Document:

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                                                                    Exhibit 10.3

                        SETTLEMENT, RELEASE, COVENANT NOT
                   TO SUE, WAIVER AND NON-DISCLOSURE AGREEMENT

      WHEREAS, WILLIAM J. STERLING, individually and on behalf of all his
successors, heirs, executors, administrators, legal representatives, and assigns
(hereinafter referred to collectively as "Sterling"), and INSTINET GROUP
INCORPORATED, on behalf of its parents, subsidiaries, divisions and affiliates,
and their respective predecessors, successors, assigns, representatives,
officers, directors, shareholders, agents, employees and attorneys (hereinafter
referred to collectively as "Instinet"), have reached agreement with respect to
all matters arising out of Sterling's employment with Instinet and the
termination thereof;

      NOW, THEREFORE, in consideration of the mutual convenants and undertakings
set forth herein, Sterling and Instinet agree as follows:

      1. Termination of Employment. By mutual agreement between the parties,
Sterling's employment with Instinet shall terminate on June 27, 2003
("Termination Date"). Through the Termination Date, Instinet will continue to
pay Sterling at his current base salary of $400,000 per annum, with continuation
of Instinet's benefit programs through such date. Sterling hereby resigns from
each of his employment and director positions with Instinet and its affiliates,
effective as of the Termination Date. Sterling shall execute and deliver such
documents evidencing such resignations as Instinet may reasonably request from
time to time.

      2. Vested Payments and Benefits. Neither Sterling's separation from
Instinet nor this Agreement shall alter or affect in any way Sterling's vested
and accrued rights, if any, to payments and benefits pursuant to the Instinet
Stock Option Plan, Island Holding Stock Incentive Plan and any other employee
benefit, welfare, retirement or equity plan maintained by Instinet.

      3. Separation Payments and Benefits. Instinet will pay Sterling the
amounts described below, subject to the provisions of this Agreement. The
payments to be provided by this paragraph 3 of the Agreement are in place of,
and not in addition to, payments Sterling would otherwise be entitled to
pursuant to any policy or practice of Instinet. All payments made pursuant to
this paragraph will be reduced by any and all applicable payroll deductions
including, but not limited to, federal, state and local tax withholdings.

                                                                               1
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            (a) Severance Payments. Sterling will be entitled to receive
severance payments for a one-year period (the "Severance Period") at the rate of
$400,000 per annum from the Termination Date through June 27, 2004. During the
Severance Period, Sterling will be eligible to continue his current health and
dental coverage for himself and his family through Instinet's US insurance
carriers, but will not be eligible for life insurance, long-term disability
insurance, 401(k) contributions or any other benefits.

            (b) Annual Bonus. Within ten days of the effectiveness of this
Agreement, Instinet agrees to pay Sterling the sum of $675,000 as a bonus.

      4. Return of Instinet Property. Sterling agrees to return to Instinet by
no later than the Termination Date, any and all property (including but not
limited to files, records, computer software, computer access codes, home
computers, laptop computers, pagers, Palm Pilots or PDAs, Blackberries, cellular
phones, fax machines, company IDs, business credit cards, proprietary and
confidential information) which belongs to Instinet, and shall not retain any
copies, duplicates or excerpts thereof.

      5. Instinet and Island Options. Instinet and Sterling agree that all
options granted by Instinet to Sterling under the Instinet 2000 Stock Option
Plan or under the Island Holding Company Inc. Stock Incentive Plan will be
governed by the terms and conditions provided in the respective plans and the
relevant option agreements.

      6. Full Satisfaction. Sterling, by entering into this Agreement, accepts
the benefits to be conferred on him hereunder in full and complete satisfaction
of any and all asserted and unasserted claims of any kind or description against
Instinet as of the date of this Agreement, including, but not limited to, claims
arising under any federal, state and local fair employment practice law,
workers' compensation law, and any other employee relations statute, executive
order, law and ordinance, including, but not limited to, Title VII of the Civil
Rights Act of 1964, as amended, the Age Discrimination in Employment Act of
1967, as amended, the Rehabilitation Act of 1973, as amended, the Family and
Medical Leave Act, the Americans With Disabilities Act of 1990, as amended, the
Civil Rights Acts of 1866 and 1871, and, except as otherwise expressly set forth
herein, of any other duty and/or other employment related obligation (all of
which are hereinafter referred to as "employment relations laws"), as well as
any claims arising from his Employment Agreement with The Island ECN dated June
20, 2001 as amended, tort,

                                                                               2
<PAGE>
tortious course of conduct, contract, obligations of "good faith," public
policy, statute, common law, equity, and all claims for wages and benefits,
monetary and equitable relief, punitive and compensatory relief, and attorneys'
fees and costs.

      7. (A) Release By Sterling. Sterling releases and discharges Instinet from
any and all liability, and waives any and all rights of any kind and description
that he has or may have against Instinet as of the date of this Agreement,
including, but not limited to, any asserted and unasserted claims arising from
any employment relations laws, tort, tortious course of conduct, contract
(including without limitation Sterling's Employment Agreement with The Island
ECN dated June 20, 2001, as amended, and any other employment agreements or
contracts), public policy, statute, common law, and equity, and claims for wages
and benefits, monetary and equitable relief, punitive and compensatory relief,
and attorneys' fees and costs. The foregoing notwithstanding, Sterling's release
and waiver do not apply to: (a) his rights arising out of this Agreement; (b)
any rights that Sterling and any covered dependents may have to purchase health
benefit continuation coverage under federal law commonly known as COBRA; (c) any
accrued benefits which have vested under the terms of any qualified retirement
or pension plans maintained by Instinet, as such plans may be amended from time
to time; or (d) any rights that Sterling may have to indemnification under
Instinet's general corporate indemnity for acts undertaken by Sterling within
the scope of his duties while employed at Instinet.

            (B) Release By Instinet. Instinet releases and discharges Sterling
from any and all liability, and waives any and all rights of any kind and
description that it has or may have against Sterling as of the date of this
Agreement, regarding which Instinet has actual knowledge or should have had
knowledge, other than rights under this Agreement or arising as a result of any
criminal act of Sterling.

      8. Non-Competition Covenant. For one year from the Termination Date,
Sterling agrees that he will not, except with the express prior written consent
of Instinet: (i) engage directly or indirectly in, or permit his name to be used
by or in connection with, any business which shall provide securities brokerage
services or financial services through the Internet or any similar medium of
electronic commerce (including, without limitation, the business of an ECN, ATS
or their equivalent), from an operational base located anywhere within the
United States (the "Restricted Area"), but the foregoing shall not prevent
Sterling from being employed by an

                                                                               3
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entity which is in such business, provided that he is not involved in the day to
day activities of such entity in such area; (ii) solicit or accept business from
any vendor or supplier of Instinet which has a material adverse effect on such
vendor's or supplier's relationship with Instinet, or (iii) approach or attempt
to induce any person who is then in the employ of Instinet in the Restricted
Area to leave the employ of Instinet to join any entity with which Sterling is
associated or employ or attempt to employ any such person or any person who at
any time during the preceding three (3) months was in the employ of Instinet.

      9. Non-Disparagement. Sterling and Instinet each agree that except, for
truthful statements in any proceeding to enforce this Agreement or pursuant to a
valid subpoena or court order, neither will make or publish any statement
(orally or in writing) that becomes or reasonably could be expected to become
publicly known, or instigate, assist or participate in the making or publication
of any such statement, which would libel, slander or disparage (whether or not
such disparagement legally constitutes libel or slander) the other or, with
respect to Instinet, any of its affiliates or any other entity or person within
Instinet or its affiliates, any of their affairs or operations, or the
reputations of any of their past or present officers, directors, agents,
representatives and employees.

      10. Unauthorized Disclosure. Without the prior written consent of
Instinet, except to the extent required by an order of a court having
jurisdiction or under subpoena from an appropriate government agency, in which
event Sterling shall use his best efforts to consult with Instinet prior to
responding to any such order or subpoena, Sterling shall not disclose any
confidential or proprietary trade secrets, customer lists, drawings, designs,
programs, software, protocols, information regarding product development,
marketing plans, sales plans, manufacturing plans, management organization
information, operating policies or manuals, business plans, financial records,
packaging design or other financial, commercial, business or technical
information (a) relating to Instinet or any of its Affiliates or (b) that
Instinet or any of its Affiliates may receive belonging to suppliers, customers
or others who do business with Instinet or any of its Affiliates (collectively,
"Confidential Information") to any third person unless such Confidential
Information has been previously disclosed to the public or is in the public
domain (other than by reason of Sterling's breach of this paragraph).

                                                                               4
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      11. Rights To Intellectual Property. Sterling acknowledges and agrees that
Instinet is the sole and exclusive owner of all right, title and interest in and
to all trademarks, copyrights and all other rights in and to all software,
computer programs, works of authorship, writings (whether or not copyrightable),
inventions (whether or not patentable), discoveries, methods, improvements,
processes, ideas, systems, know-how, data, and any other intellectual creations
of any nature whatsoever that Sterling directly or indirectly managed,
developed, or assisted in the development of, in the course of his employment by
Instinet (collectively, the "Instinet Intellectual Property"). All Instinet
Intellectual Property is deemed to be "work made for hire "pursuant to the
United States Copyright Act of 1976 (the "Act") and Instinet thereby owns all
right, title and interest in all Instinet Intellectual Property. To the extent
that the Instinet Intellectual Property or any part thereof is deemed by any
court of competent jurisdiction or any governmental or regulatory agency not to
be a "work made for hire" within the meaning of the Act, the provisions of this
section will still control and, for the consideration set forth herein, Sterling
hereby irrevocably and absolutely assigns, sets over and grants to Instinet the
Instinet Intellectual Property and all of his rights therein. Sterling further
agrees to deliver or execute such documents and to do or refrain from doing such
acts as Instinet or its nominee may reasonably request to protect its rights in
the Instinet Intellectual Property.

      12. Consultation and Cooperation By Sterling. Sterling agrees to make
himself reasonably available to Instinet during the Severance Period to respond
to requests by Instinet for information concerning facts or events relating to
Instinet that may be within his knowledge. Sterling will cooperate fully with
Instinet in connection with any or all future litigation or regulatory
proceedings brought by or against Instinet to the extent Instinet reasonably
deems Sterling's cooperation either necessary or helpful. In the event that
Instinet requires Sterling's cooperation, Instinet agrees to pay any of
Sterling's reasonable expenses in providing such cooperation (such as travel and
accommodations). With due regard to Sterling's other commitments, Instinet
agrees that, should Sterling need to devote more than minimal time to
consultation and cooperation pursuant to this paragraph, the parties will agree
a reasonable per diem fee to compensate Sterling for his time and efforts.

                                                                               5
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      13. No Admission of Liability. By entering into this Agreement, the
parties do not admit to any liability, wrongdoing, breach of any contract,
commission of any tort or the violation of any statute or law alleged by the
other to have been violated or otherwise.

      14. Entire Agreement and Severability. This Agreement constitutes the
complete settlement of all issues and disputes existing between Sterling and
Instinet as of the date hereof, and may not be modified except by a suitable
writing signed by both Sterling and Instinet. This Agreement has been entered
into by Sterling and Instinet voluntarily, knowingly, and upon advice of
counsel. If any provision of this Agreement is held to be invalid, the remaining
provisions shall remain in full force and effect.

      15. Injunctive Relief. Sterling acknowledges that a violation on
Sterling's part of this Agreement, including in particular violation of the
provisions of paragraphs 8, 9, and 10 would cause irreparable damage to
Instinet. Accordingly, Sterling agrees that Instinet is entitled to injunctive
relief from any court of competent jurisdiction for any actual or threatened
violation of this Agreement in addition to any other remedies it may have.

      16. Challenge to Release. Sterling agrees that, without limiting
Instinet's remedies, should he commence, continue, join in, or in any other
manner attempt to assert through litigation or proceeding (a "Release
Challenge") any claim released in connection herewith, Instinet shall not be
required to make any further payments to Sterling pursuant to this Agreement and
that Instinet shall be entitled to recover all payments already made by it
(including interest thereon) pursuant to paragraph 3 hereof, in addition to all
damages, attorney's fees and costs, Instinet incurs in connection with the
Sterling's Release Challenge. Sterling further agrees that Instinet shall be
entitled to the repayments and recovery of damages described above, in
connection with such Release Challenge, without waiver of or prejudice to the
release granted by him in connection with this Agreement.

      17. Attorney Fees. The parties agree that, in any suit brought by either
party for breach of this Agreement by the other, the non-prevailing party will
be liable for the reasonable attorneys fees of the prevailing party.

                                                                               6
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      18. Execution.

            a. Sterling acknowledges that he has had a reasonable and adequate
opportunity from his receipt of this document to review it. Upon execution,
Sterling or his attorney must promptly send this document by overnight mail to
the General Counsel at Instinet. A copy may be retained by Sterling.

            b. Following his signing of the Agreement, Sterling has the right to
revoke the Agreement at any time within seven (7) calendar days of his signing
it, not including the date of his signing (the "Revocation Period"). Notice of
Revocation shall be given in writing and sent by overnight mail no later than
the seventh day following the date Sterling signs this Agreement to General
Counsel, Instinet Group Incorporated, 3 Times Square, New York, NY 10036. If
Sterling does not revoke the Agreement, this Agreement shall be deemed to be
effective and to be enforceable as of the last date set forth opposite any
signature hereto. If Sterling gives Notice of Revocation during the Revocation
Period in the manner specified above, this Agreement shall become null and void
and all rights and claims of the parties which would have existed, but for the
execution of this Agreement shall be restored.

      19. Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the law of the State of New York. An action for
breach of this Agreement may be brought in any court of competent jurisdiction
located in New York.

      20. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the heirs, successors and assigns of the parties hereto.

      THE UNDERSIGNED, intending to be legally bound, have executed this
Agreement on this 27th day of June, 2003.

WILLIAM J. STERLING                           INSTINET GROUP INCORPORATED

  /s/ William J. Sterling                     By: /s/ Paul A. Merolla
--------------------------                        ------------------------------
                                                  Paul A. Merolla
                                                  General Counsel

                                                                               7
<PAGE>
                 STATEMENT BY THE EMPLOYEE WHO IS SIGNING BELOW:

INSTINET HAS ADVISED ME IN WRITING TO CONSULT WITH AN ATTORNEY PRIOR TO
EXECUTING THIS RELEASE. I HAVE CAREFULLY READ AND FULLY UNDERSTAND THE
PROVISIONS OF THIS RELEASE AND HAVE HAD SUFFICIENT TIME AND OPPORTUNITY TO
CONSULT WITH MY PERSONAL TAX, FINANCIAL AND LEGAL ADVISORS PRIOR TO EXECUTING
THIS DOCUMENT, AND I INTEND TO BE LEGALLY BOUND BY ITS TERMS. I UNDERSTAND THAT
I MAY REVOKE THIS RELEASE WITHIN SEVEN (7) DAYS FOLLOWING MY SIGNING, AND THIS
RELEASE WILL NOT BECOME ENFORCEABLE OR EFFECTIVE UNTIL THAT SEVEN (7) DAY PERIOD
HAS EXPIRED.

                                              WILLIAM J. STERLING

                                              Signed: /s/ William J. Sterling
                                                      --------------------------

THIS IS A RELEASE. READ CAREFULLY BEFORE SIGNING.

                                                                               8<PAGE>
                                                            EXHIBIT 4.17

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTIONS 312 AND 313 OF THE INDENTURE.

     THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND HAS NOT BEEN REGISTERED UNDER ANY STATE
SECURITIES LAWS, AND THIS NOTE (AND ANY INTEREST OR PARTICIPATION HEREIN) MAY
NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, ENCUMBERED OR OTHERWISE TRANSFERRED OR
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF
THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

     THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS NOTE IN AN OFFSHORE TRANSACTION AND (2) AGREES FOR THE BENEFIT OF THE
ISSUERS THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED OR DISPOSED OF ONLY (I) INSIDE THE UNITED STATES TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES IN A TRANSACTION IN
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE
<PAGE>
SECURITIES ACT OR (V) TO THE ISSUERS, IN EACH OF CASES (I) THROUGH (IV) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES, AND SUBJECT TO THE ISSUERS' AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER (X) PURSUANT TO CLAUSE (II) OR (III) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (Y) IN THE CASE OF ANY OF THE FOREGOING
CLAUSES (I) THROUGH (V), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS NOTE IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE ISSUERS AND THE TRUSTEE, THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE
RESTRICTION REFERRED TO ABOVE. AS USED HEREIN, THE TERMS "UNITED STATES,"
"OFFSHORE TRANSACTION" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT.

                                       2
<PAGE>
                      JAFRA COSMETICS INTERNATIONAL, INC.
                                      AND
                  DISTRIBUIDORA COMERCIAL JAFRA, S.A. de C.V.

                   10 3/4% Senior Subordinated Notes Due 2011

CUSIP No. 47007PAA6
ISIN No. USP58922AA61
No. A-1                                                             $198,610,000

     Each of Jafra Cosmetics International, Inc., a corporation duly organized
and existing under the laws of the State of Delaware ("Jafra US"), and
Distribuidora Comercial Jafra, S.A. de C.V., a corporation organized under the
laws of Mexico ("Jafra Distribution (Mexico)", and together with Jafra US, the
"Issuers", such term to include any Successor of either (as such term is defined
in the Indenture referred to hereinafter), for value received, hereby severally,
but not jointly, promises to pay to Cede & Co., or registered assigns, its
several share in the proportion set forth below (with respect to each Issuer,
such relative proportion, a "Several Share") of the aggregate principal sum of
$198,610,000 (One Hundred Ninety-Eight Million Six Hundred and Ten Thousand
United States Dollars) (or such lesser or greater amount as shall be outstanding
hereunder from time to time in accordance with Sections 312 and 313 of the
Indenture referred to on the reverse hereof) (the "Principal Amount") on May 15,
2011; provided that Jafra US shall be severally liable for only 40% of the
Principal Amount (the "Jafra US Portion") and Jafra Distribution (Mexico) shall
be severally liable for only 60% of the Principal Amount (the "Jafra
Distribution (Mexico) Portion", and each of the Jafra US Portion and the Jafra
Distribution (Mexico) Portion, a "Portion"). Each Issuer hereby severally, but
not jointly, promises to pay interest on its respective Portion, semi-annually
on May 15 and November 15 in each year, commencing November 15, 2003, at the
rate of 10 3/4% per annum (subject to adjustment as provided below), until the
Principal Amount is paid or made available for payment. Interest on this Note
will accrue from the most recent date to which interest on this Note or any of
its Predecessor Notes has been paid or duly provided for or, if no interest has
been paid, from the Issue Date. Interest on the Notes shall be computed on the
basis of a 360-day year of twelve 30-day months. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest, which shall be the May 1 or November 1
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly provided
for will forthwith cease to be payable to the Holder on such Regular Record Date
and may either be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest to be fixed by the Trustee,
notice whereof shall be given to Holders of Notes not more than 15 days nor less
than 10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent

                                       3

<PAGE>
with the requirements of any securities exchange on which the Notes may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.

     The Holder of this Note is entitled to the benefits of the Registration
Rights Agreement, dated May 20, 2003, among the Issuers, Credit Suisse First
Boston LLC; Merrill Lynch, Pierce, Fenner & Smith Incorporated and the Note
Guarantors named therein (the "Registration Rights Agreement"). Until (i) the
date on which this Note has been exchanged for a freely transferable Exchange
Security (as defined in the Registration Rights Agreement) in the Registered
Exchange Offer (as defined in the Registration Rights Agreement), (ii) the date
on which this Note has been effectively registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement (as defined in
the Registration Rights Agreement), or (iii) the date on which this Note is
distributed to the public pursuant to Rule 144 of the Securities Act or is
saleable pursuant to Rule 144(k) under the Securities Act (or otherwise is
eligible for resale pursuant to Rule 144 (or any successor provision) under the
Securities Act without volume restriction, if any: From and including the date
on which a Registration Default (as defined below) shall occur to but excluding
the date on which such Registration Default has been cured, additional interest
will accrue on this Note at the rate of (a) prior to the 91st day of such
period (for so long as such period is continuing), 0.25% per annum and (b)
thereafter (so long as such period is continuing), 0.50% per annum. Any such
additional interest shall not exceed such respective rates for such respective
periods, and shall not in any event exceed 0.50% per annum in the aggregate,
regardless of the number of Registration Defaults that shall have occurred and
be continuing. Any such additional interest shall be paid in the same manner
and on the same dates as interest payments in respect of this Note. Following
the cure of all Registration Defaults, the accrual of such additional interest
will cease. All Registration Defaults shall be deemed cured upon consummation
of the Registered Exchange Offer. For purposes of the foregoing, each of the
following events, as more particularly defined in the Registration Rights
Agreement, is a "Registration Default": (i) neither the Exchange Offer
Registration Statement (as defined in the Registration Rights Agreement) nor a
Shelf Registration Statement has been filed with the SEC on or before the 195th
day after the Issue Date (or if such day is not a business day, the first
business day thereafter); (ii) the Registered Exchange Offer is not consummated
on or before the 255th day after the Issue Date (or if such day is not a
business day, the first business day thereafter); (iii) if a Shelf Registration
Statement is required to be filed under the Registration Rights Agreement,
(A) the Shelf Registration Statement is not declared effective by the SEC on or
before the 285th day after the Issue Date (or if such day is not a business
day, the first business day thereafter) (or, in the case of a Shelf
Registration Statement required to be filed in response to any change in
applicable interpretations of the staff of the SEC, if later, on or before the
90th day after publication of such change) or (B) after such Shelf Registration
Statement is declared effective and during the time the Company and the Issuers
are required to use their reasonable best efforts to keep the Shelf
Registration Statement in effect, the Company and the Issuers shall have
suspended and be continuing to suspend the availability of the Shelf
Registration Statement, for more than 30 days in the aggregate in any
consecutive twelve-month period.

                                       4

<PAGE>
     Payment of the principal of (and premium, if any) and interest on this Note
will be made at the office or agency of the Issuers maintained for that purpose
in The Borough of Manhattan, The City of New York; provided, however, that at
the option of the Issuers payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the Note
Register.

     Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.

                                       5
<PAGE>
     IN WITNESS WHEREOF, each of the Issuers has caused this instrument to be
duly executed.

                                   JAFRA COSMETICS INTERNATIONAL, INC.

                                   By /s/ Michael A. DiGregorio
                                      ------------------------------------------
                                      Name: Michael A. DiGregorio
                                      Title: Senior V.P. & CFO

                                   DISTRIBUIDORA COMERCIAL JAFRA, S.A. de C.V.

                                   By /s/ Michael A. DiGregorio
                                      ------------------------------------------
                                      Name: Michael A. DiGregorio
                                      Title: Senior V.P. & CFO

                                       6

<PAGE>
This is one of the Notes referred to in the within-mentioned indenture.

                              U.S. BANK NATIONAL ASSOCIATION
                                   As Trustee

                              By: /s/ Philip Kane
                                  ----------------------------
                                  Authorized Officer

Dated: May 20, 2003

                                       7
<PAGE>
                                REVERSE OF NOTE

     This Note is one of the duly authorized issue of 10 3/4% Senior
Subordinated Notes Due 2011 of the Issuers (herein called the "Notes"), issued
under an Indenture, dated as of May 20, 2003 (herein called the "Indenture,"
which term shall have the meaning assigned to it in such instrument), among the
Issuers, Jafra Worldwide Holdings (Lux) S.ar.l. and the other Note Guarantors
from time to time parties thereto, as Note Guarantors, and U.S. Bank National
Association, as Trustee (herein called the "Trustee," which term includes any
successor trustee under the Indenture), and reference is hereby made to the
Indenture for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Issuers, any other obligor upon this
Note, the Trustee and the Holders of the Notes and of the terms upon which the
Notes are, and are to be, authenticated and delivered. The terms of the Notes
include those stated in the Indenture and those made a part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended, as in effect from time
to time (the "TIA"). The Notes are subject to all such terms, and Holders are
referred to the Indenture and the TIA for a statement of such terms. Additional
Notes may be issued under the Indenture which may vote as a class with the Notes
and otherwise be treated as Notes for purposes of the Indenture.

     All terms used in this Note that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.

     This Note is entitled to the benefits of the certain senior subordinated
Note Guarantees of the Note Guarantors and may hereafter be entitled to certain
other senior subordinated Note Guarantees made for the benefit of the Holders.
Reference is made to Article Thirteen of the Indenture and to the Note
Guarantees for terms relating to such Note Guarantees, including the release,
termination and discharge thereof. Neither the Issuers nor any Note Guarantor
shall be required to make any notation on this Note to reflect any Note
Guarantee or any such release, termination or discharge.

     The Notes are subordinated to Senior Indebtedness of the Issuers, as
defined in the Indenture, and the Note Guarantees are subordinated to Senior
Indebtedness of the relevant Note Guarantor, as defined in the Indenture. To the
extent provided in the Indenture, Senior Indebtedness must be paid before the
Notes or the relevant Note Guarantee may be paid. The Issuers and the Note
Guarantors agree, and each Noteholder by accepting a Note agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give it effect and appoints the Trustee as attorney-in-fact for such
purposes.

     The Notes will be redeemable, at the Issuers' option, in whole or in part,
and from time to time on and after May 15, 2007 and prior to maturity; provided,
however, that any such optional redemption may only be effected concurrently by
both of the Issuers on a pro rata basis as between their respective Portions,
based on the relative proportions of the Jafra US Portion and the Jafra
Distribution (Mexico) Portion. Such redemption may be made upon notice mailed by
first-class mail to each Holder's registered address in accordance with the
Indenture. Any such redemption and notice may, in the Issuers' discretion, be
subject to the satisfaction of one or more conditions precedent. The Notes will
be so redeemable at the following Redemption Prices

                                       8
<PAGE>
(expressed as a percentage of principal amount), plus accrued interest, if any,
to the relevant Redemption Date (subject to the right of Holders of record on
the relevant Regular Record Date to receive interest due on the relevant
Interest Payment Date), if redeemed during the 12-month period commencing on May
15 of the years set forth below:

<Table>
<Caption>
                                        REDEMPTION
PERIOD                                    PRICE
------                                  ----------
<S>                                    <C>
2007 ................................   105.375%
2008 ................................   102.688%
2009 and thereafter .................   100.000%
</Table>

     In addition, at any time and from time to time prior to May 15, 2006, the
Issuers at their option may concurrently redeem the Notes, on a pro rata basis
as between their respective Portions (based on the relative proportions of the
Jafra US Portion and the Jafra Distribution (Mexico) Portion), in an aggregate
principal amount equal to up to 35% of the original aggregate principal amount
of the Notes (including the principal amount of any Additional Notes), with
funds in an aggregate amount not exceeding the aggregate cash proceeds of one or
more Equity Offerings, at a Redemption Price (expressed as a percentage of
principal amount thereof) of 110.750% plus accrued interest, if any, to the
Redemption Date (subject to the right of Holders of record on the relevant
Record Date to receive interest due on the relevant Interest Payment Date);
provided, however, that an aggregate principal amount of the Notes equal to at
least 65% of the original aggregate principal amount of the Notes (including
the principal amount of any Additional Notes) must remain outstanding after each
such redemption. The Issuers may make such redemption upon notice mailed by
first-class mail to each Holder's registered address in accordance with the
Indenture (but in no event more than 180 days after the completion of the
related Equity Offering). Any such notice may be given prior to the completion
of the related Equity Offering, and any such redemption or notice may, at the
Issuers' discretion, be subject to the satisfaction of one or more conditions
precedent, including the completion of the related Equity Offering.

     The Jafra Distribution (Mexico) Portion of the Notes may be redeemed, at
the option of Jafra Distribution (Mexico), at any time as a whole but not in
part, on not less than 30 nor more than 60 days' notice in accordance with the
Indenture at a Redemption Price equal to 100% of the principal amount thereof,
plus accrued and unpaid interest (if any) to the date of redemption (subject to
the right of Holders of record on the relevant Record Date to receive interest
due on the relevant Interest Payment Date), in the event Jafra Distribution
(Mexico), any successor to Jafra Distribution (Mexico) or any current or future
Note Guarantor of such Jafra Distribution (Mexico) Portion has become or would
become obligated to pay, on the next date on which any amount would be payable
with respect to the Notes, and such obligation cannot be avoided by such
Person's taking reasonable measures available to it, any Additional Amounts in
excess of Additional Amounts that Jafra Distribution (Mexico), such successor or
such Note Guarantor would be required to pay if payments by Jafra Distribution
(Mexico), such successor or such Note Guarantor were subject to a 4.9% Mexican
withholding tax as a result of a change in or amendment to applicable treaties
or laws (including any regulations promulgated

                                       9

<PAGE>
thereunder) of Mexico (or any political subdivision or taxing authority thereof
or therein), or any change in or amendment to any official position regarding
the application or interpretation of such treaties, laws or regulations, which
change or amendment is announced or becomes effective on or after May 2, 2003
("Excessive Additional Amounts"); provided, however, that no such notice of
redemption may be given earlier than 60 days prior to the earliest date on
which Jafra Distribution (Mexico), such successor or such Note Guarantor would,
but for such redemption, be obligated to pay such Excessive Additional Amounts.
Prior to the publication of any notice of redemption pursuant to this
provision, Jafra Distribution (Mexico), any successor to Jafra Distribution
(Mexico) or any Note Guarantor will deliver to the Trustee (a) a certificate
duly signed by an officer of Jafra Distribution (Mexico), such successor or
such Note Guarantor stating that Jafra Distribution (Mexico), such successor
or such Note Guarantor is entitled to effect such redemption and setting forth
a statement of facts showing that the conditions precedent to the right of
Jafra Distribution (Mexico), such successor or such Note Guarantor so to redeem
have occurred and (b) a written opinion of Mexican legal counsel reasonably
acceptable to the Trustee to the effect that Jafra Distribution (Mexico), such
successor or such Note Guarantor has or will become obligated to pay such
Excessive Additional Amounts as a result of an amendment or change referred to
in this provision.

     In the event of any partial redemption (other than a redemption described
in the immediately preceding paragraph), the several obligation of each Issuer
for each Note that remains outstanding shall continue in the same proportion as
the relative proportions of the Jafra US Portion and the Jafra Distribution
(Mexico) Portion, respectively.

     The Indenture provides that, upon the occurrence of a Change of Control,
each Holder will have the right to require that the Issuers repurchase, on a
several basis in proportion to each Issuer's Several Share in respect of the
Notes, all or any part of such Holder's Notes at a repurchase price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, to the date of such repurchase; provided, however, that the
Issuers shall not be obligated to purchase Notes in the event they have
exercised their right to redeem all the Notes as described above.

     The Notes will not be entitled to the benefit of a sinking fund.

     The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Note or certain restrictive covenants and certain Events
of Default with respect to this Note, in each case upon compliance with certain
conditions set forth in the Indenture.

     If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.

     The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuers and the rights of the Holders of the Notes to be affected under the
Indenture at any time by the Issuers

                                       10
<PAGE>
and the Trustee with the consent of the Holders of at least a majority in
principal amount of the Notes at the time Outstanding to be affected. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Notes at the time Outstanding, on behalf
of the Holders of all Notes, to waive compliance by the Issuers with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note shall
be conclusive and binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange herefor or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Note.

     As provided in and subject to the provisions of the Indenture, the Holder
of this Note shall not have the right to institute any proceeding with respect
to the Indenture or for the appointment of a receiver or trustee or for any
other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes, the Holders of not less than 25% in principal amount of the Notes at the
time Outstanding shall have made written request to the Trustee to pursue such
remedy in respect of such Event of Default as Trustee and offered the Trustee
reasonable security or indemnity, and the Trustee shall not have received from
the Holders of a majority in principal amount of Notes at the time Outstanding
a direction inconsistent with such request, and shall have failed to institute
any such proceeding, for 60 days after receipt of such notice, request and
offer of security or indemnity. The foregoing shall not apply to any suit
instituted by the Holder of this Note for the enforcement of any payment of
principal hereof or any premium or interest hereon on or after the respective
due dates expressed herein.

     No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the several obligation of each Issuer,
which is absolute and unconditional, to pay its Several Share of the principal
of and any premium and interest on this Note at the times, place and rate, and
in the coin or currency, herein prescribed.

     As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Note Register, upon
surrender of this Note for registration of transfer at the office or agency of
the Issuers in a Place of Payment, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Issuers and the Note
Registrar duly executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Notes of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.

     The Notes are issuable only in registered form without coupons in
denominations of $1,000.00 and any integral multiple thereof. As provided in
the Indenture and subject to certain limitations therein set forth, the Notes
are exchangeable for a like aggregate principal amount of Notes of like tenor
of a different authorized denomination, as requested by the Holder surrendering
the same.

                                       11

<PAGE>
     No service charge shall be made for any such registration, transfer or
exchange, but the Issuers may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

     Prior to due presentment of this Note for registration or transfer, the
Company, the Issuers, any other obligor in respect of this Note, the Trustee
and any agent of the Company, the Issuers, such other obligor or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and none of the Company,
the Issuers, or any other obligor upon this Note, the Trustee nor any such
agent shall be affected by notice to the contrary.

     No director, officer, employee, incorporator or stockholder of the
Company, the Issuers, any Note Guarantor or any Subsidiary of any thereof shall
have any liability for any obligation of the Company, the Issuers or any Note
Guarantor under the Indenture, the Notes or any Note Guarantee, or for any
claim based on, in respect of, or by reason of, any such obligation or its
creation. Each Holder, by accepting this Note, hereby waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Notes.

     THE INDENTURE, THIS NOTE AND THE NOTE GUARANTEES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT THAT THE SAME ARE
NOT MANDATORILY APPLICABLE BY STATUTE AND THE APPLICATION OF THE LAW OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY. THE TRUSTEE, THE ISSUERS, ANY OTHER
OBLIGOR IN RESPECT OF THE NOTES AND (BY THEIR ACCEPTANCE OF THE NOTES) THE
HOLDERS, AGREE TO SUBMIT TO THE JURISDICTION OF ANY UNITED STATES FEDERAL OR
STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE, THE NOTES AND
THE NOTE GUARANTEES.

                                       12

<PAGE>
                           [FORM OF TRANSFER NOTICE]

     FOR VALUE RECEIVED the undersigned holder hereby sell(s) assign(s) and
transfer(s) unto

------------------------------------------------------------------

Insert Taxpayer Identification No.

------------------------------------------------------------------

(Please print or typewrite name and address including zip code
 of assignee)

------------------------------------------------------------------

------------------------------------------------------------------

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing

------------------------------------------------------------------

attorney to transfer such Note on the books of the Issuers with full power of
substitution in the premises.

[Check One]

[ ](a)  this Note is being transferred in compliance with the exemption from
        registration under the Securities Act of 1933, as amended, provided by
        Rule 144A thereunder.

                                       or

[ ](b)  this Note is being transferred other than in accordance with (a) above
        and documents are being furnished which comply with the conditions of
        transfer set forth in this Note and the Indenture.

If neither of the foregoing boxes is checked, the Trustee or other Note
Registrar shall not be obligated to register this Note in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 313 of the Indenture
shall have been satisfied.

Date:
     ------------------------

                                       -----------------------------------------
                                       NOTICE: The signature to this
                                       assignment must correspond with the name

                                       13

<PAGE>

                                   as written upon the face of the within-
                                   mentioned instrument in every particular,
                                   without alteration or any change
                                   whatsoever.

Signature Guarantee: _________________________________

          Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.

                                       14

<PAGE>

TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.

          The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
of 1933, as amended, and is aware that the sale to it is being made in reliance
on Rule 144A and acknowledges that it has received such information regarding
the Issuers as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.

Dated:___________________________       ______________________________________
                                             NOTICE: To be executed by an
                                                     executive officer

                                       15
<PAGE>
                       OPTION OF HOLDER TO ELECT PURCHASE

     If you wish to have this Note purchased by the Issuers pursuant to Section
411 or 415 of the Indenture, check the box: [ ].

     If you wish to have a portion of this Note purchased by the Issuers
pursuant to Section 411 or 415 of the Indenture, state the amount (in principal
amount) below:

               $ ___________________

Date: _________________

Your Signature: ________________________

(Sign exactly as your name appears on the other side of this Note)

Signature Guarantee: __________________________

     Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.

                                       16
<PAGE>
               SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

     The following increases or decreases in this Global Note have been made:

Date of     Amount of         Amount of         Principal          Signature
Exchange    decreases in      increases in      amount             of authorized
            Principal         Principal         of this Global     officer of
            Amount of this    Amount of this    Note following     Trustee or
            Global Note       Global Note       such decreases     Notes
                                                or increases       Custodian

                                       17

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