any of their affiliates (a "Designated
Director"), 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 Continuing Services Fee or any installment thereof is paid.
(b) If an employee of CD&R or of any CD&R Subsidiary is appointed
to an executive management position (or a position of comparable
responsibility), whether in addition to or other than as a Designated Director,
in any member of the Company Group, then for the period of such employee's
service in such position the Continuing Services Fee shall be increased by an
amount to be determined by CD&R, such amount not to exceed 100% of the
Continuing Services Fee in effect at such time.
(c) Jafra US, Jafra Distribution (Mexico) and Jafra Mexico jointly
and severally agree to pay to CD&R upon consummation of any Add-on Transaction,
as compensation for Transaction Services rendered by CD&R hereunder with respect
to such Add-on Transaction, a cash fee equal to 1.0% of the Transaction Value of
such Add-on Transaction (the "Add-on Fee"). Payment by the Company Group of an
Add-on Fee in excess of 1.0% of the Transaction Value of the Add-on Transaction
shall require the approval of a majority of the Disinterested Directors,
provided that an Add-on Fee shall not be payable in connection with the sale by
way of merger or otherwise of all or substantially all of the outstanding shares
of capital stock of North Atlantic or the sale of all or substantially all of
the assets of North Atlantic and its subsidiaries. As used herein, the term
"Transaction Value" means the total value of the Add-on Transaction, including,
without limitation, the aggregate amount of the cash funds or other securities
required to complete the Add-on Transaction (excluding any fees payable pursuant
to this Section 3(d)) including the amount of any indebtedness, preferred stock
or similar items assumed, refinanced or left outstanding. For purposes of
calculating the Add-on Fee, the value of any securities included in the
Transaction Value will be determined by the
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average of the last sales prices for such securities on the five trading days
ending five days prior to the consummation of the Add-on Transaction, provided
that if such securities do not have an existing public trading market, the value
of the securities shall be their fair market value as mutually agreed between
the Company Group and CD&R on the day prior to consummation of the Add-on
Transaction.
(d) Jafra US, Jafra Distribution (Mexico) and Jafra Mexico jointly
and severally agree to reimburse CD&R for such reasonable travel and other
out-of-pocket expenses ("Expenses") as may be incurred by CD&R and its employees
and agents in the course or on account of rendering any services hereunder,
including but not limited to any fees and expenses of any legal, accounting or
other professional advisors to CD&R engaged in connection with services
previously provided or being provided hereunder and any expenses incurred by any
Designated Director in connection with the performance of his or her 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
shall terminate upon, the earlier to occur of (x) the tenth anniversary of the
date of the Original Amended and Restated Agreement and (y) the date on which
the CD&R Fund no longer owns any shares of the capital stock of North Atlantic
or any parent or successor company, 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), Section 2(b), the first
sentence of Section 2(c) and (solely as to any portion of any Continuing
Services Fee, any Add-on 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 any member of the Company
Group as an entirety, the successor corporation formed by such consolidation or
into which such member of the Company Group is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for
such member of the Company Group 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 any member of the Company Group shall have the effect of terminating
this Agreement or of releasing any member of the Company Group or any such
successor corporation from its obligations hereunder (other than, with respect
to CDRJ, its liquidation under the laws of Luxembourg following approval of its
shareholders on the date hereof).
(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
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the month in which such termination occurs, for the portion of such month that
precedes such termination), any accrued and unpaid Add-on Fee or portion thereof
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 Jafra US, Jafra
Distribution (Mexico) or Jafra Mexico. 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 of CDRJ, North Atlantic, Jafra
Worldwide, Jafra US, Jafra Mexico and Jafra Distribution (Mexico) confirms and
reaffirms its obligations pursuant to the Indemnification Agreement. Without
limiting the generality of the foregoing, each of CDRJ, North Atlantic, Jafra
Worldwide, Jafra US, Jafra Mexico and Jafra Distribution (Mexico) confirms and
agrees that (i) it shall indemnify, defend and hold harmless each Indemnitee
from and against any and all Obligations, in each case whether incurred, arising
or existing with respect to third parties or otherwise at any time or from time
to time, in any way resulting from, arising out of or in connection with, based
upon or relating to, the performance of the services contemplated hereby or by
the Original Amended and Restated Agreement, 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, (ii) no
Indemnitee shall have any liability (whether direct 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 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 (iii)
the rights of each Indemnitee to be indemnified under any agreement, document,
certificate or instrument or applicable law are independent of and in addition
to any rights of such Indemnitee under any other agreement, document,
certificate or instrument or applicable law.
(b) Jafra US, Jafra Distribution (Mexico) and Jafra Mexico hereby
agree 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 "Payment Notice") and (ii) an undertaking by or on
behalf of CD&R or such 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.
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(c) Jafra Worldwide hereby agrees to assume and to perform all
obligations of CDRJ under this Agreement and the Original Amended and Restated
Agreement following the liquidation of CDRJ as if such obligations were its own.
6. Independent Contractor Status. The parties agree that CD&R
shall 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
any professional employee of CD&R or CD&R Subsidiary may be serving as a
director of a member of the Company Group pursuant to Section 2(a)(iv) hereof or
as an officer of a member of the Company Group pursuant to Section 3(c) hereof
or (b) as 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 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 the date of delivery if delivered personally or (ii) when sent
if sent by 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):
If to CDRJ, North Atlantic, Jafra Worldwide, Jafra US, Jafra
Distribution (Mexico) or Jafra Mexico to:
Jafra Cosmetics International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, III, Esq.
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If to CD&R, to:
▇▇▇▇▇▇▇, Dubilier & Rice, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
With a copy to:
Debevoise & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
8. Entire Agreement. This Agreement, together with the
Indemnification Agreement, (a) contains the complete and entire understanding
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
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.
9. Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
10. Counterparts. This Agreement may be executed in several
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 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 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.
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12. Governing Law. This Agreement shall be deemed to be a contract
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 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 validity of this Agreement, or the
transactions contemplated by this Agreement. Each party certifies and
acknowledges that (a) no representative, agent or 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, (c) it makes this waiver
voluntarily, and (d) it has been induced to enter into this Agreement by, among
other things, the mutual waivers and certifications contained in this Section
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14. Amendment; Waivers. No amendment, modification, supplement or
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
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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.
[The remainder of this page has been left blank intentionally.]
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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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President, Treasurer, and
Assistant Secretary
CDRJ INVESTMENTS (LUX) S.A.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, III
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, III
Title: Fonde de pouvoir
CDRJ NORTH ATLANTIC (LUX) S.aR.L.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, III
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, III
Title: Fonde de pouvoir
JAFRA WORLDWIDE HOLDINGS (LUX)
S.aR.L.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, III
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, III
Title: Executive Vice President
JAFRA COSMETICS INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, III
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, III
Title: Vice Chairman
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JAFRA COSMETICS INTERNATIONAL, S.A. de
C.V.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, III
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, III
Title: Assistant Secretary
DISTRIBUIDORA COMERCIAL JAFRA, S.A. de
C.V.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, III
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, III
Title: Assistant Secretary
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