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SECOND AMENDED AND RESTATED
OPERATING SERVICES AGREEMENT
by and among
REVLON HOLDINGS INC.,
REVLON, INC.
and
REVLON CONSUMER PRODUCTS CORPORATION
June 24, 1992
(Amended and Restated as of January 1, 1996)
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SECOND AMENDED AND RESTATED
OPERATING SERVICES AGREEMENT
OPERATING SERVICES AGREEMENT dated as of June 24, 1992, as amended as
of January 1, 1993, amended and restated as of September 1, 1993, amended as of
January 1, 1994 and amended and restated as of January 1, 1996 (this
"Agreement"), by and among Revlon Holdings Inc., a Delaware corporation
("Holdings"), Revlon, Inc., a Delaware corporation and a wholly owned
subsidiary of Holdings ("Public Co."), and Revlon Consumer Products
Corporation, a Delaware corporation and a wholly owned subsidiary of Public Co.
("Operating Co.").
W I T N E S S E T H:
WHEREAS, pursuant to an Asset Transfer Agreement, dated June 24, 1992
(the "Transfer Agreement"), by and among Holdings, National Health Care Group,
Inc., a Delaware corporation and a wholly owned subsidiary of Holdings, Xxxxxxx
of the Ritz Group Ltd., a Delaware corporation and a wholly owned subsidiary of
Holdings, Public Co. and Operating Co., Public Co. has acquired from Holdings
and Operating Co. has acquired from Public Co., among other things, the
Contributed Assets (as defined in the Transfer Agreement, capitalized terms
used and not defined herein shall have the meanings ascribed to them in the
Transfer Agreement); and
WHEREAS, Holdings owns certain assets relating to the Xxxxxxx of the
Ritz, Visage Beaute, Xxxx Xxxxx, Xxxxx Xxxxx, Xxxxxx, Xxxxxxxxx xx Xxxxxxx,
Guess and New Essentials businesses (such brands and any brands hereinafter
transferred from Operating Co. to Holdings, in each case, to the extent
retained by Holdings (and not sold, licensed, sublicensed or otherwise disposed
of to Operating Co. or any third party) are collectively referred to herein as
the "Retained Brands").
WHEREAS, in connection with and as part of the Transfer Agreement,
Operating Co. is willing to perform, or cause its subsidiaries to perform, for
Holdings or subsidiaries of Holdings those services for the Retained Brands as
set forth herein, for the consideration and upon and subject to the other terms
and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
SERVICES
Section 1.1 Services. Operating Co. hereby agrees to provide, or cause
its subcontractors, subsidiaries or subsidiaries' subcontractors to provide,
such services (the
"Services"), including but not limited to manufacturing, warehousing,
invoicing, collection (taking into account adjustments for returns, allowances
and related items), accounting, management information services, research and
development, advertising, sales, promotional, marketing, management, licensing,
tax, treasury (including making payments on Holdings' behalf), legal and
distribution services, for the Retained Brands as had been provided by
Holdings, or subsidiaries of Holdings, for the Retained Brands prior to the
date hereof or as are reasonably necessary or desirable in order to operate the
Retained Brands.
Section 1.2 Retained Brands Inventory. (a) At such time as a third
party shall order inventory transferred to Operating Co. pursuant to the
Transfer Agreement which relates to the Retained Brands (other than New
Essentials), Operating Co. shall sell to Holdings, and Holdings shall purchase
from Operating Co., such inventory at a price equal to the value of such
inventory as reflected on the books of Operating Co. Such sale to a third party
shall be satisfied using such inventory.
(b) At such time as any raw materials, packaging, bulks and
componentry ("basic inventory") transferred to Operating Co. pursuant to the
Transfer Agreement which is exclusively related to the Retained Brands is
converted into finished goods inventory of the Retained Brands, Operating Co.
shall sell to Holdings, and Holdings shall purchase from Operating Co., such
inventory at a price equal to the cost of goods of such inventory, as reflected
on the books of Operating Co. Sales to third parties of such inventory shall be
for the account of Holdings.
Section 1.3 Manufactured Goods. At such time as any finished goods
inventory of the Retained Brands is manufactured by Operating Co. pursuant to
this Agreement, Operating Co. shall sell to Holdings, and Holdings shall
purchase from Operating Co., such inventory at a price equal to the cost of
goods of such inventory, as reflected on the books of Operating Co.
ARTICLE II
PAYMENT FOR SERVICES
Section 2.1 Payment for Services. Holdings shall pay Operating Co. a
fee in cash (the "Service Fee") for the Services provided hereunder which shall
be equal to (i) all of Operating Co.'s (and its subsidiaries') and Public Co.'s
direct and indirect costs (including an allocable portion of corporate
overhead) in connection with providing the Services, all as allocated by
Operating Co., and (ii) a fee equal to five percent of the net sales
(determined on a basis consistent with Operating Co.'s published financial
statements) of the products of the Retained Brands (other than sales of
products of the Retained Brands by Operating Co. to Holdings pursuant to
Section 1.2 hereof).
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Section 2.2 Payment of Charges. Operating Co. shall provide a schedule
to Holdings on or before the 30th day following each calendar month calculating
the Service Fee and the payments due pursuant to Section 1.2 hereof, annexing
schedules in reasonable detail itemizing the charges so scheduled and the
calculations thereof. Payment (net of Holdings' accounts receivables collected
by Operating Co. on behalf of Holdings which shall be applied by Operating Co.
for payments due Operating Co. hereunder) shall be due on or before the 45th
day following each calendar quarter.
ARTICLE III
TERM
Section 3.1 Termination. (a) Subject to Section 6.3 hereof, each of
Holdings or Public Co. may terminate this Agreement effective at the end of any
calendar month upon 90-days written notice provided, however, that Public Co.
may not terminate this Agreement with respect to any Rights owed to a third
party arising out of, related to or due to ("related to") the Retained Brands
existing on the date hereof or entered into with the consent of Public Co. or
Operating Co. for so long as such Rights remain in effect.
(b) Upon the termination of this agreement in accordance with its
terms, Operating Co. shall sell to Holdings, and Holdings shall purchase from
Operating Co., any finished goods or basic inventory related to the Retained
Brands (other than New Essentials) at a price equal to the value of such
inventory, as reflected on the books of Operating Co.
ARTICLE IV
INDEMNIFICATION
Section 4.1 Indemnification. (a) Holdings shall indemnify and hold
harmless Public Co., Operating Co., their respective subsidiaries and their
respective directors, officers, employees, representatives and agents
(collectively, the "Public Co. Indemnified Parties") from and against any and
all Losses of any kind whatsoever that may be incurred by, imposed upon or
asserted or awarded against a Public Co. Indemnified Party related to Public
Co.'s, Operating Co.'s or Operating Co.'s subsidiaries performance of the
Services, except to the extent the same are related to a Public Co. Indemnified
Party's gross negligence or willful misconduct.
(b) Public Co. and Operating Co. shall jointly and severally
indemnify and hold harmless Holdings, its subsidiaries and affiliates (other
than Public Co. and its subsidiaries) and their respective directors, officers,
employees, representatives and agents (collectively, the "Holdings Indemnified
Parties") from and against any and all Losses of any kind whatsoever that may
be incurred by, imposed upon or asserted or awarded against a
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Holdings Indemnified Party to the extent related to the gross negligence or
willful misconduct of Public Co.'s or Operating Co.'s performance of the
Services.
(c) Notwithstanding anything in subsection (a) or (b) to the
contrary, Public Co. and Operating Co. shall jointly and severally indemnify
and hold harmless a Holdings Indemnified Party for all Losses on account of
pollution or the violation of any environmental law, regulations, rules or
orders of any federal, state, local or foreign government to the extent
directly related to the provision of the Services hereunder, other than Losses
attributable to the period prior to the date hereof.
Section 4.2 Insurance. The amount of any claim by a party entitled to
indemnification under this Agreement (an "Indemnitee") shall be reduced by any
insurance or other benefits which the Indemnitee receives in respect of such
Loss. If any Loss for which indemnification has been provided is subsequently
reduced by any reimbursement from insurance coverage or other sources, the
amount of such reduction shall be remitted to the indemnifying party. The
Indemnitee shall use its reasonable efforts to obtain such benefit or
reimbursement.
ARTICLE V
ADDITIONAL COVENANTS
Section 5.1 Confidentiality. Holdings and Public Co. and Operating Co.
acknowledge that in connection with the performance of Services hereunder, each
of (i) Holdings and (ii) Public Co. and Operating Co., as the case may be, will
gain access to highly confidential and proprietary information regarding the
other and its financial and business affairs, and each of (i) Holdings and (ii)
Public Co. and Operating Co., as the case may be, hereby agrees to keep such
information confidential and further agrees not to disclose such information to
a third party (other than for the purposes of this Agreement and the
transactions contemplated hereby), without the prior written consent of the
other party except (i) as required by law or the rules of any stock exchange on
which any of its securities are listed, (ii) in respect of information to the
extent publicly available through no fault or breach hereof by either Holdings
or Public Co. or Operating Co., as the case may be, (iii) in respect of
information obtained from a third party not, to the knowledge of the party
obtaining such information, under any obligation to either Holdings or Public
Co. or Operating Co., as the case may be, or (iv) in respect of disclosure made
in connection with the $500,000,000 Credit Agreement dated as of June 24, 1992
by and among Operating Co., the lenders parties thereto, The Chase Manhattan
Bank, N.A., Chemical Bank and Citibank, N.A., as Managing Agents, and Chemical
Bank, as Administrative Agent or any amendment thereto or credit agreement
resulting from the refinancing thereof or any successor credit agreement.
Section 5.2 Limited License. (a) Holdings hereby grants to Operating
Co. (and its subsidiaries) during the term of this Agreement a non-exclusive
royalty-free license to
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those trademarks, patents and other intellectual property rights owned by or
licensed to Holdings on the date hereof that are Excluded Assets under the
Transfer Agreement, other than any intellectual property rights which are the
subject of the Sublicensing Agreements, or that come into existence during the
term of this Agreement, and that would have been Excluded Assets had they been
in existence on the date hereof used in the manufacturing, marketing,
advertising, promotion, distribution or sale of, or research and development in
connection with, the Retained Brands (the "Holdings Intellectual Property")
subject to and on the condition that Operating Co. at all times adhere to the
methods, formulas, specifications and other quality standards of Holdings in
effect from time to time in order that the products and services identified by
the Retained Brands shall be of a standard and quality satisfactory to
Holdings.
(b) Operating Co. acknowledges the ownership (or license rights,
as the case may be) of the Holdings Intellectual Property in Holdings and
agrees that Operating Co. shall obtain no right of ownership or any other right
whatsoever over and in relation to the Holdings Intellectual Property through
any right herein permitted, and that all use of the Holdings Intellectual
Property shall inure to the benefit of Holdings. Operating Co. agrees not to
use the Holdings Intellectual Property after the termination of this Agreement.
(c) Operating Co. hereby grants to Holdings during the term of
this Agreement a non-exclusive royalty-free license to continue to use those
trademarks, patents and other intellectual property owned by Operating Co. on
the date hereof that are Contributed Assets under the Transfer Agreement used
in the manufacture, marketing, advertising, promotion, distribution or sale of,
or research and development in connection with, the Retained Brands (the
"Operating Co. Intellectual Property") subject to and on the condition that
Holdings at all times adheres to the methods, formulas, specifications and
other quality standards of Operating Co. in effect from time to time in order
that the products and services identified by the Retained Brands shall be of a
standard and quality satisfactory to Operating Co.
(d) Holdings acknowledges the ownership of the Operating Co.
Intellectual Property in Operating Co. and agrees that Holdings shall obtain no
right of ownership or any other right whatsoever over and in relation to the
Operating Co. Intellectual Property through any right herein permitted, and
that all use of the Operating Co. Intellectual Property shall inure to the
benefit of Operating Co. Holdings agrees not to use the Operating Co.
Intellectual Property after the termination of this Agreement.
Section 5.3 Force Majeure. (a) If performance by Operating Co. of any
of the Services is prevented or delayed by strikes, walkouts, fires, embargoes,
war or other outbreak of hostilities, acts of federal, state, municipal or
other government agencies, delays of carriers or suppliers, public emergency,
act of God, or any other cause (including the foregoing) which is beyond
Operating Co.'s reasonable control (each, a "Force Majeure Event"), such delay
or failure to perform shall not be deemed a breach of this Agreement but any
such duty or obligation, the performance or satisfaction of which has been
delayed thereby, shall remain in
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force and shall be performed or satisfied pursuant to this Agreement as soon as
said performance or satisfaction becomes legally and commercially practicable.
In the event of such a failure or delay, Operating Co. shall provide its full
cooperation to Holdings to secure another party or parties to provide the
Services.
(b) Holdings shall have the right to terminate the Services on
five days written notice if a material interruption of the provision of such
Service is continuous for a period of 30 days unless such interruption is cured
prior to the end of the notice period.
ARTICLE VI
RIGHT OF FIRST REFUSAL
Section 6.1 Grant of Right of First Refusal. (a) If Holdings receives
a bona fide offer (the "Offer"), from an individual or entity other than Public
Co. or Operating Co. (a "Third Party") which Holdings desires to accept, to
purchase or otherwise acquire all or any part of the Retained Brands, Holdings
shall within 48 hours after it determines that it desires to accept such Offer
submit to Public Co. and Operating Co. a notice of such Offer (the "Offer
Notice") together with a complete copy of the contract, letter of intent, term
sheet, agreement in principle or similar document in respect of such Offer if
such has been submitted to Holdings or, if such has not been submitted to
Holdings, a reasonably detailed description of the terms of such Offer,
including, but not limited to, the name of the proposed purchaser, the price
and consideration offered, the duration of the Offer and any other material
terms and conditions of the Offer.
(b) Either of Public Co. or Operating Co. shall have the right
(the "Purchase Right") at any time during the 90-day period (the "Exercise
Period") commencing on the date of Public Co.'s and Operating Co.'s receipt of
the Offer Notice to notify Holdings that it intends to purchase the Retained
Brands on terms substantially the same as those specified in the Offer Notice
by delivering to Holdings a written notice (the "Exercise Notice") to that
effect prior to the expiration of the Exercise Period. The Exercise Notice
shall also specify a closing date (the "Closing Date") which shall not be later
than the later of (i) the closing date specified in the Offer or (ii) 30 days
after the date of the Exercise Notice.
(c) If the consideration proposed to be paid by such Third Party
consists of non-cash consideration, Public Co. or Operating Co. may, at its
election, pay the fair market value of such non-cash consideration (or any part
thereof) in cash. The fair market value of such non-cash consideration shall be
determined in good faith by Holdings and Public Co. or Operating Co.
(d) The closing associated with the sale of all or a portion of
the Retained Brands (the "Closing") shall occur on the Closing Date and at a
place and at a time mutually agreed upon by Holdings and Public Co.
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(e) If Public Co. or Operating Co. fails to deliver an Exercise
Notice during the Exercise Period or the Closing shall not occur by the Closing
Date, Holdings shall be free to sell such portion of the Retained Brands to the
Third Party on terms no less favorable to Holdings as those specified in the
Offer Notice for a period of 180 days after the earlier to occur of (i) the
expiration of the Exercise Period and (ii) the date Public Co. or Operating Co.
declines to exercise its Purchase Right, provided Holdings shall give Public
Co. and Operating Co. notice of such sale at least ten days prior to the
closing therefor together with a copy of each definitive agreement relating
thereto. If the sale or transfer of the Retained Brands is not so consummated
within such period or if any of the terms or conditions of the proposed sale or
transfer are modified in any manner materially adverse to Holdings, Holdings
shall not have the right to sell, dispose of or otherwise transfer such portion
of the Retained Brands unless and until it re-offers Public Co. and Operating
Co. the Purchase Right pursuant to the terms of this Article VI. Thereafter,
Public Co. shall have the rights set forth in this Section 6.1 with respect to
such renewed or modified offer as if the same were an original Offer as
described above.
(f) If the terms of an Offer are at any time modified, amended or
supplemented in any material respect, Holdings shall promptly furnish Public
Co. with a copy of such modification, amendment or supplement.
Section 6.2 Notice of Intention to Sell the Retained Brands. If at any
time Holdings desires to actively seek offers to purchase all or a portion of
the Retained Brands, Holdings shall promptly give Public Co. and Operating Co.
a written notice to that effect and shall thereupon make available to Public
Co. and Operating Co. for immediate inspection the Retained Brands and other
relevant data with respect to the Retained Brands. Holdings shall provide to
Public Co. and Operating Co. all written presentations made available to Third
Parties in connection with a prospective sale of the Retained Brands.
Section 6.3 Termination. (a) If, in accordance with the terms of this
Article VI, Public Co. and Operating Co. elect not to exercise a Purchase Right
with respect to all or a portion of the Retained Brands and Holdings transfers
the Retained Brands to a Third Party in accordance with the terms of the Offer,
Public Co.'s and Operating Co.'s Purchase Right with respect to the Retained
Brands so transferred shall terminate upon the transfer of the Retained Brands
to such Third Party. Notwithstanding the foregoing, no failure of Public Co. to
exercise its Purchase Right as to any portion of the Retained Brands shall be
deemed a waiver or limitation of any rights of Public Co. as to any other
portion of the Retained Brands.
(b) Upon any transfer of all or a portion of the Retained Brands
to a Third Party, this Agreement shall terminate with respect to the Retained
Brands so transferred.
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ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendment and Modification; Waiver. This Agreement may be
amended, modified or supplemented only by written agreement of the parties
hereto. The failure of any of the parties hereto to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefit thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
Section 7.2 Successors and Assigns; Parties in Interest; Assignment.
This Agreement shall be binding upon and inure solely to the benefit of the
parties hereto and their respective permitted successors and assigns, and
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other person or persons any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties
hereto, except that Public Co. or Operating Co. may transfer or assign, in
whole or from time to time in part, to one or more of their respective
affiliates, any or all of its rights and obligations hereunder, and Public Co.
or Operating Co. may assign its obligations hereunder with respect to any
Service to an entity which acquires the facility at which such Service is
performed, provided that such acquirer agrees to assume and perform the same,
but no such transfer or assignment to an affiliate or third party will relieve
the transferring party of its obligations hereunder.
Section 7.3 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given upon receipt by
the respective parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) if to Holdings, to:
c/o MacAndrews & Forbes Holdings Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
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(b) if to Public Co., to:
Revlon, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx III, Esq.
(c) if to Operating Co., to:
Revlon Consumer Products Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx III, Esq.
Section 7.4 Expenses. The payment of taxes incurred in connection with
this Agreement shall be governed by the Tax Sharing Agreement (as defined in
Section 7.7 hereof). Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.
Section 7.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
Section 7.6 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 7.7 Entire Agreement. This Agreement, the Transfer Agreements,
the Reimbursement Agreement, the Real Property Asset Transfer Agreement, the
Sublicensing Agreements and the Tax Sharing Agreement, and the exhibits and
schedules hereto and thereto, as such agreements may be amended or modified,
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and supersede all prior agreements, understandings and
negotiations, both written and oral, among the parties with respect to the
subject matter hereof.
Section 7.8 Captions. The captions herein are included for convenience
of reference only and are not intended to be part of or affect the meaning or
interpretation of this Agreement.
Section 7.9 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in
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accordance with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any other remedy at
law or equity.
Section 7.10 Severability. This Agreement shall be deemed severable;
the invalidity or unenforceability of any term or provision of this Agreement
shall not affect the validity or enforceability of this Agreement or of any
other term hereof, which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto here caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
REVLON HOLDINGS INC.
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Vice President
REVLON, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Vice President
REVLON CONSUMER PRODUCTS
CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Vice President
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