<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 5, 1997
REGISTRATION NO. 333-23451
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
REVLON WORLDWIDE (PARENT) CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
2844
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)
13-3933701
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
625 MADISON AVENUE
NEW YORK, NEW YORK 10022
(212) 527-4000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
GLENN P. DICKES, ESQ.
REVLON WORLDWIDE (PARENT) CORPORATION
625 MADISON AVENUE
NEW YORK, NEW YORK 10022
(212) 527-4000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
STACY J. KANTER, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
SUBJECT TO COMPLETION, DATED JUNE 5, 1997
PROSPECTUS
OFFER FOR ALL OUTSTANDING SENIOR SECURED DISCOUNT NOTES DUE 2001
IN EXCHANGE FOR SERIES B SENIOR SECURED DISCOUNT NOTES DUE 2001
OF
REVLON WORLDWIDE (PARENT) CORPORATION
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON 1997, UNLESS EXTENDED
Revlon Worldwide (Parent) Corporation, a Delaware corporation (the
"Issuer"), hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying Letter of Transmittal (which
together constitute the "Exchange Offer"), to exchange an aggregate principal
amount at maturity of up to $770,000,000 of its Series B Senior Secured
Discount Notes due 2001 (the "New Notes") of the Issuer, which have been
registered under the Securities Act of 1933, as amended (the "Securities
Act"), for a like principal amount at maturity of its issued and outstanding
Senior Secured Discount Notes due 2001 (the "Old Notes" and, with the New
Notes, the "Notes") of the Issuer from the holders thereof. The terms of the
New Notes are identical in all material respects to the Old Notes, except for
certain transfer restrictions and registration rights relating to the Old
Notes and except that, if the Exchange Offer is not consummated by September
29, 1997, interest will accrue on the Old Notes (in addition to the accrual
of Original Issue Discount (as defined herein)) from and including such date
until but excluding the date of consummation of the Exchange Offer payable in
cash seminannually in arrears on March 15 and September 15, commencing March
15, 1998, at a rate per annum equal to .50% of the Accreted Value (as defined
herein) of the Old Notes as of the September 15 or March 15 immediately
preceding such interest payment date. The Old Notes were issued at a
substantial discount from their principal amount at maturity, and, except as
set forth above, there will be no periodic payments of interest on the Old
Notes. The Notes will mature on March 15, 2001. The Old Notes were issued
pursuant to an offering (the "Offering"), which was exempt from registration
under the Securities Act, on March 5, 1997.
The Old Notes are, and the New Notes will be, senior secured obligations of
the Issuer and will rank pari passu in right of payment with all future
senior indebtedness of the Issuer, if any, and senior to all future
subordinated indebtedness of the Issuer, if any. As of the date hereof, the
Issuer has no subordinated indebtedness outstanding and there are no current
firm arrangements by the Issuer to issue any significant amount of
indebtedness that will be pari passu or subordinated in right of payment to
the Notes. The only outstanding indebtedness of the Issuer (other than the
Non-Recourse Guaranty (as defined herein)) are the Notes, and all of the
Issuer's consolidated liabilities (other than the Notes and certain
liabilities incurred in connection with the Offering) are liabilities of its
subsidiaries. The Issuer is a holding company and therefore the Old Notes
are, and the New Notes will be, effectively subordinated to all existing and
future indebtedness and other liabilities of the Issuer's subsidiaries. As of
March 31, 1997, after giving pro forma effect to the Revlon Worldwide Merger
(as defined herein), the outstanding indebtedness and other liabilities of
such subsidiaries would have been approximately $2,137.0 million. Prior to
the Revlon Worldwide Merger, the Old Notes are, and the New Notes will be,
effectively subordinated to the $337,320,000 aggregate principal amount at
maturity of Senior Secured Discount Notes Due 1998 (the "Revlon Worldwide
Notes") of Revlon Worldwide Corporation, a wholly owned subsidiary of the
Issuer ("Revlon Worldwide"). Subject to certain restrictions contained in the
Indenture, the Issuer may incur additional indebtedness that ranks pari passu
with, or is subordinated in right of payment to, the Notes. See "Description
of the Notes." Subject to certain restrictions contained in the Indenture and
in the outstanding debt instruments of the Issuer's subsidiaries, the
Issuer's subsidiaries may incur additional indebtedness. See "Risk Factors --
Substantial Level of Indebtedness," "Description of the Notes" and
"Description of Other Indebtedness." The Old Notes are, and the New Notes
will be, secured by a pledge of 47.1% of the shares of common stock of Revlon
Worldwide and, simultaneously with the Revlon Worldwide Merger, will be
secured by a pledge of 20,000,000 shares of Common Stock (as defined herein)
of Revlon, Inc., a subsidiary of Revlon Worldwide ("Revlon Inc."),
representing approximately 39.1% of the outstanding shares of Common Stock of
Revlon, Inc. See "Description of the Notes."
The Old Notes were offered by the Issuer to fund, in part, the defeasance of
the Revlon Worldwide Notes. The Revlon Worldwide Notes are secured by a
pledge of approximately 83.1% of the shares (representing approximately 97.4%
of the voting power) of Common Stock of Revlon, Inc. Pursuant to the
indenture governing the Revlon Worldwide Notes, the defeasance of the Revlon
Worldwide Notes will be effective on August 4, 1997, the 124th day after
Revlon Worldwide irrevocably deposited (the "Deposit") in trust government
obligations sufficient to pay the principal amount of the Revlon Worldwide
Notes and any accrued interest thereon due at maturity so long as certain
conditions are satisfied. Following the defeasance of the Revlon Worldwide
Notes (the "Revlon Worldwide Notes Defeasance"), Revlon Worldwide will be
merged with and into the Issuer (the "Revlon Worldwide Merger") and the
Issuer will directly own all the shares of Common Stock of Revlon, Inc. that
are currently pledged to secure the Revlon Worldwide Notes.
The Notes will be redeemable at the option of the Issuer, in whole or in
part, at any time on and after March 15, 2000 at a redemption price equal to
102.6875% of the Accreted Value on the date of redemption. Upon a Change of
Control (as defined herein), the Issuer will have the option to redeem the
Notes in whole at a redemption price equal to the Accreted Value on the date
of redemption plus the Applicable Premium (as defined herein) and, subject to
certain conditions, each holder of the Notes will have the right to require
the Issuer to repurchase all or a portion of such holder's Notes at a price
equal to the Put Amount (as defined herein) on the date of repurchase. See
"Risk Factors -- Issuer's Ability to Pay Principal of Notes."
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount at maturity equal to that of the
surrendered Old Note. Original Issue Discount on the New Notes will accrue
from March 5, 1997, the date of original issuance of the Old Notes. Holders
whose Old Notes are accepted for exchange may, in the limited circumstances
described above, have the right to receive, in cash, accrued interest (if
any) thereon to, but not including, the date of consummation of the Exchange
Offer, such interest to be payable on the September 15 or March 15 next
following such date of consummation. Holders of Old Notes accepted for
exchange will be deemed to have waived the right to receive any other
payments or accrued interest on the Old Notes.
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Issuer contained in the Registration Agreement dated March
5, 1997 among the Issuer and the other signatories thereto (the "Registration
Agreement"). Based on interpretations by the staff of the Securities and
Exchange Commission (the "SEC") as set forth in no action letters issued to
third parties, the Issuer believes that New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold
and otherwise transferred by holders thereof (other than any such holder
which is an "affiliate" of the Issuer within the meaning of Rule 405 under
the Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course of such holder's business and such holder has
no arrangement with any person to participate in the distribution of such New
Notes. However, the Issuer does not intend to request the SEC to consider,
and the SEC has not considered, the Exchange Offer in the context of a
no-action letter and there can be no assurance that the staff of the SEC
would make a similar determination with respect to the Exchange Offer as in
such other circumstances. Each holder, other than a broker-dealer, must
acknowledge that it is not engaged in, and does not intend to engage in, a
distribution of such New Notes and has no arrangement or understanding to
participate in a distribution of New Notes. Each broker-dealer that receives
New Notes for its own account pursuant to the Exchange Offer must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Issuer has agreed that, for a period of 180 days after the
Expiration Date (as defined herein), it will make this Prospectus available
to any broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
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The Issuer will not receive any proceeds from the Exchange Offer. The Issuer
will pay all the expenses incident to the Exchange Offer. Tenders of Old
Notes pursuant to the Exchange Offer may be withdrawn at any time prior to
the Expiration Date. In the event the Issuer terminates the Exchange Offer
and does not accept for exchange any Old Notes, the Issuer will promptly
return the Old Notes to the holders thereof. See "The Exchange Offer."
There is no existing trading market for the New Notes, and there can be no
assurance regarding the future development of a market for the New Notes, or
the ability of holders of the New Notes to sell their New Notes or the price
at which such holders may be able to sell their New Notes. Chase Securities
Inc. and Smith Barney Inc. (the "Initial Purchasers") have advised the Issuer
that they currently intend to make a market in the New Notes. The Initial
Purchasers are not obligated to do so, however, and any market-making with
respect to the New Notes may be discontinued at any time without notice. The
Issuer does not intend to apply for listing or quotation of the New Notes on
any securities exchange or stock market.
SEE "RISK FACTORS" COMMENCING ON PAGE 18 OF THIS PROSPECTUS FOR A
DESCRIPTION OF CERTAIN RISKS TO BE CONSIDERED BY HOLDERS WHO TENDER THEIR OLD
NOTES IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1997.
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AVAILABLE INFORMATION
The Issuer has filed with the SEC a Registration Statement on Form S-1
(the "Registration Statement") under the Securities Act, with respect to the
New Notes being offered by this Prospectus. This Prospectus does not contain
all the information set forth in the Registration Statement and the exhibits
thereto, to which reference is hereby made. Any statements made in this
Prospectus concerning the provisions of certain documents are not necessarily
complete and, in each instance, reference is made to the copy of such
document filed as an exhibit to the Registration Statement.
The Registration Statement and the exhibits thereto may be inspected and
copied at the public reference facilities maintained by the SEC at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and will also
be available for inspection and copying at the regional offices of the SEC
located at 7 World Trade Center, New York, New York 10048 and at Citicorp
Center, 500 West Madison Street (Suite 1400), Chicago, Illinois 60661. Copies
of such material may also be obtained from the Public Reference Section of
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. The Issuer is not currently subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a
result of the Exchange Offer, the Issuer will become subject to such
requirements, and in accordance therewith will file periodic reports and
other information with the SEC. The SEC maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants, such as the Issuer, that file electronically with the SEC and
the address of such site is http://www.sec.gov. In the event the Issuer is
not required to be subject to the reporting requirements of the Exchange Act
in the future, the Issuer will be required under the Indenture, dated as of
March 1, 1997 (the "Indenture"), between the Issuer and The Bank of New York,
as trustee (the "Trustee"), pursuant to which the Old Notes have been, and
the New Notes will be, issued, to continue to file with the SEC and to
furnish to holders of the Notes the information, documents and other reports
specified in Sections 13 and 15(d) of the Exchange Act, including reports on
Form 10-K, 10-Q and 8-K, for so long as any Notes are outstanding.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the financial statements and the notes thereto contained
elsewhere in this Prospectus. Unless otherwise indicated or unless the
context otherwise requires, all references in this Prospectus to (i) the
"Issuer" mean Revlon Worldwide (Parent) Corporation, (ii) the "Company" or
"Revlon" mean Revlon Worldwide (Parent) Corporation and its subsidiaries and
(iii) "Revlon, Inc." mean Revlon, Inc. and its subsidiaries. All market share
and market position data in this Prospectus for the Company's brands and
specific products is based upon retail dollar sales which are derived from
A.C. Nielsen data. A.C. Nielsen measures retail sales volume of products sold
in the United States self-select distribution channel, which is defined as
the following channels of distribution: independent and chain drug stores,
mass-volume retailers, supermarkets and combination supermarket/drug stores.
Such data represents A.C. Nielsen's estimates based upon data gathered by
A.C. Nielsen from market samples. Such data is therefore subject to some
degree of variance.
THE ISSUER
The Issuer is a holding company whose only significant asset is all of the
common stock, par value $1.00 per share, of Revlon Worldwide, a holding
company that owns approximately 83.1% of the shares (representing
approximately 97.4% of the voting power) of common stock of Revlon, Inc. As
such, the Issuer's principal business operations are conducted by Revlon,
Inc. and its subsidiaries. The Issuer is indirectly wholly owned by
MacAndrews & Forbes Holdings Inc. ("MacAndrews Holdings"), a corporation
wholly owned through Mafco Holdings Inc. ("Mafco Holdings" and, together with
MacAndrews Holdings, "MacAndrews & Forbes") by Ronald O. Perelman. See
"Relationship with MacAndrews & Forbes" and "Ownership of Common Stock." Upon
the Revlon Worldwide Notes Defeasance, Revlon Worldwide will be merged with
and into the Issuer in the Revlon Worldwide Merger.
THE COMPANY
REVLON is one of the world's best known names in cosmetics and is a
leading mass market cosmetics brand. The Company's vision is to provide
glamour, excitement and innovation through quality products at affordable
prices. To pursue this vision, the Company's management team combines the
creativity of a cosmetics and fashion company with the marketing, sales and
operating discipline of a consumer packaged goods company. The Company
believes that its global brand name recognition, product quality and
marketing experience have enabled it to create one of the strongest consumer
brand franchises in the world, with products sold in approximately 175
countries and territories. The Company's products are marketed under such
well-known brand names as REVLON, COLORSTAY, REVLON AGE DEFYING, ALMAY and
ULTIMA II in cosmetics; MOON DROPS, ETERNA 27, REVLON RESULTS, ALMAY
TIME-OFF, ULTIMA II, JEANNE GATINEAU and NATURAL HONEY in skin care; CHARLIE,
FIRE & ICE, CIARA, CHERISH and JONTUE in fragrances; FLEX, OUTRAGEOUS,
AQUAMARINE, MITCHUM, COLORSILK, JEAN NATE, BOZZANO and COLORAMA in personal
care products; and ROUX FANCI-FULL, REALISTIC, CREME OF NATURE, FERMODYL,
VOILA, COLOMER, CREATIVE NAIL DESIGN SYSTEMS and AMERICAN CREW in
professional products. To further strengthen its consumer brand franchises,
the Company markets each core brand with a distinct and uniform global image
including packaging and advertising, while retaining the flexibility to
tailor products to local and regional preferences.
Revlon, Inc. was founded by Charles Revson, who revolutionized the
cosmetics industry by introducing nail enamels matched to lipsticks in
fashion colors 65 years ago. Today, the Company has leading market positions
in many of its principal product categories in the United States self-select
distribution channel, which the Company believes is the fastest-growing
channel of distribution for cosmetics, skin care, fragrance and personal care
products. The Company's leading market positions for its REVLON brand
products include the number one positions in lip makeup and nail enamel
(which the Company has occupied for the past 20 years), and for 1996 the
number one and two selling brands of lip makeup. The Company's market share
in lip makeup and nail enamel has increased from 24.3% and 21.2%,
respectively, for 1992, to 32.6% and 24.7%, respectively, for 1996. The
Company has the number two position in face makeup (including the number one
and two selling brands of foundation), where its market share has increased
from 10.8% for 1992 to 19.1% for 1996. Propelled by the success of its new
product launches and share gains in its existing product lines, the Company
has captured the number one position overall in color cosmetics (consisting
of lip, eye and face makeup and nail enamel) in the United States self-select
distribution channel, where its market share has increased from 14.7% for
1992 to 21.4% for 1996. The Company also has leading market positions in
several product categories in certain markets outside of the United States,
including in Brazil, Canada, South Africa and Australia.
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The Company believes that it is an industry leader in the development of
innovative and technologically advanced consumer and professional products.
In June 1994, the Company launched COLORSTAY lipcolor, which uses patented
transfer-resistant technology that provides long wear. COLORSTAY lip makeup
achieved a 14.5% market share in the United States self-select distribution
channel for 1996, making it the number one selling lip makeup in that
channel, with a market share of more than twice that of any competitor's
brand. The success of COLORSTAY lip makeup boosted the Company's total lip
makeup market share to more than twice the market share of the next largest
competitor. To capitalize on the highly successful launch of COLORSTAY
lipcolor, the Company introduced a collection of COLORSTAY cosmetics in 1995,
including foundation, eye colors, eye liners and lip pencils, and COLORSTAY
lashcolor mascara in 1996. COLORSTAY foundation, which was introduced late in
the third quarter of 1995, was the number one selling foundation in the
United States self-select distribution channel in 1996 and achieved a 9.3%
market share for such period. The Company has also introduced the COLORSTAY
collection in international markets, where it has increased the Company's
color cosmetics sales in such markets. The Company has applied the
proprietary transfer-resistant technology developed by the Company for
COLORSTAY to the ALMAY AMAZING collection, which is part of the Company's
line of hypo-allergenic, dermatologist-tested, fragrance-free cosmetics and
skin care products.
In April 1994, the Company introduced REVLON AGE DEFYING foundation, which
uses proprietary technology designed to meet the needs of women in the over
35 age bracket. REVLON AGE DEFYING foundation was the number two selling
foundation in the United States self-select distribution channel for 1996 and
achieved an 8.2% market share for such period. The Company capitalized on
this highly successful launch by introducing a collection of REVLON AGE
DEFYING color cosmetics, including eye makeup, blush and pressed powder. In
the fourth quarter of 1996, the Company introduced NEW COMPLEXION compact
makeup. With the addition of NEW COMPLEXION compact makeup, NEW COMPLEXION
foundations achieved a 6.8% market share in the United States self-select
distribution channel for the fourth quarter of 1996, giving Revlon the number
one, two and three selling brands of foundation for such period. In 1997, the
Company intends to continue to introduce new products under its COLORSTAY and
REVLON AGE DEFYING brands, including the relaunching in the first quarter of
1997 of COLORSTAY lipcolor with a new and improved formula that delivers
moisture while retaining transfer resistance. In addition, the Company
launched in the second quarter of 1997 ALMAY TIME-OFF REVITALIZER, a skin
care product which uses a proprietary technology to visibly rejuvenate skin.
In 1997, the Company also intends to introduce new products targeted to the
"trend" consumer under its STREETWEAR brand to capitalize on the successful
launch of its STREETWEAR nail enamel in 1996.
In the United States and increasingly in international markets, the
Company's products are sold principally in the expanding self-select
distribution channel. The trend in the cosmetics, skin care and fragrance
industry has been the shift of consumer purchases from the
demonstrator-assisted channel to the self-select distribution channel. The
Company believes that it is well-positioned to continue to take advantage of
the shifting consumer shopping patterns in international markets towards the
self-select distribution channel, particularly in Western Europe, Latin
America and the Far East. The Company also is expanding its presence in the
new and emerging markets of Eastern Europe, Russia, India, China, Thailand,
Vietnam, South Korea and Africa.
In the United States, the self-select distribution channel, in which
consumers select their own purchases without the assistance of an in-store
demonstrator, includes independent drug stores and chain drug stores (such as
Walgreens, CVS Drug stores, Eckerd Drug stores and Revco), mass volume
retailers (such as Wal-Mart, Target Stores and Kmart) and supermarkets and
combination supermarket/ drug stores (such as Pathmark, Albertson's, Kroger's
and Smith's). Internationally, the self-select distribution channel includes
retailers such as Boots in the United Kingdom and Western Europe, and
Shoppers Drug Mart in Canada. The foregoing retailers, among others, sell the
Company's products. See "Business -- Overview."
Business Strategy
The Company's business strategy, which implements its vision and is
intended to continue to improve operating performance, is to:
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o Strengthen and broaden its core brands through globalization of
marketing and advertising, product development and manufacturing and
through increasing its emphasis on advertising and promotion.
o Lead the industry in the development and introduction of
technologically advanced innovative products that set new trends.
o Expand the Company's presence in all markets in which the Company
competes and enter new and emerging markets.
o Continue to reduce costs and improve operating efficiencies, customer
service and product quality by reducing overhead, rationalizing factory
operations, upgrading management information systems, globally sourcing
raw materials and components and carefully managing working capital.
o Continue to expand market share and product lines through possible
strategic acquisitions or joint ventures. See "Business -- Business
Strategy."
As a result of the implementation of its strategy, the Company has
achieved 14 consecutive quarters of increased net sales, operating income and
EBITDA (as defined herein) compared with the corresponding quarter of the
prior year. Net sales, operating income and EBITDA increased 6.1%, 4.9% and
10.6%, respectively, for the first quarter of 1997 over the comparable period
in 1996, 11.8%, 36.6% and 26.3%, respectively, for 1996 over 1995 and 11.8%,
35.2% and 25.3%, respectively, for 1995 over 1994. Gross profit as a
percentage of net sales was 66.3% for the first quarter of 1997 compared with
67.1% for the first quarter of 1996, 66.5% for 1996 compared with 66.3% for
1995 and 65.5% for 1994. In addition, the Company's net loss decreased from
$191.7 million for 1994 to $139.3 million for 1995 and $86.6 million for 1996
(excluding in 1996 the $187.8 million gain from the Revlon IPO (as defined
herein) and the $6.6 million extraordinary charge incurred in connection with
the repayment of indebtedness with the proceeds therefrom) (the "Adjusted
1996 Net Loss") and decreased from an Adjusted 1996 Net Loss of $55.4 million
in the first quarter of 1996 to $54.9 million in the first quarter of 1997
(excluding in 1997 the $43.8 million extraordinary charge incurred in
connection with the repayment of the Revlon Worldwide Notes) (the "Adjusted
1997 Net Loss"). The Company has also reduced the relative amount of working
capital necessary to support net sales. The ratio of average quarterly
combined inventory and accounts receivable balances to net sales was 32.2%
for the first quarter of 1997 compared with 33.1% for the comparable period
in 1996, and 32.3% for 1996 compared with 33.2% for 1995 and 34.9% for 1994.
The Company has increased its investment in advertising and consumer directed
promotion while decreasing its selling, general and administrative ("SG&A")
expenses as a percentage of net sales to 61.7% for the first quarter of 1997
compared with 63.6% for the comparable period in 1996, and 57.3% for 1996
compared with 58.8% for 1995 and 59.3% for 1994.
Background
On June 24, 1992, Revlon, Inc., through its wholly owned subsidiary Revlon
Consumer Products Corporation ("Products Corporation"), succeeded to assets
and liabilities of the cosmetics and skin care, fragrance and personal care
products business of Revlon Holdings Inc. ("Holdings"). Holdings retained
certain small brands that historically had not been profitable (the "Retained
Brands") and certain other assets and liabilities. Unless the context
otherwise requires, references to the Company or Revlon relating to dates or
periods prior to the formation of Revlon, Inc. mean the cosmetics and skin
care, fragrance and personal care products business of Holdings to which
Revlon, Inc. has succeeded.
On March 5, 1996, Revlon, Inc. completed an initial public offering (the
"Revlon IPO") in which it issued and sold 8,625,000 shares of its Class A
Common Stock, par value $.01 per share (the "Class A Common Stock"), for
$24.00 per share. Revlon, Inc. contributed the net proceeds of $187.8 million
(net of underwriters' discount and related fees and expenses) to Products
Corporation, which in turn used such funds to repay borrowings outstanding
under its then existing credit agreement (the "1995 Credit Agreement") and to
pay fees and expenses related to entering into a new credit agreement (the
"1996 Credit Agreement"), which was subsequently repaid in May 1997 with
borrowings under its existing credit agreement (the "Credit Agreement").
Additionally, the Company recognized a $187.8 million gain in connection with
the Revlon IPO.
The Company's principal executive offices are located at 625 Madison
Avenue, New York, New York 10022, and its telephone number is (212) 527-4000.
The Issuer was incorporated in Delaware in 1997.
5
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The following sets forth a summary organizational chart for the Company.
Mafco Holdings Inc.
("Mafco Holdings")
100%
MacAndrews & Forbes
Holdings Inc.
("MacAndrews Holdings")
100%
Revlon Holdings Inc.
("Holdings")
100%
Revlon Worldwide Holdings Inc.
("Worldwide Holdings")
100%
REVLON
WORLDWIDE (PARENT)
CORPORATION
(THE "ISSUER")
100%
Revlon
Worldwide
Corporation
("Revlon Worldwide")
83.1%*
Revlon, Inc.
("Revlon, Inc.")
100%
Revlon Consumer
Products Corporation
(including operating subsidiaries)
("Products Corporation")
* Revlon Worldwide beneficially owns 11,250,000 shares of Class A Common
Stock of Revlon, Inc. (representing 56.6% of the outstanding shares of
Class A Common Stock) and all of the outstanding 31,250,000 shares of
Class B Common Stock, par value $.01 per share (the "Class B Common
Stock" and, together with the Class A Common Stock, the "Common Stock"),
of Revlon, Inc., which together represent approximately 83.1% of the
outstanding shares of Common Stock and approximately 97.4% of the
combined voting power of the outstanding shares of Common Stock of
Revlon, Inc. See "Ownership of Common Stock."
6
<PAGE>
THE TRANSACTIONS
Prior to the Revlon Worldwide Merger, the Notes will be secured by a
pledge of 47.1% of the shares of common stock of Revlon Worldwide.
Concurrently with the closing of the Offering, the Issuer deposited in escrow
the net proceeds of the Offering and certain other funds provided by
MacAndrews & Forbes. On April 2, 1997, the Issuer contributed escrowed funds,
together with Revlon Worldwide Notes that had been previously delivered to
Revlon Worldwide for cancellation (collectively, the "Capital Contribution"),
to Revlon Worldwide to finance the Revlon Worldwide Notes Defeasance. As a
result of the Deposit being made on April 2, 1997, the Revlon Worldwide Notes
Defeasance will be effective on August 4, 1997 so long as certain events of
bankruptcy, insolvency or reorganization affecting Revlon Worldwide do not
exist on such date.
The Issuer has guaranteed on a non-recourse basis the obligations of an
affiliate under a credit facility (the "Non-Recourse Guaranty") and has
pledged as security therefor the shares of common stock of Revlon Worldwide
that are not pledged as security for the Notes. Borrowings under such credit
facility were used to finance a portion of the capital contribution made by
MacAndrews & Forbes to the Issuer. See "Relationship with MacAndrews & Forbes
- -- Non-Recourse Guaranty."
The Revlon Worldwide Notes Defeasance will constitute "covenant
defeasance" for purposes of the Revlon Worldwide Notes Indenture. As a
result, following the Revlon Worldwide Notes Defeasance, Revlon Worldwide may
omit to comply with substantially all its covenants and other obligations,
other than payment, under the Revlon Worldwide Notes Indenture. See
"Description of Other Indebtedness -- Revlon Worldwide Notes."
Following the Revlon Worldwide Notes Defeasance, Revlon Worldwide will be
merged with and into the Issuer in the Revlon Worldwide Merger, and the
Issuer will directly own all of the shares of Common Stock of Revlon, Inc.
that are currently owned by Revlon Worldwide and pledged to secure the Revlon
Worldwide Notes. Simultaneously with the Revlon Worldwide Merger, (i) the
Notes will be secured by a pledge of all of the 11,250,000 shares of Class A
Common Stock and 8,750,000 shares of Class B Common Stock, in each case,
owned by Revlon Worldwide, representing in the aggregate approximately 39.1%
of the outstanding shares of Common Stock of Revlon, Inc. and (ii) the
Non-Recourse Guaranty will be secured by a pledge of the remaining shares of
Class B Common Stock of Revlon, Inc., in each case, in substitution for the
respective pledges of the Revlon Worldwide common stock. See "Risk Factors --
Security for Notes; Potential for Diminution." Following the Revlon Worldwide
Notes Defeasance and in connection with the Revlon Worldwide Merger, the
Issuer will assume the obligations of Revlon Worldwide, thereby becoming the
primary obligor under the Revlon Worldwide Notes and the Revlon Worldwide
Notes Indenture. See "Risk Factors --Substantial Level of Indebtedness."
7
<PAGE>
THE EXCHANGE OFFER
SECURITIES OFFERED ............ Up to $770,000,000 aggregate principal
amount at maturity of Series B Senior
Secured Discount Notes due 2001, which have
been registered under the Securities Act.
The terms of the New Notes and the Old Notes
are identical in all material respects,
except for certain transfer restrictions and
registration rights relating to the Old
Notes and except that, if the Exchange Offer
is not consummated by September 29, 1997,
interest will accrue on the Old Notes (in
addition to the accrual of Original Issue
Discount) from and including such date until
but excluding the date of consummation of
the Exchange Offer payable in cash
semiannually in arrears on March 15 and
September 15, commencing March 15, 1998, at
a rate per annum equal to .50% of the
Accreted Value of the Old Notes as of the
September 15 or March 15 immediately
preceding such interest payment date. See
"-- Summary Description of the New Notes"
and "Description of the Notes -- General."
THE EXCHANGE OFFER ............ The New Notes are being offered in exchange
for a like principal amount at maturity of
Old Notes. The issuance of the New Notes is
intended to satisfy obligations of the
Issuer contained in the Registration
Agreement. For procedures for tendering the
Old Notes, see "The Exchange Offer --
Procedures for Tendering Old Notes."
TENDERS; EXPIRATION DATE;
WITHDRAWAL ................... The Exchange Offer will expire at 5:00 p.m.,
New York City time, on , 1997, or such
later date and time to which it is extended.
The tender of Old Notes pursuant to the
Exchange Offer may be withdrawn at any time
prior to the Expiration Date. Any Old Note
not accepted for exchange for any reason
will be returned without expense to the
tendering holder thereof as promptly as
practicable after the expiration or
termination of the Exchange Offer. See
"The Exchange Offer -- Terms of the Exchange
Offer; Period for Tendering Old Notes"
and "The Exchange Offer -- Withdrawal."
CERTAIN CONDITIONS TO
EXCHANGE OFFER ............... The Issuer shall not be required to accept
for exchange, or to issue New Notes in
exchange for, any Old Notes and may
terminate or amend the Exchange Offer if at
any time before the acceptance of the Old
Notes for exchange or the exchange of the
New Notes for such Old Notes certain events
have occurred, which in the reasonable
judgment of the Issuer, make it inadvisable
to proceed with the Exchange Offer and/or
with such acceptance for exchange or with
such exchange. Such events include (i) any
threatened, instituted or pending action
seeking to restrain or prohibit the Exchange
Offer, (ii) a general suspension of trading
in securities on any national securities
exchange or in the over-the-counter market,
(iii) a general banking moratorium, (iv) the
commencement of a war or armed
8
<PAGE>
hostilities involving the United States and
(v) a material adverse change or development
involving a prospective material adverse
change in the Issuer's business, properties,
assets, liabilities, financial condition,
operations, results of operations or
prospects that may affect the value of the
Old Notes or the New Notes. In addition, the
Issuer will not accept for exchange any Old
Notes tendered, and no New Notes will be
issued in exchange for any such Old Notes,
at any such time any stop order shall be
threatened or in effect with respect to the
Registration Statement of which this
Prospectus constitutes a part or the
qualification of the Indenture under the
Trust Indenture Act of 1939. See "The
Exchange Offer -- Certain Conditions to the
Exchange Offer."
FEDERAL INCOME TAX
CONSEQUENCES ................. Based upon the opinion of Skadden, Arps,
Slate, Meagher & Flom LLP, special counsel
to the Issuer, the exchange pursuant to the
Exchange Offer should not result in gain or
loss to the holders or the Issuer for
federal income tax purposes. See "Certain
U.S. Federal Income Tax Considerations."
USE OF PROCEEDS ............... There will be no proceeds to the Issuer from
the exchange pursuant to the Exchange Offer.
See "Use of Proceeds."
EXCHANGE AGENT ................ The Bank of New York is serving as exchange
agent (the "Exchange Agent") in connection
with the Exchange Offer.
CONSEQUENCES OF EXCHANGING OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions
in the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend thereon
as a consequence of the issuance of the Old Notes pursuant to exemptions
from, or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the Old
Notes may not be offered or sold, unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Issuer does not
currently anticipate that it will register Old Notes under the Securities
Act. See "Description of the Notes -- Registration Rights." Based on
interpretations by the staff of the SEC, as set forth in no-action letters
issued to third parties, the Issuer believes that New Notes issued pursuant
to the Exchange Offer in exchange for Old Notes may be offered for resale,
resold or otherwise transferred by holders thereof (other than any holder
which is an "affiliate" of the Issuer within the meaning of Rule 405 under
the Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course of such holders' business and such holders
have no arrangement with any person to participate in the distribution of
such New Notes. However, the Issuer does not intend to request the SEC to
consider, and the SEC has not considered, the Exchange Offer in the context
of a no-action letter and there can be no assurance that the staff of the SEC
would make a similar determination with respect to the Exchange Offer as in
such other circumstances. Each holder, other than a broker-dealer, must
acknowledge that it is not engaged in, and does not intend to engage in, a
distribution of New Notes and has no arrangement or understanding to
participate in a distribution of New Notes. If any holder is an affiliate of
the Issuer, is engaged in or intends to engage in or has any arrangement or
understanding with respect to the distribution of the New Notes to be
acquired pursuant to the Exchange Offer, such holder
9
<PAGE>
(i) could not rely on the applicable interpretations of the staff of the SEC
and (ii) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes must acknowledge that such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities and that it will deliver a prospectus in connection with any
resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of
New Notes received in exchange for Old Notes where such Old Notes were
acquired by such broker-dealer as a result of market-making activities or
other trading activities. The Issuer has agreed that, for a period of 180
days after the Expiration Date, it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution." In addition, to comply with the state securities laws, the New
Notes may not be offered or sold in any state unless they have been
registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with. The offer
and sale of the New Notes to "qualified institutional buyers" (as such term
is defined under Rule 144A of the Securities Act) is generally exempt from
registration or qualification under the state securities laws. The Issuer
currently does not intend to register or qualify the sale of the New Notes in
any state where an exemption from registration or qualification is required
and not available. See "The Exchange Offer -- Consequences of Exchanging Old
Notes" and "Description of the Notes -- Registration Rights."
SUMMARY DESCRIPTION OF THE NEW NOTES
The terms of the New Notes and the Old Notes are identical in all material
respects, except for certain transfer restrictions and registration rights
relating to the Old Notes and except that, if the Exchange Offer is not
consummated by September 29, 1997, interest will accrue on the Old Notes (in
addition to the accrual of Original Issue Discount) from and including such
date until but excluding the date of consummation of the Exchange Offer
payable in cash semiannually in arrears on March 15 and September 15,
commencing March 15, 1998, at a rate per annum equal to .50% of the Accreted
Value of the Old Notes as of the September 15 or March 15 immediately
preceding such interest payment date.
SECURITIES OFFERED ............ Up to $770,000,000 aggregate principal
amount at maturity of Series B Senior
Secured Discount Notes due 2001, which have
been registered under the Securities Act.
MATURITY DATE ................. March 15, 2001.
YIELD TO MATURITY ............. 10 3/4% per annum (computed on a semiannual
bond equivalent basis) calculated from March
5, 1997.
ORIGINAL ISSUE DISCOUNT ....... The Old Notes were issued on March 5, 1997
at an issue price of $655.90 per $1,000
principal amount at maturity. Because the
New Notes will be treated as a continuation
of the Old Notes, which were issued at an
original issue discount ("Original Issue
Discount") for federal income tax purposes,
the New Notes will have Original Issue
Discount. Prospective holders of the New
Notes should be aware that, although there
will be no periodic payments of interest on
the New Notes, accrued Original Issue
Discount will be includable, periodically,
in a holder's gross income for United States
federal income tax purposes prior to
redemption or other disposition of such
10
<PAGE>
holder's New Notes, whether or not such New
Notes are ultimately redeemed, sold (to the
Company or otherwise) or paid at maturity.
The foregoing discussion of the federal
income tax treatment applicable to the
exchange of Old Notes for New Notes is based
upon the opinion of Skadden, Arps, Slate,
Meagher & Flom LLP, special counsel to the
Issuer. See "Certain U.S. Federal Income Tax
Considerations."
OPTIONAL REDEMPTION ........... The Notes may be redeemed at the option of
the Issuer in whole or from time to time in
part at any time on and after March 15, 2000
at a redemption price equal to 102.6875% of
the Accreted Value on the date of
redemption. See "Description of the Notes --
Optional Redemption."
CHANGE OF CONTROL ............. Upon a Change of Control the Issuer will
have the option to redeem the Notes in whole
at a redemption price equal to the Accreted
Value on the date of redemption plus the
Applicable Premium and, subject to certain
conditions, each holder of the Notes will
have the right to require the Issuer to
repurchase all or a portion of such holder's
Notes at a price equal to the Put Amount on
the date of repurchase. There can be no
assurance that the Issuer will have
sufficient funds to repurchase the Notes
upon a Change of Control. See "Description
of the Notes -- Change of Control" and "Risk
Factors -- Issuer's Ability to Pay Principal
of Notes."
COLLATERAL .................... Prior to the Revlon Worldwide Merger, the
Notes will be secured by a pledge of 47.1%
of the shares of common stock of Revlon
Worldwide. Following the Revlon Worldwide
Notes Defeasance, Revlon Worldwide will be
merged with and into the Issuer and the
Issuer will directly own all of the shares
of common stock of Revlon, Inc. that are
currently pledged to secure the Revlon
Worldwide Notes. Simultaneously with the
Revlon Worldwide Merger, the Notes will be
secured by a pledge of all of the 11,250,000
shares of Class A Common Stock and 8,750,000
shares of Class B Common Stock, in each
case, owned by Revlon Worldwide,
representing in the aggregate approximately
39.1% of the outstanding shares of Common
Stock of Revlon, Inc. No additional shares
of Common Stock of Revlon, Inc. will be
pledged by the Issuer as security for the
Notes irrespective of the value of such
Common Stock at any time.
The Issuer may withdraw shares of Common
Stock of Revlon, Inc. constituting
Collateral (as defined herein), in whole or
in part, by substituting therefor with the
Trustee cash or U.S. Government Obligations
that will be sufficient for the payment at
maturity of the principal on the Notes, or
the pro rata portion thereof, respectively.
In addition, the pro rata portion of shares
of Common Stock of Revlon, Inc. constituting
Collateral may be released following the
delivery of less than all the Notes for
cancellation. There can be no assurance as
to the value of the
11
<PAGE>
Collateral at any time or that the proceeds
from the sale or sales of all such
Collateral would be sufficient to satisfy
the amounts due on the Notes, whether at
maturity or otherwise. In addition, the
ability of the Trustee or the holders of the
Notes to realize upon the Collateral may be
subject to certain limitations, and there
can be no assurance that the Trustee or such
holders would be able to sell the Collateral
at the then current market price of Common
Stock of Revlon, Inc., as sales of
substantial amounts of Common Stock of
Revlon, Inc. could adversely affect market
prices. See "Description of the Notes --
Collateral."
RANKING AND HOLDING COMPANY
STRUCTURE .................... The Old Notes are, and the New Notes will
be, senior secured obligations of the Issuer
and will rank pari passu in right of payment
with all future senior indebtedness of the
Issuer, if any, and senior to all future
subordinated indebtedness of the Issuer, if
any. As of the date hereof, the Issuer has
no subordinated indebtedness outstanding and
there are no current firm arrangements by
the Issuer to issue any significant amount
of indebtedness that will be pari passu or
subordinated in right of payment to the
Notes. The only outstanding indebtedness of
the Issuer (other than the Non-Recourse
Guaranty) are the Notes, and all the
Issuer's consolidated liabilities (other
than the Notes and certain liabilities
incurred in connection with the Offering)
are liabilities of its subsidiaries.
Following the Revlon Worldwide Merger, the
Issuer will also be the primary obligor
under the Revlon Worldwide Notes and the
Revlon Worldwide Notes Indenture until the
defeasance trust is paid out to holders of
the Revlon Worldwide Notes at maturity. The
Issuer is a holding company and therefore
the Old Notes are, and the New Notes will
be, effectively subordinated to all existing
and future indebtedness and other
liabilities of the Issuer's subsidiaries,
including trade payables. As of March 31,
1997, after giving pro forma effect to the
Revlon Worldwide Merger, the outstanding
indebtedness and other liabilities of such
subsidiaries, including trade payables and
accrued expenses, would have been
approximately $2,137.0 million. Prior to the
Revlon Worldwide Merger, the Notes will also
be effectively subordinated to the Revlon
Worldwide Notes. See "Risk Factors --
Substantial Level of Indebtedness," "Risk
Factors -- Holding Company Structure;
Restrictions on Ability of Subsidiaries to
Pay Dividends," "Risk Factors -- Issuer's
Ability to Pay Principal of Notes,"
"Risk Factors --Subordination to Subsidiary
Liabilities" and "Description of the Notes."
CERTAIN COVENANTS ............. The indenture governing the Notes (the
"Indenture") requires the Issuer to hold at
all times the Minimum Collateral Percentage
(as defined herein) of Common Stock of
Revlon, Inc. and to not be or become an
investment company under the Investment
Company Act of 1940, as amended. In
addition, the
12
<PAGE>
Indenture contains covenants that, among
other things, limit (i) the issuance of
additional debt and redeemable stock by the
Issuer, Revlon Worldwide, or Revlon, Inc.
and the issuance of preferred stock by
Revlon, Inc. or Revlon Worldwide, (ii) the
issuance of debt and preferred stock by
Products Corporation and its subsidiaries,
(iii) the payment of dividends on capital
stock of the Issuer and its subsidiaries and
the redemption of capital stock of the
Issuer, (iv) the sale of assets and
subsidiary stock, (v) transactions with
affiliates and (vi) consolidations, mergers
and transfers of all or substantially all
the Issuer's assets. The Indenture also
prohibits certain restrictions on
distributions from subsidiaries. All of
these limitations and prohibitions, however,
are subject to a number of important
qualifications. See "Description of the
Notes -- Certain Covenants."
USE OF PROCEEDS ............... The Issuer will not receive any proceeds
from the Exchange Offer. The Issuer used the
net proceeds of the Offering, which were
approximately $490.4 million, together with
a capital contribution from MacAndrews &
Forbes, to make the Capital Contribution.
Revlon Worldwide used the Capital
Contribution to finance the Revlon Worldwide
Notes Defeasance. See "Use of Proceeds."
EXCHANGE OFFER; REGISTRATION
RIGHTS ....................... Holders of New Notes are not entitled to any
registration rights with respect to the New
Notes. Pursuant to the Registration
Agreement, the Issuer agreed to file, at its
cost, a registration statement with respect
to the Exchange Offer. The Registration
Statement of which this Prospectus is a part
constitutes the registration statement for
the Exchange Offer. See "Description of the
Notes -- Registration Rights."
RISK FACTORS
Prospective holders of New Notes should consider carefully all of the
information set forth in this Prospectus and, in particular, should evaluate
the specific factors set forth under "Risk Factors" before making a decision
to tender their Old Notes in the Exchange Offer.
13
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The summary historical financial data for, and as of the end of, each of
the years in the five year period ended December 31, 1996 have been derived
from the audited consolidated financial statements of the Company. The
summary historical financial data for the three months ended March 31, 1996
and 1997 and as of March 31, 1997 have been derived from the unaudited
consolidated financial statements of the Company which reflect, in the
opinion of management of the Company, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial data
for such periods. Results for interim periods are not necessarily indicative
of the results for the full year.
The pro forma statement of operations data for the year ended December 31,
1996 and the three months ended March 31, 1997 give pro forma effect to the
Revlon IPO and the application of the net proceeds therefrom, the Offering,
the purchase and cancellation of $778.4 million principal amount at maturity
of Revlon Worldwide Notes in March 1997, and the extinguishment of the
remaining $337.4 million principal amount at maturity of Revlon Worldwide
Notes to occur on March 15, 1998, as if such transactions had been
consummated on January 1, 1996. The pro forma adjustments are based upon
available information and certain assumptions that management of the Company
believes are reasonable. The pro forma financial data do not purport to
represent the results of operations or the financial position of the Company
that actually would have occurred had the foregoing transactions been
consummated on the aforesaid dates.
The following summary financial data should be read in conjunction with
"-- The Transactions," "Capitalization," "Selected Historical and Pro Forma
Financial Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements of the
Company included elsewhere in this Prospectus.
14
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
----------------------- ---------------------------------------------------------
1997 1996 1996 (A) 1995 (A) 1994 (A) 1993 (A) 1992
----------- ----------- ----------- ---------- ----------- ---------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL STATEMENTS OF
OPERATIONS DATA:
Net sales ........................ $ 492.5 $ 464.3 $2,167.0 $1,937.8 $1,732.5 $1,588.3 $1,632.2
Gross profit...................... 326.3 311.4 1,441.3 1,285.7 1,135.2 1,019.5 1,076.8
Selling, general and
administrative expenses ......... 303.8 295.1 1,241.1 1,139.1 1,026.8 969.6 996.7
Restructuring charges............. -- -- -- -- -- -- 162.7 (b)
----------- ----------- ----------- ---------- ----------- ---------- -----------
Business consolidation costs .... 5.4 -- -- -- -- -- --
Operating income (loss)........... 17.1 16.3 200.2 146.6 108.4 49.9 (82.6)
Interest expense, net............. 60.7 58.5 236.7 232.6 214.9 171.7 94.0
Amortization of debt issuance
costs............................ 3.4 3.6 12.5 15.2 12.6 11.2 6.7
Other, net........................ 2.5 2.6 12.1 12.7 21.0 39.3 26.0
Gain on sale of subsidiary stock 0.1 187.8 (c) 187.8 (c) -- -- -- --
----------- ----------- ----------- ---------- ----------- ---------- -----------
Income (loss) before income
taxes............................ (49.4) 139.4 126.7 (113.9) (140.1) (172.3) (209.3)
Provision for income taxes........ 5.5 7.0 25.5 25.4 22.8 19.0 14.7
----------- ----------- ----------- ---------- ----------- ---------- -----------
Income (loss) before
extraordinary item and
cumulative effect of accounting
changes.......................... (54.9) 132.4 101.2 (139.3) (162.9) (191.3) (224.0)
Extraordinary items--early
extinguishments of debt.......... (43.8) (6.6) (6.6) -- -- (9.5) (2.9)
Cumulative effect of accounting
changes.......................... -- -- -- -- (28.8)(d) (6.0)(e) --
----------- ----------- ----------- ---------- ----------- ---------- -----------
Net income (loss)................. $ (98.7) $ 125.8 $ 94.6 $ (139.3) $ (191.7) $ (206.8) $ (226.9)
=========== =========== =========== ========== =========== ========== ===========
OTHER DATA:
Net cash used for operating
activities....................... $ (75.9) $(100.4) $ (10.2) $ (51.7) $ (1.3) $ (150.5) $ (244.9)
Net cash used for investing
activities....................... (327.6) (12.1) (65.1) (72.5) (51.0) (8.7) (48.1)
Net cash provided by (used for)
financing activities............. 400.9 95.1 78.5 125.2 (48.8) 266.8 286.2
Ratio of earnings to fixed
charges (f) ..................... -- 3.07x 1.47x -- -- -- --
EBITDA (g)........................ $ 39.7 $ 35.9 $ 282.8 $ 224.0 $ 178.8 $ 118.9 $ 150.1
Cash interest expense ............ 39.6 43.7 139.0 148.2 138.5 109.8 110.4
Ratio of EBITDA to interest
expense, net .................... 0.65x 0.61x 1.19x 0.96x 0.83x 0.69x 1.60x
Ratio of EBITDA to cash interest
expense ......................... 1.00x 0.82x 2.03x 1.51x 1.29x 1.08x 1.36x
PRO FORMA DATA (H)(I):
Operating income.................. $ 17.1 $ 200.2
Interest expense, net ............ 46.0 (i) 183.2 (h)
Income (loss) before
extraordinary item .............. (39.7)(i) 155.2 (h)
Ratio of earnings to fixed
charges (j) ..................... -- --
Cash interest expense............. 39.6 136.4
Ratio of EBITDA to cash interest
expense.......................... 1.00x 2.07x
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1997
--------------
(IN MILLIONS)
<S> <C>
Balance Sheet Data:
Total assets ....................................................................... $ 1,944.4
Long-term debt, excluding current portion........................................... 2,245.0
Total stockholder's deficiency...................................................... (1,003.0)
</TABLE>
15
<PAGE>
NOTES TO SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
(a) Effective January 1, 1996, Products Corporation acquired from Holdings
substantially all of the assets of its Tarlow Advertising Division
("Tarlow"). Products Corporation assumed substantially all of the
liabilities and obligations of Tarlow. Net liabilities assumed were
approximately $3.4 million. The assets acquired and liabilities assumed
were accounted for at historical cost in a manner similar to that of a
pooling of interests and, accordingly, prior period financial
statements beginning with January 1, 1993 have been restated as if the
acquisition took place at the beginning of such period. In addition to
the liabilities assumed, Products Corporation paid $4.1 million to
Holdings, which payment was accounted for as an increase to capital
deficiency.
(b) Represents restructuring charges of $162.7 million in 1992, which
included (i) consolidation of certain worldwide manufacturing and
warehouse facilities, (ii) consolidation and improvements in management
information systems, (iii) vacating premises under lease, (iv)
personnel reductions and (v) discontinuance of certain product lines.
(c) Represents the gain on sale of subsidiary stock recognized as a result
of the Revlon IPO. On March 5, 1996, Revlon, Inc. issued and sold in
the Revlon IPO 8,625,000 shares of its Class A Common Stock for $24.00
per share. Revlon, Inc. contributed the net proceeds of $187.8 million
(net of underwriters' discount and related fees and expenses) to
Products Corporation, which in turn used such funds to repay borrowings
outstanding under the 1995 Credit Agreement and to pay fees and
expenses related to entering into the 1996 Credit Agreement.
(d) Effective January 1, 1994, the Company adopted SFAS No. 112,
"Employers' Accounting for Postemployment Benefits." The Company
recognized a charge of $28.8 million in the first quarter of 1994 to
reflect the cumulative effect of the accounting change, net of income
tax benefit.
(e) Effective January 1, 1993, the Company adopted SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than
Pensions," for its retiree benefit plan in the United States.
Accordingly, the Company recognized a charge of $6.0 million in the
1993 first quarter to reflect the cumulative effect of the accounting
change.
(f) Earnings used in computing the ratio of earnings to fixed charges
consist of income (loss) before income taxes plus fixed charges. Fixed
charges consist of interest expense (including amortization of debt
issuance costs, but not losses relating to the early extinguishment of
debt) and 33% of rental expense (considered to be representative of the
interest factors). Fixed charges exceeded earnings before fixed charges
by $49.4 million for the three months ended March 31, 1997 and by
$113.9 million in 1995, $140.1 million in 1994, $172.3 million in 1993
and $209.3 million in 1992. Excluding the $187.8 million gain on sale
of subsidiary stock in the Revlon IPO from 1996 earnings (the "Adjusted
Earnings"), fixed charges would have exceeded Adjusted Earnings before
fixed charges by $48.4 million for the three months ended March 31,
1996 and by $61.1 million in 1996.
(g) EBITDA is defined as operating income (loss) before restructuring
charges, plus depreciation and amortization other than that relating to
early extinguishment of debt, debt discount and debt issuance costs.
EBITDA is presented here not as a measure of operating results but
rather as a measure of debt service ability. EBITDA should not be
considered in isolation or as a substitute for net income or cash flow
from operations prepared in accordance with generally accepted
accounting principles as a measure of the profitability or liquidity of
the Company. EBITDA does not take into account the Company's debt
service requirements and other commitments and, accordingly, is not
necessarily indicative of amounts that may be available for
discretionary uses.
(h) The pro forma statement of operations data for the year ended December
31, 1996 reflects a reduction of interest expense of $2.6 million
related to the Revlon IPO, a reduction of interest expense and
amortization of debt issuance costs of $74.4 million and $2.9 million,
respectively, reflecting interest expense and amortization of debt
issuance costs on the $778.4 million principal amount at maturity of
Revlon Worldwide Notes cancelled during March 1997, a reduction of
interest expense and amortization of debt issuance costs of $32.3
million and $1.3 million, respectively,
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reflecting the extinguishment of the remaining $337.4 million principal
amount at maturity of Revlon Worldwide Notes to occur on March 15, 1998
and an increase in interest expense and amortization of debt issuance
costs of $55.8 million and $3.7 million, respectively, related to the
Notes.
(i) The pro forma statement of operations data for the three months ended
March 31, 1997 reflects a reduction of interest expense and amortization
of debt issuance costs of $17.6 million and $0.8 million, respectively,
reflecting $778.4 million principal amount at maturity of Revlon
Worldwide Notes cancelled during March 1997, a reduction of interest
expense and amortization of debt issuance costs of $8.5 million and $0.3
million, respectively, reflecting the extinguishment of the remaining
$337.4 million principal amount at maturity of Revlon Worldwide Notes to
occur on March 15, 1998, and an increase in interest expense and
amortization of debt issuance costs of $11.4 million and $0.6 million,
respectively, related to the Notes.
(j) As adjusted to give pro forma effect to the Revlon IPO and the
application of the net proceeds therefrom, the Offering, the purchase
and cancellation of $778.4 million principal amount at maturity of Revlon
Worldwide Notes in March 1997, and the extinguishment of the remaining
$337.4 million principal amount at maturity of Revlon Worldwide Notes
to occur on March 15, 1998 as if such transactions had been consummated
on January 1, 1996, fixed charges would have exceeded earnings before
fixed charges by $34.2 million for the three months ended March 31,
1997 and would have exceeded Adjusted Earnings before fixed charges by
$7.1 million in 1996.
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RISK FACTORS
Prospective holders of New Notes should consider carefully all of the
information set forth in this Prospectus and, in particular, should evaluate
the following risks before tendering their Old Notes in the Exchange Offer,
although the risk factors set forth below (other than "--Consequences of
Failure to Exchange and Requirements for Transfer of New Notes") are
generally applicable to the Old Notes as well as the New Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions
in the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend thereon
as a consequence of the issuance of the Old Notes pursuant to exemptions
from, or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the Old
Notes may not be offered or sold, unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Issuer does not
currently anticipate that it will register Old Notes under the Securities
Act. See "The Exchange Offer -- Consequences of Exchanging Old Notes."
SUBSTANTIAL LEVEL OF INDEBTEDNESS
The Company has a substantial amount of outstanding indebtedness. As of
March 31, 1997, the Issuer's total indebtedness (excluding the Non-Recourse
Guaranty and the $301.7 million accreted value of the Revlon Worldwide Notes)
was approximately $1,975.1 million, consisting of the $508.7 million accreted
value of the Notes and the approximately $1,466.4 million of consolidated
indebtedness of the Issuer's subsidiaries. See "Consolidated Capitalization."
Following the Revlon Worldwide Merger, the Issuer will also be the primary
obligor under the Revlon Worldwide Notes and the Revlon Worldwide Notes
Indenture until the defeasance trust is paid out to holders of the Revlon
Worldwide Notes at maturity. In addition, subject to the restrictions imposed
by the Indenture, the Issuer may incur from time to time additional
indebtedness that ranks pari passu with, or is subordinated in right of
payment to, the Notes. See "Description of the Notes -- Certain Covenants."
Subject to certain limitations contained in its outstanding debt instruments,
the Issuer's subsidiaries may incur additional indebtedness to finance
working capital or capital expenditures, investments or acquisitions or for
other purposes. See "--Restrictions Imposed by the Terms of the Company's
Indebtedness; Consequences of Failure to Comply" and "Description of Other
Indebtedness."
This level of consolidated indebtedness could have important consequences
to the holders of the Notes, including the following: (i) a substantial
portion of the Company's cash flow from operations must be dedicated to the
payment of the principal of and interest on such indebtedness and will not be
available for other purposes; (ii) the ability of the Company to obtain
financing in the future for working capital needs, capital expenditures,
acquisitions, investments, general corporate purposes or other purposes may
be materially limited or impaired; and (iii) the Company's level of
indebtedness may reduce the Company's flexibility to respond to changing
business and economic conditions.
ISSUER'S ABILITY TO PAY PRINCIPAL OF NOTES
The Issuer currently anticipates that, in order to pay the principal
amount at maturity of the Notes or upon the occurrence of an Event of Default
or to redeem or repurchase the Notes upon a Change of Control, the Issuer
will be required to adopt one or more alternatives, such as refinancing its
indebtedness, selling its equity securities or the equity securities or
assets of Revlon, Inc., or seeking capital contributions or loans from its
affiliates. None of the affiliates of the Issuer are required to make any
capital contributions, loans or other payments to the Issuer with respect to
the Issuer's obligations on the Notes. There can be no assurance that any of
the foregoing actions could be effected on satisfactory terms, that any of
the foregoing actions would enable the Issuer to pay the principal amount of
the Notes or that any of such actions would be permitted by the terms of the
Indenture or any other
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debt instruments of the Issuer or the Issuer's subsidiaries then in effect.
See "--Holding Company Structure; Restrictions on Ability of Subsidiaries to
Pay Dividends," "--Subordination to Subsidiary Liabilities," "--Restrictions
Imposed by the Company's Indebtedness; Consequences of Failure to Comply,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Description of Other Indebtedness."
HOLDING COMPANY STRUCTURE; RESTRICTIONS ON ABILITY OF SUBSIDIARIES TO PAY
DIVIDENDS
The Issuer is a holding company with no business operations of its own.
The Issuer's only significant asset is all of the outstanding capital stock
of Revlon Worldwide, a holding company that owns approximately 83.1% of the
shares (representing approximately 97.4% of the voting power) of Common Stock
of Revlon, Inc., through which the Company conducts its business operations.
Accordingly, the Issuer's only source of cash to pay the principal amount at
maturity of the Notes is distributions with respect to its ownership interest
in Revlon, Inc. from the net earnings and cash flow generated by Revlon, Inc.
The Company currently expects that the earnings and cash flow of Revlon, Inc.
will be retained and used in the business of Revlon, Inc., including for debt
service. There can be no assurance that Revlon, Inc. will generate sufficient
cash flow to pay dividends or distribute funds to the Issuer or that
applicable state law and contractual restrictions, including negative
covenants contained in the debt instruments of Products Corporation, the
operating subsidiary of Revlon, Inc., will permit such dividends or
distributions. The terms of the Credit Agreement and three of the four issues
of the Products Corporation Notes (as defined herein) currently restrict
Products Corporation from paying dividends or making distributions, except to
Revlon, Inc. under certain limited circumstances. Accordingly, the Issuer
does not anticipate that it will receive any distributions from Revlon, Inc.
See "--Restrictions Imposed by the Terms of the Company's Indebtedness" and
"Description of Other Indebtedness."
SUBORDINATION TO SUBSIDIARY LIABILITIES
Any right of the Issuer and its creditors, including holders of the Notes,
to participate in the assets of any of the Issuer's subsidiaries upon any
liquidation or reorganization of any such subsidiary will be subject to the
prior claims of that subsidiary's creditors, including trade creditors
(except to the extent the Issuer may itself be a creditor of such
subsidiary). Accordingly, the Notes will be effectively subordinated to
liabilities, including trade payables, of the Issuer's subsidiaries. The
ability of the Issuer's creditors, including the holders of the Notes, to
participate in such assets will also be limited to the extent that the
outstanding shares of Revlon, Inc. Common Stock are not beneficially owned by
the Issuer. The Issuer is a holding company and substantially all of the
Issuer's liabilities (other than the Notes) are liabilities of its
subsidiaries. As of March 31, 1997, after giving pro forma effect to the
Revlon Worldwide Merger, subsidiaries of the Issuer would have had
outstanding indebtedness of $1,466.4 million and other outstanding
liabilities, including trade payables and accrued expenses, of $670.6
million. Prior to the Revlon Worldwide Merger, the Notes will also be
effectively subordinated to the Revlon Worldwide Notes. See "--Substantial
Level of Indebtedness" and "Description of Other Indebtedness."
PRO FORMA NET LOSS AND DEFICIENCY OF EARNINGS TO FIXED CHARGES; ABILITY TO
SERVICE DEBT
As of March 31, 1997, the Company had an accumulated deficit of
approximately $1,003.0 million. The Company's Adjusted 1997 Net Loss was
$54.9 million for the first quarter of 1997, the Company's Adjusted 1996 Net
Loss was $86.6 million in 1996 and the Company experienced net losses of
$139.3 million, $191.7 million, $206.8 million and $226.9 million (in part as
a result of a restructuring charge of $162.7 million) for 1995, 1994, 1993
and 1992, respectively. On a historical basis, the Company's earnings before
fixed charges were insufficient to cover fixed charges by approximately $49.4
million in the first quarter of 1997, the Company's Adjusted Earnings before
fixed charges were insufficient to cover fixed charges by approximately $61.1
million in 1996 and the Company's earnings before fixed charges were
insufficient to cover fixed charges by approximately $113.9 million, $140.1
million, $172.3 million and $209.3 million for 1995, 1994, 1993 and 1992,
respectively. On a pro forma basis, after giving effect to the Revlon IPO and
the application of the net proceeds therefrom, the Offering, the purchase and
cancellation of $778.4 million principal amount at maturity of Revlon Worldwide
Notes in March 1997,
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and the extinguishment of the remaining $337.4 million principal amount at
maturity of Revlon Worldwide Notes to occur on March 15, 1998 as if such
transactions had been consummated on January 1, 1996, the Company's earnings
before fixed charges for the first quarter of 1997 would have been
insufficient to cover fixed charges by $34.2 million and the Company's
Adjusted Earnings before fixed charges for the year ended December 31, 1996
would have been insufficient to cover fixed charges by $7.1 million. As a
result, on a historical and a pro forma basis, the Company would have had to
achieve growth in its earnings before fixed charges at least equal to the
amounts of such insufficiencies in order to cover its fixed charges. Fixed
charges consist of interest expense (including amortization of debt issuance
costs but not the losses relating to the early extinguishment of debt) and 33%
of rental expense (considered by the Company to be representative of the
interest factor).
Based upon the Company's current level of operations and anticipated growth
in net sales and earnings as a result of its business strategy, the Company
expects that cash flows from operations and funds from currently available
subsidiary credit facilities and refinancings of existing subsidiary
indebtedness will be sufficient to enable the Company's subsidiaries to satisfy
their anticipated cash requirements, including debt service. The Company may
borrow additional funds under the Credit Agreement, subject to certain
restrictions. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Financial Condition, Liquidity and Capital
Resources." Other than the Revlon Worldwide Notes Defeasance and the refinancing
of the Company's Japanese yen-denominated credit agreement (the "Yen Credit
Agreement") and the redemption of the 10 7/8% Sinking Fund Debentures due 2010
of Products Corporation (the "Sinking Fund Debentures"), both of which are
permitted with borrowings under the Credit Agreement, the Issuer does not have
any current plans with respect to the refinancing of its other subsidiary
indebtedness, although it believes that it will be able to refinance such
indebtedness upon maturity. However, there can be no assurance that the Company
will be able to refinance such other indebtedness or that net sales or earnings
will grow as a result of the continued implementation of the Company's business
strategy (see "--Implementation of Business Strategy"). As a result, there can
be no assurance that the Company will be able to satisfy anticipated cash
requirements on a consolidated basis. If the Company is unable to satisfy such
cash requirements, the Company could be required to adopt one or more
alternatives, such as reducing or delaying capital expenditures, restructuring
its indebtedness, selling assets or operations, seeking capital contributions
or loans from affiliates of the Company, selling equity securities of the
Issuer or issuing additional shares of Revlon, Inc. capital stock. There can be
no assurance that any of such actions could be effected, that they would enable
the Company to continue to satisfy its capital requirements or that they would
be permitted under the terms of the Company's various debt instruments then in
effect. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Financial Condition, Liquidity and Capital Resources"
and "Description of Other Indebtedness."
RESTRICTIONS IMPOSED BY THE TERMS OF THE COMPANY'S INDEBTEDNESS; CONSEQUENCES
OF FAILURE TO COMPLY
The terms and conditions of the debt instruments of the Company, including
the Indenture, the Credit Agreement and the four issues of debt securities of
Products Corporation (the "Products Corporation Notes"), and prior to the
Revlon Worldwide Notes Defeasance, the Revlon Worldwide Notes Indenture,
impose restrictions on the ability of the Issuer and its subsidiaries to
incur debt, create liens, pay dividends, sell assets and make investments or
acquisitions. The terms of the Credit Agreement require Products Corporation
to maintain specified financial ratios and meet certain tests, including
minimum interest coverage and a leverage ratio and impose limitations on the
ability of the Issuer and its subsidiaries to make capital expenditures. All
of the capital stock of Products Corporation, substantially all of the
non-real property domestic assets of Products Corporation, Products
Corporation's facility located in Phoenix, Arizona and certain assets outside
the United States are pledged as collateral for the obligations under the
Credit Agreement. See "Description of Other Indebtedness -- Credit
Agreement." In addition, the occurrence of a change of control (as defined in
the relevant agreement) of the Company would be an event of default under the
Credit Agreement and would give the holders of three of the four issues of
the Products Corporation Notes and, prior to the Revlon Worldwide Notes
Defeasance, the holders of the Revlon Worldwide Notes, the right to require
repurchase of their notes. See "Description of Other Indebtedness."
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The ability of the Issuer and its subsidiaries to comply with the terms of
their respective debt instruments can be affected by events beyond their
control, including events such as prevailing economic conditions, changes in
consumer preferences and changes in the competitive environment, which could
have the effect of impairing the Company's operating performance, and there
can be no assurance that the Issuer and its subsidiaries will be able to
comply with the provisions of their respective debt instruments, including
compliance by Products Corporation with the financial ratios and tests
contained in the Credit Agreement. Breach of any of these covenants or the
failure to fulfill the obligations thereunder and the lapse of any applicable
grace periods would result in an event of default under the applicable debt
instruments, and the holders of such indebtedness could declare all amounts
outstanding under their debt instruments to be due and payable immediately.
There can be no assurance that the assets or cash flow of the Issuer or the
Issuer's subsidiaries, as the case may be, would be sufficient to repay in
full borrowings under their outstanding debt instruments whether upon
maturity or if such indebtedness were to be accelerated upon an event of
default or, in the case of three of the four issues of the Products
Corporation Notes, upon a required repurchase in the event of a change of
control, or that the Company would be able to refinance or restructure its
payments on such indebtedness. In the case of the Credit Agreement, if such
indebtedness were not so repaid, refinanced or restructured, the lenders
could proceed to realize on their collateral. In addition, any event of
default or declaration of acceleration under one debt instrument could also
result in an event of default under one or more of the Company's other debt
instruments including, prior to the Revlon Worldwide Notes Defeasance, the
Revlon Worldwide Notes. See "--Substantial Level of Indebtedness" and
"Description of Other Indebtedness."
SECURITY FOR THE NOTES; POTENTIAL FOR DIMINUTION
The Old Notes are, and the New Notes will be, secured by a pledge of 47.1%
of the common stock of Revlon Worldwide. Following the Revlon Worldwide Notes
Defeasance, Revlon Worldwide will be merged with and into the Issuer in the
Revlon Worldwide Merger and the Issuer will directly own all of the shares of
common stock of Revlon, Inc. that are currently pledged to secure the Revlon
Worldwide Notes. Simultaneously with the Revlon Worldwide Merger, the Notes
will be secured by a pledge of all of the 11,250,000 shares of Class A Common
Stock and 8,750,000 shares of Class B Common Stock, in each case, owned by
Revlon Worldwide, representing in the aggregate approximately 39.1% of the
outstanding shares of Common Stock of Revlon, Inc. The Class A Common Stock
of Revlon, Inc. is currently listed on the NYSE. Since the Revlon IPO, the
high and low reported closing prices were $42 3/8 per share and $23 1/2 per
share, respectively. There is currently no market for the common stock of
Revlon Worldwide. Additionally, because the principal asset of Revlon
Worldwide is approximately 42,500,000 shares of Common Stock of Revlon, Inc.,
all of which have been pledged to secure the Revlon Worldwide Notes prior to
the Revlon Worldwide Notes Defeasance, the value of the Revlon Worldwide
common stock pledged to secure the Notes will depend, in part, upon the
extent, if any, by which the value at any time of such shares of Revlon, Inc.
Common Stock exceeds the accreted value at such time of the Revlon Worldwide
Notes. There can be no assurance that the proceeds from the sale or sales of
all of such collateral would be sufficient to satisfy the amounts due on the
Notes in the event of a default. In addition, the ability of the holders of
the Notes to realize upon the collateral may be subject to certain
limitations and there can be no assurance that the Trustee or the holders of
the Notes would be able to sell the shares (including shares of Revlon, Inc.)
pledged as collateral at the then current market value. Sales of substantial
amounts of the Revlon, Inc. Common Stock (whether by the Trustee or other
secured lenders or otherwise) could adversely affect market prices. See
"Description of the Notes -- Collateral."
If the Trustee under the Indenture or the holders of the Notes or the
lenders to which the remaining shares of common stock of Revlon Worldwide or
Revlon, Inc., as the case may be, are pledged to secure the Non-Recourse
Guaranty, were to foreclose upon the common stock of Revlon Worldwide or
Revlon, Inc., as the case may be, such foreclosure could, under certain
circumstances, constitute a change of control under certain debt instruments
of Revlon, Inc. and its subsidiaries. Such occurrence of a change of control
would result in an event of default permitting acceleration under the Credit
Agreement and would enable the holders of three of the four issues of the
Products Corporation Notes to require that
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Products Corporation repurchase their Products Corporation Notes. There can
be no assurance that the assets of the Issuer's subsidiaries would be
sufficient to repay in full borrowings under such debt instruments if they
became due, and in such event no assets of the subsidiaries of the Issuer
would be available to the holders of the Notes. In such event the value of
the common stock of Revlon Worldwide and Revlon, Inc. that is the collateral
securing the Notes would be substantially diminished or eliminated. In
addition, the stock of Products Corporation and certain of its subsidiaries
is pledged to secure indebtedness and certain guarantees under the Credit
Agreement and other indebtedness of the subsidiaries of the Issuer. If
creditors of the subsidiaries of the Issuer were to foreclose upon the stock
of Products Corporation and its subsidiaries, the value of the common stock
of Revlon Worldwide and Revlon, Inc. would likewise be substantially
diminished or eliminated.
Simultaneously with the Revlon Worldwide Merger, the Notes will be secured
solely by 20,000,000 shares of Common Stock of Revlon, Inc. No additional
shares of Revlon, Inc. Common Stock or other collateral will be pledged
irrespective of the market value of such shares at any time. In addition, the
Indenture permits the Issuer, under certain circumstances, to grant liens on
its assets, if any, other than the shares of Revlon Worldwide or Revlon,
Inc., as the case may be, pledged to secure the Notes. Furthermore, because
the shares of Revlon, Inc. Common Stock pledged to secure the Notes will not
be pledged simultaneously with the issuance of the Notes, but rather
simultaneously with the Revlon Worldwide Merger, in certain circumstances
such pledge could be deemed to have been made in respect of an antecedent
debt and could constitute a preference under the United States Bankruptcy
Code. Under applicable provisions of the United States Bankruptcy Code, if
the Issuer were to become the subject of a bankruptcy case within the 90-day
period following the Revlon Worldwide Notes Defeasance (or within one year
thereof to the extent that a holder of the Notes is deemed to be an insider
of the Issuer), a bankruptcy court could avoid the pledge of some or all of
the Revlon, Inc. Common Stock as a preference (if the Issuer was insolvent at
the time thereof). For these purposes, the Issuer would be presumed insolvent
for the 90 days preceding bankruptcy. There can be no assurance as to the
relative values of the shares of Revlon Worldwide common stock and Revlon,
Inc. Common Stock pledged to secure the Notes on the date of the Revlon
Worldwide Merger. In addition, following the Deposit but prior to the Revlon
Worldwide Defeasance, the funds used to make the deposit could be subject to
the claims of creditors of Revlon Worldwide.
LIMITATIONS ON HOLDERS' CLAIMS
Under the Indenture, in the event of an acceleration of the maturity of
the Notes upon the occurrence of an Event of Default (as defined herein), the
holders of the Notes will be entitled to recover only the amount that may be
declared due and payable pursuant to the Indenture, which will be less than
the principal amount at maturity of such Notes. See "Description of the Notes
- -- Defaults."
If a bankruptcy case is commenced by or against the Issuer under the
United States Bankruptcy Code, the claim of a holder of Notes with respect to
the principal amount thereof may be limited to an amount equal to the sum of
(i) the Issue Price of the Notes and (ii) that portion of the Original Issue
Discount which has been amortized and, therefore, is not deemed to constitute
"unmatured interest" for purposes of the United States Bankruptcy Code.
Accordingly, holders of the Notes under such circumstances may, even if
sufficient funds are available, receive a lesser amount than they would be
entitled to under the express terms of the Indenture. In addition, there can
be no assurance that a bankruptcy court would compute the accrual of interest
by the same method as that used for the calculation of Original Issue
Discount under federal income tax law and, accordingly, a holder might be
required to recognize gain or loss in the event of a distribution related to
such a bankruptcy case.
OPERATING HISTORY UNDER THE BUSINESS STRATEGY
The Company's business strategy is to (i) strengthen and broaden its core
brands through globalization of marketing and advertising, product
development and manufacturing and through increasing its emphasis on
advertising and promotion; (ii) lead the industry in the development and
introduction of technologically advanced innovative products that set new
trends; (iii) expand the Company's presence in all markets in which the
Company competes and enter new and emerging
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markets; (iv) continue to reduce costs and improve operating efficiencies,
customer service and product quality by reducing overhead, rationalizing
factory operations, upgrading management information systems, globally
sourcing raw materials and components and carefully managing working capital;
and (v) continue to expand market share and product lines through possible
strategic acquisitions or joint ventures. See "Business -- Business
Strategy." The Company's ability to continue to implement its strategy
successfully will be dependent on business, financial and other factors,
including prevailing economic conditions, changes in consumer preferences and
changes in the competitive environment, beyond the Company's control. There
can be no assurance that the Company will continue to be successful in the
implementation of its strategy. The inability of the Company to successfully
implement its business strategy could significantly affect the value of the
Common Stock of Revlon, Inc. pledged to secure the Notes. See "Selected
Financial Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements of the
Company included elsewhere in this Offering Memorandum.
COMPETITION
The cosmetics and skin care, fragrance and personal care and professional
products business is highly competitive. The Company competes on the basis of
numerous factors. Brand recognition, together with product quality,
performance and price and the extent to which consumers are educated on
product benefits, have a marked influence on consumer's choices among
competing products and brands. Advertising, promotion, merchandising and
packaging, and the timing of new product introductions and line extensions,
also have a significant impact on buying decisions, and the structure and
quality of the sales force affect product reception, in-store position,
permanent display space and inventory levels in retail outlets. An increase
in the amount of competition faced by the Company could have a material
adverse effect on the Company's business, financial condition and results of
operations. In addition, the Company competes in selected product categories
against a number of multinational manufacturers, some of which are larger and
have substantially greater resources than the Company. Those competitors that
have greater financial resources may have more flexibility to respond to
changing business and economic conditions than the Company. See "Business --
Competition."
SOCIAL, POLITICAL AND ECONOMIC RISKS AFFECTING FOREIGN OPERATIONS
AND EFFECTS OF FOREIGN CURRENCY FLUCTUATIONS
The Company has operations based in 27 foreign countries and its products
are sold in approximately 175 countries and territories. The Company is
exposed to the risk of changes in social, political and economic conditions
inherent in foreign operations, including changes in the laws and policies
that govern foreign investment in countries where it has operations as well
as, to a lesser extent, changes in United States laws and regulations
relating to foreign trade and investment. In addition, the Company's results
of operations and the value of its foreign assets are affected by
fluctuations in foreign currency exchange rates, which may adversely affect
reported earnings and, accordingly, the comparability of period-to-period
results of operations. Changes in currency exchange rates may affect the
relative prices at which the Company and foreign competitors sell their
products in the same market. For 1996 and 1995, 42.0% and 42.6%,
respectively, of the Company's net sales were outside the United States. In
addition, the cost of certain items required in the Company's operations may
be affected by changes in the value of the relevant currencies. The Company
enters into forward foreign exchange contracts to hedge certain cash flows
denominated in foreign currency (see "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Financial Condition,
Liquidity and Capital Resources"). The Company generally does not use
derivative instruments to manage currency fluctuations. The Company recorded
net foreign currency losses of $5.7 million, $10.9 million and $18.2 million
in fiscal 1996, 1995 and 1994, respectively. For a more complete discussion
of foreign currency fluctuations, see "Management's Discussion and Analysis
of Financial Condition and Results of Operations." In addition, the Company's
operations in Brazil (which accounted for approximately 6.1% of the Company's
net sales for 1996) were subject to hyperinflationary conditions. There can
be no assurance as to the future effect of changes in social, political and
economic conditions on the Company's business or financial condition. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
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LACK OF PUBLIC MARKET FOR THE NOTES
The New Notes are being offered to the holders of the Old Notes. The Old
Notes were issued on March 5, 1997 to a small number of institutional
investors and institutional accredited investors and are eligible for trading
in the Private Offering, Resale and Trading through Automated Linkages
(PORTAL) Market, the National Association of Securities Dealers' screenbased,
automated market for trading of securities eligible for resale under Rule
144A. To the extent that Old Notes are tendered and accepted in the Exchange
Offer, the trading market for the remaining untendered Old Notes could be
adversely affected. There is no existing trading market for the New Notes,
and there can be no assurance regarding the future development of a market
for the New Notes, or the ability of holders of the New Notes to sell their
New Notes or the price at which such holders may be able to sell their New
Notes. Although the Initial Purchasers have informed the Issuer that they
currently intend to make a market in the New Notes, they are not obligated to
do so and any such market making may be discontinued at any time without
notice. As a result, the market price of the New Notes could be adversely
affected. The Issuer does not intend to apply for listing or quotation of the
New Notes on any securities exchange or stock market.
CONTROL BY MACANDREWS & FORBES
The Issuer is indirectly owned through MacAndrews & Forbes by Ronald O.
Perelman. As a result MacAndrews & Forbes will be able to direct and control
the policies of the Issuer and its subsidiaries, including mergers, sales of
assets and similar transactions. See "Ownership of Common Stock" and
"Relationship with MacAndrews & Forbes." The shares of common stock of the
Issuer and shares of common stock of intermediate holding companies are or
may from time to time be pledged to secure obligations of MacAndrews & Forbes
or its affiliates. A foreclosure upon any such shares of common stock could
constitute a change of control under the Indenture and certain debt
instruments of the Issuer's subsidiaries. Such occurrence of a change of
control would result in an event of default permitting acceleration under the
Credit Agreement and would enable holders of three of the four issues of the
Products Corporation Notes to require that Products Corporation repurchase
their Products Corporation Notes. See "--Security for the Notes; Potential
for Diminution." In addition, a change of control under the Indenture would
give the holders of the Notes the right to require the Issuer to repurchase
the Notes. See "--Issuer's Ability to Pay Principal of Notes." There can be
no assurance that upon a change of control the assets of the Company would be
sufficient to repay in full the borrowings under the Credit Agreement or to
repurchase the Products Corporation Notes and the Notes. See "--
Subordination to Subsidiary Liabilities" and "--Security for the Notes;
Potential for Diminution."
FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of
management as well as assumptions made by and information currently available
to management. Such forward looking statements are principally contained in
the sections "Prospectus Summary," "Business -- Strategy" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
include, without limitation, the Company's expectation and estimates as to
introduction of new products, future financial performance, including growth
in net sales and earnings, cash flows from operations, capital expenditures,
the ability to refinance indebtedness, capital contributions or loans from
affiliates, the sale of assets or additional shares of Revlon, Inc. and the
sale of equity securities of the Issuer. In addition, in those and other
portions of this Prospectus, the words "anticipate," "believe," "estimate,"
"expect," "plans," "intends" and similar expressions, as they relate to the
Company or the Company's management, are intended to identify forward-looking
statements. Such statements reflect the current views of the Company with
respect to future events and are subject to certain risks, uncertainties and
assumptions, including the risk factors described in this Prospectus. In
addition to factors that may be described in this Prospectus, the following
factors, among others, could cause the Company's actual results to differ
materially from those expressed in any forward-looking statements made by the
Company: (i) difficulties or delays in developing and introducing new
products or failure of customers to accept new product offerings; (ii)
changes in consumer preferences, including reduced consumer demand for the
Company's color
24
<PAGE>
cosmetics and other current products; (iii) difficulties or delays in the
Company's continued expansion into the self-select distribution channel and
development of new markets; (iv) unanticipated costs or difficulties or
delays in completing projects associated with the Company's strategy to
improve operating efficiencies, including information system upgrades; (v)
effects of and changes in economic conditions, including inflation and
monetary conditions, and in trade, monetary, fiscal and tax policies in
countries outside of the United States in which the Company operates,
including Brazil; (vi) actions by competitors, including business
combinations, technological breakthroughs, new product offerings and
marketing and promotional successes; (vii) difficulties or delays in
realizing improved results from business consolidations and in realizing
gains from the sale of certain facilities held for sale; (viii) combinations
among significant customers or the loss, insolvency or failure to pay its
debts by a significant customer or customers; and (ix) the inability to
refinance indebtedness, secure capital contributions or loans from affiliates
or sell assets or additional shares of Revlon, Inc. or equity securities of
the Issuer. Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may vary
materially from those described herein as anticipated, believed, estimated or
expected. The Company does not intend to update these forward-looking
statements.
USE OF PROCEEDS
The Issuer will not receive any proceeds from the Exchange Offer. The
Issuer used the net proceeds of the Offering, which were approximately $490.4
million, together with a capital contribution from MacAndrews & Forbes, to
make the Capital Contribution. Revlon Worldwide used the Capital Contribution
to finance the Revlon Worldwide Notes Defeasance. The Revlon Worldwide Notes
mature on March 15, 1998 and original issue discount thereon accretes at the
rate of 12% per annum, compounded on a semiannual basis. As of December 31,
1996, the accreted value of the Revlon Worldwide Notes was approximately
$969.6 million. See "Description of Other Indebtedness -- Revlon Worldwide
Notes."
25
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1997. This table should be read in conjunction with "Selected
Historical and Pro Forma Financial Data" and the Consolidated Financial
Statements of the Company included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1997
-------------------
(DOLLARS IN
MILLIONS)
<S> <C>
Short-term borrowings--third parties ........................................ $ 23.4
Current portion of long-term debt--third parties ............................ 8.4
-------------------
$ 31.8
===================
Long-term debt:
Working capital lines....................................................... $ 278.6
Bank mortgage loan agreement due 1997....................................... 34.9
9 1/2% Senior Notes due 1999................................................ 200.0
9 3/8% Senior Notes due 2001................................................ 260.0
10 1/2% Senior Subordinated Notes due 2003.................................. 555.0
10 7/8% Sinking Fund Debentures due 2010.................................... 79.7
Advances from Holdings ..................................................... 30.4
Senior Secured Discount Notes Due 1998...................................... 301.7 (a)
Senior Secured Discount Notes due 2001...................................... 508.7
Other mortgages and notes payable (8.6%-13.0%) due through 2001 ............ 4.4
-------------------
Long-term debt including current portion ................................... 2,253.4
Less current portion........................................................ 8.4
-------------------
Total long-term debt....................................................... 2,245.0 (a)
-------------------
Stockholder's deficiency:
Common stock, par value $1.00 per share, 1,000 shares authorized, issued
and outstanding............................................................ --
Capital deficiency.......................................................... (410.9)
Accumulated deficit since June 24, 1992..................................... (570.8)
Adjustment for minimum pension liability.................................... (12.4)
Currency translation adjustment............................................. (8.9)
-------------------
Total stockholder's deficiency............................................. (1,003.0) (a)
-------------------
Total long-term debt and stockholder's deficiency......................... $ 1,242.0
===================
</TABLE>
- ------------
(a) In accordance with Statement of Financial Accounting Standards No.
125, which is effective for transactions occurring after December 31,
1996, the covenant defeasance of the Revlon Worldwide Notes is not
considered an extinguishment of debt for accounting purposes.
Therefore, the Revlon Worldwide Notes will not be considered
extinguished for accounting purposes until the defeasance trust is
paid out to holders of the Revlon Worldwide Notes upon maturity of
the Revlon Worldwide Notes. Assuming that the Revlon Worldwide Notes
had been repaid as of March 31, 1997 and Revlon Worldwide relieved of
its obligation for such liability, total long-term debt and
stockholders' deficiency would have been $1,943.3 million and
$1,022.1 million, respectively.
26
<PAGE>
PRICE RANGE OF CLASS A COMMON STOCK OF REVLON, INC.
Since the Revlon IPO, the Class A Common Stock has been traded on the NYSE
under the symbol "REV." The following table sets forth for the periods
indicated the high and low closing prices per share of the Class A Common
Stock as reported by the NYSE.
<TABLE>
<CAPTION>
HIGH LOW
----------------------
<S> <C> <C>
1996
- ----
First Quarter (February 29 to March
31).................................... $28 1/4 $25 1/2
Second Quarter.......................... 31 3/8 24 3/4
Third Quarter........................... 31 1/8 23 1/2
Fourth Quarter.......................... 36 1/2 28 5/8
1997
- ----
First Quarter........................... 42 3/8 29 5/8
Second Quarter (through June 4)......... 41 1/4 33 1/4
</TABLE>
On June 4, 1997, the last reported sales price of the Class A Common Stock
on the New York Stock Exchange was $40 per share.
27
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
The selected historical financial data for, and as of the end of, each of
the years in the five year period ended December 31, 1996 have been derived
from the audited consolidated financial statements of the Company. The
selected historical financial data for the three months ended March 31, 1996
and 1997 and as of March 31, 1997 have been derived from the unaudited
consolidated financial statements of the Company which reflect, in the
opinion of management of the Company, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial data
for such periods. Results for interim periods are not necessarily indicative
of the results for the full year.
The pro forma statement of operations data for the year ended December 31,
1996 and the three months ended March 31, 1997 give pro forma effect to the
Revlon IPO and the application of the net proceeds therefrom, the Offering,
the purchase and cancellation of $778.4 million principal amount at maturity
of Revlon Worldwide Notes in March 1997, and the extinguishment of the
remaining $337.4 million principal amount at maturity of Revlon Worldwide
Notes to occur on March 15, 1998, as if such transactions had been
consummated on January 1, 1996. The pro forma adjustments are based upon
available information and certain assumptions that management of the Company
believes are reasonable. The pro forma financial data do not purport to
represent the results of operations or the financial position of the Company
that actually would have occurred had the foregoing transactions been
consummated on the aforesaid dates.
The following selected financial data should be read in conjunction with
"Prospectus Summary -- The Transactions," "Capitalization," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements of the Company included elsewhere in
this Prospectus.
28
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
---------------------- -------------------------------------------------------
1997 1996 1996 (A) 1995 (A) 1994 (A) 1993 (A) 1992
----------- ---------- ---------- ---------- ----------- ---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL STATEMENTS OF
OPERATIONS DATA:
Net sales ...................... $ 492.5 $ 464.3 $2,167.0 $1,937.8 $1,732.5 $1,588.3 $1,632.2
Gross profit ................... 326.3 311.4 1,441.3 1,285.7 1,135.2 1,019.5 1,076.8
Selling, general and
administrative expenses ....... 303.8 295.1 1,241.1 1,139.1 1,026.8 969.6 996.7
Restructuring charges........... -- -- -- -- -- -- 162.7(b)
----------- ---------- ---------- ---------- ----------- ---------- ----------
Business consolidation costs ... 5.4 -- -- -- -- -- --
Operating income (loss) ........ 17.1 16.3 200.2 146.6 108.4 49.9 (82.6)
Interest expense, net .......... 60.7 58.5 236.7 232.6 214.9 171.7 94.0
Amortization of debt issuance
costs ......................... 3.4 3.6 12.5 15.2 12.6 11.2 6.7
Other, net ..................... 2.5 2.6 12.1 12.7 21.0 39.3 26.0
Gain on sale of subsidiary
stock ......................... 0.1 187.8(c) 187.8 (c) -- -- -- --
----------- ---------- ---------- ---------- ----------- ---------- ----------
Income (loss) before income
taxes ......................... (49.4) 139.4 126.7 (113.9) (140.1) (172.3) (209.3)
Provision for income taxes .... 5.5 7.0 25.5 25.4 22.8 19.0 14.7
----------- ---------- ---------- ---------- ----------- ---------- ----------
Income (loss) before
extraordinary item and
cumulative effect of
accounting changes ............ (54.9) 132.4 101.2 (139.3) (162.9) (191.3) (224.0)
Extraordinary items--early
extinguishments of debt ....... (43.8) (6.6) (6.6) -- -- (9.5) (2.9)
Cumulative effect of accounting
changes ....................... -- -- -- -- (28.8)(d) (6.0)(e) --
----------- ---------- ---------- ---------- ----------- ---------- ----------
Net income (loss) .............. $ (98.7) $ 125.8 $ 94.6 $ (139.3) $ (191.7) $ (206.8) $ (226.9)
=========== ========== ========== ========== =========== ========== ==========
OTHER DATA:
Net cash used for operating
activities..................... $ (75.9) $(100.4) $ (10.2) $ (51.7) $ (1.3) $ (150.5) $ (244.9)
Net cash used for investing
activities..................... (327.6) (12.1) (65.1) (72.5) (51.0) (8.7) (48.1)
Net cash provided by (used for)
financing activities........... 400.9 95.1 78.5 125.2 (48.8) 266.8 286.2
Ratio of earnings
to fixed charges (f) .......... -- 3.07x 1.47x -- -- -- --
EBITDA (g) ..................... $ 39.7 $ 35.9 $ 282.8 $ 224.0 $ 178.8 $ 118.9 $ 150.1
Cash interest expense .......... 39.6 43.7 139.0 148.2 138.5 109.8 110.4
Ratio of EBITDA to
interest expense, net ......... 0.65x 0.61x 1.19x 0.96x 0.83x 0.69x 1.60x
Ratio of EBITDA to cash
interest expense .............. 1.00x 0.82x 2.03x 1.51x 1.29x 1.08x 1.36x
PRO FORMA DATA (H)(I):
Operating income ............... $ 17.1 $ 200.2
Interest expense, net .......... 46.0 (i) 183.2 (h)
Income (loss) before
extraordinary item ............ (39.7)(i) 155.2 (h)
Ratio of earnings to fixed
charges (j) ................... -- --
Cash interest expense .......... 39.6 136.4
Ratio of EBITDA to cash
interest expense .............. 1.00x 2.07x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------
MARCH 31, 1997 1996 1995 1994 1993 1992
--------------- ----------- ----------- ----------- ----------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets .................. $ 1,944.4 $ 1,626.3 $ 1,544.5 $ 1,431.5 $ 1,566.3 $1,438.3
Long-term debt, excluding
current portion .............. 2,245.0 2,321.8 2,330.4 2,095.5 1,887.3 969.0
Total stockholder's deficiency (1,003.0) (1,461.3) (1,555.7) (1,411.1) (1,221.2) (443.1)
</TABLE>
See Notes to Selected Historical and Pro Forma Financial Data.
29
<PAGE>
NOTES TO SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
(a) Effective January 1, 1996, Products Corporation acquired from Holdings
substantially all of the assets of its Tarlow Advertising Division
("Tarlow"). Products Corporation assumed substantially all of the
liabilities and obligations of Tarlow. Net liabilities assumed were
approximately $3.4 million. The assets acquired and abilities assumed
were accounted for at historical cost in a manner similar to that of a
pooling of interests and, accordingly, prior period financial
statements beginning with January 1, 1993 have been restated as if the
acquisition took place at the beginning of such period. In addition to
the liability assumed, Products Corporation paid $4.1 million to
Holdings, which payment was accounted for as an increase to capital
deficiency.
(b) Represents restructuring charges of $162.7 million in 1992, which
included (i) consolidation of certain worldwide manufacturing and
warehouse facilities, (ii) consolidation and improvements in management
information systems, (iii) vacating premises under lease, (iv)
personnel reductions and (v) discontinuance of certain product lines.
(c) Represents the gain on sale of subsidiary stock recognized as a result
of the Revlon IPO. On March 5, 1996, Revlon, Inc. issued and sold in
the Revlon IPO 8,625,000 shares of its Class A Common Stock for $24.00
per share. Revlon, Inc. contributed the net proceeds of $187.8 million
(net of underwriters' discount and related fees and expenses) to
Products Corporation, which in turn used such funds to repay borrowings
outstanding under the 1995 Credit Agreement and to pay fees and
expenses related to entering into the 1996 Credit Agreement.
(d) Effective January 1, 1994, the Company adopted SFAS No. 112,
"Employers' Accounting for Postemployment Benefits." The Company
recognized a charge of $28.8 million in the first quarter of 1994 to
reflect the cumulative effect of the accounting change, net of income
tax benefit.
(e) Effective January 1, 1993, the Company adopted SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than
Pensions," for its retiree benefit plan in the United States.
Accordingly, the Company recognized a charge of $6.0 million in the
1993 first quarter to reflect the cumulative effect of the accounting
change.
(f) Earnings used in computing the ratio of earnings to fixed charges
consist of income (loss) before income taxes plus fixed charges. Fixed
charges consist of interest expense (including amortization of debt
issuance costs, but not losses relating to the early extinguishment of
debt) and 33% of rental expense (considered to be representative of the
interest factors). Fixed charges exceeded earnings before fixed charges
by $49.4 million for the three months ended March 31, 1997 and by
$113.9 million in 1995, $140.1 million in 1994, $172.3 million in 1993
and $209.3 million in 1992. Excluding the $187.8 million gain on sale
of subsidiary stock in the Revlon IPO from 1996 earnings (the "Adjusted
Earnings"), fixed charges would have exceeded Adjusted Earnings before
fixed charges by $48.4 million for the three months ended March 31,
1996 and by $61.1 million in 1996.
(g) EBITDA is defined as operating income (loss) before restructuring
charges, plus depreciation and amortization other than that relating to
early extinguishment of debt, debt discount and debt issuance costs.
EBITDA is presented here not as a measure of operating results but
rather as a measure of debt service ability. EBITDA should not be
considered in isolation or as a substitute for net income or cash flow
from operations prepared in accordance with generally accepted
accounting principles as a measure of the profitability or liquidity of
the Company. EBITDA does not take into account the Company's debt
service requirements and other commitments and, accordingly, is not
necessarily indicative of amounts that may be available for
discretionary uses.
(h) The pro forma statement of operations data for the year ended December
31, 1996 reflects a reduction of interest expense of $2.6 million
related to the Revlon IPO, a reduction of interest expense and
amortization of debt issuance costs of $74.4 million and $2.9 million,
respectively, reflecting interest expense and amortization of debt
issuance costs on the $778.4 million principal amount at maturity of
Revlon Worldwide Notes cancelled during March 1997, a reduction of
interest expense and amortization of debt issuance costs of $32.3
million and $1.3 million, respectively, reflecting the extinguishment
of the remaining $337.4 million principal amount at maturity of Revlon
Worldwide Notes to occur on March 15, 1998 and an increase in interest
expense and amortization of debt issuance costs of $55.8 million and
$3.7 million, respectively, related to the Notes.
30
<PAGE>
(i) The pro forma statement of operations data for the three months ended
March 31, 1997 reflects a reduction of interest expense and amortization
of debt issuance costs of $17.6 million and $0.8 million, respectively,
reflecting $778.4 million principal amount at maturity of Revlon
Worldwide Notes cancelled during March 1997, a reduction of interest
expense and amortization of debt issuance costs of $8.5 million and $0.3
million, respectively, reflecting the extinguishment of the remaining
$337.4 million principal amount at maturity of Revlon Worldwide Notes to
occur on March 15, 1998, and an increase in interest expense and
amortization of debt issuance costs of $11.4 million and $0.6 million,
respectively, related to the Notes.
(j) As adjusted to give pro forma effect to the Revlon IPO and the
application of the net proceeds therefrom, the Offering, the purchase
and cancellation of $778.4 million principal amount at
maturity of Revlon
Worldwide Notes in March 1997, and the extinguishment of the remaining
$337.4 million principal amount at maturity of Revlon Worldwide Notes
to occur on March 15, 1998 as if such transactions had been consummated
on January 1, 1996, fixed charges would have exceeded earnings before
fixed charges by $34.2 million for the three months ended March 31,
1997 and would have exceeded Adjusted Earnings before fixed charges by
$7.1 million in 1996.
31
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Consolidated Financial Statements of the Company and the notes thereto
included elsewhere in this Prospectus. The Issuer is a holding company with
no independent business operations of its own. Accordingly, except as other
wise indicated, the following discussion of the Company relates to the
operations of Revlon, Inc.
OVERVIEW
The Company operates in a single business segment with many different
products, which include an extensive array of glamorous, exciting and
innovative cosmetics and skin care, fragrance and personal care products, and
professional products, consisting of hair and nail care products for use
principally in and resale by professional salons. In addition, the Company
also operates retail outlet stores and has a licensing group.
In the United States and increasingly in international markets, the
Company's products are sold principally in the self-select distribution
channel, which the Company believes is the fastest-growing channel of
distribution for cosmetics, skin care, fragrance and personal care products.
In addition, the trend in the cosmetics, skin care and fragrance industry has
been the shift of consumer purchases from the demonstrator-assisted channel
to the self-select distribution channel.
The Company's net sales in the United States are made primarily in the
self-select distribution channel, which for 1996 represented approximately
86% of the Company's net sales in the United States. In the United States,
the Company also sells ULTIMA II products in the demonstrator-assisted
distribution channel and consumer and professional products to United States
Government military exchanges and commissaries. Outside the United States,
the Company sells consumer products in the self-select distribution channel
and through department stores and specialty stores, such as perfumeries, and
sells professional products.
The Company is making substantial improvements in its global sourcing,
materials management and distribution capabilities, which have contributed to
an improvement in the Company's gross profit margin. Such improvements
include the utilization of the Company's large purchasing capacity to
maximize cost savings in raw materials and components, improvement in the
percentage of timely order fulfillment and improvement in the timeliness and
accuracy of new product and promotion deliveries. See "Business --
Manufacturing and Related Operations and Raw Materials." The Company
continues to upgrade its management information systems to provide an
integrated system for forecasting, production, inventory management,
distribution, procurement and accounting. The Company is rationalizing and
increasing the efficiency of its manufacturing operations worldwide by
centralizing production of some product categories for sale throughout the
world within designated facilities and by shifting production of certain
other product categories to more cost effective manufacturing sites. Shifts
of production may result in the closing of certain of the Company's less
significant manufacturing facilities, and the Company continually reviews its
needs in this regard. In addition, as part of its efforts to continuously
improve operating efficiencies, the Company attempts to ensure that a
significant portion of its capital expenditures are devoted to improving
operating efficiencies.
The Company has increased its emphasis on advertising and promotion. The
Company increased advertising expenditures by 17.3% for 1996 over 1995 levels
and by 26.2% for 1995 over 1994 levels. The level of advertising expenditures
in any period is based upon the Company's assessment of advertising and
promotional support required by each of the Company's products in light of
expected volume, competitive pressures and the dynamics of the markets for
such products during such period. For 1997, the Company intends to increase
its advertising expenditures over 1996 levels.
The Company has achieved 14 consecutive quarters of increased net sales,
operating income and EBITDA compared with the corresponding quarter of the
prior year. Net sales, operating income and EBITDA increased 6.1%, 4.9% and
10.6%, respectively, for the first quarter of 1997 over the comparable period
in 1996, 11.8%, 36.6% and 26.3%, respectively, for 1996 over 1995 and
increased 11.8%, 35.2% and 25.3%, respectively, for 1995 over 1994. In
addition, the Company's net loss decreased from $191.7 million for 1994 to
$139.3 million for 1995 and an Adjusted 1996 Net Loss of $86.6 million for
1996 and decreased from an Adjusted 1996 Net Loss of $55.4 million in the
first quarter of 1996 to an Adjusted 1997 Net Loss of $54.9 million in the
first quarter of 1997. Through careful management of working
32
<PAGE>
capital, the Company has also reduced the relative amount of working capital
necessary to support net sales. The ratio of average quarterly combined
inventory and accounts receivable balances to net sales was 32.2% for the
first quarter of 1997 compared with 33.1% for the comparable period in 1996,
and 32.3% for 1996 compared with 33.2% for 1995 and 34.9% for 1994.
To reflect the integration of management reporting responsibilities
culminating in the third quarter of 1996, the Company presents its business
geographically as its United States operation, which comprise the Company's
business in the United States, and its International operation, which
comprise its business outside of the United States. The Company previously
presented its business as the Consumer Group, which comprised the Company's
consumer products operations throughout the world (except principally Spain,
Portugal and Italy) and professional products operations in certain markets,
principally in South Africa and Argentina, and the Professional Group, which
comprised the Company's professional products operations throughout the world
(except principally South Africa and Argentina) and consumer products
operations in Spain, Portugal and Italy. The Company has restated the
management's discussion and analysis data for prior periods to conform to the
presentation for 1996.
RESULTS OF OPERATIONS
The following table sets forth the Company's net sales by operation for
the first quarter of each of 1997 and 1996 and for each of the last three
years:
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
----------------- -------------------------------
1997 1996 1996 1995 1994
-------- -------- ---------- ---------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net sales:
United States $282.5 $259.6 $1,257.2 $1,113.2 $ 983.2
International 210.0 204.7 909.8 824.6 749.3
-------- -------- ---------- ---------- ---------
$492.5 $464.3 $2,167.0 $1,937.8 $1,732.5
======== ======== ========== ========== =========
</TABLE>
The following sets forth certain statements of operations data as a
percentage of net sales for the first quarter of each of 1997 and 1996 and
for each of the last three years:
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------- -----------------------
1997 1996 1996 1995 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Cost of sales ...................... 33.7% 32.9% 33.5% 33.7% 34.5%
Gross profit ....................... 66.3 67.1 66.5 66.3 65.5
Selling, general and administrative
expenses .......................... 61.7 63.6 57.3 58.8 59.3
Business consolidation costs ....... 1.1 -- -- -- --
Operating income.................... 3.5 3.5 9.2 7.5 6.2
EBITDA ............................. 8.1 7.7 13.1 11.6 10.3
</TABLE>
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1996
Net Sales
Net sales were $492.5 million and $464.3 million for the first quarter of
1997 and 1996, respectively, an increase of $28.2 million, or 6.1%, primarily
as a result of successful new product introductions worldwide, increased
demand in the United States, increased distribution internationally into the
expanding self-select distribution channel and the further development of new
international markets.
<PAGE>
United States. The United States operation's net sales increased to $282.5
million for the first quarter of 1997 from $259.6 million for the first
quarter of 1996, an increase of $22.9 million, or 8.8%. Net sales improved
for the first quarter of 1997 primarily as a result of continued consumer
acceptance of new product offerings and general improvement in consumer
demand for the Company's color cosmetics in the United States, partially
offset by overall softness in the fragrance industry and lower sales of one
of the Company's prestige brands. The Company improved the dollar share of
its Revlon branded cosmetics in the color cosmetics business in the United
States self-select distribution channel to 21.9%
33
<PAGE>
in the first quarter of 1997 from 21.6% in the first quarter of 1996,
continuing as the number one brand in market share. Market share, which is
subject to a number of conditions, can vary from quarter to quarter as a
result of such things as timing of new product introductions and advertising
and promotional spending. New product introductions (including, in 1997,
certain products launched during 1996) generated incremental net sales in the
first quarter of 1997, principally as a result of launches of products in the
COLORSTAY collection, including COLORSTAY foundation, lip makeup, eye makeup,
and blush, launches of products in the ALMAY AMAZING collection, including
lip makeup, eye makeup, face makeup and concealer and launches of REVLON AGE
DEFYING line extensions, STREETWEAR nail enamel and NEW COMPLEXION face
makeup.
International. The International operation's net sales increased to $210.0
million for the first quarter of 1997 from $204.7 million for the first
quarter of 1996, an increase of $5.3 million, or 2.6% on a reported basis or
6.3% on a constant U.S. dollar basis. Net sales improved principally as a
result of successful new product introductions, including the continued
roll-out of the COLORSTAY cosmetics collection and REVLON AGE DEFYING makeup,
increased distribution into the expanding self-select distribution channel,
the further development of new international markets, partially offset, on a
reported basis, by the unfavorable effect on sales of a stronger U.S. dollar
against certain foreign currencies, primarily the Spanish peseta and several
other European currencies, the South African rand and the Japanese yen and
partially offset by sales lost in exiting the unprofitable
demonstrator-assisted channel in Japan. The International operation's sales
are divided into the following geographic areas: Europe, which is comprised
of Europe, the Middle East and Africa (in which net sales increased by 0.2%
to $95.4 million for the first quarter of 1997 as compared to the first
quarter of 1996); the Western Hemisphere, which is comprised of Canada,
Mexico, Central America, South America and Puerto Rico (in which net sales
increased by 12.0% to $74.7 million for the first quarter of 1997 as compared
to the first quarter of 1996); and the Far East (in which net sales decreased
by 6.8% to $39.9 million for the first quarter of 1997 as compared to the
first quarter of 1996). Excluding in both periods the effect of the Company's
strategy of exiting the demonstrator-assisted distribution channel in Japan,
Far East net sales for the first quarter of 1997 would have been at the same
level as those in the first quarter of 1996.
The Company's operations in Brazil are significant and, along with
operations in certain other countries, have been subject to, and may continue
to be subject to, significant political and economic uncertainties. In
Brazil, net sales, operating income and income before taxes were $34.4
million, $6.8 million and $4.4 million, respectively, for the first quarter
of 1997 compared to $31.6 million, $7.3 million and $6.0 million,
respectively, for the first quarter of 1996. In Mexico, operating results for
the first quarter of 1997 and 1996 were adversely affected by the continued
weakness of the Mexican economy. Effective January 1997, Mexico is considered
a hyperinflationary economy. In Venezuela, operating results for the first
quarter of 1997 and 1996 were adversely affected by high inflation and in the
1996 period by a currency devaluation.
Cost of sales
As a percentage of net sales, cost of sales was 33.7% for the first
quarter of 1997 compared to 32.9% for the first quarter of 1996,
respectively. The increase in cost of sales as a percentage of net sales is
due primarily to changes in product mix involving an increase in sales of the
Company's higher cost enhanced performance technology-based products, an
increase in export sales, increased sales of lower margin products (such as
those products sold in Brazil), the effect of weaker local currencies on the
cost of imported purchases and competitive pressures on the Company's
toiletries business in certain international markets. This was partially
offset by the benefits of improved overhead absorption against higher
production volumes and more efficient global production and purchasing. The
aforementioned increases in sales that negatively impacted cost of sales as a
percentage of net sales were, however, more profitable to the Company's
overall operating results.
Selling, general & administrative expenses
As a percentage of net sales, SG&A expenses were 61.7% for the first
quarter of 1997, an improvement from 63.6% for the first quarter of 1996.
SG&A expenses other than advertising expense, as a percentage of net sales,
improved to 45.4% for the first quarter of 1997 compared with 47.3% for the
first quarter of 1996 primarily as a result of reduced general and
administrative expenses, improved
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productivity and lower distribution costs in the first quarter of 1997
compared with the first quarter of 1996. In accordance with its business
strategy, the Company increased advertising and consumer-directed promotion
in the first quarter of 1997 compared with the first quarter of 1996 to
support growth in existing product lines, new product launches and increased
distribution in the self-select distribution channel in many of the Company's
markets in the International operation. Advertising expense increased by 5.9%
to $80.2 million, or 16.3% of net sales, for the first quarter of 1997
compared to $75.7 million, or 16.3% of net sales, for the first quarter of
1996.
Business consolidation costs
In the first quarter of 1997 the Company incurred business consolidation
costs of approximately $5.4 million in connection with the implementation of
its business strategy to rationalize factory operations. These costs
primarily included severance and other related costs in certain International
operations. These business consolidations are intended to lower the Company's
operating costs and increase efficiency in the future. Facilities relating to
such operations are held for sale, and the Company believes it may realize a
gain based upon current estimated market values.
Operating income
As a result of the foregoing, operating income increased by $0.8 million,
or 4.9%, to $17.1 million for the first quarter of 1997 from $16.3 million
for the first quarter of 1996.
Other expenses/income
Interest expense was $63.1 million for the first quarter of 1997 compared
to $59.5 million for the first quarter of 1996. The increase in interest
expense is attributable to the higher accreted value of Revlon Worldwide
Notes, prior to the cancellation and interest on the Notes, partially offset
by lower average outstanding borrowings under the 1996 Credit Agreement and
lower interest rates under the 1996 Credit Agreement than under the 1995
Credit Agreement.
Foreign currency losses, net, were $1.8 million for the first quarter of
1997 compared to $2.1 million for the first quarter of 1996. The reduction in
the foreign currency loss in the first quarter of 1997 as compared to the
first quarter of 1996 was due to a stable Venezuelan bolivar versus the
devaluation which occurred in the first quarter of 1996, partially offset by
the relatively greater strengthening of the U.S. dollar and U.K. pound
against most foreign currencies.
Gain on issuance of subsidiary stock in the amount of $187.8 million was
recognized as a result of the Revlon IPO in the first quarter of 1996.
Provision for income taxes
The provision for income taxes was $5.5 million and $7.0 million for the
first quarter of 1997 and the first quarter of 1996, respectively. The
decrease was primarily attributable to the implementation of tax planning
involving the utilization of net operating loss carryforwards in certain
International operations, partially offset by higher taxable income in
certain International operations.
Extraordinary item
The extraordinary item in the first quarter of 1997 resulted from the
cancellation of a portion of the Revlon Worldwide Notes as well as the
write-off of the deferred financing costs associated with the cancellation.
The extraordinary item in the first quarter of 1996 resulted from the
write-off of deferred financing costs associated with the extinguishment of
the 1995 Credit Agreement prior to maturity with the net proceeds from the
Revlon IPO and 1996 Credit Agreement.
YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1995
Net sales
Net sales were $2,167.0 million and $1,937.8 million for 1996 and 1995,
respectively, an increase of $229.2 million, or 11.8%, primarily as a result
of successful new product introductions worldwide, increased demand in the
United States, acquisitions of certain exclusive line professional product
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businesses, increased distribution internationally into the expanding
self-select distribution channel and the further development of new
international markets.
United States. The United States operation's net sales increased to
$1,257.2 million for 1996 from $1,113.2 million for 1995, an increase of
$144.0 million, or 12.9%. Net sales improved for 1996 primarily as a result
of continued consumer acceptance of new product offerings, general
improvement in consumer demand for the Company's color cosmetics in the
United States and acquisitions of certain exclusive line professional product
businesses, partially offset by overall softness in the fragrance industry
and lower sales of one of the Company's prestige brands. The Company improved
the dollar share of its REVLON branded cosmetics in the color cosmetics
business in the United States self-select distribution channel to 21.4% for
1996 from 19.8% for 1995, moving into the leading position in market share.
Market share, which is subject to a number of conditions, can vary from
quarter to quarter as a result of such things as timing of new product
introductions and advertising and promotional spending. New product
introductions (including, in 1996, certain products launched during 1995)
generated incremental net sales in 1996, principally as a result of launches
of products in the COLORSTAY collection, including COLORSTAY foundation, lip
makeup, eye makeup and COLORSTAY lashcolor mascara, launches of products in
the ALMAY AMAZING collection, including lip makeup, eye makeup, face makeup
and concealer, and launches of CHERISH fragrance and MITCHUM CLEAR and ALMAY
CLEAR COMPLEXION MAKEUP and TREATMENT line extensions.
International. The International operation's net sales increased to $909.8
million for 1996 from $824.6 million for 1995, an increase of $85.2 million,
or 10.3% on a reported basis or 12.6% on a constant U.S. dollar basis. Net
sales improved principally as a result of successful new product
introductions, including the continued roll-out of the COLORSTAY cosmetics
collection and REVLON AGE DEFYING makeup, increased distribution into the
expanding self-select distribution channel, the further development of new
international markets, partially offset, on a reported basis, by the
unfavorable effect on sales of a stronger U.S. dollar against certain foreign
currencies, primarily the South African rand, Japanese yen, and several
European currencies. The International operation's sales are divided into the
following geographic areas: Europe, which is comprised of Europe, the Middle
East and Africa (in which net sales increased to $404.0 million for 1996 from
$374.6 million for 1995, an increase of $29.4 million, or 7.8%); the Western
Hemisphere, which is comprised of Canada, Mexico, Central America, South
America and Puerto Rico (in which net sales increased to $311.9 million for
1996 from $275.4 million for 1995, an increase of $36.5 million, or 13.3%);
and the Far East (in which net sales increased to $193.9 million for 1996
from $174.6 million for 1995, an increase of $19.3 million, or 11.1%).
The Company's operations in Brazil are significant and, along with
operations in certain other countries, have been subject to, and may continue
to be subject to, significant political and economic uncertainties. In
Brazil, net sales, operating income and income before taxes were $132.7
million, $25.1 million and $20.0 million, respectively, for 1996 compared to
$118.6 million, $22.8 million and $19.8 million, respectively, for 1995. In
Mexico, net sales for 1996 and 1995 were adversely affected by the December
1994 devaluation of the Mexican peso and related economic weakness.
Additionally, Mexico will be considered a hyperinflationary economy beginning
in 1997. In Venezuela, net sales and income before taxes for 1996 and 1995
were adversely affected by high inflation and in the 1996 period by a
currency devaluation.
Cost of sales
As a percentage of net sales, cost of sales was 33.5% for 1996 compared to
33.7% for 1995, respectively. The improvement for 1996 resulted from the
benefits of improved overhead absorption against higher production volumes
and more efficient global production and purchasing. This improvement was
partially offset by changes in product mix involving an increase in sales of
the Company's higher cost technology-based products, an increase in export
sales, and lower margin products (such as those products sold in Brazil), the
effect of weaker local currencies on the cost of imported purchases and
competitive pressures on the Company's toiletries business in certain
international markets in Europe and the Far East. The aforementioned
increases in sales that negatively impacted cost of sales were, however, more
profitable to the Company's overall operating results.
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<PAGE>
Selling, general and administrative expenses
As a percentage of net sales, SG&A expenses were 57.3% for 1996, an
improvement from 58.8% for 1995. SG&A expenses other than advertising
expense, as a percentage of net sales, improved to 40.9% for 1996 compared
with 43.2% for 1995 primarily as a result of reduced general and
administrative expenses, improved productivity and lower distribution costs
in 1996 compared with 1995, partially offset by additional costs incurred in
Japan in 1996 in connection with the Company's strategy of exiting the
demonstrator-assisted distribution channel. In accordance with its business
strategy, the Company increased advertising and consumer-directed promotion
in 1996 compared with 1995 to support growth in existing product lines, new
product launches and increased distribution in the self-select distribution
channel in many of the Company's markets in the International operation.
Advertising expense increased by 17.3% to $355.2 million, or 16.4% of net
sales, for 1996 compared to $302.7 million, or 15.6% of net sales, for 1995.
Operating income
As a result of the foregoing, operating income increased by $53.6 million,
or 36.6%, to $200.2 million for 1996 from $146.6 million for 1995.
Other expenses/income
Interest expense was $240.1 million for 1996 compared to $237.5 million
for 1995. The increase was attributable to the higher accretion of the Revlon
Worldwide Notes, partially offset by lower average outstanding borrowings as
a result of the paydown of debt under the 1996 Credit Agreement and under the
1995 Credit Agreement with the use of proceeds from the Revlon IPO in the
1996 period and lower interest rates under the 1996 Credit Agreement than
under the 1995 Credit Agreement.
Foreign currency losses, net, were $5.7 million for 1996 compared to $10.9
million for 1995. The reduction in the foreign currency loss in 1996 as
compared to 1995 was due to lower foreign currency losses primarily in Mexico
and Venezuela and the Company's simplification of its international corporate
structure, which resulted in $2.1 million of gains, previously deferred in
the currency translation account, partially offset by the strengthening of
the U.S. dollar against the Spanish peseta and the strengthening of the U.K.
pound against several European currencies.
Miscellaneous, net was $6.4 million for 1996 compared to $1.8 million for
1995. The increase relates primarily to the Company's continued investment in
certain emerging markets.
Gain on sale of subsidiary stock in the amount of $187.8 million was
recognized as a result of the Revlon IPO.
Extraordinary item
The extraordinary item resulted from the write-off recorded in the first
quarter of 1996 of deferred financing costs associated with the
extinguishment of the 1995 Credit Agreement prior to its maturity with the
net proceeds from the Revlon IPO and borrowings under the 1996 Credit
Agreement.
YEAR ENDED DECEMBER 31, 1995 COMPARED WITH YEAR ENDED DECEMBER 31, 1994
Net sales
Net sales were $1,937.8 million and $1,732.5 million for 1995 and 1994,
respectively, an increase of $205.3 million, or 11.8%, primarily as a result
of successful new product introductions worldwide, increased demand in the
United States, increased distribution internationally into the expanding
self-select distribution channel, the development of new international
markets and a weaker U.S. dollar versus most foreign currencies.
United States. The United States operation's net sales increased to
$1,113.2 million for 1995 from $983.2 million for 1994, an increase of $130.0
million, or 13.2%. Net sales improved primarily as a result of continued
consumer acceptance of new product offerings and general improvement in
consumer demand for the Company's color cosmetics in the United States,
contributing to the Company's improved
37
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share of the color cosmetics business in the United States self-select
distribution channel, as well as increased net sales at the retail outlet
stores. New product introductions (including, in 1995, certain products
launched during 1994) generated incremental net sales in 1995, principally as
a result of the June 1994 launch of COLORSTAY lipcolor, the 1994 first
quarter launch of REVLON AGE DEFYING makeup, the 1995 second and third
quarter launches of COLORSTAY lip makeup line extensions and eye and face
makeup, respectively, which are part of the COLORSTAY collection, the 1995
second quarter launches of REVLON AGE DEFYING line extensions, CHARLIE WHITE
fragrance and ALMAY CLEAR COMPLEXION MAKEUP, and the 1995 third quarter
launches of ALMAY TIME-OFF line extensions and LASTING fragrance.
International. The International operation's net sales increased to $824.6
million for 1995 from $749.3 million for 1994, an increase of $75.3 million,
or 10.0%. Net sales improved principally as a result of successful new
product introductions, increased distribution into the expanding self-select
distribution channel, the development of new international markets and the
favorable effect on sales of a weaker U.S. dollar versus most foreign
currencies, partially offset by lower unit volume in Mexico and Argentina
resulting from recessionary conditions. Net sales were also favorably
affected by the continued roll-out of COLORSTAY lipcolor, REVLON AGE DEFYING
makeup and CHARLIE WHITE fragrance into various international markets, the
continued expansion during the third quarter of 1994 of the ALMAY cosmetics
line outside the United States and the expansion during the third quarter of
1994 of the CHARLIE RED fragrance outside the United States. Introduction of
the COLORSTAY cosmetics collection began in the fourth quarter of 1995 and
continued in the first part of 1996. The International operation's sales are
divided into the following geographic areas: Europe, which is comprised of
Europe, the Middle East and Africa (in which net sales increased to $374.6
million for 1995 from $334.8 million for 1994, an increase of $39.8 million,
or 11.9%); the Western Hemisphere, which is comprised of Canada, Mexico,
Central America, South America and Puerto Rico (in which net sales increased
to $275.4 million for 1995 from $269.7 million for 1994, an increase of $5.7
million, or 2.1%); and the Far East (in which net sales increased to $174.6
million for 1995 from $144.8 million for 1994, an increase of $29.8 million,
or 20.6%).
The Company's operations in Brazil and Mexico have been subject to
significant political and economic uncertainties. Operations in Brazil were
significantly improved for 1995 over 1994 primarily as a result of higher
unit volume in the first half of 1995. Unit volume in the second half of 1995
declined from the unit volume for the second half of 1994 due to the strong
unit volume in the second half of 1994 as a result of the Brazilian
government's July 1, 1994 introduction of a new economic and monetary policy,
which resulted in increased consumer purchasing. In Brazil, net sales,
operating income and income before taxes were $118.6 million, $22.8 million
and $19.8 million, respectively, for 1995 compared with $108.1 million, $29.5
million and $14.9 million, respectively, for 1994. However, net sales and
operating income for 1994 benefited from the hyperinflationary pricing
component included in these accounts until the Brazilian government's July 1,
1994 introduction of a new economic and monetary policy and related issuance
of a new currency, which significantly reduced inflation. The Company's
income before taxes and cash flow from operations in Brazil for 1994 were not
affected to the same extent as operating income because of a corresponding
charge in the foreign currency translation account. In Mexico, net sales and
operating income were $20.5 million and $1.6 million, respectively, for 1995
compared with $31.1 million and $3.2 million, respectively, for 1994. While
the December 1994 devaluation of the Mexican peso did not have a significant
adverse effect on 1994 operating results in Mexico, 1995 operating results in
Mexico were, and future operating results may continue to be, adversely
affected by this devaluation and other factors such as decreases in unit
volume, limitations on price increases and higher relative costs of products
sourced outside of Mexico. The Company has taken measures to mitigate the
effect of these conditions by increasing prices in line with inflation, where
possible, and efficiently managing its working capital levels.
Cost of sales
As a percentage of net sales, cost of sales was 33.7% for 1995, an
improvement from 34.5% for 1994. This improvement resulted from the benefits
on overhead absorption of higher production volumes allocated over a fixed
manufacturing base, and globalization benefits such as more efficient
production and purchasing performance in 1995 compared with 1994, partially
offset by changes in the product mix involving increases in 1995 compared to
1994 in sales of lower margin products sold in Brazil and by the
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Company's retail outlet stores. The first half of 1994 included the benefit
of the inflationary component of pricing in Brazil, partially offset by the
adverse impact of higher transition costs associated with factory
consolidations charged to cost of sales for inventory produced in 1993 and
sold during 1994.
Selling, general and administrative expenses
As a percentage of net sales, SG&A expenses were 58.8% for 1995 and 59.3%
for 1994. SG&A expenses, other than advertising expense, as a percentage of
net sales improved to 43.2% for 1995 compared with 45.4% for 1994, primarily
as a result of reduced general and administrative expenses, improved
productivity in 1995 compared with 1994, including lower relative costs
in Japan in 1995 in connection with the Company's strategy of exiting the
demonstrator-assisted distribution channel, partially offset by higher
European regional headquarters expenses and severance costs in 1995. The
Company increased advertising and consumer directed promotion during 1995
compared with 1994, principally in the United States and Europe, to support
growth in existing product lines, new product launches and increased
distribution in the self-select distribution channel in Europe in 1995.
Advertising expense increased by 26.2% to $302.7 million, or 15.6% of net
sales, for 1995 from $239.9 million, or 13.8% of net sales, for 1994. In the
fourth quarter of 1995, consistent with the management of its business, the
Company reclassified certain advertising expenses for prior periods to
conform to the presentation for 1995.
Operating income
As a result of the foregoing, operating income increased by $38.2 million,
or 35.2%, to $146.6 million for 1995 from $108.4 million for 1994.
Other expenses/income
Interest expense was $237.5 million for 1995 and $221.2 million for 1994,
an increase of $16.3 million, or 7.4%. The increase in 1995 was due to higher
outstanding borrowings under the Company's credit facilities and the higher
accretion of the Revlon Worldwide Notes.
Foreign currency losses, net, were $10.9 million for 1995 and $18.2
million for 1994. Results improved in 1995 primarily as a result of reduced
inflation associated with the Brazilian government's July 1, 1994
introduction of a new economic and monetary policy and related issuance of a
new currency and the January 1995 repayment of approximately $26.9 million
under the Yen Credit Agreement, partially offset by the adverse effect of a
currency devaluation in Venezuela primarily in the fourth quarter of 1995.
Provision for income taxes
The provision for income taxes was $25.4 million and $22.8 million for
1995 and 1994, respectively. The increase in the provision for income taxes
was primarily attributable to higher taxable earnings of certain foreign
operations.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Net cash used for operating activities was $75.9 million and $100.4
million for the first quarter of 1997 and 1996, respectively. Net cash used
for operating activities was $10.2 million, $51.7 million and $1.3 million
for 1996, 1995 and 1994, respectively. The decrease in net cash used for
operating activities for the first quarter of 1997 compared with the first
quarter of 1996 resulted primarily from higher operating income, lower taxes
paid, net of refunds, and improved working capital management. The decrease
in net cash used for operating activities for 1996 compared with 1995
resulted primarily from higher operating income, lower restructuring payments
($13.3 million for 1996 compared with $24.2 million for 1995) and improved
management of inventory relative to business growth, partially offset by
higher trade receivable balances as a result of higher net sales and
increased spending on merchandise display units in connection with the
Company's continued expansion into the self-select distribution channel. The
increase in net cash used for operating activities for 1995 compared with
1994 resulted primarily from an increase in inventories associated with
expected sales volume, higher trade receivable balances, increased spending
on merchandise display units in connection with the Company's continued
39
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expansion into the self-select distribution channel and higher income taxes
paid, net of refunds, offset in part by higher operating income, lower
restructuring payments ($24.2 million for 1995 compared with $37.2 million
for 1994) and lower severance payments.
Net cash used for investing activities was $327.6 million and $12.1
million for the first quarter of 1997 and 1996, respectively. Net cash used
for investing activities was $65.1 million, $72.5 million and $51.0 million
for 1996, 1995 and 1994, respectively. Net cash used for investing activities
for the first quarter of 1997, consisted primarily of the purchase of
marketable securities that were deposited in an irrevocable trust to effect
the covenant defeasance of the remaining $337.4 million principal amount at
maturity of the Revlon Worldwide Notes and in the first quarter of 1996 and
for fiscal 1996, 1995 and 1994 consisted primarily of capital expenditures
and in 1996 and 1995 included $7.1 million and $21.2 million, respectively,
used for acquisitions. The Company's capital expenditures for the first
quarter of 1997 and 1996 and for fiscal 1996, 1995 and 1994 were $8.0
million, $11.8 million, $58.0 million, $54.3 million and $52.5 million,
respectively. The increase in capital expenditures through 1996 was primarily
attributable to significant information system enhancements in accordance
with the Company's business strategy. See "Business -- Strategy."
Net cash provided by financing activities was $400.9 million and $95.1
million for the first quarter of 1997 and 1996, respectively. Net cash
provided by (used for) financing activities was $78.5 million, $125.2 million
and $(48.8) million for 1996, 1995 and 1994, respectively. Net cash provided
by financing activities for the first quarter of 1997 included cash drawn
under the 1996 Credit Agreement and net proceeds from the issuance of the
Notes, partially offset by the purchase of the Revlon Worldwide Notes and
repayment of approximately $4.6 million under the Yen Credit Agreement. Net
cash provided by financing activities for 1996 included the net proceeds from
the Revlon IPO, cash drawn under the 1995 Credit Agreement and under the 1996
Credit Agreement, partially offset by the repayment of borrowings under the
1995 Credit Agreement, the payment of fees and expenses related to the 1996
Credit Agreement and repayment of approximately $5.2 million under the Yen
Credit Agreement. Net cash provided by financing activities for 1996 included
the net proceeds from the Revlon IPO, cash drawn under the 1995 Credit
Agreement and under the 1996 Credit Agreement, partially offset by the
repayment of borrowings under the 1995 Credit Agreement, the payment of fees
and expenses related to the 1996 Credit Agreement and repayment of
approximately $5.2 million under the Yen Credit Agreement. Net cash provided
by financing activities for 1995 consisted primarily of borrowings under the
credit agreement of Products Corporation in effect at that time and
borrowings under the 1995 Credit Agreement, partially offset by repayments of
cash drawn under those credit agreements, repayment of $26.9 million under
the Yen Credit Agreement and payment of debt issuance costs under the 1995
Credit Agreement. Net cash used for financing activities for 1994 consisted
primarily of repayments of borrowings under the credit agreement of Products
Corporation in effect at that time and a repayment of $12.0 million under the
Yen Credit Agreement.
In February 1995, Products Corporation entered into the 1995 Credit
Agreement, which provided up to $500.0 million comprised of three senior
secured facilities: a $100.0 million term loan facility, a $225.0 million
revolving credit facility and a $175.0 million multi-currency facility.
Borrowings under the 1995 Credit Agreement were used to refinance Products
Corporation's previous $150.0 million credit agreement, refinance then
existing lines of credit outside of the United States and refinance
approximately $26.9 million paid under the Yen Credit Agreement in January
1995. The 1995 Credit Agreement was scheduled to terminate on June 30, 1997.
The net proceeds of $187.8 million from the Revlon IPO were contributed to
Products Corporation and were used to repay borrowings under the 1995 Credit
Agreement and to pay fees and expenses related to the 1996 Credit Agreement.
In January 1996, Products Corporation entered into the 1996 Credit
Agreement, which became effective upon consummation of the Revlon IPO on
March 5, 1996. The 1996 Credit Agreement provided up to $600 million
comprised of four senior secured facilities: a $130.0 million term loan
facility, a $220.0 million multi-currency facility, a $200.0 million
revolving acquisition facility and a $50.0 million special standby letter of
credit facility. As of March 31, 1997 Products Corporation had approximately
$129.0 million outstanding under the term loan facility, $112.6 million
outstanding under the multi-currency facility, $37.0 million outstanding
under the revolving acquisition facility and $34.5 million outstanding
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under the special standby letter of credit facility. In January 1997, the
1996 Credit Agreement was amended to, among other things, permit the merger
of Products Corporation's subsidiary, Prestige Fragrance & Cosmetics, Inc.
("PFC"), which operates 195 retail outlet stores throughout the United
States, with and into The Cosmetic Center, Inc. ("Cosmetic Center") and
generally to exclude Cosmetic Center (as the survivor of the merger) from
the definition of "subsidiary" under the Credit Agreement. See "Business --
Distribution" and Note 7(a) to the Consolidated Financial Statements of the
Company included elsewhere in this Prospectus. In accordance with scheduled
reductions, the term loan facility was reduced by $1.0 million on January 31,
1997. The 1996 Credit Agreement was scheduled to terminate on December 31,
2000.
In May 1997, Products Corporation entered into a credit agreement (the
"Credit Agreement"). The proceeds of loans made under the Credit Agreement were
used for the purpose of repaying the loans outstanding under the 1996 Credit
Agreement and will be used to repurchase or redeem the 10 7/8% Sinking Fund
Debentures due 2010 of Products Corporation (the "Sinking Fund Debentures") and
for general corporate purposes or, in the case of the acquisition facility, the
financing of acquisitions.
The Credit Agreement is comprised of five senior secured facilities: a
$115.0 million initial term loan facility, an $85.0 million deferred draw
term loan facility, a $300.0 million multi-currency facility, a $200.0
million revolving acquisition facility, which may be increased to $400 million
under certain circumstances with the consent of majority lenders, and a $50.0
million special standby letter of credit facility. At May 30, 1997, Products
Corporation had approximately $115.0 million outstanding under the initial
term loan facility, zero outstanding under the deferred draw term loan
facility, $184.4 million outstanding under the multi-currency facility, zero
outstanding under the acquisition facility and $34.4 million outstanding
under the special standby letter of credit facility. See "Description of
Other Indebtedness -- Credit Agreement."
In connection with the Credit Agreement, the Company expects to record an
extraordinary item related to the early extinguishment of debt of
approximately $15 million in 1997.
A subsidiary of Products Corporation is the borrower under the Yen Credit
Agreement, which had a principal balance of approximately yen 4.3 billion as of
March 31, 1997 (approximately $34.9 million U.S. dollar equivalent as of March
31, 1997) and is currently due on December 31, 1997. In May 1997, Products
Corporation received a commitment letter with respect to an extension of the
term of the Yen Credit Agreement. In the event that the documentation for such
extension is not completed, Products Corporation is able and intends to
refinance the Yen Credit Agreement under the Credit Agreement. Accordingly,
Products Corporation's obligation under the Yen Credit Agreement has been
classified as long-term as of March 31, 1997. In accordance with the terms of
the Yen Credit Agreement, approximately yen 2.7 billion (approximately $26.9
million U.S. dollar equivalent) was paid in January 1995 and approximately
yen 539 million (approximately $5.2 million U.S. dollar equivalent) was paid
in January 1996. A payment of approximately yen 539 million (approximately
$4.6 million U.S. dollar equivalent) was paid in January 1997. See
"Description of Other Indebtedness --Yen Credit Agreement."
Products Corporation expects to redeem all of the outstanding Sinking Fund
Debentures on or about July 15, 1997 with the proceeds of borrowings under
the Credit Agreement. In the event that they are not redeemed, the $61.0
million aggregate principal amount of Sinking Fund Debentures previously
purchased on the open market by Products Corporation (which was not
previously used for sinking fund payments, including the payment in July
1996) and no longer outstanding will be used to meet future sinking fund
requirements of such issue. If they are not redeemed, $9.0 million aggregate
principal amount of previously purchased Sinking Fund Debentures will be used
for the sinking fund payment due July 15, 1997. $9.0 million aggregate
principal amount of previously purchased Sinking Fund Debentures was used for
the sinking fund payment due July 15, 1996.
Products Corporation borrows funds from its affiliates from time to time
to supplement its working capital borrowings at interest rates more favorable
to Products Corporation than interest rates under the Credit Agreement. No
such borrowings were outstanding as of March 31, 1997.
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In June 1996, $10.9 million in notes due to Products Corporation from
Holdings under the Financing Reimbursement Agreement was offset against an
$11.7 million demand note payable by Products Corporation to Holdings. See
"Relationship with MacAndrews & Forbes --Financing Reimbursement Agreement"
and "Relationship with MacAndrews & Forbes -- Other."
The Company's principal sources of funds are expected to be cash flow
generated from operations and borrowings under the Credit Agreement and other
existing working capital lines. The Indenture, the Revlon Worldwide Notes
Indenture and the indentures governing three of the four issues of the Products
Corporation Notes contain certain provisions that by their terms limit the
Company's ability to, among other things, incur debt. The Company's principal
uses of funds are expected to be the payment of operating expenses, working
capital and capital expenditure requirements and debt service payments.
The Company estimates that capital expenditures for 1997 will be
approximately $60 million, including approximately $10 million for upgrades
to the Company's management information systems. Pursuant to tax sharing
agreements, Revlon Worldwide (or the Company following the Revlon Worldwide
Merger) and Revlon, Inc. may be required to make tax sharing payments to
Mafco Holdings as if Revlon Worldwide (or the Company following the Revlon
Worldwide Merger) or Revlon, Inc., as the case may be, were filing separate
income tax returns, except that no payments are required by Revlon, Inc. if
and to the extent that Products Corporation is prohibited under the Credit
Agreement from making tax sharing payments to Revlon, Inc. See "Relationship
with MacAndrews & Forbes --Tax Sharing Agreement." The Credit Agreement
prohibits Products Corporation from making any cash tax sharing payments
other than in respect of state and local income taxes. The Company
anticipates that, with respect to Revlon, Inc. as a result of net operating
tax losses and prohibitions under the Credit Agreement and with respect to
Revlon Worldwide (or the Company following the Revlon Worldwide Merger) as a
result of the absence of business operations or source of income of its own,
no federal tax payments or payments in lieu of taxes pursuant to the tax
sharing agreements will be required for 1997.
As of March 31, 1997, Products Corporation was party to a series of
interest rate swap agreements (which expire at various dates through December
2001) totaling a notional amount of $225.0 million in which Products
Corporation agreed to pay on such notional amount a variable interest rate
equal to the six month London Inter-Bank Offered Rate (6.00% per annum at
April 21, 1997) to its counterparties and the counterparties agreed to pay on
such notional amounts fixed interest rates averaging approximately 6.03% per
annum. Products Corporation entered into these agreements in 1993 and 1994
(and in the first quarter of 1996 extended a portion equal to a notional
amount of $125.0 million through December 2001) to convert the interest rate
on $225.0 million of fixed-rate indebtedness to a variable rate. If Products
Corporation had terminated these agreements, which Products Corporation
considers to be held for other than trading purposes, on March 31, 1997, a
loss of approximately $6.5 million would have been realized. Certain other
swap agreements were terminated in 1993 for a gain of $14.0 million. The
amortization of the realized gain on these agreements for the first quarter
of 1997 was approximately $0.8 million and for fiscal 1996 and 1995 was
approximately $3.2 million in each year. The remaining unamortized gain,
which is being amortized over the original lives of the agreements, is $2.3
million as of March 31, 1997. Although cash flow from the presently
outstanding agreements was slightly positive for the first quarter of 1997
and for fiscal 1996, future positive or negative cash flows from these
agreements will depend upon the trend of short-term interest rates during the
remaining lives of such agreements. Based on current interest rate levels,
Products Corporation expects to have a slightly negative cash flow from these
agreements in 1997, although no assurances can be given that short-term
interest rates will not rise above current levels. In the event of
nonperformance by the counterparties at any time during the remaining lives
of the agreements, Products Corporation could lose some or all of any
possible future positive cash flows from these agreements. However, Products
Corporation does not anticipate nonperformance by such counterparties,
although no assurances can be given.
Products Corporation enters into forward foreign exchange contracts from
time to time to hedge certain cash flows denominated in foreign currencies.
At March 31, 1997, Products Corporation had forward foreign exchange
contracts denominated in various currencies, predominantly the U.K. pound, of
approximately $67.5 million (U.S. dollar equivalent). If Products Corporation
had terminated these contracts on March 31, 1997, no material gain or loss
would have been realized.
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Based upon the Company's current level of operations and anticipated growth
in net sales and earnings as a result of its business strategy, the Company
expects that cash flows from operations and funds from currently available
subsidiary credit facilities and refinancings of existing subsidiary
indebtedness will be sufficient to enable the Company to meet its anticipated
cash requirements for the foreseeable future, including debt service of its
subsidiaries. However, there can be no assurance that cash flow will be
sufficient to meet the Company's cash requirements on a consolidated basis. If
the Company is unable to satisfy such cash requirements from these sources, the
Company could be required to adopt one or more alternatives, such as reducing
or delaying capital expenditures, restructuring subsidiary indebtedness,
selling assets or operations, selling its equity securities, seeking capital
contributions or loans from affiliates of the Company or selling additional
shares of capital stock of Revlon, Inc. There can be no assurance that any of
such actions could be effected, that they would enable the Issuer's
subsidiaries to continue to satisfy their capital requirements or that they
would be permitted under the terms of the Company's various debt instruments
then in effect. The Issuer, as a holding company, will be dependent on
distributions with respect to its approximately 83.1% indirect ownership
interest in Revlon, Inc. from the net earnings generated by Products
Corporation to pay its expenses and to pay the principal amount at maturity of
the Notes. The terms of the Credit Agreement, the Senior Subordinated Notes,
the 1999 Senior Notes and the Senior Notes generally restrict Products
Corporation from paying dividends or making distributions, except that Products
Corporation is permitted to pay dividends and make distributions to Revlon,
Inc., among other things, to enable Revlon, Inc. to pay expenses incidental to
being a public holding company, including, among other things, professional
fees such as legal and accounting, regulatory fees such as SEC filing fees and
other miscellaneous expenses related to being a public holding company, and to
pay dividends or make distributions in certain circumstances to finance the
purchase by Revlon, Inc. of its Class A Common Stock in connection with the
delivery of such Class A Common Stock to grantees under the Revlon, Inc. 1996
Stock Plan (the "Revlon, Inc. Stock Plan"), provided that the aggregate amount
of such dividends and distributions taken together with any purchases of Revlon,
Inc. common stock on the market to satisfy matching obligations under an excess
savings plan may not exceed $6.0 million per annum.
The Revlon Worldwide Notes mature in March 1998 and funds have been
deposited in an irrevocable trust to effect the covenant defeasance of the
remaining $337.4 million principal amount at maturity of the Revlon Worldwide
Notes not previously delivered to the Trustee for cancellation. The covenant
defeasance of the Revlon Worldwide Notes is expected to be effected on August
4, 1997, the 124th day following the Deposit.
The Issuer currently anticipates that cash flow generated from operations
will be insufficient to pay the principal amount at maturity of the Notes.
Accordingly, the Issuer currently anticipates that it will be required to
adopt one or more alternatives to pay the principal amount at maturity of the
Notes, such as refinancing its indebtedness, selling its equity securities or
the equity securities or assets of Revlon, Inc. or seeking capital
contributions or loans from its affiliates. There can be no assurance that
any of the foregoing actions could be effected on satisfactory terms, that
any of the foregoing actions would enable the Issuer to pay the principal
amount at maturity of the Notes or that any of such actions would be
permitted by the terms of the Indenture or any other debt instruments of the
Issuer and the Issuer's subsidiaries then in effect. See "Risk Factors --
Holding Company Structure; Restrictions on Ability of Subsidiaries to Pay
Dividends" and "Risk Factors -- Issuer's Ability to Pay Principal of Notes."
INFLATION
In general, costs are affected by inflation and the effects of inflation
may be experienced by the Company in future periods. Management believes,
however, that such effects have not been material to the Company during the
past three years in the United States or foreign non-hyperinflationary
countries. The Company operates in certain countries around the world, such
as Brazil, that have experienced hyperinflation in the past three years. This
hyperinflation has had a material effect on the Company's results of
operations in Brazil and may, in the future, have a material effect on
results of operations in Mexico. Mexico will be considered a
hyperinflationary economy beginning in 1997. In hyperinflationary foreign
countries, the Company attempts to mitigate the effects of inflation by
increasing prices in line with inflation, where possible, and efficiently
managing its working capital levels. See "Risk Factors -- Social, Political
and Economic Risks Affecting Foreign Operations and Effects of Foreign
Currency Fluctuations."
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THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Issuer will accept for exchange Old Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m.,
New York City time, on , 1997; provided, however, that if the Issuer,
in its sole discretion, has extended the period of time for which the
Exchange Offer is open, the term "Expiration Date" means the latest time and
date to which the Exchange Offer is extended.
As of the date of this Prospectus, $770,000,000 aggregate principal amount
at maturity of the Old Notes was outstanding. This Prospectus, together with
the Letter of Transmittal, is first being sent on or about , 1997, to
all holders of Old Notes known to the Issuer. The Issuer's obligation to
accept Old Notes for exchange pursuant to the Exchange Offer is subject to
certain conditions as set forth below under "--Certain Conditions to the
Exchange Offer."
The Issuer expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Old Notes, by giving oral or
written notice of such extension to the holders thereof as described below.
During any such extension, all Old Notes previously tendered will remain
subject to the Exchange Offer and may be accepted for exchange by the Issuer.
Any Old Notes not accepted for exchange for any reason will be returned
without expense to the tendering holder thereof as promptly as practicable
after the expiration or termination of the Exchange Offer.
Old Notes tendered in the Exchange Offer must be in denominations of
principal amount of $1,000 and any integral multiple thereof.
The Issuer expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not therefore accepted
for exchange, upon the occurrence of any of the events specified below under
"--Certain Conditions to the Exchange Offer." The Issuer will give oral or
written notice of any extension, amendment, non-acceptance or termination to
the holders of the Old Notes as promptly as practicable, such notice in the
case of any extension to be issued by means of a press release or other
public announcement no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
PROCEDURES FOR TENDERING OLD NOTES
The tender to the Issuer of Old Notes by a holder thereof as set forth
below and the acceptance thereof by the Issuer will constitute a binding
agreement between the tendering holder and the Issuer upon the terms and
subject to the conditions set forth in this Prospectus and in the
accompanying Letter of Transmittal. Except as set forth below, a holder who
wishes to tender Old Notes for exchange pursuant to the Exchange Offer must
transmit a properly completed and duly executed Letter of Transmittal,
including all other documents required by such Letter of Transmittal, to The
Bank of New York, as Exchange Agent, at the address set forth below under
"--Exchange Agent" on or prior to the Expiration Date. In addition, either
(i) certificates for such Old Notes must be received by the Exchange Agent
along with the Letter of Transmittal, or (ii) a timely confirmation of a
book-entry transfer (a "Book-Entry Confirmation") of such Old Notes, if such
procedure is available, into the Exchange Agent's account at The Depository
Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedure
for book-entry transfer described below, must be received by the Exchange
Agent prior to the Expiration Date, or (iii) the holder must comply with the
guaranteed delivery procedures described below. THE METHOD OF DELIVERY OF OLD
NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS
RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE
ISSUER.
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Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered holder of the Old Notes who
has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution (as defined herein). In the event that
signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, are required to be guaranteed, such guarantees must be by a firm
which is a member of a registered national securities exchange or a member of
the National Association of Securities Dealers, Inc. or by a commercial bank
or trust company having an office or correspondent in the United States
(collectively, "Eligible Institutions"). If Old Notes are registered in the
name of a person other than a signer of the Letter of Transmittal, the Old
Notes surrendered for exchange must be endorsed by, or be accompanied by a
written instrument or instruments of transfer or exchange, in satisfactory
form as determined by the Issuer in its sole discretion, duly executed by,
the registered Holder with the signature thereon guaranteed by an Eligible
Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined
by the Issuer in its sole discretion, which determination shall be final and
binding. The Issuer reserves the absolute right to reject any and all tenders
of any particular Old Notes not properly tendered or to not accept any
particular Old Notes which acceptance might, in the judgment of the Issuer or
its counsel, be unlawful. The Issuer also reserves the absolute right to
waive any defects or irregularities or conditions of the Exchange Offer as to
any particular Old Notes either before or after the Expiration Date
(including the right to waive the ineligibility of any holder who seeks to
tender Old Notes in the Exchange Offer). The interpretation of the terms and
conditions of the Exchange Offer as to any particular Old Notes either before
or after the Expiration Date (including the Letter of Transmittal and the
instructions thereto) by the Issuer shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with
tenders of Old Notes for exchange must be cured within such reasonable period
of time as the Issuer shall determine. Neither the Issuer, the Exchange Agent
nor any other person shall be under any duty to give notification of any
defect or irregularity with respect to any tender of Old Notes for exchange,
nor shall any of them incur any liability for failure to give such
notification.
If the Letter of Transmittal is signed by a person or persons other than
the registered holder or holders of Old Notes, such Old Notes must be
endorsed or accompanied by appropriate powers of attorney, in either case
signed exactly as the name or names of the registered holder or holders that
appear on the Old Notes.
If the Letter of Transmittal or any Old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Issuer, proper evidence satisfactory to the Issuer of their authority to
so act must be submitted.
By tendering, each holder will represent to the Issuer that, among other
things, the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the holder, and that neither the holder
nor such other person has any arrangement or understanding with any person to
participate in the distribution of the New Notes. In the case of a holder
that is not a broker-dealer, each such holder, by tendering, will also
represent to the Issuer that such holder is not engaged in, or intends to
engage in, a distribution of the New Notes. If any holder or any such other
person is an "affiliate," as defined under Rule 405 of the Securities Act, of
the Issuer, or is engaged in or intends to engage in or has an arrangement or
understanding with any person to participate in a distribution of such New
Notes to be acquired pursuant to the Exchange Offer, such holder or any such
other person (i) could not rely on the applicable interpretations of the
staff of the SEC and (ii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. Each broker-dealer that receives New Notes for its own account
in exchange for Old Notes, where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. See "Plan of Distribution." The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
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ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, the Issuer will accept, promptly after the Expiration Date, all Old
Notes properly tendered and will issue the New Notes promptly after
acceptance of the Old Notes. See "--Certain Conditions to the Exchange
Offer." For purposes of the Exchange Offer, the Issuer shall be deemed to
have accepted properly tendered Old Notes for exchange when, as and if the
Issuer has given oral or written notice thereof to the Exchange Agent, with
written confirmation of any oral notice to be given promptly thereafter.
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount at maturity equal to that of the
surrendered Old Note. Original Issue Discount on the New Notes will accrue
from March 5, 1997, the date of original issuance of the Old Notes. If the
Exchange Offer is not consummated by the 180th day following the Deposit Date
(or if such day is not a business day, the first business day thereafter),
interest will accrue on the Old Notes (in addition to the accrual of Original
Issue Discount) from and including such date until but excluding the date of
consummation of the Exchange Offer payable in cash semiannually in arrears on
March 15 and September 15 commencing September 15, 1997, at a rate per annum
equal to .50% of the Accreted Value of the Old Notes as of the September 15
or March 15 immediately preceding such interest payment date. Payments of
such interest, if any, on Old Notes in exchange for which the New Notes were
issued will be made to the persons who, at the close of business on March 1
or September 1 next preceding the interest payment date, are registered
holders of such Old Notes if such record date occurs prior to such exchange,
or are registered holders of the New Notes if such record date occurs on or
after the date of such exchange, even if Notes are cancelled after the record
date and on or before the interest payment date.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of certificates for such Old Notes or a timely
Book-Entry Confirmation of such Old Notes into the Exchange Agent's account
at the Book-Entry Transfer Facility, a properly completed and duly executed
Letter of Transmittal and all other required documents. If any tendered Old
Notes are not accepted for any reason set forth in the terms and conditions
of the Exchange Offer or if Old Notes are submitted for a greater principal
amount at maturity than the holder desired to exchange, such unaccepted or
non-exchanged Old Notes will be returned without expense to the tendering
holder thereof (or, in the case of Old Notes tendered by book-entry transfer
into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry procedures described below, such non-exchanged Old
Notes will be credited to an account maintained with such Book-Entry Transfer
Facility) as promptly as practicable after the expiration or termination of
the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with
respect to the Old Notes at the Book-Entry Transfer Facility for purposes of
the Exchange Offer within two business days after the date of this
Prospectus, and any financial institution that is a participant in the
Book-Entry Transfer Facility's systems may make book-entry delivery of Old
Notes by causing the Book-Entry Transfer Facility to transfer such Old Notes
into the Exchange Agent's account at the Book-Entry Transfer Facility in
accordance with such Book-Entry Transfer Facility's procedures for transfer.
However, although delivery of Old Notes may be effected through book-entry
transfer at the Book-Entry Transfer Facility, the Letter of Transmittal or
facsimile thereof, with any required signature guarantees and any other
required documents, must, in any case, be transmitted to and received by the
Exchange Agent at one of the addresses set forth below under "--Exchange
Agent" on or prior to the Expiration Date or the guaranteed delivery
procedures described below must be complied with.
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GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes
and the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot
be completed on a timely basis, a tender may be effected if (i) the tender is
made through an Eligible Institution, (ii) prior to the Expiration Date, the
Exchange Agent received from such Eligible Institution a properly completed
and duly executed Letter of Transmittal (or a facsimile thereof) and Notice
of Guaranteed Delivery, substantially in the form provided by the Issuer (by
telegram, telex, facsimile transmission, mail or hand delivery), setting
forth the name and address of the holder of Old Notes and the amount of Old
Notes tendered, stating that the tender is being made thereby and
guaranteeing that within five New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Old Notes, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent, and (iii) the certificates for
all physically tendered Old Notes, in proper form for transfer, or a
Book-Entry Confirmation, as the case may be, and all other documents required
by the Letter of Transmittal, are received by the Exchange Agent within three
NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at one of the addresses set forth below under
"--Exchange Agent." Any such notice of withdrawal must specify the name of
the person having tendered the Old Notes to be withdrawn, identify the Old
Notes to be withdrawn (including the principal amount of such Old Notes), and
(where certificates for Old Notes have been transmitted) specify the name in
which such Old Notes are registered, if different from that of the
withdrawing holder. If certificates for Old Notes have been delivered or
otherwise identified to the Exchange Agent, then, prior to the release of
such certificates the withdrawing holder must also submit the serial numbers
of the particular certificates to be withdrawn and signed notice of
withdrawal with signatures guaranteed by an Eligible Institution unless such
holder is an Eligible Institution. If Old Notes have been tendered pursuant
to the procedure for book-entry transfer described above, any notice of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Old Notes and otherwise
comply with the procedures of such facility. All questions as to the
validity, form and eligibility (including time of receipt) of such notices
will be determined by the Issuer, whose determination shall be final and
binding on all parties. Any Old Notes so withdrawn will be deemed not to have
been validly tendered for exchange for purposes of the Exchange Offer. Any
Old Notes which have been tendered for exchange but which are not exchanged
for any reason will be returned to the holder thereof without cost to such
holder (or, in the case of Old Notes tendered by book-entry transfer into the
Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the
book-entry transfer procedures described above, such Old Notes will be
credited to an account maintained with such Book-Entry Transfer Facility for
the Old Notes) as soon as practicable after withdrawal, rejection of tender
or termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described under "--Procedures
for Tendering Old Notes" above at any time on or prior to the Expiration
Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Issuer
shall not be required to accept for exchange, or to issue New Notes in
exchange for, any Old Notes and may terminate or amend the Exchange Offer, if
at any time before the acceptance of such Old Notes for exchange or the
exchange of the New Notes for such Old Notes, any of the following events
shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order of decree shall have been
issued by, any court or governmental agency or other
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governmental regulatory or administrative agency or commission, (i)
seeking to restrain or prohibit the making or consummation of the Exchange
Offer or any other transaction contemplated by the Exchange Offer, or
assessing or seeking any damages as a result thereof, or (ii) resulting in
a material delay in the ability of the Issuer to accept for exchange or
exchange some or all of the Old Notes pursuant to the Exchange Offer; or
any statute, rule, regulation, order or injunction shall be sought,
proposed, introduced, enacted, promulgated or deemed applicable to the
Exchange Offer or any of the transactions contemplated by the Exchange
Offer by any government or governmental authority, domestic or foreign, or
any action shall have been taken, proposed or threatened, by any
government, governmental authority, agency or court, domestic or foreign,
that in the reasonable judgment of the Issuer might directly or indirectly
result in any of the consequences referred to in clauses (i) or (ii) above
or, in the reasonable judgment of the Issuer, might result in the holders
of New Notes having obligations with respect to resales and transfers of
New Notes which are greater than those described in the interpretation of
the SEC referred to on the cover page of this Prospectus, or would
otherwise make it inadvisable to proceed with the Exchange Offer; or
(b) there shall have occurred (i) any general suspension of or general
limitation on prices for, or trading in, securities on any national
securities exchange or in the over-the-counter market, (ii) any limitation
by any governmental agency or authority which may adversely affect the
ability of the Issuer to complete the transactions contemplated by the
Exchange Offer, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any
limitation by any governmental agency or authority which adversely affects
the extension of credit or (iv) a commencement of a war, armed hostilities
or other similar international calamity directly or indirectly involving
the United States, or, in the case of any of the foregoing existing at the
time of the commencement of the Exchange Offer, a material acceleration or
worsening thereof; or
(c) any change (or any development involving a prospective change) shall
have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Issuer and its subsidiaries taken as a whole that, in the
reasonable judgment of the Issuer, is or may be adverse to the Issuer, or
the Issuer shall have become aware of facts that, in the reasonable
judgment of the Issuer, have or may have adverse significance with respect
to the value of the Old Notes or the New Notes;
which in the reasonable judgment of the Issuer in any case, and regardless of
the circumstances (including any action by the Issuer) giving rise to any
event described above, makes it inadvisable to proceed with the Exchange
Offer and/or with such acceptance for exchange or with such exchange.
The foregoing conditions are for the sole benefit of the Issuer and may be
asserted by the Issuer regardless of the circumstances giving rise to any
such condition or may be waived by the Issuer in whole or in part at any time
and from time to time in its sole discretion. The failure by the Issuer at
any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which
may be asserted at any time and from time to time.
In addition, the Issuer will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes,
if at such time any stop order shall be threatened or in effect with respect
to the Registration Statement of which this Prospectus constitutes a part or
the qualification of the Indenture under the Trust Indenture Act of 1939 (the
"TIA").
EXCHANGE AGENT
The Bank of New York has been appointed as the Exchange Agent for the
Exchange Offer. All executed Letters of Transmittal should be directed to the
Exchange Agent at one of the addresses set forth below. Questions and
requests for assistance, requests for additional copies of this Prospectus or
of the Letter of Transmittal and requests for Notices of Guaranteed Delivery
should be directed to the Exchange Agent addressed as follows:
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Delivery To: The Bank of New York, Exchange Agent
By Mail: By Overnight Courier or Hand:
The Bank of New York The Bank of New York
101 Barclay Street--(7 East) 101 Barclay Street--(7 East)
Reorganization Section Reorganization Section
New York, New York 10286 Corporate Trust Services Window
Attention: Arwen Gibbons New York, New York 10286
Attention: Arwen Gibbons
By Facsimile:
(212) 571-3080
Confirm by Telephone:
(212) 815-6333
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET
FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF
TRANSMITTAL.
FEES AND EXPENSES
The Issuer will not make any payment to brokers, dealers, or others
soliciting acceptances of the Exchange Offer.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Issuer and are estimated in the aggregate to be
$ .
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who
instruct the Issuer to register New Notes in the name of, or request that Old
Notes not tendered or not accepted in the Exchange Offer be returned to, a
person other than the registered tendering holder will be responsible for the
payment of any applicable transfer tax thereon.
CONSEQUENCES OF EXCHANGING OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions
in the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend thereon
as a consequence of the issuance of the Old Notes pursuant to exemptions
from, or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the Old
Notes may not be offered or sold, unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Issuer does not
currently anticipate that it will register Old Notes under the Securities
Act. See "Description of the Notes -- Registration Rights." Based on
interpretations by the staff of the SEC, as set forth in no-action letters
issued to third parties, the Issuer believes that New Notes issued pursuant
to the Exchange Offer in exchange for Old Notes may be offered for resale,
resold or otherwise transferred by holders thereof (other than any such
holder which is an "affiliate" of the Issuer within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holders' business and such
holders have no arrangement or understanding with any person to participate
in the distribution of such New Notes. However, the Issuer does not intend to
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<PAGE>
request the SEC to consider, and the SEC has not considered, the Exchange
Offer in the context of a no-action letter and there can be no assurance that
the staff of the SEC would make a similar determination with respect to the
Exchange Offer as in such other circumstances. Each holder, other than a
broker-dealer, must acknowledge that it is not engaged in, and does not
intend to engage in, a distribution of New Notes and has no arrangement or
understanding to participate in a distribution of New Notes. If any holder is
an affiliate of the Issuer, is engaged in or intends to engage in or has any
arrangement or understanding with respect to the distribution of the New
Notes to be acquired pursuant to the Exchange Offer, such holder (i) could
not rely on the applicable interpretations of the staff of the SEC and (ii)
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Each broker-dealer
that receives New Notes for its own account in exchange for Old Notes, where
such Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
See "Plan of Distribution." In addition, to comply with the state securities
laws, the New Notes may not be offered or sold in any state unless they have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with. The offer
and sale of the New Notes to "qualified institutional buyers" (as such term
is defined under Rule 144A of the Securities Act) is generally exempt from
registration or qualification under the state securities laws. The Issuer
currently does not intend to register or qualify the sale of the New Notes in
any state where an exemption from registration or qualification is required
and not available.
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BUSINESS
OVERVIEW
REVLON is one of the world's best known names in cosmetics and is a
leading mass market cosmetics brand. The Company's vision is to provide
glamour, excitement and innovation through quality products at affordable
prices. To pursue this vision, the Company's management team combines the
creativity of a cosmetics and fashion company with the marketing, sales and
operating discipline of a consumer packaged goods company. The Company
believes that its global brand name recognition, product quality and
marketing experience have enabled it to create one of the strongest consumer
brand franchises in the world, with products sold in approximately 175
countries and territories. The Company's products are marketed under such
well-known brand names as REVLON, COLORSTAY, REVLON AGE DEFYING, ALMAY and
ULTIMA II in cosmetics; MOON DROPS, ETERNA 27, REVLON RESULTS, ALMAY
TIME-OFF, ULTIMA II, JEANNE GATINEAU and NATURAL HONEY in skin care; CHARLIE,
FIRE & ICE, CIARA, CHERISH and JONTUE in fragrances; FLEX, OUTRAGEOUS,
AQUAMARINE, MITCHUM, COLORSILK, JEAN NATE, BOZZANO and COLORAMA in personal
care products; and ROUX FANCI-FULL, REALISTIC, CREME OF NATURE, FERMODYL,
VOILA, COLOMER, CREATIVE NAIL DESIGN SYSTEMS and AMERICAN CREW in
professional products. To further strengthen its consumer brand franchises,
the Company markets each core brand with a distinct and uniform global image
including packaging and advertising, while retaining the flexibility to
tailor products to local and regional preferences.
Revlon, Inc. was founded by Charles Revson, who revolutionized the
cosmetics industry by introducing nail enamels matched to lipsticks in
fashion colors 65 years ago. Today, the Company has leading market positions
in many of its principal product categories in the United States self-select
distribution channel, which the Company believes is the fastest-growing
channel of distribution for cosmetics, skin care, fragrance and personal care
products. The Company's leading market positions for its REVLON brand
products include the number one positions in lip makeup and nail enamel
(which the Company has occupied for the past 20 years), and for 1996 the
number one and two selling brands of lip makeup. The Company's market share
in lip makeup and nail enamel has increased from 24.3% and 21.2%,
respectively, for 1992, to 32.6% and 24.7%, respectively, for 1996. The
Company has the number two position in face makeup (including the number one
and two selling brands of foundation), where its market share has increased
from 10.8% for 1992 to 19.1% for 1996. Propelled by the success of its new
product launches and share gains in its existing product lines, the Company
has captured the number one position overall in color cosmetics (consisting
of lip, eye and face makeup and nail enamel) in the United States self-select
distribution channel, where its market share has increased from 14.7% for
1992 to 21.4% for 1996. The Company also has leading market positions in
several product categories in certain markets outside of the United States,
including in Brazil, Canada, South Africa and Australia.
The Company believes that it is an industry leader in the development of
innovative and technologically advanced consumer and professional products.
In June 1994, the Company launched COLORSTAY lipcolor, which uses patented
transfer-resistant technology that provides long wear. COLORSTAY lip makeup
achieved a 14.5% market share in the United States self-select distribution
channel for 1996, making it the number one selling lip makeup in that
channel, with a market share of more than twice that of any competitor's
brand. The success of COLORSTAY lip makeup boosted the Company's total lip
makeup market share to more than twice the market share of the next largest
competitor. To capitalize on the highly successful launch of COLORSTAY
lipcolor, the Company introduced a collection of COLORSTAY cosmetics in 1995,
including foundation, eye colors, eye liners and lip pencils, and COLORSTAY
lashcolor mascara in 1996. COLORSTAY foundation, which was introduced late in
the third quarter of 1995, was the number one selling foundation in the
United States self-select distribution channel in 1996 and achieved a 9.3%
market share for such period. The Company has also introduced the COLORSTAY
collection in international markets, where it has increased the Company's
color cosmetics sales in such markets. The Company has applied the
proprietary transfer-resistant technology developed by the Company for
COLORSTAY to the ALMAY AMAZING collection, which is part of the Company's
line of hypo-allergenic, dermatologist-tested, fragrance-free cosmetics and
skin care products.
In April 1994, the Company introduced REVLON AGE DEFYING foundation, which
uses proprietary technology designed to meet the needs of women in the over
35 age bracket. REVLON AGE DEFYING foundation was the number two selling
foundation in the United States self-select distribution channel for
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1996 and achieved an 8.2% market share for such period. The Company
capitalized on this highly successful launch by introducing a collection of
REVLON AGE DEFYING color cosmetics, including eye makeup, blush and pressed
powder. In the fourth quarter of 1996, the Company introduced NEW COMPLEXION
compact makeup. With the addition of NEW COMPLEXION compact makeup, NEW
COMPLEXION foundations achieved a 6.8% market share in the United States
self-select distribution channel for the fourth quarter of 1996, giving
Revlon the number one, two and three selling brands of foundation for such
period. In 1997, the Company intends to continue to introduce new products
under its COLORSTAY and REVLON AGE DEFYING brands, including a relaunching of
COLORSTAY lipcolor with a new and improved formula that delivers moisture
while retaining transfer resistance. In addition, the Company intends to
launch in the second quarter of 1997 ALMAY TIME-OFF REVITALIZER, a skin care
product which uses a proprietary technology to rejuvenate skin. In 1997, the
Company also intends to introduce new products targeted to the "trend"
consumer under its STREETWEAR brand to capitalize on the successful launch of
its STREETWEAR nail enamel in 1996.
In the United States and increasingly in international markets, the
Company's products are sold principally in the expanding self-select
distribution channel. The trend in the cosmetics, skin care and fragrance
industry has been the shift of consumer purchases from the
demonstrator-assisted channel to the self-select distribution channel. The
Company believes that it is well-positioned to continue to take advantage of
the shifting consumer shopping patterns in international markets towards the
self-select distribution channel, particularly in Western Europe, Latin
America and the Far East. The Company also is expanding its presence in the
new and emerging markets of Eastern Europe, Russia, India, China, Thailand,
Vietnam, South Korea and Africa.
The self-select distribution channel, in which consumers select their own
purchases without the assistance of an in-store demonstrator, includes in the
United States independent drug stores and chain drug stores (such as
Walgreens, CVS Drug stores, Eckerd Drug stores and Revco), mass volume
retailers (such as Wal-Mart, Target Stores and Kmart) and supermarkets and
combination supermarket/ drug stores (such as Pathmark, Albertson's, Kroger's
and Smith's). Internationally, the self-select distribution channel includes
retailers such as Boots in the United Kingdom and Western Europe and Shoppers
Drug Mart in Canada. The foregoing retailers, among others, sell the
Company's products.
BUSINESS STRATEGY
The Company's business strategy, which implements its vision and is
intended to continue to improve operating performance, is to:
o Strengthen and broaden its core brands through globalization of
marketing and advertising, product development and manufacturing and
through increasing its emphasis on advertising and promotion.
o Lead the industry in the development and introduction of
technologically advanced innovative products that set new trends.
o Expand the Company's presence in all markets in which the Company
competes and enter new and emerging markets.
o Continue to reduce costs and improve operating efficiencies, customer
service and product quality by reducing overhead, rationalizing factory
operations, upgrading management information systems, globally sourcing
raw materials and components and carefully managing working capital.
o Continue to expand market share and product lines through possible
strategic acquisitions or joint ventures.
As a result of the implementation of its strategy, the Company has
achieved 14 consecutive quarters of increased net sales, operating income and
EBITDA compared with the corresponding quarter of the prior year. Net sales,
operating income and EBITDA increased 6.1%, 4.9% and 10.6%, respectively, for
the first quarter of 1997 over the comparable period in 1996, 11.8%, 36.6%
and 26.3%, respectively, for 1996 over 1995 and increased 11.8%, 35.2% and
25.3%, respectively, for 1995 over 1994. Gross profit as a percentage of net
sales was 66.3% for the first quarter of 1997 compared with 67.1% for the
first quarter of 1996, 66.5% for 1996, compared with 66.3% for 1995 and 65.5%
for 1994. In addition, the
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Company's net loss decreased from $191.7 million for 1994 to $139.3 million
for 1995 and an Adjusted 1996 Net Loss of $86.6 million for 1996 and
decreased from an Adjusted 1996 Net Loss of $55.4 million in the first
quarter of 1996 to an Adjusted 1997 Net Loss of $54.9 million in the first
quarter of 1997. The Company has also reduced the relative amount of working
capital necessary to support net sales. The ratio of average quarterly
combined inventory and accounts receivable balances to net sales was 32.2%
for the first quarter of 1997 compared with 33.1% for the comparable period
in 1996, and 32.3% for 1996 compared with 33.2% for 1995 and 34.9% for 1994.
The Company has increased its investment in advertising and consumer directed
promotion while decreasing its SG&A expenses as a percentage of net sales to
61.7% for the first quarter of 1997 compared with 63.6% for the comparable
period in 1996, and 57.3% for 1996 compared with 58.8% for 1995 and 59.3% for
1994.
Key steps in implementing the Company's business strategy are as follows:
Strengthen and Broaden Core Brands. The Company believes that its brand
names are widely recognized among consumers and retailers throughout the
world. The Company intends to continue to strengthen and broaden its
portfolio of core brands, including REVLON, COLORSTAY, REVLON AGE DEFYING,
ALMAY, ULTIMA II, CHARLIE, FLEX, OUTRAGEOUS and MITCHUM, by, among other
things, continuing to globalize its marketing and advertising, product
development and manufacturing to provide a uniform image and product
throughout the world. Each core brand is marketed with a distinct and uniform
global image, including packaging and advertising. The Company has formed
Global Marketing Committees, consisting of managers from the Company's
marketing, research and development, operations, advertising and finance
departments from the United States and abroad, which develop strategies for
the Company's current and new brands and products. The Global Marketing
Committees coordinate the Company's globalization efforts while allowing
sufficient flexibility to tailor the Company's products to local and regional
preferences. As part of the Company's globalizing efforts, major United
States product successes, such as COLORSTAY and REVLON AGE DEFYING, are
introduced into international markets, and major international product
successes, such as CHARLIE RED and CHARLIE WHITE, are introduced into the
United States.
As part of the strategy to strengthen and broaden its core brands, the
Company has increased its investment in advertising and promotion. The
Company increased advertising expenditures by 17.3% for 1996 over 1995 levels
and by 26.2% for 1995 over 1994 levels. In 1997, the Company intends to
increase its advertising expenditures over 1996 levels. The Company intends
to target the increased advertising and promotion to support new product
introductions as well as certain of the Company's existing brands. The
Company also has developed unique marketing materials such as the "Revlon
Report," a glossy color pamphlet distributed in magazines and on
merchandising units, available in 30 countries and 16 languages, which
highlights seasonal and other fashion and color trends, describes the
Company's products that address those trends and contains coupons, rebate
offers and other promotional material to encourage consumers to try the
Company's products. The Company has created two Color Mobiles, which are
on-the-road beauty sampling and information vehicles patterned on the
innovative vehicles that launched COLORSTAY lipstick, that travel to major
retailers in the United States, at which Company trainers educate consumers
on the COLORSTAY and REVLON AGE DEFYING collections and the latest product
and shade offerings. In addition, the uniform global image of the Company's
core brands is reinforced through the visibility of Halle Berry, Cindy
Crawford, Daisy Fuentes, Melanie Griffith and Vendela, among others, who act
as celebrity spokespersons for the Company's brands throughout the world in
all areas of the Company's marketing efforts, including appearing in the
Company's print and television advertisements.
Lead the Industry in Product Innovation and Trends. The Company intends to
continue to lead the industry in developing and marketing trend-setting
products that incorporate proprietary technologies. The Company's recent
product introductions include the breakthrough COLORSTAY makeup, which uses
proprietary transfer-resistant technology that provides long wear. COLORSTAY
has effectively created an entirely new product category -long wearing,
transfer-resistant lip makeup -that has driven substantially all growth in
lip makeup sales in the United States self-select distribution channel since
its introduction. In 1996, a number of the Company's competitors began
producing long wearing, transfer-resistant lipcolor. In the first quarter of
1997, the Company relaunched COLORSTAY lipcolor with
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a new and improved formula that delivers moisture while retaining transfer
resistance. Launched in June 1994, COLORSTAY achieved a 13.6% and 14.5%
market share in the United States self-select distribution channel for 1995
and 1996, respectively, making it the number one selling lip makeup in that
channel, with a market share of more than twice that of any competitor's
brand. The success of COLORSTAY lip makeup boosted the Company's total lip
makeup market share to 32.6%, more than twice the market share of the next
largest competitor. To capitalize on the highly successful launch of
COLORSTAY lipcolor, the Company introduced a collection of COLORSTAY
cosmetics, including foundation, eye colors, eye liners and lip pencils,
which address consumers' desire for cosmetic products that can be applied
once and will remain fresh during the entire day, and introduced COLORSTAY
lashcolor mascara in 1996. COLORSTAY foundation, which was introduced late in
the third quarter of 1995, was the number one selling foundation in the
United States self-select distribution channel in 1996 and achieved a 9.3%
market share for that period. The Company introduced REVLON AGE DEFYING
foundation which uses proprietary technology that does not settle in but
instead conceals fine facial lines and is designed to meet the needs of women
in the over 35 age bracket. Launched in April 1994, REVLON AGE DEFYING
foundation achieved an 8.2% market share in the United States self-select
distribution channel for 1996, making it the number two selling foundation in
that channel. The Company capitalized on this highly successful launch by
introducing a collection of REVLON AGE DEFYING color cosmetics, including eye
makeup, blush and pressed powder. The Company has introduced new fragrances,
such as FIRE & ICE and CHARLIE RED in 1994 followed by CHARLIE WHITE in 1995.
The launch of CHARLIE RED and CHARLIE WHITE returned the CHARLIE fragrance
collection to a leading position in market share in the self-select
distribution channel in the United States. In addition, the Company launched
the new fragrance CHERISH in 1996 and the new fragrances FIRE & ICE COOL,
CHARLIE SUNSHINE and STREETWEAR SCENTS in the first quarter of 1997. Other
innovative product introductions include MITCHUM CLEAR roll-on
anti-perspirant and NEW COMPLEXION compact makeup. In the second quarter of
1997, the Company introduced ALMAY TIME-OFF REVITALIZER, a skin care product
which uses a proprietary technology to visibly rejuvenate skin. In 1997, the
Company intends also to introduce new products targeted to the "trend"
consumer under its STREETWEAR brand to capitalize on the successful launch of
its STREETWEAR nail enamel in 1996.
Expand Presence in All Markets. The Company believes that the self-select
distribution channel in the United States represents the fastest-growing
channel of distribution for cosmetics, skin care, fragrance and personal care
products. The Company intends to capitalize on its established presence and
experience in marketing into the self-select distribution channel to increase
market share in this channel. The Company believes that it can attract
consumers from department stores and specialty stores, existing consumers in
the self-select distribution channel and new cosmetics consumers by providing
them with glamour, excitement and innovation through quality products at
affordable prices. The Company reinforces this effort with its unique
marketing materials such as the "Revlon Report"; the Color Mobiles, which
create consumer and retail excitement about the Company's new products and
encourage trial and purchase by consumers; and magazine inserts containing
samples of the Company's newest products, trial size products and "shade
samplers," a collection of trial size products in different shades, which
allow the consumer to sample the Company's newest face, eye and lip makeup
and nail enamel in coordinated colors. The Company also provides
point-of-sale testers on the Company's display units which provide
information about the Company's products and permit consumers to test the
products, thereby achieving the benefits of an in-store demonstrator without
the corresponding cost. The Company develops jointly with retailers carefully
tailored advertising, point of purchase and other focused marketing programs.
The Company believes that strong relationships with retailers and consumer
traffic generated by its innovative marketing programs will enable the
Company to increase its presence in the expanding self-select distribution
channel by, among other things, increasing the permanent display space
devoted to the Company's products.
The Company intends to capitalize on its experience in the self-select
distribution channel in the United States to realize growth opportunities in
the international markets for cosmetics and skin care, fragrance and personal
care products. The Company believes that the worldwide recognition of the
REVLON name, the Company's existing international presence and the Company's
strengths in the self-select distribution channel are platforms from which to
gain further significant international penetration. Pursuant to its strategy,
the Company introduced the COLORSTAY collection in international
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markets and as a result increased its color cosmetics sales in such markets.
In addition, the Company intends to achieve growth through increasing
distribution into the expanding self-select distribution channels in Western
Europe, Latin America and the Far East, expanding the distribution of certain
regional international brands and entering new and emerging markets. Such new
and emerging markets include Eastern Europe; Thailand; South Korea; Vietnam;
India; and China; and northern and central Africa, where the Company intends
to expand the distribution of its products by capitalizing on its market
strengths in South Africa.
The Company intends to strengthen its professional products business by
introducing a portfolio of innovative, technologically advanced professional
products for exclusive salon use under the REVLON brand, such as
REVLONISSIMO, VOILA hair color and PERFECT PERM permanent wave and line
extensions of the SYNAPLEX, FERMODYL and SENSOR PERM brands. The Company has
strengthened its exclusive line professional distributor network and intends
to capitalize on this strength to develop a line of home use maintenance
products for purchase in salons. The Company will also further strengthen its
leadership position in the supply of professional and retail ethnic hair care
products through, among other things, the introduction of new products
tailored to the specific needs of the ethnic customer, such as the HERBA RICH
hair relaxer system and the AROSCI line of hair care products. The Company
has recently entered the new markets of Scandinavia, South Korea, Japan,
Turkey and Greece. In addition, the Company intends to expand its presence in
existing markets, such as the Caribbean, United Kingdom and Africa. In
Africa, the Company has established distributors with direct sales forces.
As part of its business strategy, the Company acquired in 1995 Creative
Nail, a leading United States designer, manufacturer and supplier of nail
care and other products, including nail care treatment, nail extensions and
hand creams and lotions for the professional nail industry. In April 1996,
the Company acquired American Crew, Inc. ("American Crew"), which
manufactures and distributes men's shampoos, conditioners, gels and other
hair care products for use and resale by professional salons. The Company
believes that these acquisitions have broadened the Company's professional
products range and enhanced its distribution capabilities.
Improve Operating Efficiencies. The Company is rationalizing and
increasing the efficiency of its manufacturing operations worldwide by
centralizing production of some product categories for sale throughout the
world within designated facilities and by shifting production of certain
other product categories to more cost effective manufacturing sites. The
Company is making substantial improvements in its global sourcing, materials
management and distribution capabilities, which have contributed to an
improvement in the Company's gross profit margin. The Company intends to
continue to globally source raw materials and components from accredited
vendors, which allows the Company to utilize its large purchasing capacity to
maximize cost savings and ensure the quality of its raw materials and
components. The Company continues to upgrade its management information
systems to provide an integrated system for forecasting, production,
inventory management, distribution, procurement and accounting. As part of
its efforts to continuously improve operating efficiencies, the Company
attempts to ensure that a significant portion of its capital expenditures are
devoted to improving operating efficiencies. Improvements in manufacturing,
sourcing and systems have contributed to improved customer service levels,
improved product quality, an increase in gross profit as a percentage of net
sales and improved management of working capital, as evidenced by the
reduction in the relative amount of working capital necessary to support the
Company's net sales. Gross profit as a percentage of net sales was 66.5% for
1996 compared with 66.3% for 1995 and 65.5% for 1994. The ratio of average
quarterly combined inventory and accounts receivable balances to net sales
was 32.3% for 1996 compared with 33.2% for 1995 and 34.9% for 1994. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The Company also measures the improvement in operating
performance by tracking key performance indicators, such as the percentage of
timely order fulfillment which was approximately 99% for the Company's major
United States facilities in 1996.
Strategic Acquisitions. The Company intends to pursue acquisitions of
brands and businesses which expand the Company's market share and product
lines.
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PRODUCTS
The Company's products include consumer products consisting of cosmetics
and skin care, fragrance and personal care products, and professional
products consisting of hair care products principally for use in and resale
by professional salons. The Company manufactures and markets a variety of
products worldwide. The following table sets forth the Company's principal
brands.
<TABLE>
<CAPTION>
PERSONAL CARE PROFESSIONAL
BRAND COSMETICS SKIN CARE FRAGRANCES PRODUCTS PRODUCTS
- --------------- ----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
REVLON Revlon, Moon Drops, Charlie, Charlie Flex, Flex Revlon
ColorStay, Revlon Revlon Results, Red, Charlie Balsam, Professional,
Age Defying, Eterna 27 White, Charlie Outrageous, Roux Fanci-full,
Super Lustrous, Sunshine, Fire & Aquamarine, Realistic, Creme
Moon Drops, Ice, Fire & Ice Mitchum, Lady of Nature,
Velvet Touch, New Cool, Cherish, Mitchum, Hi & Arosci, Sensor
Complexion, Touch Lasting, Jontue, Dri, Colorsilk, Perm, Perfect
& Glow, Lashful, StreetWear Frost & Glow, Perm, Fermodyl,
Lengthwise, Scents, Ciara Revlon Shadings, Perfect Touch,
Naturally Jean Nate, Roux Salon Perfection,
Glamorous, Custom Fanci-full, Revlonissimo,
Eyes, Softstroke Realistic, Creme Voil|fa, Young
Timeliner, of Nature, Herba Color, Creative
StreetWear, Rich, Fabu-laxer Nail Design
Revlon Implements Systems,
Contours,
American Crew,
R PRO,
True Cystem
ALMAY Almay, Time-Off, Time-Off, Almay
Almay Clear Moisture Balance,
Complexion Moisture Renew,
Makeup, Amazing, Almay Clear
One Coat Complexion
Treatment,
ULTIMA II Ultima II, Ultima II, Madly, UII
Wonderwear, The Interactives, CHR
Nakeds
SIGNIFICANT Colorama(b), Jeanne Floid(b), Bozzano(b), Colomer(b),
REGIONAL Juvena(b), Gatineau(b), Versace(a), Juvena(b), Intercosmo(b),
BRANDS Jeanne Natural Honey Charlie Gold, Geniol(b), Personal Bio
Gatineau(b) Myrurgia(a) Colorama(b), Point, Natural
Llongueras(b), Wonder,
Bain de Llongueras(b)
Soleil(b), ZP-11
- --------------- ----------------- ----------------- ----------------- ----------------- -----------------
</TABLE>
(a) License held for distribution outside the United States.
(b) Trademark owned in certain markets outside the United States.
Cosmetics and Skin Care. The Company sells a broad range of cosmetics and
skin care products designed to fulfill specifically identified consumer
needs, principally priced in the upper range of the self-select distribution
channel, including lip makeup, nail color and nail care products, eye and
face makeup and skin care products such as lotions, cleansers, creams, toners
and moisturizers. Many of the Company's products incorporate patented,
patent-pending or proprietary technology.
The Company markets several different lines of REVLON lip makeup (which
includes lipstick, lipcolor and liner), and has the number one and two
selling brands of lip makeup in the United States self-select distribution
channel. The Company's breakthrough COLORSTAY lipcolor, which uses patented
transfer-resistant technology that provides long wear, is produced in 40
shades and is the number one brand in the United States self-select
distribution channel. SUPER LUSTROUS, the Company's flagship lipstick brand,
is produced in 57 shades and is the number two brand in the United States
self-select distribution channel. MOON DROPS, a moisturizing lipstick, is
also produced in 57 shades.
The Company's nail color and nail care lines include enamels, cuticle
preparations and enamel removers. The Company's flagship REVLON nail enamel
is produced in 85 shades and uses a patented formula that provides consumers
with improved wear, application, shine and gloss in a toluene-free and
formaldehyde-free formula. REVLON nail enamel is the number one brand in the
United States self-select distribution channel. STREETWEAR nail enamel
launched in August 1996 is produced in 19 shades targeted
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at the "trend" consumer. STRONG WEAR is a patented strengthening nail enamel
formula produced in 19 shades, which contains ingredients that provide
protection against splitting, chipping and breaking. The Company sells nail
strengtheners, hardeners and fortifiers and quick dry nail products,
including CALCIUM GEL NAIL BUILDER strengthener and TOP SPEED quick dry base
coat and top coat.
The Company sells face makeup, including foundation, powder, blush and
concealers, under such REVLON brand names as REVLON AGE DEFYING, which is
targeted to women in the over 35 age bracket; COLORSTAY foundation,
introduced late in the third quarter of 1995, which uses proprietary
transfer-resistant technology that provides long wear; and NEW COMPLEXION,
for consumers in the 25 to 49 age bracket. COLORSTAY foundation was the
number one selling foundation in the United States self-select distribution
channel in 1996. REVLON AGE DEFYING was the number two foundation in the
United States self-select distribution channel for 1996. The Company was
number two in sales of face makeup in the United States self-select
distribution channel with a 19.1% share for 1996.
The Company's eye makeup products include mascaras, eye shadows and
liners. COLORSTAY Eyecolor, COLORSTAY lashcolor mascara, LASHFUL and
LENGTHWISE mascaras, SOFTSTROKE eyeliners and CUSTOM EYES and OVERTIME SHADOW
eye shadows are targeted towards women in the 18 to 49 age bracket, and
REVLON AGE DEFYING eye color is targeted to women over 35. For 1996, the
Company had a 12.7% market share in eye makeup for the United States
self-select distribution channel.
The Company's ALMAY brand consists of a complete line of hypo-allergenic,
dermatologist-tested, fragrance-free cosmetics and skin care products
targeted to consumers who want "healthy looking skin." The Company positions
the ALMAY brand as the clean, natural and healthy choice. ALMAY products
include lip makeup, nail color and nail care products, eye and face makeup,
skin care products, and sunscreen lotions and creams, including TIME-OFF skin
care and makeup, the AMAZING collection, which uses long wear
transfer-resistant technology and includes AMAZING LASH mascara, ALMAY
AMAZING eye makeup, ALMAY AMAZING LASTING makeup and ALMAY CLEAR COMPLEXION
MAKEUP and TREATMENT and ALMAY EASY-TO-WEAR eyecolor and ONE COAT mascara.
The Company targets ALMAY to value conscious consumers by offering benefits
equal or superior to higher priced products, such as Clinique, at affordable
prices. ALMAY is the leading brand in the hypo-allergenic market in the
United States self-select distribution channel. The Company launched in the
second quarter of 1997 ALMAY TIME-OFF REVITALIZER, a skin care product which
uses a proprietary technology to visibly rejuvenate skin.
The Company sells implements which include nail and eye grooming tools
such as clippers, scissors, files, tweezers and eye lash curlers. The
Company's implements are sold individually and in sets under the REVLON brand
name and are the number one brand in the United States self-select
distribution channel with a market share of 36.4% for 1996, which is more
than two times that of the next largest competitor.
The Company also sells cosmetics in international markets under regional
brand names including COLORAMA, which is the top selling popular priced
cosmetics line in Brazil, and JUVENA.
The Company's skin care products, including moisturizers, are sold under
the brand names ETERNA 27, MOON DROPS and REVLON RESULTS. In addition, the
Company sells skin care products in international markets under
internationally recognized brand names and under regional brands, including
NATURAL HONEY.
The Company's premium priced cosmetics and skin care products are sold
under the ULTIMA II brand name, the Company's flagship premium priced brand
sold throughout the world, and the JEANNE GATINEAU brand name, which is sold
outside the United States. The ULTIMA II line includes the WONDERWEAR
collection, which includes a long wearing foundation that uses proprietary
technology, cheek and eyecolor products that use patented technology and
WONDERWEAR LIPSEXXXY lipstick, which uses patented transfer-resistant
technology that provides long wear, and THE NAKEDS makeup, a trend-setting
line of makeup emphasizing neutral colors.
Fragrances. The Company sells a selection of moderately priced and premium
priced fragrances, including perfumes, eau de toilettes and colognes. The
Company's portfolio includes fragrances such as CHARLIE, FIRE & ICE, JONTUE,
and CIARA; highly successful line extensions such as CHARLIE RED and CHARLIE
WHITE and new additions such as CHERISH, CHARLIE SUNSHINE, FIRE & ICE COOL
and STREETWEAR SCENTS. The Company's CHARLIE fragrance has been a market
leader since the mid-1970's and, the
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Company believes, one of the top selling fragrances worldwide. CHARLIE
fragrances are currently the number two women's fragrance collection in the
United States self-select distribution channel. In international markets, the
Company distributes under license certain brands including VERSACE, VAN GILS
and MYRURGIA.
Personal Care Products. The Company sells a broad line of personal care
consumer products which complements its core cosmetics lines and enables the
Company to meet the consumer's broader beauty care needs. In the self-select
distribution channel, the Company sells haircare, anti-perspirant and other
personal care products, including the FLEX, OUTRAGEOUS and AQUAMARINE
haircare lines throughout the world and the COLORAMA, JUVENA, LLONGUERAS and
NATURAL HONEY brands outside the United States; the COLORSILK, REVLON
SHADINGS, FROST & GLOW and ROUX FANCI-FULL hair coloring lines in the United
States; and the MITCHUM, LADY MITCHUM and HI & DRI anti-perspirant brands
throughout the world. Certain hair care products, including ROUX FANCI-FULL
hair coloring and PERFECT TOUCH and SALON PERFECTION home permanents, were
originally developed for professional use. The Company also markets
hypo-allergenic personal care products, including sunscreens, moisturizers
and anti-perspirants, under the ALMAY brand.
Professional Products. The Company sells a comprehensive line of salon
products, including permanent wave preparations, hair relaxers, temporary and
permanent hair coloring products, shampoos, conditioners, styling products
and hair conditioners, to professional salons and beauty supply stores under
the REVLON brand as well as other brand names such as ROUX FANCI-FULL,
REALISTIC, FERMODYL, VOIL|fa, REVLONISSIMO, CREME OF NATURE, COLOMER,
FABULAXER, LOTTABODY, NATURAL WONDER, SENSOR and INTERCOSMO. Most of the
Company's salon products in the United States currently are distributed in
the non-exclusive distribution channels, in contrast to those products that
are distributed exclusively to professional salons. The Company is developing
several new, exclusive salon lines, the first of which, VOILA, was introduced
in 1995. R PRO, launched in 1996, is a professionally targeted cosmetic line
being distributed through open line channels. Through Creative Nail, which
was acquired in November 1995, the Company sells nail enhancement systems and
nail color and treatment products and services for use by the professional
salon industry under the brand name of CREATIVE NAIL DESIGN SYSTEMS. Through
American Crew, which was acquired in April 1996, the Company sells men's
shampoos, conditioners, gels, and other hair care products for use by
professional salons under the brand name of AMERICAN CREW. The Company also
sells retail hair care products under the LLONGUERAS, PERSONAL BIO POINT,
GENIOL, FIXPRAY and LANOFIL brands outside the United States. The Company
markets in salons, beauty supply stores and the self-select distribution
channel several lines of hair relaxers, styling products, hair conditioners
and other hair care products under such names as FABU-LAXER and CREME OF
NATURE designed for the particular needs of ethnic consumers. The Company has
also developed a new exclusive line of ethnic products, AROSCI, which was
successfully launched in 1996. The Company also sells wigs and hair pieces to
retail outlets and certain professional salons under the REVLON brand and,
pursuant to a license, under the ADOLFO brand.
MARKET SHARE
The Company has leading market positions for its REVLON brand products in
many of its principal product categories in the United States self-select
distribution channel, including the number one position in lip makeup and
nail enamel (which the Company has occupied for the past 20 years), and for
1996 the number one and two selling brands of lip makeup. The Company's
market share in lip makeup and nail enamel has increased from 24.3% and
21.2%, respectively, for 1992, to 32.6% and 24.7%, respectively, for 1996.
The Company has the number two position in face makeup (including the number
one and two selling brands of foundation), where its market share has
increased from 10.8% for 1992 to 19.1% for 1996. Propelled by the success of
its new product launches and share gains in its existing product lines, the
Company has captured the number one position overall in color cosmetics
(consisting of lip, eye and face makeup and nail enamel) in the United States
self-select distribution channel, where its market share has increased from
14.7% for 1992 to 21.4% for 1996.
The trend in the cosmetics and skin care and fragrance industry has been
the shift of consumer purchases from department and specialty stores
(demonstrator-assisted distribution channels) to the self-select distribution
channel. The Company anticipated this trend and shifted its distribution
accordingly.
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The market for color cosmetics in the United States self-select
distribution channel was approximately $2.6 billion in 1996. The Company's
REVLON brand had the number one position in color cosmetics in 1996 and its
market share for 1994, 1995 and 1996 is as follows:
COLOR COSMETICS
[GRAPHIC OMITTED]
The market for lip makeup in the United States self-select distribution
channel was approximately $689.0 million in 1996. The Company's REVLON brand
had the number one position in lip makeup in 1996 and its market share for
1994, 1995 and 1996 is as follows:
LIP MAKEUP
[GRAPHIC OMITTED]
The market for nail enamel in the United States self-select distribution
channel was approximately $285.3 million in 1996. The Company's REVLON brand
had the number one position in nail enamel in 1996 and its market share for
1994, 1995 and 1996 is as follows:
NAIL ENAMEL
[GRAPHIC OMITTED]
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The market for face makeup (which includes foundation) in the United
States self-select distribution channel was approximately $916.6 million in
1996. The Company's REVLON brand had the number two position in face makeup
in 1996 and its market share for 1994, 1995 and 1996 is as follows:
FACE MAKEUP
[GRAPHIC OMITTED]
The market for foundation in the United States self-select distribution
channel was approximately $467.8 million in 1996. The Company's REVLON brand
had the number two position in foundation in 1996 and its market share for
1994, 1995 and 1996 is as follows:
FOUNDATION
[GRAPHIC OMITTED]
The market for eye makeup in the United States self-select distribution
channel was approximately $760.1 million in 1996. The Company's REVLON brand
had the number three position in eye makeup in 1996 and its market share for
1994, 1995 and 1996 is as follows:
EYE MAKEUP
[GRAPHIC OMITTED]
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The Company's growth in retail sales in the United States self-select
distribution channel for all of its color cosmetics and for its lip makeup,
face makeup, nail enamel and eye makeup compared with the overall growth in
retail sales in such product categories for 1996, compared with 1995, is as
follows:
GROWTH IN REVLON BRAND RETAIL SALES VERSUS CATEGORY
[GRAPHIC OMITTED]
The market for implements in the United States self-select distribution
channel was approximately $215.3 million in 1996. The Company's REVLON brand
had the number one position in implements in 1996 and its market share for
1994, 1995 and 1996 is as follows:
IMPLEMENTS
[GRAPHIC OMITTED]
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ALMAY is the leading brand in color cosmetics in the hypo-allergenic
market in the United States self-select distribution channel. The ALMAY brand
was the number five brand in the overall color cosmetics market in the United
States self-select distribution channel for 1996 with a 6.0% market share.
MARKETING
The Company's vision is to provide glamour, excitement and innovation
through quality products at affordable prices. The Company's marketing
efforts are designed to implement this vision. The Company has formed Global
Marketing Committees, consisting of managers from the Company's marketing,
research and development, operations, advertising and finance departments
from the United States and abroad, which develop strategies for the Company's
current and new brands and products. The Global Marketing Committees
coordinate the Company's globalization efforts while allowing sufficient
flexibility to tailor the Company's products to local and regional
preferences.
Consumer Products. The Company markets extensive consumer product lines at
a range of retail prices primarily through the self-select distribution
channel and markets select premium lines through demonstrator-assisted
channels. Each line is distinctively positioned and is marketed globally with
consistently recognizable logos, packaging and advertising designed to
differentiate it from other brands. The Company's existing consumer product
lines are carefully segmented, and new product lines are developed, to target
specific consumer needs as measured by focus groups and other market research
techniques.
The Company uses print and television advertising and point-of-sale
merchandising, including displays and samples. The Company has shifted a
significant portion of its marketing to appeal to a broader audience and has
increased media advertising, particularly national television advertising.
The Company increased advertising expenditures by 17.3% for 1996 over 1995
levels and by 26.2% for 1995 over 1994 levels. In 1997, the Company intends
to increase its advertising expenditures over 1996 levels. The Company's
marketing emphasizes a uniform global image and product for its portfolio of
core brands, including REVLON, COLORSTAY, REVLON AGE DEFYING, ALMAY, ULTIMA
II, FLEX, CHARLIE, OUTRAGEOUS and MITCHUM. The Company coordinates
advertising campaigns with in-store promotional and other marketing
activities. The Company develops jointly with retailers carefully tailored
advertising, point-of-purchase and other focused marketing programs. The
Company has devoted greater resources to promotional sales of its permanent
line of products and reduced the number of promotional sales of non-recurring
products, which historically have had a higher cost of sales and resulted in
larger sales returns. In addition, Halle Berry, Cindy Crawford, Daisy
Fuentes, Melanie Griffith and Vendela, among others, act as celebrity
spokespersons for the Company's brands throughout the world in all areas of
the Company's marketing efforts, including appearing in the Company's print
and television advertising. The visibility of such spokespersons reinforces
the global image of the Company's core brands. In the self-select
distribution channel, the Company uses network and spot television
advertising, national cable advertising and print advertising in major
general interest, women's fashion and women's service magazines, as well as
coupons, magazine inserts and point-of-sale testers. In the
demonstrator-assisted distribution channel, the Company principally uses
cooperative advertising programs with retailers, supported by Company-paid or
Company-subsidized demonstrators and coordinated in-store promotions and
displays.
The Company also has developed unique marketing materials such as the
"Revlon Report," a glossy, color pamphlet distributed in magazines and on
merchandising units, available in 30 countries and 16 languages, which
highlights seasonal and other fashion and color trends, describes the
Company's products that address those trends and contains coupons, rebate
offers and other promotional material to encourage consumers to try the
Company's products. The Company has created two Color Mobiles, which are
on-the-road beauty sampling and information vehicles patterned on the
innovative vehicles that launched COLORSTAY lipcolor, that travel to major
retailers in the United States, at which Company trainers educate consumers
on the COLORSTAY and REVLON AGE DEFYING collections and the latest product
and shade offerings. The Color Mobiles create consumer and retail excitement
about the Company's new products and encourage trial and purchase by
consumers. Other marketing materials designed to introduce the Company's
newest products to consumers and encourage trial and
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purchase include point-of-sale testers on the Company's display units that
provide information about the Company's products and permit consumers to test
the products, thereby achieving the benefits of an in-store demonstrator
without the corresponding cost, magazine inserts containing samples of the
Company's newest products, trial size products and "shade samplers," which
are collections of trial size products in different shades. Additionally, the
Company has its own website which features current product and promotional
information.
Professional Products. Professional products are marketed through
educational seminars on their application and benefits and advertising,
displays and samples to communicate to professionals and consumers the
quality and performance characteristics of such products. The shift to
exclusive line distributors will significantly reinforce the Company's
marketing and educational efforts with salon professionals. The Company
believes that its presence in the professional markets benefits its consumer
products business since the Company is able to anticipate consumer trends in
hair, nail and skin care which often appear first in salons.
NEW PRODUCT DEVELOPMENT AND RESEARCH AND DEVELOPMENT
The Company believes that it is an industry leader in the development of
innovative and technologically-advanced consumer and professional products.
The Company's marketing and research and development groups identify consumer
needs and shifts in consumer preferences in order to develop new product
introductions, tailor line extensions and promotions and redesign or
reformulate existing products to satisfy such needs or preferences. The
Company's Advanced Concept Group consists of a select group of researchers
that conducts research on a wide range of areas to develop new and innovative
technology. The Company independently develops substantially all of its new
products. The Company also has entered into joint research projects with
major university and commercial laboratories to develop advanced
technologies.
The Company believes that its Edison, New Jersey facility is one of the
most extensive cosmetics research and development facilities in the United
States. The Edison facility is responsible for all new product research
worldwide. The Edison facility performs research for new products, ideas,
concepts and packaging. Research and development for consumer products is
also conducted at manufacturing facilities in Brazil. Research and
development for professional products is conducted principally at the Edison
facility.
The research and development group at the Edison facility performs
extensive safety and quality tests on the Company's products, including
toxicology, microbiology and package testing. Additionally, quality control
testing is performed at each manufacturing facility.
In certain instances, proprietary technology developed for use in products
and packaging is available for licensing to third parties. The Company
received the Innovation Award from the Coalition of NorthEast Governors
("CONEG") for its ENVIROGLUV glass decorating technology (which resulted in
significant cost reductions in decorating REVLON AGE DEFYING and COLORSTAY
makeup bottles and REVLON nail enamel bottles in 1996 and which is being
offered for licensing to qualified glass decorators). The CONEG challenge
awards program is a nationwide competition to publicly recognize companies
which make significant contributions to environmental issues relating to
packaging and source reduction.
As of December 31, 1996, the Company employed approximately 200 people in
its research and development activities, including specialists in
pharmacology, toxicology, chemistry, microbiology, engineering, biology,
dermatology and quality control. In 1996, 1995 and 1994, the Company spent
approximately $26.3 million, $22.3 million and $19.7 million, respectively,
on research and development activities.
MANUFACTURING AND RELATED OPERATIONS AND RAW MATERIALS
The Company is rationalizing its worldwide manufacturing operations which
is intended to lower costs and improve customer service and product quality.
The globalization of the Company's core brands allows it to centralize
production of some product categories for sale throughout the world within
designated facilities and shift production of certain other product
categories to more cost effective
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manufacturing sites to reduce production costs. Shifts of production may
result in the closing of certain of the Company's less significant
manufacturing facilities, and the Company continually reviews its needs in
this regard. In addition, as part of its efforts to continuously improve
operating efficiencies, the Company attempts to ensure that a significant
portion of its capital expenditures are devoted to improving operating
efficiencies.
In the United States, the Company manufactures REVLON brand color
cosmetics, personal care products and fragrances for sale in the United
States, Japan and most of the countries in Latin America and Southeast Asia
at its Phoenix, Arizona facility. The Company manufactures ULTIMA II
cosmetics and skin treatment products for sale in the United States and most
of the countries in Latin America and Southeast Asia, personal care products
for sale in the United States and ALMAY brand products for sale throughout
the world at its Oxford, North Carolina facility. Nail care and other
implements for sale throughout the world are manufactured at the Company's
Irvington, New Jersey facility and Vista, California facility. The Company
manufactures salon and retail professional products and personal care
consumer products for sale in the United States and Canada at the Company's
Jacksonville, Florida facility. The Phoenix facility has been ISO-9002
certified. ISO-9002 certification is an internationally recognized standard
for quality management of manufacturing facilities.
The Company manufactures its entire line of consumer products (except
implements) for sale in most of the countries of Europe at its Maesteg, South
Wales facility. Local production of cosmetics and personal care products
takes place at the Company's facilities in Spain, Canada, Venezuela, Mexico,
New Zealand, Brazil, Australia and South Africa. The manufacture of
professional products for sale by retailers outside the United States has
been centralized principally at the Company's facilities in Ireland, Spain
and Italy. Production of color cosmetics for Japan and Mexico has been
shifted to the United States while production of personal care products for
Argentina has been centralized in Brazil. The Maestag facility has been
certified by the British equivalent of ISO-9002.
The Company purchases raw materials and components throughout the world.
The Company continuously pursues reductions in cost of goods through the
global sourcing of raw materials and components from qualified vendors,
utilizing its large purchasing capacity to maximize cost savings. The global
sourcing of raw materials and components from accredited vendors also ensures
the quality of the raw materials and components. The Company believes that
alternate sources of raw materials and components exist and does not
anticipate any significant shortages of, or difficulty in obtaining, such
materials.
The Company's improvements in manufacturing, sourcing and related
operations have contributed to improved customer service, including an
improvement in the percentage of timely order fulfillment at the Company's
manufacturing sites in Oxford, North Carolina, Phoenix, Arizona, Irvington,
New Jersey and Maesteg, South Wales, and the timeliness and accuracy of new
product and promotion deliveries. The Company measures the improvement in
operating performance by tracking key performance indicators, such as the
percentage of timely order fulfillment which was approximately 99% for the
Company's major United States facilities in 1996. To promote the Company's
understanding of and responsiveness to the needs of its retail customers, the
Company assigns members of senior operations management to lead
inter-departmental teams that visit significant accounts, and has provided
retail accounts with a designated customer service representative. As a
result of these efforts, accompanied by stronger and more customer-focused
management, the Company has developed strong relationships with its
retailers.
The Company emphasizes safety and increased training of employees
resulting in an improved safety record. The Company anticipates that the
globalization of, and continued improvement in, the quality of its
manufacturing operations will result in lower manufacturing costs.
BUSINESS PROCESS ENHANCEMENTS
The Company's management information systems have been substantially
upgraded to provide comprehensive order processing, production and accounting
support for the Company's business. The Company's expenditures on
improvements to its management information systems were approximately
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$13 million for 1996. The Company intends to continue to upgrade management
information systems in 1997. The Company's expenditures on improvements to
its management information systems are anticipated to be approximately $10
million for 1997. Systems improvements have been and the Company anticipates
that they will continue to be instrumental in contributing to the reduction
of the time from order entry to shipment, improved forecasting of demand and
improved operating efficiencies.
DISTRIBUTION
As a result of its improved customer service and consumer traffic
generated by its products and innovative marketing programs, the Company
believes that its relationships with self-select distribution cosmetic
retailers are the best in the cosmetics industry. The Company's products are
sold in approximately 175 countries and territories. The Company's worldwide
sales force had approximately 2,100 people as of December 31, 1996, including
a dedicated sales force for cosmetics, skin care and fragrance products in
the self-select distribution channel, for the demonstrator-assisted
distribution channel, for personal care products distribution and for salon
distribution. In addition, the Company utilizes sales representatives and
independent distributors to serve specialized markets and related
distribution channels.
United States. The United States operation's net sales accounted for
approximately 58.0% of the Company's 1996 net sales. Of these net sales,
approximately 86% were made in the self-select distribution channel. However,
the Company intends to use premium products such as ULTIMA II to maintain its
presence in the demonstrator-assisted distribution channel. The Company also
sells a broad range of consumer and retail professional products to United
States Government military exchanges and commissaries. The Company licenses
its trademarks to select manufacturers for products that the Company believes
have the potential to extend the Company's brand names and image. As of
December 31, 1996, 19 licenses were in effect relating to 23 product
categories to be marketed in the self-select distribution channel. Pursuant
to the licenses, the Company retains strict control over product design and
development, product quality, advertising and use of its trademarks. These
licensing arrangements offer opportunities for the Company to generate
revenues and cash flow through earned royalties, royalty advances and, in
some cases, up-front licensing fees. Products designed for professional use
or resale by beauty salons are sold through wholesale beauty supply
distributors and directly to professional salons. Various hair care products,
such as ethnic hair relaxers, scalp conditioners, shampoos and hair coloring
products and wigs and hairpieces are sold directly and through wholesalers to
chain drug stores and mass volume retailers. Wigs and hairpieces are also
sold through mail order direct marketing, retail outlet malls, salons and
certain department stores.
The Company also operates retail stores through Cosmetic Center and
Prestige Fragrance & Cosmetics, divisions of The Cosmetic Center, Inc.
("Cosmetic Center Inc."). See "-- Cosmetic Center Merger." Cosmetic Center
consists of 68 specialty retail stores in the middle Atlantic region and in
Chicago, which offer a broad range of brand name prestige and mass
merchandised cosmetics products at value prices. Prestige Fragrance &
Cosmetics consists of 195 retail outlet stores throughout the United States
in factory outlet malls, rural areas and other similar locations that are not
disruptive to the Company's principal distribution channels. In these stores,
the Company sells its first quality, first quality excess, returned and
refurbished, and discontinued consumer products and retail professional
products, as well as similar products of competing cosmetics companies.
International. The International operation's net sales accounted for
approximately 42.0% of the Company's 1996 net sales. The International
operation's ten largest countries in terms of these sales, which include
Brazil, Japan, the United Kingdom, Australia, South Africa, Canada and Spain
accounted for approximately 30.7% of the Company's net sales in 1996, with
Brazil accounting for approximately 6.1% of the Company's net sales. The
International operation is increasing distribution through the expanding
self-select distribution channels outside the United States, such as drug
stores/chemists, hypermarkets/mass volume retailers and variety stores, as
these channels gain importance. The International operation also distributes
through department stores and specialty stores such as perfumeries. The
International operation's professional products are sold directly to beauty
salons by the Company's direct sales force in Spain, France, Germany,
Portugal, Italy, Mexico and Ireland and through
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distributors in other countries. The Company actively sells its products
through wholly owned subsidiaries in 27 countries outside of the United
States, through joint ventures in India and Indonesia, and through a large
number of distributors and licensees elsewhere around the world. The Company
continues to pursue strategies to establish its presence in new emerging
markets. Such new and emerging markets include Eastern Europe; South Korea;
Southeast Asia; Chile; the Middle East; India; and China, where in 1996 the
Company established a subsidiary with a local minority partner. In addition,
the Company is building a franchise through local distributorships in
northern and central Africa, where the Company intends to expand the
distribution of its products by capitalizing on its market strengths in South
Africa.
COSMETIC CENTER MERGER
Pursuant to an Agreement and Plan of Merger dated November 27, 1996 and
amended as of February 20, 1997 and March 20, 1997 among Cosmetic Center,
Inc., Products Corporation and Prestige Fragrance & Cosmetic, Inc., a
subsidiary of Products Corporation ("PFC"), PFC was merged with and into
Cosmetic Center, Inc. (the "Cosmetic Center Merger") effective April 25, 1997
with Cosmetic Center, Inc. surviving as a subsidiary of Products Corporation.
As a result of the Cosmetic Center Merger, Products Corporation received
8,479,335 shares of newly issued Cosmetic Center, Inc. Class C common stock
in exchange for its one share of PFC common stock outstanding prior to the
Cosmetic Center Merger. As a result of the Cosmetic Center Merger, Cosmetic
Center, Inc. stockholders received for each share of Cosmetic Center, Inc.
Class A or Class B common stock they held one share of Cosmetic Center, Inc.
Class C common stock or for those stockholders who so elected (and subject to
a limitation) $7.63 in cash (the "Cash Election"). As a result of the
Cosmetic Center Merger and the Cash Election, Products Corporation holds
approximately 85% of Cosmetic Center, Inc.'s outstanding common stock. For
its fiscal year ended September 27, 1996, Cosmetic Center, Inc. had net sales
of approximately $133.8 million.
CUSTOMERS
The Company's principal customers include chain drug stores and large mass
volume retailers, including such well known retailers as Wal-Mart, Walgreens,
Kmart, Target, CVS Drug Stores, Drug Emporium, American Drug Stores, Eckerd
Drug stores, Revco and Thrifty Payless in the self-select distribution
channel, J.C. Penney in the demonstrator-assisted distribution channel,
Sally's Beauty Company for professional products, Shoppers Drug Mart in
Canada and Boots in the United Kingdom and Western Europe. The foregoing
customers are representative of the Company's customers, and for 1996, each
of the foregoing customers accounted for 1% or more of the Company's net
sales. Wal-Mart and its affiliates accounted for approximately 10.1% of the
Company's 1996 consolidated net sales. Although the loss of Wal-Mart as a
customer could have an adverse effect on the Company, the Company believes
that its relationship with Wal-Mart is satisfactory and the Company has no
reason to believe that Wal-Mart will not continue as a customer.
COMPETITION
The cosmetics and skin care, fragrance, personal care and professional
products business is characterized by vigorous competition throughout the
world. Brand recognition, together with product quality, performance and
price and the extent to which consumers are educated on product benefits,
have a marked influence on consumers' choices among competing products and
brands. Advertising, promotion, merchandising and packaging, and the timing
of new product introductions and line extensions, also have a significant
impact on buying decisions, and the structure and quality of the sales force
affect product reception, in-store position, permanent display space and
inventory levels in retail outlets. The Company competes in most of its
product categories against a number of companies, some of which have
substantially greater resources than the Company. In addition to products
sold in the self-select and demonstrator-assisted distribution channels, the
Company's products also compete with similar products sold door-to-door or
through mail order or telemarketing by representatives of direct sales
companies. The Company's principal competitors include L'Oreal S.A., The
Procter & Gamble Company, Helene Curtis Industries, Inc., and Joh A.
Benckiser GmbH in the self-select distribution
66
<PAGE>
channel; L'Oreal S.A., Unilever N.V., Estee Lauder, Inc. and Joh A. Benckiser
GmbH in the demonstrator-assisted distribution channel; and L'Oreal S.A. and
Matrix Essentials, Inc., which is owned by Bristol-Myers Squibb Company, in
professional products.
SEASONALITY
The Company's business is subject to certain seasonal fluctuations, with
net sales in the second half of the year generally benefiting from increased
retailer purchases in the United States for the back-to-school and Christmas
selling seasons.
PATENTS, TRADEMARKS AND PROPRIETARY TECHNOLOGY
The Company's major trademarks are registered in the United States and in
many other countries, and the Company considers trademark protection to be
very important to its business. Significant trademarks include REVLON,
COLORSTAY, REVLON AGE DEFYING, FLEX, MITCHUM, ETERNA 27, ULTIMA II, ALMAY,
CHARLIE, JEAN NATE, REVLON RESULTS, COLORAMA, FIRE & ICE, MOON DROPS, SUPER
LUSTROUS and WONDERWEAR LIPSEXXXY for consumer products and REVLON, ROUX
FANCI-FULL, REALISTIC, FERMODYL, COLOMER, CREATIVE NAIL, AMERICAN CREW, R PRO
and INTERCOSMO for professional products.
The Company utilizes certain proprietary or patented technologies in the
formulation or manufacture of a number of the Company's products, including
COLORSTAY lipcolor and cosmetics, FLEX & GO shampoo, LENGTHWISE mascara,
REVLON nail enamel, REVLON AGE DEFYING foundation and cosmetics, NEW
COMPLEXION makeup, WONDERWEAR foundation, WONDERWEAR LIPSEXXXY lipstick, DAY
INTO NIGHT eyeshadows, ALMAY TIME-OFF skin care and makeup, OUTRAGEOUS
shampoo, FLEX hairspray and various professional products, including FERMODYL
shampoo and conditioners. The Company also protects certain of its packaging
and component concepts through design patents. The Company considers its
proprietary technology and patent protection to be important to its business.
GOVERNMENT REGULATION
The Company is subject to regulation by the Federal Trade Commission and
the Food and Drug Administration (the "FDA") in the United States, as well as
various other federal, state, local and foreign regulatory authorities. The
Phoenix, Arizona and Oxford, North Carolina manufacturing facilities are
registered with the FDA as drug manufacturing establishments, permitting the
manufacture of cosmetics that contain over-the-counter drug ingredients such
as sunscreens. Compliance with federal, state, local and foreign laws and
regulations pertaining to discharge of materials into the environment, or
otherwise relating to the protection of the environment, has not had, and is
not anticipated to have, a material effect upon the capital expenditures,
earnings or competitive position of the Company. State and local regulations
in the United States that are designed to protect consumers or the
environment have an increasing influence on product claims, contents and
packaging.
WOMEN'S HEALTH INITIATIVES
The Company vigorously supports research, advocacy and public education on
women's health through a range of ongoing programs. In 1993, the Company
co-led with the National Breast Cancer Coalition (the "NBCC") the successful
campaign to deliver more than 2.6 million signatures to President Clinton,
which prompted the President to declare breast cancer a national health
priority. In 1996, Revlon and the NBCC launched a similar campaign which is
expected to culminate in 1997 in Washington D.C. and generate increased
federal funding for breast cancer research. Since 1994, a Canadian subsidiary
has sponsored the "Kiss for the Cure" campaign, in which one dollar from the
sale of each "KISS FOR THE CURE" lipstick is donated to Canada's Breast
Cancer Foundation. In 1995, a "Kiss for the Cure" campaign was launched in
Argentina. Since 1994, the Company has sponsored the annual Revlon Run/Walk
for Women, which, through 1996, has raised more than $3.2 million for breast
and ovarian cancer research and related community service programs. The
proceeds have gone to the Revlon/UCLA Women's Cancer Research Program, the
Wellness Community and the Watts Health Foundation. In 1996, more than 25,000
people participated in this event. The Company also helps to raise funds for
the Revlon/UCLA Women's Cancer Research Program through the annual Fire and
Ice Ball.
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<PAGE>
The Company sponsors the annual SHARE walk. SHARE is a self-help group for
women with breast or ovarian cancer. The Company sponsors women's health
seminars and supports a variety of women's health organizations. The
Company's award winning video entitled "Once a Year . . . For a Lifetime"
emphasizes the importance of education and early detection in the fight
against breast cancer and is made available at no cost to hospitals,
universities and community groups. In 1995, the Company received the 1995
Pink Ribbon Award, which is given each year by Self Magazine in recognition
of a commitment to the fight against breast cancer, and was also honored by
Health Watch for its women's health efforts particularly geared to women of
color. In addition, the Company was honored for its commitment to the fight
against breast and ovarian cancer at the Dreamball, the annual benefit for
the American Cancer Society and the Look Good . . . Feel Better program, a
joint program of the American Cancer Society, the Cosmetics, Toiletries &
Fragrance Association and the National Cosmetology Association that helps
women cancer patients contend with chemotherapy's appearance-related side
effects. The Company also focuses its health initiatives on its employees,
providing free mammography screenings as well as on-site workshops and
lectures on health issues.
INDUSTRY SEGMENTS, FOREIGN AND DOMESTIC OPERATIONS
The Company operates in a single business segment. Certain information
concerning geographic segments of the Company is set forth in Note 15 of the
Notes to Consolidated Financial Statements of the Company included elsewhere
in this Offering Memorandum.
EMPLOYEES
As of December 31, 1996, the Company employed the equivalent of
approximately 14,300 full-time persons. Approximately 2,100 of such employees
in the United States at the end of 1996 were covered by collective bargaining
agreements. The agreements covering employees in Phoenix, Arizona and
Jacksonville, Florida expire in 1997. In addition, the Company will be
negotiating collective bargaining agreements or portions thereof covering
employees in twelve countries outside of the United States during 1997. The
Company expects that such agreements will be renewed in the ordinary course
of negotiations, and further believes that its employee relations are
satisfactory. Although the Company has experienced minor work stoppages of
limited duration in the past in the ordinary course of business, such work
stoppages have not had a material impact on the Company's results of
operations or financial condition.
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<PAGE>
PROPERTIES
The following table sets forth as of December 31, 1996 the Company's major
manufacturing, research and warehouse/distribution facilities all of which
are owned except where otherwise noted.
<TABLE>
<CAPTION>
APPROXIMATE
FLOOR SPACE
LOCATION USE SQ. FT.
- ------------------------------------ ----------------------------------------- -------------
<S> <C> <C>
Oxford, North Carolina............... Manufacturing, warehousing, distribution 1,012,000
and office
Phoenix, Arizona..................... Manufacturing, warehousing, distribution 706,000
and office (partially leased)
Holmdel, New Jersey.................. Warehousing, distribution and office 540,000
Jacksonville, Florida................ Manufacturing, warehousing, distribution, 526,000
research and office
Mississauga, Canada.................. Manufacturing, warehousing, distribution 245,000
and office
Edison, New Jersey................... Research and office (leased) 133,000
Irvington, New Jersey................ Manufacturing, warehouse and office 96,000
Sao Paulo, Brazil.................... Manufacturing, warehousing, distribution, 408,000
office and research
Maesteg, South Wales, United
Kingdom............................. Manufacturing, distribution and office 316,000
Santa Maria, Spain................... Manufacturing and warehousing 173,000
Barcelona, Spain..................... Manufacturing, warehousing, research 152,000
and office
Caracas, Venezuela................... Manufacturing, distribution and office 145,000
Argenteuil, France................... Warehousing and distribution (leased) 73,000
Kempton Park, South Africa........... Warehousing, distribution and office 127,000
(leased)
Canberra, Australia.................. Warehousing, distribution and office 125,000
(leased)
Isando, South Africa................. Manufacturing, warehousing, distribution 94,000
and office
Rydalmere, Australia................. Manufacturing, warehousing, distribution 93,000
and office
Bologna, Italy....................... Manufacturing, warehousing, distribution, 60,000
office and research
</TABLE>
In addition to the facilities described above, additional facilities are
owned and leased in various areas throughout the world, including the lease
for the Company's executive offices in New York, New York (345,000 square
feet, of which 85,000 square feet are currently sublet to affiliates of the
Company). Management considers the Company's facilities to be well-maintained
and satisfactory for the Company's operations, and believes that the
Company's facilities provide sufficient capacity for its current and expected
production requirements. Products Corporation leases from Holdings on arms'
length terms its research and development facility located in Edison, New
Jersey. See "Relationship with MacAndrews & Forbes -- Other."
LEGAL PROCEEDINGS
The Company is involved in various routine legal proceedings incident to
the ordinary course of its business. The Company believes that the outcome of
all pending legal proceedings in the aggregate is unlikely to have a material
adverse effect on the business or consolidated financial condition of the
Company.
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<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Issuer
The following table sets forth certain information (ages as of June 4,
1997) concerning the Directors and executive officers of the Issuer. Each
Director holds office until his successor is duly elected and qualified or
until his resignation or removal, if earlier.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------ ----- ----------------------------------------------------
<S> <C> <C>
Ronald O. Perelman 54 Chairman of the Board and Director
Howard Gittis 63 Vice Chairman of the Board and Director
Irwin Engelman 63 Executive Vice President and Chief Financial Officer
Barry F. Schwartz 48 Executive Vice President and General Counsel
</TABLE>
Revlon, Inc.
The Company conducts its business through Revlon, Inc., Products
Corporation and Products Corporation's subsidiaries. The following table sets
forth certain information (ages as of June 4, 1997) concerning the Directors
and executive officers of Revlon, Inc. Each Director holds office until his
successor is duly elected and qualified or until his resignation or removal,
if earlier.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------- ----- -------------------------------------------------------
<S> <C> <C>
Ronald O. Perelman 54 Chairman of the Executive Committee of the Board
and Director
Jerry W. Levin 53 Chairman of the Board and Director
George Fellows 54 President, Chief Executive Officer and Director
William J. Fox 40 Senior Executive Vice President, Chief Financial
Officer
and Director
Carlos Colomer 52 Executive Vice President
Ronald H. Dunbar 59 Senior Vice President, Human Resources
M. Katherine Dwyer 47 Senior Vice President
Wade H. Nichols III 54 Senior Vice President and General Counsel
Donald G. Drapkin 49 Director
Meyer Feldberg 55 Director
Howard Gittis 63 Director
Vernon E. Jordan 61 Director
Henry A. Kissinger 74 Director
Edward J. Landau 67 Director
Linda G. Robinson 44 Director
Terry Semel 54 Director
Martha Stewart 55 Director
</TABLE>
Mr. Perelman has been Chairman of the Board and a Director of the Issuer
since its formation in 1997 and of Revlon Worldwide since its formation in
1993. Mr. Perelman has been Chairman of the Board and Chief Executive Officer
of MacAndrews Holdings and various of its affiliates since 1980. Mr. Perelman
also is Chairman of the Board of Andrews Group Incorporated ("Andrews
Group"), Consolidated Cigar Holdings Inc. ("Cigar Holdings"), Mafco
Consolidated Group Inc. ("Mafco Consolidated"), Meridian Sports Incorporated
("Meridian") and, M&F Worldwide Corp. ("MFW") and is the Chairman of the
Executive Committees, of the Boards of Directors of Revlon, Inc., Products
Corporation and The Coleman Company, Inc. ("Coleman") and Marvel
Entertainment Group, Inc. ("Marvel"). Mr. Perelman is a Director of the
following corporations which file reports pursuant to the Exchange Act:
Andrews Group, California Federal Bank, A Federal Savings Bank ("California
Federal"), Coleman, Coleman Holdings Inc. ("Coleman Holdings"), Coleman
Worldwide Corporation ("Coleman Worldwide"), Cigar Holdings, Consolidated
Cigar Corporation ("Consolidated Cigar"), The Cosmetic Center, Inc.
("Cosmetic Center"), First Nationwide Holdings Inc. ("FN Holdings"), First
Nationwide (Parent) Holdings Inc. ("FN Parent"), Mafco Consolidated, Marvel,
Marvel (Parent) Holdings Inc. ("Marvel Parent"), Marvel III Holdings Inc.
("Marvel III"), Meridian, MFW, Pneumo Abex Corporation ("Pneumo Abex"),
Products Corporation,
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<PAGE>
Revlon, Inc., Revlon Worldwide and Toy Biz, Inc. ("Toy Biz"). (On December
27, 1996, Marvel Holdings Inc. ("Marvel Holdings"), of which Mr. Perelman was
a director, Marvel Parent, Marvel III and Marvel and several of its
subsidiaries filed voluntary petitions for reorganization under Chapter 11 of
the United States Bankruptcy Code).
Mr. Gittis has been Vice Chairman of the Board of the Issuer since March
1997 and a Director of the Issuer and of Revlon Worldwide since their
respective formations in 1997 and 1993. He has been Vice Chairman of
MacAndrews Holdings and various of its affiliates since 1985. Mr. Gittis is a
Director of the following corporations which file reports pursuant to the
Exchange Act: Andrews Group, California Federal, Cigar Holdings, Consolidated
Cigar, Cosmetic Center, FN Holdings, FN Parent, Mafco Consolidated, MFW,
Pneumo Abex, Products Corporation, Revlon, Inc., Revlon Worldwide, Jones
Apparel Group, Inc., Loral Space & Communications Ltd. and Rutherford-Moran
Oil Corporation.
Mr. Engelman has been Executive Vice President and Chief Financial Officer
of the Issuer since March 1997. He has been Executive Vice President and Chief
Financial Officer of MacAndrews Holdings and various of its affiliates since
1992. He was Executive Vice President and Chief Financial Officer of GAF
Corporation from 1990 to 1991; Director, President and Chief Operating Officer
of Citytrust Bancorp Inc. from 1988 to 1990; Executive Vice President of the
Blackstone Group LP from 1987 to 1988; and Director and Executive Vice
President of General Foods Corporation for more than five years prior to 1987.
Mr. Engelman is a Director of the following corporation which files reports
pursuant to the Exchange Act: Products Corporation. (On December 27, 1996,
Marvel Parent, Marvel III, of which Mr. Engelman is an executive officer, and
Marvel Holdings, of which Mr. Engelman was an executive officer, filed
voluntary petitions for reorganization under Chapter 11 of the United States
Bankruptcy Code.)
Mr. Schwartz has been Executive Vice President and General Counsel of the
Issuer since March 1997. He has been Executive Vice President and General
Counsel of MacAndrews Holdings and various of its affiliates since 1993. Mr.
Schwartz was Senior Vice President of MacAndrews & Forbes from 1989 to 1993.
(On December 27, 1996, Marvel Parent, Marvel III, of which Mr. Schwartz is an
executive Officer, and Marvel Holdings, of which Mr. Schwartz was an executive
officer, filed voluntary petitions for reorganization under Chapter 11 of the
United States Bankruptcy Code.)
Mr. Levin was President, Chief Executive Officer, Chief Operating Officer
and a Director of the Issuer and of Revlon Worldwide from their respective
formations in 1997 and 1993 to March 1997. Mr. Levin has been Chairman of the
Board of Revlon, Inc. and of Products Corporation since November 1995 and a
Director of Revlon, Inc. and of Products Corporation since their respective
formations in 1992. Mr. Levin was Chief Executive Officer of Revlon, Inc. and
of Products Corporation from their respective formations in 1992 to January
1997 and President of Revlon, Inc. and of Products Corporation from their
respective formations in 1992 to November 1995. He has been the President and
a Director of Holdings since 1991 and Chief Executive Officer since March
1992. Mr. Levin has been Executive Vice President of MacAndrews Holdings
since March 1989. Mr. Levin has been Chairman and Chief Executive Officer of
Coleman since February 1997. For 15 years prior to joining MacAndrews
Holdings, he held various senior executive positions with The Pillsbury
Company. Mr. Levin is a Director of the following corporations which file
reports pursuant to the Exchange Act: Coleman, Coleman Holdings, Coleman
Worldwide, Cosmetic Center, Ecolab, Inc., First Bank System, Inc., Meridian,
Products Corporation, Revlon, Inc. and Revlon Worldwide.
Mr. Fellows has been President and Chief Executive Officer of Revlon, Inc.
and of Products Corporation since January 1997. He was President and Chief
Operating Officer of Revlon, Inc. and Products Corporation from November 1995
until January 1997, and has been a Director of Revlon, Inc. since November
1995 and a Director of Products Corporation since 1994. Mr. Fellows was
Senior Executive Vice President of Revlon, Inc. and of Products Corporation
and President and Chief Operating Officer of the Consumer Group from February
1993 to November 1995. From 1989 through January 1993, he was a senior
executive officer of Mennen Corporation and then Colgate-Palmolive Company
which acquired Mennen Corporation in 1992. From 1986 to 1989, he was Senior
Vice President of Holdings. Prior to 1986, he was President of Holdings'
Domestic Beauty Group.
Mr. Fox was Executive Vice President and Chief Financial Officer of the
Issuer and of Revlon Worldwide from their respective formations in 1997 and
1993 to March 1997. Mr. Fox has been Senior
71
<PAGE>
Executive Vice President and Chief Financial Officer of Revlon, Inc. and of
Products Corporation since January 1997. Mr. Fox was Executive Vice President
and Chief Financial Officer of Revlon, Inc. and of Products Corporation since
their respective formations in 1992 until January 1997. Mr. Fox was elected
as a Director of Revlon, Inc. in November 1995 and of Products Corporation in
September 1994. He has been Executive Vice President and Chief Financial
Officer of Holdings since November 1991 and prior to such time had been a
Vice President of Holdings since 1987. He has been Senior Vice President of
MacAndrews Holdings since August 1990. He was Vice President of MacAndrews
Holdings from February 1987 to August 1990 and was Treasurer of MacAndrews
Holdings from February 1987 to September 1992. Prior to February 1987 he was
Vice President and Assistant Treasurer of MacAndrews Holdings. Mr. Fox joined
MacAndrews & Forbes Group, Incorporated in 1983 as Assistant Controller prior
to which time he was a certified public accountant at the international
auditing firm of Coopers & Lybrand. Mr. Fox is a Director of the following
corporations which file reports pursuant to the Exchange Act: Cosmetic Center
and The Hain Food Group, Inc.
Mr. Colomer has been Executive Vice President of Revlon, Inc. and of
Products Corporation since August 1993. Prior to August 1993, he served as
President and General Manager of various of Revlon, Inc.'s and Holdings'
international subsidiaries. Mr. Colomer joined Holdings in 1979 when Henry
Colomer, S.A., the haircare and cosmetics company which was founded by his
father, was acquired by Holdings, and has held positions of increasing
responsibility since that date.
Mr. Dunbar has been Senior Vice President, Human Resources of Revlon, Inc.
and of Products Corporation since their respective formations in 1992. He was
elected Senior Vice President, Human Resources of Holdings in July 1991. Mr.
Dunbar was Vice President and General Manager of Arnold Menn and Associates,
a career management consulting and executive outplacement firm, from 1989 to
1991 and Executive Vice President and Chief Human Resources Officer of Ryder
System Inc., a highway transportation firm, from 1978 to 1989. Prior to that,
Mr. Dunbar served in senior executive human resources positions at Xerox
Corporation and Ford Motor Company.
Ms. Dwyer was elected as Senior Vice Presient of Revlon, Inc. and of
Products Corporation in November 1996. Prior to that she served in various
appointed officer positions for Revlon, Inc. and for Products Corporation,
including President of Products Corporation's United States Cosmetics Unit
from November 1995 to November 1996 and Executive Vice President and General
Manager of Products Corporation's Mass Cosmetics Unit from June 1993 to
November 1995. From 1991 to 1993, Ms. Dwyer was Executive Vice President and
General Manager for Victoria Creations. Prior to 1991, she served in various
senior positions for Avon Products Inc., Cosmair, Inc. and Gillette.
Mr. Nichols was Senior Vice President and General Counsel of the Issuer
and of Revlon Worldwide from their respective formations in 1997 and 1993 to
March 1997. Mr. Nichols has been Senior Vice President and General Counsel of
Revlon, Inc. and of Products Corporation since their respective formations in
1992. He was elected Senior Vice President and General Counsel of Holdings in
March 1992. He was Vice President and Secretary of Holdings from 1984 to 1992
and Secretary from 1981 to 1984. He joined Holdings in 1978. Mr. Nichols has
been Vice President-Law of MacAndrews Holdings since 1988. Mr. Nichols is a
Director of Cosmetic Center, which files reports pursuant to the Exchange
Act.
Mr. Drapkin was a Director of the Issuer and of Revlon Worldwide from
their respective formations in 1997 and 1993 to March 1997. He has been Vice
Chairman of MacAndrews Holdings and various of its affiliates since 1987. Mr.
Drapkin was a partner in the law firm of Skadden, Arps, Slate, Meagher & Flom
for more than five years prior to March 1987. Mr. Drapkin is a Director of
the following corporations which file reports pursuant to the Exchange Act:
Algos Pharmaceutical Corporation, Andrews Group, Coleman, Coleman Holdings,
Coleman Worldwide, Consolidated Cigar, Marvel, Marvel Parent, Marvel III,
Products Corporation, Revlon, Inc., Revlon Worldwide, Toy Biz and VIMRx
Pharmaceuticals Inc. (On December 27, 1996, Marvel Holdings, of which Mr.
Drapkin was a director, Marvel Parent, Marvel III and Marvel and several of
its subsidiaries filed voluntary petitions for reorganization under Chapter
11 of the United States Bankruptcy Code).
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<PAGE>
Dr. Feldberg has been a Director of Revlon, Inc. since February 1997. Dr.
Feldberg has been the Dean of Columbia University Business School for more
than the past five years. Dr. Feldberg is a Director of the following
corporations which file reports pursuant to the Exchange Act: Federated
Department Stores, Inc., Paine Webber Group, Inc. (certain funds) and KIII
Communications Corporation.
Mr. Jordan has been a Director of Revlon, Inc. since June 1996. Mr. Jordan
is a Senior Partner in the Washington, D.C. law firm of Akin, Gump, Strauss,
Hauer & Feld, LLP where he has practiced law since 1982. He is a Director of
the following corporations which file reports pursuant to the Exchange Act:
American Express Company, Bankers Trust Company, Bankers Trust New York
Company, Corning Incorporated, Dow Jones & Company, Inc., J.C. Penney
Company, Inc., Ryder System, Inc., Sara Lee Corporation, Union Carbide
Corporation and Xerox Corporation. He is also trustee of the Ford Foundation
and Howard University.
Dr. Kissinger has been a Director of Revlon, Inc. since June 1996. Dr.
Kissinger has been Chairman of the Board and Chief Executive Officer of
Kissinger Associates, Inc., an international consulting firm since 1982. Dr.
Kissinger is an Advisor to the Board of Directors of American Express
Company, serves as Counselor to The Chase Manhattan Bank and is a member of
its International Advisory Committee. He is Chairman of the International
Advisory Board of American International Group, Inc. and is a Director of
Continental Grain Company, Hollinger International Inc. and Freeport-McMoran,
Inc., all of which file reports pursuant to the Exchange Act.
Mr. Landau has been a Director of Revlon, Inc. since June 1996. Mr. Landau
has been a Senior Partner in the New York law firm of Lowenthal, Landau,
Fischer & Bring, P.C. for more than the past five years. He has been a
Director of Products Corporation since June 1992 and was a Director of
Holdings from 1989 until April 1993. Mr. Landau is a Director of Offitbank
Investment Fund, Inc., which files reports pursuant to the Exchange Act.
Ms. Robinson has been a Director of Revlon, Inc. since June 1996. Ms.
Robinson has been Chairman and Chief Executive Officer of Robinson Lerer &
Montgomery, LLC, a strategic communications consulting firm, since May 1996.
For more than five years prior to that she was Chairman and Chief Executive
Officer of Robinson Lerer Sawyer Miller Group, or its predecessors. Ms.
Robinson is a Director of VIMRx Pharmaceuticals, Inc. which files reports
pursuant to the Exchange Act, and is a trustee of New York University Medical
Center.
Mr. Semel has been a Director of Revlon, Inc. since June 1996. Mr. Semel
has been Chairman and Co-Executive Officer of the Warner Bros. Division of
Time Warner Entertainment LP ("Warner Brothers") since March 1994 and of
Warner Music Group since November 1995. For more than ten years prior to that
he was President of Warner Brothers or its predecessor Warner Bros. Inc.
Ms. Stewart has been a Director of Revlon, Inc. since June 1996. Ms.
Stewart is the Chairman of Martha Stewart Living Omnimedia LLC. She has been
an author, founder of the magazine Martha Stewart Living, creator of a
syndicated television series, a syndicated newspaper column and a catalog
company and a lifestyle consultant and lecturer for more than the past five
years.
73
<PAGE>
EXECUTIVE COMPENSATION
The Company conducts its business through Revlon Inc., Products
Corporation and Products Corporation's subsidiaries. For 1996, the Company's
executive officers were compensated by Products Corporation for services
rendered to the Company and its subsidiaries, participated in benefit plans
sponsored by Products Corporation and did not receive compensation from the
Issuer or from Revlon, Inc. other than grants of options under the Revlon,
Inc. Stock Plan. The following table sets forth certain compensation awarded
to, earned by or paid to the Chief Executive Officer and the four most highly
paid executive officers, other than the Chief Executive Officer, who served
as executive officers of Revlon, Inc. as of December 31, 1996 (collectively,
the "Named Executive Officers"), for services rendered in all capacities to
the Company and its subsidiaries during 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION (A) AWARDS
--------------------------------------------- --------------
OTHER ALL
ANNUAL SECURITIES OTHER
NAME AND SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) OPTIONS ($)
- ------------------------------- ------ ----------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Jerry W. Levin (b)
Chairman of the Board .......... 1996 1,500,000 1,500,000 93,801 170,000 307,213
1995 1,450,000 1,450,000 42,651 0 308,002
1994 1,300,000 1,300,000 39,184 0 540,177
George Fellows(c)
President and Chief Executive
Officer........................ 1996 1,025,000 870,000 15,242 120,000 4,500
1995 841,667 531,700 68,559 0 4,500
1994 745,833 449,200 11,625 0 104,500
William J. Fox (d)
Senior Executive Vice President
and Chief Financial Officer ... 1996 750,000 598,600 50,143 50,000 56,290
1995 660,000 455,000 54,731 0 56,290
1994 601,333 329,900 59,143 0 56,290
Carlos Colomer
Executive Vice President........ 1996 700,000 192,600 -- 37,000 --
1995 600,000 135,200 -- 0 --
1994 550,000 280,200 -- 0 --
M. Katherine Dwyer (e)
Senior Vice President........... 1996 500,000 326,100 90,029 45,000 4,500
</TABLE>
- ------------
(a) The amounts shown in Annual Compensation for 1996, 1995 and 1994
reflect salary, bonus and other annual compensation awarded to,
earned by or paid to the persons listed for services rendered to the
Company and its subsidiaries. Products Corporation has a bonus plan
(the "Executive Bonus Plan") in which executives participate
(including the Chief Executive Officer and the other Named Executive
Officers). The Executive Bonus Plan provides for payment of cash
compensation upon the achievement of predetermined individual and
corporate performance goals during the calendar year.
(b) Mr. Levin was Chief Executive Officer of Revlon, Inc. during 1994,
1995 and 1996. The amount shown for Mr. Levin under Other Annual
Compensation for 1996 includes $26,400 in respect of personal use of
a company-provided automobile and payments in respect of gross ups
for taxes on imputed income arising out of personal use of a
company-provided automobile and for taxes on imputed income arising
out of premiums paid or reimbursed by Products Corporation in respect
of
74
<PAGE>
life insurance. The amount shown for Mr. Levin under All Other
Compensation for 1996 reflects $302,713 in respect of life insurance
premiums and $4,500 in respect of matching contributions under the
Revlon Employees' Savings and Investment Plan (the "401(k) Plan").
The amount shown for Mr. Levin under Other Annual Compensation for
1995 reflects payments in respect of gross ups for taxes on imputed
income arising out of personal use of a company-provided automobile
and for taxes on imputed income arising out of premiums paid or
reimbursed by Products Corporation in respect of life insurance. The
amount shown for Mr. Levin under All Other Compensation for 1995
reflects $303,502 in respect of life insurance premiums and $4,500 in
respect of matching contributions under the 401(k) Plan. The amount
shown for Mr. Levin under Other Annual Compensation for 1994 reflects
payments in respect of gross ups for taxes on imputed income arising
out of personal use of a company-provided automobile and for taxes on
imputed income arising out of premiums paid or reimbursed by Products
Corporation in respect of life insurance. The amounts shown for Mr.
Levin under All Other Compensation for 1994 reflect payments in
respect of life insurance premiums and certain relocation expenses
and matching contributions under the 401(k) Plan. In connection with
such relocation, Products Corporation purchased for face value a
$525,000 purchase money note made by the purchaser of Mr. Levin's
home secured by a mortgage on such home.
(c) Mr. Fellows became Chief Executive Officer of Revlon, Inc. in January
1997. The amount shown for Mr. Fellows under Other Annual
Compensation for 1996 reflects payments in respect of gross ups for
taxes on imputed income arising out of personal use of a
company-provided automobile and for taxes on imputed income arising
out of premiums paid or reimbursed by Products Corporation in respect
of life insurance. The amount shown for Mr. Fellows under All Other
Compensation for 1996 reflects matching contributions under the
401(k) Plan. The amount shown for Mr. Fellows under Other Annual
Compensation for 1995 includes $43,251 in respect of membership fees
and related expenses for personal use of a health and country club
and $9,458 in respect of gross ups for taxes on imputed income
arising out of personal use of a company-provided automobile. The
amount shown for Mr. Fellows under All Other Compensation for 1995
reflects matching contributions under the 401(k) Plan. The amount
shown for Mr. Fellows under Other Annual Compensation for 1994
reflects payments in respect of gross ups for taxes on imputed income
arising out of personal use of a company-provided automobile. The
amounts shown for Mr. Fellows under All Other Compensation for 1994
reflect matching contributions under the 401(k) Plan and
reimbursement for long-term compensation and other benefits under
plans of his prior employer, which Mr. Fellows forfeited by accepting
employment with Products Corporation.
(d) Mr. Fox became Senior Executive Vice President of Revlon, Inc. in
January 1997. The amount shown for Mr. Fox under Other Annual
Compensation for 1996 reflects payments in respect of gross ups for
taxes on imputed income arising out of personal use of a
company-provided automobile and for taxes on imputed income arising
out of premiums paid or reimbursed by Products Corporation in respect
of life insurance. The amount shown for Mr. Fox under All Other
Compensation for 1996 reflects $51,790 in respect of life insurance
premiums and $4,500 in respect of matching contributions under the
401(k) Plan. The amount shown for Mr. Fox under Other Annual
Compensation for 1995 reflects payments in respect of gross ups for
taxes on imputed income arising out of personal use of a
company-provided automobile and for taxes on imputed income arising
out of premiums paid or reimbursed by Products Corporation in respect
of life insurance. The amount shown for Mr. Fox under All Other
Compensation for 1995 reflects $51,790 in respect of life insurance
premiums and $4,500 in respect of matching contributions under the
401(k) Plan. The amount shown for Mr. Fox under Other Annual
Compensation for 1994 reflects payments in respect of gross ups for
taxes on imputed income arising out of personal use of a
company-provided automobile and for taxes on imputed income arising
out of premiums paid or reimbursed by Products Corporation in respect
of life insurance for Mr. Fox. The amounts shown for Mr. Fox under
All Other Compensation for 1994 reflect payments in respect of life
insurance premiums and matching contributions under the 401(k) Plan.
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(e) Ms. Dwyer became an executive officer of Revlon, Inc. on December 17,
1996. The amount shown for Ms. Dwyer under Other Annual Compensation
for 1996 reflects $57,264 in expense reimbursements and payments in
respect of gross up for taxes on imputed income arising out of
personal use of a company-provided automobile. The amount shown for
Ms. Dwyer under All Other Compensation for 1996 reflects matching
contributions under the 401(k) Plan.
OPTION GRANTS IN THE LAST FISCAL YEAR
During 1996, the following grants of stock options were made pursuant to
the Revlon, Inc. Stock Plan to the executive officers named in the Summary
Compensation Table:
<TABLE>
<CAPTION>
GRANT DATE
VALUE
INDIVIDUAL GRANTS (A) (B)
---------------------------- ------------
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES OF BASE GRANT DATE
OPTIONS IN FISCAL PRICE EXPIRATION PRESENT
NAME GRANTED (#) YEAR ($/SH) DATE VALUE $
- -------------------------- ------------ --------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Jerry W. Levin
Chairman (c).............. 170,000 17% 24.00 2/28/06 1,885,079
George Fellows
President and Chief
Executive Officer (c) .... 120,000 12% 24.00 2/28/06 1,330,644
William J. Fox
Senior Executive Vice
President and Chief
Financial Officer (c) ... 50,000 5% 24.00 2/28/06 554,435
Carlos Colomer
Executive Vice President . 37,000 4% 24.00 2/28/06 410,282
M. Katherine Dwyer
Senior Vice President
(c)....................... 45,000 5% 24.00 2/28/06 498,992
</TABLE>
- ------------
(a) Prior to the consummation of the Revlon IPO, the Board of Directors
made initial grants under the Revlon, Inc. Stock Plan of
non-qualified options having a term of 10 years to purchase shares of
Class A Common Stock at an exercise price equal to the initial public
offering price. The grants to Messrs. Levin, Fellows, Fox and Colomer
and Ms. Dwyer will not vest as to any portion until the third
anniversary of the grant date and will thereupon become 100% vested,
except that upon termination of employment by Revlon, Inc. other than
for "cause", death or "disability" under the applicable employment
agreement, such options will vest with respect to 50% of the shares
subject thereto (if the termination is between the second and third
anniversaries of the grant).
(b) Present values were calculated using the Black-Scholes option pricing
model. The model as applied used the grant date of February 29, 1996,
and the exercise price per share specified in the table above was
equal to the fair market value per share of Class A Common Stock on
the date of grant. The model also assumes (i) risk-free rate of
return of 5.99%, which was the rate as of the grant date for the U.S.
Treasury Zero Coupon Bond issues with a remaining term similar to the
expected term of the options, (ii) stock price volatility of 31%
based upon the peer group average, (iii) a constant dividend rate of
zero percent and (iv) that the options normally would be exercised on
the final day of their seventh year after grant. No discount from the
theoretical value was taken to reflect the waiting period, if any,
prior to vesting of the stock options, the restrictions on the
transfer of the stock options and the likelihood that the stock
options will be exercised in advance of the final day of their term.
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<PAGE>
(c) Mr. Levin served as Chief Executive Officer of Revlon, Inc. during
1996. Mr. Fellows was elected Chief Executive Officer of Revlon, Inc.
in January 1997. Mr. Fox was elected Senior Executive Vice President
of Revlon, Inc. in January 1997. Ms. Dwyer became an executive
officer of Revlon, Inc. in December 1996.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following chart shows the number of stock options exercised during
1996 and the 1996 year-end value of the stock options held by the executive
officers named in the Summary Compensation Table:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL AT FISCAL YEAR-END
SHARES VALUE YEAR-END (#) EXERCISABLE/
ACQUIRED ON REALIZED EXERCISABLE/ UNEXERCISABLE
NAME EXERCISE (#) ($) UNEXERCISABLE (A)($)
- ----------------------------- ------------- ---------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Jerry W. Levin
Chairman (b)................. 0 0 0/170,000 0/998,750
George Fellows
President and
Chief Executive Officer (b) . 0 0 0/120,000 0/705,000
William J. Fox
Senior Executive Vice
President and
Chief Financial Officer (b) . 0 0 0/50,000 0/293,750
Carlos Colomer
Executive Vice President .... 0 0 0/37,000 0/217,375
M. Katherine Dwyer
Senior Vice President (b) ... 0 0 0/45,000 0/264,375
</TABLE>
- ------------
(a) Amounts shown represent the market value of the underlying shares of
Class A Common Stock at year-end calculated using the December 31,
1996 New York Stock Exchange (the "NYSE") closing price per share of
Class A Common Stock of $29.875 minus the exercise price of the stock
option. The actual value, if any, an executive may realize is
dependent upon the amount by which the market price of shares of
Class A Common Stock exceeds the exercise price per share when the
stock options are exercised. The actual value realized may be greater
or less than the value shown in the table.
(b) Mr. Levin served as Chief Executive Officer during 1996. Mr. Fellows
was elected Chief Executive Officer in January 1997. Mr. Fox was
elected Senior Executive Vice President in January 1997. Ms. Dwyer
became an executive officer of Revlon, Inc. in December 1996.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Each of the Named Executive Officers has entered into an executive
employment agreement with Products Corporation (except in the case of Mr.
Colomer, who has entered into an Executive Employment Agreement with a
subsidiary of Products Corporation), which became effective upon consummation
of the Revlon IPO, providing for their continued employment. Effective January
1, 1997, Mr. Fellows' Employment Agreement was amended to provide that he will
serve as the President and Chief Executive Officer of Products Corporation at a
base salary of $1,250,000 for 1997; $1,350,000 for 1998; $1,450,000 for 1999;
$1,550,000 for 2000 and $1,700,000 for 2001. At any time after January 1, 2001,
Products Corporation may terminate the term of Mr. Fellows' agreement by 12
months prior notice of non-renewal. The agreements for Messrs. Levin, Fox and
Colomer and Ms. Dwyer provide for base salary of not less than $1,500,000,
$1,650,000, and $1,800,000 during 1996, 1997 and 1998 and thereafter,
respectively, in the case of Mr. Levin, and $750,000, $700,000 and $500,000 (or
any greater amount to which such base salary amounts may be increased) in the
case of Messrs. Fox and Colomer and Ms. Dwyer,
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<PAGE>
respectively, and further provide that at any time on or after the second
anniversary of the effective date of the relevant agreement, Products
Corporation may terminate the term by 12 months prior notice of non-renewal.
All the agreements provide for participation in the Executive Bonus Plan,
continuation of life insurance and executive medical insurance coverage in the
event of permanent disability, the provision of post-retirement life insurance
coverage in the amount of two times base salary in certain circumstances, and
participation in other executive benefit plans on a basis equivalent to senior
executives of Products Corporation generally. The agreements with Messrs.
Fellows and Colomer and Ms. Dwyer provide for company-paid supplemental term
life insurance during employment in the amount of three times base salary,
while the agreements with Messrs. Levin and Fox provide that, in lieu of any
participation in company-paid pre-retirement life insurance coverage, Products
Corporation will pay premiums and gross ups for taxes thereon in respect of, in
the case of Mr. Levin, whole life insurance policies on his life in the amount
of $14,100,000 under a split dollar arrangement pursuant to which Products
Corporation would be repaid the amount of premiums it paid up to the cash
surrender value of the policies from insurance proceeds payable under the
policies and, in the case of Mr. Fox, a whole life insurance policy on his life
in the amount of $5,000,000 under an arrangement providing for all insurance
proceeds to be paid to the designated beneficiary under such policy. The
agreements also require that management recommend to the Compensation Committee
that Messrs. Levin, Fellows, Fox and Colomer and Ms. Dwyer be granted options
to purchase 170,000, 170,000, 50,000, 37,000, and 45,000 (in first year and
30,000 thereafter) shares of Class A Common Stock, respectively, each year
during the term of the relevant executive employment agreement. The agreements
provide that in the event of termination of the term of the relevant executive
employment agreement by Products Corporation otherwise than for "good reason"
as defined in the Executive Severance Policy or failure of the Compensation
Committee to adopt and implement the recommendations of management with respect
to stock option grants, the executive would be entitled to severance pursuant
to the Executive Severance Policy as in effect on January 1, 1996 (see
"--Executive Severance Policy"). In addition, the employment agreement with Mr.
Fellows provides that if he remains continuously employed with Products
Corporation or its affiliates until age 60, then upon any subsequent retirement
he will be entitled to a supplemental pension benefit in a sufficient amount so
that his annual pension benefit from all qualified and non-qualified pension
plans of Products Corporation and its affiliates (expressed as a straight life
annuity) equals $500,000. Upon any earlier retirement with Products
Corporation's consent or any earlier termination of employment by Products
Corporation otherwise than for "good reason" (as defined in the Executive
Severance Policy), Mr. Fellows will be entitled to a reduced annual payment in
an amount equal to the product of multiplying $28,540 by the number of
anniversaries, as of the date of retirement or termination, of Mr. Fellows'
fifty-third birthday (but in no event more than would have been payable to Mr.
Fellows under the foregoing provision had he retired at age 60). In each case,
Products Corporation reserves the right to treat Mr. Fellows as having deferred
payment of pension for purposes of computing such supplemental payments.
As of December 31, 1996, 1995 and 1994, Mr. Colomer had a loan outstanding
from Revlon, Inc.'s subsidiary in Spain in the amount of 25.0 million Spanish
pesetas (approximately $205,000 U.S. dollar equivalent as of December 31,
1996) dating from 1991 pursuant to a management retention program
grandfathered under a 1992 change in the Spanish tax law which currently
covers certain executives of such subsidiary, including Mr. Colomer. Pursuant
to this management retention program, outstanding loans do not bear interest
but an amount equal to the one-year government bond interest rate in effect
at the beginning of the year is deducted from the executives' annual
compensation, and loans must be repaid in full upon termination of
employment. The amount deducted from Mr. Colomer's compensation was 2.15
million Spanish pesetas (approximately $16,988 U.S. dollar equivalent as of
December 31, 1996) for 1996; 2.25 million Spanish pesetas (approximately
$18,097 U.S. dollar equivalent as of December 31, 1995) for 1995 and 2.25
million Spanish pesetas (approximately $17,094 U.S. dollar equivalent as of
December 31, 1994) for 1994.
EXECUTIVE SEVERANCE POLICY
Products Corporation's Executive Severance Policy, as amended effective
January 1, 1996, provides that upon termination of employment of eligible
executive employees, including the Named
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Executive Officers, other than voluntary resignation, retirement or
termination by Products Corporation for good reason, in consideration for the
execution of a release and confidentiality agreement and Revlon, Inc.'s
standard Employee Agreement as to Confidentiality and Non-Competition (the
"Non-Competition Agreement"), the eligible executive will be entitled to
receive, in lieu of severance under any employment agreement then in effect
or under Products Corporation's basic severance plan, a number of months of
severance pay in semi-monthly installments based upon such executive's grade
level and years of service reduced by the amount of any compensation from
subsequent employment, unemployment compensation or statutory termination
payments received by such executive during the severance period, and, in
certain circumstances, by the actuarial value of enhanced pension benefits
received by the executive as well as continued participation in medical and
certain other benefit plans for the severance period (or in lieu thereof,
upon commencement of subsequent employment, a lump sum payment equal to the
then present value of 50% of the amount of base salary then remaining payable
through the balance of the severance period, not to exceed six months' base
salary). Pursuant to the Executive Severance Policy, upon meeting the
conditions set forth therein, Messrs. Levin, Fellows, Colomer and Fox and Ms.
Dwyer would be entitled to severance pay equal to two years of base salary at
the rate in effect on the date of employment termination plus continued
participation in the medical and dental plans for two years on the same terms
as active employees.
DEFINED BENEFIT PLANS
The following table shows the estimated annual retirement benefits payable
(as of December 31, 1996) at normal retirement age (65) to a person retiring
with the indicated average compensation and years of credited service, on a
straight life annuity basis, after Social Security offset, under the Revlon
Employees' Retirement Plan (the "Retirement Plan"), including amounts
attributable to the Pension Equalization Plan, each as described below:
<TABLE>
<CAPTION>
HIGHEST CONSECUTIVE
FIVE-YEAR AVERAGE
COMPENSATION ESTIMATED ANNUAL STRAIGHT LIFE BENEFITS AT RETIREMENT
DURING FINAL TEN YEARS WITH INDICATED YEARS OF CREDIT SERVICE (A)
- ---------------------- ------------------------------------------------------
15 20 25 30 35
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 600,000.............. $152,022 $202,696 $253,370 $304,044 $304,044
700,000.............. 178,022 237,363 296,703 356,044 356,044
800,000.............. 204,022 272,029 340,037 408,044 408,044
900,000.............. 230,022 306,696 383,370 460,044 460,044
1,000,000.............. 256,022 341,363 426,703 500,000 500,000
1,100,000.............. 282,022 376,029 470,037 500,000 500,000
1,200,000.............. 308,022 410,696 500,000 500,000 500,000
1,300,000.............. 334,022 445,363 500,000 500,000 500,000
1,400,000.............. 360,022 480,029 500,000 500,000 500,000
1,500,000.............. 386,022 500,000 500,000 500,000 500,000
2,000,000.............. 500,000 500,000 500,000 500,000 500,000
2,500,000.............. 500,000 500,000 500,000 500,000 500,000
</TABLE>
- ------------
(a) The normal form of benefit for the Retirement Plan and the Pension
Equalization Plan is a life annuity.
The Retirement Plan is intended to be a tax qualified defined benefit
plan. Retirement Plan benefits are a function of service and final average
compensation. The Retirement Plan is designed to provide an employee having
30 years of credited service with an annuity generally equal to 52% of final
average compensation, less 50% of estimated individual Social Security
benefits. Final average compensation is defined as average annual base salary
and bonus (but not any part of bonuses in excess of 50% of base salary)
during the five consecutive calendar years in which base salary and bonus
(but not any part of bonuses in excess of 50% of base salary) were highest
out of the last 10 years prior to retirement or earlier termination. Except
as otherwise indicated, credited service only includes all periods of
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employment with Revlon, Inc. or a subsidiary prior to retirement. The base
salaries and bonuses of each of the Named Executive Officers are set forth in
the Summary Compensation Table under columns entitled "Salary" and "Bonus,"
respectively.
The Employee Retirement Income Security Act of 1974, as amended, places
certain maximum limitations upon the annual benefit payable under all
qualified plans of an employer to any one individual. In addition, the
Omnibus Budget Reconciliation Act of 1993 limits the annual amount of
compensation that can be considered in determining the level of benefits
under qualified plans. The Pension Equalization Plan, as amended effective
January 1, 1996, is a non-qualified benefit arrangement designed to provide
for the payment by Revlon, Inc. of the difference, if any, between the amount
of such maximum limitations and the annual benefit that would be payable
under the Retirement Plan but for such limitations, up to a combined maximum
annual straight life annuity benefit at age 65 under the Retirement Plan and
the Pension Equalization Plan of $500,000. Benefits provided under the
Pension Equalization Plan are conditioned on the participant's compliance
with his or her Non-Competition Agreement and, in any case, on the
participant not competing with Products Corporation for one year after
termination of employment.
The number of years of credited service under the Retirement Plan and the
Pension Equalization Plan as of January 1, 1997 for Mr. Levin is seven years
(which includes credit for service with MacAndrews Holdings), for Mr. Fellows
is eight years (which includes credit for prior service with Holdings), for
Mr. Fox is 13 years (which includes credit for service with MacAndrews
Holdings) and for Ms. Dwyer is 3 years. Mr. Colomer does not participate in
the Retirement Plan or the Pension Equalization Plan. Mr. Colomer
participates in the Revlon Foreign Service Employees Pension Plan (the
"Foreign Pension Plan"). The Foreign Pension Plan is a non-qualified defined
benefit plan. The plan is designed to provide an employee with 2% of final
average salary for each year of credited service, up to a maximum of 30
years, reduced by the sum of all other Revlon, Inc. provided retirement
benefits and social security or other government provided retirement
benefits. Credited service includes all periods of employment with Revlon,
Inc. or a subsidiary prior to retirement. Final average salary is defined as
average annual base salary during the five consecutive calendar years in
which base salary was highest out of the last 10 years prior to retirement.
The normal form of payment under the Foreign Pension Plan is a life annuity.
Mr. Colomer's credited service as of January 1, 1997 under the Foreign
Pension Plan is 17 years (which includes credit for service with Holdings).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of Revlon, Inc. (made up of Messrs. Gittis and
Drapkin and from and after June 6, 1996 Mr. Semel) determined compensation of
executive officers of Products Corporation, from and after the Revlon IPO.
Revlon, Inc. has used an airplane which was owned by a corporation of
which Messrs. Gittis, Drapkin and Levin were the sole stockholders. As of
December 31, 1996, Mr. Levin no longer holds an ownership interest in the
corporation that owns the airplane. See "Relationship with MacAndrews and
Forbes."
OWNERSHIP OF COMMON STOCK
Ronald O. Perelman, 35 East 62nd Street, New York, New York 10021, through
MacAndrews & Forbes, beneficially owns all of the outstanding shares of
Common Stock of the Issuer. No other director, executive officer or other
person beneficially owns any shares of common stock of the Issuer. MacAndrews
& Forbes, through Revlon Worldwide, beneficially owns 11,250,000 shares of
Class A Common Stock of Revlon, Inc. (representing 56.6% of the outstanding
shares of Class A Common Stock) and all of the outstanding 31,250,000 shares
of Class B Common Stock of Revlon, Inc., which together represent
approximately 83.1% of the outstanding shares of Common Stock and
approximately 97.4% of the combined voting power of the outstanding shares of
Common Stock of Revlon, Inc. All of the shares of Common Stock of Revlon,
Inc. owned by Revlon Worldwide are currently pledged by Revlon Worldwide to
secure its obligations under the Revlon Worldwide Notes. Following the Revlon
Worldwide
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Notes Defeasance, Revlon Worldwide will be merged with and into the Issuer.
All of the shares of Common Stock of Revlon, Inc. then held by the Issuer
will be pledged either to secure the Notes or the Non-Recourse Guaranty. The
shares of common stock of the Issuer and shares of common stock of
intermediate holding companies are or may from time to time be pledged to
secure obligations of MacAndrews & Forbes or its affiliates.
The Class A Common Stock and Class B Common Stock of Revlon, Inc. are
substantially identical except that each share of Class A Common Stock
entitles the holder thereof to one vote and each share of Class B Common
Stock entitles the holder to ten votes on all matters submitted to a vote of
stockholders. Each share of Class B Common Stock is convertible at the
holder's option into one share of Class A Common Stock. Upon any transfer of
shares of Class B Common Stock other than to a Permitted Transferee
(generally defined to include affiliates of the holder of the Class B Common
Stock), including upon a foreclosure on pledged shares, such shares of Class
B Common Stock are automatically converted into shares of Class A Common
Stock.
RELATIONSHIP WITH MACANDREWS & FORBES
MacAndrews & Forbes beneficially owns all shares of common stock of the
Issuer. As a result, MacAndrews & Forbes is able to elect the entire Board of
Directors of the Company and control the vote on all matters submitted to a
vote of the Company's stockholders, including extraordinary transactions such
as mergers, sales of all or substantially all of the Company's assets or
going private transactions. MacAndrews & Forbes is wholly owned by Ronald O.
Perelman, who is Chairman of the Board and a Director of the Issuer. Messrs.
Perelman, Levin, Fox and Nichols, each of whom is an executive officer of the
Issuer, have been, and are expected to continue to be, officers of MacAndrews
& Forbes and certain of its affiliates.
MacAndrews & Forbes is a diversified holding company with interests in
several industries. Through the Company, MacAndrews & Forbes is engaged in
the cosmetics and skin care, fragrance and personal care products business.
MacAndrews & Forbes owns 83% of Coleman, which is engaged in the manufacture
and marketing of recreational outdoor products, portable generators,
power-washing equipment, spas and hot tubs and 65% of Meridian, a
manufacturer and marketer of specialized boats and watersports equipment.
Through its 85% ownership of Mafco Consolidated, MacAndrews & Forbes is
engaged in the manufacture and distribution of cigars and pipe tobacco and
through Mafco Consolidated's 36% ownership of MFW, MacAndrews & Forbes is in
the business of processing of licorice and other flavors. MacAndrews & Forbes
is also in the financial services business through its 80% ownership of
California Federal. In addition, MacAndrews & Forbes has an investment in
Marvel, a youth entertainment company, which is currently the subject of a
Chapter 11 bankruptcy case. The principal executive offices of MacAndrews &
Forbes are located at 35 East 62nd Street, New York, New York 10021.
TRANSFER AGREEMENTS
In June 1992, Revlon, Inc. and Products Corporation entered into an asset
transfer agreement with Holdings and certain of its wholly owned subsidiaries
(the "Asset Transfer Agreement"), and Revlon, Inc. and Products Corporation
entered into a real property asset transfer agreement with Holdings (the
"Real Property Transfer Agreement" and, together with the Asset Transfer
Agreement, the "Transfer Agreements"), and pursuant to such agreements on
June 24, 1992, Holdings transferred assets to Products Corporation and
Products Corporation assumed all the liabilities of Holdings, other than
certain specifically excluded assets and liabilities. The assets transferred
to Products Corporation included all the operating assets and manufacturing
and other facilities of Holdings. Holdings, however, retained the Retained
Brands and other intangible assets, its investment in Laboratory Corporation
of America Holdings (formerly known as National Health Laboratories Holdings,
Inc.) ("LabCorp."), and certain nonoperating assets, including $37.0 million
in cash. Products Corporation did not assume (i) liabilities associated with
the Retained Brands to the extent such liabilities were not reflected on the
books and records of Holdings or, if so reflected, exceeded the reserves
recorded on Holdings' books, (ii) certain income tax liabilities arising
prior to January 1, 1992 to the extent such liabilities exceeded the reserves
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<PAGE>
recorded on Holdings' books as of January 1, 1992 or were not of the nature
reserved for, (iii) other tax liabilities to the extent such liabilities are
related to the businesses and assets retained by Holdings, (iv) certain
liabilities related to agreements pursuant to which Holdings acquired or sold
certain of its businesses except to the extent such liabilities relate to
assets transferred to Products Corporation and (v) liabilities associated
with certain self-funded risks related to LabCorp. to the extent that such
liabilities exceeded the reserves recorded on Holdings' books immediately
prior to the transfer ((i) through (v) are collectively, the "Excluded
Liabilities"). In connection with the Transfer Agreements, substantially all
employees of Holdings became employees of Products Corporation. Holdings
agreed to indemnify Revlon, Inc. and Products Corporation against losses
arising from the Excluded Liabilities, and Revlon, Inc. and Products
Corporation agreed to indemnify Holdings against losses arising from the
liabilities assumed by Products Corporation. The amounts reimbursed by
Holdings to Products Corporation for the Excluded Liabilities for 1996, 1995
and 1994 were $1.4 million, $4.0 million and $7.4 million, respectively.
BENEFIT PLANS ASSUMPTION AGREEMENT
Holdings, Products Corporation and Revlon, Inc. entered into a benefit
plans assumption agreement dated as of July 1, 1992 pursuant to which
Products Corporation assumed all rights, liabilities and obligations under
all of Holdings' benefit plans, arrangements and agreements, including
obligations under the Revlon Employees' Retirement Plan and the Revlon
Employees' Savings and Investment Plan. Products Corporation was substituted
for Holdings as sponsor of all such plans theretofore sponsored by Holdings.
OPERATING SERVICES AGREEMENT
In June 1992, Revlon, Inc., Products Corporation and Holdings entered into
an operating services agreement (as amended and restated, and as subsequently
amended, the "Operating Services Agreement") pursuant to which Products
Corporation manufactures, markets, distributes, warehouses and administers,
including the collection of accounts receivable, the Retained Brands for
Holdings. Pursuant to the Operating Services Agreement, Products Corporation
is reimbursed an amount equal to all of its and Revlon, Inc.'s direct and
indirect costs incurred in connection with furnishing such services, net of
the amounts collected by Products Corporation with respect to the Retained
Brands, payable quarterly. The net amounts reimbursed by Holdings to Products
Corporation for such direct and indirect costs for 1996, 1995 and 1994 were
$5.1 million, $8.6 million and $11.5 million, respectively. Holdings also
pays Products Corporation a fee equal to 5% of the net sales of the Retained
Brands, payable quarterly. The fees paid by Holdings to Products Corporation
pursuant to the Operating Services Agreement for services with respect to the
Retained Brands for 1996, 1995 and 1994 were approximately $0.6 million, $1.7
million and $1.9 million, respectively. The Operating Services Agreement may
be terminated by either party on 90 days' notice; provided, however, that
Revlon, Inc. may not terminate the Operating Services Agreement during such
time as any contracts with third parties relating to the Retained Brands
entered into with the consent of Revlon, Inc. or Products Corporation remain
in effect. As part of the Operating Services Agreement, Holdings has granted
Products Corporation a right of first refusal with respect to any proposed
sale or other disposition by Holdings of any of the Retained Brands.
REIMBURSEMENT AGREEMENTS
Revlon, Inc., Products Corporation and MacAndrews Holdings have entered
into reimbursement agreements (the "Reimbursement Agreements") pursuant to
which (i) MacAndrews Holdings is obligated to provide certain professional
and administrative services, including employees, to Revlon, Inc. and its
subsidiaries, including Products Corporation, and purchase services from
third party providers, such as insurance and legal and accounting services,
on behalf of Revlon, Inc. and its subsidiaries, including Products
Corporation, to the extent requested by Products Corporation, and (ii)
Products Corporation is obligated to provide certain professional and
administrative services, including employees, to MacAndrews Holdings and
purchase services from third party providers, such as insurance and legal and
accounting services, on behalf of MacAndrews Holdings to the extent requested
by MacAndrews Holdings, provided that in each case the performance of such
services does not cause an unreasonable burden to MacAndrews Holdings or
Products Corporation, as the case may be. Products Corporation
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reimburses MacAndrews Holdings for the allocable costs of the services
purchased for or provided to Products Corporation and for reasonable
out-of-pocket expenses incurred in connection with the provision of such
services. MacAndrews Holdings reimburses Products Corporation for the
allocable costs of the services purchased for or provided to MacAndrews
Holdings and for the reasonable out-of-pocket expenses incurred in connection
with the purchase or provision of such services. In addition, in connection
with certain insurance coverage provided by MacAndrews Holdings, Products
Corporation obtained letters of credit under the standby letter of credit
facility (which aggregated approximately $26.4 million as of December 31,
1996) to support certain self-funded risks of MacAndrews Holdings and its
affiliates, including Revlon, Inc., associated with such insurance coverage.
The costs of such letters of credit are allocated among, and paid by, the
affiliates of MacAndrews Holdings, including Revlon, Inc., which participate
in the insurance coverage to which the letters of credit relate. The Company
expects that these self-funded risks will be paid in the ordinary course and,
therefore, it is unlikely that such letters of credit will be drawn upon.
MacAndrews Holdings has agreed to indemnify Revlon, Inc. and Products
Corporation to the extent amounts are drawn under any of such letters of
credit with respect to claims for which Products Corporation is not
responsible. The net amounts reimbursed by MacAndrews Holdings to Products
Corporation for the services provided under the Reimbursement Agreements for
1996, 1995 and 1994 were $2.2 million, $3.0 million and $1.6 million,
respectively. Each of Revlon, Inc. and Products Corporation, on the one hand,
and MacAndrews Holdings on the other, has agreed to indemnify the other party
for losses arising out of the provision of services by it under the
Reimbursement Agreements other than losses resulting from its willful
misconduct or gross negligence. The Reimbursement Agreements may be
terminated by either party on 90 days' notice. The Company does not expect
Revlon, Inc. to request services under the Reimbursement Agreements unless
their costs would be at least as favorable to Revlon, Inc. as could be
obtained from unaffiliated third parties.
In March 1993, Revlon Worldwide and MacAndrews Holdings entered into a
reimbursement agreement pursuant to which MacAndrews Holdings agreed to provide
third party services to Revlon Worldwide on the same basis as it provides
services to Revlon, Inc., and Revlon Worldwide agreed to indemnify MacAndrews
Holdings on the same basis as Revlon, Inc. is obligated to indemnify MacAndrews
Holdings under the Reimbursement Agreements. There were no services provided
and no payments made pursuant to this agreement during 1996, 1995 or 1994.
TAX SHARING AGREEMENT
Holdings, Revlon Worldwide, Revlon, Inc. and Products Corporation are for
federal income tax purposes included in the affiliated group of which Mafco
Holdings is the common parent, and the Company's, Revlon Worldwide's, Revlon,
Inc.'s and Product Corporation's federal taxable income and loss will be
included in such group's consolidated tax return filed by Mafco Holdings. The
Issuer, Revlon Worldwide, Revlon, Inc. and Products Corporation also may be
included in certain state and local tax returns of Mafco Holdings or its
subsidiaries.
In June 1992, Holdings, Revlon, Inc., Products Corporation and certain of
its subsidiaries, and Mafco Holdings entered into a tax sharing agreement (as
subsequently amended, the "1992 Tax Sharing Agreement"), pursuant to which
Mafco Holdings has agreed to indemnify Revlon, Inc. and Products Corporation
against federal, state or local income tax liabilities of the consolidated or
combined group of which Mafco Holdings (or a subsidiary of Mafco Holdings
other than Revlon, Inc. or Products Corporation and its subsidiaries) is the
common parent for taxable periods beginning on or after January 1, 1992
during which Revlon, Inc., Products Corporation or a subsidiary of Products
Corporation is a member of such group. Pursuant to the 1992 Tax Sharing
Agreement, for all taxable periods beginning on or after January 1, 1992,
Revlon, Inc. will pay to Holdings amounts equal to the taxes that Revlon,
Inc. would otherwise have to pay if it were to file separate federal, state
or local income tax returns (including any amounts determined to be due as a
result of a redetermination arising from an audit or otherwise of the
consolidated or combined tax liability relating to any such period which is
attributable to Revlon, Inc.), except that Revlon, Inc. will not be entitled
to carry back any losses to taxable periods ending prior to January 1, 1992.
No payments are required by Revlon, Inc. if and to the extent Products
Corporation is
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prohibited under the Credit Agreement from making tax sharing payments to
Revlon, Inc. The Credit Agreement prohibits Products Corporation from making
cash tax sharing payments other than in respect of state income taxes.
In March 1993, Revlon Worldwide and Mafco Holdings entered into a tax
sharing agreement (the "1993 Tax Sharing Agreement" and, together with the
1992 Tax Sharing Agreement, the "Tax Sharing Agreements") pursuant to which,
for all taxable periods beginning on or after January 1, 1993, Revlon
Worldwide will pay to Mafco Holdings amounts equal to the taxes that Revlon
Worldwide would otherwise have to pay if it were to file separate federal,
state and local income tax returns for itself, excluding Revlon, Inc. and its
subsidiaries (including any amounts determined to be due as a result of a
redetermination arising from an audit or otherwise of the tax liability
relating to any such period which is attributable to Revlon Worldwide).
Since the payments to be made by Revlon, Inc. under the 1992 Tax Sharing
Agreement and by Revlon Worldwide under the 1993 Tax Sharing Agreement will
be determined by the amount of taxes that Revlon, Inc. or Revlon Worldwide,
as the case may be, would otherwise have to pay if it were to file separate
federal, state or local income tax returns, the Tax Sharing Agreements will
benefit Mafco Holdings to the extent Mafco Holdings can offset the taxable
income generated by Revlon, Inc. or Revlon Worldwide against losses and tax
credits generated by Mafco Holdings and its other subsidiaries. There were no
cash tax payments made by Revlon, Inc. or Revlon Worldwide pursuant to the
Tax Sharing Agreements for 1996, 1995 or 1994.
FINANCING REIMBURSEMENT AGREEMENT
Holdings and Products Corporation entered into a financing reimbursement
agreement (the "Financing Reimbursement Agreement") in 1992 pursuant to which
Holdings agreed to reimburse Products Corporation for Holdings' allocable
portion of (i) the debt issuance cost and advisory fees related to the
capital restructuring of Holdings and (ii) interest expense attributable to
the higher cost of funds paid by Products Corporation under the credit
agreement in effect at that time as a result of additional borrowings for the
benefit of Holdings in connection with the assumption of certain liabilities
by Products Corporation under the Asset Transfer Agreement and the repurchase
of Original Senior Subordinated Notes from affiliates. The amount of interest
reimbursed by Holdings for 1994 was approximately $0.8 million and was
evidenced by noninterest-bearing promissory notes originally due and payable
on June 30, 1995. In connection with the execution of the 1995 Credit
Agreement in February 1995, the $13.3 million in notes payable by Holdings to
Products Corporation under the Financing Reimbursement Agreement was offset
against the $25.0 million advance (the "Advance") payable by Products
Corporation to Holdings (see "--Other Related Transactions") and Holdings
agreed not to demand payment under the resulting $11.7 million note payable by
Products Corporation so long as any indebtedness remained outstanding under the
1995 Credit Agreement. In connection with the execution of the 1995 Credit
Agreement in February 1995, the Financing Reimbursement Agreement was amended
and extended to provide that Holdings would reimburse Products Corporation
for a portion of the debt issuance costs and advisory fees related to the
1995 Credit Agreement (which portion was approximately $4.7 million and was
evidenced by a noninterest-bearing promissory note payable on June 30, 1996)
and 1 1/2% per annum of the average balance outstanding under the 1995
Credit Agreement and the average balance outstanding under working capital
borrowings from affiliates through June 30, 1996 (see "--Other Related
Transactions"), and such amounts were evidenced by a noninterest-bearing
promissory note payable on June 30, 1996. The amount of interest reimbursed by
Holdings for 1995 was approximately $4.2 million (see "--Other Related
Transactions"). As of December 31, 1995 the aggregate amount of notes payable
by Holdings under the Financing Reimbursement Agreement was $8.9 million. In
June 1996, $10.9 million in notes due to Products Corporation, which included
$2.0 million of interest reimbursement in 1996, under the Financing
Reimbursement Agreement from Holdings was offset against a $11.7 million
demand note payable by Products Corporation to Holdings. The Financing
Reimbursement Agreement expired on June 30, 1996.
REGISTRATION RIGHTS AGREEMENT
Prior to the consummation of the Revlon IPO, Revlon, Inc. and Revlon
Worldwide entered into the Registration Rights Agreement pursuant to which
Revlon Worldwide and certain transferees of Common
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Stock held by Revlon Worldwide (the "Revlon, Inc. Holders") have the right to
require Revlon, Inc. to register all or part of the Class A Common Stock
owned by such Revlon, Inc. Holders and the Class A Common Stock issuable upon
conversion of the Class B Common Stock owned by such Revlon, Inc. Holders
under the Securities Act (a "Demand Registration"); provided that Revlon,
Inc. may postpone giving effect to a Demand Registration up to a period of 30
days if Revlon, Inc. believes such registration might have a material adverse
effect on any plan or proposal by Revlon, Inc. with respect to any financing,
acquisition, recapitalization, reorganization or other material transaction,
or Revlon, Inc. is in possession of material non-public information that, if
publicly disclosed, could result in a material disruption of a major
corporate development or transaction then pending or in progress or in other
material adverse consequences to Revlon, Inc. Revlon Worldwide does not have
any present intention to request any such registration. In addition, the
Revlon, Inc. Holders will have the right to participate in registrations by
Revlon, Inc. of its Class A Common Stock (a "Piggyback Registration"). The
Revlon, Inc. Holders will pay all out-of-pocket expenses incurred in
connection with any Demand Registration. The Company will pay any expenses
incurred in connection with a Piggyback Registration, except for underwriting
discounts, commissions and expenses attributable to the shares of Class A
Common Stock sold by such Revlon, Inc. Holders.
NON-RECOURSE GUARANTY
The Issuer has issued the Non-Recourse Guaranty with respect to the
obligations of an affiliate under a credit facility and has pledged as
security therefor 529 shares of common stock of Revlon Worldwide
(representing 52.9% of the outstanding shares) and, after the Revlon
Worldwide Merger, will pledge 22,500,000 shares of Class B Common Stock of
Revlon, Inc. (representing approximately 44.0% of the outstanding shares of
Revlon, Inc. Common Stock), in each case, that are owned by the Issuer and
are not pledged as security for the Notes. See "Risk Factors -- Control by
MacAndrews & Forbes."
OTHER RELATED TRANSACTIONS
Pursuant to a lease dated April 2, 1993 (the "Edison Lease"), Holdings
leases to Products Corporation the Edison research and development facility
for a term of up to 10 years with an annual rent of $1.4 million and certain
shared operating expenses payable by Products Corporation which, together
with the annual rent are not to exceed $2.0 million per year. Pursuant to an
assumption agreement dated February 18, 1993, Holdings agreed to assume all
costs and expenses of the ownership and operation of the Edison facility as
of January 1, 1993, other than (i) the operating expenses for which Products
Corporation is responsible under the Edison Lease and (ii) environmental
claims and compliance costs relating to matters which occurred prior to
January 1, 1993 up to an amount not to exceed $8.0 million (the amount of
such claims and costs for which Products Corporation is responsible, the
"Environmental Limit"). In addition, pursuant to such assumption agreement,
Products Corporation agreed to indemnify Holdings for environmental claims
and compliance costs relating to matters which occurred prior to January 1,
1993 up to an amount not to exceed the Environmental Limit and Holdings
agreed to indemnify Products Corporation for environmental claims and
compliance costs relating to matters which occurred prior to January 1, 1993
in excess of the Environmental Limit and all such claims and costs relating
to matters occurring on or after January 1, 1993. Pursuant to an occupancy
agreement, during 1996 and 1995 Products Corporation rented a portion of the
administration building located at the Edison facility and space for a retail
store of Products Corporation. Products Corporation provides certain
administrative services, including accounting, for Holdings with respect to
the Edison facility pursuant to which Products Corporation pays on behalf of
Holdings costs associated with the Edison facility and is reimbursed by
Holdings for such costs, less the amount owed by Products Corporation to
Holdings pursuant to the Edison Lease and the occupancy agreement. The net
amount reimbursed by Holdings to Products Corporation for such costs with
respect to the Edison facility for 1996, 1995 and 1994 was $1.1 million, $1.2
million and $2.1 million, respectively.
Effective January 1, 1996, Products Corporation acquired from Holdings
substantially all of the assets of Tarlow. Products Corporation assumed
substantially all of the liabilities and obligations of Tarlow. Net
liabilities assumed were approximately $3.4 million. The assets acquired and
liabilities
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assumed were accounted for at historical cost in a manner similar to that of
a pooling of interests and, accordingly, prior period financial statements
have been restated as if the acquisition took place at the beginning of the
earliest period. In addition to the liabilities assumed, Products Corporation
paid $4.1 million to Holdings, which payment was accounted for as an increase
in capital deficiency. Credit Suisse First Boston Corporation, a nationally
recognized investment banking firm, rendered its written opinion that the
terms of the purchase are fair from a financial standpoint to Products
Corporation.
Effective January 1, 1994, Products Corporation sold the inventory,
contracts, dedicated tools, dies and molds, intellectual property and a
license agreement relating to the NEW ESSENTIALS brand to Holdings for $2.2
million (representing the net book value of such brand which Products
Corporation believes approximated its fair market value at the time of sale),
and the Operating Services Agreement was amended to include NEW ESSENTIALS as
a "Retained Brand."
During 1996, 1995 and 1994, Products Corporation leased certain facilities
to MacAndrews & Forbes or its affiliates pursuant to occupancy agreements and
leases including space at Products Corporation's New York headquarters and at
Products Corporation's offices in London and Tokyo. The rent paid by
MacAndrews & Forbes or its affiliates to Products Corporation for 1996, 1995
and 1994 was $4.6 million, $5.3 million and $4.1 million, respectively.
During 1992, Holdings made the Advance of $25.0 million to Products
Corporation. The Advance was evidenced by a noninterest-bearing demand note
payable by Products Corporation, the payment of which was subordinated to the
obligations of Products Corporation under its then existing credit agreement.
The note was reduced to $11.7 million as a result of the offset against it of
amounts owed to Products Corporation by Holdings under the Financing
Reimbursement Agreement and in June 1996, amounts due under the Financing
Reimbursement Agreement were offset against the note. Holdings agreed not to
demand payment under the note so long as any indebtedness remained
outstanding under the 1995 Credit Agreement.
In October 1993, Products Corporation borrowed from Holdings approximately
$23.2 million, as adjusted and subject to further adjustment for expenses,
representing certain amounts received by Holdings from an escrow account
relating to the sale by Holdings of certain of its businesses. In July 1995,
Products Corporation borrowed from Holdings approximately $0.8 million,
representing certain amounts received by Holdings relating to an arbitration
arising out of the sale by Holdings of certain of its businesses. In 1995,
Products Corporation borrowed from Holdings approximately $5.6 million,
representing certain amounts received by Holdings from the sale by Holdings
of certain of its businesses. Such amounts are evidenced by
noninterest-bearing promissory notes. Holdings agreed not to demand payment
under such notes so long as any indebtedness remains outstanding under the
Credit Agreement.
The Credit Agreement is supported by, among other things, guarantees from
Holdings and certain of its subsidiaries. The obligations under such
guarantees are secured by, among other things, (i) the capital stock and
certain assets of certain subsidiaries of Holdings and (ii) a mortgage on
Holdings' Edison, New Jersey facility.
Products Corporation borrows funds from its affiliates from time to time
to supplement its working capital borrowings. No such borrowings were
outstanding as of December 31, 1996. The interest rates for such borrowings
are more favorable to Products Corporation than interest rates under the
Credit Agreement and, for borrowings occurring prior to the execution of the
Credit Agreement, the credit facility in effect at the time of such
borrowing. The amount of interest paid by Products Corporation for such
borrowings for 1996, 1995 and 1994 was $0.5 million, $1.2 million and $1.1
million, respectively.
In November 1993, Products Corporation assigned to Holdings a lease for
warehouse space in New Jersey (the "N.J. Warehouse") between Products
Corporation and a trust established for the benefit of certain family members
of Ronald O. Perelman. The N.J. Warehouse had become vacant as a result of
divestitures and restructuring of Products Corporation. The lease has annual
lease payments of approximately $2.3 million and terminates on June 30, 2005.
In consideration for Holdings assuming all liabilities and obligations under
the lease, Products Corporation paid Holdings $7.5 million (for which a
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liability was previously recorded) in three installments of $2.5 million each
in January 1994, January 1995 and January 1996. Credit Suisse First Boston
Corporation, a nationally recognized investment banking firm, rendered its
written opinion that the terms of the lease transfer were fair from a
financial standpoint to Products Corporation. During 1996, 1995 and 1994,
Products Corporation paid certain costs associated with the N.J. Warehouse on
behalf of Holdings and was reimbursed by Holdings for such amount. The
amounts reimbursed by Holdings to Products Corporation for such costs were
$0.2 million, $0.2 million and $0.3 million for 1996, 1995 and 1994,
respectively.
During 1996, 1995 and 1994, Products Corporation used an airplane which
was owned by a corporation of which Messrs. Gittis, Drapkin and Levin were
the sole stockholders. Products Corporation paid approximately $0.2 million,
$0.4 million and $0.5 million for the usage of the airplane in 1996, 1995 and
1994, respectively. As of December 31, 1996, Mr. Levin no longer holds an
ownership interest in the corporation that owned the airplane.
Consolidated Cigar, an affiliate of Products Corporation, assembles
lipstick cases for Products Corporation. Products Corporation paid
approximately $1.0 million, $1.0 million and $0.6 million for such services
in 1996, 1995 and 1994, respectively.
In the fourth quarter of 1996, Products Corporation and certain of its
subsidiaries purchased an inactive subsidiary from an affiliate for net cash
consideration of approximately $3.0 million in a series of transactions in
which Products Corporation expects to realize certain tax benefits in future
years.
During 1994, the Company was retained by an affiliate, Meridian, to act as
licensing agent for Meridian's trademarks. The Company will receive a
percentage of any royalties generated by such licenses. No royalties were
earned by Meridian for 1996, 1995 or 1994. However, Meridian paid Products
Corporation approximately $0.1 million in 1994 for reimbursement of expenses
incurred in connection with such licensing activities.
In January 1995, Products Corporation agreed to license certain of its
trademarks to Guthy-Renker Corporation ("Guthy-Renker"), a corporation in
which an affiliate of MacAndrews & Forbes held a 37.5% equity interest, to be
used by Guthy-Renker in connection with the marketing and sale of hair
extensions and hair pieces. The amount paid by Guthy-Renker to Products
Corporation pursuant to such license for 1995 was less than $60,000. In
connection with this licensing arrangement, Guthy-Renker agreed to use
Products Corporation as its exclusive supplier of hair extensions and hair
pieces. Guthy-Renker purchased $1.1 million of wigs from Products Corporation
during 1995. Products Corporation terminated the license with Guthy-Renker
during 1995.
The Company believes, and the Board of Directors of Revlon, Inc. or
Products Corporation, as applicable, has determined that the terms of the
foregoing transactions are at least as favorable to Revlon, Inc. or Products
Corporation, as applicable, as those that could be obtained from unaffiliated
third parties.
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DESCRIPTION OF THE NOTES
The New Notes will be issued under the Indenture dated as of March 1, 1997
between the Issuer and The Bank of New York, as trustee (the "Trustee"), a
copy of which is filed as an exhibit to the Registration Statement of which
this Prospectus constitutes a part. The following summary, which describes
certain provisions of the Indenture and the Notes, does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Trust Indenture Act of 1939, as amended (the "TIA"), and all the
provisions of the Indenture and the Notes, including the definitions therein
of terms not defined in this Prospectus. Certain terms used herein are
defined below under "Certain Definitions." The New Notes are identical in all
material respects to the terms of the Old Notes, except for certain transfer
restrictions and registration rights relating to the Old Notes and except
that, if the Exchange Offer is not consummated by September 29, 1997,
interest will accrue on the Old Notes (in addition to the accrual of Original
Issue Discount) from and including such date until but excluding the date of
consummation of the Exchange Offer payable in cash semiannually in arrears on
March 15 and September 15, commencing March 15, 1998, at a rate per annum
equal to .50% of the Accredited Value of the Old Notes as of the September 15
or March 15 immediately preceding such interest payment date.
GENERAL
The Notes will mature on March 15, 2001. The Trustee authenticated and
delivered Old Notes for original issue in an aggregate principal amount at
maturity of $770 million.
The Old Notes were offered at a substantial discount from their principal
amount. See "Certain Tax Aspects." There will be no periodic cash payments of
interest, except as described below. The New Notes will be treated as a
continuation of the Old Notes, which were issued at an Original Issue
Discount (the difference between the original issue price of the Notes and
their principal amount at maturity). The calculation of the accrual of
Original Issue Discount in the period during which a New Note remains
outstanding will be on a semi-annual bond equivalent basis using a 360-day
year composed of twelve 30-day months; such accrual will commence from the
date of original issue of the Notes. The aggregate principal amount at
maturity of the Notes represents a yield to maturity of 10.75%, without
giving effect to any periodic payments of interest described below.
Redemption or purchase by the Issuer of a Note may cause the Original Issue
Discount and interest, if any, to cease to accrue on such Note, under the
terms and subject to the conditions of the Indenture.
If by September 29, 1997 neither (i) the Exchange Offer is consummated nor
(ii) a shelf registration statement with respect to the resale of the Old
Notes (the "Shelf Registration Statement") is declared effective, interest
will accrue (in addition to the accrual of Original Issue Discount) on the
Old Notes from and including such date until but excluding the earlier of (i)
the consummation of the Exchange Offer and (ii) the effective date of such
Shelf Registration Statement. In each case such interest will be payable in
cash semi-annually in arrears on March 15 and September 15, commencing March
15, 1998, at a rate per annum equal to .50% of the Accreted Value of the
Notes as of the Semi-Annual Accrual Date (as defined) immediately preceding
the interest payment date. Payments of such interest, if any, on Old Notes in
exchange for which the New Notes were issued will be made to the persons who,
at the close of business on March 1 or September 1 next preceding the
interest payment date, are registered holders of such Old Notes if such
record date occurs prior to such exchange, or are registered holders of the
New Notes if such record date occurs on or after the date of such exchange,
even if Notes are cancelled after the record date and on or before the
interest payment date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. Holders of Old Notes accepted for exchange will
be deemed to have waived the right to receive any other payments or accrued
interest on the Old Notes.
Principal and interest will be payable at the office of the Trustee, but,
at the option of the Issuer, interest may be paid by check mailed to the
registered holders of the Notes at their registered addresses. The Notes will
be transferable and exchangeable at the office of the Trustee and will be
issued only in fully registered form, without coupons, in denominations of
$1,000 and any integral multiple thereof. Wherever it is provided that the
Accreted Value, the Put Amount, the Due Amount or the principal amount at
maturity with respect to a Note will be paid, such provision will be deemed
to require the simultaneous payment of accrued and unpaid interest (if any)
on such Note.
Any Old Notes that remain outstanding after the consummation of the
Exchange Offer, together with the New Notes issued in connection with the
Exchange Offer, will be treated as a single class of securities under the
Indenture.
OPTIONAL REDEMPTION
On and after March 15, 2000, the Notes may be redeemed at the option of
the Issuer in whole, or from time to time in part, at 102.6875% of the
Accreted Value thereof at the time of redemption (subject
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to the right of holders of record on the relevant record date to receive
interest due (if any) on the relevant interest payment date). In addition,
the Notes may be redeemed at the option of the Issuer in connection with the
occurrence of a Change of Control as a whole at a redemption price equal to
the sum of the Accreted Value thereof plus the Applicable Premium thereon at
the time of redemption (subject to the right of holders of record on the
relevant record date to receive interest due (if any) on the relevant
interest payment date).
"Accreted Value" as of any date (the "Specified Date") means, with respect
to each $1,000 principal amount at maturity of Notes:
(i) if the Specified Date is one of the following dates (each a
"Semi-Annual Accrual Date"), the amount set forth opposite such date
below:
<TABLE>
<CAPTION>
SEMI-ANNUAL ACCRUAL DATE ACCRETED VALUE
- ------------------------------------------------------- --------------
<S> <C>
March 5, 1997 ......................................... $ 655.90
March 15, 1997 ......................................... 657.81
September 15, 1997 .................................... 693.17
March 15, 1998 ........................................ 730.42
September 15, 1998 .................................... 769.68
March 15, 1999 ........................................ 811.06
September 15, 1999 .................................... 854.65
March 15, 2000 ........................................ 900.59
September 15, 2000 .................................... 948.99
March 15, 2001 ........................................ 1,000.00
</TABLE>
(ii) if the Specified Date occurs between two Semi-Annual Accrual Dates,
the sum of (A) the Accreted Value for the Semi-Annual Accrual Date
immediately preceding the Specified Date and (B) an amount equal to the
product of (i) the Accreted Value for the immediately following
Semi-Annual Accrual Date less the Accreted Value for the immediately
preceding Semi-Annual Accrual Date and (ii) a fraction, the numerator of
which is the number of days from the immediately preceding Semi-Annual
Accrual Date to the Specified Date, using a 360-day year of twelve 30-day
months, and the denominator of which is 180 (or, if the Semi-Annual
Accrual Date immediately preceding the Specified Date is March 5, 1997,
the denominator of which is 10).
Notice of redemption will be mailed at least 30 days but not more than 60
days before any redemption date to each holder of Notes to be redeemed at its
registered address. Notes in denominations larger than $1,000 principal
amount at maturity may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the redemption price of and accrued
interest (if any) on all Notes (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the
redemption date, on and after such date Accreted Value ceases to increase and
interest (if any) ceases to accrue on such Notes (or such portions thereof)
called for redemption.
The following definitions are used to determine the Applicable Premium:
"Applicable Premium" means, with respect to a Note at any time, the
greater of (i) 1.0% of the Accreted Value of such Note at such time and (ii)
the excess of (A) the present value at such time of the principal amount at
maturity plus any required interest payments due on such Note, computed using
a discount rate equal to the Treasury Rate plus 100 basis points, over (B)
the Accreted Value of such Note at such time.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519)
which has become publicly available at least two business days prior to the
date fixed for repayment or, in the case of defeasance, prior to the date of
deposit (or, if such Statistical Release is no longer published, any publicly
available source of similar market data)) most nearly equal to the then
remaining average life to Stated Maturity) of the Notes; provided, however,
that if the average life to Stated Maturity of the Notes is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of United
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States Treasury securities for which such yields are given, except that if
the average life to Stated Maturity of the Notes is less than one year, the
weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year shall be used.
SINKING FUND
There will be no mandatory sinking fund payments for the Notes.
COLLATERAL
During the period from the Issue Date through the time of the Merger, the
Notes will be secured by a security interest in and a pledge by the Issuer of
all its right, title and interest in and to (i) 471 shares of Revlon
Worldwide Common Stock (representing 47.1% of the outstanding shares of
Revlon Worldwide Common Stock) plus 47.1% of any additional shares of Revlon
Worldwide Common Stock issued after the date of the Indenture and prior to
the Merger (collectively, the "Revlon Worldwide Pledged Shares") and (ii) all
dividends, cash, instruments and other property and proceeds from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any of the foregoing (the "Revlon Worldwide Collateral").
After the Merger, the Notes will be secured by a security interest in and
a pledge by the Issuer of all its right, title and interest in and to (i) a
number of shares of Common Stock of Revlon, Inc. equal to the Revlon, Inc.
Collateral Number (collectively, the "Revlon, Inc. Pledged Shares," which
term shall exclude any Withdrawn Shares but shall include any Other Revlon
Shares (as defined below); and the Revlon, Inc. Pledged Shares, together with
the Revlon Worldwide Pledged Shares, are referred to as the "Pledged Shares")
and (ii) all dividends, cash, instruments and other property and proceeds
from time to time received, receivable or otherwise distributed in respect of
or in exchange for any of the Revlon, Inc. Pledged Shares (clauses (i) and
(ii) collectively, the "Revlon, Inc. Collateral," which term shall exclude
any Withdrawn Collateral). The Indenture will permit the Issuer, so long as
no Default has occurred and is continuing and so long as the Class A shares
of Common Stock of Revlon, Inc. and the Class B shares of Common Stock of
Revlon, Inc. are substantially identical except with respect to voting
rights, to withdraw Revlon, Inc. Pledged Shares of either class of Common
Stock of Revlon, Inc., in whole or in part, by substituting therefor with the
Trustee an equal number of shares of the other class of Common Stock of
Revlon, Inc. (such other shares, the "Other Revlon Shares").
The Indenture also will permit the Issuer to release Revlon, Inc.
Collateral in whole or in part by substituting therefor with the Trustee cash
or U.S. Government Obligations sufficient for the payment of principal at
maturity or redemption of, and interest (if any) on, all the Notes or the
applicable pro rata portion thereof and by satisfying certain other
conditions, including the delivery to the Trustee of a certificate of an
independent accounting firm as to the sufficiency of such cash and U.S.
Government Obligations (such cash and U.S. Government Obligations, the
"Substitute Collateral"). The Revlon, Inc. Pledged Shares to be withdrawn
will consist of Class A shares of Revlon, Inc. Common Stock and Class B
shares of Revlon, Inc. Common Stock in such proportions as the Issuer shall
elect. If less than all of the Revlon, Inc. Collateral is to be released, the
Issuer will be required to deliver an Officer's Certificate to the Trustee
stating that the ratio of (x) the Market Value of the remaining Revlon, Inc.
Collateral, after giving effect to such release and all prior releases of
Revlon, Inc. Collateral, to (y) the aggregate Accreted Value of that portion
of the outstanding Notes not covered by cash or U.S. Government Obligations
(the "Revlon, Inc.-Secured Portion"), after giving effect to such release, is
at least equal to such ratio immediately prior to such release; provided,
however, that no such release shall be permitted if (x) such ratio, after
giving effect to the release, would be less than 1.5 to 1.0 or (y) the Market
Value of the remaining Revlon, Inc. Collateral would be less than the
aggregate principal amount at maturity of the Revlon, Inc.-Secured Portion,
after giving effect to such release.
After the Merger, in connection with or after a redemption of the Notes in
part or upon delivery from time to time by the Issuer of less than all the
Notes for cancellation, the Indenture will permit the Issuer to request a
release of a portion of the Revlon, Inc. Collateral, so long as (x) the ratio
of the Market Value of the remaining Revlon, Inc. Collateral to the aggregate
Accreted Value of the Notes not so redeemed
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or delivered and not covered by cash or U.S. Government Obligations, is at
least equal to such ratio immediately prior to such release; provided,
however, that no such release shall be permitted if (x) such ratio, after
giving effect to the release, would be less than the 1.5 to 1.0 or (y) the
Market Value of the remaining Revlon, Inc. Collateral would be less than the
aggregate principal amount at maturity of the Revlon, Inc.-Secured Portion,
after giving effect to such release. The Revlon, Inc. Pledged Shares to be
withdrawn will consist of Class A shares of Revlon, Inc. Common Stock and
Class B shares of Revlon, Inc. Common Stock in such proportions as the Issuer
shall elect. In addition, in connection with a redemption of Notes, or with a
purchase of Notes pursuant to the provisions described under "Change of
Control," or with the payment at maturity of the principal amount of the
Notes, the Indenture permits the Issuer to request, subject to certain
conditions, a release of Substitute Collateral to the extent necessary to pay
the redemption price, purchase price or principal amount at maturity, as the
case may be.
The Revlon Worldwide Collateral, the Revlon, Inc. Collateral and the
Substitute Collateral are referred to herein as the "Collateral."
The security interest in the Revlon Worldwide Collateral and the Revlon,
Inc. Collateral will be a first priority security interest. However, absent
any Default, the Issuer will be able to vote, as it sees fit in its sole
discretion, the Revlon Worldwide Pledged Shares, prior to the Merger, and the
Revlon, Inc. Pledged Shares, after the Merger, provided that no vote may be
cast, and no consent, waiver or ratification given or action taken, which
would be inconsistent with or violate any provision of the Indenture or the
Notes.
Notwithstanding anything to the contrary in the six preceding paragraphs,
upon satisfaction by the Issuer after the Merger of the conditions to its
legal defeasance option or its covenant defeasance option or the discharge of
the Indenture, the Lien of the Indenture on all the Collateral will terminate
and all the Collateral will be released without any further action by the
Trustee or any other person.
There can be no assurance that the proceeds of any sale of the Collateral
pursuant to the Indenture following an Event of Default would be sufficient
to satisfy payments due on the Notes. In addition, the ability of the holders
of Notes to realize upon the Collateral may be subject to certain bankruptcy
law limitations in the event of a bankruptcy.
If an Event of Default occurs under the Indenture, the Trustee, on behalf
of the holders of the Notes, in addition to any rights or remedies available
to it under the Indenture, may take such action as it deems advisable to
protect and enforce its rights in the Collateral, including the institution
of foreclosure proceedings. The proceeds received by the Trustee from any
foreclosure will be applied by the Trustee first to pay the expenses of such
foreclosure and fees and other amounts then payable to the Trustee under the
Indenture and, thereafter, to pay the Default Amount (as defined) on the
Notes.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each holder of Notes will have the right to require the Issuer to
repurchase all or any part of such holder's Notes at a purchase price equal
to their Put Amount as of the date of purchase (subject to the right of
holders of record on the relevant record date to receive interest due (if
any) on the relevant interest payment date):
(i) prior to the earlier to occur of the first public offering of Voting
Stock of Parent or the first public offering of Voting Stock of the
Issuer, the Permitted Holders cease to be the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
person will be deemed to have "beneficial ownership" of all shares that
any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of a majority in the aggregate of the total voting power of
the Voting Stock of the Issuer, whether as a result of issuance of
securities of the Issuer, any merger, consolidation, liquidation or
dissolution of the Issuer, any direct or indirect transfer of securities
by Parent or otherwise (for purposes of this clause (i) and clause (ii)
below, the Permitted Holders will be deemed to beneficially own any Voting
Stock of a corporation (the "specified corporation") held by any other
corporation (the "parent corporation") so long as the Permitted Holders
"beneficially own," directly or indirectly, in the aggregate a majority of
the voting power of the Voting Stock of the parent corporation);
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(ii) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders, is or becomes
the "beneficial owner," directly or indirectly, of more than 35% of the
total voting power of the Voting Stock of the Issuer; provided, however,
that the Permitted Holders "beneficially own," directly or indirectly, in
the aggregate a lesser percentage of the total voting power of the Voting
Stock of the Issuer than such other person and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of the Issuer (for the
purposes of this clause (ii), such other person will be deemed to
"beneficially own" any Voting Stock of a specified corporation held by a
parent corporation, if such other person "beneficially owns," directly or
indirectly, more than 35% of the voting power of the Voting Stock of such
parent corporation and the Permitted Holders "beneficially own," directly
or indirectly, in the aggregate a lesser percentage of the voting power of
the Voting Stock of such parent corporation and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of such parent corporation);
(iii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Issuer
(together with any new directors whose election by such Board of Directors
or whose nomination for election by the shareholders of the Issuer was
approved by a vote of 66 2/3% of the directors of the Issuer then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors of the
Issuer then in office; or
(iv) a "Change of Control," as defined in any Products Corporation
Indenture, shall have occurred as a result of a pledgee (or pledgees) or
their transferees following foreclosure of shares of Common Stock of
Revlon, Inc. becoming the "beneficial owner" (as defined in such Products
Corporation Indenture) of such shares.
Within 45 days following any Change of Control, the Issuer will mail a
notice to each holder stating (i) that a Change of Control has occurred and
that such holder has the right to require the Issuer to repurchase all or any
part of such holder's Notes at a purchase price in cash equal to their Put
Amount as of the date of purchase (subject to the right of holders of record
on the relevant record date to receive interest due (if any) on the relevant
interest payment date); (ii) the circumstances and relevant facts regarding
such Change of Control; (iii) the repurchase date (which will be no earlier
than 30 days nor later than 60 days from the date such notice is mailed); and
(iv) the instructions, determined by the Issuer consistent with the
Indenture, that a holder must follow in order to have its Notes repurchased.
Subject to the limitations contained in the Credit Agreement and certain
other debt instruments of the Company's subsidiaries, the Company could, in
the future, enter into certain transactions, including acquisitions,
refinancings or other recapitalizations, that would not constitute a Change
of Control under the Indenture, but that could increase the amount of
indebtedness outstanding at such time or otherwise affect the Company's
capital structure or credit ratings. If such a transaction did constitute a
Change of Control, the holders would have the right to require repurchase of
the Notes as described above. See "Risk Factors -- Issuer's Ability to Pay
Principal of Notes," "Risk Factors -- Security for Notes; Potential for
Diminution" and "Risk Factors -- Control by MacAndrews & Forbes."
The provisions relating to the Company's obligation to make an offer to
repurchase the Notes as a result of a Change of Control may be waived or
modified with the written consent of the holders of a majority in principal
amount of the Notes. The Company may not waive the right of the holders to
require the Company to repurchase the Notes or any of the other provisions
discussed below without such consent of the holders.
The Issuer's ability to pay cash to holders of Notes upon a purchase may
be limited by the Issuer's then existing financial resources. The Issuer will
comply with any tender offer rules under the Exchange Act which may then be
applicable, including Rule 14e-1, in connection with any offer required to be
made by the Issuer to repurchase the Notes as a result of a Change of
Control.
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The provisions relative to the Issuer's obligation to make an offer to
repurchase the Notes as a result of a Change of Control may be waived or
modified with the written consent of the holders of a majority in principal
amount at maturity of the Notes.
CERTAIN COVENANTS
Set forth below are certain covenants contained in the Indenture:
Limitation on Debt of the Issuer, Revlon Worldwide and Revlon, Inc.;
Limitation on Preferred Stock of Revlon Worldwide, Revlon, Inc. and
Products Corporation. (a) The Issuer will not, and will not permit (i)
Revlon, Inc. or (ii) prior to the Merger, Revlon Worldwide, to, issue any
Debt; provided, however, that the foregoing shall not prohibit the
issuance of the following Debt:
(1) the Notes and Debt issued by the Issuer in exchange for, or the
proceeds of which are used to Refinance, any Debt permitted by this
clause (1); provided, however, that in the case of any Debt (other
than any New Notes) issued in connection with a Refinancing, (i) the
Debt so issued does not provide for any payment of principal or
interest in cash prior to the Stated Maturity of the Notes, (ii) the
principal amount (or, in the case of Debt issued at a discount, the
accreted value) of the Debt so issued as of the date of the Stated
Maturity of the Debt being Refinanced will not exceed the sum of (A)
the principal amount (or if the Debt being Refinanced was issued at a
discount, the accreted value) of the Debt being Refinanced as of the
date of the Stated Maturity of the Debt being Refinanced and (B) any
Refinancing Costs thereof, and (iii) the Stated Maturity of the Debt
so issued is later than the Stated Maturity of the Notes;
(2) Debt owed to and held by Products Corporation or a Wholly Owned
Recourse Subsidiary; provided, however, that any subsequent issuance
or transfer of any Capital Stock which results in any such Wholly
Owned Recourse Subsidiary ceasing to be a Wholly Owned Recourse
Subsidiary or any subsequent transfer of such Debt (other than to
Products Corporation or a Wholly Owned Recourse Subsidiary) will be
deemed, in each case, to constitute the issuance of such Debt by the
Issuer, Revlon Worldwide or Revlon, Inc., as the case may be;
(3) Debt of Revlon, Inc. outstanding on the Issue Date consisting of
a guarantee of Products Corporation's obligations under or in respect
of the Credit Agreement and any Debt issued in the form of a guarantee
of any other Debt of Products Corporation and its Subsidiaries
permitted to be issued as described under "Limitation on Debt of
Products Corporation and its Subsidiaries" below;
(4) the Revlon Worldwide Notes;
(5) any Secured Non-Recourse Guarantee;
(6) Debt of the Issuer acquired as a result of the Merger; and
(7) Debt of the Issuer that is not secured by a Lien on any assets,
property or Capital Stock owned by the Issuer or any of its
Subsidiaries, the proceeds of which Debt are used solely for deposit
(or the purchase of U.S. Government Obligations to be deposited) with
the Escrow Agent in an aggregate principal amount not to exceed the
amount necessary, together with the net proceeds of this Offering, to
comply with the Issuer's obligations described in the first paragraph
under "--Escrow of Proceeds and Other Amounts; Special Mandatory
Redemption."
(b) The Issuer will not permit (i) Revlon, Inc. or Products Corporation
or (ii) prior to the Merger, Revlon Worldwide to issue any Preferred
Stock; provided, however, that Revlon, Inc. or Products Corporation may
issue the following Preferred Stock:
(1) Preferred Stock outstanding on the Issue Date and Preferred Stock
issued to Refinance any Preferred Stock permitted by this clause (1);
provided, however, that in the case of a Refinancing, the liquidation
value of the Preferred Stock so issued does not exceed the liquidation
value of the Preferred Stock so Refinanced plus any Refinancing Costs
thereof;
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(2) Preferred Stock (other than Preferred Stock described in clause
(1)) of Revlon, Inc. issued to and held by the Issuer and Preferred
Stock (other than Preferred Stock described in clause (1)) of Products
Corporation issued to and held by the Issuer or Revlon, Inc.;
provided, however, that any subsequent transfer of such Preferred
Stock (other than to the Issuer or a wholly owned Subsidiary of the
Issuer), will be deemed, in each case, to constitute the issuance of
such Preferred Stock by Revlon, Inc. or Products Corporation, as the
case may be; and
(3) Preferred Stock (other than Preferred Stock described in clauses
(1) and (2) but including Preferred Stock described in the proviso to
clause (2)) issued by Products Corporation; provided, however, that
the liquidation value of any Preferred Stock issued pursuant to this
clause (3) will constitute Debt of Products Corporation for purposes
of the covenant described under "Limitation on Debt of Products
Corporation and its Subsidiaries" below and dividends on such
Preferred Stock will be included in determining Consolidated Interest
Expense for purposes of calculating the Consolidated EBITDA Coverage
Ratio under the provision described in the first paragraph of
"Limitation on Debt of Products Corporation and its Subsidiaries"
below.
Limitation on Debt of Products Corporation and its Subsidiaries. The
Issuer will not permit Products Corporation or any Subsidiary of Products
Corporation to issue, directly or indirectly, any Debt; provided, however,
that Products Corporation and its Subsidiaries will be permitted to issue
Debt if, at the time of such issuance, the Consolidated EBITDA Coverage Ratio
for the period of the most recently completed four consecutive fiscal
quarters ending at least 45 days prior to the date such Debt is issued
exceeds the ratio of 2.50 to 1.0.
Notwithstanding the foregoing, Products Corporation and its Subsidiaries
may issue the following Debt:
(1) Debt issued pursuant to the Credit Agreement, any Refinancing
Agreement or any other credit agreement, indenture or other agreement, in
an aggregate principal amount not to exceed $600 million outstanding at
any one time;
(2) Debt (other than Debt described in clause (1) above) issued for
working capital and general corporate purposes in an aggregate principal
amount at the time of such issue which, when taken together with the
aggregate principal amount then outstanding of all other Debt issued
pursuant to this clause (2), will not exceed the sum of (i) 50% of the
book value of the inventory of Products Corporation and its consolidated
Subsidiaries and (ii) 80% of the book value of the accounts receivable of
Products Corporation and its consolidated Subsidiaries, in each case as
determined in accordance with GAAP;
(3) Debt (other than Debt described in clauses (1) and (2) above) in
respect of the undrawn portion of the face amount of or unpaid
reimbursement obligations in respect of letters of credit for the account
of Products Corporation or any of its Subsidiaries in an aggregate amount
at any time outstanding not to exceed the excess of (i) $150 million over
(ii) the undrawn portion of the face amount of or unpaid reimbursement
obligations in respect of letters of credit issued under the Credit
Agreement, any Refinancing Agreement or any other credit agreement,
indenture or other agreement pursuant to clause (1) above;
(4) Debt of Products Corporation issued to and held by a Wholly Owned
Recourse Subsidiary and Debt of a Subsidiary of Products Corporation
issued to and held by Products Corporation or a Wholly Owned Recourse
Subsidiary; provided, however, that any subsequent issuance or transfer of
any Capital Stock that results in any such Wholly Owned Recourse
Subsidiary ceasing to be a Wholly Owned Recourse Subsidiary or any
subsequent transfer of such Debt (other than to Products Corporation or a
Wholly Owned Recourse Subsidiary) will be deemed, in each case, to
constitute the issuance of such Debt by Products Corporation or of such
Debt by such Subsidiary;
(5) the Debt Issued pursuant to each of the Products Corporation
Indentures and Debt issued to Refinance any Debt permitted by this clause
(5); provided, however, that, in the case of a Refinancing, the principal
amount of the Debt so issued may not exceed the principal amount of the
Debt so Refinanced plus any Refinancing Costs thereof;
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(6) Debt (other than Debt described in clause (1), (2), (3), (4) or (5)
above or (11) below) outstanding on the Issue Date and Debt issued to
Refinance any Debt permitted by this clause (6), or by the first paragraph
of this covenant; provided, however, that, in the case of a Refinancing,
the principal amount of the Debt so issued may not exceed the principal
amount of the Debt so Refinanced plus any Refinancing Costs thereof;
(7) Debt issued and arising out of purchase money obligations for
property acquired in an amount not to exceed, for the period through June
30, 1997, $15 million, plus for each period of twelve consecutive months
ending on June 30 thereafter, $15 million; provided, however, that any
such amounts which are available to be utilized during any 12-month period
and are not so utilized may be utilized during any succeeding period;
(8) Debt of a Subsidiary of Products Corporation issued and outstanding
on or prior to the date on which such Subsidiary was acquired by Products
Corporation (other than Debt issued as consideration in, or to provide all
or any portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
Subsidiary became a Subsidiary of Products Corporation or was acquired by
Products Corporation);
(9) Debt issued to Refinance Debt referred to in the foregoing clause (8)
or this clause (9); provided, however, that the principal amount of such
Debt so issued may not exceed the principal amount of the Debt so
Refinanced plus any Refinancing Costs thereof;
(10) Non-Recourse Debt of a Non-Recourse Subsidiary; provided, however,
that if any such Debt thereafter ceases to be Non-Recourse Debt of a
Non-Recourse Subsidiary, then such event will be deemed to constitute the
issuance of such Debt by the issuer thereof;
(11) Permitted Affiliate Debt; and
(12) Debt (other than Debt described in clauses (1) through (11) above
and in the first paragraph of this covenant) in an aggregate principal
amount outstanding at any time not to exceed $150 million.
To the extent Products Corporation or any Subsidiary of Products
Corporation guarantees any Debt of Products Corporation or of a Subsidiary of
Products Corporation, such guarantee and such Debt will be deemed to be the
same indebtedness and only the amount of the indebtedness will be deemed to
be outstanding.
Limitation on Restricted Payments. (a) The Issuer will not, and will not
permit (i) Revlon, Inc., Products Corporation or any Subsidiary of Products
Corporation (other than a Non-Recourse Subsidiary), directly or indirectly,
or (ii) prior to the Merger, Revlon Worldwide, directly or indirectly, to
make any Restricted Payment if, at the time such Restricted Payment is made:
(1) a Default has occurred or is continuing (or would result therefrom);
or
(2) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of (i) 50%
of Consolidated Net Income (or, if such aggregate Consolidated Net Income
is a deficit, minus 100% of such deficit) of the Issuer accrued during the
period (treated as one accounting period) from January 1, 1997, to the end
of the most recent fiscal quarter ending at least 45 days prior to the
date of such Restricted Payment and (ii) the aggregate Net Cash Proceeds
from sales of Capital Stock of the Issuer (other than Redeemable Stock or
Exchangeable Stock) or cash capital contributions (other than the Issuer
Capital Contribution) made to the Issuer.
(b) The preceding paragraph will not prohibit the following (none of which
will be included in the calculation of the amount of Restricted Payments,
except to the extent expressly provided in clause (v) below):
(i) so long as no Default has occurred and is continuing or would result
from such transaction, any Restricted Payment to the extent it consists of
Unrestricted Assets;
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(ii) any purchase, repurchase, redemption, defeasance or other
acquisition by a Non-Recourse Subsidiary of Non-Recourse Debt of such
Non-Recourse Subsidiary;
(iii) dividends or distributions made by Revlon Worldwide, Revlon, Inc.
or Products Corporation to the Issuer, Revlon Worldwide, or Revlon, Inc.
and, if Revlon, Inc. (or, after any merger or consolidation of Revlon,
Inc. and Products Corporation with each other, Products Corporation) is
not wholly owned, to its other stockholders on a pro rata basis;
(iv) dividends or distributions made by a Subsidiary of Products
Corporation to the Issuer, Revlon Worldwide, Revlon, Inc., Products
Corporation or a Subsidiary of Products Corporation and, if a Subsidiary
of Products Corporation is not wholly owned, to its other stockholders to
the extent they are not Affiliates of the Issuer;
(v) dividends paid within 60 days after the date of declaration thereof,
or Restricted Payments made within 60 days after the making of a binding
commitment in respect thereof, if at such date of declaration or
commitment such dividend or other Restricted Payment would have complied
with this covenant; provided, however, that at the time of payment of such
dividend or the making of such Restricted Payment no other Default has
occurred or is continuing (or will result therefrom); provided further,
however, that such dividend or other Restricted Payment shall be included
in the calculation of the amount of Restricted Payments; and
(vi) so long as no Default under the Products Corporation Indentures has
occurred and is continuing or would result from such transaction, amounts
paid or property transferred pursuant to the Permitted Transactions.
(c) The Issuer, Revlon Worldwide, Revlon, Inc., Products Corporation or
any Subsidiary of Products Corporation may take actions to make a Restricted
Payment in anticipation of the occurrence of any of the events described in
clause (b) of this covenant; provided, however, that the making of such
Restricted Payment will be conditioned upon the occurrence of such event.
Limitation on Restrictions on Distributions from Subsidiaries. (a) The
Issuer will not, and will not permit (i) Revlon, Inc. or (ii) prior to the
Merger, Revlon Worldwide, to, create or otherwise cause or permit to exist or
become effective any consensual encumbrance or restriction on the ability of
Revlon, Inc. to (x) pay dividends or make any other distributions on its
Capital Stock or pay any Debt owed to the Issuer or, prior to the Merger,
Revlon Worldwide, (y) make any loans or advances to the Issuer or, prior to
the Merger, Revlon Worldwide, or (z) transfer any of its property or assets
to the Issuer or, prior to the Merger, Revlon Worldwide, except: (1) any
encumbrance or restriction pursuant to an agreement in effect at or entered
into on the Issue Date; (2) any encumbrance or restriction with respect to
Revlon, Inc. pursuant to an agreement effecting a guarantee of Bank Debt or a
Refinancing of any Debt issued pursuant to an agreement referred to in clause
(1) above or this clause (2) or contained in any amendment to an agreement
referred to in clause (1) above or this clause (2); provided, however, that
any such encumbrance or restriction with respect to Revlon, Inc. is no less
favorable to the holders of Notes than the least favorable of the
encumbrances and restrictions with respect to Revlon, Inc. contained in the
agreements referred to in clause (1) above; and (3) any encumbrance or
restriction relating to Unrestricted Assets.
(b) The Issuer will not, and will not permit Products Corporation or any
Subsidiary of Products Corporation to, create or otherwise cause or permit to
exist or become effective any consensual encumbrance or restriction on the
ability of Products Corporation or any Subsidiary of Products Corporation to
(i) pay dividends or make any other distributions on its Capital Stock or pay
any Debt owed to the Issuer, (ii) make any loans or advances to the Issuer or
Revlon Worldwide or (iii) transfer any of its property or assets to the
Issuer or Revlon Worldwide, except as follows:
(1) any encumbrance or restriction pursuant to an agreement in effect at
or entered into on the Issue Date;
(2) any encumbrance or restriction with respect to a Subsidiary of
Products Corporation pursuant to an agreement relating to any Debt issued
by such Subsidiary on or prior to the date on
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which such Subsidiary was acquired by Products Corporation (other than
Debt issued as consideration in, or to provide all or any portion of the
funds or credit support utilized to consummate, the transaction or series
of related transactions pursuant to which such Subsidiary became a
Subsidiary of Products Corporation or was acquired by Products
Corporation) and outstanding on such date;
(3) any encumbrance or restriction with respect to Products Corporation
or any Subsidiary of Products Corporation pursuant to an agreement
effecting an issuance of Bank Debt or a Refinancing of any other Debt
issued pursuant to an agreement referred to in clause (1) or (2) above or
this clause (3) (or in the case of Products Corporation, an issuance of
any other Debt permitted to be issued under the Indenture) or contained in
any amendment to an agreement referred to in clause (1) or (2) above or
this clause (3); provided, however, that any such encumbrance or
restriction with respect to Products Corporation or any Subsidiary of
Products Corporation, as the case may be, is no less favorable to the
holders of the Notes than the least favorable of the encumbrances and
restrictions with respect to Products Corporation or such Subsidiary of
Products Corporation, as the case may be, contained in the agreements
referred to in clause (1) or (2) above;
(4) any such encumbrance or restriction consisting of customary
nonassignment provisions in leases governing leasehold interests to the
extent such provisions restrict the transfer of the lease;
(5) in the case of clause (iii) above, restrictions contained in security
agreements securing Debt of Products Corporation or a Subsidiary of
Products Corporation (other than security agreements securing Debt of a
Subsidiary of Products Corporation issued in connection with any agreement
referred to in clause (1), (2) or (3) above) and restrictions contained in
agreements relating to a disposition of property of Products Corporation
or a Subsidiary of Products Corporation, to the extent such restrictions
restrict the transfer of the property subject to such agreements;
(6) any encumbrance or restriction binding on a Foreign Subsidiary
contained in an agreement pursuant to which such Foreign Subsidiary has
issued Debt consisting of working capital borrowings; and
(7) any encumbrance or restriction relating to a Non-Recourse Subsidiary.
Limitation on Liens and Sales of Assets and Subsidiary Stock. (a) The
Issuer will not, and will not permit (i) Revlon, Inc. or (ii) prior to the
Merger, Revlon Worldwide, to, make any Asset Disposition. The Issuer will not
create, incur or suffer to exist a Lien on the Collateral (other than the
Lien of the Indenture or the Escrow Agreement) or on any Unrestricted Assets
(other than a Lien to secure a Secured Non-Recourse Guarantee).
(b) The Issuer will not permit Products Corporation or any Subsidiary of
Products Corporation (other than a Non-Recourse Subsidiary) to make any Asset
Disposition unless (i) Products Corporation or such Subsidiary receives
consideration at the time of such Asset Disposition at least equal to the
fair market value, as determined in good faith by the Board of Directors of
Products Corporation, the determination of which will be conclusive and
evidenced by a resolution of the Board of Directors of Products Corporation
(including as to the value of all non-cash consideration), of the Capital
Stock and assets subject to such Asset Disposition, (ii) at least 75% of the
consideration consists of cash, cash equivalents, readily marketable
securities which Products Corporation intends, in good faith, to liquidate
promptly after such Asset Disposition or the assumption of liabilities
(including, in the case of the sale of the Capital Stock of a Subsidiary of
Products Corporation, liabilities of such Subsidiary) (provided, however,
that in respect of an Asset Disposition, more than 25% of the consideration
may consist of consideration other than cash, cash equivalents, such readily
marketable securities or such assumed liabilities if (x) such Asset
Disposition is approved by a majority of those members of the Board of
Directors of Products Corporation having no personal stake in such Asset
Disposition and (y) if such Asset Disposition involves aggregate
consideration in excess of $10 million (with the value of any non-cash
consideration being determined by a majority of those members of the Board of
Directors of Products Corporation having no personal stake in such Asset
Disposition), such Asset Disposition has been determined, in the written
opinion of a nationally recognized investment banking firm, to be fair from
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a financial point of view to Products Corporation or such Subsidiary, as the
case may be); and (iii) an amount equal to 100% of the Net Available Cash
from such Asset Disposition is applied by Products Corporation (or such
Subsidiary, as the case may be) at Products Corporation's election (1) to the
prepayment, repayment or repurchase of Debt of Products Corporation or Debt
of a Wholly Owned Recourse Subsidiary or, additionally in the case of an
Asset Disposition by a Subsidiary that is not a Wholly Owned Recourse
Subsidiary, Debt of such Subsidiary (in each case other than Debt owed to (i)
an Unrestricted Subsidiary, (ii) a Non-Recourse Subsidiary or (iii) an
Affiliate of the Issuer which is not a Subsidiary of the Issuer) (whether or
not the related loan commitment is permanently reduced in connection
therewith), (2) to the investment by Products Corporation or such Wholly
Owned Recourse Subsidiary (or, additionally in the case of an Asset
Disposition by a Subsidiary that is not a Wholly Owned Recourse Subsidiary,
the investment by such Subsidiary) in (x) assets to replace the assets that
were the subject of such Asset Disposition, (y) assets that (as determined by
the Board of Directors of Products Corporation, the determination of which
will be conclusive and evidenced by a resolution of such Board of Directors)
will be used in the businesses of Products Corporation and its Wholly Owned
Recourse Subsidiaries (or, additionally in the case of an Asset Disposition
by a Subsidiary that is not a Wholly Owned Recourse Subsidiary, the
businesses of such Subsidiary) existing on the Issue Date or in businesses
reasonably related thereto or (z) Temporary Cash Investments or (3) to make a
Restricted Payment to Revlon, Inc., Revlon Worldwide or the Issuer.
Notwithstanding the foregoing, Products Corporation and its Subsidiaries
will not be required to apply any Net Available Cash in accordance with this
paragraph (b) except to the extent that the aggregate Net Available Cash from
all Asset Dispositions made by Products Corporation and its Subsidiaries
which are not applied in accordance with this paragraph (b) exceed $10
million.
Limitation on Transactions with Affiliates. The Issuer will not, and will
not permit (i) Revlon, Inc., Products Corporation or any Subsidiary of
Products Corporation (other than a Non-Recourse Subsidiary) or (ii) prior to
the Merger, Revlon Worldwide, to conduct any business or enter into any
transaction or series of similar transactions (including the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
Affiliate of the Issuer or any legal or beneficial owner of 10% or more of
the voting power of the Voting Stock of the Issuer or with an Affiliate of
any such owner.
The provisions of the preceding paragraph will not prohibit (i) any
Restricted Payment permitted to be paid as described under "Limitation on
Restricted Payments" above, (ii) any transaction between the Issuer and any
of its Subsidiaries; provided, however, that no portion of any minority
interest in any such Subsidiary is owned by (x) any Affiliate (other than the
Issuer, Revlon Worldwide, Revlon, Inc., Products Corporation or a Wholly
Owned Recourse Subsidiary) of the Issuer or (y) any legal or beneficial owner
of 10% or more of the voting power of the Voting Stock of the Issuer or any
Affiliate of such owner (other than the Issuer, Revlon Worldwide, Revlon,
Inc., Products Corporation or any Wholly Owned Recourse Subsidiary), (iii)
any transaction between Subsidiaries of the Issuer; provided, however, that
no portion of any minority interest in any such Subsidiary is owned by (x)
any Affiliate (other than the Issuer, Revlon Worldwide, Revlon, Inc.,
Products Corporation or a Wholly Owned Recourse Subsidiary) of the Issuer or
(y) any legal or beneficial owner of 10% or more of the voting power of the
Voting Stock of the Issuer or any Affiliate of such owner (other than the
Issuer, Revlon Worldwide, Revlon, Inc., Products Corporation or any Wholly
Owned Recourse Subsidiary), (iv) any transaction between Revlon, Inc.,
Products Corporation or a Subsidiary of Products Corporation and its own
employee stock ownership plan, (v) any transaction with an officer or
director of Products Corporation or any Subsidiary of Products Corporation
entered into in the ordinary course of business (including compensation or
employee benefit arrangements with any such officer or director); provided,
however, such officer holds, directly or indirectly, no more than 10% of the
outstanding Capital Stock of the Issuer, (vi) any Permitted Transaction,
(vii) the Merger, and (viii) with respect to Products Corporation and its
Subsidiaries, any transaction permitted by the first paragraph of the
covenant limiting transactions with Affiliates of any of the Products
Corporation Indentures.
Limitation on Other Business Activities. The Issuer will not (i) prior to
the Merger, engage in any trade or business other than (A) the ownership of
the Capital Stock of Revlon Worldwide and (B) the ownership of the Capital
Stock of one or more Unrestricted Subsidiaries and (ii) thereafter, engage in
any
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trade or business other than (A) the ownership of the Capital Stock of
Revlon, Inc., and (B) the ownership of the Capital Stock of one or more
Unrestricted Subsidiaries. The Issuer will not permit any Unrestricted
Subsidiary to engage in any business other than the ownership of Capital
Stock of one or more Unrestricted Subsidiaries and the ownership of
Unrestricted Assets. Unless Revlon, Inc. and Products Corporation have merged
with each other or have otherwise consolidated with each other, the Issuer
will not permit Revlon, Inc. to (i) engage in any trade or business other
than the ownership of the Capital Stock of Products Corporation or (ii) fail
to own 100% of the Capital Stock of Products Corporation. After any such
merger or consolidation, the covenants described herein under "Certain
Covenants" restricting the activities of Revlon, Inc. (but not Products
Corporation) will not be applicable to the surviving corporation.
The Merger. The Issuer shall cause the Merger to occur as promptly as
practicable after August 4, 1997 but in any event not later than August 11,
1997.
Minimum Collateral Percentage. The Issuer shall not at any time after the
Merger permit the number of Revlon, Inc. Pledged Shares to constitute less
than the Minimum Collateral Percentage of the number of shares of Common
Stock of Revlon, Inc. outstanding at such time (treating all shares of Common
Stock of all classes as a single class). The "Minimum Collateral Percentage"
at any time shall equal 25% multiplied by (i) the principal amount at
maturity of the then outstanding Revlon, Inc.-Secured Portion divided by (ii)
$770 million.
Maintenance of Non-Investment Company Status. The Issuer will not at any
time be or become an "investment company" registered or required to become so
registered under the Investment Company Act of 1940 or any successor law,
rule or regulation.
SEC Reports. Notwithstanding that the Issuer may not be required to be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, from and after the earlier of (such date, the "reporting date") (i) the
effectiveness of the Shelf Registration Statement (as defined herein) or the
Exchange Offer Registration Statement (as defined herein) or (ii) the Merger,
the Issuer will file or cause to be filed with the SEC and provide the
Trustee and holders of the Notes with the information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) specified in Sections 13 and 15(d) of the
Exchange Act. Prior to the reporting date, the Issuer shall provide the
Trustee and holders of the Notes information that is substantially similar to
that required to be provided to such persons after the reporting date. The
Issuer also will comply with the other provisions of TIA Section 314(a).
SUCCESSOR ISSUER
The Issuer may not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all its assets to, any person unless:
(i) the resulting, surviving or transferee person (if not the Issuer) is
organized and existing under the laws of the United States of America, any
State thereof or the District of Columbia and such person expressly assumes
by a supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Issuer under the
Indenture and the Notes; (ii) except in the case of the Merger, immediately
after giving effect to such transaction (and treating any Debt which becomes
an obligation of the resulting, surviving or transferee person or any of its
Subsidiaries as a result of such transaction as having been issued by such
person or such Subsidiary at the time of such transaction), no Default has
happened and is continuing; (iii) except in the case of the Merger,
immediately after giving effect to such transaction, the resulting, surviving
or transferee person has a Consolidated Net Worth in an amount which is not
less than the Consolidated Net Worth of the Issuer immediately prior to such
transaction and (iv) the Issuer delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture (if any) comply with the
Indenture. The resulting, surviving or transferee person will be the
successor company and thereafter, except in the case of a lease, the Issuer
will be discharged from all obligations and covenants under the Indenture and
the Notes.
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DEFAULTS
An Event of Default is defined in the Indenture as (i) a default in the
payment of interest (if any) on the Notes when due, continued for 30 days,
(ii) a default in the payment of principal of any Note when due at its Stated
Maturity, upon redemption, upon required purchase, upon declaration or
otherwise, (iii) (1) the failure by the Issuer to comply with its obligations
described under "Successor Issuer" above, (2) the failure by the Issuer to
comply with its obligations described under "--Escrow Release and the
Merger," "Minimum Collateral Percentage" or "Maintenance of Non-Investment
Company Status" above, or (3) the Trustee fails to have a perfected security
interest in the Revlon Worldwide Collateral or the Revlon, Inc. Collateral
(the "continued perfection provision"), (iv) the failure by the Issuer to
comply for 30 days after notice with any of its obligations under the
covenants described under "Limitation on Debt of the Issuer, Revlon Worldwide
and Revlon, Inc.; Limitation on Preferred Stock of Revlon Worldwide, Revlon,
Inc. and Products Corporation," "Limitation on Debt of Products Corporation
and its Subsidiaries," "Limitation on Restricted Payments," "Limitation on
Restrictions on Distributions from Subsidiaries," "Limitation on Liens and
Sales of Assets and Subsidiary Stock," "Limitation on Transactions with
Affiliates," "Limitation on Other Business Activities," "SEC Reports," or
"Change of Control" (other than a failure to purchase Notes), (v) the failure
by the Issuer to comply for 60 days after notice with its other agreements
contained in the Indenture, the Escrow Agreement or the Notes or with certain
representations and warranties given in relation to the grant of the security
interest described under "Collateral" above, (vi) Debt of the Issuer or any
Significant Subsidiary is not paid within any applicable grace period after
final maturity or is accelerated by the holders thereof because of a default
and the total principal amount of the portion of such Debt that is unpaid or
accelerated exceeds $25 million or its foreign currency equivalent and such
default continues for 10 days after notice (the "cross acceleration
provision"), (vii) certain events of bankruptcy, insolvency or reorganization
of the Issuer or a Significant Subsidiary (the "bankruptcy provisions") or
(viii) any judgment or decree for the payment of money in excess of $25
million is entered against the Issuer or a Significant Subsidiary and is not
discharged and either (A) an enforcement proceeding has been commenced by any
creditor upon such judgment or decree or (B) there is a period of 60 days
following the entry of such judgment or decree during which such judgment or
decree is not discharged, waived or the execution thereof stayed and, in the
case of (B), such default continues for 10 days after the notice specified in
the next sentence (the "judgment default provision"). However, a default
under clauses (iv), (v), (vi) and (viii)(B) will not constitute an Event of
Default until the Trustee or the holders of 25% in principal amount at
maturity of the outstanding Notes notify the Issuer of the default and the
Issuer does not cure such default within the time specified after receipt of
such notice.
If an Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount at maturity of the outstanding
Notes may declare the Accreted Value of and accrued interest (if any) on all
the Notes as of the date of declaration to be due and payable (the "Default
Amount"). Upon such a declaration, such Default Amount will be due and
payable immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization of the Issuer occurs, the Default
Amount on all the Notes as of the date of such Event of Default will ipso
facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any holders of the Notes. Under
certain circumstances, the holders of a majority in principal amount at
maturity of the outstanding Notes may rescind any such acceleration with
respect to the Notes and its consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee
will be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the holders of the Notes
unless such holders have offered to the Trustee reasonable indemnity or
security against any loss, liability or expense. Except to enforce the right
to receive payment of principal, premium (if any) or interest (if any) when
due, no holder of a Note may pursue any remedy with respect to the Indenture
or the Notes unless (i) such holder has previously given the Trustee notice
that an Event of Default is continuing, (ii) holders of at least 25% in
principal amount at maturity of the outstanding Notes have requested the
Trustee to pursue the remedy, (iii) such holders have offered the Trustee
reasonable security or indemnity against
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any loss, liability or expense, (iv) the Trustee has not complied with such
request within 60 days after the receipt thereof and the offer of security or
indemnity and (v) the holders of a majority in principal amount at maturity
of the outstanding Notes have not given the Trustee a direction inconsistent
with such request within such 60-day period. Subject to certain restrictions,
the holders of a majority in principal amount at maturity of the outstanding
Notes are given the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or of exercising any
trust or power conferred on the Trustee. The Trustee, however, may refuse to
follow any direction that conflicts with law or the Indenture or that the
Trustee determines is unduly prejudicial to the rights of any other holder of
a Note or that would involve the Trustee in personal liability.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder of the Notes
notice of the Default within 90 days after it occurs. Except in the case of a
Default in the payment of principal of or interest, if any, on any Note, the
Trustee may withhold notice if and so long as a committee of its Trust
Officers in good faith determines that withholding notice is in the interest
of the holders of the Notes. In addition, the Issuer is required to deliver
to the Trustee, within 120 days after the end of each fiscal year, a
certificate indicating whether the signers thereof know of any Default that
occurred during the previous year. The Issuer also is required to deliver to
the Trustee, within 30 days after the occurrence thereof, written notice of
any event which would constitute certain Defaults, their status and what
action the Issuer is taking or proposes to take in respect thereof.
AMENDMENT, SUPPLEMENT, WAIVER
Subject to certain exceptions, the Indenture may be amended or
supplemented with the consent of the holders of a majority in principal
amount at maturity of the Notes then outstanding and any past default or
noncompliance with any provisions may be waived with the consent of the
holders of a majority in principal amount at maturity of the Notes then
outstanding. However, without the consent of each holder of an outstanding
Note affected, no amendment may, among other things, (i) reduce the principal
amount at maturity of Notes whose holders must consent to an amendment, (ii)
reduce the rate of or extend the time for payment of interest (if any) on any
Note, (iii) reduce the principal of or extend the Stated Maturity of any Note
or reduce the Accreted Value, Put Amount, Due Amount or Default Amount of any
Note, (iv) reduce the premium payable upon the redemption of any Note or
change the time at which any Note may be redeemed as described under
"Optional Redemption" above, (v) make any Note payable in money other than
that stated in the Note, (vi) impair the rights of any holder of the Notes to
receive payment of principal of and interest (if any) on such holder's Notes
on or after the due dates therefor or to institute suit for the enforcement
of any such payment on or with respect to such holder's Notes, (vii) make any
change to the provisions regarding security and the pledge of collateral that
adversely affects such holder, (viii) make certain changes to the Issuer's
obligation to redeem Notes in a Special Mandatory Redemption or (ix) make any
change in the amendment provisions which require each holder's consent or in
the waiver provisions.
Without the consent of or notice to any holder of the Notes, the Issuer
and the Trustee may amend or supplement the Indenture to cure any ambiguity,
omission, defect or inconsistency, to provide for the assumption by a
successor corporation of the obligations of the Issuer under the Indenture if
in compliance with the provisions described under "Successor Issuer" above,
to provide for uncertificated Notes in addition to or in place of
certificated Notes (provided that the uncertificated Notes are issued in
registered form for purposes of Section 163(f) of the Code, or in a manner
such that the uncertificated Notes are described in Section 163(f)(2)(B) of
the Code), to add guarantees with respect to the Notes or to secure (or
provide additional security for) the Notes, to add to the covenants of the
Issuer for the benefit of the holders of the Notes or to surrender any right
or power conferred upon the Issuer, to provide for issuance of the Exchange
Notes under the Indenture (including to provide for treatment of the Exchange
Notes and the Notes as a single class of securities) in connection with the
Exchange Offer, to make any change that does not adversely affect the rights
of any holder of the Notes or to comply with any requirement of the SEC in
connection with the qualification of the Indenture under the TIA.
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The consent of the holders of the Notes is not necessary under the
Indenture to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Issuer is
required to mail to holders of the Notes a notice briefly describing such
amendment. However, the failure to give such notice to all holders of the
Notes, or any defect therein, will not impair or affect the validity of the
amendment.
A consent to any amendment or waiver under the Indenture by any holder of
Notes given in connection with a tender of such holder's Notes will not be
rendered invalid by such tender.
TRANSFER
The Notes will be issued in registered form and will be transferable only
upon the surrender of the Notes being transferred for registration of
transfer. The Issuer may require payment of a sum sufficient to cover any
tax, assessment or other governmental charge payable in connection with
certain transfers and exchanges. See "Book Entry; Delivery and Form."
DEFEASANCE
The Issuer at any time may terminate all its obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register
the transfer or exchange of the Notes, to replace mutilated, destroyed, lost
or stolen Notes and to maintain a registrar and paying agent in respect of
the Notes. The Issuer at any time may terminate its obligations under the
covenants described under "Certain Covenants," "Change of Control" and
"Collateral," above and the operation of the continued perfection provision,
the cross acceleration provision, the bankruptcy provisions with respect to
Significant Subsidiaries and the judgment default provision described under
"Defaults" above and the limitations contained in clause (iii) described
under "Successor Issuer" above ("covenant defeasance").
The Issuer may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Issuer exercises its
legal defeasance option, payment of the Notes may not be accelerated because
of an Event of Default with respect thereto. If the Issuer exercises its
covenant defeasance option, payment of the Notes may not be accelerated
because of an Event of Default specified in clause (iii)(2) and (3), (iv),
(vi), (vii) (with respect only to Significant Subsidiaries) or (viii) under
"Defaults" above, or because of the failure of the Issuer to comply with
clause (iii) described under "Successor Issuer" above, or with its
obligations under "Collateral" above.
In order to exercise either defeasance option, the Issuer must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal and interest (if any) on
the Notes to redemption or maturity, as the case may be, and must comply with
certain other conditions, including (unless the Notes will mature or be
redeemed within 40 days) delivering to the Trustee an Opinion of Counsel to
the effect that holders of the Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit and defeasance
and will be subject to federal income tax on the same amount and in the same
manner and at the same times as would have been in the case if such deposit
and defeasance had not occurred (and, in the case of legal defeasance only,
such Opinion of Counsel must be based on a ruling of the Internal Revenue
Service or other change in applicable federal income tax law).
CONCERNING THE TRUSTEE
The Bank of New York is to be the Trustee under the Indenture and has been
appointed by the Issuer as Registrar and Paying Agent with regard to the
Notes.
GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without
giving effect to applicable principles of conflicts of law to the extent that
the application of the law of another jurisdiction would be required thereby.
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CERTAIN DEFINITIONS
"Affiliate" of any specified person means (i) any other person which,
directly or indirectly, is in control of, is controlled by or is under common
control with such specified person or (ii) any other person who is a director
or officer (A) of such specified person, (B) of any subsidiary of such
specified person or (C) of any person described in clause (i) above. For
purposes of this definition, control of a person means the power, direct or
indirect, to direct or cause the direction of the management and policies of
such person whether by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Applicable Premium" means, with respect to a Note at any time, the
greater of (i) 1.0% of the Accreted Value of such Note at such time and (ii)
the excess of (A) the present value at such time of the principal amount at
maturity plus any required interest payments due on such Note, computed using
a discount rate equal to the Treasury Rate plus 100 basis points, over (B)
the Accreted Value of such Note at such time.
"Asset Disposition" means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) of shares of
Capital Stock of a Subsidiary of the Issuer (other than directors' qualifying
shares and other than Capital Stock of an Unrestricted Subsidiary or a
Non-Recourse Subsidiary), property or other assets (each referred to for the
purposes of this definition as a "disposition") by the Issuer or any of its
Subsidiaries (other than an Unrestricted Subsidiary or a Non-Recourse
Subsidiary) (including any disposition by means of a merger, consolidation or
similar transaction) other than (i) a disposition by a Subsidiary of Products
Corporation to Products Corporation or by Products Corporation or a
Subsidiary of Products Corporation to a Wholly Owned Recourse Subsidiary,
(ii) a disposition of property or assets by Products Corporation or its
Subsidiaries at fair market value in the ordinary course of business, (iii) a
disposition by Products Corporation or its Subsidiaries of obsolete assets in
the ordinary course of business, (iv) a disposition subject to or permitted
by the provisions described under "Limitation on Restricted Payments" above,
(v) a disposition by the Issuer of any Unrestricted Assets, (vi) a Revlon,
Inc. Primary Issuance, (vii) a disposition of (A) Capital Stock of Revlon
Worldwide to the Issuer, (B) Capital Stock of Revlon, Inc. to the Issuer or
Revlon Worldwide or (C) Capital Stock of Products Corporation to Revlon,
Inc., (viii) an issuance of employee stock options, (ix) a merger of Revlon,
Inc. with or into Products Corporation or the Issuer, (x) the Merger and (xi)
a disposition by Products Corporation or any of its Subsidiaries in which
Products Corporation or its Subsidiaries receive as consideration Capital
Stock of (or similar interests in) a person engaged in, or assets that will
be used in, the businesses of Products Corporation and its Wholly Owned
Recourse Subsidiaries, or additionally, in the case of a disposition by a
Subsidiary that is not a Wholly Owned Recourse Subsidiary, the business of
such Subsidiary, existing on the Issue Date or in businesses reasonably
related thereto, as determined by the Board of Directors of Products
Corporation, the determination of which will be conclusive and evidenced by a
resolution of the Board of Directors of Products Corporation.
"Bank Debt" means any and all amounts payable by Products Corporation or
any Subsidiary of Products Corporation under or in respect of the Credit
Agreement or any Refinancing Agreement, or any other agreements with lenders
party to the foregoing, including principal, premium (if any), interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to Products Corporation), fees,
charges, expenses, reimbursement obligations, guarantees and all other
amounts payable thereunder or in respect thereof; provided, however, that
nothing in this definition shall permit Products Corporation or any
Subsidiary of Products Corporation to issue any Debt that is not permitted
pursuant to the provisions described under "Limitation on Debt of Products
Corporation and its Subsidiaries" above.
"Board of Directors" means, with respect to any person, the Board of
Directors of such person or any committee thereof duly authorized to act on
behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" of a person means any obligation which is
required to be classified and accounted for as a capital lease on the face of
a balance sheet of such person prepared in accordance
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with GAAP; the amount of such obligation shall be the capitalized amount
thereof, determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under
such lease prior to the first date upon which such lease may be terminated by
the lessee without payment of a penalty.
"Capital Stock" of any person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such person, including any
Preferred Stock, but excluding any debt securities convertible into or
exchangeable for such equity.
"Closing Price" on any Trading Day with respect to the per share price of
any Capital Stock means the last reported sales price regular way or, in case
no such reported sale takes place on such Trading Day, the average of the
reported closing bid and asked prices regular way, on the principal national
securities exchange on which such Capital Stock is listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange, on the National Association of Securities Dealers Automated
Quotations National Market System or, if such Capital Stock is not listed or
admitted to trading on any national securities exchange or quoted on such
National Market System, the average of the closing bid and asked prices in
the over-the-counter market as furnished by any New York Stock Exchange
member firm that is selected from time to time by the Issuer for that purpose
and is reasonably acceptable to the Trustee.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated EBITDA Coverage Ratio" for any period means the ratio of (i)
the aggregate amount of EBITDA for such period to (ii) Consolidated Interest
Expense for such period; provided, however, that (1) if Products Corporation
or any Subsidiary of Products Corporation has issued any Debt since the
beginning of such period that remains outstanding or if the transaction
giving rise to the need to calculate the Consolidated EBITDA Coverage Ratio
is an issuance of Debt, or both, EBITDA and Consolidated Interest Expense for
such period will be calculated after giving effect on a pro forma basis to
such Debt as if such Debt had been issued on the first day of such period and
the discharge of any other Debt Refinanced or otherwise discharged with the
proceeds of such new Debt as if such discharge had occurred on the first day
of such period, (2) if since the beginning of such period Products
Corporation or any Subsidiary of Products Corporation will have made any
Asset Disposition, EBITDA for such period will be reduced by an amount equal
to the EBITDA (if positive) directly attributable to the assets which are the
subject of such Asset Disposition for such period, or increased by an amount
equal to the EBITDA (if negative), directly attributable thereto for such
period and Consolidated Interest Expense for such period will be reduced by
an amount equal to the Consolidated Interest Expense directly attributable to
any Debt of Products Corporation or any Subsidiary of Products Corporation
Refinanced or otherwise discharged with respect to Products Corporation and
its continuing Subsidiaries in connection with such Asset Dispositions for
such period (or if the Capital Stock of any Subsidiary of Products
Corporation is sold, the Consolidated Interest Expense for such period
directly attributable to the Debt of such Subsidiary to the extent Products
Corporation and its continuing Subsidiaries are no longer liable for such
Debt after such sale) and (3) if since the beginning of such period Products
Corporation or any Subsidiary of Products Corporation (by merger or
otherwise) will have made an Investment in any Subsidiary of Products
Corporation (or any person which becomes a Subsidiary of Products
Corporation) or an acquisition of assets, including any acquisition of assets
occurring in connection with a transaction causing a calculation to be made
hereunder, which constitutes all of an operating unit of a business, EBITDA
and Consolidated Interest Expense for such period will be calculated after
giving pro forma effect thereto, as if such Investment or acquisition
occurred on the first day of such period. For purposes of this definition,
whenever pro forma effect is to be given to an acquisition of assets, the
amount of income or earnings relating thereto, and the amount of Consolidated
Interest Expense associated with any Debt issued in connection therewith, the
pro forma calculations will be determined in good faith by a responsible
financial or accounting Officer of Products Corporation. If any Debt bears a
floating rate of interest and is being given pro forma effect, the interest
on such Debt will be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period.
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"Consolidated Interest Expense" means, for any period, the sum of (a) the
interest expense of Products Corporation and its consolidated Subsidiaries
(other than Non-Recourse Subsidiaries) for such period as determined in
accordance with GAAP consistently applied, plus (b) Preferred Stock dividends
in respect of Preferred Stock of Products Corporation or any Subsidiary of
Products Corporation (other than a Non-Recourse Subsidiary) held by persons
other than Products Corporation or a Wholly Owned Recourse Subsidiary, plus
(c) the cash contributions to an employee stock ownership plan of Products
Corporation and its Subsidiaries (other than Non-Recourse Subsidiaries) to
the extent such contributions are used by an employee stock ownership plan to
pay interest.
"Consolidated Net Income" means with respect to any person, for any
period, the consolidated net income (or loss) of such person and its
consolidated Subsidiaries for such period as determined in accordance with
GAAP, adjusted to the extent included in calculating such net income (or
loss), by excluding (i) all extraordinary gains or losses; (ii) the portion
of net income (or loss) of such person and its consolidated Subsidiaries
attributable to minority interests in unconsolidated persons except to the
extent that, in the case of net income, cash dividends or distributions have
actually been received by such person or one of its consolidated Subsidiaries
(subject, in the case of a dividend or distribution received by a Subsidiary
of such person, to the limitations contained in clause (v) below) and, in the
case of net loss, such person or any Subsidiary of such person has actually
contributed, lent or transferred cash to such unconsolidated person; (iii)
net income (or loss) of any other person attributable to any period prior to
the date of combination of such other person with such person or any of its
Subsidiaries on a "pooling of interests" basis; (iv) net gains or losses in
respect of dispositions of assets by such person or any of its Subsidiaries
(including pursuant to a sale-and-leaseback arrangement) other than in the
ordinary course of business; (v) the net income of any Subsidiary of such
person to the extent that the declaration of dividends or distributions by
that Subsidiary of that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulations applicable to that Subsidiary or its shareholders; (vi) any net
income or loss of any Non-Recourse Subsidiary, except that such person's
equity in the net income of any such Non-Recourse Subsidiary for such period
will be included in such Consolidated Net Income up to the aggregate amount
of cash actually distributed by such Non-Recourse Subsidiary during such
period to such person as a dividend or other distribution, and (vii) the
cumulative effect of a change in accounting principles; provided, however,
that in using Consolidated Net Income for purposes of calculating the
Consolidated EBITDA Coverage Ratio at any time, net income of a Subsidiary of
the type described in clause (v) of this definition will not be excluded;
provided further, however, that in calculating Consolidated Net Income of the
Issuer, net income of a Subsidiary of the type described in clause (v) of
this definition will not be excluded.
"Consolidated Net Worth" of any person means, at any date, all amounts
which would, in conformity with GAAP, be included under shareholders' equity
on a consolidated balance sheet of such person as at such date, less (x) any
amounts attributable to Redeemable Stock and (y) any amounts attributable to
Exchangeable Stock.
"Credit Agreement" means the Amended and Restated Credit Agreement dated
as of January 24, 1996, by and among Products Corporation, The Chase
Manhattan Bank, N.A., Chemical Bank and Citibank, N.A., as agents, and the
Banks named therein, as the same may be amended or restated from time to
time.
"Debt" of any person means, without duplication, (i) the principal of and
premium (if any) in respect of (A) indebtedness of such person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such person is responsible or
liable; (ii) all Capital Lease Obligations of such person; (iii) all
obligations of such person issued or assumed as the deferred purchase price
of property, all conditional sale obligations of such person and all
obligations of such person under any title retention agreement (but excluding
trade accounts payable and other accrued current liabilities arising in the
ordinary course of business); (iv) all obligations of such person for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i) through
(iii) above) entered into in the ordinary course of business of such person
to the extent such letters of credit are not drawn upon or, if and to the
extent drawn upon, such drawing is reimbursed no later than the third
Business Day following receipt by such person of a demand
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for reimbursement following payment on the letter of credit); (v) the amount
of all obligations of such person with respect to the redemption, repayment
(including liquidation preference) or other repurchase of, in the case of a
Subsidiary of Products Corporation, any Preferred Stock and, in the case of
any other person, any Redeemable Stock (but excluding in each case any
accrued dividends); (vi) all obligations of the type referred to in clauses
(i) through (v) of other persons and all dividends of other persons for the
payment of which, in either case, such person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including
guarantees of such obligations and dividends; and (vii) all obligations of
the type referred to in clauses (i) through (vi) of other persons secured by
any Lien on any property or asset of such person (whether or not such
obligation is assumed by such person), the amount of such obligation being
deemed to be the lesser of the value of such property or assets or the amount
of the obligation so secured.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Due Amount" as of any date means with respect to each $1,000 principal
amount at maturity of Notes, the Accreted Value thereof on such date plus any
premium due and payable thereon.
"EBITDA" for any period means the Consolidated Net Income of Products
Corporation for such period, plus the following to the extent included in
calculating such Consolidated Net Income: (i) income tax expense, (ii)
Consolidated Interest Expense, (iii) depreciation expense, (iv) amortization
expense, (v) all other noncash charges (excluding any noncash charge to the
extent that it requires an accrual of or a reserve for cash disbursements for
any future period) and (vi) foreign currency gains or losses.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchangeable Stock" means any Capital Stock of a person which by its
terms or otherwise is required to be exchanged or converted or is
exchangeable or convertible at the option of the holder into another security
(other than Capital Stock of such person which is neither Exchangeable Stock
nor Redeemable Stock).
"Foreign Subsidiary" means any Subsidiary of Products Corporation which
(i) is organized under the laws of any jurisdiction outside of the United
States, (ii) is organized under the laws of Puerto Rico or the U.S. Virgin
Islands, (iii) has substantially all its operations outside of the United
States, or (iv) has substantially all its operations in Puerto Rico or the
U.S. Virgin Islands.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, as in effect from time
to time, except that for purposes of calculating Consolidated EBITDA Coverage
Ratio, it shall mean generally accepted accounting principles in the United
States as in effect on the Issue Date.
"guarantee" means any obligation, contingent or otherwise, of any person
directly or indirectly guaranteeing any Debt or other obligation of any other
person and any obligation, direct or indirect, contingent or otherwise, of
such person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation of such other person
(whether arising by virtue of partnership arrangements, or by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered
into for purposes of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided, however, that the
term "guarantee" will not include endorsements for collection or deposit in
the ordinary course of business. The term "guarantee" used as a verb has a
corresponding meaning.
"Investment" in any person means any loan or advance to, any net payment
on a guarantee of, any acquisition of Capital Stock, equity interest,
obligation or other security of, or capital contribution or other investment
in, such person. Investments shall exclude advances to customers and
suppliers in the ordinary course of business. The term "Invest" has a
corresponding meaning. For purposes of the definitions of "Non-Recourse
Subsidiary," "Unrestricted Subsidiary" and "Restricted Payment" and for
purposes of the "Limitation on Restricted Payments" covenant, (i)
"Investment" shall include a designation after the Issue Date of a Subsidiary
as a Non-Recourse Subsidiary, and such Investment
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shall be valued at an amount equal to the portion (proportionate to the
Issuer's equity interest in such Subsidiary) of the fair market value of the
net assets of such Subsidiary at the time that such Subsidiary is designated
a Non-Recourse Subsidiary; and (ii) any property transferred to or from a
Non-Recourse Subsidiary or an Unrestricted Subsidiary shall be valued at its
fair market value at the time of such transfer, in each case as determined in
good faith by the Board of Directors of the Issuer (or of Products
Corporation in the case of a Non-Recourse Subsidiary), and if such property
so transferred (including in a series of related transactions) has a fair
market value, as so determined by such Board of Directors, in excess of $10
million, such determination shall be confirmed by an independent appraiser.
"issue" means issue, assume, guarantee, incur or otherwise become liable
for; provided, however, that any Debt or Capital Stock of a person existing
at the time such person becomes a Subsidiary of another person (whether by
merger, consolidation, acquisition or otherwise) will be deemed to be issued
by such Subsidiary at the time it becomes a Subsidiary of such other person.
"Issue Date" means the date of original issue of the Notes.
"Issuer" means the party named as such in the Indenture until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained therein and required by the TIA, each other obligor on
the indenture securities.
"Issuer Capital Contribution" means the capital contribution to the Issuer
referred to in the second paragraph of "Transactions" above.
"Legal Holiday" means a Saturday, a Sunday, or a day on which banking
institutions are not required to be open in the State of New York.
"Lien" means any mortgage, pledge, security interest, conditional sale or
other title retention agreement or other similar lien.
"Market Value" means as of any date the sum of (i) in respect of Revlon,
Inc. Pledged Shares, an amount equal to the product of (x) the average of the
Closing Prices per share of the Class A Common Stock of Revlon, Inc. during
the five Trading Days ending immediately prior to such date and (y) the
number of Revlon, Inc. Pledged Shares, (ii) as to Collateral consisting of
cash, the amount of such cash, (iii) as to any other Collateral having a
purported value equal to or less than $5 million, the fair market value
thereof as of such date as determined by the Board of Directors of the Issuer
(the determination of which will be conclusive and will be evidenced by a
resolution of such Board of Directors), and (iv) as to any other Collateral
having a purported value more than $5 million, the fair market value thereof
as of such date as determined by an independent appraiser.
"Merger" means the merger of Revlon Worldwide with and into the Issuer.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only
as and when received, but excluding any other consideration received in the
form of assumption by the acquiring person of Debt or other obligations
relating to such properties or assets or received in any other noncash form)
therefrom, in each case net of (i) all legal, title and recording tax
expenses, commissions and other fees and expenses incurred, and all Federal,
state, provincial, foreign and local taxes required or estimated in good
faith to be required to be accrued as a liability under generally accepted
accounting principles, as a consequence of such Asset Disposition, (ii) all
payments made on any Debt which is secured by any assets subject to such
Asset Disposition, in accordance with the terms of any Lien upon or other
security agreement of any kind with respect to such assets, or which must by
its terms, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law be repaid out of the proceeds from or in
connection with such Asset Disposition and (iii) all distributions and other
payments required to be made to minority interest holders in Subsidiaries or
joint ventures as a result of such Asset Disposition; provided, however, that
in connection with an Asset Disposition to a Subsidiary of Products
Corporation (other than a Wholly Owned Recourse Subsidiary), Net Available
Cash will be deemed to be a percentage of Net Available Cash (as calculated
above) equal to (A) 100% minus (B) Products Corporation's percentage
ownership in such Subsidiary.
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"Net Cash Proceeds," with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys'
fees, accountants' fees, underwriters' or placement agents' fees, discounts
or commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or estimated in
good faith to be payable as a result thereof.
"Non-Convertible Capital Stock" means, with respect to any corporation,
any non-convertible Capital Stock of such corporation and any Capital Stock
of such corporation convertible solely into non-convertible common stock of
such corporation; provided, however, that Non-Convertible Capital Stock will
not include any Redeemable Stock or Exchangeable Stock.
"Non-Recourse Debt" means Debt or that portion of Debt (i) as to which
neither Products Corporation nor its Subsidiaries (other than a Non-Recourse
Subsidiary) (A) provide credit support (including any undertaking, agreement
or instrument which would constitute Debt), (B) is directly or indirectly
liable or (C) constitute the lender and (ii) no default with respect to which
(including any rights which the holders thereof may have to take enforcement
action against the assets of a Non-Recourse Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Debt of Products
Corporation or its Subsidiaries (other than Non-Recourse Subsidiaries) to
declare a default on such other Debt or cause the payment thereof to be
accelerated or payable prior to its Stated Maturity.
"Non-Recourse Subsidiary" means a Subsidiary of Products Corporation (i)
which has been designated as such by Products Corporation, (ii) which has no
Debt other than Non-Recourse Debt and (iii) which is in the same line of
business as Products Corporation and its Wholly Owned Recourse Subsidiaries
existing on the Issue Date or in businesses reasonably related thereto.
"Obligations" means (a) the full and punctual payment of principal of and
interest on the Notes when due, whether at maturity, by acceleration, by
redemption or otherwise, and all other monetary obligations of the Issuer
under the Indenture and the Notes and (b) the full and punctual performance
of all other obligations of the Issuer under the Indenture and the Notes.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Issuer.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, Vice Chairman, the President or a Vice President (regardless of Vice
Presidential designation), and by the Treasurer, an Assistant Treasurer,
Secretary or an Assistant Secretary, of the Issuer, and delivered to the
Trustee. The principal executive, financial or accounting officer of the
Issuer will be one of the Officers signing an Officers' Certificate given
pursuant to (i) the requirement for a Compliance Certificate as described in
the last paragraph under "Defaults" above, (ii) the requirement for an
Officers' Certificate as described in the fourth paragraph under "Escrow of
Proceeds and Other Amounts; Special Mandatory Redemption" above or (iii) the
requirement for an Officers' Certificate described in the third paragraph
under "Collateral" above.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Issuer (or its Parent or one of its Subsidiaries) or the
Trustee.
"Parent" means Revlon Holdings Inc. and any other person which acquires or
owns directly or indirectly 80% or more of the voting power of the Voting
Stock of the Issuer.
"Permitted Affiliate Debt" means (i) Debt of Products Corporation issued
to the Issuer or an Affiliate of the Issuer representing amounts owing by
Products Corporation pursuant to the Tax Sharing Agreements described under
clauses (i) and (iii) of the definition of "Tax Sharing Agreements" and (ii)
Debt of Products Corporation issued to the Issuer or an Affiliate of the
Issuer to the extent of cash actually received by Products Corporation, which
cash either is required to be advanced or contributed to Products Corporation
pursuant to the terms of the Credit Agreement or any Refinancing Agreement
or, if not advanced or contributed to Products Corporation, would lead to a
default under the Credit Agreement or any Refinancing Agreement.
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"Permitted Holders" means Ronald O. Perelman (or in the event of his
incompetence or death, his estate, heirs, executor, administrator, committee
or other personal representative (collectively, "heirs")) or any person
controlled, directly or indirectly, by Ronald O. Perelman or his heirs.
"Permitted Transactions" means any transaction or series of similar
transactions (including the purchase, sale, lease or exchange of any property
or the rendering of any service) between the Issuer, Revlon Worldwide,
Revlon, Inc., Products Corporation or any Subsidiary of Products Corporation,
on the one hand, and any Affiliate of the Issuer or any legal or beneficial
owner of 10% or more of the voting power of Voting Stock of the Issuer or an
Affiliate of any such owner, on the other hand, existing on, or pursuant to
an agreement in effect on, the Issue Date and disclosed in a Schedule to the
Indenture and any Tax Sharing Agreement.
"person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Note as of any date means the Accreted Value of the Note
as of such date plus the premium, if any, payable on the Note which is due or
overdue or is to become due at the relevant time.
"principal amount at maturity" of a Note means the amount specified as
such on the face of such Note.
"Products Corporation Indentures" means the Indenture, dated as of
February 15, 1993, the Indenture dated as of April 1, 1993, and the Indenture
dated as of June 1, 1993, each between Products Corporation and the trustee
thereunder, and in each case as in effect on the Issue Date; provided,
however, for purposes of interpreting provisions of the Indenture that refer
to the Products Corporation Indentures, the provisions of the Products
Corporation Indentures (but not the Debt issued thereunder) will be deemed to
be in effect whether or not such Indentures have been discharged.
"Put Amount" as of any date means, with respect to each $1,000 principal
amount at maturity of Notes, 101% of the Accreted Value thereof as of the
date of repurchase.
"Redeemable Stock" means any Capital Stock that by its terms or otherwise
is required to be redeemed on or prior to the first anniversary of the Stated
Maturity of the Notes or is redeemable at the option of the holder thereof at
any time on or prior to the first anniversary of the Stated Maturity of the
Notes.
"Refinance" means, in respect of any Debt, to refinance, extend, renew,
refund, repay, prepay, redeem, defease or retire, or to issue Debt in
exchange or replacement for, such Debt. "Refinanced" and "Refinancing" shall
have correlative meanings.
"Refinancing Agreement" means any credit agreement, indenture or other
agreement pursuant to which Products Corporation or any Subsidiary of
Products Corporation Refinances, in whole or in part, Debt of Products
Corporation or any Subsidiary of Products Corporation issued pursuant to the
provisions described under clause (1) of the second paragraph of "Limitation
on Debt of Products Corporation and its Subsidiaries" above; provided,
however, that the principal amount of the Refinancing Debt issued pursuant to
such Refinancing Agreement may exceed the principal amount of the Debt so
Refinanced, but, to the extent such Refinancing Debt is issued pursuant to
the provisions described under clause (1) of the second paragraph of
"Limitation on Debt of Products Corporation and its Subsidiaries," such
Refinancing Debt does not in any event exceed, after taking into account all
other Debt outstanding under the Credit Agreement and all other Refinancing
Agreements (to the extent such other outstanding Debt was issued pursuant to
the provisions described under such clause (1)), $600 million.
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"Refinancing Costs" means, with respect to any Debt or Preferred Stock
being Refinanced, any premium actually paid thereon and reasonable costs and
expenses, including underwriting discounts, in connection with such
Refinancing; provided, that if any Debt issued in connection with such a
Refinancing is issued at a discount, Refinancing Costs shall be an amount
equal to the accreted value (as of the Stated Maturity of the Debt being
Refinanced) of the portion of such Debt used to pay such premiums, costs and
expenses.
"Registration Agreement" means the Registration Agreement dated March 5,
1997, between the Issuer and certain other parties.
"Restricted Payment" means, as to any person making a Restricted Payment,
(i) any dividend or any distribution on or in respect of the Capital Stock of
such person (including any payment in connection with any merger or
consolidation involving such person) or to the holders of the Capital Stock
of such person (except dividends or distributions payable solely in the
Non-Convertible Capital Stock of such person or in options, warrants or other
rights to purchase the Non-Convertible Capital Stock of such person), (ii)
any purchase, redemption or other acquisition or retirement for value of any
Capital Stock of the Issuer or of any direct or indirect parent of the Issuer
or (iii) any Investment in (A) any Affiliate of the Issuer other than a
Subsidiary of the Issuer and other than an Affiliate of the Issuer which will
become a Subsidiary of the Issuer as a result of any such Investment, or (B)
a Non-Recourse Subsidiary or (C) an Unrestricted Subsidiary.
"Revlon, Inc. Collateral Number" means 20,000,000; provided, however, that
in the event, prior to the Merger, of (i) the distribution of a dividend upon
shares of Revlon, Inc. in shares of Revlon, Inc., (ii) the combination of
shares of Common Stock of Revlon, Inc. into a smaller number of shares or
other units, (iii) the subdivision of outstanding shares of Common Stock of
Revlon, Inc., (iv) the conversion or reclassification of shares of Common
Stock of Revlon, Inc. by issuance or exchange of other securities or (v) a
consolidation, merger or binding shares exchange, the Revlon, Inc. Collateral
Number in effect immediately before such action shall be adjusted to equal
the number of shares of Common Stock of Revlon, Inc. that would have
constituted Revlon, Inc. Pledged Shares had the Merger occurred immediately
prior to such action.
"Revlon, Inc. Nonpledged Shares" means the Capital Stock of Revlon, Inc.
that does not constitute Revlon, Inc. Collateral.
"Revlon, Inc. Primary Issuance" means any primary issuance of Capital
Stock of Revlon, Inc.
"Revlon Worldwide" means Revlon Worldwide Corporation, a Delaware
corporation which is the immediate parent corporation of Revlon, Inc. and the
wholly owned direct subsidiary of the Issuer on the Issue Date, and its
successors.
"Revlon Worldwide Indenture" means the Indenture dated as of March 15,
1993, between Revlon Worldwide and the trustee thereunder, pursuant to which
the Revlon Worldwide Notes were issued, as such agreement may be amended and
in effect from time to time.
"Revlon Worldwide Notes" means the Series B Senior Secured Discount Notes
Due 1998 of Revlon Worldwide.
"Revlon Worldwide Notes Defeasance" means the termination of certain
obligations under the covenant defeasance provisions of the Revlon Worldwide
Indenture.
"Secured Non-Recourse Guarantee" means any Guarantee by the Issuer or an
Unrestricted Subsidiary of obligations of any other Person in respect of
which Guarantee the holders thereof have no recourse to any assets of the
Issuer or its Subsidiaries, other than Unrestricted Assets.
"Shelf Registration Statement" has the meaning ascribed thereto in the
Registration Agreement.
"Significant Subsidiary" means (i) prior to the Merger, Revlon Worldwide,
(ii) any Subsidiary (other than a Non-Recourse Subsidiary and other than an
Unrestricted Subsidiary) of the Issuer which at the time of determination
either (A) had assets which, as of the date of Products Corporation's most
recent quarterly consolidated balance sheet, constituted at least 5% of
Products Corporation's total assets on a consolidated basis as of such date,
in each case determined in accordance with generally accepted accounting
principles, or (B) had revenues for the 12-month period ending on the date of
Products
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Corporation's most recent quarterly consolidated statement of income which
constituted at least 5% of Products Corporation's total revenues on a
consolidated basis for such period, or (iii) any Subsidiary of the Issuer
(other than a Non-Recourse Subsidiary and other than an Unrestricted
Subsidiary) which, if merged with all Defaulting Subsidiaries (as defined
below) of the Issuer, would at the time of determination either (A) have had
assets which, as of the date of Products Corporation's most recent quarterly
consolidated balance sheet, would have constituted at least 10% of Products
Corporation's total assets on a consolidated basis as of such date or (B)
have had revenues for the 12-month period ending on the date of Products
Corporation's most recent quarterly consolidated statement of income which
would have constituted at least 10% of Products Corporation's total revenues
on a consolidated basis for such period (each such determination being made
in accordance with generally accepted accounting principles). "Defaulting
Subsidiary" means any Subsidiary of the Issuer (other than a Non-Recourse
Subsidiary and other than an Unrestricted Subsidiary) with respect to which
an event described under clause (vi), (vii) or (viii) of "Defaults" above has
occurred and is continuing.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the principal of such security is
due and payable, including pursuant to any mandatory redemption provision
(but excluding any provision providing for the repurchase of such security at
the option of the holder thereof upon the happening of any contingency).
"Subsidiary" means, with respect to any person, any corporation,
association, partnership or other business entity of which more than 50% of
the total voting power of shares of Capital Stock or other interests
(including partnership interests) entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned, directly or indirectly, by (i) such
person, (ii) such person and one or more Subsidiaries of such person or (iii)
one or more Subsidiaries of such person.
"Tax Sharing Agreements" means (i) that certain agreement dated June 24,
1992, as amended to the Issue Date, among Holdings, Products Corporation,
certain of its Subsidiaries, Revlon, Inc. and Mafco Holdings, (ii) that
certain agreement dated March 17, 1993, as amended to the Issue Date, between
Revlon Worldwide and Mafco Holdings and (iii) any other tax allocation
agreement between the Issuer or any of its Subsidiaries with the Issuer,
Revlon Worldwide, Revlon, Inc., Products Corporation or any direct or
indirect shareholder of the Issuer with respect to consolidated or combined
tax returns including the Issuer or any of its Subsidiaries but only to the
extent that amounts payable from time to time by the Issuer or any such
Subsidiary under any such agreement do not exceed the corresponding tax
payments that the Issuer or such Subsidiary would have been required to make
to any relevant taxing authority had the Issuer or such Subsidiary not joined
in such consolidated or combined returns, but instead had filed returns
including only the Issuer or its Subsidiaries (provided that any such
agreement may provide that, if the Issuer or any such Subsidiary ceases to be
a member of the affiliated group of corporations of which Mafco Holdings is
the common parent for purposes of filing a consolidated federal income tax
return (such cessation, a "Deconsolidation Event"), then the Issuer or such
Subsidiary will indemnify such direct or indirect shareholder with respect to
any federal, state or local income, franchise or other tax liability
(including any related interest, additions or penalties) imposed on such
shareholder as the result of an audit or other adjustment with respect to any
period prior to such Deconsolidation Event that is attributable to the
Issuer, such Subsidiary or any predecessor business thereof (computed as if
the Issuer, such Subsidiary or such predecessor business, as the case may be,
were a stand-alone entity that filed separate tax returns as an independent
corporation), but only to the extent that any such tax liability exceeds any
liability for taxes recorded on the books of the Issuer or such Subsidiary
with respect to any such period).
"Temporary Cash Investments" means any of the following: (i) any
investment in direct obligations of the United States of America or any
agency thereof or obligations guaranteed by the United States of America or
any agency thereof, in each case, maturing within 360 days of the date of
acquisition thereof, (ii) investments in time deposit accounts, certificates
of deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company (including the Trustee)
which is organized under the laws of the United States of America, any state
thereof or any foreign country recognized by the United States having
capital, surplus and undivided profits aggregating in excess of $250,000,000
and whose debt is rated "A" (or such similar equivalent rating) or higher by
at least one nationally recognized statistical rating organization (as
defined in Rule 436 under the
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Securities Act) or any money-market fund sponsored by any registered broker
dealer or mutual fund distributor, (iii) repurchase obligations with a term
of not more than 30 days for underlying securities of the types described in
clause (i) above entered into with a bank meeting the qualifications
described in clause (ii) above, (iv) investments in commercial paper,
maturing not more than 90 days after the date of acquisition, issued by a
corporation (other than an Affiliate or Subsidiary of the Issuer) organized
and in existence under the laws of the United States of America or any
foreign country recognized by the United States of America with a rating at
the time as of which any investment therein is made of "P-2" (or higher)
according to Moody's Investors Service, Inc. or "A-2" (or higher) according
to Standard and Poor's Corporation, (v) securities with maturities of six
months or less from the date of acquisition backed by standby or direct pay
letters of credit issued by any bank satisfying the requirements of clause
(ii) above and (vi) securities with maturities of six months or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States of America, or by any political subdivision or
taxing authority thereof, and rated at least "A" by Standard & Poor's
Corporation or "A" by Moody's Investors Service, Inc.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and Friday,
other than a day on which securities are not traded on the applicable
securities exchange or in the applicable securities market.
"Trustee" means the party named as such in the Indenture until a successor
replaces it and, thereafter, means the successor.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial Code as in
effect from time to time.
"Unrestricted Assets" means (i) the Revlon, Inc. Nonpledged Shares, (ii)
Capital Stock of Unrestricted Subsidiaries and (iii) all dividends, cash and
other property and proceeds (including proceeds of sale) from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any of the foregoing.
"Unrestricted Subsidiary" means a Subsidiary of the Issuer, other than
Revlon, Inc. or any of its Subsidiaries, which (i) is acquired or organized
by the Issuer or any other Unrestricted Subsidiary (or any combination of the
foregoing), (ii) is capitalized only with Unrestricted Assets and (iii) does
not have any Debt (A) which is held by the Issuer, (B) as to which the Issuer
or any of its Subsidiaries (other than an Unrestricted Subsidiary) have
provided credit support (other than any Secured Non-Recourse Guarantee) or
(C) any default as to which would permit any holder (whether upon notice,
after lapse of time or both) of any Debt of the Issuer or any of its
Subsidiaries (other than an Unrestricted Subsidiary) to declare a default on
such Debt or to cause the payment thereof to be accelerated prior to its
Stated Maturity.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States
of America (including any agency or instrumentality thereof) for the payment
of which the full faith and credit of the United States of America is pledged
and which are not callable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.
"Wholly Owned Recourse Subsidiary" means a Subsidiary of Products
Corporation (other than a Non-Recourse Subsidiary) all the Capital Stock of
which (other than directors' qualifying shares) is owned by Products
Corporation or another Wholly Owned Recourse Subsidiary.
"Withdrawn Collateral" means any Withdrawn Shares, together with any cash,
instruments or other Collateral which are released from the Lien of the
Indenture.
"Withdrawn Shares" means any Pledged Shares which are released from the
Lien of the Indenture as provided under "Collateral" above.
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REGISTRATION RIGHTS
Holders of the New Notes are not entitled to any registration rights with
respect to the New Notes. The Issuer has entered into a registration
agreement (the "Registration Agreement") with the Initial Purchasers, for the
benefit of the holders of the Old Notes, pursuant to which the Issuer has
agreed that it will, at its cost, by September 1, 1997, use its best efforts
to cause a registration statement (the "Registration Statement") to be
declared effective under the Securities Act. The Registration Statement of
which this Prospectus is a part constitutes the registration statement for
the Exchange Offer. Upon the Registration Statement being declared effective,
the Issuer will offer the New Notes in exchange for surrender of the Old
Notes. The Issuer will keep the Exchange Offer open for not less than 30 days
(or longer if required by applicable law) after the date notice of the
Exchange Offer is mailed to the holders of the Old Notes. For each Old Note
surrendered to the Issuer pursuant to the Exchange Offer, the holder of such
Old Note will receive a New Note having a principal amount at maturity equal
to that of the surrendered Old Note. Because the New Notes will be treated as
a continuation of the Old Notes, Original Issue Discount on each New Note
will accrue from March 5, 1997, the date of original issuance of the Old
Notes. Under existing SEC interpretations, the New Notes would in general be
freely transferable after the Exchange Offer without further registration
under the Securities Act; provided, however, that in the case of
broker-dealers, a prospectus meeting the requirements of the Securities Act
be delivered as required. The Issuer has agreed for a period of 180 days
after consummation of the Exchange Offer to make available a prospectus
meeting the requirements of the Securities Act to any broker-dealer for use
in connection with any resale of any such New Notes acquired as described
below. A broker-dealer which delivers such a prospectus to purchasers in
connection with such resales will be subject to certain of the civil
liability provisions under the Securities Act and will be bound by the
provisions of the Registration Agreement (including certain indemnification
rights and obligations).
In the event that applicable interpretations of the staff of the SEC do
not permit the Issuer to effect such an Exchange Offer, or if for any other
reason the Exchange Offer is not consummated by September 29, 1997, the
Issuer will, at its cost, (a) as promptly as practicable, file a shelf
registration statement with respect to the resale of the Old Notes (the
"Shelf Registration Statement") covering resales of the Old Notes, (b) use
its best efforts to cause the Shelf Registration Statement to be declared
effective under the Securities Act and (c) use its best efforts to keep
effective the Shelf Registration Statement until two years after its
effective date. The Issuer will, in the event of the Shelf Registration
Statement, provide to each holder of the Old Notes copies of the prospectus,
which is a part of the Shelf Registration Statement, notify each such holder
when the Shelf Registration Statement for the Old Notes has become effective
and take certain other actions as are required to permit unrestricted resales
of the Old Notes. A holder of Old Notes who sells such Old Notes pursuant to
the Shelf Registration Statement generally would be required to be named as a
selling securityholder in the related prospectus and to deliver a prospectus
to purchasers, will be subject to certain of the civil liability provisions
under the Securities Act in connection with such sales and will be bound by
the provisions of the Registration Agreement which are applicable to such a
holder (including certain indemnification obligations).
If by September 29, 1997, neither (i) the Exchange Offer is consummated
nor (ii) the Shelf Registration Statement is declared effective, interest
will accrue (in addition to the accrual of Original Issue Discount) on the
Notes from and including such date, until but excluding the earlier of (i)
the consummation of the Exchange Offer and (ii) the effective date of a Shelf
Registration Statement. In each case, such interest will be payable in cash
semiannually in arrears on March 15 and September 15, commencing March 15,
1998, at a rate per annum equal to .50% of the Accreted Value of the Old
Notes as of the September 15 and March 15 immediately preceding such interest
payment date.
The summary herein of certain provisions of the Registration Agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Registration Agreement, a
copy of which is filed as an exhibit to the Registration Statement of which
this Prospectus constitutes a part.
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DESCRIPTION OF OTHER INDEBTEDNESS
Each of the following summaries of certain indebtedness of the Company is
subject to and qualified in its entirety by reference to the detailed
provisions of the respective agreements and instruments to which each summary
relates. Copies of such agreements and instruments are filed as exhibits to
the Registration Statement of which this Prospectus constitutes a part.
Capitalized terms used below and not defined have the meanings set forth in
the respective agreements.
REVLON WORLDWIDE NOTES
On March 25, 1993, Revlon Worldwide issued and sold $1,115.8 million
principal amount of senior secured discount notes (the "Original Revlon
Worldwide Notes") having terms substantially identical in all material respects
to the Revlon Worldwide Notes. The Original Revlon Worldwide Notes were sold to
the initial purchasers thereof pursuant to the Section 4(2) exemption from the
registration requirements of the Securities Act and applicable state securities
laws. The Original Revlon Worldwide Notes were issued at a substantial discount
from their principal amount at maturity representing a yield to maturity of
approximately 12% per annum calculated at March 25, 1993. On June 15, 1993,
Revlon Worldwide consummated a registered exchange offer whereby holders of the
Original Revlon Worldwide Notes exchanged such notes for the Revlon Worldwide
Notes. There are no periodic payments on the Revlon Worldwide Notes. At
December 31, 1996, the accreted value of the Revlon Worldwide Notes was $969.6
million.
The Revlon Worldwide Notes are secured by a pledge of all of the Common
Stock of Revlon, Inc. owned by Revlon Worldwide, a portion of which may be
released upon the occurrence of certain events as specified in the indenture
relating to the Revlon Worldwide Notes (the "Revlon Worldwide Notes
Indenture"). The Revlon Worldwide Notes are senior secured obligations of
Revlon Worldwide and mature on March 15, 1998.
The Revlon Worldwide Notes may be redeemed at the option of Revlon Worldwide
in whole or from time to time in part at any time at 100% of their principal
amount at maturity. The Revlon Worldwide Notes may be redeemed in whole or in
part upon the occurrence of other events specified in the Revlon Worldwide
Notes Indenture at the prices and under the conditions specified therein, such
as upon a Change of Control (as defined in the Revlon Worldwide Notes
Indenture). In addition, upon a Change of Control (as defined in the Revlon
Worldwide Notes Indenture), and subject to certain conditions, each holder of
Revlon Worldwide Notes will have the right to require Revlon Worldwide to
repurchase all or a portion of such holder's Revlon Worldwide Notes at the
accreted value on the date of repurchase plus 1% of the accreted value thereof
as of the date specified in the Revlon Worldwide Notes Indenture.
The Revlon Worldwide Notes Indenture contains various material restrictive
covenants that limit (i) the issuance of additional debt and redeemable stock
by Revlon Worldwide and Revlon, Inc. and the issuance of preferred stock by
Revlon, Inc., (ii) the issuance of debt and preferred stock by Products
Corporation and its subsidiaries, (iii) the payment of dividends on capital
stock of Revlon Worldwide and its subsidiaries and the redemption of capital
stock of Revlon Worldwide or investments in affiliates, (iv) the sale of
assets and subsidiary stock, (v) transactions with affiliates, (vi) the
business activities of Revlon Worldwide and Revlon, Inc. and (vii)
consolidations, mergers and transfers of all or substantially all Revlon
Worldwide's assets. The Revlon Worldwide Notes Indenture also prohibits
certain restrictions on distributions from subsidiaries and requires that
shares of Revlon, Inc. pledged as collateral to secure the Revlon Worldwide
Notes constitute at least a majority of the voting stock of Revlon, Inc. All
of these limitations and prohibitions, however, are subject to a number of
important qualifications.
Events of default under the Revlon Worldwide Notes Indenture include,
among other things, (i) a default continuing for 30 days in payment of
interest (if any) when due, (ii) a default in the payment of any principal
when due at maturity, upon redemption, upon required purchase, upon
declaration or otherwise, (iii) failure to comply with the covenants in the
Revlon Worldwide Notes Indenture, such as the covenant that the pledged
shares constitute a majority of the voting stock of Revlon, Inc. (the
"majority ownership provision"), subject in certain instances to grace
periods, (iv) the failure to have a perfected security interest in the
collateral (the "continued perfection provision"), (v) failure to pay other
indebtedness of Revlon Worldwide or any Significant Subsidiary (as defined in
the Revlon Worldwide
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Notes Indenture) in excess of $25 million upon final maturity or as a result
of acceleration and such default continues for 10 days after notice (the
"cross-acceleration provision"), (v) certain events of bankruptcy, insolvency
or reorganization of Revlon Worldwide or a Significant Subsidiary (the
"bankruptcy provisions") and (vi) failure to pay any judgment in excess of
$25 million against Revlon Worldwide or a Significant Subsidiary (the
"judgment default provision").
Revlon Worldwide at any time may terminate all its obligations under the
Revlon Worldwide Notes and the Revlon Worldwide Notes Indenture ("legal
defeasance"), except for certain obligations, including those respecting the
defeasance trust and obligations to register the transfer or exchange of the
Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain
a registrar and paying agent in respect of the Notes. Pursuant to the Revlon
Worldwide Notes Indenture, Revlon Worldwide at any time may terminate its
obligations under the covenants described above, the provisions relating to
the Revlon, Inc. stock securing the Revlon Worldwide Notes and the operation
of the majority ownership provision, the continued perfection provision, the
cross acceleration provision, the bankruptcy provisions with respect to
Significant Subsidiaries and the judgment default provision and the financial
net worth test required to be met for mergers involving Revlon Worldwide
("covenant defeasance"). The Revlon Worldwide Notes Defeasance will
constitute "covenant defeasance" for purposes of the Revlon Worldwide Notes
Indenture.
Following the Revlon Worldwide Notes Defeasance, payment of the Revlon
Worldwide Notes may not be accelerated because of an Event of Default arising
with respect to the majority ownership provision, the continued perfection
provision, the breach of certain covenants, the cross-acceleration provision,
the bankruptcy provisions, (with respect only to Significant Subsidiaries) or
the judgment default provisions, or because of the failure of Revlon
Worldwide to comply with the financial net worth condition for mergers
provisions, or its obligations to secure the Revlon Worldwide Notes.
On April 2, 1997, the Issuer contributed escrowed funds, together with
Revlon Worldwide Notes that had been previously delivered to Revlon Worldwide
for cancellation, to Revlon Worldwide to finance the Revlon Worldwide Notes
Defeasance. As a result of the Deposit being made on April 2, 1997, the
Revlon Worldwide Notes Defeasance will be effective on August 4, 1997 so long
as certain events of bankruptcy, insolvency or reorganization affecting
Revlon Worldwide do not exist on such date.
CREDIT AGREEMENT
In May 1997, Products Corporation entered into the Credit Agreement. The
proceeds of loans made under the Credit Agreement were used for the purpose of
repaying the loans outstanding under the 1996 Credit Agreement and will be
used to repurchase or redeem the Sinking Fund Debentures and for general
corporate purposes or, in the case of the Acquisition Facility (as defined
herein), the financing of acquisitions.
The Credit Agreement is comprised of five senior secured facilities: a
$115.0 million initial term loan facility (the "Term Loan Facility"), an
$85.0 million deferred draw term loan facility (the "Deferred Draw Term Loan
Facility"), a $300.0 million multi-currency facility (the "Multi-Currency
Facility"), a $200.0 million revolving acquisition facility which may be
increased to $400 million under certain circumstances with the consent of
majority of the lenders (the "Acquisition Facility") and a $50.0 million
special standby letter of credit facility (the "Special LC Facility" and
together with the Term Loan Facility, the Deferred Draw Term Loan Facility,
the Multi-Currency Facility and the Acquisition Facility, the "Credit
Facilities"). The Multi-Currency Facility is available (i) to Products
Corporation, in revolving credit loans denominated in U.S. dollars (the
"Revolving Credit Loans"), (ii) to Products Corporation, in standby and
commercial letters of credit denominated in U.S. dollars (the "Operating
Letters of Credit") and (iii) to Products Corporation and certain of its
international subsidiaries designated from time to time in revolving credit
loans and bankers' acceptances denominated in U.S. Dollars and other
currencies (the "Local Loans"). The Credit Facilities (other than loans in
foreign currencies) bear interest at a rate equal to, at Products
Corporation's option, either (A) the Alternate Base Rate plus 1/2 of 1% (or 1
1/2% for Local Loans); or (B) the Eurodollar Rate plus 1 1/2%. Loans in
foreign currencies bear interest at a rate equal to the Eurocurrency Rate or,
in the case of Local Loans, the local lender rate, in each case plus 1 1/2%.
The applicable margin is reduced (or increased, but not above 3/4 of 1% for
Alternate Base Rate Loans not
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constituting Local Loans and 1 3/4% for other loans) in the event Products
Corporation attains (or fails to attain) certain leverage ratios. Products
Corporation pays the Lender a commitment fee of 3/8 of 1% of the unused
portion of the Credit Facilities, subject to reduction (or increase, but not
above 1/2 of 1%) based on certain leverage ratios. Products Corporation also
paid certain facility and other fees to the lenders and agents upon closing
of the Credit Agreement. Prior to its termination date, the commitments under
the Credit Facilities will be reduced by: (i) the net proceeds in excess of
$10.0 million each year received during such year from sales of assets by
Holdings (or certain of its subsidiaries), Products Corporation or any of its
subsidiaries (and $25.0 million with respect to certain specified
dispositions), subject to certain limited exceptions, (ii) certain proceeds
from the sales of collateral security granted to the lenders, (iii) the net
proceeds from the issuance by Holdings, Products Corporation or any of its
subsidiaries of certain additional debt, (iv) 50% of the excess cash flow of
Products Corporation and its subsidiaries (unless certain leverage ratios are
attained) and (v) certain scheduled reductions in the case of the Term Loan
Facilities, which commence on May 31, 1998 in the aggregate amount of $1.0
million annually over the remaining life of the Credit Agreement, and the
Acquisition Facility, which will commence on December 31, 1999 in the amount
of $25 million, $60 million during 2000, $90 million during 2001 and $25
million during 2002 (which reductions will be proportionately increased if
the Acquisition Facility is increased). The Credit Agreement will terminate
on May 30, 2002. As of May 30, 1997, Products Corporation had approximately
$115.0 million outstanding under the Term Loan Facility, zero outstanding under
the Deferred Draw Term Loan Facility, $184.4 million outstanding under the
Multi-Currency Facility, none outstanding under the Acquisition Facility and
$34.4 million outstanding under the Special LC Facility. The weighted average
interest rates on the Term Loan Facility and the Multi-Currency Facility were
9.0% and 7.4% per annum, respectively, as of May 30, 1997.
The Credit Facilities, subject to certain exceptions and limitations, are
supported by guarantees from Holdings and certain of its subsidiaries,
Revlon, Inc., Products Corporation and the domestic subsidiaries of Products
Corporation. The obligations of Products Corporation under the Credit
Facilities and the obligations under the aforementioned guarantees are
secured, subject to certain limitations, by (i) mortgages on Holdings'
Edison, New Jersey and Products Corporation's Phoenix, Arizona facilities;
(ii) the capital stock of Products Corporation and its domestic subsidiaries
and 66% of the capital stock of its first tier foreign subsidiaries and the
capital stock of certain subsidiaries of Holdings; (iii) domestic
intellectual property and certain other domestic intangibles of (x) Products
Corporation and its domestic subsidiaries (other than Cosmetic Center)
and (y) certain subsidiaries of Holdings; (iv) domestic inventory and
accounts receivable of (x) Products Corporation and its domestic subsidiaries
(other than Cosmetic Center) and (y) certain subsidiaries of Holdings;
and (v) the assets of certain foreign subsidiary borrowers under the
Multi-Currency Facility (to support their borrowings only). The Credit
Agreement provides that the liens on the stock and personal property referred
to above may be shared from time to time with specified types of other
obligations incurred or guaranteed by Products Corporation, such as interest
rate hedging obligations, working capital lines and the Yen Credit Agreement.
The Credit Agreement contains various material restrictive covenants
prohibiting Products Corporation and its subsidiaries from (i) incurring
additional indebtedness or guarantees, with certain exceptions, (ii) making
dividend, tax sharing (see "Relationship with MacAndrews & Forbes -- Tax
Sharing Agreement") and other payments or loans to Revlon, Inc. or other
affiliates, with certain exceptions, including among others, permitting
Products Corporation to pay dividends and make distributions to Revlon, Inc.,
among other things, to enable Revlon, Inc. to pay expenses incidental to being
a public holding company, including, among other things, professional fees such
as legal and accounting, regulatory fees such as SEC filing fees and other
miscellaneous expenses related to being a public holding company, and to pay
dividends or make distributions in certain circumstances to finance the
purchase by Revlon, Inc. of its common stock in connection with the delivery of
such common stock to grantees under any stock option plan, provided that the
aggregate amount of such dividends and distributions taken together with any
purchases of Revlon, Inc. common stock on the market to satisfy matching
obligations under an excess savings plan may not exceed $6.0 million per annum,
(iii) creating liens or other encumbrances on their assets or revenues,
granting negative pledges or selling or transferring any of
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their assets except in the ordinary course of business, all subject to certain
limited exceptions, (iv) with certain exceptions, engaging in merger or
acquisition transactions, (v) prepaying indebtedness, subject to certain
limited exceptions, (vi) making investments, subject to certain limited
exceptions and (vii) entering into transactions with affiliates of Products
Corporation other than upon terms no less favorable to Products Corporation or
its subsidiaries than it would obtain in an arms' length transaction. In
addition to the foregoing, the Credit Agreement contains financial covenants
requiring Products Corporation and its subsidiaries to maintain minimum
interest coverage, and covenants which limit the leverage ratio of Products
Corporation and its subsidiaries and the amount of capital expenditures.
"Events of Default" under the Credit Agreement include (i) a default in
the payment when due of any principal of the loans under the Credit
Agreement, (ii) a default in the payment of interest on the loans, or any
other amounts payable under the Credit Agreement for five days after the due
date thereof, (iii) the failure to comply with the covenants in the Credit
Agreement or the ancillary security documents, subject in certain instances
to grace periods, (iv) the institution of any bankruptcy, insolvency or
similar proceeding by or against Products Corporation or any of its
subsidiaries, (v) a default by Revlon, Inc. or any of its subsidiaries under
any debt instruments in excess of $5.0 million, if the effect of such default
is to cause or permit the acceleration of the maturity of the obligation
under such instruments, (vi) the agreements by certain affiliates of Products
Corporation providing that such affiliates will not demand payment of or
retain proceeds of any payment on account of certain indebtedness of Products
Corporation held by such affiliates, ceasing to be valid and enforceable or
if an affiliate which holds indebtedness of Products Corporation fails to
execute such agreement, (vii) the acceleration of, or failure to pay
principal or interest when due under, any of Revlon Worldwide's or Revlon
Worldwide Parent's debt instruments in excess of $500,000, (viii) failure to
pay any judgment in excess of $5.0 million and such judgment shall not have
been vacated, stayed, satisfied or bonded pending appeal within 60 days from
the entry thereof, (ix) the occurrence of a change of control such that (x)
Revlon, Inc. shall cease to own 100% of the capital stock of Products
Corporation, (y) in the event that Ronald O. Perelman (and heirs and
affiliates) shall cease to control Products Corporation, any other person
either (A) controls Products Corporation or (B) owns more than 25% of the
voting stock of Products Corporation or (z) the directors of Products
Corporation in May 1997 (or other directors nominated by at least two-thirds
of such continuing directors) shall cease to constitute at least two-thirds
of the Board of Directors of Products Corporation, (x) the failure of
Products Corporation to have received from Revlon, Inc. any cash capital
contributions in the amount equal to the net proceeds of certain equity
offerings of certain parents of Products Corporation, (xi) Products
Corporation or any of its subsidiaries paying any amount in respect of
federal capital gains taxes other than pursuant to a promissory note for the
amount of such capital gains, (xii) any representation or warranty of the
borrower, any guarantor or any pledgor failing to be correct in all material
respects when made or confirmed, and (xiii) Revlon, Inc. having any
meaningful assets or indebtedness (with certain exceptions) or Revlon, Inc.
conducting any meaningful business other than those that are customary for a
publicly traded holding company which is not itself an operating company.
1999 SENIOR NOTES
On June 4, 1993, Products Corporation issued and sold $200.0 million
principal amount of 1999 Senior Notes. The 1999 Senior Notes were sold in a
registered offering under the Securities Act and applicable state securities
laws. The 1999 Senior Notes bear interest at 9 1/2% per annum, payable
semiannually on each June 1 and December 1. The 1999 Senior Notes are senior
unsecured obligations of Products Corporation and mature on June 1, 1999.
The 1999 Senior Notes may not be redeemed prior to maturity. Upon a Change
of Control (as defined in the indenture pursuant to which the 1999 Senior
Notes were issued (the "1999 Senior Note Indenture")), and subject to certain
conditions, each holder of 1999 Senior Notes will have the right to require
Products Corporation to repurchase all or a portion of such holder's 1999
Senior Notes at 101%
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of the principal amount thereof plus accrued and unpaid interest, if any, to
the date of repurchase. In addition, under certain circumstances in the event
of an Asset Disposition (as defined in the 1999 Senior Note Indenture),
Products Corporation will be obligated to make offers to purchase the 1999
Senior Notes.
The 1999 Senior Note Indenture contains various material restrictive
covenants that limit (i) the issuance of additional debt and redeemable stock
by Products Corporation, (ii) the issuance of debt and preferred stock by
Products Corporation's subsidiaries, (iii) the incurrence of liens on the
assets of Products Corporation and its subsidiaries which do not equally and
ratably secure the 1999 Senior Notes, (iv) the payment of dividends on and
redemption of capital stock of Products Corporation and its subsidiaries,
investments in affiliates and the redemption of certain subordinated
obligations of Products Corporation, except that the 1999 Senior Note
Indenture permits Products Corporation to pay dividends and make
distributions to Revlon, Inc., among other things, to enable Revlon, Inc. to
pay expenses incidental to being a public holding company, including, among
other things, professional fees such as legal and accounting, regulatory fees
such as SEC filing fees and other miscellaneous expenses related to being a
public holding company, and to pay dividends or make distributions up to $5.0
million per annum in certain circumstances to finance the purchase by Revlon,
Inc. of its Class A Common Stock in connection with the delivery of such
Class A Common Stock to grantees under the Revlon, Inc. Stock Plan, (v) the
sale of assets and subsidiary stock, (vi) transactions with affiliates and
(vii) consolidations, mergers and transfers of all or substantially all
Products Corporation's assets. The 1999 Senior Note Indenture also prohibits
certain restrictions on distributions from subsidiaries. All of these
limitations and prohibitions, however, are subject to a number of important
qualifications.
Events of default under the 1999 Senior Note Indenture include, among
other things, (i) a default continuing for 30 days in the payment of interest
when due, (ii) a default in the payment of any principal when due, (iii) the
failure to comply with the covenants in the 1999 Senior Note Indenture,
subject in certain instances to grace periods, (iv) a failure to pay other
indebtedness of Products Corporation or a Significant Subsidiary (as defined
in the 1999 Senior Note Indenture) in excess of $25 million upon final
maturity or as a result of such indebtedness becoming accelerated and such
default continues for a period of 10 days after notice thereof, (v) certain
events of bankruptcy, insolvency or reorganization of Products Corporation or
a Significant Subsidiary and (vi) the failure to pay any judgment in excess
of $25 million.
SENIOR NOTES
On April 6, 1993, Products Corporation issued and sold $260.0 million
principal amount of senior notes (the "Original Senior Notes") having terms
substantially identical in all material respects to Products Corporation's
$260.0 million principal amount of 9 3/8% Senior Notes Due 2001 (together with
the Original Senior Notes, the "Senior Notes"). The Original Senior Notes were
sold to the initial purchasers thereof pursuant to the Section 4(2) exemption
from the registration requirements of the Securities Act and applicable state
securities laws. The Original Senior Notes bore interest at 9 7/8% per annum
until the consummation of an offer to exchange the Senior Notes for a like
principal amount of such notes, at which time the interest on the Senior Notes
permanently decreased to 9 3/8% per annum. On June 15, 1993, Products
Corporation consummated a registered exchange offer whereby holders of the
Original Senior Notes exchanged such notes for registered Senior Notes.
Interest is payable semiannually on each April 1 and October 1. The Senior
Notes are senior unsecured obligations of Products Corporation and mature on
April 1, 2001.
The Senior Notes may be redeemed at the option of Products Corporation in
whole or in part at any time on or after April 1, 1998 at the redemption
prices set forth therein, plus accrued and unpaid interest, if any, to the
date of redemption. Upon a Change of Control (as defined in the indenture
pursuant to which the Senior Notes were issued (the "Senior Note
Indenture")), Products Corporation will have the option to redeem the Senior
Notes in whole at a redemption price equal to the principal amount thereof
plus the Applicable Premium (as defined in the Senior Note Indenture), plus
accrued and unpaid interest, if any, to the date of redemption, and, subject
to certain conditions, each holder of Senior Notes will have the right to
require Products Corporation to repurchase all or a portion of such holder's
Senior Notes at 101%
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of the principal amount thereof plus accrued and unpaid interest, if any, to
the date of repurchase. In addition, under certain circumstances in the event
of an Asset Disposition (as defined in the Senior Note Indenture), Products
Corporation will be obligated to make offers to purchase the Senior Notes.
The Senior Note Indenture contains various material restrictive covenants
that limit (i) the issuance of additional indebtedness and redeemable stock
by Products Corporation, (ii) the issuance of indebtedness and preferred
stock by Products Corporation's subsidiaries, (iii) the incurrence of liens
on the assets of Products Corporation and its subsidiaries which do not
equally and ratably secure the Senior Notes, (iv) the payment of dividends on
capital stock of Products Corporation and its subsidiaries, investments in
affiliates and the redemption of capital stock and certain subordinated
obligations of Products Corporation, except that the Senior Note Indenture
permits Products Corporation to pay dividends and make distributions to
Revlon, Inc., among other things, to enable Revlon, Inc. to pay expenses
incidental to being a public holding company, including, among other things,
professional fees such as legal and accounting, regulatory fees such as SEC
filing fees and other miscellaneous expenses related to being a public
holding company, and to pay dividends or make distributions up to $5.0
million per annum in certain circumstances to finance the purchase by Revlon,
Inc. of its Class A Common Stock in connection with the delivery of such
Class A Common Stock to grantees under the Revlon, Inc. Stock Plan, (v) the
sale of assets and subsidiary stock, (vi) transactions with affiliates and
(vii) consolidations, mergers and transfers of all or substantially all of
Products Corporation's assets. The Senior Note Indenture also prohibits
certain restrictions on distributions from subsidiaries of Products
Corporation. All of these limitations and prohibitions, however, are subject
to a number of important qualifications.
Events of default under the Senior Note Indenture include, among other
things, (i) a default continuing for 30 days in the payment of interest when
due, (ii) a default in the payment of any principal when due, (iii) the
failure to comply with the covenants in the Senior Note Indenture, subject in
certain instances to grace periods, (iv) failure to pay other indebtedness of
Products Corporation or a Significant Subsidiary (as defined in the Senior
Note Indenture) in excess of $25 million upon final maturity or as a result
of such indebtedness becoming accelerated and such default continues for a
period of 10 days after notice thereof, (v) certain events of bankruptcy,
insolvency or reorganization of Products Corporation or a Significant
Subsidiary and (vi) the failure to pay any judgment in excess of $25 million.
SENIOR SUBORDINATED NOTES
On February 25, 1993, Products Corporation issued and sold $555.0 million
principal amount of senior subordinated notes (the "Original Senior
Subordinated Notes") having terms substantially identical in all material
respects with Products Corporation's $555.0 million principal amount of 10 1/2%
Senior Subordinated Notes Due 2003 (together with the Original Senior
Subordinated Notes, the "Senior Subordinated Notes"). The Original Senior
Subordinated Notes were sold to the initial purchasers thereof pursuant to the
Section 4(2) exemption from the registration requirements of the Securities Act
and applicable state securities laws. The Original Senior Subordinated Notes
bore interest at 11% per annum until the consummation of an offer to exchange
the Senior Subordinated Notes for a like principal amount of such notes, at
which time the interest rate on the Senior Subordinated Notes permanently
decreased to 10 1/2% per annum. On June 15, 1993, Products Corporation
consummated a registered exchange offer whereby holders of Original Senior
Subordinated Notes exchanged such notes for registered Senior Subordinated
Notes. Interest is payable semiannually on each February 15 and August 15. The
Senior Subordinated Notes are unsecured senior subordinated obligations of
Products Corporation and are subordinated in right of payment to all existing
and future Senior Debt (as defined in the indenture pursuant to which the
Senior Subordinated Notes were issued (the "Senior Subordinated Note
Indenture")). The Senior Subordinated Notes mature on February 15, 2003.
The Senior Subordinated Notes may be redeemed at the option of Products
Corporation in whole or in part at any time on or after February 15, 1998 at
the redemption prices set forth therein, plus accrued and unpaid interest, if
any, to the date of redemption. Upon a Change of Control (as defined in the
Senior Subordinated Note Indenture), Products Corporation will have the
option to redeem the "Senior Subordinated Notes in whole or in part at a
redemption price equal to the principal amount thereof plus the Applicable
Premium (as defined in the Senior Subordinated Note Indenture), plus
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accrued and unpaid interest, if any, to the date of redemption, and subject
to certain conditions, each holder of Senior Subordinated Notes will have the
right to require Products Corporation to repurchase all or a portion of such
holder's Senior Subordinated Notes at 101% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of repurchase. In
addition, under certain circumstances in the event of an Asset Disposition
(as defined in the Senior Subordinated Note Indenture), Products Corporation
will be obligated to make offers to purchase the Senior Subordinated Notes.
The Senior Subordinated Note Indenture contains various material
restrictive covenants that limit (i) the issuance of additional indebtedness
and redeemable stock by Products Corporation and the issuance of any other
senior subordinated indebtedness of Products Corporation that is senior to
the Senior Subordinated Notes, (ii) the issuance of indebtedness and
preferred stock by Products Corporation's subsidiaries, (iii) the incurrence
of liens on the assets of Products Corporation and its subsidiaries to secure
debt other than Senior Debt (as defined in the Senior Subordinated Note
Indenture) or debt of a subsidiary unless the Senior Subordinated Notes are
equally and ratably secured, (iv) the payment of dividends on capital stock
of Products Corporation and its subsidiaries, investments in affiliates and
the redemption of capital stock and certain subordinated obligations of
Products Corporation, except that the Senior Subordinated Note Indenture
permits Products Corporation to pay dividends and make distributions to
Revlon, Inc., among other things, to enable Revlon, Inc. to pay expenses
incidental to being a public holding company, including, among other things,
professional fees such as legal and accounting, regulatory fees such as SEC
filing fees and other miscellaneous expenses related to being a public
holding company, and to pay dividends or make distributions up to $5.0
million per annum in certain circumstances to finance the purchase by Revlon,
Inc. of its Class A Common Stock in connection with the delivery of such
Class A Common Stock to grantees under the Revlon, Inc. Stock Plan, (v) the
sale of assets and subsidiary stock, (vi) transactions with affiliates and
(vii) consolidations, mergers and transfers of all or substantially all of
Products Corporation's assets. The Senior Subordinated Note Indenture also
prohibits certain restrictions on distributions from subsidiaries of Products
Corporation. All of these limitations and prohibitions, however, are subject
to a number of important qualifications.
Events of default under the Senior Subordinated Note Indenture include,
among other things, (i) a default continuing for 30 days in the payment of
interest when due, (ii) a default in the payment of any principal when due,
(iii) the failure to comply with the covenants in the Senior Subordinated
Note Indenture, subject in certain instances to grace periods, (iv) failure
to pay other indebtedness of Products Corporation or a Significant Subsidiary
(as defined in the Senior Subordinated Note Indenture) in excess of $25
million upon final maturity or as a result of such indebtedness becoming
accelerated and such default continues for a period of 10 days after notice
thereof, (v) certain events of bankruptcy, insolvency or reorganization of
Products Corporation or a Significant Subsidiary and (vi) the failure to pay
any judgment in excess of $25 million.
SINKING FUND DEBENTURES
In connection with the transfer to Products Corporation of the cosmetics and
skin care, fragrance and personal care products business of Holdings, Products
Corporation assumed all obligations of Holdings under the indenture pursuant to
which the Sinking Fund Debentures were issued (the "Sinking Fund Debentures
Indenture"). The Sinking Fund Debentures were originally sold to the initial
purchasers thereof pursuant to the Section 4(2) exemption from the registration
requirements of the Securities Act and applicable state securities laws. The
Sinking Fund Debentures bear interest at the rate of 10 7/8% per annum, payable
semiannually on each January 15 and July 15, and mature on July 15, 2010. The
aggregate principal amount of Sinking Fund Debentures outstanding as of
December 31, 1996 was $85.0 million face amount (net of repurchases) ($79.6
million carrying value).
On each July 15 until maturity, Products Corporation will be required to
make a mandatory sinking fund payment for the redemption of $9.0 million
aggregate principal amount of Sinking Fund Debentures, at 100% of their
principal amount, together with accrued but unpaid interest to the date fixed
for redemption subject to reduction for certain prior redemptions. In May
1982 and May 1984, Holdings surrendered to the trustee for the Sinking Fund
Debentures $40 million and $75 million, in principal
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amount, respectively, of Sinking Fund Debentures for cancellation and for
application to mandatory sinking fund payments. As of December 31, 1996,
Products Corporation had approximately $61.0 million aggregate principal
amount of such surrendered Sinking Fund Debentures available to be used to
satisfy sinking fund payment obligations. Products Corporation also may at
its option on each July 15 until maturity make an optional sinking fund
payment for the redemption of up to an additional $13.5 million aggregate
principal amount of Sinking Fund Debentures, at 100% of their principal
amount, plus accrued and unpaid interest, if any, to the date of redemption.
In addition, the Sinking Fund Debentures may be redeemed at any time, at the
option of Products Corporation, at 101.95% of their principal amount for the
year beginning July 15, 1996 and thereafter at a premium that declines
annually until July 15, 2000 to 100% of their principal amount, in each case
plus accrued and unpaid interest, if any, to the date of redemption.
The Sinking Fund Debentures Indenture contains various restrictive
covenants prohibiting (with certain exceptions) Products Corporation and its
subsidiaries from (i) incurring indebtedness in excess of 5% of the
consolidated net tangible assets, where such indebtedness is secured by any
manufacturing plant or warehouse in the United States owned or leased by
Products Corporation or any of its subsidiaries, the book value of which
exceeds 2% of the consolidated net tangible assets of Products Corporation,
unless the Sinking Fund Debentures are equally and ratably secured, (ii)
entering into certain sale and leaseback transactions or (iii) consolidating
or merging with or into, or selling or transferring all or substantially all
of their properties and assets to, another corporation, unless certain
conditions are satisfied. Events of default under the Sinking Fund Debentures
Indenture include, among other things, (i) a default in the payment of any
principal when due (including any sinking fund payment), (ii) a default
continuing for 60 days in the payment of any interest or a failure to comply
with any covenant continuing for 60 days after notice thereof, (iii) a
default under other indebtedness in excess of $10 million resulting in such
indebtedness becoming accelerated and remaining unpaid for a period of 10
days after notice thereof and (iv) certain events of bankruptcy, insolvency
or reorganization of Products Corporation. The Credit Agreement provides that
the Sinking Fund Debentures are equally and ratably secured by the Phoenix,
Arizona facility.
Products Corporation expects to redeem the Sinking Fund Debentures on or
about July 15, 1997 with borrowings under the Credit Agreement. See "--Credit
Agreement."
YEN CREDIT AGREEMENT
The Pacific Finance & Development Corp., a subsidiary of Products
Corporation ("Pacific Finance"), is the borrower under the Yen Credit
Agreement, which had a principal balance of approximately yen 4.8 billion as
of December 31, 1996 (approximately $41.7 million U.S. dollar equivalent as
of December 31, 1996). In accordance with the terms of the Yen Credit
Agreement, approximately yen 2.7 billion (approximately $26.9 million U.S.
dollar equivalent) was paid in January 1995 and approximately yen 539 million
(approximately $5.2 million U.S. dollar equivalent) was paid in January 1996.
A payment of approximately yen 539 million (approximately $4.6 million U.S.
dollar equivalent as of December 31, 1996) was paid in January 1997. The
balance of the Yen Credit Agreement of approximately yen 4.3 billion
(approximately $37.1 million U.S. dollar equivalent as of December 31, 1996)
is currently due on December 31, 1997. The interest rate on the outstanding
principal balance was 3.1% per annum as of May 30, 1997. As described below,
Products Corporation has received a commitment letter with respect to an
extension of the term of the Yen Credit Agreement. In the event that the
documentation for such extension is not completed, Products Corporation is
able and intends to refinance the Yen Credit Agreement under the Credit
Agreement. Accordingly, Products Corporation's obligation under the Yen
Credit Agreement has been classified as long-term as of December 31, 1996.
The applicable interest rate at December 31, 1996 under the Yen Credit
Agreement was the Euro-Yen rate plus 2.5% which approximated 3.1%. The
interest rate at December 31, 1995, applicable to the remaining balance,
was the Euro-Yen rate plus 3.5%, which approximated 4.1%.
Borrowings under the Yen Credit Agreement are secured by a first mortgage
on certain real property in Tokyo, Japan owned by Revlon Real Estate K.K., a
pledge of all of the common stock of Revlon Real Estate K.K., a pledge of a
note payable by Products Corporation to Pacific Finance and a pledge of all
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of the common stock of Cosmetic Center owned by Products Corporation. In
addition, Products Corporation has guaranteed the obligations of Pacific
Finance to repay any amounts due under the Yen Credit Agreement.
The Yen Credit Agreement contains certain material restrictive covenants
prohibiting Pacific Finance from (with certain limited exceptions) incurring
material obligations, creating liens, engaging in any new activities or
consolidating with, or merging into, any other entity or selling, leasing or
otherwise transferring or permitting the transfer of all or any substantial
part of its assets to any other entity. Events of default under the Yen
Credit Agreement include, among other things, (i) a default in the payment of
all or any principal when due, (ii) a default continuing for three days in
the payment of interest or a failure to comply with any covenant (subject to
grace periods in certain instances), (iii) a default under any indebtedness
of Products Corporation, Pacific Finance or Revlon Real Estate K.K. in excess
of $10.0 million beyond the period of cure provided under such indebtedness,
(iv) a judgment in excess of $5.0 million being entered against Products
Corporation or certain subsidiaries of Products Corporation, including
Pacific Finance, which is not covered by insurance and which remains
unsatisfied for 30 days and (v) change of control and certain events of
bankruptcy, insolvency or reorganization relating to Products Corporation or
certain subsidiaries of Products Corporation.
In May 1997, Products Corporation received a commitment letter pursuant to
which the Yen Credit Agreement will be amended to (i) extend its maturity to
March 31, 1999 (or December 31, 2000 if the 1999 Senior Notes are refinanced
on or prior to March 31, 1999 and no default is continuing under the Yen
Credit Agreement on such date), (ii) revise the amortization schedule in
light of the extended maturity, (iii) revise the applicable margin to
match that for Eurodollar Loans under the Credit Agreement (but in no event
less than 0.75%), (iv) provide for certain fees payable at closing and on
March 31, 1998 and (v) provide for financial covenants substantially the same
as in the Credit Agreement. The closing for these amendments, which is
expected to occur on or about June 30, 1997, is subject to a number of
conditions precedent, including no material adverse change in the business
and operations of Products Corporation, Pacific Finance and Revlon Real
Estate K.K.
OTHER INDEBTEDNESS
The Company also maintains working capital lines in various countries
outside the United States for use in its international operations. As of
December 31, 1996, the aggregate amount outstanding under these lines was
approximately $27.1 million having a weighted average interest rate of 5.7%,
converted into U.S. dollars at the applicable exchange rates on such date.
Most of these working capital lines are short-term facilities that contain
customary events of default and few restrictive covenants. In addition, a
mortgage on the Company's Oxford, North Carolina facility secures a $4.6
million borrowing which matures on January 1, 1998. The obligations under
several of these foreign working capital lines are guaranteed by Products
Corporation.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the Issuer,
has advised the Issuer that the following discussion, except as otherwise
indicated, expresses their opinion as to the material federal income tax
considerations applicable to the exchange of Old Notes for New Notes and the
ownership and disposition of the New Notes by holders who acquire the New
Notes pursuant to the Exchange Offer. This discussion is based on laws,
regulations, rulings and decisions now in effect, all of which are subject to
change. The discussion does not cover all aspects of federal taxation that
may be relevant to, or the actual tax effect that any of the matters
described herein will have on, particular holders, and does not address
state, local, foreign or other tax laws. Certain holders (including insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
taxpayers subject to the alternative minimum tax and foreign partners) may be
subject to special rules not discussed below. The description assumes that
holders of the New Notes will hold the New Notes as "capital assets"
(generally, property held for investment purposes) within the meaning of
Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code").
EACH HOLDER SHOULD CONSULT ITS OWN TAX ADVISOR IN DETERMINING THE FEDERAL,
STATE, LOCAL AND ANY OTHER TAX CONSEQUENCES TO THE PARTICULAR HOLDER OF THE
EXCHANGE OF OLD NOTES FOR NEW NOTES AND THE OWNERSHIP AND DISPOSITION OF THE
NEW NOTES.
EXCHANGE OF NOTES
The exchange of the Old Notes for the New Notes pursuant to the Exchange
Offer will not be treated as an "exchange" for federal income tax purposes
because the New Notes do not differ materially in kind or extent from the Old
Notes, and because the exchange will occur by operation of the terms of the
Old Notes. Rather the New Notes received by a holder will be treated as a
continuation of the Old Notes in the hands of such holder. As a result, no
gain or loss will be recognized on the exchange of Old Notes for New Notes
pursuant to the Exchange Offer.
ORIGINAL ISSUE DISCOUNT
The Old Notes were issued on March 5, 1997 and have Original Issue
Discount for federal income tax purposes. Because the New Notes will be
treated as a continuation of the Old Notes, which were issued with Original
Issue Discount, the New Notes will have Original Issue Discount for federal
income tax purposes, and holders of the New Notes will be required to
recognize such Original Issue Discount as ordinary income in advance of the
receipt of the cash payments to which such income is attributable (regardless
of the holder's regular method of accounting).
The total amount of Original Issue Discount with respect to a New Note
will be equal to the excess of the "stated redemption price at maturity" of
such New Note over its "issue price." The "stated redemption price at
maturity" of a New Note will be equal to the stated principal amount due at
maturity. The "issue price" of all the New Notes will be equal to the issue
price of the Old Notes. Holders of New Notes are required to include Original
Issue Discount in income as it accrues in accordance with a constant yield
method based on compounding at the end of each accrual period (regardless of
a holder's regular method of accounting). In general, the amount of Original
Issue Discount that is includable in income is determined by allocating to
each day in an accrual period the ratable portion of Original Issue Discount
allocable to the accrual period. The amount of Original Issue Discount that
is allocable to an accrual period is generally an amount equal to the product
of the adjusted issue price of a Note at the beginning of such accrual period
(the issue price of the Notes determined as described above, generally
increased by all prior accruals of Original Issue Discount with respect to
the Notes) and the yield to maturity (the discount rate, which when applied
to all payments under the Notes results in a present value equal to the issue
price) less any qualified stated interest (interest that is unconditionally
payable in cash or property at least annually at a single fixed rate)
allocable to the accrual period.
DISPOSITION OF NEW NOTES
A holder's tax basis in a New Note will be increased by the amount of
Original Issue Discount that is includable in such holder's income. If a New
Note is redeemed, sold or otherwise disposed of, the
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holder thereof will generally recognize gain or loss equal to the difference
between the amount realized on the redemption, sale or other disposition of
such New Note and the holder's adjusted basis in the New Note. Subject to the
market discount rules discussed below, such gain or loss will be capital gain
or loss and will be long-term capital gain or loss if, on the date of the
sale, a holder has a holding period for the New Notes (which would include
the holding period of the Old Notes) of more than one year.
Under the market discount rules of the Code, an exchanging holder (other
than a holder who made the election described below) who purchased an Old
Note with "market discount" (generally defined as the amount by which the
adjusted issue price of the Old Note on the holder's date of purchase exceeds
the holder's purchase price) will be required to treat any gain recognized on
the redemption, sale or other disposition of the New Note received in the
exchange as ordinary income to the extent of the market discount that accrued
during the holding period of such New Note (which would include the holding
period of the Old Note). A holder who has elected under applicable Code
provisions to include market discount in income annually as such discount
accrues will not, however, be required to treat any gain recognized as
ordinary income under these rules. Holders should consult their tax advisors
as to the portion of any gain that would be taxable as ordinary income under
these provisions.
INFORMATION REPORTING
Each New Note will contain a legend stating that it has Original Issue
Discount and setting forth the issue date, the issue price, the amount of
Original Issue Discount and the yield to maturity. The Issuer will report
annually to the IRS and to each holder (other than holders not subject to the
information reporting requirements) the amount of Original Issue Discount
accrued with respect to such New Note and any interest paid with respect to
the Old Notes as described above under "Description of the Notes --
Registration Rights."
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BOOK-ENTRY; DELIVERY AND FORM
Except as set forth below, the Notes will initially be issued in the form
of one or more registered Notes in global form without coupons (each a
"Global Note"). Each Global Note will be deposited with, or on behalf of, DTC
and registered in the name of Cede & Co., as nominee of DTC, or will remain
in the custody of the Trustee pursuant to the FAST Balance Certificate
Agreement between DTC and the Trustee.
DTC has advised the Issuer that it is (i) a limited purpose trust company
organized under the laws of the State of New York, (ii) a member of the
Federal Reserve System, (iii) a "clearing corporation" within the meaning of
the Uniform Commercial Code, as amended, and (iv) a "Clearing Agency"
registered pursuant to Section 17A of the Exchange Act. DTC was created to
hold securities for its participation (collectively, the "Participants") and
facilitates the clearance and settlement of securities transactions between
Participants through electronic book-entry changes to the accounts of its
Participants, thereby eliminating the need for physical transfer and delivery
of certificates. DTC's Participants include securities brokers and dealers
(including the Initial Purchasers), banks and trust companies, clearing
corporations and certain other organizations. Access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust
companies (collectively, the "Indirect Participants") that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly. Holders who are not Participants may beneficially own securities
held by or on behalf of the Depository only through Participants or Indirect
Participants.
The Issuer expects that pursuant to procedures established by DTC (i) upon
deposit of the Global Notes, DTC will credit the accounts of Participants
designated by the Initial Purchasers with an interest in the Global Note and
(ii) ownership of the Notes will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by DTC (with
respect to the interest of Participants), the Participants and the Indirect
Participants. The laws of some states require that certain persons take
physical delivery in definitive form of securities that they own and that
security interest in negotiable instruments can only be perfected by delivery
of certificates representing the instruments. Consequently, the ability to
transfer Notes or to pledge the Notes as collateral will be limited to such
extent. For certain other restrictions on the transferability of the Notes,
see "Notice to Investors."
So long as DTC or its nominee is the registered owner of a Global Note,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the Notes represented by the Global Note for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in a
Global Note will not be entitled to have Notes represented by such Global
Note registered in their names, will not receive or be entitled to receive
physical delivery of certificated securities (the "Certificated Securities"),
and will not be considered the owners or Holders thereof under the Indenture
for any purpose, including with respect to giving of any directions,
instruction or approval to the Trustee thereunder. As a result, the ability
of a person having a beneficial interest in Notes represented by a Global
Note to pledge or transfer such interest to persons or entities that do not
participate in DTC's system or to otherwise take action with respect to such
interest, may be affected by the lack of a physical certificate evidencing
such interest.
Accordingly, each holder owning a beneficial interest in a Global Note
must rely on the procedures of DTC and, if such holder is not a Participant
or an Indirect Participant, on the procedures of the Participant through
which such holder owns its interest, to exercise any rights of a holder of
Notes under the Indenture or such Global Note. The Issuer understands that
under existing industry practice, in the event the Issuer requests any action
of holders of Notes or a holder that is an owner of a beneficial interest in
a Global Note desires to take any action that DTC, as the holder of such
Global Note, is entitled to take, DTC would authorize the Participants to
take such action and the Participant would authorize holders owning through
such Participants to take such action or would otherwise act upon the
instruction of such holders. Neither the Issuer nor the Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of Notes by DTC, or for maintaining, supervising or
reviewing any records of DTC relating to such Notes.
Payments with respect to the principal of, premium, if any, and interest
on, any Notes represented by a Global Note registered in the name of DTC or
its nominee on the applicable record date will be
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payable by the Trustee to or at the direction of DTC or its nominee in its
capacity as the registered holder of the Global Note representing such Notes
under the Indenture. Under the terms of the Indenture, the Issuer and the
Trustee may treat the persons in whose names the Notes, including the Global
Notes, are registered as the owners thereof for the purpose of receiving such
payment and for any and all other purposes whatsoever. Consequently, neither
the Issuer nor the Trustee has or will have any responsibility or liability
for the payment of such amounts to beneficial owners of interest in the
Global Note (including principal, premium, if any, and interest), or to
immediately credit the accounts of the relevant Participants with such
payment, in amounts proportionate to their respective holdings in principal
amount of beneficial interest in the Global Note as shown on the records of
DTC. Payments by the Participants and the Indirect Participants to the
beneficial owners of interests in the Global Note will be governed by
standing instructions and customary practice and will be the responsibility
of the Participants or the Indirect Participants and DTC.
CERTIFICATED SECURITIES
If (i) the Issuer notifies the Trustee in writing that DTC is no longer
willing or able to act as a depository or DTC ceases to be registered as a
clearing agency under the Exchange Act and the Issuer is unable to locate a
qualified successor within 90 days, (ii) the Issuer, at its option, notifies
the Trustee in writing that it elects to cause the issuance of Notes in
definitive form under the Indenture or (iii) upon the occurrence of certain
other events, then, upon surrender by DTC of its Global Notes, Certificated
Securities will be issued to each person that DTC identifies as the
beneficial owner of the Notes represented by the Global Notes. Upon any such
issuance, the Trustee is required to register such Certificated Securities in
the name of such person or persons (or the nominee of any thereof), and cause
the same to be delivered thereto.
Neither the Issuer nor the Trustee shall be liable for any delay by DTC or
any Participant or Indirect Participant in identifying the beneficial owners
of the related Notes and each such person may conclusively rely on, and shall
be protected in relying on, instructions from DTC for all purposes (including
with respect to the registration and delivery, and the respective principal
amounts, of the Notes to be issued).
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Issuer has agreed that for a period of 180 days after
the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any
such resale. In addition, until , 1997, all dealers effecting
transactions in the New Notes may be required to deliver a prospectus.
The Issuer will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such New
Notes. Any broker-dealer that resells New Notes that were received by it for
its own account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commissions or concessions
126
<PAGE>
received by any such persons may be deemed to be underwriting compensation
under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Issuer will
promptly send additional copies of the Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such
document in the Letter of Transmittal. The Issuer has agreed to pay all
expenses incident to the Exchange Offer other than commissions or concessions
of any brokers or dealers and will indemnify the holders of the Notes
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of the
New Notes will be passed upon for the Issuer by Paul, Weiss, Rifkind, Wharton
& Garrison, New York, New York and, with respect to certain federal income
tax considerations, by Skadden, Arps, Slate, Meagher & Flom LLP, New York,
New York. Skadden, Arps, Slate, Meagher & Flom LLP has acted as counsel for
the Issuer in connection with the Exchange Offer. Skadden, Arps, Slate,
Meagher & Flom LLP and Paul, Weiss, Rifkind, Wharton & Garrison have from
time to time represented, and may continue to represent, MacAndrews & Forbes
and certain of its affiliates (including the Issuer and Revlon, Inc.) in
connection with certain legal matters. Joseph H. Flom, a partner in the firm
of Skadden, Arps, Slate, Meagher & Flom LLP, is a director of Revlon Group
Incorporated, a wholly owned subsidiary of MacAndrews & Forbes.
EXPERTS
The financial statements and schedule of the Company and subsidiaries as
of December 31, 1995 and 1996 and for each of the years in the three-year
period ended December 31, 1996, included herein and elsewhere in the
Registration Statement have been audited and reported on by KPMG Peat Marwick
LLP, independent certified public accountants. Such financial statements and
schedule have been included herein and in the Registration Statement in
reliance upon the reports of KPMG Peat Marwick LLP, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.
127
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
AUDITED FINANCIAL STATEMENTS:
Independent Auditors' Report............................................................ F-2
Consolidated Balance Sheets as of December 31, 1996 and 1995............................ F-3
Consolidated Statements of Operations for each of the years in the three-year period
ended December 31, 1996................................................................ F-4
Consolidated Statements of Stockholder's Deficiency for each of the years in the
three-year period ended December 31, 1996.............................................. F-5
Consolidated Statements of Cash Flows for each of the years in the three-year period
ended December 31, 1996................................................................ F-6
Notes to Consolidated Financial Statements.............................................. F-7
UNAUDITED INTERIM FINANCIAL STATEMENTS:
Consolidated Condensed Balance Sheets as of March 31, 1997 and December 31, 1996 ....... F-35
Consolidated Condensed Statements of Operations for each of the three months ended
March 31, 1997 and 1996................................................................ F-36
Consolidated Condensed Statements of Cash Flows for each of the three months ended
March 31, 1997 and 1996................................................................ F-37
Notes to Unaudited Consolidated Condensed Financial Statements.......................... F-38
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholder
Revlon Worldwide (Parent) Corporation:
We have audited the accompanying consolidated balance sheets of Revlon
Worldwide (Parent) Corporation and its subsidiaries as of December 31, 1996
and 1995, and the related consolidated statements of operations, cash flows
and stockholder's deficiency for each of the years in the three-year period
ended December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Revlon
Worldwide (Parent) Corporation and its subsidiaries as of December 31, 1996
and 1995 and the results of their operations and their cash flows for each of
the years in the three-year period ended December 31, 1996, in conformity
with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, in 1994
the Company adopted the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits."
KPMG PEAT MARWICK LLP
New York, New York
January 28, 1997
F-2
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1995
-------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................. $ 38.6 $ 36.3
Trade receivables, less allowances of $24.9 and
$23.7, respectively.................................. 426.3 363.1
Inventories........................................... 281.0 277.8
Prepaid expenses and other............................ 74.5 62.4
-------------- --------------
Total current assets................................. 820.4 739.6
Property, plant and equipment, net..................... 381.1 367.1
Other assets........................................... 144.2 152.1
Intangible assets related to businesses acquired, net . 280.6 285.7
-------------- --------------
Total assets......................................... $ 1,626.3 $ 1,544.5
============== ==============
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
Current liabilities:
Short-term borrowings--third parties.................. $ 27.1 $ 22.7
Current portion of long-term debt--third parties ..... 8.8 9.2
Accounts payable...................................... 161.9 151.6
Accrued expenses and other............................ 365.2 370.6
-------------- --------------
Total current liabilities............................ 563.0 554.1
Long-term debt--third parties.......................... 2,291.4 2,289.1
Long-term debt--affiliates............................. 30.4 41.3
Other long-term liabilities............................ 202.8 215.7
Stockholder's deficiency:
Common stock, par value $1.00 per share; 1,000 shares
authorized, issued and outstanding................... -- --
Capital deficiency.................................... (971.0) (967.0)
Accumulated deficit since June 24, 1992............... (472.1) (566.7)
Adjustment for minimum pension liability.............. (12.4) (17.0)
Currency translation adjustment....................... (5.8) (5.0)
-------------- --------------
Total stockholder's deficiency....................... (1,461.3) (1,555.7)
-------------- --------------
Total liabilities and stockholder's deficiency ...... $ 1,626.3 $ 1,544.5
============== ==============
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net sales........................................... $2,167.0 $1,937.8 $1,732.5
Cost of sales....................................... 725.7 652.1 597.3
---------- ---------- ----------
Gross profit...................................... 1,441.3 1,285.7 1,135.2
Selling, general and administrative expenses ....... 1,241.1 1,139.1 1,026.8
---------- ---------- ----------
Operating income.................................. 200.2 146.6 108.4
---------- ---------- ----------
Other expenses (income):
Interest expense .................................. 240.1 237.5 221.2
Interest and net investment income ................ (3.4) (4.9) (6.3)
Amortization of debt issuance costs................ 12.5 15.2 12.6
Foreign currency losses, net....................... 5.7 10.9 18.2
Miscellaneous, net................................. 6.4 1.8 2.8
Gain on sale of subsidiary stock .................. (187.8) -- --
---------- ---------- ----------
Other expenses, net............................... 73.5 260.5 248.5
---------- ---------- ----------
Income (loss) before income taxes .................. 126.7 (113.9) (140.1)
Provision for income taxes.......................... 25.5 25.4 22.8
---------- ---------- ----------
Income (loss) before extraordinary item and
cumulative effect of accounting change ............ 101.2 (139.3) (162.9)
Extraordinary item--early extinguishment of debt ... (6.6) -- --
Cumulative effect of accounting change:
Postemployment benefits, net of income tax benefit
of $1.3............................................ -- -- (28.8)
---------- ---------- ----------
Net income (loss)................................... $ 94.6 $ (139.3) $ (191.7)
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIENCY
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
CURRENCY
CAPITAL ACCUMULATED OTHER TRANSLATION
DEFICIENCY DEFICIT (A) ADJUSTMENTS ADJUSTMENT
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
Balance, January 1, 1994.......... $(967.2) $(235.7) $(13.9) $(4.4)
Net loss......................... (191.7)(b)
Capital contribution from
parent........................... 0.2
Adjustment for minimum pension
liability....................... 3.0
Currency translation adjustment . (1.4)
------------ ------------- ------------- -------------
Balance, December 31, 1994........ (967.0) (427.4) (10.9) (5.8)
Net loss......................... (139.3)
Adjustment for minimum pension
liability....................... (6.1)
Currency translation adjustment . 0.8
------------ ------------- ------------- -------------
Balance, December 31, 1995........ (967.0) (566.7) (17.0) (5.0)
Net income....................... 94.6
Capital contribution from
parent........................... 0.1
Adjustment for minimum pension
liability....................... 4.6
Currency translation adjustment . (0.8)(d)
Acquisition of business.......... (4.1)(c)
------------ ------------- ------------- -------------
Balance, December 31, 1996........ $(971.0) $(472.1) $(12.4) $(5.8)
============ ============= ============= =============
</TABLE>
- ------------
(a) Represents net loss since June 24, 1992, the effective date of the
transfer agreements referred to in Note 12.
(b) Includes cumulative effect of change to new accounting standard for
postemployment benefits as of January 1, 1994.
(c) Represents amounts paid to Revlon Holdings Inc. for the Tarlow
Advertising Division ("Tarlow"). See Note 12.
(d) Includes $2.1 of gains related to the Company's simplification of its
international corporate structure.
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................................ $ 94.6 $(139.3) $(191.7)
Adjustments to reconcile net income (loss) to net cash (used
for) provided by operating activities:
Depreciation and amortization................................... 95.1 92.6 83.0
Amortization of debt discount................................... 106.7 94.9 84.5
Gain on sale of subsidiary stock................................ (187.8) -- --
Extraordinary item.............................................. 6.6 -- --
Gain on sale of business interests and certain fixed assets,
net............................................................ -- (2.2) --
Cumulative effect of accounting change.......................... -- -- 28.8
Change in assets and liabilities:
Increase in trade receivables.................................. (67.5) (44.5) (22.1)
(Increase) decrease in inventories............................. (5.5) (15.3) 14.1
(Increase) decrease in prepaid expenses and other
current assets................................................ (7.2) 4.5 19.1
Increase in accounts payable................................... 10.8 10.2 23.4
Decrease in accrued expenses and other current liabilities ... (10.2) (12.2) (22.8)
Other, net .................................................... (45.8) (40.4) (17.6)
--------- ---------- ----------
Net cash used for operating activities........................... (10.2) (51.7) (1.3)
--------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................................. (58.0) (54.3) (52.5)
Proceeds from the sale of business interests and certain fixed
assets.......................................................... -- 3.0 4.6
Acquisition of businesses, net of cash acquired.................. (7.1) (21.2) (3.1)
--------- ---------- ----------
Net cash used for investing activities........................... (65.1) (72.5) (51.0)
--------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in short-term borrowings--third parties . 5.8 (122.9) (5.8)
Proceeds from the issuance of long-term debt--third parties ..... 266.4 493.7 157.6
Repayment of long-term debt--third parties....................... (366.6) (236.3) (197.8)
Net proceeds from initial public offering........................ 187.8 -- --
Proceeds from the issuance of debt--affiliates................... 115.0 157.4 141.7
Repayment of debt--affiliates.................................... (115.0) (151.0) (141.7)
Net contribution from parent..................................... 0.1 -- 0.2
Acquisition of business from affiliate........................... (4.1) -- --
Payment of debt issuance costs................................... (10.9) (15.7) (3.0)
--------- ---------- ----------
Net cash provided by (used for) financing activities ............ 78.5 125.2 (48.8)
--------- ---------- ----------
Effect of exchange rate changes on cash.......................... (0.9) (0.1) 0.9
--------- ---------- ----------
Net increase (decrease) in cash and cash equivalents ........... 2.3 0.9 (100.2)
Cash and cash equivalents at beginning of period................ 36.3 35.4 135.6
--------- ---------- ----------
Cash and cash equivalents at end of period...................... $ 38.6 $ 36.3 $ 35.4
========= ========== ==========
Supplemental schedule of cash flow information:
Cash paid during the period for:
Interest....................................................... $ 139.0 $ 148.2 $ 138.5
Income taxes, net of refunds................................... 15.4 18.8 3.9
Supplemental schedule of noncash investing activities:
In connection with business acquisitions, liabilities were
assumed as follows:
Fair value of assets acquired.................................. $ 9.7 $ 27.3 $ 3.3
Cash paid...................................................... (7.2) (21.6) (3.1)
--------- ---------- ----------
Liabilities assumed............................................ $ 2.5 $ 5.7 $ 0.2
========= ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION:
Revlon Worldwide (Parent) Corporation ("Revlon Worldwide (Parent)" and
together with its subsidiaries, the "Company") is a holding company, formed
in 1997, that conducts its business exclusively through its indirect
subsidiary, Revlon Consumer Products Corporation ("Products Corporation") and
its subsidiaries. The Company operates in a single business segment with many
different products, which include an extensive array of glamorous, exciting
and innovative cosmetic and skin care, fragrance and personal care products,
and professional products (products for use in and resale by professional
salons). In the United States and increasingly in international markets, the
Company's products are sold principally in the self-select distribution
channel. The Company also sells certain products in the demonstrator-assisted
distribution channel, sells consumer and professional products to United
States military exchanges and commissaries, operates retail outlet stores and
has a licensing group. Outside the United States, the Company also sells
consumer products through department stores and specialty stores, such as
perfumeries.
Products Corporation was formed in April 1992 and, on June 24, 1992,
succeeded to assets and liabilities of the cosmetic and skin care, fragrance
and personal care products business of its then parent company whose name was
changed from Revlon, Inc. to Revlon Holdings Inc. ("Holdings"). Certain
consumer products lines sold in demonstrator-assisted distribution channels
considered not integral to the Company's business and which historically had
not been profitable (the "Retained Brands") and certain other assets and
liabilities are retained by Holdings. Revlon Worldwide (Parent) has had no
business operations of its own and its only material asset is its ownership
of all of the common stock of Revlon Worldwide Corporation ("Revlon
Worldwide"), which in turn has as its only material asset 83.1% of the
outstanding shares of capital stock of Revlon, Inc. (which represents
approximately 97.4% of the voting power of those outstanding shares), which,
in turn, owns all of the capital stock of Products Corporation. As such for
the years ended December 31, 1996, 1995 and 1994 its net income (loss) has
consisted almost entirely of its equity in the net income (loss) of Revlon,
Inc., and accretion of interest expense and amortization of debt issuance
costs related to Revlon Worldwide's Senior Secured Discount Notes Due 1998
(the "Senior Secured Discount Notes"). For such years, Revlon Worldwide has
had no cash flows of its own other than capital contributions from its parent
in 1994 and 1996.
The Consolidated Financial Statements of the Company presented herein
relate to the business to which the Company succeeded and include the assets,
liabilities and results of operations of such business. Assets, liabilities,
revenues, other income, costs and expenses which were identifiable
specifically to the Company are included herein and those identifiable
specifically to the retained and divested businesses of Holdings have been
excluded. Amounts which were not identifiable specifically to either the
Company or Holdings are included herein to the extent applicable to the
Company pursuant to a method of allocation generally based on the respective
proportion of the business of the Company to the applicable total of the
businesses of the Company and Holdings. The operating results of the Retained
Brands and divested businesses of Holdings have not been reflected in the
Consolidated Financial Statements of the Company. Management of the Company
believes that the basis of allocation and presentation is reasonable.
Although the Retained Brands were not transferred to Products Corporation
when the cosmetic and skin care, fragrance and personal care products
business of Holdings was transferred to Products Corporation, Products
Corporation's bank lenders required that all assets and liabilities relating
to such Retained Brands existing on the date of transfer (June 24, 1992),
other than the brand names themselves and certain other intangible assets, be
transferred to Products Corporation. Any assets and liabilities that had not
been disposed of or satisfied by December 31 of the applicable year have been
F-7
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
reflected in the Company's consolidated financial position as of such dates.
However, any new assets or liabilities generated by such Retained Brands
since the transfer date and any income or loss associated with inventory that
has been transferred to Products Corporation relating to such Retained Brands
have been and will be for the account of Holdings. In addition, certain
assets and liabilities relating to divested businesses were transferred to
Products Corporation on the transfer date and any remaining balances as of
December 31 of the applicable year have been reflected in the Company's
Consolidated Balance Sheets as of such dates. At December 31, 1996 and 1995,
the amounts reflected in the Company's Consolidated Balance Sheets aggregated
a net liability of $23.6 and $31.2, respectively, of which $5.2 and $6.8,
respectively, are included in accrued expenses and other and $18.4 and $24.4,
respectively, are included in other long-term liabilities, respectively.
The Consolidated Financial Statements include the accounts of Revlon
Worldwide (Parent) and its subsidiaries after elimination of all material
intercompany balances and transactions. Further, the Company has made a
number of estimates and assumptions relating to the reporting of assets and
liabilities, the disclosure of liabilities and the reporting of revenues and
expenses to prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from those
estimates.
Revlon Worldwide (Parent) is a partially direct and partially indirect
wholly owned subsidiary of Holdings and an indirect wholly owned subsidiary
of MacAndrews & Forbes Holdings Inc. ("MacAndrews Holdings"), a corporation
wholly owned through Mafco Holdings Inc. ("Mafco Holdings" and, together with
MacAndrews Holdings, "MacAndrews & Forbes") by Ronald O. Perelman.
CASH AND CASH EQUIVALENTS:
Cash equivalents (primarily investments in time deposits which have
original maturities of three months or less) are carried at cost, which
approximates fair value.
INVENTORIES:
Inventories are stated at the lower of cost or market value. Cost is
principally determined by the first-in, first-out method.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment is recorded at cost and is depreciated on a
straight-line basis over the estimated useful lives of such assets as
follows: land improvements, 20 to 40 years; buildings and improvements, 5 to
50 years; machinery and equipment, 3 to 17 years; and office furniture and
fixtures, 2 to 12 years. Leasehold improvements are amortized over their
estimated useful lives or the terms of the leases, whichever is shorter.
Repairs and maintenance are charged to operations as incurred, and
expenditures for additions and improvements are capitalized.
INTANGIBLE ASSETS RELATED TO BUSINESSES ACQUIRED:
Intangible assets related to businesses acquired principally represent
goodwill, which is being amortized on a straight-line basis over 40 years.
The Company evaluates, when circumstances warrant, the recoverability of its
intangible assets on the basis of undiscounted cash flow projections and
through the use of various other measures, which include, among other things,
a review of its image, market share and business plans. Accumulated
amortization aggregated $94.2 and $84.2 at December 31, 1996 and 1995,
respectively.
F-8
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
REVENUE RECOGNITION:
The Company recognizes net sales upon shipment of merchandise. Net sales
comprise gross revenues less expected returns, trade discounts and customer
allowances. Cost of sales is reduced for the estimated net realizable value
of expected returns.
INCOME TAXES:
Income taxes are calculated using the liability method in accordance with
the provisions of Statement of Financial Accounting Standards ("SFAS") No.
109, "Accounting for Income Taxes."
The Company is included in the affiliated group of which Mafco Holdings is
the common parent, and the Company's federal taxable income and loss will be
included in such group's consolidated tax return filed by Mafco Holdings. The
Company also may be included in certain state and local tax returns of Mafco
Holdings or its subsidiaries. For all periods presented, federal, state and
local income taxes are provided as if the Company filed its own income tax
returns. On June 24, 1992, Holdings, Products Corporation and certain of its
subsidiaries, Revlon, Inc. and Mafco Holdings entered into a tax sharing
agreement and on March 17, 1993 Revlon Worldwide and Mafco Holdings entered
into a tax sharing agreement, each of which is described in Note 9.
PENSION AND OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS:
Products Corporation sponsors pension and other retirement plans in
various forms covering substantially all employees who meet eligibility
requirements. For plans in the United States, the minimum amount required
pursuant to the Employee Retirement Income Security Act, as amended, is
contributed annually. Various subsidiaries outside the United States have
retirement plans under which funds are deposited with trustees or reserves
are provided.
Effective January 1, 1994, the Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." SFAS No. 112 requires the Company to
accrue for benefits such as severance, disability and health insurance
provided to former employees prior to their retirement, if estimable. The
cumulative effect of this change was an after-tax charge of $28.8 principally
for severance related to benefits previously recorded on an as and when paid
basis. Such benefits generally are vested and accumulate over employees'
service periods. Effective January 1, 1994, the Company accounts for such
benefits on a terminal basis in accordance with the provisions of SFAS No. 5,
"Accounting for Contingencies," as amended by SFAS No. 112, which requires
companies to accrue for postemployment benefits when it is probable that a
liability has been incurred and the amount of such liability can be
reasonably estimated, which is generally when an employee is terminated. The
Company does not believe such liabilities can be reasonably estimated prior
to termination.
RESEARCH AND DEVELOPMENT:
Research and development expenditures are expensed as incurred. The
amounts charged against earnings in 1996, 1995 and 1994 were $26.3, $22.3 and
$19.7, respectively.
FOREIGN CURRENCY TRANSLATION:
Assets and liabilities of foreign operations are generally translated into
United States dollars at the rates of exchange in effect at the balance sheet
date. Income and expense items are generally translated at the weighted
average exchange rates prevailing during each period presented. Gains and
losses resulting from foreign currency transactions are included in the
results of operations. Gains and losses
F-9
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
resulting from translation of financial statements of foreign subsidiaries
and branches operating in non-highly inflationary economies are recorded as a
component of stockholder's deficiency. Foreign subsidiaries and branches
operating in highly inflationary economies translate nonmonetary assets and
liabilities at historical rates and include translation adjustments in the
results of operations.
ISSUANCE OF SUBSIDIARY STOCK:
The Company recognizes gains and losses on issuances of subsidiary stock
in its Consolidated Statements of Operations.
STOCK-BASED COMPENSATION:
SFAS No. 123, "Accounting for Stock-Based Compensation," encourages, but
does not require companies to record compensation cost for stock-based
employee compensation plans at fair value. The Company has chosen to account
for stock-based compensation plans using the intrinsic value method
prescribed in Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees," and related Interpretations. Accordingly,
compensation cost for stock options is measured as the excess, if any, of the
quoted market price of Revlon, Inc.'s stock at the date of the grant over the
amount an employee must pay to acquire the stock. See Note 11.
DERIVATIVE FINANCIAL INSTRUMENTS:
Derivative financial instruments are utilized by the Company to reduce
interest rate and foreign exchange risks. The Company maintains a control
environment which includes policies and procedures for risk assessment and
the approval, reporting and monitoring of derivative financial instrument
activities. The Company does not hold or issue derivative financial
instruments for trading purposes.
The differentials to be received or paid under interest rate contracts
designated as hedges are recognized in income over the life of the contracts
as adjustment to interest expense. Gains and losses on terminations of
interest rate contracts designated as hedges are deferred and amortized into
interest expense over the remaining life of the original contracts.
Unrealized gains and losses on outstanding contracts designated as hedges are
not recognized.
Gains and losses on contracts to hedge identifiable foreign currency
commitments are deferred and accounted for as part of the related foreign
currency transaction. Gains and losses on all other forward exchange
contracts are included in income currently. Transaction gains and losses have
not been material.
2. INVENTORIES
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1996 1995
-------- -------
<S> <C> <C>
Raw materials and supplies $ 76.6 $ 84.8
Work-in-process ............ 19.4 27.9
Finished goods ............. 185.0 165.1
-------- -------
$281.0 $277.8
======== =======
</TABLE>
F-10
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
3. PREPAID EXPENSES AND OTHER
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1996 1995
------- -------
<S> <C> <C>
Prepaid expenses .................. $43.1 $36.5
Other ............................. 31.4 25.9
------- -------
$74.5 $62.4
======= =======
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT, NET
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
--------- ---------
<S> <C> <C>
Land and improvements ......... $ 37.5 $ 39.4
Buildings and improvements ... 207.6 203.2
Machinery and equipment ...... 194.9 192.8
Office furniture and fixtures 59.4 47.8
Leasehold improvements ........ 37.5 33.6
Construction-in-progress ..... 43.7 41.4
--------- ---------
580.6 558.2
Accumulated depreciation ..... (199.5) (191.1)
--------- ---------
$ 381.1 $ 367.1
========= =========
</TABLE>
Depreciation expense for the years ended December 31, 1996, 1995 and 1994
was $39.1, $38.6 and $34.7, respectively.
5. ACCRUED EXPENSES AND OTHER
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1996 1995
-------- --------
<S> <C> <C>
Advertising and promotional costs and accrual for
sales returns ................................... $136.4 $127.8
Compensation and related benefits ................ 95.5 100.7
Interest ......................................... 36.7 37.9
Taxes, other than federal income taxes ........... 35.0 33.8
Restructuring costs .............................. 6.9 15.2
Net liabilities assumed from Holdings ............ 5.2 6.8
Other ............................................ 49.5 48.4
-------- --------
$365.2 $370.6
======== ========
</TABLE>
6. SHORT-TERM BORROWINGS
Products Corporation maintained short-term bank lines of credit at
December 31, 1996 and 1995 aggregating approximately $72.7 and $69.0,
respectively, of which approximately $27.1 and $22.7 were outstanding at
December 31, 1996 and 1995, respectively. Compensating balances at December
31, 1996 and 1995 were approximately $7.4 and $7.2, respectively. Interest
rates on amounts borrowed under such short-term lines at December 31, 1996
and 1995 varied from 2.2% to 12.1% and 2.0% to 13.4%, respectively.
F-11
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
7. LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
---------- ---------
<S> <C> <C>
Working capital lines (a) ..................... $ 187.2 $ 277.5
Bank mortgage loan agreement due 1997 (b) .... 41.7 52.4
9 1/2% Senior Notes due 1999 (c) .............. 200.0 200.0
9 3/8% Senior Notes due 2001 (d) .............. 260.0 260.0
10 1/2% Senior Subordinated Notes due 2003 (e) 555.0 555.0
10 7/8% Sinking Fund Debentures due 2010 (f) . 79.6 79.2
Advances from Holdings (g) .................... 30.4 41.3
Senior Secured Discount Notes Due 1998,
net of unamortized discount of $146.2
and $252.9 (h) ............................... 969.6 862.9
Other mortgages and notes payable (8.6%-13.0%)
due through 2001 ............................. 7.1 11.3
---------- ---------
2,330.6 2,339.6
Less current portion .......................... (8.8) (9.2)
---------- ---------
$2,321.8 $2,330.4
========== =========
</TABLE>
- ------------
(a) The credit agreement in effect at December 31, 1995 (the "Former Credit
Agreement"), which was subsequently amended, provided up to $500.0 comprised
of three senior secured facilities: a $100.0 term loan facility, a $225.0
revolving credit facility and a $175.0 multi-currency facility. Products
Corporation complied with each of the financial covenants contained in the
Former Credit Agreement, as of and for the defined measurement periods ended
December 31, 1995. The Former Credit Agreement was scheduled to expire on
June 30, 1997.
In connection with repayments of indebtedness under the Former Credit
Agreement in 1996, the commitments thereunder were extinguished, representing
an early extinguishment of a portion of such facilities. Consequently, in
1996, the Company recognized a loss of approximately $6.6 representing the
then unamortized debt issuance costs, which have been reported in the
Consolidated Statements of Operations as an extraordinary item.
Loans that were outstanding under the Former Credit Agreement's revolving
credit facility and term loan facility bore interest initially at a rate
equal to, at Products Corporation's option, either (A) the alternate base
rate, defined to mean the highest of (i) the prime rate, (ii) the secondary
market rate for certificates of deposit plus 1% and (iii) the federal funds
rate plus 1/2%; in each case plus 2-1/2% or (B) the Eurodollar Rate plus
3-1/2%. The multi-currency facility bore interest at a rate equal to the
Eurocurrency Rate, the local lender rate or the alternate base rate, in each
case plus 3-1/2%.
In January 1996, Products Corporation entered into a credit agreement (the
"Credit Agreement"), which became effective upon consummation of Revlon,
Inc.'s initial public equity offering (the "Offering") on March 5, 1996. The
Credit Agreement includes, among other things, (i) an extension of the term
of the facilities from June 30, 1997 to December 31, 2000 (subject to earlier
termination in certain circumstances), (ii) a reduction of the interest
rates, (iii) an increase in the amount of the credit facilities from $500.0
to $600.0 (subject to reduction as described below) and (iv) the release of
security interests in assets of certain foreign subsidiaries of Products
Corporation which were then pledged.
The Credit Agreement is comprised of four senior secured facilities: a
$130.0 term loan facility (the "Term Loan Facility"), a $220.0 multi-currency
facility (the "Multi-Currency Facility"), a $200.0 revolving
F-12
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
7. LONG-TERM DEBT (Continued)
acquisition facility (the "Acquisition Facility") and a $50.0 standby letter
of credit facility (the "Special LC Facility" and together with the Term Loan
Facility, the Multi-Currency Facility and the Acquisition Facility, the
"Credit Facilities"). The Multi-Currency Facility is available (i) to
Products Corporation, in revolving credit loans denominated in U.S. dollars
(the "Revolving Credit Loans"), (ii) to Products Corporation, in standby and
commercial letters of credit denominated in U.S. dollars (the "Operating
Letters of Credit") and (iii) to Products Corporation and certain of its
international subsidiaries designated from time to time in revolving credit
loans and bankers' acceptances denominated in U.S. dollars and other
currencies (the "Local Loans"). The Credit Facilities (other than loans in
foreign currencies) bear interest at a rate equal to, at Products
Corporation's option, either (A) the Alternate Base Rate plus 1.5% (or 2.5%
for Local Loans); or (B) the Eurodollar Rate plus 2.5%. Loans in foreign
currencies bear interest at a rate equal to the Eurocurrency Rate or, in the
case of Local Loans, the local lender rate, in each case plus 2.5%. The
applicable margin is reduced (or increased, but not above 2% for Alternate
Base Rate Loans not constituting Local Loans and 3% for other loans) in the
event Products Corporation attains (or fails to attain) certain leverage
ratios. Products Corporation pays the Lender a commitment fee of 1/2 of 1% of
the unused portion of the Credit Facilities. Products Corporation also paid
certain facility and other fees to the lenders and agents upon closing of the
Credit Agreement. Prior to its termination date, the commitments under the
Credit Facilities will be reduced by: (i) the net proceeds in excess of $10.0
each year received during such year from sales of assets by Holdings (or
certain of its subsidiaries), Products Corporation or any of its subsidiaries
(and $25.0 with respect to certain specified dispositions), subject to
certain limited exceptions, (ii) certain proceeds from the sales of
collateral security granted to the lenders, (iii) the net proceeds from the
issuance by Holdings, Products Corporation or any of its subsidiaries of
certain additional debt, (iv) 50% of the excess cash flow of Products
Corporation and its subsidiaries and (v) certain scheduled reductions in the
case of the Term Loan Facility, which commence on January 31, 1997 in the
amount of $1.0 annually over the remaining life of the Credit Agreement, and
the Acquisition Facility, which will commence on December 31, 1997 in the
amount of $20.0, $50.0 in 1998, $60.0 in 1999 and $70.0 in 2000. In addition,
the Credit Agreement requires that the net proceeds from any sale of equity
securities of any parent of Products Corporation which has the assets of
Products Corporation or certain of its subsidiaries as its only substantial
assets be contributed to Products Corporation (except to the extent that such
proceeds are applied to repay or refinance the Senior Secured Discount Notes
of Revlon Worldwide or are deposited with the trustee under the Indenture
covering such notes) and that Products Corporation use 50% of such proceeds,
in certain circumstances, to reduce commitments under the Credit Agreement.
The Credit Agreement will terminate on December 31, 2000 (subject to earlier
termination on March 31, 1999 if Products Corporation has not refinanced its
9-1/2% Senior Notes due 1999 (the "1999 Senior Notes") before March 31, 1999
or if an alternative plan for the refinancing of the 1999 Senior Notes has
not been approved by the majority lenders prior to March 15, 1999). As of
December 31, 1996, Products Corporation had approximately $130.0 outstanding
under the Term Loan Facility, $57.2 outstanding under the Multi-Currency
Facility, none outstanding under the Acquisition Facility and $33.5
outstanding under the Special LC Facility.
The Credit Facilities, subject to certain exceptions and limitations, are
supported by guarantees from Holdings and certain of its subsidiaries,
Revlon, Inc. and the domestic subsidiaries of Products Corporation. The
obligations of Products Corporation under the Credit Facilities and the
obligations under the aforementioned guarantees are secured, subject to
certain limitations, by (i) mortgages on Holdings' Edison, New Jersey and
Products Corporation's Phoenix, Arizona facilities; (ii) the capital stock of
Products Corporation and its domestic subsidiaries and 66% of the capital
stock of its first tier foreign subsidiaries and the capital stock of certain
subsidiaries of Holdings; (iii) domestic intellectual property and certain
other domestic intangibles of (x) Products Corporation and its domestic
subsidiaries and (y) certain subsidiaries of Holdings; (iv) domestic
inventory and accounts receivable of (x) Products
F-13
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
7. LONG-TERM DEBT (Continued)
Corporation and its domestic subsidiaries and (y) certain subsidiaries of
Holdings; and (v) the assets of certain foreign subsidiary borrowers under
the Multi-Currency Facility (to support their borrowings only). The Credit
Agreement provides that the liens on the stock and personal property referred
to above may be shared from time to time with specified types of other
obligations incurred or guaranteed by Products Corporation that were not
included in the Former Credit Agreement, such as interest rate hedging
obligations, working capital lines and the Yen Credit Agreement (as defined
below).
The Credit Agreement contains various restrictive covenants prohibiting
Products Corporation and its subsidiaries from, among other things, (i)
incurring additional indebtedness, with certain exceptions, (ii) making
dividend, tax sharing (see Note 9 "Income Taxes") and other payments or loans
to the Company or other affiliates, with certain exceptions, including among
others, permitting Products Corporation to pay dividends and make
distributions to Revlon, Inc., among other things, to enable Revlon, Inc. to
pay expenses incidental to being a public holding company, including, among
other things, professional fees such as legal and accounting, regulatory fees
such as Securities and Exchange Commission ("Commission") filing fees and
other miscellaneous expenses related to being a public holding company, and
to pay dividends or make distributions up to $5.0 per annum in certain
circumstances to finance the purchase by Revlon, Inc. of its common stock in
connection with the delivery of such common stock to grantees under any stock
option plan, (iii) creating liens or other encumbrances on their assets or
revenues, granting negative pledges or selling or transferring any of their
assets except in the ordinary course of business, all subject to certain
limited exceptions, (iv) with certain exceptions, engaging in merger or
acquisition transactions, (v) prepaying indebtedness, subject to certain
limited exceptions, (vi) making investments, subject to certain limited
exceptions and (vii) entering into transactions with affiliates of Products
Corporation other than upon terms no less favorable to Products Corporation
or its subsidiaries than it would obtain in an arms' length transaction. In
addition to the foregoing, the Credit Agreement contains certain financial
covenants including, among other things, covenants requiring Products
Corporation and its subsidiaries to maintain minimum consolidated adjusted
net worth, minimum EBITDA (defined as earnings before interest, taxes,
depreciation and amortization and certain other charges), minimum interest
coverage, and covenants which limit the amount of total indebtedness of
Products Corporation and the amount of capital expenditures.
In January 1997, the Credit Agreement was amended to, among other things,
(i) permit the merger of Prestige Fragrance & Cosmetics, Inc. ("PFC"), a
wholly owned subsidiary of Products Corporation, into The Cosmetic Center,
Inc. ("Cosmetic Center") and to generally exclude Cosmetic Center (as the
survivor of the merger) from the definition of "subsidiary" under the Credit
Agreement, (ii) increase the amount of permitted dividends and distributions
to finance the purchase by Revlon, Inc. if its common stock in connection
with the delivery of such common stock to grantees under any stock option
plan to $6.0 per annum, and (iii) permit Products Corporation to purchase
capital stock of Revlon, Inc. for purposes of making matching contributions
under a proposed Non-Qualified Excess Savings Plan for Key Executives.
(b) The Pacific Finance & Development Corp., a subsidiary of Products
Corporation, is the borrower under a yen denominated credit agreement (the
"Yen Credit Agreement"), which had a principal balance of approximately yen
4.8 billion as of December 31, 1996 (approximately $41.7 U.S. dollar
equivalent as of December 31, 1996). In accordance with the terms of the Yen
Credit Agreement, approximately yen 2.7 billion (approximately $26.9 U.S.
dollar equivalent) was paid in January 1995 and approximately yen 539 million
(approximately $5.2 U.S. dollar equivalent) was paid in January 1996. A
payment of approximately yen 539 million (approximately $4.6 U.S. dollar
equivalent as of December 31, 1996) was paid in January 1997. The balance of
the Yen Credit Agreement of approximately yen 4.3 billion (approximately
$37.1 U.S. dollar equivalent as of December 31, 1996) is currently due on
December 31, 1997. Products
F-14
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
7. LONG-TERM DEBT (Continued)
Corporation is currently renegotiating an extension of the term of the Yen
Credit Agreement. In the event that such extension is not obtained, Products
Corporation is able and intends to refinance the Yen Credit Agreement under
existing long-term credit facilities. Accordingly, the obligation under the
Yen Credit Agreement has been classified as long-term as of December 31,
1996. The applicable interest rate at December 31, 1996 under the Yen Credit
Agreement was the Euro-Yen rate plus 2.5% which approximated 3.1%. The
interest rate at December 31, 1995, applicable to the remaining balance, was
the Euro-Yen rate plus 3.5%, which approximated 4.1%.
(c) The 1999 Senior Notes are senior unsecured obligations of Products
Corporation and rank pari passu in right of payment to all existing and
future Senior Debt (as defined in the indenture relating to the 1999 Senior
Notes (the "1999 Senior Note Indenture")). The 1999 Senior Notes bear
interest at 9-1/2% per annum. Interest is payable on June 1 and December 1.
The 1999 Senior Notes may not be redeemed prior to maturity. Upon a Change
of Control (as defined in the 1999 Senior Note Indenture) and subject to
certain conditions, each holder of 1999 Senior Notes will have the right to
require Products Corporation to repurchase all or a portion of such holder's
1999 Senior Notes at 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of repurchase. In addition, under
certain circumstances in the event of an Asset Disposition (as defined in the
1999 Senior Note Indenture), Products Corporation will be obligated to make
offers to purchase the 1999 Senior Notes.
The 1999 Senior Note Indenture contains various restrictive covenants
that, among other things, limit (i) the issuance of additional debt and
redeemable stock by Products Corporation, (ii) the issuance of debt and
preferred stock by Products Corporation's subsidiaries, (iii) the incurrence
of liens on the assets of Products Corporation and its subsidiaries which do
not equally and ratably secure the 1999 Senior Notes, (iv) the payment of
dividends on and redemption of capital stock of Products Corporation and its
subsidiaries and the redemption of certain subordinated obligations of
Products Corporation, except that the 1999 Senior Note Indenture permits
Products Corporation to pay dividends and make distributions to Revlon, Inc.,
among other things, to enable Revlon, Inc. to pay expenses incidental to
being a public holding company, including, among other things, professional
fees such as legal and accounting, regulatory fees such as Commission filing
fees and other miscellaneous expenses related to being a public holding
company, and to pay dividends or make distributions up to $5.0 per annum in
certain circumstances to finance the purchase by Revlon, Inc. of its Class A
Common Stock in connection with the delivery of such Class A Common Stock to
grantees under any stock option plan, (v) the sale of assets and subsidiary
stock, (vi) transactions with affiliates and (vii) consolidations, mergers
and transfers of all or substantially all of Products Corporation's assets.
The 1999 Senior Note Indenture also prohibits certain restrictions on
distributions from subsidiaries. All of these limitations and prohibitions,
however, are subject to a number of important qualifications.
(d) The 9 3/8% Senior Notes due 2001 (the "Senior Notes") are senior
unsecured obligations of Products Corporation and rank pari passu in right of
payment to all existing and future Senior Debt (as defined in the indenture
relating to the Senior Notes (the "Senior Note Indenture")). The Senior Notes
bear interest of 9 3/8% per annum. Interest is payable on April 1 and October
1.
The Senior Notes may be redeemed at the option of Products Corporation in
whole or in part at any time on or after April 1, 1998 at the redemption
prices set forth therein, plus accrued and unpaid interest, if any, to the
date of redemption. Upon a Change of Control (as defined in the Senior Note
Indenture), Products Corporation will have the option to redeem the Senior
Notes in whole or in part at a redemption price equal to the principal amount
thereof plus the Applicable Premium (as defined in the Senior Note
Indenture), plus accrued and unpaid interest, if any, to the date of
redemption, and, subject to certain
F-15
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
7. LONG-TERM DEBT (Continued)
conditions, each holder of Senior Notes will have the right to require
Products Corporation to repurchase all or a portion of such holder's Senior
Notes at 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of repurchase. In addition, under certain
circumstances in the event of an Asset Disposition (as defined in the Senior
Note Indenture), Products Corporation will be obligated to make offers to
purchase the Senior Notes.
The Senior Note Indenture contains various restrictive covenants that,
among other things, limit (i) the issuance of additional indebtedness and
redeemable stock by Products Corporation, (ii) the issuance of indebtedness
and preferred stock by Products Corporation's subsidiaries, (iii) the
incurrence of liens on the assets of Products Corporation and its
subsidiaries which do not equally and ratably secure the Senior Notes, (iv)
the payment of dividends on capital stock of Products Corporation and its
subsidiaries and the redemption of capital stock and certain subordinated
obligations of Products Corporation, except that the Senior Note Indenture
permits Products Corporation to pay dividends and make distributions to
Revlon, Inc., among other things, to enable Revlon, Inc. to pay expenses
incidental to being a public holding company, including, among other things,
professional fees such as legal and accounting, regulatory fees such as
Commission filing fees and other miscellaneous expenses related to being a
public holding company, and to pay dividends or make distributions up to $5.0
per annum in certain circumstances to finance the purchase by Revlon, Inc. of
its Class A Common Stock in connection with the delivery of such Class A
Common Stock to grantees under any stock option plan, (v) the sale of assets
and subsidiary stock, (vi) transactions with affiliates and (vii)
consolidations, mergers and transfers of all or substantially all of Products
Corporation's assets. The Senior Note Indenture also prohibits certain
restrictions on distributions from subsidiaries of Products Corporation. All
of these limitations and prohibitions, however, are subject to a number of
important qualifications.
(e) The Senior Subordinated Notes are unsecured obligations of Products
Corporation and are subordinated in right of payment to all existing and
future Senior Debt (as defined in the indenture relating to the Senior
Subordinated Notes (the "Senior Subordinated Note Indenture")). The Senior
Subordinated Notes bear interest of 10 1/2% per annum. Interest is payable on
February 15 and August 15.
The Senior Subordinated Notes may be redeemed at the option of Products
Corporation in whole or in part at any time on or after February 15, 1998 at
the redemption prices set forth therein, plus accrued and unpaid interest, if
any, to the date of redemption. Upon a Change of Control (as defined in the
Senior Subordinated Note Indenture), Products Corporation will have the
option to redeem the Senior Subordinated Notes in whole or in part at a
redemption price equal to the principal amount thereof plus the Applicable
Premium (as defined in the Senior Subordinated Note Indenture), plus accrued
and unpaid interest, if any, to the date of redemption, and, subject to
certain conditions, each holder of Senior Subordinated Notes will have the
right to require Products Corporation to repurchase all or a portion of such
holder's Senior Subordinated Notes at 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the date of repurchase. In
addition, under certain circumstances in the event of an Asset Disposition
(as defined in the Senior Subordinated Note Indenture), Products Corporation
will be obligated to make offers to purchase the Senior Subordinated Notes.
The Senior Subordinated Note Indenture contains various restrictive
covenants that, among other things, limit (i) the issuance of additional
indebtedness and redeemable stock by Products Corporation, (ii) the issuance
of indebtedness and preferred stock by Products Corporation's subsidiaries,
(iii) the incurrence of liens on the assets of Products Corporation and its
subsidiaries to secure debt other than Senior Debt (as defined in the Senior
Subordinated Note Indenture) or debt of a subsidiary, unless the Senior
Subordinated Notes are equally and ratably secured, (iv) the payment of
dividends on capital
F-16
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
7. LONG-TERM DEBT (Continued)
stock of Products Corporation and its subsidiaries and the redemption of
capital stock and certain subordinated obligations of Products Corporation,
except that the Senior Subordinated Note Indenture permits Products
Corporation to pay dividends and make distributions to Revlon, Inc., among
other things, to enable Revlon, Inc. to pay expenses incidental to being a
public holding company, including, among other things, professional fees such
as legal and accounting, regulatory fees such as Commission filing fees and
other miscellaneous expenses related to being a public holding company, and
to pay dividends or make distributions up $5.0 per annum in certain
circumstances to finance the purchase by Revlon, Inc. of its Class A Common
Stock in connection with the delivery of such Class A Common Stock to
grantees under any stock option plan, (v) the sale of assets and subsidiary
stock, (vi) transactions with affiliates and (vii) consolidations, mergers
and transfers of all or substantially all of Products Corporation's assets.
The Senior Subordinated Note Indenture also prohibits certain restrictions on
distributions from subsidiaries of Products Corporation. All of these
limitations and prohibitions, however, are subject to a number of important
qualifications.
(f) Holdings' 10 7/8% Sinking Fund Debentures due 2010 (face value of
$85.0, net of repurchases) (the "Sinking Fund Debentures") are redeemable, in
whole or in part, at 101.96% of the principal amount for the year beginning
July 15, 1996, decreasing evenly each year on July 15, to par by July 15,
2000. Mandatory sinking fund redemptions of $9.0 per year commenced in 1991.
Optional sinking fund redemptions of up to an additional $13.5 per year may
be made annually and may be applied to reduce any subsequent mandatory
sinking fund redemption. Interest is payable on January 15 and July 15.
Holdings purchased $115.0 of the Sinking Fund Debentures in the open market
prior to 1985, $9.0 of which had been used in each of the years 1991 through
1996 to satisfy sinking fund payment obligations and approximately $61.0 of
which is creditable to future sinking fund requirements. The indenture
relating to the Sinking Fund Debentures contains various restrictive
covenants prohibiting Products Corporation and its subsidiaries from (i)
incurring indebtedness in excess of 5% of the consolidated net tangible
assets, where such indebtedness is secured by any manufacturing plant in the
United States owned or leased by Products Corporation, the book value of
which exceeds 2% of the consolidated net tangible assets of Products
Corporation, unless the Sinking Fund Debentures are equally and ratably
secured, (ii) entering into certain sale and leaseback transactions or (iii)
consolidating or merging with or into, or selling or transferring all or
substantially all of their properties and assets to, another corporation,
unless certain conditions are satisfied.
(g) During 1992, Holdings made an advance of $25.0 to Products
Corporation. This advance was evidenced by a noninterest-bearing demand note
payable by Products Corporation, the payment of which was subordinated to the
obligations of Products Corporation under the credit agreement in effect at
that time. Holdings agreed not to demand payment under the note so long as
any indebtedness remained outstanding under the credit agreement in effect at
that time. In February 1995, the $13.3 in notes due to Products Corporation
under the Financing Reimbursement Agreement, referred to in Note 12, was
offset against the $25.0 note and Holdings agreed not to demand payment under
the resulting $11.7 note so long as indebtedness remains outstanding under
the Credit Agreement. In October 1993, Products Corporation borrowed from
Holdings approximately $23.2 (as adjusted and subject to further adjustment
for certain expenses) representing amounts received by Holdings from an
escrow account relating to divestiture by Holdings of certain of its
predecessor businesses. In July 1995, Products Corporation borrowed from
Holdings approximately $0.8, representing certain amounts received by
Holdings relating to an arbitration arising out of the sale by Holdings of
certain of its businesses. In 1995, Products Corporation borrowed from
Holdings approximately $5.6, representing certain amounts received by
Holdings from the sale by Holdings of certain of its businesses. In June
1996, $10.9 in notes due to Products Corporation under the Financing
Reimbursement Agreement from Holdings was offset
F-17
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
7. LONG-TERM DEBT (Continued)
against the $11.7 demand note (referred to above) payable by Products
Corporation to Holdings. In accordance with the Credit Agreement, such
amounts, as adjusted, are evidenced by noninterest-bearing promissory notes
payable to Holdings that are subordinated to Products Corporation's
obligations under the Credit Agreement.
(h) The Senior Secured Discount Notes were issued by Revlon Worldwide on
March 25, 1993 in the aggregate principal amount of $1,115.8. The Senior
Secured Discount Notes were issued at a substantial discount from their
principal amount at maturity representing a yield to maturity of
approximately 12% per annum calculated at March 25, 1993. There are no
periodic interest payments on the Senior Secured Discount Notes.
The Senior Secured Discount Notes are secured by a pledge of all of the
common stock of Revlon, Inc. owned by Revlon Worldwide, a portion of which
may be released upon the occurrence of certain events as specified in the
indenture relating to the Senior Secured Discount Notes (the "Senior Secured
Discount Notes Indenture"). The Senior Secured Discount Notes are senior debt
of Revlon Worldwide and rank pari passu in right of payment with any future
senior debt of Revlon Worldwide. Revlon Worldwide is a holding company and
substantially all of its liabilities (other than the Senior Secured Discount
Notes) are liabilities of subsidiaries. The Senior Secured Discount Notes are
effectively subordinated to all liabilities of Revlon Worldwide's
subsidiaries, including trade payables.
The Senior Secured Discount Notes may be redeemed at the option of Revlon
Worldwide in whole or from time to time in part at any time at 100% of their
principal amount at maturity. The Senior Secured Discount Notes may be
redeemed in whole or in part upon the occurrence of other events specified in
the Senior Secured Discount Notes Indenture at the prices and under the
conditions specified therein, such as upon a Change of Control (as defined in
the Senior Secured Discount Notes Indenture).
The Senior Secured Discount Notes Indenture contains covenants that, among
other things, limit (i) the issuance of other debt and redeemable stock by
Revlon Worldwide and Revlon, Inc. and the issuance of preferred stock by
Revlon, Inc., (ii) the issuance of debt and preferred stock by Products
Corporation and its subsidiaries, (iii) the payment of dividends on capital
stock of Revlon Worldwide and its subsidiaries and the redemption of capital
stock of Revlon Worldwide, (iv) the sale of assets and subsidiary stock, (v)
transactions with affiliates, and (vi) consolidations, mergers and transfers
of all or substantially all Revlon Worldwide's assets. The Senior Secured
Discount Notes Indenture also prohibits certain restrictions on distributions
from subsidiaries. All of these limitations and prohibitions, however, are
subject to a number of important qualifications.
Products Corporation borrows funds from its affiliates from time to time
to supplement its working capital borrowings at interest rates more favorable
to Products Corporation than the rate under the Credit Agreement. No such
borrowings were outstanding at December 31, 1996 or 1995.
The aggregate amounts of long-term debt maturities and sinking fund
requirements (at December 31, 1996), in the years 1997 through 2001 are $8.8,
$1,010.2, $201.2, $214.9 and $260.9, respectively, and $634.6 thereafter.
8. FINANCIAL INSTRUMENTS
As of December 31, 1996, Products Corporation was party to a series of
interest rate swap agreements (which expire at various dates through December
2001) totaling a notional amount of $225.0 in which Products Corporation
agreed to pay on such notional amount a variable interest rate equal to the
six month London Inter-Bank Offered Rate (5.6875% per annum at January 24,
1997) to its counterparties and the counterparties agreed to pay on such
notional amounts fixed interest rates
F-18
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
8. FINANCIAL INSTRUMENTS (Continued)
averaging approximately 6.03% per annum. Products Corporation entered into
these agreements in 1993 and 1994 (and in the first quarter of 1996 extended
a portion equal to a notional amount of $125.0 through December 2001) to
convert the interest rate on $225.0 of fixed-rate indebtedness to a variable
rate. If Products Corporation had terminated these agreements, which Products
Corporation considers to be held for other than trading purposes, on December
31, 1996, a loss of approximately $3.5 would have been realized. Certain
other swap agreements were terminated in 1993 for a gain of $14.0. The
amortization of the realized gain on these agreements for 1996 and 1995 was
approximately $3.2 in each of the years. The remaining unamortized gain,
which is being amortized over the original lives of the agreements, is $3.1
as of December 31, 1996. Although cash flow from the presently outstanding
agreements was positive for 1996, future positive or negative cash flows from
these agreements will depend upon the trend of short-term interest rates
during the remaining lives of such agreements. In the event of nonperformance
by the counterparties at any time during the remaining lives of the
agreements, Products Corporation could lose some or all of any possible
future positive cash flows from these agreements. However, Products
Corporation does not anticipate nonperformance by such counterparties,
although no assurances can be given.
Products Corporation enters into forward foreign exchange contracts from
time to time to hedge certain cash flows denominated in foreign currencies.
At December 31, 1996, Products Corporation had forward foreign exchange
contracts denominated in various currencies, predominantly the U.K. pound of
approximately $62.0 (U.S. dollar equivalent). If Products Corporation had
terminated these contracts on December 31, 1996, no material gain or loss
would have been realized. Products Corporation had similar contracts
outstanding at December 31, 1995 in the amount of $8.0 (U.S. dollar
equivalent).
The fair value of the Company's long-term debt is estimated based on the
quoted market prices for the same issues or on the current rates offered to
the Company for debt of the same remaining maturities. The estimated fair
value of long-term debt at December 31, 1996 was approximately $35.6 more
than the carrying value of $2,330.6. Because considerable judgment is
required in interpreting market data to develop estimates of fair value, the
estimates are not necessarily indicative of the amounts that could be
realized or would be paid in a current market exchange. The effect of using
different market assumptions or estimation methodologies may be material to
the estimated fair value amounts.
Products Corporation also maintains standby and trade letters of credit
with certain banks for various corporate purposes under which Products
Corporation is obligated, of which approximately $40.9 were outstanding at
December 31, 1996. Included in this amount are $26.4 in standby letters of
credit which support Products Corporation's self-insurance programs. See Note
12. The estimated liability under such programs is accrued by Products
Corporation.
The carrying amounts of cash and cash equivalents, trade receivables,
accounts payable and short-term borrowings approximate their fair values.
9. INCOME TAXES
In June 1992, Holdings, Revlon, Inc., Products Corporation and certain of
its subsidiaries, and Mafco Holdings entered into a tax sharing agreement (as
subsequently amended, the "1992 Tax Sharing Agreement"), pursuant to which
Mafco Holdings has agreed to indemnify Revlon, Inc. and Products Corporation
against federal, state or local income tax liabilities of the consolidated or
combined group of which Mafco Holdings (or a subsidiary of Mafco Holdings
other than Revlon, Inc. or Products Corporation and its subsidiaries) is the
common parent for taxable periods beginning on or after January 1, 1992
during which Revlon, Inc., Products Corporation or a subsidiary of Products
Corporation is a member of
F-19
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
9. INCOME TAXES (Continued)
such group. Pursuant to the 1992 Tax Sharing Agreement, for all taxable
periods beginning on or after January 1, 1992, Revlon, Inc. will pay to
Holdings amounts equal to the taxes that Revlon, Inc. would otherwise have to
pay if it were to file separate federal, state or local income tax returns
(including any amounts determined to be due as a result of a redetermination
arising from an audit or otherwise of the consolidated or combined tax
liability relating to any such period which is attributable to Revlon, Inc.),
except that Revlon, Inc. will not be entitled to carry back any losses to
taxable periods ending prior to January 1, 1992. No payments are required by
Revlon, Inc. if and to the extent Products Corporation is prohibited under
the Credit Agreement from making cash tax sharing payments to Revlon, Inc.
The Credit Agreement prohibits Products Corporation from making such cash tax
sharing payments other than in respect of state and local income taxes.
In March 1993, Revlon Worldwide and Mafco Holdings entered into a tax
sharing agreement (the "1993 Tax Sharing Agreement" and, together with the
1992 Tax Sharing Agreement, the "Tax Sharing Agreements") pursuant to which,
for all taxable periods beginning on or after January 1, 1993, Revlon
Worldwide will pay to Mafco Holdings amounts equal to the taxes that Revlon
Worldwide would otherwise have to pay if it were to file separate federal,
state and local income tax returns for itself, excluding Revlon, Inc. and its
subsidiaries (including any amounts determined to be due as a result of a
redetermination arising from an audit or otherwise of the tax liability
relating to any such period which is attributable to Revlon Worldwide).
Since the payments to be made by Revlon, Inc. under the 1992 Tax Sharing
Agreement and by Revlon Worldwide under the 1993 Tax Sharing Agreement will
be determined by the amount of taxes that Revlon, Inc. or Revlon Worldwide,
as the case may be, would otherwise have to pay if it were to file separate
federal, state or local income tax returns, the Tax Sharing Agreements will
benefit Mafco Holdings to the extent Mafco Holdings can offset the taxable
income generated by Revlon, Inc. or Revlon Worldwide against losses and tax
credits generated by Mafco Holdings and its other subsidiaries. As a result
of the net operating tax losses and prohibitions under the Credit Agreement,
no federal tax payments or payments in lieu of taxes pursuant to the 1992 Tax
Sharing Agreement were required by Revlon, Inc. for 1996, 1995 or 1994 and
with respect to Revlon Worldwide as a result of the absence of business
operations or source of income of its own, no federal tax payments or
payments in lieu of taxes pursuant to the 1993 Tax Sharing Agreement were
required for 1996, 1995 or 1994.
Pursuant to the asset transfer agreement referred to in Note 12, Products
Corporation assumed all tax liabilities of Holdings other than (i) certain
income tax liabilities arising prior to January 1, 1992 to the extent such
liabilities exceeded reserves on Holdings' books as of January 1, 1992 or
were not of the nature reserved for and (ii) other tax liabilities to the
extent such liabilities are related to the business and assets retained by
Holdings.
F-20
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
9. INCOME TAXES (Continued)
The Company's income (loss) before income taxes and the applicable
provision (benefit) for income taxes are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1996 1995 1994
-------- ---------- ----------
<S> <C> <C> <C>
Income (loss) before income taxes:
Domestic ......................................... $ 86.2 $(137.5) $(156.9)
Foreign .......................................... 40.5 23.6 16.8
-------- ---------- ----------
$126.7 $(113.9) $(140.1)
======== ========== ==========
Provision (benefit) for income taxes:
Federal .......................................... $ -- $ -- $ --
State and local .................................. 1.2 3.4 2.8
Foreign .......................................... 24.3 22.0 $ 20.0
-------- ---------- ----------
$ 25.5 $ 25.4 $ 22.8
======== ========== ==========
Current .......................................... $ 22.7 $ 37.1 $ 40.5
Deferred ......................................... 6.6 3.0 1.4
Benefits of operating loss carryforwards ........ (4.7) (15.4) (18.1)
Carryforward utilization applied to goodwill .... 1.0 0.8 --
Effect of enacted change of tax rates ............ (0.1) (0.1) --
Beginning-of-year valuation allowance adjustment -- -- (1.0)
-------- ---------- ----------
$ 25.5 $ 25.4 $ 22.8
======== ========== ==========
</TABLE>
The effective tax rate on income (loss) before income taxes is reconciled
to the applicable statutory federal income tax rate as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1996 1995 1994
-------- --------- ---------
<S> <C> <C> <C>
Statutory federal income tax rate ....................... 35.0% (35.0)% (35.0)%
State and local taxes, net of federal income tax benefit 0.6 1.9 1.3
Foreign and U.S. tax effects attributable to operations
outside the U.S. ....................................... 14.3 12.1 10.1
Nondeductible amortization expense ...................... 2.3 2.2 1.8
U.S. loss without benefit ............................... 19.8 41.1 38.1
Nontaxable gain on issuance of subsidiary stock ........ (51.9) -- --
-------- --------- ---------
Effective rate .......................................... 20.1% 22.3% 16.3%
======== ========= =========
</TABLE>
F-21
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
9. INCOME TAXES (Continued)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1996 and 1995 are presented below:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
--------- ---------
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to doubtful accounts .... $ 3.9 $ 3.7
Inventories ................................................... 12.5 12.8
Net operating loss carryforwards .............................. 395.4 357.3
Restructuring and related reserves ............................ 10.2 13.4
Employee benefits ............................................. 31.7 36.3
State and local taxes ......................................... 12.8 12.8
Self-insurance ................................................ 3.6 3.9
Advertising, sales discounts and returns and coupon
redemptions .................................................. 23.6 19.1
Other ......................................................... 23.9 19.7
--------- ---------
Total gross deferred tax assets .............................. 517.6 479.0
Less valuation allowance ..................................... (473.2) (444.2)
--------- ---------
Net deferred tax assets ...................................... 44.4 34.8
Deferred tax liabilities:
Plant, equipment and other assets ............................. (43.0) (34.6)
Inventories ................................................... (0.2) (0.2)
Other ......................................................... (7.2) (6.3)
--------- ---------
Total gross deferred tax liabilities ......................... (50.4) (41.1)
--------- ---------
Net deferred tax liability ................................... $ (6.0) $ (6.3)
========= =========
</TABLE>
The valuation allowance for deferred tax assets at January 1, 1996 was
$444.2. The valuation allowance increased by $29.0 during the year ended
December 31, 1996 and increased by $53.9 during the year ended December 31,
1995.
During 1996, 1995 and 1994, certain of the Company's foreign operations
generated taxable income as to which the related tax liability was offset by
the utilization of operating loss carryforwards generated in prior years.
Accordingly, credits of $4.7, $15.4 and $18.1 representing the reduction of
current foreign taxes payable for the years ended December 31, 1996, 1995 and
1994, respectively, have been recognized in the Consolidated Statements of
Operations. Certain other foreign operations generated losses during the
years 1996, 1995 and 1994 for which the potential tax benefit was reduced by
a valuation allowance as it is more likely than not that such benefit will
not be realized. At December 31, 1996, the Company had foreign tax loss
carryforwards of approximately $332.2 which expire in future years as
follows: 1997-$53.3; 1998-$30.0; 1999-$33.0; 2000-$12.1; 2001 and
beyond-$30.4; unlimited-$173.4. The Company will receive a benefit only to
the extent it has taxable income during the carryforward periods in the
applicable foreign jurisdictions.
Appropriate United States and foreign income taxes have been accrued on
foreign earnings that have been or are expected to be remitted in the near
future. Unremitted earnings of foreign subsidiaries which have been, or are
currently intended to be, permanently reinvested in the future growth of the
business aggregated approximately $16.1 at December 31, 1996, excluding those
amounts which, if remitted in the near future, would not result in
significant additional taxes under tax statutes currently in effect.
F-22
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
10. POSTRETIREMENT BENEFITS
PENSIONS:
The Company uses a September 30 date for measurement of Plan obligations
and assets.
The following tables reconcile the funded status of all of the Company's
significant pension plans with the respective amounts recognized in the
Consolidated Balance Sheets at the dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------------------
OVERFUNDED UNDERFUNDED
PLANS PLANS TOTAL
------------ ------------- ----------
<S> <C> <C> <C>
Actuarial present value of benefit obligation:
Accumulated benefit obligation as of September 30,
1996, includes vested benefits of $286.9 ........... $(163.7) $(131.4) $(295.1)
============ ============= ==========
Projected benefit obligation as of September 30,
1996 for service rendered to date .................. $(198.1) $(141.4) $(339.5)
Fair value of plan assets as of September 30, 1996 .. 173.3 81.6 254.9
------------ ------------- ----------
Plan assets less than projected benefit obligation .. (24.8) (59.8) (84.6)
Amounts contributed to plans during fourth quarter
1996 ................................................ 0.2 0.5 0.7
Unrecognized net (assets) obligation ................. (1.5) 0.2 (1.3)
Unrecognized prior service cost ...................... 5.2 3.9 9.1
Unrecognized net loss ................................ 20.2 20.5 40.7
Adjustment to recognize additional minimum liability -- (15.3) (15.3)
------------ ------------- ----------
Accrued pension cost ............................. $ (0.7) $ (50.0) $ (50.7)
============ ============= ==========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------------------------
OVERFUNDED UNDERFUNDED
PLANS PLANS TOTAL
------------ ------------- ----------
<S> <C> <C> <C>
Actuarial present value of benefit obligation:
Accumulated benefit obligation as of September 30,
1995, includes vested benefits of $269.1 ............ $(18.8) $(257.2) $(276.0)
============ ============= ==========
Projected benefit obligation as of September 30, 1995
for service rendered to date ........................ $(21.9) $(294.1) $(316.0)
Fair value of plan assets at September 30, 1995 ...... 26.3 185.0 211.3
------------ ------------- ----------
Plan assets in excess of (less than) projected benefit
obligation ........................................... 4.4 (109.1) (104.7)
Amounts contributed to plans during fourth quarter
1995 ................................................. 0.2 0.9 1.1
Unrecognized net (assets) obligation .................. (1.3) 0.2 (1.1)
Unrecognized prior service cost ....................... 0.3 9.9 10.2
Unrecognized net loss ................................. 1.9 45.2 47.1
Adjustment to recognize additional minimum liability . -- (19.9) (19.9)
------------ ------------- ----------
Prepaid (accrued) pension cost .................... $ 5.5 $ (72.8) $ (67.3)
============ ============= ==========
</TABLE>
The weighted-average discount rate assumed was 7.75% for 1996 and 1995 for
domestic plans. For foreign plans, the weighted-average discount rate was
7.9% and 7.6% for 1996 and 1995, respectively. The rate of future
compensation increases was 5.25% for 1996 and 1995 for domestic plans and was
a weighted-average of 5.05% and 4.81% for 1996 and 1995, respectively, for
foreign plans. The expected long-term rate of return on assets was 9.0% for
1996 and 1995 for domestic plans and a weighted-average of 10.4% for 1996 and
1995 for foreign plans.
F-23
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
10. POSTRETIREMENT BENEFITS (Continued)
Plan assets consist primarily of common stock, mutual funds and fixed
income securities, which are stated at fair market value and cash equivalents
which are stated at cost, which approximates fair market value.
In accordance with the provisions of SFAS No. 87, "Employers' Accounting
for Pensions," the Company recorded an additional liability to the extent
that, for certain U.S. plans, the unfunded accumulated benefit obligation
exceeded recorded liabilities. At December 31, 1996, the additional liability
was recognized by recording an intangible asset to the extent of unrecognized
prior service costs of $1.8, a due from affiliates of $1.1 and a charge to
stockholder's deficiency of $12.4. At December 31, 1995, the additional
liability was recognized by recording an intangible asset to the extent of
unrecognized prior service costs of $1.6, a due from affiliates of $1.3, and
a charge to stockholder's deficiency of $17.0.
Net periodic pension cost for the pension plans consisted of the following
components
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 10.6 $ 8.2 $ 9.1
Interest cost on projected benefit obligation . 24.3 21.7 20.8
Actual (return) loss on plan assets ............ (30.4) (27.3) 2.7
Net amortization and deferrals ................. 15.1 13.4 (14.4)
-------- -------- --------
19.6 16.0 18.2
Portion allocated to Holdings .................. (0.3) (0.3) (0.3)
-------- -------- --------
Net periodic pension cost of the Company ...... $ 19.3 $ 15.7 $ 17.9
======== ======== ========
</TABLE>
A substantial portion of the Company's employees in the United States are
covered by defined benefit retirement plans. To the extent that aggregate
pension costs could be identified as relating to the Company or to Holdings,
such costs have been so apportioned. The components of the net periodic
pension cost applicable solely to the Company are not presented as it is not
practical to segregate such information between Holdings and the Company. In
1996 and 1995, there was a settlement loss of $0.3 and $0.1, respectively,
and a curtailment loss of $1.0 and $0.1, respectively, resulting from
workforce reductions.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS:
During 1996, 1995 and 1994, the Company sponsored an unfunded retiree
benefit plan, which provides death benefits payable to beneficiaries of
certain key employees. Participation in this plan is limited to participants
enrolled as of December 31, 1993. Net periodic postretirement benefit cost
for each of the years ended December 31, 1996, 1995 and 1994 was $0.7 which
consists primarily of interest on the accumulated postretirement benefit
obligation. The Company's date of measurement of Plan obligations is
September 30. At December 31, 1996 and 1995, the portion of accumulated
benefit obligation attributable to retirees was $6.9 and $6.7, respectively,
and to other fully eligible participants, $1.3 and $1.0, respectively. The
amount of unrecognized gain at December 31, 1996 and 1995 was $1.2 and $1.7,
respectively. At December 31, 1996 and 1995, the accrued postretirement
benefit obligation recorded on the Company's Consolidated Balance Sheets was
$9.4. Of these amounts, $2.0 and $2.2 was attributable to Holdings and was
recorded as a receivable from affiliates at December 31, 1996 and 1995,
respectively. The weighted average discount rate used in determining the
accumulated postretirement benefit obligation at September 30, 1996 and 1995
was 7.75%.
F-24
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
11. STOCK COMPENSATION PLAN
At December 31, 1996, Revlon, Inc. has a stock-based compensation plan
(the "Plan"), which is described below. The Company applies APB Opinion No.
25 and related Interpretations in accounting for the Plan. Under APB Opinion
No. 25, because the exercise price of Revlon, Inc.'s employee stock options
equals the market price of the underlying stock on the date of grant, no
compensation cost has been recognized. Had compensation cost for Revlon,
Inc.'s Plan been determined consistent with SFAS No. 123, the Company's net
income for 1996 of $94.6 would have been reduced to the pro forma amount of
$91.4. The effects of applying SFAS 123 in this pro forma disclosure are not
necessarily indicative of future amounts.
Under the Plan, Revlon, Inc. may grant options to its employees for up to
an aggregate of 5.0 million shares of Class A Common Stock. Non-qualified
options granted under the Plan have a term of 10 years during which the
holder can purchase shares of Class A Common Stock at an exercise price which
must be not less than the market price on the date of the grant. Options
granted in 1996 to certain executive officers will not vest as to any portion
until the third anniversary of the grant date and will thereupon become 100%
vested, except that upon termination of employment by Revlon, Inc. other than
for "cause", death or "disability" under the applicable employment agreement,
such options will vest with respect to 25% of the shares subject thereto (if
the termination is between the first and second anniversaries of the grant)
and 50% of the shares subject thereto (if the termination is between the
second and third anniversaries of the grant). All other initial option grants
will vest 25% each year beginning on the first anniversary of the date of
grant and will become 100% vested on the fourth anniversary of the date of
grant. The fair value of each option grant is estimated on the date of the
grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for option grants in 1996: no dividend
yield; expected volatility of 31%; risk-free interest rate of 5.99%; and an
expected average life of seven years for the Plan's options. At December 31,
1996 there were no options exercisable under the Plan.
A summary of the status of the Plan as of December 31, 1996, and changes
during the year then ended is presented below:
<TABLE>
<CAPTION>
SHARES WEIGHTED AVERAGE
(000) EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Outstanding at beginning of year -- --
Granted .......................... 1,010.2 $24.33
Exercised ........................ -- --
Fortfeited ....................... (119.1) 24.00
---------
Outstanding at end of year ...... 891.1 24.37
=========
</TABLE>
The weighted average fair value of each option granted during 1996
approximated $11.00.
The following table summarizes information about the Plan's options
outstanding at December 31, 1996:
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
RANGE OF NUMBER AVERAGE AVERAGE
EXERCISE OUTSTANDING YEARS EXERCISE
PRICES (000) REMAINING PRICE
- ---------------- ------------- ----------- ----------
<S> <C> <C> <C>
$24.00 to
$29.88.......... 855.1 9.16 $24.06
31.00 to 33.88 .. 36.0 9.79 31.88
-------------
24.00 to 33.88 .. 891.1 9.19 24.37
=============
</TABLE>
F-25
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
12. RELATED PARTY TRANSACTIONS
TRANSFER AGREEMENTS
In June 1992, Revlon, Inc. and Products Corporation entered into an asset
transfer agreement with Holdings and certain of its wholly owned subsidiaries
(the "Asset Transfer Agreement"), and Revlon, Inc. and Products Corporation
entered into a real property asset transfer agreement with Holdings (the
"Real Property Transfer Agreement" and, together with the Asset Transfer
Agreement, the "Transfer Agreements"), and pursuant to such agreements on
June 24, 1992, Holdings transferred assets to Products Corporation and
Products Corporation assumed all the liabilities of Holdings, other than
certain specifically excluded assets and liabilities (the liabilities
excluded are referred to as the "Excluded Liabilities"). Holdings retained
certain small brands that historically had not been profitable ("Retained
Brands"). Holdings agreed to indemnify Revlon, Inc. and Products Corporation
against losses arising from the Excluded Liabilities, and Revlon, Inc. and
Products Corporation agreed to indemnify Holdings against losses arising from
the liabilities assumed by Products Corporation. The amounts reimbursed by
Holdings to Products Corporation for the Excluded Liabilities for 1996, 1995
and 1994 were $1.4, $4.0 and $7.4, respectively.
BENEFIT PLANS ASSUMPTION AGREEMENT
Holdings, Revlon, Inc. and Products Corporation entered into a benefit
plans assumption agreement dated as of July 1, 1992 pursuant to which
Products Corporation assumed all rights, liabilities and obligations under
all of Holdings' benefit plans, arrangements and agreements, including
obligations under the Revlon Employees' Retirement Plan and the Revlon
Employees' Savings and Investment Plan. Products Corporation was substituted
for Holdings as sponsor of all such plans theretofore sponsored by Holdings.
OPERATING SERVICES AGREEMENT
In June 1992, Revlon, Inc., Products Corporation and Holdings entered into
an operating services agreement (as amended and restated, and as subsequently
amended, the "Operating Services Agreement") pursuant to which Products
Corporation manufactures, markets, distributes, warehouses and administers,
including the collection of accounts receivable, the Retained Brands for
Holdings. Pursuant to the Operating Services Agreement, Products Corporation
is reimbursed an amount equal to all of its and Revlon, Inc.'s direct and
indirect costs incurred in connection with furnishing such services, net of
the amounts collected by Products Corporation with respect to the Retained
Brands, payable quarterly. The net amounts reimbursed by Holdings to Products
Corporation for such direct and indirect costs for 1996, 1995 and 1994 were
$5.1, $8.6 and $11.5, respectively. Holdings also pays Products Corporation a
fee equal to 5% of the net sales of the Retained Brands, payable quarterly.
The fees paid by Holdings to Products Corporation pursuant to the Operating
Services Agreement for services with respect to the Retained Brands for 1996,
1995 and 1994 were approximately $0.6, $1.7 and $1.9, respectively.
REIMBURSEMENT AGREEMENTS
Revlon, Inc., Products Corporation and MacAndrews Holdings have entered
into reimbursement agreements (the "Reimbursement Agreements") pursuant to
which (i) MacAndrews Holdings is obligated to provide certain professional
and administrative services, including employees, to Revlon, Inc.and its
subsidiaries, including Products Corporation, and purchase services from
third party providers, such as insurance and legal and accounting services,
on behalf of Revlon, Inc. and its subsidiaries, including Products
Corporation, to the extent requested by Products Corporation, and (ii)
Products Corporation is
F-26
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
12. RELATED PARTY TRANSACTIONS (Continued)
obligated to provide certain professional and administrative services,
including employees, to MacAndrews Holdings and purchase services from third
party providers, such as insurance and legal and accounting services, on
behalf of MacAndrews Holdings to the extent requested by MacAndrews Holdings,
provided that in each case the performance of such services does not cause an
unreasonable burden to MacAndrews Holdings or Products Corporation, as the
case may be. Products Corporation reimburses MacAndrews Holdings for the
allocable costs of the services purchased for or provided to Products
Corporation and for reasonable out-of-pocket expenses incurred in connection
with the provision of such services. MacAndrews Holdings reimburses Products
Corporation for the allocable costs of the services purchased for or provided
to MacAndrews Holdings and for the reasonable out-of-pocket expenses incurred
in connection with the purchase or provision of such services. In addition,
in connection with certain insurance coverage provided by MacAndrews
Holdings, Products Corporation obtained letters of credit under the Special
LC Facility (which aggregated approximately $26.4 as of December 31, 1996) to
support certain self-funded risks of MacAndrews Holdings and its affiliates,
including Revlon, Inc., associated with such insurance coverage. The costs of
such letters of credit are allocated among, and paid by, the affiliates of
MacAndrews Holdings, including Revlon, Inc., which participate in the
insurance coverage to which the letters of credit relate. Revlon Worldwide
expects that these self-funded risks will be paid in the ordinary course and,
therefore, it is unlikely that such letters of credit will be drawn upon.
MacAndrews Holdings has agreed to indemnify Revlon, Inc. and Products
Corporation to the extent amounts are drawn under any of such letters of
credit with respect to claims for which Revlon, Inc. and Products Corporation
are not responsible. The net amounts reimbursed by MacAndrews Holdings to
Products Corporation for the services provided under the Reimbursement
Agreements for 1996, 1995 and 1994 were $2.2, $3.0 and $1.6, respectively.
Each of Revlon, Inc. and Products Corporation, on the one hand, and
MacAndrews Holdings, on the other, has agreed to indemnify the other party
for losses arising out of the provision of services by it under the
Reimbursement Agreements other than losses resulting from its willful
misconduct or gross negligence. The Reimbursement Agreements may be
terminated by either party on 90 days' notice. Revlon Worldwide does not
expect Revlon, Inc. to request services under the Reimbursement Agreements
unless their costs would be at least as favorable to Revlon, Inc. as could be
obtained from unaffiliated third parties.
In March 1993, Revlon Worldwide and MacAndrews Holdings entered into a
reimbursement agreement pursuant to which MacAndrews Holdings agreed to
provide third party services to Revlon Worldwide on the same basis as it
provides services to Revlon, Inc., and Revlon Worldwide agreed to indemnify
MacAndrews Holdings on the same basis as Revlon, Inc. is obligated to
indemnify MacAndrews Holdings under the Reimbursement Agreements. There were
no services provided pursuant to this agreement during 1996, 1995 or 1994.
TAX SHARING AGREEMENTS
Holdings, Revlon Worldwide, Products Corporation and certain of its
subsidiaries, Revlon, Inc. and Mafco Holdings are parties to the Tax Sharing
Agreements which are described in Note 9. Since the payments to be made by
Revlon, Inc. under the 1992 Tax Sharing Agreement and by Revlon Worldwide
under the 1993 Tax Sharing Agreement will be determined by the amount of
taxes that Revlon, Inc. or Revlon Worldwide, as the case may be, would
otherwise have to pay if it were to file separate federal, state and local
income tax returns, the Tax Sharing Agreements will benefit Mafco Holdings to
the extent Mafco Holdings can offset the taxable income generated by Revlon,
Inc. or Revlon Worldwide against losses and tax credits generated by Mafco
Holdings and its other subsidiaries.
F-27
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
12. RELATED PARTY TRANSACTIONS (Continued)
FINANCING REIMBURSEMENT AGREEMENT
Holdings and Products Corporation entered into a financing reimbursement
agreement (the "Financing Reimbursement Agreement") in 1992 pursuant to which
Holdings agreed to reimburse Products Corporation for Holdings' allocable
portion of (i) the debt issuance cost and advisory fees related to the
capital restructuring of Holdings, and (ii) interest expense attributable to
the higher cost of funds paid by Products Corporation under the credit
agreement in effect at that time as a result of additional borrowings for the
benefit of Holdings in connection with the assumption of certain liabilities
by Products Corporation under the Asset Transfer Agreement and the repurchase
of Old Senior Subordinated Notes from affiliates. The amount of interest to
be reimbursed by Holdings for 1994 was approximately $0.8 and was evidenced
by noninterest-bearing promissory notes originally due and payable on June
30, 1995. In February 1995, the $13.3 in notes then payable by Holdings to
Products Corporation under the Financing Reimbursement Agreement was offset
against a $25.0 note payable by Products Corporation to Holdings and Holdings
agreed not to demand payment under the resulting $11.7 note payable by
Products Corporation so long as any indebtedness remained outstanding under
the Former Credit Agreement. In February 1995, the Financing Reimbursement
Agreement was amended and extended to provide that Holdings would reimburse
Products Corporation for a portion of the debt issuance costs and advisory
fees related to the Former Credit Agreement (which portion was approximately
$4.7 and is evidenced by a noninterest-bearing promissory note payable on
June 30, 1996), and 1 1/2% per annum of the average balance outstanding under
the Former Credit Agreement and the average balance outstanding under working
capital borrowings from affiliates through June 30, 1996 and such amounts
were evidenced by a noninterest-bearing promissory note payable on June 30,
1996. The amount of interest to be reimbursed by Holdings for 1995 was
approximately $4.2. As of December 31, 1995, the aggregate amount of notes
payable by Holdings under the Financing Reimbursement Agreement was $8.9. In
June 1996, $10.9 in notes due to Products Corporation, which included $2.0 of
interest reimbursement in 1996, under the Financing Reimbursement Agreement
from Holdings was offset against an $11.7 demand note payable by Products
Corporation to Holdings. The Financing Reimbursement Agreement expired on
June 30, 1996.
REGISTRATION RIGHTS AGREEMENT
Prior to the consummation of the Offering, Revlon, Inc. and Revlon
Worldwide, entered into the Registration Rights Agreement pursuant to which
Revlon Worldwide and certain transferees of Common Stock held by Revlon
Worldwide (the "Holders") have the right to require Revlon, Inc. to register
all or part of the Class A Common Stock owned by such Holders and the Class A
Common Stock issuable upon conversion of the Class B Common Stock owned by
such Holders under the Securities Act (a "Demand Registration"); provided
that Revlon, Inc. may postpone giving effect to a Demand Registration up to a
period of 30 days if Revlon, Inc. believes such registration might have a
material adverse effect on any plan or proposal by Revlon, Inc. with respect
to any financing, acquisition, recapitalization, reorganization or other
material transaction, or Revlon, Inc. is in possession of material non-public
information that, if publicly disclosed, could result in a material
disruption of a major corporate development or transaction then pending or in
progress or in other material adverse consequences to Revlon, Inc. In
addition, the Holders have the right to participate in registrations by
Revlon, Inc. of its Class A Common Stock (a "Piggyback Registration"). The
Holders will pay all out-of-pocket expenses incurred in connection with any
Demand Registration. Revlon, Inc. will pay any expenses incurred in
connection with a Piggyback Registration, except for underwriting discounts,
commissions and expenses attributable to the shares of Class A Common Stock
sold by such Holders.
F-28
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
12. RELATED PARTY TRANSACTIONS (Continued)
OTHER
Pursuant to a lease dated April 2, 1993 (the "Edison Lease"), Holdings
leases to Products Corporation the Edison research and development facility
for a term of up to 10 years with an annual rent of $1.4 and certain shared
operating expenses payable by Products Corporation which, together with the
annual rent are not to exceed $2.0 per year. Pursuant to an assumption
agreement dated February 18, 1993, Holdings agreed to assume all costs and
expenses of the ownership and operation of the Edison facility as of January
1, 1993, other than (i) the operating expenses for which Products Corporation
is responsible under the Edison Lease and (ii) environmental claims and
compliance costs relating to matters which occurred prior to January 1, 1993
up to an amount not to exceed $8.0 (the amount of such claims and costs for
which Products Corporation is responsible, the "Environmental Limit"). In
addition, pursuant to such assumption agreement, Products Corporation agreed
to indemnify Holdings for environmental claims and compliance costs relating
to matters which occurred prior to January 1, 1993 up to an amount not to
exceed the Environmental Limit and Holdings agreed to indemnify Products
Corporation for environmental claims and compliance costs relating to matters
which occurred prior to January 1, 1993 in excess of the Environmental Limit
and all such claims and costs relating to matters occurring on or after
January 1, 1993. Pursuant to an occupancy agreement, during 1996 and 1995
Products Corporation rented a portion of the administration building located
at the Edison facility and space for a retail store of Products Corporation.
Products Corporation provides certain administrative services, including
accounting, for Holdings with respect to the Edison facility pursuant to
which Products Corporation pays on behalf of Holdings costs associated with
the Edison facility and is reimbursed by Holdings for such costs, less the
amount owed by Products Corporation to Holdings pursuant to the Edison Lease
and the occupancy agreement. The net amount reimbursed by Holdings to
Products Corporation for such costs with respect to the Edison facility for
1996, 1995 and 1994 was $1.1, $1.2 and $2.1, respectively.
In the fourth quarter of 1996, Products Corporation and certain of its
subsidiaries purchased an inactive subsidiary from an affiliate for net cash
consideration of approximately $3.0 in a series of transactions in which
Products Corporation expects to realize foreign tax benefits in future years.
Effective January 1, 1996, Products Corporation acquired from Holdings
substantially all of the assets of Tarlow in consideration for the assumption
of substantially all of the liabilities and obligations of Tarlow. Net
liabilities assumed were approximately $3.4. The assets acquired and
liabilities assumed were accounted for at historical cost in a manner similar
to that of a pooling of interests and, accordingly, prior period financial
statements have been restated as if the acquisition took place at the
beginning of the earliest period. Products Corporation paid $4.1 to Holdings
which was accounted for as an increase in capital deficiency. A nationally
recognized investment banking firm rendered its written opinion that the
terms of the purchase are fair from a financial standpoint to Products
Corporation.
Effective January 1, 1994, Products Corporation sold the inventory,
contracts, dedicated tools, dies and molds, intellectual property and a
license agreement relating to the NEW ESSENTIALS brand to Holdings for $2.2
(representing the net book value of such brand which Products Corporation
believes approximated its fair market value at the time of sale), and the
Operating Services Agreement was amended to include NEW ESSENTIALS as a
Retained Brand.
During 1996, 1995 and 1994, Products Corporation leased certain facilities
to MacAndrews & Forbes or its affiliates pursuant to occupancy agreements and
leases including space at Products Corporation's New York headquarters and at
Products Corporation's offices in London and Tokyo. The rent paid by
MacAndrews & Forbes or its affiliates to Products Corporation for 1996, 1995
and 1994 was $4.6, $5.3 and $4.1, respectively.
F-29
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
12. RELATED PARTY TRANSACTIONS (Continued)
In July 1995, Products Corporation borrowed from Holdings approximately
$0.8, representing certain amounts received by Holdings relating to an
arbitration arising out of the sale by Holdings of certain of its businesses.
In 1995, Products Corporation borrowed from Holdings approximately $5.6,
representing certain amounts received by Holdings from the sale by Holdings
of certain of its businesses. Such amounts are evidenced by
noninterest-bearing promissory notes. Holdings agreed not to demand payment
under such notes so long as any indebtedness remains outstanding under the
Credit Agreement.
The Credit Agreement is supported by, among other things, guarantees from
Holdings and certain of its subsidiaries. The obligations under such
guarantees are secured by, among other things, (i) the capital stock and
certain assets of certain subsidiaries of Holdings and (ii) a mortgage on
Holdings' Edison, New Jersey facility.
Products Corporation borrows funds from its affiliates from time to time
to supplement its working capital borrowings. No such borrowings were
outstanding as of December 31, 1996, 1995 or 1994. The interest rates for
such borrowings are more favorable to Products Corporation than interest
rates under the Credit Agreement and, for borrowings occurring prior to the
execution of the Credit Agreement, the credit facility in effect at the time
of such borrowing. The amount of interest paid by Products Corporation for
such borrowings for 1996, 1995 and 1994 was $0.5, $1.2 and $1.1,
respectively.
In November 1993, Products Corporation assigned to Holdings a lease for
warehouse space in New Jersey (the "N.J. Warehouse") between Products
Corporation and a trust established for the benefit of certain family members
of the Chairman of the Executive Committee. The N.J. Warehouse had become
vacant as a result of divestitures and restructuring of Products Corporation.
The lease has annual lease payments of approximately $2.3 and terminates on
June 30, 2005. In consideration for Holdings assuming all liabilities and
obligations under the lease, Products Corporation paid Holdings $7.5 (for
which a liability was previously recorded) in three installments of $2.5 each
in January 1994, January 1995 and January 1996. A nationally recognized
investment banking firm rendered its written opinion that the terms of the
lease transfer were fair from a financial standpoint to Products Corporation.
During 1996, 1995 and 1994, Products Corporation paid certain costs
associated with the N.J. Warehouse on behalf of Holdings and was reimbursed
by Holdings for such amounts. The amounts reimbursed by Holdings to Products
Corporation for such costs were $0.2, $0.2 and $0.3 for 1996, 1995 and 1994,
respectively.
During 1996, 1995 and 1994, Products Corporation used an airplane which
was owned by a corporation of which Messrs. Gittis, Drapkin and Levin were
the sole stockholders. Products Corporation paid approximately $0.2, $0.4 and
$0.5 for the usage of the airplane for 1996, 1995 and 1994, respectively. As
of December 31, 1996, Mr. Levin no longer holds an ownership interest in the
corporation that owned the airplane.
Consolidated Cigar, an affiliate of Products Corporation, assembles
lipstick cases for Products Corporation. Products Corporation paid
approximately $1.0, $1.0 and $0.6 for such services for 1996, 1995 and 1994,
respectively.
During 1994, Products Corporation was retained by an affiliate, Meridian,
to act as licensing agent for Meridian's trademarks. Products Corporation
will receive a percentage of any royalties generated by such licenses. No
royalties were earned by Meridian for 1994, 1995 or 1996. However, Meridian
paid Products Corporation approximately $0.1 in 1994 for reimbursement of
expenses incurred in connection with such licensing activities.
In January 1995, Products Corporation agreed to license certain of its
trademarks to Guthy-Renker Corporation ("Guthy-Renker"), a corporation in
which an affiliate of MacAndrews & Forbes held a 37.5%
F-30
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
12. RELATED PARTY TRANSACTIONS (Continued)
equity interest, to be used by Guthy-Renker in connection with the marketing
and sale of hair extensions and hair pieces. The amount paid by Guthy-Renker
to Products Corporation pursuant to such license for 1995 was less than $0.1.
In connection with this licensing arrangement, Guthy-Renker agreed to use
Products Corporation as its exclusive supplier of hair extensions and hair
pieces. Guthy-Renker purchased $1.1 of wigs from Products Corporation during
1995. Products Corporation terminated the license with Guthy-Renker during
1995.
13. COMMITMENTS AND CONTINGENCIES
The Company currently leases manufacturing, executive, including research
and development, and sales facilities and various types of equipment under
operating lease agreements. Rental expense was $51.7, $49.3 and $51.0 for the
years ended December 31, 1996, 1995 and 1994, respectively. Minimum rental
commitments under all noncancelable leases, including those pertaining to
idled facilities and the Edison research and development facility, with
remaining lease terms in excess of one year from December 31, 1996 aggregated
$230.0; such commitments for each of the five years subsequent to December
31, 1996 are $37.9, $36.4, $31.2, $28.6 and $25.6, respectively. Such amounts
exclude the minimum rentals to be received in the future under noncancelable
subleases of $16.1.
The Company and its subsidiaries are defendants in litigation and
proceedings involving various matters. In the opinion of the Company's
management, based upon advice of its counsel handling such litigation and
proceedings, adverse outcomes, if any, will not result in a material effect
on the Company's consolidated financial condition or results of operations.
14. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the unaudited quarterly results of
operations:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------------------
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales ............................... $464.3 $517.9 $571.1 $613.7
Gross profit ............................ 311.4 347.2 378.1 404.6
Income (loss) before extraordinary item 132.4(a) (26.1) (6.7) 1.6
Net income (loss) ....................... 125.8(b) (26.1) (6.7) 1.6
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 (C)
---------------------------------------
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales .............................. $412.2 $452.6 $514.5 $558.5
Gross profit ........................... 270.6 299.0 346.8 369.3
Net loss ............................... (57.0) (38.6) (21.5) (22.2)
</TABLE>
- ------------
(a) Includes the gain on issuance of subsidiary stock of $187.8 that was
recognized in connection with the Offering. See Note 16.
(b) Includes a charge of $6.6 resulting from the write-off of deferred
financing costs associated with the extinguishment of the Former Credit
Agreement prior to maturity.
(c) Effective January 1, 1996, Products Corporation acquired from Holdings
substantially all of the assets of Tarlow in consideration for the assumption
of substantially all of the liabilities and obligations
F-31
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
14. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (Continued)
of Tarlow. Net liabilities assumed were approximately $3.4. The assets
acquired and liabilities assumed were accounted for at historical cost in a
manner similar to that of a pooling of interests and, accordingly, prior
period financial statements presented have been restated as if the
acquisition took place at the beginning of the earliest period. Products
Corporation paid $4.1 to Holdings which was accounted for as an increase to
capital deficiency.
15. GEOGRAPHIC SEGMENTS
The Company operates in a single business segment. The Company has
operations based in 26 foreign countries and its products are sold throughout
the world. The Company is exposed to the risk of changes in social, political
and economic conditions inherent in foreign operations and the Company's
results of operations and the value of its foreign assets are affected by
fluctuations in foreign currency exchange rates. The Company enters into
forward foreign exchange contracts to hedge certain cash flows denominated in
foreign currency. In addition, the Company's operations in Brazil (which
accounted for approximately 6.1% of the Company's net sales for 1996) are
subject to hyperinflationary conditions. There can be no assurance as to the
future effect of changes in social, political and economic conditions on the
Company's business or financial condition. During 1996, one customer
accounted for approximately 10.1% of the Company's consolidated net sales.
Information related to the Company's geographic segments for each of the
years in the three-year period ended December 31, 1996 with respect to
operating results, and as of December 31, 1996 and 1995 with respect to
identifiable assets, is presented below.
Operating profit (loss), as presented below, is operating income, net
foreign currency translation (gains) losses and identifiable miscellaneous
income and expense; it excludes general corporate income and expenses, net
interest and investment income and expense, including amortization of debt
issuance costs, and income taxes. Export sales, including those to
affiliates, are not significant. Export sales to non-affiliates and related
operating profits are reflected in their geographic area of origin.
Identifiable assets, as presented below, are those assets used in each
geographic area. Corporate assets are principally cash and cash equivalents,
certain property and equipment and nonoperating assets.
F-32
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
15. GEOGRAPHIC SEGMENTS (Continued)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
GEOGRAPHIC AREAS
Net Sales:
United States ................................. $1,282.2 $1,155.8 $1,019.8
Europe, Middle East and Africa ................ 404.1 357.1 320.7
Latin America, Canada and Puerto Rico ......... 297.2 259.5 253.4
Far East, Australia and other areas of the
world ......................................... 183.5 165.4 138.6
---------- ---------- ----------
$2,167.0 $1,937.8 $1,732.5
========== ========== ==========
Operating profit (loss):
United States ................................. $ 163.9 $ 121.7 $ 85.7
Europe, Middle East and Africa ................ 9.9 7.6 16.2
Latin America, Canada and Puerto Rico ......... 23.3 14.9 18.3
Far East, Australia and other areas of the
world ......................................... 7.5 7.8 (3.7)
---------- ---------- ----------
204.6 152.0 116.5
Unallocated expenses (income):
Interest expense .............................. 240.1 237.5 221.2
Interest and net investment income ............ (3.4) (4.9) (6.3)
Amortization of debt issuance costs ........... 12.5 15.2 12.6
Corporate expenses and miscellaneous, net ..... 16.5 18.1 29.1
Gain on issuance of subsidiary stock .......... (187.8) -- --
---------- ---------- ----------
Income (loss) before income taxes ............. $ 126.7 $ (113.9) $ (140.1)
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
---------- ---------
<S> <C> <C>
Identifiable assets:
United States .................................... $ 944.1 $ 897.6
Europe, Middle East and Africa ................... 287.6 268.3
Latin America, Canada and Puerto Rico ............ 198.7 167.8
Far East, Australia and other areas of the world 130.6 127.0
Corporate ........................................ 65.3 83.8
---------- ---------
$1,626.3 $1,544.5
========== =========
</TABLE>
F-33
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
15. GEOGRAPHIC SEGMENTS (Continued)
<TABLE>
<CAPTION>
SKIN CARE,
COSMETICS PERSONAL CARE
AND AND
FRAGRANCES PROFESSIONAL TOTAL
------------ --------------- ----------
<S> <C> <C> <C>
CLASSES OF SIMILAR PRODUCTS (UNAUDITED):
1996 ................................. $1,263.9 903.1 $2,167.0
% of net sales ....................... 58% 42% 100%
1995 ................................. $1,075.2 862.6 1,937.8
% of net sales ....................... 55% 45% 100%
1994 ................................. $ 884.8 847.7 1,732.5
% of net sales ....................... 51% 49% 100%
</TABLE>
16. GAIN ON ISSUANCE OF SUBSIDIARY STOCK
On March 5, 1996, Revlon, Inc. completed an initial public offering in
which it issued and sold 8,625,000 shares of its Class A Common Stock for
$24.00 per share. The proceeds, net of underwriter's discount and related
fees and expenses, of $187.8 were contributed to Products Corporation and
were used by Products Corporation to repay borrowings outstanding under
Products Corporation's credit agreement in effect at that time and to pay
fees and expenses related to the Credit Agreement.
17. PENDING ACQUISITION
On November 27, 1996, Products Corporation and PFC entered into an
Agreement and Plan of Merger with Cosmetic Center pursuant to which PFC will
merge with and into Cosmetic Center, with Cosmetic Center surviving the
merger (the "Merger"). In the Merger, Products Corporation would receive
newly issued common stock of Cosmetic Center constituting between 74% and 84%
of the outstanding common stock. The Merger is subject to a number of
significant conditions, including obtaining financing for Cosmetic Center and
approval of the transaction by Cosmetic Center stockholders, among other
conditions.
F-34
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
----------- --------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 35.6 $ 38.6
Trade receivables, less allowances of $22.3 and
$24.9, respectively................................. 394.5 426.3
Inventories.......................................... 305.9 281.0
Prepaid expenses and other........................... 78.0 74.5
----------- --------------
Total current assets................................ 814.0 820.4
Property, plant and equipment, net.................... 374.0 381.1
Other assets.......................................... 157.1 144.2
Restricted marketable securities...................... 319.6 --
Intangible assets related to businesses acquired,
net.................................................. 279.7 280.6
----------- --------------
Total assets........................................ $ 1,944.4 $ 1,626.3
=========== ==============
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
Current liabilities:
Short-term borrowings--third parties................. $ 23.4 $ 27.1
Current portion of long-term debt--third parties .... 8.4 8.8
Accounts payable..................................... 146.8 161.9
Accrued expenses and other........................... 321.4 365.2
----------- --------------
Total current liabilities........................... 500.0 563.0
Long-term debt--third parties......................... 2,214.6 2,291.4
Long-term debt--affiliates............................ 30.4 30.4
Other long-term liabilities........................... 202.4 202.8
Stockholder's deficiency:
Common Stock, par value $1.00 per share; 1,000
shares authorized, issued and outstanding........... -- --
Capital deficiency................................... (410.9) (971.0)
Accumulated deficit since June 24, 1992.............. (570.8) (472.1)
Adjustment for minimum pension liability............. (12.4) (12.4)
Currency translation adjustment...................... (8.9) (5.8)
----------- --------------
Total stockholder's deficiency...................... (1,003.0) (1,461.3)
----------- --------------
Total liabilities and stockholder's deficiency ..... $ 1,944.4 $ 1,626.3
=========== ==============
</TABLE>
See Notes to Unaudited Consolidated Condensed Financial Statements.
F-35
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1997 1996
--------- ---------
<S> <C> <C>
Net sales......................................... $492.5 $ 464.3
Cost of sales..................................... 166.2 152.9
--------- ---------
Gross profit.................................... 326.3 311.4
Selling, general and administrative expenses ..... 303.8 295.1
Business consolidation costs...................... 5.4 --
--------- ---------
Operating income................................ 17.1 16.3
--------- ---------
Other expenses (income):
Interest expense................................. 63.1 59.5
Interest and net investment income............... (2.4) (1.0)
Amortization of debt issuance costs.............. 3.4 3.6
Foreign currency losses, net..................... 1.8 2.1
Miscellaneous, net............................... 0.7 0.5
Gain on issuance of subsidiary stock............. (0.1) (187.8)
--------- ---------
Other expenses (income), net.................... 66.5 (123.1)
--------- ---------
(Loss) income before income taxes................. (49.4) 139.4
Provision for income taxes........................ 5.5 7.0
--------- ---------
(Loss) income before extraordinary item........... (54.9) 132.4
Extraordinary item--early extinguishment of debt . (43.8) (6.6)
--------- ---------
Net (loss) income................................. $(98.7) $ 125.8
========= =========
</TABLE>
See Notes to Unaudited Consolidated Condensed Financial Statements.
F-36
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1997 1996
--------- ---------
<S> <C> <C>
Net (loss) income................................................ $ (98.7) $ 125.8
Adjustments to reconcile net (loss) income to net cash (used
for) provided by operating activities:
Depreciation and amortization.................................. 26.0 23.2
Amortization of debt discount.................................. 29.8 25.2
Gain on issuance of subsidiary stock........................... (0.1) (187.8)
Business consolidation costs................................... 5.4 --
Extraordinary item............................................. 43.8 6.6
Change in assets and liabilities:
Decrease in trade receivables................................. 26.0 3.7
Increase in inventories....................................... (27.9) (36.4)
Increase in prepaid expenses and other current assets ........ (5.4) (9.8)
Decrease in accounts payable.................................. (12.4) (8.7)
Decrease in accrued expenses and other current liabilities ... (44.9) (31.3)
Other, net.................................................... (17.5) (10.9)
--------- ---------
Net cash used for operating activities........................... (75.9) (100.4)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................................. (8.0) (11.8)
Purchase of marketable securities................................ (319.6) --
Other, net....................................................... -- (0.3)
--------- ---------
Net cash used for investing activities........................... (327.6) (12.1)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in short-term borrowings--third parties . (2.4) 0.4
Proceeds from the issuance of long-term debt--third parties ..... 643.2 140.3
Repayment of long-term debt--third parties....................... (225.4) (222.5)
Net proceeds from issuance of subsidiary common stock ........... 0.1 187.8
Proceeds from the issuance of debt--affiliates................... 33.9 19.4
Repayment of debt--affiliates.................................... (33.9) (19.4)
Payment of debt issuance costs................................... (14.6) (10.9)
--------- ---------
Net cash provided by financing activities........................ 400.9 95.1
--------- ---------
Effect of exchange rate changes on cash and cash equivalents .... (0.4) (0.5)
--------- ---------
Net decrease in cash and cash equivalents...................... (3.0) (17.9)
--------- ---------
Cash and cash equivalents at beginning of period............... 38.6 36.3
--------- ---------
Cash and cash equivalents at end of period..................... $ 35.6 $ 18.4
========= =========
Supplemental schedule of cash flow information:
Cash paid during the period for:
Interest....................................................... $ 39.6 $ 43.7
Income taxes, net of refunds................................... 2.9 5.0
Supplemental schedule of noncash financing activities:
Noncash contribution from parent to cancel Revlon Worldwide
Senior Secured Discount Notes.................................. $ 560.1 $ --
</TABLE>
See Notes to Unaudited Consolidated Condensed Financial Statements.
F-37
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(1) BASIS OF PRESENTATION
Revlon Worldwide (Parent) Corporation ("Revlon Worldwide (Parent)" and
together with its subsidiaries, the "Company") is a holding company formed in
1997, that conducts its business exclusively through its indirect subsidiary,
Revlon Consumer Products Corporation ("Products Corporation") and its
subsidiaries. Products Corporation was formed in April 1992 and, on June 24,
1992, succeeded to assets and liabilities of the cosmetic and skin care,
fragrances and personal care products business of its then parent company,
whose name was changed from Revlon, Inc. to Revlon Holdings Inc.
("Holdings"). Revlon Worldwide (Parent) has had no business operations of its
own and its only material asset is its ownership of all of the common stock
of Revlon Worldwide Corporation ("Revlon Worldwide"), which, in turn, has as
its only material asset 83.1% of the outstanding shares of capital stock of
Revlon, Inc. (which represents approximately 97.4% of the voting power of
those outstanding shares), which, in turn, owns all of the capital stock of
Products Corporation. The Company is an indirect wholly owned subsidiary of
Holdings and an indirect wholly owned subsidiary of MacAndrews & Forbes
Holdings Inc., a corporation wholly owned by Mafco Holdings Inc.
The accompanying Consolidated Condensed Financial Statements are
unaudited. In management's opinion, all adjustments (consisting of only
normal recurring accruals) necessary for a fair presentation have been made.
The Unaudited Consolidated Condensed Financial Statements include the
accounts of the Company after elimination of all material intercompany
balances and transactions. Further, the Company has made a number of
estimates and assumptions relating to the assets and liabilities, the
disclosure of contingent assets and liabilities and the reporting of revenues
and expenses to prepare these financial statements in conformity with
generally accepted accounting principles. Actual results could differ from
those estimates.
The Company recognizes gains and losses on issuances of subsidiary stock
in its Statements of Operations.
The Company accounts for investments in marketable securities, consisting
of U.S. Treasury Bills, in accordance with Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities."
The results of operations and financial position, including working
capital, for interim periods are not necessarily indicative of those to be
expected for a full year, due, in part, to seasonal fluctuations which are
normal for the Company's business.
The Company matches advertising and promotion expenses with sales revenues
for interim reporting purposes. Advertising and promotion expenses estimated
for a full year are charged to earnings for interim reporting purposes in
proportion to the relationship that net sales for such period bear to
estimated full year net sales. As a result, in the first quarter of 1997 and
1996, disbursements and commitments for advertising and promotion exceeded
advertising and promotion expenses by $22.2 and $14.9, respectively, and such
amounts were deferred.
(2) INVENTORIES
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
----------- --------------
<S> <C> <C>
Raw materials and
supplies.................. $ 94.2 $ 76.6
Work-in-process............ 21.4 19.4
Finished goods............. 190.3 185.0
----------- --------------
$305.9 $281.0
=========== ==============
</TABLE>
F-38
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(3) GAIN ON ISSUANCE OF SUBSIDIARY STOCK
On March 5, 1996, Revlon, Inc. completed an initial public offering (the
"Revlon IPO") in which it issued and sold 8,625,000 shares of its Class A
Common Stock for $24.00 per share. The proceeds, net of underwriter's
discount and related fees and expenses, of $187.8 were contributed to
Products Corporation and were used to repay borrowings outstanding under the
credit agreement in effect at that time (the "Former Credit Agreement") and
to pay fees and expenses related to the credit agreement which became
effective on March 5, 1996 (the "Credit Agreement").
As a result of the Revlon IPO, the Company's ownership in Revlon, Inc. was
reduced to 83.1% of Revlon, Inc.'s outstanding common stock (with the Company
having approximately 97.4% of the voting power of the outstanding shares of
Revlon, Inc. common stock) from 100% prior to the Revlon IPO. Additionally,
the Company recognized a $187.8 gain on this transaction in the first quarter
of 1996.
(4) EXTRAORDINARY ITEM
The extraordinary item in the first quarter of 1997 resulted from the
cancellation of a portion of Revlon Worldwide's Senior Secured Discount Notes
due 1998 (the "Revlon Worldwide Notes") (See Note 7). The extraordinary item
in the first quarter of 1996 resulted from the write-off of deferred
financing costs associated with the extinguishment of the Former Credit
Agreement prior to maturity with the net proceeds from the Revlon IPO and
Credit Agreement.
(5) BUSINESS CONSOLIDATIONS
In the first quarter of 1997 the Company incurred business consolidation
costs of approximately $5.4 in connection with the implementation of its
business strategy to rationalize factory operations. These costs primarily
included severance and other related costs in certain International
operations. As of March 31, 1997 substantially all of the costs were included
in accrued expenses and other.
(6) MERGER OF SUBSIDIARY
On April 25, 1997, Prestige Fragrance & Cosmetics, Inc., a wholly owned
subsidiary of Products Corporation ("PFC"), and The Cosmetic Center, Inc.
("Cosmetic Center") completed the merger of PFC with and into Cosmetic
Center, with Cosmetic Center surviving the merger (the "Cosmetic Merger"). In
the Cosmetic Merger, Products Corporation received in exchange for all of the
capital stock of PFC newly issued Class C common stock of Cosmetic Center
constituting approximately 85% of the outstanding common stock. Accordingly,
the Cosmetic Merger will be accounted for as a reverse acquisition using the
purchase method of accounting and PFC will be considered the acquiring entity
for accounting purposes, even though Cosmetic Center is the surviving legal
entity.
(7) PURCHASE OF THE REVLON WORLDWIDE NOTES
During March 1997, $778.4 principal amount at maturity (accreted value of
$694.0) of the Revlon Worldwide Notes was delivered to the Trustee under the
Indenture for cancellation. On April 2, 1997, funds were deposited in an
irrevocable trust to effect the covenant defeasance of the remaining balance
of $337.4 principal amount at maturity of the Revlon Worldwide Notes. In
connection with the Revlon Worldwide Notes that were canceled the Company
recorded a capital contribution of $560.1 and recorded an extraordinary loss
of $43.8, which included the write-off of deferred financing costs, in the
first quarter of 1997.
The covenant defeasance of the Revlon Worldwide Notes is expected to be
effected on August 4, 1997, the 124th day following the deposit. Upon such
effectiveness of the covenant defeasance, Revlon Worldwide may omit to comply
with substantially all of its covenants and other obligations, other than
payment, under the indenture governing the Revlon Worldwide Notes.
F-39
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(7) PURCHASE OF THE REVLON WORLDWIDE NOTES (CONTINUED)
Following the covenant defeasance, Revlon Worldwide will be merged with
and into the Company with the Company surviving (the "Merger"), and the
Company will directly own all of the shares of Common Stock of Revlon, Inc.
that are currently owned by Revlon Worldwide and are currently pledged to
secure the Revlon Worldwide Notes. Following the Merger, 20 million shares of
Revlon, Inc. Common Stock will be pledged to secure the indebtedness of the
Company and the balance to secure the obligations of an affiliate (See Note
8).
(8) ISSUANCE OF SENIOR SECURED DISCOUNT NOTES DUE 2001
On March 5, 1997, the Company consummated a private placement offering of
$770.0 aggregate principal amount at maturity of its Senior Secured Discount
Notes due 2001 (the "New Notes"). The New Notes were issued at a discount
from their principal amount at maturity representing a yield to maturity of
10 3/4% per annum calculated from March 5, 1997. The Company has filed a
registration statement under the Securities Act of 1933, as amended relating
to an offer to exchange the New Notes for a like principal amount of notes
with substantially identical terms. The indenture governing the New Notes
(the "Indenture") requires the Company to hold at all times a minimum
percentage of Common Stock of Revlon, Inc. pledged to secure the New Notes.
In addition, the Indenture contains covenants that, among other things, limit
(i) the issuance of additional debt and redeemable stock by the Company,
Revlon Worldwide, or Revlon, Inc. and the issuance of preferred stock by
Revlon, Inc. or Revlon Worldwide, (ii) the issuance of debt and preferred
stock by Products Corporation and its subsidiaries, (iii) the payments of
dividends on capital stock of the Company and its subsidiaries and the
redemption of capital stock of the Company, (iv) the sale of assets and
subsidiary stock, (v) transactions with affiliates and (vi) consolidations,
mergers and transfers of all or substantially all of the Company's assets.
The Indenture also prohibits certain restrictions on distributions from
subsidiaries. All of these limitations and prohibitions, however, are subject
to a number of important qualifications.
F-40
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
- -----------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Available Information................ 2
Prospectus Summary................... 3
Risk Factors ........................ 18
Use of Proceeds ..................... 25
Capitalization ...................... 26
Price Range of Class A Common Stock
of Revlon, Inc. .................... 27
Selected Historical and Pro Forma
Financial Data ..................... 28
Management's Discussion and Analysis
of Financial Condition and Results
of Operations ...................... 32
The Exchange Offer................... 44
Business ............................ 51
Management .......................... 70
Ownership of Common Stock ........... 80
Relationship with MacAndrews
& Forbes ........................... 81
Description of the Notes............. 88
Description of Other Indebtedness .. 114
Certain U.S. Federal Income Tax
Considerations ..................... 123
Book-Entry; Delivery and Form ...... 125
Plan of Distribution................. 126
Legal Matters ....................... 127
Experts.............................. 127
Index to Consolidated Financial
Statements ......................... F-1
</TABLE>
UNTIL 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT PARTICIPATING IN THE
EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
$770,000,000
REVLON WORLDWIDE
(PARENT) CORPORATION
SERIES B SENIOR SECURED DISCOUNT
NOTES DUE 2001
PROSPECTUS
, 1997
<PAGE>
Appendix of Graphic Material Omitted from Prospectus
Page
No. Description
--- -----------
59 Bar chart of the Company's market share for color cosmetics in the
United States self-select distribution channel, depicting the
Company's market share of 17.3%, 19.5% and 21.4% for 1994, 1995 and
1996, respectively.
59 Bar chart of the Company's market share for lip makeup in the United
States self-select distribution channel, depicting the Company's
market share of 29.4%, 33.5% and 32.6% for 1994, 1995 and 1996,
respectively.
59 Bar chart of the Company's market share for nail enamel in the United
States self-select distribution channel, depicting the Company's
market share of 21.6%, 22.4% and 24.7% for 1994, 1995 and 1996,
respectively.
60 Bar chart of the Company's market share for face makeup in the United
States self-select distribution channel, depicting the Company's
market share of 13.1%, 15.7% and 19.1% for 1994, 1995 and 1996,
respectively.
60 Bar chart of the Company's market share for foundation in the United
States self-select distribution channel, depicting the Company's
market share of 15.4%, 20.0% and 25.3% for 1994, 1995 and 1996,
respectively.
60 Bar chart of the Company's market share for eye makeup in the United
States self-select distribution channel, depicting the Company's
market share of 10.9%, 10.9% and 12.7% for 1994, 1995 and 1996.
61 Bar chart depicting the Company's growth in retail sales in the United
States self-select distribution channel for color cosmetics, lip
makeup, face makeup, nail enamel and eye makeup
<PAGE>
Compared with overall growth in retail sales in such product
categories for 1996 over 1995, as follows:
Category Revlon
-------- ------
Total color ................... 13.9% 25.2%
Lip makeup .................... 17.5 14.3
Face makeup ................... 9.6 32.0
Nail .......................... 23.0 35.6
Eye ........................... 13.0 33.5
57 Bar chart of the Company's market share for implements in the United
States self-select distribution channel, depicting the Company's
market share of 35.8%, 35.8% and 36.4% for 1994, 1995 and 1996,
respectively.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below is a table of the SEC registration fee and estimates of
all other expenses to be incurred in connection with the issuance and
distribution of the securities described in this Registration Statement:
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee................. $153,044
Printing and engraving expenses ..... *
Legal fees and expenses.............. *
Transfer agent fees and expenses .... *
Accounting fees and expenses......... *
Miscellaneous........................ *
------------
Total.............................. $ *
============
</TABLE>
- ------------
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Corporation Law") empowers a Delaware corporation to indemnify any
persons who are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of such corporation), by reason of the fact that such person is or was
an officer, director, employee or agent of such corporation, or is or was
serving at the request of such corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise. The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding,
provided that such officer or director acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best
interests, and, for criminal proceedings, had no reasonable cause to believe
his conduct was unlawful. A Delaware corporation may indemnify officers and
directors against expenses (including attorneys' fees) in an action by or in
the right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any
action referred to above, the corporation must indemnify him against the
expenses which such officer or director actually and reasonably incurred.
Article VIII of the By-laws of the Registrant, a copy of which is filed as
Exhibit 3.2 to this Registration Statement, allows the Registrant to maintain
director and officer liability insurance on behalf of any person who is or
was a director or officer of the Registrant or such person who serves or
served as a director, officer, employee or agent, of another corporation,
partnership or other enterprise at the request of the Registrant. Article
VIII of the Registrant's By-Laws provides for indemnification of the officers
and directors of the Registrant to the fullest extent permitted by applicable
law.
Pursuant to Section 102(b)(7) of the Delaware Corporation Law, Article
Sixth of the Certificate of Incorporation of the Registrant, a copy of which
is filed as Exhibit 3.1 to this Registration Statement, provides that no
director of the Registrant shall be personally liable to the Registrant or
its shareholders for monetary damages for any breach of his fiduciary duty as
a director; provided, however, that such clause shall not apply to any
liability of a director (1) for any breach of the Director's duty of loyalty
to the Registrant or its stockholders, (2) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of the
law, (3) pursuant to Section 174 of the Delaware Corporation Law, or (4) for
any transaction from which the director derived an improper personal benefit.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
In connection with the organization of the Registrant, on February 24,
1997, National Health Care Group, Inc., Revlon Holdings Inc. and Charles of
the Ritz Group Ltd. contributed, respectively, 750, 230 and 20 shares of
common stock of Revlon Worldwide Corporation to the Registrant in exchange
for, respectively, 750, 230 and 20 shares of common stock of the Registrant.
On March 5, 1997, the Registrant sold $770,000,000 aggregate principal amount
at maturity of the Old Notes to Chase Securities Inc. and Smith Barney Inc.
(collectively, the "Initial Purchasers") for $505,043,000 less a discount to
the Initial Purchasers of $12,626,075. Such transactions were exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act") in reliance on section 4(2) of such Act on the basis that
such transactions did not involve a public offering. In accordance with the
agreement pursuant to which the Initial Purchasers purchased the Old Notes,
such initial purchasers agreed to offer and sell such notes only to
"qualified institutional buyers" (as defined in Rule 144A under the
Securities Act) and to a limited number of institutional "accredited
investors" (as defined in Rule 501(A)(1), (2), (3) or (7) under the
Securities Act). Except for the transactions described above there have not
been any recent sales of unregistered securities.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------------
<S> <C>
3. CERTIFICATE OF INCORPORATION AND BY-LAWS.
*3.1 Certificate of Incorporation of Registrant.
*3.2 By-Laws of Registrant.
4. INSTRUMENTS DEFINING THE RIGHT OF SECURITY HOLDERS, INCLUDING INDENTURES.
*4.1 Indenture, dated as of March 1, 1997, between the Registrant and The Bank of New York, as
Trustee, relating to the Senior Secured Discount Notes due 2001 and the Series B Senior Secured
Discount Notes due 2001.
4.2 Indenture, dated as of July 15, 1980, between Holdings and The Chase Manhattan Bank, N.A., as
Trustee, relating to the 10 7/8% Sinking Fund Debentures due 2010 (the "Debentures Indenture").
(Incorporated by reference to Exhibit 4.1 to the Form S-1 of Revlon, Inc. filed with the
Securities and Exchange Commission on May 22, 1992, File No. 33-47100 (the "Revlon 1992 Form
S-1")).
4.3 First Supplemental Indenture, dated as of August 15, 1986, to the Debentures Indenture.
(Incorporated by reference to Exhibit 4.2 to the Revlon 1992 Form S-1).
4.4 Instrument of Appointment and Acceptance of Successor Trustee and Appointment of Agent dated as
of November 19, 1987, to appoint First National Bank of Minneapolis, as Trustee, relating to the
Debentures Indenture. (Incorporated by reference to Exhibit 4.3 to the Revlon 1992 Form S-1).
4.5 Second Supplemental Indenture, dated as of June 24, 1992, among Holdings, Revlon, Inc. and First
National Bank of Minneapolis, as Trustee, to the Debentures Indenture. (Incorporated by
reference to Exhibit 4.4 to the Amendment No. 1 to the Revlon Form S-1 filed with the Securities
and Exchange Commission on June 29,1992, File No. 33-47100 (the "Revlon 1992 Amendment No. 1")).
4.6 Third Supplemental Indenture, dated as of June 24, 1992, among Revlon, Inc., Products
Corporation and First National Bank of Minneapolis, as Trustee, to the Debentures Indenture.
(Incorporated by reference to Exhibit 4.5 to the Revlon 1992 Amendment No. 1).
II-2
<PAGE>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------------
4.7 Indenture, dated as of February 15, 1993, between Products Corporation and The Bank of New York,
as Trustee, relating to Products Corporation's 10 1/2% Series B Senior Subordinated Notes Due
2003. (Incorporated by reference to Exhibit 4.31 to the Registration Statement on Form S-1 of
Products Corporation filed with the Securities and Exchange Commission on March 17, 1993, File
No. 33-59650).
4.8 Indenture, dated as of April 1, 1993, between Products Corporation and NationsBank of Georgia,
National Association, as Trustee, relating to Products Corporation's 9 3/8% Senior Notes Due
2001 and Products Corporation's 9 3/8% Series B Senior Notes Due 2001. (Incorporated by
reference to Exhibit 4.28 to the Amendment No. 1 to the Registration Statement on Form S-1 of
Products Corporation as filed with the Securities and Exchange Commission on April 13, 1993,
File No. 33-59650).
4.9 Indenture dated as of June 1, 1993, between Products Corporation and NationsBank of Georgia,
National Association, as Trustee, relating to Products Corporation's 9 1/2% Senior Notes Due
1999. (Incorporated by reference to Exhibit 4.31 to the Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1993 of Products Corporation).
4.10 Financing Reimbursement Agreement by and between Holdings and Products Corporation dated
February 28, 1995. (Incorporated by reference to Exhibit 4.30 to the Annual Report on Form 10-K
for the year ended December 31, 1994 of Products Corporation (the "Products Corporation 1994
10-K")).
4.11 Amendment to the Financing Reimbursement Agreement by and between Holdings and Products
Corporation dated May 3, 1996. (Incorporated by reference to Exhibit 4.10 to the Annual Report
on Form 10-K for the year ended December 31, 1996 of Revlon, Inc. (the "Revlon, Inc. 1996
10-K")).
4.12 Second Amended and Restated Credit Agreement dated as of December 22, 1994, between Pacific
Finance & Development Corp. and the Long-Term Credit Bank of Japan, Ltd. (the "Yen Credit
Agreement"). (Incorporated by reference to Exhibit 4.32 to the Products Corporation 1994 10-K).
4.13 Credit Agreement, dated as of February 28, 1995 among Products Corporation, Chemical Bank,
Citibank N.A. and the lenders party thereto (the "Former Credit Agreement"). (Incorporated by
reference to Exhibit 4.33 to the Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1995 of Products Corporation (the "Products Corporation First Quarter 10-Q")).
4.14 First Amendment, dated as of February 28, 1995, with respect to the Former Credit Agreement.
(Incorporated by reference to Exhibit 4.34 to the Products Corporation First Quarter 10-Q).
4.15 Second Amendment, dated as of February 28, 1995, with respect to the Former Credit Agreement.
(Incorporated by reference to Exhibit 4.35 to the Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1995 of Products Corporation).
4.16 Third Amendment, dated as of October 30, 1995, with respect to the Former Credit Agreement.
(Incorporated by reference to Exhibit 4.17 to the Registration Statement on Form S-1 of Revlon,
Inc. filed with the Securities and Exchange Commission on November 17,1995 (File No.
33-99558)(the "Revlon 1995 Form S-1")).
4.17 Amended and Restated Credit Agreement, dated as of January 24,1996, among Products Corporation,
Chemical Bank, Citibank N.A., Chemical Securities Inc. and the lenders party thereto.
(Incorporated by reference to Exhibit 4.18 to the Amendment No. 3 to the Revlon 1995 Form S-1
filed with the Securities and Exchange Commission on February 5, 1996 (the "Revlon 1995
Amendment No. 3")).
4.18 First Amendment and Consent Number 1 dated as of January 9, 1997 to the Credit Agreement.
(Incorporated by reference to Exhibit 4.18 to the Revlon, Inc. 1996 10-K).
II-3
<PAGE>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------------
4.19 Indenture dated as of March 15, 1993, between Revlon Worldwide and the First National Bank of
Boston, as Trustee, relating to the Senior Secured Discount Notes due 1998 and the Series B
Senior Secured Discount Notes Due 1998. (Incorporated by reference to Exhibit 4.28 to the
Worldwide Form S-1).
*4.20 Registration Agreement, dated March 5, 1997, among the Registrant and the Initial Purchasers.
4.21 First Amendment and Consent, dated as of March 10, 1997, with respect to the Yen Credit
Agreement. (Incorporated by reference to Exhibit 4.8 to the Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1997 of Revlon, Inc. (the "Revlon, Inc. March 31, 1997 Form
10-Q")).
4.22 Defeasance Trust Agreement dated April 1, 1997 between Revlon Worldwide Corporation and State
Street Bank and Trust Company, as Successor Trustee, under the Indenture dated as of March 15,
1993 between Revlon Worldwide Corporation and the First National Bank of Boston, as Trustee,
relating to the Senior Secured Discount Notes due 1998 and the Series B Senior Secured Discount
Notes due 1998. (Incorporated by reference to Exhibit 4.20 to the Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1997 of Revlon Worldwide Corporation.)
4.23 Amended and Restated Credit Agreement, dated as of May 30, 1997, among Products Corporation, The
Chase Manhattan Bank, Citibank N.A., Lehman Commercial Paper Inc., Chase Securities Inc. and the
lenders party thereto.
5. OPINIONS.
+5.1 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison, special counsel to the Registrant.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the Registrant.
10. MATERIAL CONTRACTS.
10.1 Purchase and Sale Agreement and Amendment thereto by and between Products Corporation and
Holdings, each dated as of February 18, 1993, relating to the Edison, New Jersey facility.
(Incorporated by reference to Exhibit 4.22 to the Annual Report on Form 10-K for the year ended
December 31, 1992 of Products Corporation (the "Products Corporation 1992 10-K")).
10.2 Asset Transfer Agreement, dated as of June 24, 1992, among Holdings, National Health Care Group,
Inc., Charles of the Ritz Group Ltd., Products Corporation and Revlon, Inc. (Incorporated by
reference to Exhibit 10.1 to the Revlon 1992 Amendment No. 1).
10.3 Real Property Asset Transfer Agreement, dated as of June 24,1992, among Holdings, Revlon, Inc.
and Products Corporation. (Incorporated by reference to Exhibit 10.2 to the Revlon 1992
Amendment No. 1).
10.4 Assumption Agreement relating to the Edison facility by and between Products Corporation and
Holdings, each dated as of February 18, 1993, relating to the Edison, New Jersey facility.
(Incorporated by reference to Exhibit 4.23 to the Products Corporation 1992 10-K).
10.5 Tax Sharing Agreement, dated as of June 24, 1992, among Mafco Holdings, Revlon, Inc., Products
Corporation and certain subsidiaries of Products Corporation (the "Tax Sharing Agreement").
(Incorporated by reference to Exhibit 10.5 to the Revlon 1992 Amendment
No. 1).
10.6 First Amendment, dated as of February 28, 1995, to the Tax Sharing Agreement. (Incorporated by
reference to Exhibit 10.5 to the Products Corporation 1994 10-K).
10.7 Second Amendment, dated as of January 1, 1997, to the Tax Sharing Agreement. (Incorporated by
reference to Exhibit 10.7 to the Revlon, Inc. 1996 10-K).
II-4
<PAGE>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------------
10.8 Second Amended and Restated Operating Services Agreement by and among Holdings, Revlon, Inc. and
Products Corporation, as of January 1, 1996. (Incorporated by reference to Exhibit 10.8 to the
Revlon, Inc. 1996 10-K).
10.9 Employment Agreement dated as of January 1, 1996 between Products Corporation and Jerry W.
Levin. (Incorporated by reference to Exhibit 10.10 to the Annual Report on Form 10-K for the
year ended December 31, 1995 of Products Corporation (the "Products Corporation 1995 10-K")).
10.10 Employment Agreement dated as of January 1, 1997 between Products Corporation and George
Fellows. (Incorporated by reference to Exhibit 10.10 to the Revlon, Inc. 1997 10-Q).
10.11 Employment Agreement dated as of January 1, 1996 between Products Corporation and William J.
Fox. (Incorporated by reference to Exhibit 10.12 to the Products Corporation 1995 10-K).
10.12 Employment Agreement dated as of January 1, 1996 between RIROS Corporation and Carlos Colomer
Casellas. (Incorporated by reference to Exhibit 10.13 to the Products Corporation 1995 10-K).
10.13 Employment Agreement dated as of January 1, 1996 between Products Corporation and
M. Katherine Dwyer. (Incorporated by reference to Exhibit 10.13 to the Revlon, Inc. 1996 10-K).
10.14 Revlon Employees' Savings and Investment Plan effective as of January 1, 1996. (Incorporated by
reference to Exhibit 10.15 to the Products Corporation 1995 10-K).
10.15 Revlon Employees' Retirement Plan as amended and restated December 19, 1994. (Incorporated by
reference to Exhibit 10.15 to the Products Corporation 1994 10-K).
10.16 Amended and Restated Revlon Pension Equalization Plan, effective January 1, 1996. (Incorporated
by reference to Exhibit 10.17 to the Revlon 1995 Amendment No. 4).
10.17 Executive Supplemental Medical Expense Plan Summary dated July 1991. (Incorporated by reference
to Exhibit 10.18 to the Revlon 1992 Form S-1).
10.18 Description of Post Retirement Life Insurance Program for Key Executives. (Incorporated by
reference to Exhibit 10.19 to the Revlon 1992 Form S-1).
10.19 Benefit Plans Assumption Agreement dated as of July 1, 1992, by and among Holdings, Revlon, Inc.
and Products Corporation. (Incorporated by reference to Exhibit 10.25 to the Products
Corporation 1992 10-K).
10.20 Revlon Executive Bonus Plan effective January 1, 1997. (Incorporated by reference to Exhibit
10.20 to the Revlon, Inc. 1996 10-K).
10.21 Revlon Executive Deferred Compensation Plan, amended as of October 15, 1993. (Incorporated by
reference to Exhibit 10.25 to the Products Corporation 1993 10-K).
10.22 Revlon Executive Severance Policy effective January 1, 1996. (Incorporated by reference to
Exhibit 10.23 to the Revlon 1995 Amendment No. 3).
10.23 Revlon, Inc. 1996 Stock Plan, amended and restated as of December 17, 1996. (Incorporated by
reference to Exhibit 10.23 to the Revlon, Inc. 1996 10-K).
10.24 Tax Sharing Agreement, dated as of March 17, 1993, between Revlon Worldwide and Mafco Holdings
Inc. (Incorporated by reference to Exhibit 10.30 to the Worldwide Form S-1).
10.25 Indemnity Agreement, dated March 25, 1993, between Revlon Worldwide and Holdings. (Incorporated
by reference to Exhibit 10.32 to the Worldwide Form S-1).
10.26 Form of Registration Rights Agreement. (Incorporated by reference to Exhibit 10.1 to the Annual
Report on Form 10-K for the year ended December 31, 1995 of Revlon Worldwide).
II-5
<PAGE>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------------
12. RATIO OF EARNINGS TO FIXED CHARGES.
12.1 Statement regarding the computation of ratio of earnings to fixed charges for the Registrant.
21. SUBSIDIARIES.
*21.1 Subsidiaries of the Registrant.
23. CONSENTS.
23.1 Consent of KPMG Peat Marwick LLP and Report on Schedule.
+23.2 Consent of Paul, Weiss, Rifkind, Wharton & Garrison, special counsel to the Registrant (included
in Exhibit 5.1).
23.3 Consent of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the Registrant (included
in Exhibit 8.1).
24. POWERS OF ATTORNEY.
*24.1 Power of Attorney executed by Ronald O. Perelman.
*24.2 Power of Attorney executed by Howard Gittis.
*24.3 Power of Attorney executed by Irwin Engelman.
*24.4 Power of Attorney executed by Lawrence E. Kreider.
25. FORM T-1.
*25.1 Statement of Eligibility and Qualification on Form T-1 of The Bank of New York, as Trustee under
the Indenture relating to the Registrant's Series B Senior Secured Discount Notes due 2001.
27. FINANCIAL DATA SCHEDULE.
*27.1 Financial Data Schedule for the period ended December 31, 1996.
27.2 Financial Data Schedule for the period ended March 31, 1997.
99. MISCELLANEOUS.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
99.4 Form of Letter to Clients.
</TABLE>
- ------------
* Previously filed.
+ To be filed by amendment.
(b) Financial Statement Schedules:
Schedule II--Valuation and Qualifying Accounts.
II-6
<PAGE>
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes:
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York, on June 4, 1997.
REVLON WORLDWIDE (PARENT)
CORPORATION
By /s/ Glenn P. Dickes
-----------------------------------
Glenn P. Dickes
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------- ------------------------------------- --------------
<S> <C> <C>
* Chairman of the Board and Director June 4, 1997
--------------------------- (Principal Executive Officer)
Ronald O. Perelman
* Vice Chairman of the Board and June 4, 1997
--------------------------- Director
Howard Gittis
* Executive Vice President and Chief June 4, 1997
--------------------------- Financial Officer
Irwin Engelman (Principal Financial Officer)
* Senior Vice President, Controller and June 4, 1997
--------------------------- Chief Accounting Officer (Principal
Lawrence E. Kreider Accounting Officer)
</TABLE>
*Joram C. Salig, by signing his name hereto, does hereby execute this
Amendment No. 1 to the Registration Statement on behalf of the directors and
officers of the Registrant indicated above by asterisks, pursuant to powers
of attorney duly executed by such directors and officers and filed as
exhibits to the Registration Statement.
By /s/ Joram C. Salig
-----------------------------------
Joram C. Salig
Attorney-in-Fact
II-8
<PAGE>
SCHEDULE II
REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE
BEGINNING COST AND OTHER AT END
OF YEAR EXPENSES DEDUCTIONS OF YEAR
------------ ------------ ------------ ---------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996:
Applied against asset accounts:
Allowance for doubtful accounts ..... $13.6 $ 7.1 $ (7.8)(1) $12.9
Allowance for volume and early
payment discounts ................... $10.1 $43.8 $(41.9)(2) $12.0
YEAR ENDED DECEMBER 31, 1995:
Applied against asset accounts:
Allowance for doubtful accounts ..... $11.1 $ 5.5 $ (3.0)(1) $13.6
Allowance for volume and early
payment discounts ................... $10.6 $33.3 $(33.8)(2) $10.1
YEAR ENDED DECEMBER 31, 1994:
Applied against asset accounts:
Allowance for doubtful accounts ..... $14.6 $ 4.6 $ (8.1)(1) $11.1
Allowance for volume and early
payment discounts ................... $ 9.7 $26.0 $(25.1)(2) $10.6
</TABLE>
- ------------
Notes:
(1) Doubtful accounts written off, less recoveries, reclassifications and
foreign currency translation adjustments.
(2) Discounts taken, reclassifications and foreign currency translation
adjustments.
S-1
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE
EXHIBIT NO. DESCRIPTION NO.
- ----------- ----------------------------------------------------------------------------------------- --------
<S> <C> <C>
3. CERTIFICATE OF INCORPORATION AND BY-LAWS.
*3.1 Certificate of Incorporation of Registrant.
*3.2 By-Laws of Registrant.
4. INSTRUMENTS DEFINING THE RIGHT OF SECURITY HOLDERS, INCLUDING INDENTURES.
*4.1 Indenture, dated as of March 1, 1997, between the Registrant and The Bank of New York, as
Trustee, relating to the Senior Secured Discount Notes due 2001 and the Series B Senior
Secured Discount Notes due 2001.
4.2 Indenture, dated as of July 15, 1980, between Holdings and The Chase Manhattan Bank,
N.A., as Trustee, relating to the 10 7/8% Sinking Fund Debentures due 2010 (the
"Debentures Indenture"). (Incorporated by reference to Exhibit 4.1 to the Form S-1 of
Revlon, Inc. filed with the Securities and Exchange Commission on May 22, 1992, File No.
33-47100 (the "Revlon 1992 Form S-1")).
4.3 First Supplemental Indenture, dated as of August 15, 1986, to the Debentures Indenture.
(Incorporated by reference to Exhibit 4.2 to the Revlon 1992 Form S-1).
4.4 Instrument of Appointment and Acceptance of Successor Trustee and Appointment of Agent
dated as of November 19, 1987, to appoint First National Bank of Minneapolis, as Trustee,
relating to the Debentures Indenture. (Incorporated by reference to Exhibit 4.3 to the
Revlon 1992 Form S-1).
4.5 Second Supplemental Indenture, dated as of June 24, 1992, among Holdings, Revlon, Inc.
and First National Bank of Minneapolis, as Trustee, to the Debentures Indenture.
(Incorporated by reference to Exhibit 4.4 to the Amendment No. 1 to the Revlon Form S-1
filed with the Securities and Exchange Commission on June 29,1992, File No. 33-47100 (the
"Revlon 1992 Amendment No. 1")).
4.6 Third Supplemental Indenture, dated as of June 24, 1992, among Revlon, Inc., Products
Corporation and First National Bank of Minneapolis, as Trustee, to the Debentures
Indenture. (Incorporated by reference to Exhibit 4.5 to the Revlon 1992 Amendment No. 1).
4.7 Indenture, dated as of February 15, 1993, between Products Corporation and The Bank of
New York, as Trustee, relating to Products Corporation's 10 1/2% Series B Senior
Subordinated Notes Due 2003. (Incorporated by reference to Exhibit 4.31 to the
Registration Statement on Form S-1 of Products Corporation filed with the Securities and
Exchange Commission on March 17, 1993, File No. 33-59650).
4.8 Indenture, dated as of April 1, 1993, between Products Corporation and NationsBank of
Georgia, National Association, as Trustee, relating to Products Corporation's 9 3/8%
Senior Notes Due 2001 and Products Corporation's 9 3/8% Series B Senior Notes Due 2001.
(Incorporated by reference to Exhibit 4.28 to the Amendment No. 1 to the Registration
Statement on Form S-1 of Products Corporation as filed with the Securities and Exchange
Commission on April 13, 1993, File No. 33-59650).
4.9 Indenture dated as of June 1, 1993, between Products Corporation and NationsBank of
Georgia, National Association, as Trustee, relating to Products Corporation's 9 1/2%
Senior Notes Due 1999. (Incorporated by reference to Exhibit 4.31 to the Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 1993 of Products Corporation).
<PAGE>
PAGE
EXHIBIT NO. DESCRIPTION NO.
- ----------- ----------------------------------------------------------------------------------------- --------
4.10 Financing Reimbursement Agreement by and between Holdings and Products Corporation dated
February 28, 1995. (Incorporated by reference to Exhibit 4.30 to the Annual Report on
Form 10-K for the year ended December 31, 1994 of Products Corporation (the "Products
Corporation 1994 10-K")).
4.11 Amendment to the Financing Reimbursement Agreement by and between Holdings and Products
Corporation dated May 3, 1996. (Incorporated by reference to Exhibit 4.10 to the Annual
Report on Form 10-K for the year ended December 31, 1996 of Revlon, Inc. (the "Revlon,
Inc. 1996 10-K")).
4.12 Second Amended and Restated Credit Agreement dated as of December 22, 1994, between
Pacific Finance & Development Corp. and the Long-Term Credit Bank of Japan, Ltd. (the
"Yen Credit Agreement"). (Incorporated by reference to Exhibit 4.32 to the Products
Corporation 1994 10-K).
4.13 Credit Agreement, dated as of February 28, 1995 among Products Corporation, Chemical
Bank, Citibank N.A. and the lenders party thereto (the "Former Credit Agreement").
(Incorporated by reference to Exhibit 4.33 to the Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1995 of Products Corporation (the "Products Corporation
First Quarter 10-Q")).
4.14 First Amendment, dated as of February 28, 1995, with respect to the Former Credit
Agreement. (Incorporated by reference to Exhibit 4.34 to the Products Corporation First
Quarter 10-Q).
4.15 Second Amendment, dated as of February 28, 1995, with respect to the Former Credit
Agreement. (Incorporated by reference to Exhibit 4.35 to the Quarterly Report on Form
10-Q for the quarterly period ended June 30, 1995 of Products Corporation).
4.16 Third Amendment, dated as of October 30, 1995, with respect to the Former Credit
Agreement. (Incorporated by reference to Exhibit 4.17 to the Registration Statement on
Form S-1 of Revlon, Inc. filed with the Securities and Exchange Commission on November
17,1995 (File No. 33-99558)(the "Revlon 1995 Form S-1")).
4.17 Amended and Restated Credit Agreement, dated as of January 24,1996, among Products
Corporation, Chemical Bank, Citibank N.A., Chemical Securities Inc. and the lenders party
thereto. (Incorporated by reference to Exhibit 4.18 to the Amendment No. 3 to the Revlon
1995 Form S-1 filed with the Securities and Exchange Commission on February 5, 1996 (the
"Revlon 1995 Amendment No. 3")).
4.18 First Amendment and Consent Number 1 dated as of January 9, 1997 to the Credit Agreement.
(Incorporated by reference to Exhibit 4.18 to the Revlon, Inc. 1996 10-K).
4.19 Indenture dated as of March 15, 1993, between Revlon Worldwide and the First National
Bank of Boston, as Trustee, relating to the Senior Secured Discount Notes due 1998 and
the Series B Senior Secured Discount Notes Due 1998. (Incorporated by reference to
Exhibit 4.28 to the Worldwide Form S-1).
*4.20 Registration Agreement, dated March 5, 1997, among the Registrant and the Initial
Purchasers.
4.21 First Amendment and Consent, dated as of March 10, 1997, with respect to the Yen Credit
Agreement. (Incorporated by reference to Exhibit 4.8 to the Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1997 of Revlon, Inc. (the "Revlon, Inc. March
31, 1997 Form 10-Q")).
<PAGE>
PAGE
EXHIBIT NO. DESCRIPTION NO.
- ----------- ----------------------------------------------------------------------------------------- --------
4.22 Defeasance Trust Agreement dated April 1, 1997 between Revlon Worldwide Corporation and
State Street Bank and Trust Company, as Successor Trustee, under the Indenture dated as
of March 15, 1993 between Revlon Worldwide Corporation and the First National Bank of
Boston, as Trustee, relating to the Senior Secured Discount Notes due 1998 and the Series
B Senior Secured Discount Notes due 1998. (Incorporated by reference to Exhibit 4.20 to
the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1997 of Revlon
Worldwide Corporation.)
4.23 Amended and Restated Credit Agreement, dated as of May 30, 1997, among Products
Corporation, The Chase Manhattan Bank, Citibank N.A., Lehman Commercial Paper Inc., Chase
Securities Inc. and the lenders party thereto.
5. OPINIONS.
+5.1 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison, special counsel to the Registrant.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the Registrant.
10. MATERIAL CONTRACTS.
10.1 Purchase and Sale Agreement and Amendment thereto by and between Products Corporation and
Holdings, each dated as of February 18, 1993, relating to the Edison, New Jersey
facility. (Incorporated by reference to Exhibit 4.22 to the Annual Report on Form 10-K
for the year ended December 31, 1992 of Products Corporation (the "Products Corporation
1992 10-K")).
10.2 Asset Transfer Agreement, dated as of June 24, 1992, among Holdings, National Health Care
Group, Inc., Charles of the Ritz Group Ltd., Products Corporation and Revlon, Inc.
(Incorporated by reference to Exhibit 10.1 to the Revlon 1992 Amendment No. 1).
10.3 Real Property Asset Transfer Agreement, dated as of June 24,1992, among Holdings, Revlon,
Inc. and Products Corporation. (Incorporated by reference to Exhibit 10.2 to the Revlon
1992 Amendment No. 1).
10.4 Assumption Agreement relating to the Edison facility by and between Products Corporation
and Holdings, each dated as of February 18, 1993, relating to the Edison, New Jersey
facility. (Incorporated by reference to Exhibit 4.23 to the Products Corporation 1992
10-K).
10.5 Tax Sharing Agreement, dated as of June 24, 1992, among Mafco Holdings, Revlon, Inc.,
Products Corporation and certain subsidiaries of Products Corporation (the "Tax Sharing
Agreement"). (Incorporated by reference to Exhibit 10.5 to the Revlon 1992 Amendment No.
1).
10.6 First Amendment, dated as of February 28, 1995, to the Tax Sharing Agreement.
(Incorporated by reference to Exhibit 10.5 to the Products Corporation 1994 10-K).
10.7 Second Amendment, dated as of January 1, 1997, to the Tax Sharing Agreement.
(Incorporated by reference to Exhibit 10.7 to the Revlon, Inc. 1996 10-K).
10.8 Second Amended and Restated Operating Services Agreement by and among Holdings, Revlon,
Inc. and Products Corporation, as of January 1, 1996. (Incorporated by reference to
Exhibit 10.8 to the Revlon, Inc. 1996 10-K).
10.9 Employment Agreement dated as of January 1, 1996 between Products Corporation and Jerry
W. Levin. (Incorporated by reference to Exhibit 10.10 to the Annual Report on Form 10-K
for the year ended December 31, 1995 of Products Corporation (the "Products Corporation
1995 10-K")).
<PAGE>
PAGE
EXHIBIT NO. DESCRIPTION NO.
- ----------- ----------------------------------------------------------------------------------------- --------
10.10 Employment Agreement dated as of January 1, 1997 between Products Corporation and George
Fellows. (Incorporated by reference to Exhibit 10.10 to the Revlon, Inc. 1997 10-Q).
10.11 Employment Agreement dated as of January 1, 1996 between Products Corporation and William
J. Fox. (Incorporated by reference to Exhibit 10.12 to the Products Corporation 1995
10-K).
10.12 Employment Agreement dated as of January 1, 1996 between RIROS Corporation and Carlos
Colomer Casellas. (Incorporated by reference to Exhibit 10.13 to the Products Corporation
1995 10-K).
10.13 Employment Agreement dated as of January 1, 1996 between Products Corporation and M.
Katherine Dwyer. (Incorporated by reference to Exhibit 10.13 to the Revlon, Inc. 1996
10-K).
10.14 Revlon Employees' Savings and Investment Plan effective as of January 1, 1996.
(Incorporated by reference to Exhibit 10.15 to the Products Corporation 1995 10-K).
10.15 Revlon Employees' Retirement Plan as amended and restated December 19, 1994.
(Incorporated by reference to Exhibit 10.15 to the Products Corporation 1994 10-K).
10.16 Amended and Restated Revlon Pension Equalization Plan, effective January 1, 1996.
(Incorporated by reference to Exhibit 10.17 to the Revlon 1995 Amendment No. 4).
10.17 Executive Supplemental Medical Expense Plan Summary dated July 1991. (Incorporated by
reference to Exhibit 10.18 to the Revlon 1992 Form S-1).
10.18 Description of Post Retirement Life Insurance Program for Key Executives. (Incorporated
by reference to Exhibit 10.19 to the Revlon 1992 Form S-1).
10.19 Benefit Plans Assumption Agreement dated as of July 1, 1992, by and among Holdings,
Revlon, Inc. and Products Corporation. (Incorporated by reference to Exhibit 10.25 to the
Products Corporation 1992 10-K).
10.20 Revlon Executive Bonus Plan effective January 1, 1997. (Incorporated by reference to
Exhibit 10.20 to the Revlon, Inc. 1996 10-K).
10.21 Revlon Executive Deferred Compensation Plan, amended as of October 15, 1993.
(Incorporated by reference to Exhibit 10.25 to the Products Corporation 1993 10-K).
10.22 Revlon Executive Severance Policy effective January 1, 1996. (Incorporated by reference
to Exhibit 10.23 to the Revlon 1995 Amendment No. 3).
10.23 Revlon, Inc. 1996 Stock Plan, amended and restated as of December 17, 1996. (Incorporated
by reference to Exhibit 10.23 to the Revlon, Inc. 1996 10-K).
10.24 Tax Sharing Agreement, dated as of March 17, 1993, between Revlon Worldwide and Mafco
Holdings Inc. (Incorporated by reference to Exhibit 10.30 to the Worldwide Form S-1).
10.25 Indemnity Agreement, dated March 25, 1993, between Revlon Worldwide and Holdings.
(Incorporated by reference to Exhibit 10.32 to the Worldwide Form S-1).
10.26 Form of Registration Rights Agreement. (Incorporated by reference to Exhibit 10.1 to the
Annual Report on Form 10-K for the year ended December 31, 1995 of Revlon Worldwide).
<PAGE>
PAGE
EXHIBIT NO. DESCRIPTION NO.
- ----------- ----------------------------------------------------------------------------------------- --------
12. RATIO OF EARNINGS TO FIXED CHARGES.
12.1 Statement regarding the computation of ratio of earnings to fixed charges for the
Registrant.
21. SUBSIDIARIES.
*21.1 Subsidiaries of the Registrant.
23. CONSENTS.
23.1 Consent of KPMG Peat Marwick LLP and Report on Schedule.
+23.2 Consent of Paul, Weiss, Rifkind, Wharton & Garrison, special counsel to the Registrant
(included in Exhibit 5.1).
23.3 Consent of Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the Registrant
(included in Exhibit 8.1).
24. POWERS OF ATTORNEY.
*24.1 Power of Attorney executed by Ronald O. Perelman.
*24.2 Power of Attorney executed by Howard Gittis.
*24.3 Power of Attorney executed by Irwin Engelman.
*24.4 Power of Attorney executed by Lawrence E. Kreider.
25. FORM T-1.
*25.1 Statement of Eligibility and Qualification on Form T-1 of The Bank of New York, as
Trustee under the Indenture relating to the Registrant's Series B Senior Secured Discount
Notes due 2001.
27. FINANCIAL DATA SCHEDULE.
*27.1 Financial Data Schedule for the period ended December 31, 1996.
27.2 Financial Data Schedule for the period ended March 31, 1997.
99. MISCELLANEOUS.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
99.4 Form of Letter to Clients.
</TABLE>
- ------------
* Previously filed.
+ To be filed by amendment.
<PAGE>
===============================================================================
REVLON CONSUMER PRODUCTS CORPORATION
and
CERTAIN BORROWING SUBSIDIARIES
------------------
$750,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of May 30, 1997
------------------
THE CHASE MANHATTAN BANK,
as Administrative Agent
CITIBANK, N.A.,
as Documentation Agent
LEHMAN COMMERCIAL PAPER INC.,
as Syndication Agent
CHASE SECURITIES INC.,
as Arranger
===============================================================================
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.................................................... 2
1.1 Defined Terms..................................................... 2
1.2 Other Definitional Provisions..................................... 49
SECTION 2. AMOUNTS AND TERMS OF INITIAL TERM LOAN COMMITMENT.............. 49
2.1 Initial Term Loan Commitments..................................... 49
2.2 Obligations of the Company........................................ 49
2.3 Procedure for Borrowing Initial Term Loans........................ 50
2.4 Amortization of Initial Term Loans................................ 51
2.5 Use of Proceeds of Initial Term Loans............................. 51
SECTION 3. AMOUNTS AND TERMS OF DEFERRED DRAW TERM LOAN COMMITMENT........ 51
3.1 Deferred Draw Term Loan Commitments............................... 51
3.2 Obligations of the Company........................................ 51
3.3 Procedure for Borrowing Deferred Draw Term Loans.................. 52
3.4 Amortization of Deferred Draw Term Loans.......................... 53
3.5 Use of Proceeds of Deferred Draw Term Loans....................... 53
SECTION 4. AMOUNT AND TERMS OF SPECIAL LETTER OF CREDIT FACILITY.......... 54
4.1 Special Letter of Credit Facility................................. 54
4.2 Procedure for Issuance of Special Letters of Credit............... 54
4.3 Special L/C Participations........................................ 55
4.4 Reimbursement Obligation of the Company........................... 56
4.5 Obligations Absolute.............................................. 56
4.6 Special Letter of Credit Payments................................. 56
4.7 Application....................................................... 57
4.8 Cash Collateral for Special Letters of Credit..................... 57
4.9 Existing Special Letters of Credit................................ 58
SECTION 5. AMOUNT AND TERMS OF REVOLVING CREDIT SUB-FACILITY.............. 58
5.1 Revolving Credit Commitments...................................... 58
5.2 Obligations of Company............................................ 59
5.3 Procedure for Borrowing Revolving Credit Loans.................... 59
5.4 Use of Proceeds of Revolving Credit Loans......................... 60
5.5 Refunded Revolving Credit Loans................................... 60
SECTION 6. AMOUNT AND TERMS OF SWING LINE SUB-FACILITY.................... 62
6.1 Swing Line Commitments............................................ 62
6.2 Participations.................................................... 64
-i-
<PAGE>
Page
----
6.3 Use of Proceeds of Swing Line Loans............................... 64
SECTION 7. AMOUNT AND TERMS OF OPERATING LETTER OF CREDIT SUB-FACILITY.... 64
7.1 Operating Letter of Credit Facility............................... 64
7.2 Procedure for Issuance of Operating Letters of Credit............. 65
7.3 Operating L/C Participations...................................... 65
7.4 Reimbursement Obligation of the Company........................... 66
7.5 Obligations Absolute.............................................. 67
7.6 Operating Letter of Credit Payments............................... 67
7.7 Application....................................................... 67
7.8 Cash Collateral for Operating Letters of Credit................... 68
7.9 Existing Operating Letters of Credit.............................. 68
SECTION 8. AMOUNT AND TERMS OF LOCAL LOAN SUB-FACILITY.................... 69
8.1 Local Loan Commitments............................................ 69
8.2 Obligations of Local Borrowers.................................... 69
8.3 Procedure for Borrowing Local Loans............................... 70
8.4 Currency Conversion and Contingent Funding Agreement.............. 71
8.5 Designation of Additional Denomination Currencies................. 74
8.6 Re-Allocation of Currency Sublimits............................... 75
8.7 Resignation or Removal of a Local Fronting Lender................. 77
8.8 Reports........................................................... 78
8.9 Bankers' Acceptances.............................................. 78
8.10 Use of Proceeds of Local Loans and Acceptances................... 79
8.11 Existing Local Loans and Acceptances............................. 80
SECTION 9. AMOUNT AND TERMS OF ACQUISITION FACILITY....................... 80
9.1 Acquisition Loan Commitments...................................... 80
9.2 Obligations of the Company........................................ 81
9.3 Procedure for Borrowing Syndicated Acquisition Loans.............. 82
9.4 Procedure for Borrowing Fronted Acquisition Loans................. 87
9.5 Matters Relating to Syndicated Acquisition Loans.................. 88
9.6 Matters Relating to Fronted Acquisition Loans..................... 88
9.7 Aggregate Acquisition Loan Commitment Increases................... 92
9.8 Mandatory Reduction of Aggregate Acquisition Loan Commitment...... 93
9.9 Use of Proceeds of Acquisition Loans.............................. 93
SECTION 10. PROVISIONS RELATING TO CERTAIN EXTENSIONS OF CREDIT;
FEES AND PAYMENT............................................... 94
10.1 Voluntary Termination or Reduction of Aggregate Commitment....... 94
10.2 Optional Prepayments............................................. 94
10.3 Mandatory Prepayments............................................ 96
10.4 Mandatory Commitment Reductions.................................. 97
10.5 Application of Payments and Commitment Reductions................ 99
10.6 Interest Rate and Payment Dates; Risk Participation Fees;
Local Administrative Fee.......................................100
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10.7 Letter of Credit Fees, Commissions and Other Charges.............103
10.8 Conversion Options, Minimum Tranches and Maximum
Interest Periods...............................................103
10.9 Inability to Determine Interest Rate.............................107
10.10 Illegality......................................................108
10.11 Requirements of Law; Changes of Law.............................109
10.12 Indemnity.......................................................111
10.13 Taxes...........................................................112
10.14 Commitment Fee..................................................115
10.15 Computation of Interest and Fees................................116
10.16 Pro Rata Treatment and Payments.................................117
10.17 Payments on Account of Loans and Fees...........................121
10.18 Interest Act (Canada)...........................................121
10.19 Converted Acquisition Loans.....................................121
SECTION 11. REPRESENTATIONS AND WARRANTIES.................................122
11.1 Corporate Existence..............................................122
11.2 Corporate Power..................................................122
11.3 No Legal Bar to Loans............................................123
11.4 No Material Litigation...........................................123
11.5 No Default.......................................................124
11.6 Ownership of Properties; Liens...................................124
11.7 Taxes............................................................124
11.8 ERISA............................................................124
11.9 Financial Condition..............................................125
11.10 No Change.......................................................126
11.11 Federal Regulations.............................................126
11.12 Not an "Investment Company".....................................126
11.13 Matters Relating to Subsidiaries................................126
11.14 Pledge Agreements...............................................126
11.15 Security Agreements.............................................127
11.16 Security Documents of Borrowing Subsidiaries....................127
11.17 Mortgages.......................................................128
11.18 Guarantees......................................................128
11.19 Company Tax Sharing Agreement...................................128
11.20 Intellectual Property...........................................128
11.21 Solvency........................................................128
11.22 Environmental Matters...........................................129
11.23 Models..........................................................130
11.24 Disclosure......................................................130
11.25 Senior Indebtedness.............................................130
11.26 Regulation H....................................................131
11.27 Affiliate Obligations...........................................131
11.28 Indebtedness Owing to Affiliates................................131
11.29 No Recordation Necessary........................................131
11.30 Accounts Receivable and Inventory...............................131
11.31 Intellectual Property Filings...................................132
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11.32 Restricted Payments.............................................132
11.33 Certain Tax Liabilities.........................................132
SECTION 12. CONDITIONS PRECEDENT...........................................132
12.1 Conditions to Initial Extensions of Credit.......................132
12.2 Conditions to Each Acquisition Loan..............................137
12.3 Conditions to Each Extension of Credit...........................138
SECTION 13. AFFIRMATIVE COVENANTS..........................................139
13.1 Financial Statements.............................................139
13.2 Certificates; Other Information..................................141
13.3 Payment of Obligations...........................................142
13.4 Conduct of Business and Maintenance of Existence.................142
13.5 Maintenance of Property; Insurance...............................142
13.6 Inspection of Property; Books and Records; Discussions...........142
13.7 Notices..........................................................143
13.8 Maintenance of Corporate Identity................................144
13.9 Environmental Laws...............................................145
13.10 Additional Guarantees...........................................145
13.11 Additional Stock Pledges........................................145
13.12 Additional Security Agreements..................................147
13.13 Asset Transfers.................................................148
13.14 Intellectual Property...........................................148
SECTION 14. NEGATIVE COVENANTS.............................................151
14.1 Financial Covenants..............................................151
14.2 Indebtedness.....................................................152
14.3 Limitation on Liens..............................................155
14.4 Limitation on Contingent Obligations.............................159
14.5 Limitation on Fundamental Changes................................160
14.6 Limitation on Sale of Assets.....................................160
14.7 Limitation on Restricted Payments................................161
14.8 Limitation on Investments........................................163
14.9 Limitation on Payments on Account of Debt........................165
14.10 Limitation on Transactions with Affiliates......................166
14.11 Hazardous Materials.............................................166
14.12 Accounting Changes..............................................166
14.13 Limitation on Negative Pledge Clauses...........................166
14.14 Amendment of Company Tax Sharing Agreement......................167
14.15 Amendment of Revlon Holdings Operating Agreement................167
SECTION 15. EVENTS OF DEFAULT..............................................167
SECTION 16. THE AGENTS.....................................................172
16.1 Appointment......................................................172
16.2 Consultation with Documentation Agent and Syndication Agent......173
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16.3 Delegation of Duties.............................................173
16.4 Exculpatory Provisions...........................................173
16.5 Reliance by the Agents...........................................173
16.6 Notice of Default................................................174
16.7 Non-Reliance on the Agents, the Arranger and the Other Lenders...174
16.8 Indemnification..................................................175
16.9 Each of the Agents and the Arranger in Its Individual Capacity...176
16.10 Successor Agents................................................176
SECTION 17. MISCELLANEOUS..................................................177
17.1 Amendments and Waivers...........................................177
17.2 Releases of Collateral Security and Guarantee Obligations........179
17.3 Notices..........................................................180
17.4 No Waiver; Cumulative Remedies...................................181
17.5 Survival of Representations and Warranties.......................181
17.6 Payment of Expenses and Taxes....................................181
17.7 Successors and Assigns; Loan Participations......................182
17.8 Adjustments; Set-off.............................................186
17.9 Delegation by each Borrowing Subsidiary..........................188
17.10 Judgment........................................................188
17.11 QFL Notes.......................................................188
17.12 Collateral Agency Agreements and Intercreditor Agreement........189
17.13 Certain Waivers.................................................190
17.14 Severability....................................................190
17.15 Effectiveness; Counterparts.....................................190
17.16 SUBMISSION TO JURISDICTION; WAIVERS.............................192
17.17 Acknowledgements................................................194
17.18 GOVERNING LAW...................................................194
-v-
<PAGE>
SCHEDULES
Schedule I Lenders; Addresses for Notices
Schedule II Commitments
Schedule III Borrowers; Denomination Currencies; Currency Sublimits;
Maximum Sublimits; Local Fronting Lenders
Schedule IV Subsidiaries; Directly Pledged Subsidiaries; Subsidiaries
Scheduled for Dissolution
Schedule V Pledge Agreements
Schedule VI Security Agreements
Schedule VII Indebtedness
Schedule VIII Contingent Obligations
Schedule IX Existing Special Letters of Credit
Schedule X Disposition Assets
Schedule XI UCC Financing Statements
Schedule XII Environmental Matters
Schedule XIII Domestic Local Counsel
Schedule XIV International Local Counsel
EXHIBITS
Exhibit A-1 Form of Initial Term Loan Note
Exhibit A-2 Form of Deferred Draw Term Loan Note
Exhibit B Form of Revolving Credit Note
Exhibit C Form of Swing Line Note
Exhibit D-1 Form of Affiliate Guarantee
Exhibit D-2 Form of Affiliate Pledge Agreement
Exhibit D-3 Form of Affiliate Security Agreement
Exhibit E-1 Form of Revlon Guarantee
Exhibit E-2 Form of Revlon Pledge Agreement
Exhibit F-1 Form of Company Guarantee
Exhibit F-2 Form of Company Pledge Agreement (Domestic)
Exhibit F-3 Form of Company Pledge Agreement (International)
Exhibit F-4 Form of Company Security Agreement
Exhibit G-1 Form of Subsidiaries Guarantee
Exhibit G-2 Form of Subsidiary Pledge Agreement (Domestic)
Exhibit G-3 Form of Subsidiary Pledge Agreement (International)
Exhibit G-4 Form of Subsidiary Security Agreement
Exhibit H-1 Form of New Jersey Fee Mortgage
Exhibit H-2 Form of Arizona Fee Deed of Trust
Exhibit I-1 Form of Collateral Agency Agreement (Bank Obligations)
Exhibit I-2 Form of Collateral Agency Agreement (Mortgage Obligations)
Exhibit J Form of Affiliate Subordination Letter
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<PAGE>
Exhibit K Form of Swing Line Loan Participation
Certificate
Exhibit L-1 Form of Local Loan Participation Certificate
Exhibit L-2 Form of Refunded Revolving Credit Loan Participation
Certificate
Exhibit M-1 Form of Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
Exhibit M-2 Form of Opinion of Senior Vice President and General Counsel
of the Company
Exhibit M-3 Form of Opinion of Simpson Thacher & Bartlett
Exhibit N Form of Commitment Transfer Supplement
Exhibit O Form of Compliance Certificate
Exhibit P Form of Company Tax Sharing Agreement
Exhibit Q-1 Form of Capital Gains Note
Exhibit Q-2 Form of Subordinated Intercompany Note
Exhibit Q-3 Form of Voluntary Capital Contribution Note
Exhibit R-1 Form of Borrowing Subsidiary Joinder Agreement
Exhibit R-2 Form of Local Fronting Lender Joinder Agreement
Exhibit R-3 Form of Acquisition Fronting Lender Joinder Agreement
Exhibit S-1 Form of Local Loan Statement
Exhibit S-2 Form of Interest Allocation Statement (Local Loans)
Exhibit S-3 Form of Interest Allocation Statement (Fronted Acquisition
Loans)
Exhibit T Form of Intercreditor Agreement
Exhibit U-1 Form of U.S. Tax Compliance Certificate
Exhibit U-2 Form of QFL Term Loan Note
Exhibit V Form of Direct Acquisition Participation Agreement
Exhibit W Form of New Acquisition Lender Supplement
Exhibit X Form of Acquisition Loan Commitment Supplement
Exhibit Y Form of Terms of Amended and Restated Yen Credit Agreement
-vii-
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of May 30, 1997,
among:
(a) REVLON CONSUMER PRODUCTS CORPORATION, a Delaware corporation (the
"Company");
(b) the Borrowing Subsidiaries from time to time parties hereto;
(c) the several Lenders from time to time parties hereto;
(d) the Co-Agents named on Schedule I hereto (in such capacities, the
"Co-Agents");
(e) CITIBANK, N.A., a national banking association ("Citibank"), as
documentation agent (in such capacity, the "Documentation Agent") for
the Lenders;
(f) LEHMAN COMMERCIAL PAPER INC., a Delaware corporation ("Lehman"), as
syndication agent (in such capacity, the "Syndication Agent") for the
Lenders;
(g) CHASE SECURITIES INC., as arranger (in such capacity, the "Arranger");
and
(h) THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase"), as
administrative agent (in such capacity, the "Administrative Agent";
together with the Documentation Agent and the Syndication Agent, the
"Agents") for the Lenders.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company and certain of its Subsidiaries are parties to
the Amended and Restated Credit Agreement, dated as of January 24, 1996 (as
amended, supplemented or otherwise modified from time to time through the date
hereof, the "Existing Agreement"), among the Company, the Borrowing
Subsidiaries, the banks and other financial institutions from time to time
parties thereto, the Co-Agents named therein, the Documentation Agent, the
Arranger, and the Administrative Agent;
WHEREAS, the Company has requested that the Existing Agreement be
amended in order to extend its maturity, increase the amounts available
thereunder, permit the repurchase or redemption by the Company of its 10-7/8%
Sinking Fund Debentures due 2010 and effect certain other changes thereto;
WHEREAS, each of the parties to the Existing Agreement (after giving
effect to the assignment by certain of the lenders under the Existing Agreement
of their interests in the Existing Agreement to other Lenders, as reflected in,
and as effected by, Schedule II hereto) is agreeable to the requested
amendments, but only upon the terms and subject to the conditions set forth
herein, and each of the parties to the Existing Agreement, for convenience of
reference, has agreed to restate the Existing Agreement as so amended;
<PAGE>
2
WHEREAS, each of the Lenders and the other parties hereto are
agreeable to the terms and provisions of the Existing Agreement, as amended and
restated hereby;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties to the Existing Agreement hereby agree that the
Existing Agreement shall be, and hereby is, amended and restated in its
entirety, and the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following respective meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Acceptable Assignee Rating" shall mean, for purposes of clause (a) of
the definition of the term "Eligible Assignee", a commercial bank having a
credit rating from any two of S&P, Moody's and Fitch in respect of (X) its
long term bank deposits or (Y) if no such debt has a rating from any two of
such agencies which is then published and in effect, its long term debt or
(Z) if neither of the foregoing types of debt have ratings from any two of
such agencies which are then published and in effect, the long term debt of
its holding company, which credit rating shall be (a) BBB or better, in the
case of S&P, (b) Baa2 or better, in the case of Moody's and (c) BBB or
better, in the case of Fitch. Notwithstanding the foregoing, if the
foregoing debt of the relevant commercial bank or its holding company, as
the case may be, is rated only by one of S&P, Moody's and Fitch (but not by
two or more of such agencies) and such rating is not worse than the rating
described for such rating agency in the immediately foregoing sentence,
such commercial bank shall be deemed to have an Acceptable Assignee Rating;
"Acceptances" shall have the meaning assigned to such term in
subsection 8.9(a);
"Acquisition Borrower" shall mean, with respect to any Acquisition
Loan, the Company or the Acquisition Subsidiary (as the context shall
require) which has been designated as the "Acquisition Borrower" with
respect to such Acquisition Loan in the notice of borrowing provided
pursuant to subsection 9.3 or 9.4, as the case may be, with respect
thereto;
"Acquisition Direct Lender" means, at any date, each bank and other
financial institution which holds an Acquisition Loan Commitment;
"Acquisition Fronting Lender" means, at any date with respect to any
Fronted Acquisition Loan to a specific Acquisition Borrower in Dollars or a
specific Approved Acquisition Currency (as the case may be), the
Acquisition Direct Lender which has agreed (in its sole discretion) to make
such Fronted Acquisition Loans to such
<PAGE>
3
Acquisition Borrower in the relevant currency by executing and delivering
to the Administrative Agent an Acquisition Fronting Lender Joinder
Agreement;
"Acquisition Fronting Lender Joinder Agreement" shall mean a Fronting
Lender Joinder Agreement, substantially in the form of Exhibit R-3;
"Acquisition Lender" shall mean an Acquisition Direct Lender or an
Acquisition Fronting Lender, as the context shall require; collectively,
the "Acquisition Lenders");
"Acquisition Loan" shall mean a Syndicated Acquisition Loan or a
Fronted Acquisition Loan, as the context shall require; collectively, the
"Acquisition Loans";
"Acquisition Loan Commitment" of any Acquisition Lender at any date
shall mean the obligation of such Acquisition Lender at such date to make
Acquisition Loans to the Acquisition Borrowers (and to purchase
participating interests in Fronted Acquisition Loans) in an aggregate
principal amount at any one time outstanding not to exceed the amount set
forth opposite such Acquisition Lender's name on Schedule II; collectively,
as to all such Acquisition Lenders, the "Acquisition Loan Commitments";
"Acquisition Loan Commitment Percentage" means, with respect to any
Acquisition Direct Lender at any date, the percentage which the Acquisition
Loan Commitment of such Acquisition Direct Lender constitutes of the
Aggregate Acquisition Loan Commitment then in effect (or, if no Aggregate
Acquisition Loan Commitment is then in effect, the percentage which the
aggregate outstanding principal amount of Syndicated Acquisition Loans of
such Acquisition Direct Lender constitutes of the aggregate principal
amount of all Syndicated Acquisition Loans then outstanding or, if no
Aggregate Acquisition Loan Commitment is then in effect and no Syndicated
Acquisition Loans are then outstanding, the percentage which the aggregate
principal amount of Fronted Acquisition Loans in which such Acquisition
Direct Lender has purchased participating interests constitutes of the
aggregate principal amount of all Fronted Acquisition Loans then
outstanding);
"Acquisition Loan Commitment Supplement" shall mean an Acquisition
Loan Commitment Supplement, substantially in the form of Exhibit X,
executed and delivered pursuant to subsection 9.7.
"Acquisition Loan Conversion Notice" shall have the meaning assigned
to such term in subsection 9.5(a);
"Acquisition Subsidiary" shall mean, with respect to any Acquisition
Loan, the wholly-owned Foreign Subsidiary of the Company which (a) is a
party to a Borrowing Subsidiary Joinder Agreement and (b) has been
designated as the Acquisition Subsidiary for purposes of borrowing such
Acquisition Loan in the notice of borrowing provided pursuant to subsection
9.3 or 9.4, as the case may be, with respect thereto;
<PAGE>
4
"Adjustment Date" shall mean, with respect to the effectiveness of any
change in the Applicable Margin or the Commitment Fee Rate, (a) the second
Business Day following receipt by the Administrative Agent of (i) the
financial statements required to be delivered pursuant to subsection
13.1(a) or (c), as the case may be, for the most recently completed fiscal
period and (ii) the compliance certificate required pursuant to subsection
13.2(b) with respect to such financial statements or (b) if such compliance
certificate and financial statements have not been delivered in a timely
manner, the date upon which the compliance certificate required to be
delivered pursuant to subsection 13.2(b) for the most recently completed
fiscal period was due; provided, however, that in the event that the
Adjustment Date is determined in accordance with the provisions of clause
(b) of this definition, then the date which is two Business Days following
the date of receipt of the financial statements and compliance certificate
referenced in clause (a) of this definition also shall be deemed to
constitute an "Adjustment Date";
"Administrative Agent" shall have the meaning assigned to such term in
the preamble hereto;
"Affected Loan" shall have the meaning assigned to such term in
subsection 10.9(a);
"Affiliate" of any Person shall mean any other Person (other than a
Subsidiary or a Permitted Joint Venture) which, directly or indirectly, is
in control of, is controlled by, or is under common control with, the first
Person. For purposes of this definition, a Person shall be deemed to be
"controlled by" another Person if such other Person possesses, directly or
indirectly, power either to (a) vote 10% or more of the securities having
ordinary voting power for the election of directors of such first Person or
(b) direct or cause the direction of the management and policies of such
first Person whether by contract or otherwise;
"Affiliate Guarantee" shall mean the Amended and Restated Affiliate
Guarantee, to be executed and delivered by Revlon Holdings and certain of
its Subsidiaries, substantially in the form of Exhibit D-1, as the same may
be amended, supplemented or otherwise modified from time to time;
"Affiliate IP Security Agreements" shall be the collective reference
to (a) each Affiliate Patent Security Agreement and Affiliate Trademark
Security Agreement, in each case as executed and delivered by the Revlon
Holdings or any Revlon Holdings Support Party on February 28, 1995 and as
each of the same has been and further may be amended, supplemented or
otherwise modified from time to time and (b) each other security agreement,
substantially in the form of a Security Agreement described in clause (a)
above, and each Affiliate Copyright Security Agreement, in each case, which
is from time to time executed and delivered by Revlon Holdings or any
Revlon Holdings Support Party as collateral security for any obligations
owing hereunder and as each of the same may be amended, supplemented or
otherwise modified from time to time;
<PAGE>
5
"Affiliate Pledge Agreement" shall mean each Amended and Restated
Pledge and Security Agreement, to be executed and delivered by Revlon
Holdings and certain of its Subsidiaries listed on Schedule IV,
substantially in the form of Exhibit D-2, as the same may be amended,
supplemented or otherwise modified from time to time;
"Affiliate Security Agreement" shall mean the Amended and Restated
Security Agreement, to be executed and delivered by the Pledged
Subsidiaries of Revlon Holdings listed on Schedule IV, substantially in the
form of Exhibit D-3, as the same may be amended, supplemented or otherwise
modified from time to time;
"Affiliate Subordination Letter" shall mean the Letter Agreement, to
be executed and delivered by each Affiliate of the Company (other than
California Federal Bank, A Federal Savings Bank and officers and directors
of the Company) which from time to time holds any Indebtedness (including,
without limitation, any Indebtedness under subsection 14.2(n), but other
than trade credit in the ordinary course of business, any Subordinated
Intercompany Note, any Capital Contribution Note and any Capital Gains
Note) of the Company, substantially in the form of Exhibit J, as the same
may be amended, supplemented or otherwise modified from time to time;
"Agent" shall have the meaning assigned to such term in the preamble
hereto;
"Aggregate Acquisition Loan Commitment" shall mean $200,000,000, as
such amount may be increased in accordance with the provisions of
subsection 9.7 and as such amount may be reduced from time to time pursuant
to the terms of this Agreement;
"Aggregate Commitment" shall mean, at any date, the sum of (a) the
Aggregate Initial Term Loan Commitment then in effect (or, if no Aggregate
Initial Term Loan Commitment is then in effect, the aggregate principal
amount of the Initial Term Loans then outstanding), (b) the Aggregate
Deferred Draw Term Loan Commitment then in effect (or, if no Aggregate
Deferred Draw Term Loan Commitment is then in effect, the aggregate
principal amount of the Deferred Draw Term Loans then outstanding), (c) the
Aggregate Special L/C Commitment then in effect (or, if no Aggregate
Special L/C Commitment is then in effect, the aggregate amount of Special
L/C Obligations then outstanding), (d) the Aggregate Multi-Currency
Commitment then in effect (or, if no Aggregate Multi-Currency Commitment is
then in effect, the Aggregate Outstanding Multi-Currency Extensions of
Credit then outstanding) and (e) the Aggregate Acquisition Loan Commitment
then in effect (or, if no Aggregate Acquisition Loan Commitment is then in
effect, the amount of the Aggregate Outstanding Acquisition Extensions of
Credit then outstanding);
"Aggregate Deferred Draw Term Loan Commitment" shall mean $85,000,000,
as such amount may be reduced from time to time pursuant to the terms of
this Agreement;
"Aggregate Initial Term Loan Commitment" shall mean $115,000,000, as
such amount may be reduced from time to time pursuant to the terms of this
Agreement;
<PAGE>
6
"Aggregate Multi-Currency Commitment" shall mean $300,000,000, as such
amount may be reduced from time to time pursuant to the terms of this
Agreement;
"Aggregate Outstanding Acquisition Extensions of Credit" shall mean
the amount equal to the sum of (a) the aggregate principal amount of
Acquisition Loans which are denominated in Dollars and (b) the amount equal
to the Equivalent in Dollars of 105% of the aggregate principal amount of
Acquisition Loans which are denominated in Approved Acquisition Currencies.
"Aggregate Outstanding Multi-Currency Extensions of Credit" shall
mean, at any time, the amount equal to the sum of (a) the aggregate
principal amount then outstanding of the Revolving Credit Loans, (b) the
aggregate principal amount of then outstanding Swing Line Loans, (c) the
aggregate amount of then outstanding Operating L/C Obligations, (d) the
aggregate principal amount then outstanding of Local Loans which are
denominated in Dollars, (e) the Equivalent in Dollars of 105% of the
aggregate principal amount then outstanding of the Local Loans which are
denominated in Denomination Currencies and (f) the Equivalent in Dollars of
105% of the aggregate undiscounted face amount then outstanding of the
Acceptances which are denominated in Denomination Currencies;
"Aggregate Special L/C Commitment" shall mean $50,000,000, as such
amount may be reduced from time to time pursuant to the terms of this
Agreement;
"Agreement" shall mean this Amended and Restated Credit Agreement, as
the same may be amended, supplemented or otherwise modified from time to
time;
"Alternate Base Rate" for any day shall mean a rate per annum (rounded
upwards, if necessary, to the next 1/16th of 1%) equal to the greatest of
(a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%; provided that, with respect to any Local Loan which is
denominated in Dollars and with respect to which the Multi-Currency
Lenders have not been requested to purchase a participating interest
pursuant to subsection 8.4(a), "Alternate Base Rate" shall mean the rate of
interest from time to time publicly announced by the relevant Local
Fronting Lender as its base rate (or its equivalent thereof) for loans
denominated in Dollars at the principal lending office of such Local
Fronting Lender in the local jurisdiction for the Denomination Currency
applicable to it (or such other rate as may be mutually agreed between the
relevant Borrower and the relevant Local Fronting Lender as reflecting the
Cost of Funds to such Local Fronting Lender for the Local Loans to which
such rate is applicable);
"Alternate Base Rate Loans" shall mean the Dollar Loans hereunder at
such time as such Dollar Loans are made and/or being maintained at a rate
of interest based upon the Alternate Base Rate;
"Applicable Margin" shall mean:
<PAGE>
7
(a) during the period from the Closing Date through and including the
Adjustment Date occurring with respect to the delivery of the consolidated
financial statements of the Company and its Subsidiaries for the fiscal
period ending June 30, 1997, (i) with respect to Alternate Base Rate Loans,
1/2% per annum and (ii) with respect to all other Loans, 1-1/2% per annum;
and
(b) thereafter, for the period commencing with any Adjustment Date and
ending on the day immediately preceding the next succeeding Adjustment
Date, the Applicable Margin shall be the rate per annum set forth below for
the relevant type of Loan opposite the Leverage Ratio for such period:
Alternate Base
Rate Loans
not
constituting
Period Local Loans Other Loans
------
Leverage Ratio is greater than 5.25 to 3/4% 1-3/4%
1.0
Leverage Ratio is greater than 4.75 to 1/2% 1-1/2%
1.0, but less than or equal to 5.25 to
1.0
Leverage Ratio is greater than 4.25 to 1/4% 1-1/4%
1.0, but less than or equal to 4.75 to
1.0
Leverage Ratio is greater than 3.75 to 0% 1%
1.0, but less than or equal to 4.25 to
1.0
Leverage Ratio is greater than 3.25 to 0% 7/8%
1.0, but less than or equal to 3.75 to
1.0
Leverage Ratio is greater than 2.75 to 0% 3/4%
1.0, but less than or equal to 3.25 to
1.0
Leverage Ratio is less than or equal to 0% 5/8%
2.75 to 1.0
; provided, however, that, in the event that the financial statements
required to be delivered pursuant to subsection 13.1(a) and (c) are not
delivered when due, then during the period from the date upon which such
financial statements were required to be delivered until the date upon
which they actually are delivered, the Leverage Ratio shall be deemed for
purposes of this definition to be greater than 4.75 to 1.0 but less than
5.25 to 1.0.
<PAGE>
8
"Application" shall mean an application, in such form as the Issuing
Lender for the Letter of Credit requested thereby may specify from time to
time, requesting such Issuing Lender to open such Letter of Credit;
"Approved Acquisition Currency" shall mean, a Scheduled Acquisition
Currency or a Special Acquisition Currency, as the context shall require
(collectively, the "Approved Acquisition Currencies";
"Arranger" shall have the meaning assigned to such term in the
preamble hereto;
"Available Acquisition Loan Commitment" shall mean, at any date, the
amount equal to the difference between (a) the Aggregate Acquisition Loan
Commitment and (b) the sum (without duplication) of (i) the Aggregate
Outstanding Acquisition Extensions of Credit and (ii) the aggregate
principal amount of any Indebtedness then outstanding under subsection
14.2(k);
"Available Deferred Draw Term Loan Commitment" shall mean, at any
date, the amount equal to the difference between (a) the Aggregate Deferred
Draw Term Loan Commitment and (b) the aggregate principal amount of then
outstanding Deferred Draw Term Loans;
"Available Multi-Currency Commitment" shall mean, at any date, the
amount equal to the difference between (a) the Aggregate Multi-Currency
Commitment on such date and (b) the sum of (i) the aggregate principal
amount then outstanding of the Revolving Credit Loans, (ii) the aggregate
principal amount of then outstanding Swing Line Loans, (iii) the aggregate
amount of then outstanding Operating L/C Obligations and (iv) the sum of
the Currency Sublimits then in effect;
"Base CD Rate" shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which
is one and the denominator of which is one minus the C/D Reserve Percentage
and (b) the C/D Assessment Rate;
"Benefited Facilities" shall have the meaning assigned to such term in
the Collateral Agency Agreement (Bank Obligations);
"benefitted Lender" shall have the meaning assigned to such term in
subsection 17.8(b);
"Benefited Multi-Currency Portion" shall have the meaning assigned to
such term in the Collateral Agency Agreement (Bank Obligations);
"Borrower" shall mean the Company or a Borrowing Subsidiary, as the
context shall require; collectively, the "Borrowers";
<PAGE>
9
"Borrowing Subsidiary" shall mean a Local Subsidiary or an Acquisition
Subsidiary, as the context shall require; collectively, the "Borrowing
Subsidiaries";
"Borrowing Subsidiary Joinder Agreement" shall mean a Borrowing
Subsidiary Joinder Agreement, substantially in the form of Exhibit R-1,
executed and delivered by a duly authorized officer of each Subsidiary of
the Company which has been designated as a "Local Subsidiary" pursuant to
subsection 8.5 or as an "Acquisition Subsidiary" in accordance with the
provisions set forth in the definition of such term, as the case may be;
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in New York, New York (or, (x) in the case of
any Local Loan, Acceptance or Fronted Acquisition Loan, the location of the
funding office of the relevant Fronting Lender or (y) in the case of any
Syndicated Acquisition Loan denominated in an Approved Acquisition
Currency, the location in which the principal eurocurrency market for such
Approved Acquisition Currency is located) are authorized or required by law
to close;
"Capital Contribution" shall mean the receipt by the Company of cash
from a source outside of the Company and its Subsidiaries which is either
(a) recorded as an addition to the Company's stockholders' equity in
accordance with GAAP or (b) subject to the terms and conditions of, and
evidenced by, a Capital Contribution Note;
"Capital Contribution Note" shall mean any promissory note,
substantially in the form of Exhibit Q-3, made by the Company in favor of
any Affiliate thereof evidencing Indebtedness permitted pursuant to
subsection 14.2(h) of this Agreement, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof;
"Capital Expenditures" shall mean, for any period, the amount equal to
all expenditures (by the expenditure of cash or the incurrence of
Indebtedness) made by the Company and its Subsidiaries during such period
in respect of the purchase or other acquisition or improvement of any fixed
or capital asset and any other amounts which would, in accordance with
GAAP, be set forth as capital expenditures on the consolidated statement of
cash flows of the Company and its Subsidiaries for such period;
"Capital Gains Amount" shall mean, with respect to any amount payable
by the Company on any date under the Company Tax Sharing Agreement, the
amount equal to the excess, if any, of (a) the amount so payable by the
Company under the Company Tax Sharing Agreement over (b) the amount which
would have been payable by the Company thereunder in the event that the
calculation of such amounts had been determined without taking into account
any income or gain recognized by the Company or any of its Subsidiaries
upon, or as a result of, the sale, exchange or other disposition of any
asset of the Company or any of its Subsidiaries (including, without
limitation, the sale or exchange of the outstanding stock of any of its
Subsidiaries);
<PAGE>
10
"Capital Gains Note" shall mean any promissory note made by the
Company in favor of Revlon in respect of certain payments owing under the
Company Tax Sharing Agreement, substantially in the form of Exhibit Q-1, as
the same may be amended, supplemented or otherwise modified from time to
time in accordance with the terms hereof;
"Cash Equivalents" shall mean (a) securities with maturities of one
year or less from the date of acquisition issued or fully guaranteed or
insured by the United States Government or any agency thereof, (b)
certificates of deposit and eurodollar time deposits with maturities of one
year or less from the date of acquisition and overnight bank deposits of
any Lender or of any commercial bank having capital and surplus in excess
of $500,000,000, (c) repurchase obligations of any Lender or of any
commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
Government, (d) commercial paper of a domestic issuer rated at least A-2 by
S&P or P-2 by Moody's, (e) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States or by any political
subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by
Moody's, (f) securities with maturities of one year or less from the date
of acquisition backed by standby letters of credit issued by any Lender or
any commercial bank satisfying the requirements of clause (b) of this
definition, (g) shares of money market mutual or similar funds having
assets in excess of $250,000,000 and which invest exclusively in assets
satisfying the requirements of clause (a) of this definition or (h) shares
of money market mutual or similar funds having assets in excess of
$500,000,000 and which invest exclusively in assets satisfying the
requirements of clauses (b) through (f) of this definition;
"CCI" shall mean The Cosmetic Center, Inc., a Delaware corporation.
"CCI Agreements" shall mean, collectively, (a) the Supply Agreement,
dated as of April 25, 1997, between the Company and CCI, (b) the Services
Agreement, dated as of April 25, 1997, between the Company and CCI, (c) the
Registration Rights Agreement, dated as of April 25, 1997, between the
Company and CCI, (d) the Sublease, dated as of April 25, 1997, between the
Company, as sublessor, and CCI, as sublessee, with respect to premises
located in New York, New York, (e) the Agreements of Lease, each dated as
of April 25, 1997, between the Company, as owner, and CCI, as tenant, with
respect to (i) the Oxford employee store, (ii) the Irvington employee store
and (iii) the Phoenix employee store, and (f) the Agreement of Lease, dated
April 25, 1997, between the Company, as lessor, and CCI, as lessee, in
respect of premises located in Holmdel, New Jersey, as each of the
foregoing agreements referenced in clauses (a) through (f) of this
definition may be amended, supplemented or otherwise modified from time to
time upon
<PAGE>
11
terms no less favorable to the Company than it would obtain in a comparable
arm's length transaction with a Person that is not an Affiliate.
"C/D Assessment Rate" shall mean, for any day as applied to any
Alternate Base Rate Loan, the annual assessment rate in effect on such day
which is payable by a member of the Bank Insurance Fund maintained by the
Federal Deposit Insurance Corporation (the "FDIC") classified as
well-capitalized and within supervisory subgroup "B" (or a comparable
successor assessment risk classification) within the meaning of 12 C.F.R.
ss. 327.3(d) (or any successor provision) to the FDIC (or any successor)
for the FDIC's (or such successor's) insuring time deposits at offices of
such institution in the United States.
"C/D Reserve Percentage" shall mean, for any day as applied to any
Alternate Base Rate Loan, that percentage (expressed as a decimal) which is
in effect on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) (the "Board"), for determining
the maximum reserve requirement for a Depositary Institution (as defined in
Regulation D of the Board) in respect of new non-personal time deposits in
Dollars having a maturity of 30 days or more.
"Chase" shall have the meaning assigned to such term in the preamble
hereto;
"Citibank" shall have the meaning assigned to such term in the
preamble hereto;
"Closing Date" shall have the meaning assigned to such term in
subsection 12.1;
"Co-Agents" shall have the meaning assigned to such term in the
preamble hereto;
"Code" shall mean the Internal Revenue Code of 1986, as hereafter
amended from time to time;
"Collateral Agency Agreements" shall be the collective reference to
the Amended and Restated Collateral Agency Agreements, to be executed and
delivered by the Company and the Administrative Agent, substantially in the
respective forms of Exhibit I-1 and I-2, as the same may be amended,
supplemented or otherwise modified from time to time;
"Commercial Letter of Credit" shall have the meaning assigned to such
term in subsection 7.1.
"Committed Facility" shall mean any revolving or similar financing
facility under which the borrower party thereto may incur Indebtedness up
to an aggregate principal amount at any one time outstanding specified
therein upon such borrower's request and subject only to such conditions as
are normally included in committed financing arrangements;
<PAGE>
12
"Commitment" shall mean the Aggregate Initial Term Loan Commitment,
the Aggregate Deferred Draw Term Loan Commitment, the Aggregate Special L/C
Commitment, the Aggregate Multi-Currency Commitment or the Aggregate
Acquisition Loan Commitment, as the context shall require; collectively,
the "Commitments";
"Commitment Fee Rate" shall mean:
(a) during the period from the Closing Date through and including the
Adjustment Date occurring with respect to the delivery of the consolidated
financial statements of the Company and its Subsidiaries for the fiscal
period ending June 30, 1997, 3/8% per annum; and
(b) thereafter, for the period commencing with any Adjustment Date and
ending on the day immediately preceding the next succeeding Adjustment
Date, the Commitment Fee Rate shall be the rate per annum set forth below
opposite the Leverage Ratio for such period:
Commitment Fee
Period Rate
------ -----
Leverage Ratio is greater than 5.25 to 1/2%
1.0
Leverage Ratio is greater than 4.75 to 3/8%
1.0, but less than or equal to 5.25 to
1.0
Leverage Ratio is greater than 4.25 to 3/8%
1.0, but less than or equal to 4.75 to
1.0
Leverage Ratio is greater than 3.75 to 3/10%
1.0, but less than or equal to 4.25 to
1.0
Leverage Ratio is greater than 3.25 to 1/4%
1.0, but less than or equal to 3.75 to
1.0
Leverage Ratio is greater than 2.75 to 1/4%
1.0, but less than or equal to 3.25 to
1.0
Leverage Ratio is less than or equal to 22.5 basis points
2.75 to 1.0
; provided, however, that, in the event that the financial statements
required to be delivered pursuant to subsection 13.1(a) and (c) are not
delivered when due, then during the period from the date upon which such
financial statements were required to be delivered until the date upon
which they actually are delivered, the Leverage Ratio shall be deemed for
purposes of this definition to be greater than 4.75 to 1.0 but less than
5.25 to 1.0.
<PAGE>
13
"Commitment Percentage" shall mean, as to any Lender, its Initial Term
Loan Commitment Percentage, its Deferred Draw Term Loan Commitment
Percentage, its Special L/C Commitment Percentage, its Multi-Currency
Commitment Percentage or its Acquisition Loan Commitment Percentage, as the
context shall require;
"Commitment Period" shall mean the period from (and including) the
Closing Date to (but not including) the earlier of (a) the Termination Date
and (b) the date upon which the Commitments are terminated;
"Commitment Transfer Supplement" shall have the meaning assigned to
such term in subsection 17.7(c);
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Company within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Company and which is treated as a single employer under Section 414 of the
Code;
"Company" shall have the meaning assigned to such term in the preamble
hereto;
"Company Guarantee" shall mean the Amended and Restated Company
Guarantee, to be executed and delivered by the Company, substantially in
the form of Exhibit F-1, as the same may be amended, supplemented or
otherwise modified from time to time;
"Company IP Security Agreements" shall be the collective reference to
(a) the Company Patent Security Agreement, as executed and delivered by the
Company on February 28, 1995, (b) the Company Trademark Security Agreement,
as executed and delivered by the Company on February 28, 1995 and (c) the
Company Copyright Security Agreement which may be executed and delivered by
the Company pursuant to the terms of this Agreement, and as each of the
same has been (in the case of clauses (a) and (b)) and further may be
amended, supplemented or otherwise modified from time to time;
"Company Pledge Agreement" shall be the collective reference to (a)
the Amended and Restated Pledge and Security Agreement (Domestic), to be
executed and delivered by the Company, substantially in the form of Exhibit
F-2, (b) each Company Pledge Agreement (International) and (c) each Amended
and Restated Pledge and Security Agreement listed on Schedule V as being
executed and delivered by the Company, as each of the same may be amended,
supplemented or otherwise modified from time to time;
"Company Pledge Agreement (International)" shall mean each Pledge and
Security Agreement and each Amended and Restated Pledge and Security
Agreement, substantially in the form of Exhibit F-3, to be executed and
delivered (including, without limitation, pursuant to subsection 13.11(c))
by the Company with respect to each direct
<PAGE>
14
Subsidiary thereof which is a Foreign Subsidiary, as the same may be
amended, supplemented or otherwise modified from time to time;
"Company Security Agreement" shall mean the Amended and Restated
Security Agreement, to be executed and delivered by the Company,
substantially in the form of Exhibit F-4, as the same may be amended,
supplemented or otherwise modified from time to time;
"Company Tax Sharing Agreement" shall mean the Tax Sharing Agreement
entered into as of June 24, 1992 (as amended through the date hereof and as
further amended, supplemented or otherwise modified from time to time in
accordance with the provisions of subsection 14.14) among the Company and
certain of its Subsidiaries, Revlon, Revlon Holdings and Mafco, in the form
of Exhibit P;
"Consolidated Net Income" shall mean, for any period, the amount which
would be set forth as net income on a consolidated statement of operations
of the Company and its Subsidiaries determined on a consolidated basis in
accordance with GAAP for such period;
"Contingent Obligation" as to any Person shall mean any obligation of
such Person guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends, letters of credit or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, any
"keep-well" or "make-well" agreement, guarantee of return on equity or
other obligation of such Person, whether or not contingent, (a) to purchase
any such primary obligation or any property constituting direct or indirect
security therefor, (b) to advance or supply funds (i) for the purchase or
payment of any such primary obligation or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor, (c) to purchase, sell or lease
property, or to purchase or sell securities or services, primarily for the
purpose of assuring the obligee under any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation
or (d) otherwise to assure or hold harmless the obligee under such primary
obligation against loss in respect thereof;
"Continuing Director" shall mean a natural person who (a) is a member
of the board of directors of the Company on the date hereof or (b) becomes
a member of the board of directors of the Company after the date hereof
and, when first elected to the board of directors after the date hereof,
was nominated for such position by at least 66-2/3% of the directors then
constituting Continuing Directors;
"Contractual Obligation" of any Person shall mean any provision of any
material debt security or of any material preferred stock or other equity
interest issued by such Person or of any material indenture, mortgage,
agreement, instrument or undertaking to which such Person is a party or by
which it or any of its material property is bound;
<PAGE>
15
"Converted Acquisition Loan" shall have the meaning assigned to such
term in subsection 10.19(a);
"Copyright" shall, as to the Company or any Domestic Subsidiary, have
the meaning assigned to such term in the Company Copyright Security
Agreement or the Subsidiary Copyright Security Agreement, as the case may
be;
"Cost of Funds" shall mean, with respect to any Fronting Lender, the
rate of interest which reflects the cost to such Fronting Lender of
obtaining funds of the type utilized to fund any extension of credit to the
relevant Borrower hereunder in the local market for the period during which
such extension of credit is outstanding;
"Credit Documents" shall mean this Agreement, the Notes, the Drafts,
the Applications, the Affiliate Subordination Letters and the Security
Documents; each, a "Credit Document";
"Cross Default" of any Person shall mean (i) default in the payment of
any amount when due (whether at maturity or by acceleration) on any of its
Indebtedness (other than any such default in respect of any Loan, any Note,
any Draft or any Reimbursement Obligation) or in the payment of any matured
Contingent Obligation in respect of any Indebtedness of any other Person
(except for any such payments on account of any such Indebtedness and
Contingent Obligations in an aggregate principal amount at any one time
outstanding of up to $5,000,000 (or, with respect to any other currency,
the Equivalent thereof)) or (ii) default in the observance or performance
of any other agreement or condition relating to any such Indebtedness or
Contingent Obligation (except for any such Indebtedness and Contingent
Obligations in an aggregate principal amount at any one time outstanding of
up to $5,000,000 (or, with respect to any other currency, the Equivalent
thereof)) or contained in any instrument or agreement evidencing, securing
or relating thereto, or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Contingent Obligation (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause,
with the giving of notice if required, such Indebtedness to become due or
to be required to be redeemed or repurchased prior to its stated maturity
or such Contingent Obligation to become payable;
"Currency Sublimit" shall mean, with respect to any Local Fronting
Lender, the amount from time to time equal to the amount of Dollars set
forth under the heading "Currency Sublimit" on Schedule III, as the same
may be or may be deemed to be modified from time to time in accordance with
the terms of this Agreement; collectively as to all Fronting Lenders, the
"Currency Sublimits";
"Default" shall mean any of the events specified in Section 15,
whether or not any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied;
<PAGE>
16
"Deferred Draw Term Loan" and "Deferred Draw Term Loans" shall have
the meanings assigned to such terms in subsection 3.1;
"Deferred Draw Term Loan Commitment" of any Deferred Draw Term Loan
Lender at any date shall mean the obligation of such Deferred Draw Term
Loan Lender at such date to make Deferred Draw Term Loans to the Company,
in an aggregate principal amount at any one time outstanding not to exceed
the amount set forth opposite such Deferred Draw Term Loan Lender's name on
Schedule II; collectively, as to all such Deferred Draw Term Loan Lenders,
the "Deferred Draw Term Loan Commitments";
"Deferred Draw Term Loan Commitment Percentage" shall mean, at any
date with respect to each Deferred Draw Term Loan Lender, the percentage
which the Deferred Draw Term Loan Commitment of such Deferred Draw Term
Loan Lender constitutes of the Aggregate Deferred Draw Term Loan Commitment
then in effect (or, if no Aggregate Deferred Draw Term Loan Commitment is
then in effect, the percentage which the aggregate outstanding principal
amount of Deferred Draw Term Loans of such Deferred Draw Term Loan Lender
constitutes of the aggregate principal amount of all Deferred Draw Term
Loans then outstanding);
"Deferred Draw Term Loan Commitment Period" shall mean the period from
(and including) the Closing Date to (but not including) the earlier of (a)
September 15, 1997 and (b) the date upon which the Commitments are
terminated.
"Deferred Draw Term Loan Lender" shall mean each bank or other
financial institution from time to time party hereto which holds a Deferred
Draw Term Loan Commitment; collectively, the "Deferred Draw Term Loan
Lenders";
"Deferred Draw Term Loan Note" shall have the meaning assigned to such
term in subsection 3.2(c);
"Denomination Currency" shall mean each currency set forth in Schedule
III, as such Schedule III may be amended, supplemented or otherwise
modified from time to time;
"Deposit Requirement" shall have the meaning assigned to such term in
subsection 7.8(a);
"Designated Resale Transaction" shall have the meaning assigned to
such term in subsection 10.3(g);
"Direct Acquisition Participation" shall mean, with respect to any
Syndicated Acquisition Loan requested to be made by an Acquisition Direct
Lender, the sale of a participating interest in such Syndicated Acquisition
Loan by such Acquisition Direct Lender to any other Acquisition Direct
Lender pursuant to a participation agreement,
<PAGE>
17
substantially in the form of Exhibit V (with such modifications thereto as
the relevant Acquisition Borrower and the Administrative Agent reasonably
may approve);
"Directly Pledged Subsidiaries" at any date shall mean each of the
Subsidiaries of Revlon Holdings and the Company having shares of capital
stock which comprise the Pledged Stock at such date (other than any such
Subsidiaries having capital stock which then constitutes "Pledged Stock"
only under a Generic Pledge Agreement); each, a "Directly Pledged
Subsidiary";
"Disposition Asset" shall mean any asset, brand or Subsidiary listed
on Schedule X; provided that any such asset, brand or Subsidiary listed on
Schedule X shall cease to constitute a "Disposition Asset" from and after
the date upon which the Company notifies the Administrative Agent in
writing that such asset, brand or Subsidiary is to cease to constitute a
"Disposition Asset";
"Documentation Agent" shall have the meaning assigned to such term in
the preamble hereto;
"Dollar Loan" shall mean any Loan which is denominated in Dollars;
collectively, the "Dollar Loans";
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America;
"Domestic Subsidiary" shall mean each Subsidiary of the Company which
is organized under the laws of a State within the United States;
"Draft" shall mean a draft which is (a) in a form customary in the
relevant jurisdiction for acceptance and discount as a bankers' acceptance,
(b) otherwise reasonably acceptable in form and substance to the relevant
Local Fronting Lender, (c) stated to mature on the date which is 30, 60, 90
or 180 days after the date thereof (or such other maturity as is agreeable
to the relevant Local Fronting Lender, in its sole discretion) and (d) duly
completed and executed by the relevant Local Subsidiary;
"EBITDA" shall mean, for any period, the amount equal to:
(a) Consolidated Net Income for such period;
(b) plus (to the extent deducted in the determination of Consolidated
Net Income) the sum of (i) tax expense on account of such period,
(ii) Interest Expense (including, without limitation, fees,
commissions and other charges associated with standby letters of
credit and other financing charges) for such period, (iii)
depreciation and amortization expense for such period, (iv) any
losses in respect of currency fluctuations for such period, (v)
any losses in respect of equity earnings for such period, (vi)
the
<PAGE>
18
amount (not to exceed the excess of the book value of the
Roppongi Building on December 31, 1995 over $35,000,000) equal to
any write-down in the book value of the Roppongi Building (or,
upon the sale thereof, any loss upon such sale) and (vii)
non-cash write-offs in respect of unamortized debt issuance
costs;
(c) minus (to the extent included in the determination of
Consolidated Net Income) the sum of (i) interest income for such
period, (ii) extraordinary gains for such period, (iii) any gains
in respect of currency fluctuations for such period and (iv) any
gains in respect of equity earnings for such period;
provided that, for purposes of the calculation only of the Leverage Ratio
and compliance with the provisions of subsection 14.1(a), the EBITDA of any
Person acquired by the Company or any of its Subsidiaries during the
relevant calculation period shall be included, on a pro forma basis, in the
EBITDA of the Company as if such Person had been acquired on the first day
of the calculation period;
"Eligible Assignee" shall mean (a) a commercial bank organized under
the laws of the United States, or any State thereof, having total assets in
excess of $1,000,000,000 and having an Acceptable Assignee Rating; (b) a
commercial bank organized under the laws of any other country having total
assets in excess of $1,000,000,000 (provided that such commercial bank
shall not be an Eligible Assignee if it or its holding company has a credit
rating from S&P, Moody's or Fitch for the type of debt described in clause
(X), (Y) or (Z) of the definition of the term "Acceptable Assignee Rating"
and it or its holding company, as the case may be, does not have an
Acceptable Assignee Rating); and (c) a finance company, insurance company
or other financial institution (other than savings and loan associations
and savings banks organized under the laws of the United States or any
State thereof) or fund which is (or which is managed by a manager which
manages funds which are) primarily engaged in making, purchasing or
otherwise investing in commercial loans for its own account in the ordinary
course of its business, which has (or, if so managed, have) total assets in
excess of $200,000,000; provided that in no event shall the Company, any of
its Subsidiaries or any Affiliate thereof constitute an Eligible Assignee;
"Eligible Insurer" shall mean an insurance company which (a) is rated
at least "A" by A.M. Best Company, (b) has an equivalent rating from
another rating agency of internationally recognized standing or (c)
otherwise is reasonably acceptable to the Agents;
"Environmental Laws" shall mean any and all federal, national, state,
provincial, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees or requirements of any Governmental Authority
within or outside of the United States regulating, relating to or imposing
liability or standards of conduct concerning any Hazardous Materials or
environmental protection, as now or may at any time hereafter be
<PAGE>
19
in effect, including, without limitation, the Clean Water Act, also known
as the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C. ss. 1251 et
seq., the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7
U.S.C. ss. 136 et seq., the Surface Mining Control and Reclamation Act
("SMCRA"), 30 U.S.C. ss. 1201 et seq., the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss. 9601 et
seq. (as amended by the Superfund Amendment and Reauthorization Act of 1986
("SARA"), Public Law 99-499, 100 Stat. 1613), the Emergency Planning and
Community Right to Know Act ("EPCRKA"), 42 U.S.C. ss. 1101 et seq., the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 6901 et
seq., the Safe Drinking Water Act ("SDWA"), 42 U.S.C. ss. 300F et seq., the
Toxic Substances Control Act ("TSCA"), 15 U.S.C. ss. 2601 et seq.,
together, in each case, with each amendment thereto, and the regulations
adopted and publications promulgated thereunder and all substitutions
therefor;
"Equity Offering" shall mean each sale, transfer, issuance or other
disposition (whether public or private) by the Company or any Affiliate
thereof of all or any portion of the capital stock or other equity
interests in any Person (other than a Subsidiary of the Company) which has
the assets of the Company or one or more Pledged Subsidiaries as its only
substantial operating assets. For purposes of this definition, any such
sale, transfer, issuance or other disposition of the capital stock of one
or more Directly Pledged Subsidiaries of Revlon Holdings constituting
Disposition Assets which does not provide the purchaser thereof with an
equity interest in any other significant assets of the Company and its
Subsidiaries shall be deemed not to constitute an "Equity Offering" and,
instead, the provisions of subsection 10.4(b)(ii) shall apply thereto;
"Equivalent" shall mean, at any date with respect to:
(a) an amount of a currency other than Dollars, the amount of
Dollars into which such amount of such other currency could be
converted at the spot exchange rate quoted in The Wall Street Journal
on such day (or, if such currency is not quoted in The Wall Street
Journal on such day, such other source as shall be reasonably selected
by the Administrative Agent); and
(b) an amount of Dollars, the amount of a particular currency
into which such amount of Dollars could be converted at the spot
exchange rate quoted in The Wall Street Journal on such day (or, if
such currency is not quoted in The Wall Street Journal on such day,
such other source as shall be reasonably selected by the
Administrative Agent);
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time;
"Eurocurrency Base Rate" with respect to each Acquisition Loan which
is a Eurocurrency Loan for each Interest Period shall mean the rate per
annum equal to the average (rounded upwards to the nearest whole multiple
of 1/16th of one percent) of the
<PAGE>
20
respective rates notified to the Administrative Agent by each of the
Eurocurrency Reference Lenders as the rate at which such Eurocurrency
Reference Lender is offered deposits in the relevant Approved Acquisition
Currency two Working Days prior to the beginning of such Interest Period in
the interbank eurocurrency market where the foreign currency and exchange
operations or eurocurrency funding operations of such Eurocurrency
Reference Lender are customarily conducted at or about 11:00 A.M. (London
time) for delivery on the first day of such Interest Period for the number
of days contained therein and in an amount equal to a representative amount
of such deposits; provided that, with respect to Fronted Acquisition Loans
which are Eurocurrency Loans in which the Acquisition Direct Lenders have
not been requested to purchase participating interests pursuant to
subsection 9.6(a) and with respect to Local Loans, the "Eurocurrency Base
Rate" shall be the rate per annum equal to the rate at which the relevant
Fronting Lender is offered deposits in the relevant Approved Acquisition
Currency or Denomination Currency, as the case may be, two Working Days
prior to the beginning of such Interest Period in the interbank
eurocurrency market where the foreign currency and exchange operations or
eurocurrency funding operations of such Fronting Lender are customarily
conducted at or about 11:00 A.M. (London time) (or such other time as is
customary for the relevant jurisdiction) for delivery on the first day of
such Interest Period for the number of days contained therein and in an
amount equal to a representative amount of such deposits;
"Eurocurrency Loan" shall mean each Local Loan and Acquisition Loan
hereunder at such time as it is made and/or being maintained at a rate of
interest based upon the Eurocurrency Rate;
"Eurocurrency Rate" with respect to Eurocurrency Loan for each
Interest Period shall mean the rate per annum (rounded upwards to the
nearest whole multiple of 1/100th of one percent) equal to the following:
Eurocurrency Base Rate
-----------------------------------------
1.00 - Eurocurrency Reserve Requirements;
"Eurocurrency Reference Lenders" for any purpose shall mean (subject
to the provisions of subsection 10.15(d)) Chase and Citibank, or such other
Multi-Currency Lenders as may be designated pursuant to subsection
10.15(c);
"Eurocurrency Reserve Requirements" with respect to any Interest
Period for any Eurodollar Loan or Acquisition Loan shall mean the aggregate
of the rates (expressed as a decimal) of reserve requirements current on
the date two Working Days prior to the beginning of such Interest Period
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal
Reserve System or other governmental authority having jurisdiction with
respect thereto), as now and from time to time hereafter in effect, dealing
with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency
<PAGE>
21
liabilities" in Regulation D of such Board) required to be maintained by a
member bank of such System;
"Eurodollar Base Rate" with respect to each Eurodollar Loan for each
Interest Period shall mean the rate per annum equal to the average (rounded
upwards to the nearest whole multiple of 1/16th of one percent) of the
respective rates notified to the Administrative Agent by each of the
Eurocurrency Reference Lenders as the rate at which such Eurocurrency
Reference Lender is offered Dollar deposits two Working Days prior to the
beginning of such Interest Period in the interbank eurodollar market where
the foreign currency and exchange operations or eurodollar funding
operations of such Eurocurrency Reference Lender are customarily conducted
at or about 11:00 A.M. (London time) (or, with respect to Local Loans, such
other time as is customary for the relevant jurisdiction) for delivery on
the first day of such Interest Period for the number of days contained
therein and in an amount equal to a representative amount of such deposits;
provided that, with respect to Fronted Loans which are Eurodollar Loans in
which the Multi-Currency Lenders or the Acquisition Direct Lenders, as the
case may be, have not been requested to purchase participating interests
pursuant to subsection 8.4(a) or 9.6(a), as the case may be, the
"Eurodollar Base Rate" shall be the rate per annum equal to the rate at
which the relevant Fronting Lender is offered Dollar deposits two Working
Days prior to the beginning of such Interest Period in the interbank
eurodollar market where the foreign currency and exchange operations or
eurodollar funding operations of such Fronting Lender are customarily
conducted at or about 11:00 A.M. (London time) (or such other time as is
customary for the relevant jurisdiction) for delivery on the first day of
such Interest Period for the number of days contained therein and in an
amount equal to a representative amount of such deposits;
"Eurodollar Loan" shall mean each Dollar Loan hereunder at such time
as it is made and/or being maintained at a rate of interest based upon the
Eurodollar Rate;
"Eurodollar Rate" with respect to each Eurodollar Loan for each
Interest Period shall mean the rate per annum (rounded upwards to the
nearest whole multiple of 1/100th of one percent) equal to the following:
Eurodollar Base Rate
-----------------------------------------
1.00 - Eurocurrency Reserve Requirements;
"Event of Default" shall mean any of the events specified in Section
15, provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied;
"Excess Cash Flow" shall mean, for any fiscal year of the Company, the
amount equal to (a) EBITDA of the Company and its Subsidiaries for such
fiscal year minus (b) the sum (without duplication) of (i) interest paid in
cash during such period, (ii) the aggregate principal amount of long-term
Indebtedness for borrowed money (including, without limitation, any current
maturities thereof) which is repaid during such period
<PAGE>
22
pursuant to scheduled reductions and amortizations thereof, (iii) the
aggregate principal amount of Indebtedness on account of the deferred
purchase price of services and property which is repaid during such period
pursuant to scheduled reductions and amortizations thereof, (iv) the
aggregate amount of taxes paid during such period, (v) amounts paid in cash
during such period in respect of Capital Expenditures permitted hereunder,
(vi) all amounts paid in cash during such fiscal year on account of
permitted Investments, (vii) any cash expenditures on display purchases
during such fiscal year, (viii) any foreign currency losses during such
year, (ix) any cash costs for debt issuance, (x) any cash costs paid under
the Revlon Holdings Operating Agreement, (xi) the cash costs relating to
the restructuring charges incurred by the Company and its Subsidiaries
during its 1991 and 1992 fiscal years and (xii) any net increase (or plus
any net decrease) in working capital (excluding cash, cash equivalents and
short-term Indebtedness) during such fiscal year;
"Exchanged Note" shall have the meaning assigned to such term in
subsection 17.11(a);
"Existing Agreement" shall have the meaning assigned to such term in
the recitals hereto;
"Federal Funds Effective Rate" for any day shall mean the interest
rate per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published for such day
(or, if such day is not a Business Day, for the next preceding Business
Day) by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by
it;
"Fitch" shall mean Fitch Investors Service, Inc. (or any successor
thereto);
"Foreign Subsidiary" shall mean any Subsidiary of the Company which is
not a Domestic Subsidiary;
"Fronted Acquisition Loan" or "Fronted Acquisition Loans" shall have
the meanings assigned to such terms in subsection 9.1(b);
"Fronted Loan" shall mean a Local Loan or a Fronted Acquisition Loan,
as the context shall require; collectively, the "Fronted Loans";
"Fronting Lender" shall mean a Local Fronting Lender or an Acquisition
Fronting Lender, as the context shall require; collectively, the "Fronting
Lenders");
"Fully Satisfied" shall mean, with respect to the Payment Obligations
or Obligations (as defined in the Security Documents) as of any date, that,
on or before such
<PAGE>
23
date, (a) the principal of and interest accrued to such date on such
Payment Obligations (other than the Undrawn L/C Obligations) shall have
been paid in full in cash, (b) all fees, expenses and other amounts then
due and payable which constituted Payment Obligations (other than the
Undrawn L/C Obligations) shall have been paid in full in cash, (c) the
Commitments shall have expired or irrevocably been terminated and (d) the
Undrawn L/C Obligations shall have been Fully Secured; provided, however,
that, on such date, none of the Agents or the Lenders shall have made any
claims in respect of Payment Obligations against any Borrower or any
Guarantor under any provision of any of the Credit Documents that has not
been cash collateralized by an amount sufficient in the reasonable judgment
of the Administrative Agent and such Lender to secure such claim;
"Fully Secured" shall mean, with respect to any Undrawn L/C
Obligations as of any date, that, on or before such date, such Undrawn L/C
Obligations shall have been secured by the grant to the relevant Issuing
Lender by the Company of a first priority, perfected security interest in,
and Lien on, (a) cash or Cash Equivalents in an amount at least equal to
the excess of the amount of such Undrawn L/C Obligations over the amount
equal to the Aggregate Special L/C Commitment or the maximum commitment to
issue Operating Letters of Credit, as the case may be, on such date or (b)
other collateral security which is acceptable to such Issuing Lender and
the Required Lenders;
"Funded Indebtedness" at any date shall mean the aggregate principal
amount or face amount, as the case may be, (without duplication) of
Indebtedness of the Company and its Subsidiaries on a consolidated basis,
other than Indebtedness permitted pursuant to subsection 14.2(g), (h), (j),
(l), (m) and (o) and other than any Indebtedness on account of the undrawn
face amount of letters of credit (including, without limitation, Letters of
Credit);
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect as of the date of, and used in, the
preparation of the audited consolidated financial statements of the Company
and its Subsidiaries for the fiscal year ended December 31, 1996, except
that, with respect to the presentation of financial statements required to
be furnished hereunder, GAAP shall mean generally accepted accounting
principles in the United States of America as in effect from time to time;
"GE Portion" shall have the meaning assigned to such term in
subsection 9.3(f);
"GE Share" shall have the meaning assigned to such term in subsection
8.4(e);
"Generic Pledge Agreements" shall be the reference to the Amended and
Restated Company Pledge Agreement (International) and the Amended and
Restated Subsidiary Pledge Agreement (International);
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government (including,
<PAGE>
24
without limitation, any governmental department, commission, board, bureau,
agency or instrumentality, or other court or arbitrator, in each case
whether of the United States or foreign) and the National Association of
Insurance Commissioners;
"Grantors" shall be the collective reference to the grantors parties
to the Security Agreements; individually, a "Grantor";
"Guarantees" shall be the collective reference to the Affiliate
Guarantee, the Revlon Guarantee, the Company Guarantee, the Subsidiaries
Guarantee and each other Guarantee delivered pursuant to subsection 13.10,
as each of the same may be amended, supplemented or otherwise modified from
time to time; individually, a "Guarantee";
"Guarantors" shall be the collective reference to the guarantors
parties to the Guarantees; individually, a "Guarantor";
"Hazardous Materials" shall mean any hazardous materials, hazardous
wastes, hazardous or toxic substances, defined or regulated as such in or
under any Environmental Law, including without limitation asbestos,
Petroleum Products and material exhibiting the characteristics of
ignitability, corrosivity, reactivity or extraction procedure toxicity, as
such terms are defined in connection with hazardous materials or hazardous
wastes or hazardous or toxic substances in any Environmental Law;
"Indebtedness" of a Person shall mean (a) indebtedness of such Person
for borrowed money whether short-term or long-term and whether secured or
unsecured, (b) indebtedness of such Person for the deferred purchase price
of services or property, which purchase price (i) is due twelve months or
more from the date of incurrence of the obligation in respect thereof or
(ii) customarily or actually is evidenced by a note or similar written
instrument (including, without limitation, any such indebtedness which is
non-recourse to the credit of such Person but is secured by assets of such
Person), (c) obligations of such Person under leases which have been or, in
accordance with GAAP, should be, recorded as capitalized leases, (d)
obligations of such Person arising under acceptance facilities, (e) the
undrawn face amount of, and unpaid reimbursement obligations and other
amounts owing in respect of, all letters of credit issued for the account
of such Person, (f) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (g) all obligations of such
Person upon which interest charges are customarily paid, (h) all
obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person (even though the
rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), (i)
obligations of such Person to purchase, redeem, retire, defease or
otherwise acquire for value any capital stock or other equity interests of
such Person or any warrants, rights or options to acquire such capital
stock or other equity interests (with redeemable preferred stock being
valued at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends), (j) all executory
obligations of such Person in respect of interest rate agreements
(including, without limitation, any Interest Rate Agreements) and foreign
<PAGE>
25
exchange and other financial hedge contracts (including, without
limitation, equity hedge contracts), (k) all Indebtedness of the types
referred to in clauses (a) through (j) above which is guaranteed directly
or indirectly by such Person and (l) renewals, extensions, refundings,
deferrals, restructurings, amendments and modifications of any such
indebtedness, obligation or guarantee;
"indemnified liabilities" shall have the meaning assigned to such term
in subsection 17.6;
"Indentures" shall be the collective reference to (a) the Indenture,
dated as of April 1, 1993, between the Company and NationsBank of Georgia,
National Association, relating to the 9-3/8% Senior Notes due 2001 and the
9-3/8% Series B Senior Notes due 2001 of the Company, (b) the Indenture,
dated as of June 1, 1993, between the Company and NationsBank of Georgia,
National Association, relating to the 9-1/2% Senior Notes due 1999 of the
Company and (c) each instrument, document and agreement delivered in
connection therewith, as each of the foregoing may be amended, supplemented
or otherwise modified from time to time to the extent permitted by
subsection 14.9;
"Initial Term Loan" and "Initial Term Loans" shall have the meanings
assigned to such terms in subsection 2.1;
"Initial Term Loan Commitment" of any Initial Term Loan Lender at any
date shall mean the obligation of such Initial Term Loan Lender at such
date to make Initial Term Loans to the Company, in an aggregate principal
amount at any one time outstanding not to exceed the amount set forth
opposite such Initial Term Loan Lender's name on Schedule II; collectively,
as to all such Initial Term Loan Lenders, the "Initial Term Loan
Commitments";
"Initial Term Loan Commitment Percentage" shall mean, at any date with
respect to each Initial Term Loan Lender, the percentage which the Initial
Term Loan Commitment of such Initial Term Loan Lender constitutes of the
Aggregate Initial Term Loan Commitment then in effect (or, if no Aggregate
Initial Term Loan Commitment is then in effect, the percentage which the
aggregate outstanding principal amount of Initial Term Loans of such
Initial Term Loan Lender constitutes of the aggregate principal amount of
all Initial Term Loans then outstanding);
"Initial Term Loan Lender" shall mean each bank or other financial
institution from time to time party hereto which holds an Initial Term Loan
Commitment; collectively, the "Initial Term Loan Lenders";
"Initial Term Loan Note" shall have the meaning assigned to such term
in subsection 2.2(c);
<PAGE>
26
"Insolvency" shall mean with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of such term as
used in Section 4245 of ERISA;
"Insolvent" shall pertain to a condition of Insolvency;
"Intellectual Property" shall have the meaning assigned to such term
in subsection 11.20;
"Intellectual Property Security Agreements" shall be the collective
reference to the Affiliate IP Security Agreements, the Company IP Security
Agreements and the Subsidiary IP Security Agreements;
"Intercreditor Agreement" shall mean the Amended and Restated
Intercreditor Agreement, substantially in the form of Exhibit T, duly
executed and delivered by each of The Long-Term Credit Bank of Japan, Ltd.
(acting through its Los Angeles Agency) and The Chase Manhattan Bank, as
administrative agent, with respect to the relative priority of each party
thereto in the Pledged Stock of CCI;
"Interest Expense" shall mean, for any period, the amount which, in
conformity with GAAP, would be set forth opposite the caption "interest
expense" (or any like caption) on a consolidated income statement of the
Company and its Subsidiaries for such period;
"Interest Payment Date" shall mean:
(a) as to any Alternate Base Rate Loan, the last day of each
March, June, September and December, commencing on the first of such
days to occur after such Alternate Base Rate Loan is made or
Eurodollar Loans are converted to Alternate Base Rate Loans;
(b) as to any Local Rate Loan which does not have an Interest
Period, (i) in the case of any such Local Rate Loan for which Italian
Lire is the Denomination Currency, the last day of each calendar
quarter and (ii) in each other case, the last day of each calendar
month, commencing (in the case of clause (i) and (ii) above) on the
first of such days to occur after such Local Rate Loan is made or
Eurocurrency Loans are converted into Local Rate Loans;
(c) as to any Local Rate Loan, Eurocurrency Loan and Eurodollar
Loan with an Interest Period of three months or less, the last day of
the Interest Period with respect thereto;
(d) as to any Local Rate Loan, Eurocurrency Loan and Eurodollar
Loan with an Interest Period of four, five or six months, the last day
of each March, June, September and December, commencing on the first
such day to occur after
<PAGE>
27
the commencement of such Interest Period, and the last day of such
Interest Period;
(e) as to any Acceptance, the last Business Day of the calendar
week in which such Acceptance matures (or such earlier date as the
relevant Local Fronting Lender may elect); and
(f) in any event, each of the last day of the Commitment Period
and the Termination Date;
"Interest Period" shall mean, (a) initially, with respect to any
Eurodollar Loan or Eurocurrency Loan or (to the extent customary with
respect to loans in the relevant Denomination Currency) any Local Rate
Loan, the period commencing on the borrowing date or the initial date of
conversion with respect to such Loan and ending one, two, three or six
months (or, to the extent available to all the Lenders with respect to any
such Loan, four or five months) thereafter as selected by the relevant
Borrower in a notice of borrowing or conversion, as the case may be, as
provided herein and (b) thereafter, each period commencing on the last day
of the immediately preceding Interest Period applicable to such Loan and
ending one, two, three or six months (or, to the extent available to all
the Lenders with respect to any such Loan, four or five months) thereafter,
in any such case as selected by the relevant Borrower in accordance with
the provisions of subsection 10.8; provided that all of the foregoing
provisions relating to Interest Periods are subject to the following:
(x) if any Interest Period relating to a Eurodollar Loan or a
Eurocurrency Loan would otherwise end on a day which is not a Working
Day, such Interest Period shall be extended to the next succeeding
Working Day, unless the result of such extension would be to carry
such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Working Day;
(y) any Interest Period relating to any Loan that would otherwise
extend beyond the Termination Date shall end on such date; and
(z) if any Interest Period relating to a Eurodollar Loan or a
Eurocurrency Loan begins on the last Working Day of a calendar month
(or on a day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period), such Interest
Period shall end on the last Working Day of a calendar month;
"Interest Rate Agreement" shall mean any interest rate swap, option,
cap, collar or insurance or any other agreement or arrangement with any
Lender (or any Affiliate thereof) or any other bank or financial
institution which is designed to provide protection against fluctuations in
interest rates, and any renewals thereof or substitutions therefor;
<PAGE>
28
"Investment" shall mean, with respect to the Company and its
Subsidiaries:
(a) the purchase of all or substantially all of the assets or
stock of one or more Persons, or of assets which comprise any business
unit of any such Persons, or of assets, stock, bonds, notes,
debentures or other securities of any Permitted Joint Venture;
(b) the making of any advances, loans, extensions of credit,
capital contributions to, or any investments (including, without
limitation, the payment of management fees and other Restricted
Payments) in, Permitted Joint Ventures;
(c) the incurrence of any Contingent Obligation in the nature of
a guarantee of Indebtedness of any Permitted Joint Venture; or
(d) to the extent that such amounts are financed with the
proceeds of Revolving Credit Loans of the type which are to become
Refunded Revolving Credit Loans or with the proceeds of Acquisition
Loans, the costs of facility shutdown, severance and other customary
items which result from the consummation of any of the transactions
described in clauses (a), (b) and (c) above and the costs of
assimilating any businesses acquired in such transactions;
"Investment Consideration" shall mean, with respect to any Investment
in any Person or Permitted Joint Venture, the sum (without duplication) of:
(a) the aggregate of the purchase prices paid by the Company and
its Subsidiaries for such Investment;
(b) the aggregate amount of the Indebtedness of such Persons or
Permitted Joint Ventures, as the case may be, paid or assumed by the
Company and its Subsidiaries in connection with such Investment;
(c) any amounts constituting an "Investment" pursuant to clause
(d) of the definition of such term;
(d) except in the case of Investments in Permitted Joint
Ventures, the aggregate amount of Indebtedness for which such Person
remains liable following such Investment; and
(e) in the case of Investments in Permitted Joint Ventures, (i)
the aggregate of the amount invested in such Investments (net of any
loans or extensions of credit to the extent that they have been repaid
and net of any contributions of Surplus Assets) in such Permitted
Joint Ventures made by the Company and its Subsidiaries and (ii) the
aggregate amount of Contingent Obligations of the Company and its
Subsidiaries then outstanding on account of Indebtedness of such
Permitted Joint Ventures;
<PAGE>
29
"Investment Grade Rating" shall mean (a) with respect to Fitch, BBB-
or better, (b) with respect to S&P, BBB- or better, (c) with respect to
Moody's, Baa3 or better and (d) with respect to IBCA Ltd., BBB- or better;
"Issuing Lender" with respect to:
(a) any Special Letter of Credit issued or requested to be
issued, shall mean the Special L/C Lender or affiliate thereof (acting
in its capacity as such an issuer) from time to time designated by the
Administrative Agent as the issuer thereof; and
(b) any Operating Letter of Credit issued or requested to be
issued, shall mean the Multi-Currency Lender or affiliate thereof
(acting in its capacity as such an issuer) from time to time
designated by the Administrative Agent as the issuer thereof; and
provided that no such Lender or affiliate thereof shall have any obligation
to serve as an Issuing Lender, but rather shall serve in such capacity only
with its prior consent;
"judgment currency" shall have the meaning assigned to such term in
subsection 17.10;
"L/C Fee Payment Date" shall mean the last day of each March, June,
September and December and, in any event, the last day of the Commitment
Period and the Termination Date;
"L/C Obligation" shall mean an Operating L/C Obligation or a Special
L/C Obligation, as the case may be; collectively, the "L/C Obligations";
"L/C Participant" shall mean an Operating L/C Participant or a Special
L/C Participant, as the context shall require; collectively, the "L/C
Participants";
"Lehman" shall have the meaning assigned to such term in the preamble
hereto;
"Lender" shall mean a Syndicated Lender or a Fronting Lender, as the
context shall require; collectively, the "Lenders";
"Letter of Credit" shall mean a Special Letter of Credit or an
Operating Letter of Credit, as the context shall require; collectively, the
"Letters of Credit";
"Leverage Ratio" shall mean, at any date, the amount equal to the
ratio of (a) Funded Indebtedness of the Company and its Subsidiaries on a
consolidated basis at such date to (b) EBITDA of the Company and its
Subsidiaries for the period of four consecutive fiscal quarters ended on
the last day of the most recent fiscal quarter for which the Administrative
Agent has received the financial statements required to be
<PAGE>
30
delivered pursuant to subsection 13.1(a) or (c), as the case may be, and
the compliance certificate required pursuant to subsection 13.2(b) with
respect to such financial statements (such period of four fiscal quarters,
the "calculation period"); provided, however, that the amount of Funded
Indebtedness from time to time outstanding on account of Multi-Currency
Loans shall be deemed to be the amount equal to the lesser of (x) the
aggregate principal amount of Multi-Currency Loans outstanding on the last
day of the calculation period and (y) the average daily principal amount of
Multi-Currency Loans outstanding during the calculation period;
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other) or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, (a) any conditional sale or
other title retention agreement, (b) any financing lease having
substantially the same economic effect as any of the foregoing, (c) the
filing of any financing statement under the Uniform Commercial Code (other
than any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing and (d)
in the case of securities, any purchase option, call or similar right of a
third party with respect to such securities (other than, in the case of
capital stock of an issuer other than any Subsidiary of the Company,
pursuant to normal settlement terms));
"Loan" shall mean an Initial Term Loan, a Deferred Draw Term Loan, a
Revolving Credit Loan, a Swing Line Loan, an Acquisition Loan, a Local Loan
or an Acceptance, as the context shall require; collectively, the "Loans";
"Local Borrower" shall mean the Company or a Local Subsidiary, as the
context shall require; collectively, the "Local Borrowers";
"Local Court" shall have the meaning assigned to such term in
subsection 16.14(a);
"Local Fronting Lender" shall mean, with respect to a particular
jurisdiction listed on Schedule III (as such Schedule III may be, or may be
deemed to be, amended, supplemented or otherwise modified from time to
time), the Multi-Currency Lender (acting in its capacity as a lender of
Local Loans or as a creator of Acceptances) from time to time set forth
opposite such jurisdiction thereon; provided, however, that each Local
Fronting Lender shall be either (a) a Multi-Currency Lender on the date
hereof or (b) an Eligible Assignee on the date of its appointment as a
Local Fronting Lender;
"Local Fronting Lender Joinder Agreement" shall mean a Fronting Lender
Joinder Agreement, substantially in the form of Exhibit R-2;
"Local Loan" and "Local Loans" shall have the meanings assigned to
such terms in subsection 8.1; provided that the term "Local Loans" shall,
to the extent utilized
<PAGE>
31
directly or indirectly in the Security Documents, be deemed to include any
Acceptances outstanding under this Agreement;
"Local Loan Participation Certificate" shall mean a certificate,
substantially in the form of Exhibit L-1;
"Local Outstandings" shall mean, at any date with respect to any Local
Fronting Lender, the sum of (a) the aggregate principal amount then
outstanding of the Local Loans made by such Local Fronting Lender in
Dollars, (b) the Equivalent in Dollars of 105% of the aggregate principal
amount then outstanding of the Local Loans made by such Local Fronting
Lender in the relevant Denomination Currency and (c) the Equivalent in
Dollars of 105% of the aggregate undiscounted face amount then outstanding
of the Acceptances created by such Local Fronting Lender in the relevant
Denomination Currency;
"Local Rate" shall mean, with respect to:
(a) any Local Loan in a Denomination Currency, the rate of
interest from time to time publicly announced by the relevant Local
Fronting Lender as its base rate (or its equivalent thereof) for loans
denominated in such Denomination Currency at the principal lending
office of such Local Fronting Lender in the local jurisdiction for
such Denomination Currency (or such other rate as may be mutually
agreed between the relevant Borrower and such Local Fronting Lender as
reflecting the Cost of Funds to such Local Fronting Lender for the
Local Loans to which such rate is applicable); provided that, with
respect to any Local Loans advanced by way of overdrafts, the "Local
Rate" shall be the rate from time to time agreed upon between the
relevant Local Borrower and the relevant Local Fronting Lender; and
(b) any Acceptance, the rate from time to time agreed upon
between the relevant Local Borrower and the relevant Local Fronting
Lender;
"Local Rate Loan" shall mean each Local Loan hereunder at such time as
it is made and/or being maintained at a rate of interest based upon the
Local Rate for the relevant Denomination Currency; provided, however, that
(other than any Local Loans made on the Closing Date) no Local Loan shall
be made or maintained as a Local Rate Loan unless either (a) the Local
Fronting Lender with respect thereto so agrees (in its sole discretion) or
(b) the right of the relevant Borrower to obtain Eurocurrency Loans has
been suspended pursuant to subsection 8.7, 10.9 or 10.10;
"Local Subsidiary" shall mean each Subsidiary of the Company listed
under the heading "Name of Borrower and Address for Notices" on Schedule
III hereto (as such Schedule III may be or may be deemed to be amended,
supplemented or otherwise modified from time to time) and each other
Subsidiary of the Company which is designated as a "Local Subsidiary" in
accordance with the provisions of subsection 8.5;
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32
provided that, in each case in which there is more than one Subsidiary of
the Company listed for any jurisdiction under the heading "Local
Subsidiaries," the term "Local Subsidiary" shall be the collective
reference to such Subsidiaries.
"M&FG" shall mean MacAndrews & Forbes Group, Incorporated, a Delaware
corporation;
"M&FH" shall mean MacAndrews & Forbes Holdings Inc., a Delaware
corporation;
"Mafco" shall mean Mafco Holdings Inc., a Delaware corporation;
"Mafco Consolidated Group" shall mean the "Affiliated Group" (within
the meaning of Section 1504(a)(1) of the Code) of which Mafco is the common
parent and any affiliated group that is a continuation thereof under
Regulation Section 1.1502-75(d)(2) or (3);
"Material Adverse Effect" shall mean a material adverse effect upon
(i) the business, condition (financial or otherwise), operations,
performance, properties or prospects of (A) Revlon or (B) the Company and
its Subsidiaries taken as a whole or (ii) the ability of the Company and
its Subsidiaries taken as a whole to perform the obligations of the Company
under the Credit Documents or (iii) the rights and remedies available to
either Agent, any Fronting Lender and/or the Syndicated Lenders under any
Credit Document;
"Maximum Sublimit" of any Local Fronting Lender shall mean the amount
of Dollars set forth opposite the name of such Local Fronting Lender under
the heading "Maximum Sublimit" on Schedule III (as said Schedule III may be
or may be deemed to be, amended, supplemented or otherwise modified from
time to time);
"Moody's" shall mean Moody's Investors Service, Inc. (or any successor
thereto);
"Mortgaged Properties" shall mean the real property and improvements
encumbered by the Mortgages;
"Mortgages" shall be the collective reference to the amended and
restated fee mortgage or the deed of trust, as the case may be, to be made
by the fee owner of each such property, covering the Mortgaged Properties,
in substantially the form of Exhibits H-1 and H-2, as the same may be
amended, supplemented or otherwise modified from time to time;
individually, a "Mortgage";
"Multi-Currency Commitment" of any Multi-Currency Lender at any date
shall mean the obligation of such Multi-Currency Lender at such date to (a)
make Revolving Credit Loans to the Company, (b) issue or participate in
Operating Letters of Credit issued on behalf of the Company (net of
participating interests held by Operating L/C
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33
Participants, in the case of Operating Letters of Credit issued by such
Multi-Currency Lender), (c) participate in Swing Line Loans made to the
Company and (d) participate in Local Loans and Acceptances made to the
Local Borrowers, in an aggregate principal and/or face amount at any one
time outstanding not to exceed the amount set forth opposite such
Multi-Currency Lender's name on Schedule II; collectively, as to all such
Multi-Currency Lenders, the "Multi-Currency Commitments";
"Multi-Currency Commitment Percentage" means, with respect to any
Multi-Currency Lender at any date, the percentage which the Multi-Currency
Commitment of such Multi-Currency Lender constitutes of the Aggregate
Multi-Currency Commitment then in effect (or, if no Aggregate
Multi-Currency Commitment is then in effect, the percentage which the
portion of the Aggregate Outstanding Multi-Currency Extensions of Credit in
which such Multi-Currency Lender then has an interest constitutes of the
Aggregate Outstanding Multi-Currency Extensions of Credit then
outstanding);
"Multi-Currency Lender" means, at any date, each bank and other
financial institution which holds a Multi-Currency Commitment;
"Multi-Currency Loans" shall be the collective reference to the
Revolving Credit Loans, the Swing Line Loans and the Local Loans;
"Multiemployer Plan" shall mean a Plan (other than a welfare plan as
defined in Section 3(1) of ERISA) which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA;
"Net Excess Cash Flow" shall mean, for any period, the amount equal to
50% of Excess Cash Flow for such period minus the amount of any reductions
(whether voluntary or mandatory) of the Aggregate Acquisition Loan
Commitment which do not require the repayment of Acquisition Loans;
"Net Interest Expense" shall mean, for any period, the amount equal to
(a) Interest Expense for such period minus (b) the amount which, in
conformity with GAAP, would be set forth opposite the caption "interest
income" (or any like caption) on a consolidated income statement of the
Company and its Subsidiaries for such period;
"Net Proceeds" shall mean, with respect to any Net Proceeds Event of
any Person, (a) the gross cash consideration, and all cash proceeds of
non-cash consideration (including, without limitation, any such cash
proceeds in the nature of principal and interest payments on account of
promissory notes or similar obligations), received by such Person in
connection with such Net Proceeds Event, minus (b) the sum, without
duplication, of:
(i) any taxes which are paid or actually currently payable to any
state, local or foreign taxing authority and are directly attributable
to such Net Proceeds Event;
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34
(ii) any federal taxes which are directly attributable to any Net
Proceeds Event of the Company or any of its Subsidiaries (other than
any gains taxes which are required to be accrued on a Capital Gains
Note);
(iii) the amount of fees and commissions (including reasonable
investment banking fees), legal, title and recording tax expenses and
other costs and expenses directly incident to such Net Proceeds Event
which are paid or payable by such Person and its Subsidiaries, other
than fees and commissions (including, without limitation, management
consulting and financial services fees) paid or payable to Affiliates
of such Person (or officers or employees of such Person or any
Affiliate of such Person);
(iv) the amount of liabilities (other than intercompany
liabilities or liabilities owing to any Affiliate of such Person), if
any, which are required to be repaid at the time or as a result of
such Net Proceeds Event out of the proceeds thereof (including, in the
case of any Net Proceeds Event in respect of the sale, transfer or
other disposition of the capital stock of CCI, the Shortfall Amount);
and
(v) in the case of any Net Proceeds Event of any Person other
than the Company and its Subsidiaries, any amount of cash
consideration (or, in the case of non-cash consideration, the fair
market value thereof) paid by such Person in connection with the
acquisition of any asset after the Closing Date, the mortgage, sale,
lease, transfer or other disposition of which gave rise to such Net
Proceeds Event;
"Net Proceeds Event" shall mean:
(a) with respect to the Company and its Subsidiaries:
(i) the incurrence by the Company or any of its Subsidiaries of
any Indebtedness for borrowed money (other than Indebtedness permitted
pursuant to clauses (a), (b) and (d) through (o) of subsection 14.2);
and
(ii) the sale, lease, transfer (by merger or otherwise) or other
disposition (other than (X) in the ordinary course of business or (Y)
with respect to property, plant and equipment, in connection with the
purchase, construction or other acquisition, not more than 90 days
prior to or (to the extent that the Company deposits such amounts in a
cash collateral account with the Administrative Agent pending such
purchase, construction or other acquisition) after such sale, lease,
transfer or other disposition, of property, plant or equipment of the
same nature and having the same use) by the Company or any of its
Subsidiaries of any interest in any real or personal, tangible or
intangible, property (including, without limitation, the capital stock
or other equity interests of (1) the Company or such Subsidiary by way
of Equity Offering or otherwise or (2) any other Person) of the
<PAGE>
35
Company or such Subsidiary to any Person (other than the Company or
any of its Subsidiaries or any Permitted Joint Venture pursuant to
subsection 14.6); and
(b) with respect to any other Person, (i) any sale, lease, transfer
(or other disposition) by such Person of any interest in any collateral
security provided pursuant to any Security Document (other than any sale,
lease, transfer (or other disposition) by Revlon Holdings of the real
property and improvements covered by the Mortgage to which Revlon Holdings
is a party) and (ii) any Equity Offering;
"New Acquisition Lender Supplement" means a New Acquisition Lender
Supplement, substantially in the form of Exhibit W, executed and delivered
pursuant to subsection 9.7.
"Non-Funding Lender" shall have the meaning assigned to such term in
subsection 10.16(c);
"Non-Voting Stock" shall have the meaning assigned to such term in
subsection 13.11(b);
"Note" shall mean any Initial Term Loan Note, any Deferred Draw Term
Loan Note, any Revolving Credit Note or the Swing Line Note, as the context
may require; collectively, the "Notes"; without affecting the foregoing,
each Acquisition Loan shall (except to the extent contemplated by
subsection 17.7(h)) be evidenced by this Agreement, and not by a promissory
note;
"Notice of an Actionable Event" shall have the meaning assigned to
such term in the Collateral Agency Agreements;
"Operating L/C Obligations" shall mean, at any time, an amount equal
to the sum of (a) the aggregate amount of Undrawn Operating L/C Obligations
then outstanding and (b) the aggregate amount of then unreimbursed
Operating L/C Reimbursement Obligations;
"Operating L/C Participants" shall be, with respect to any Operating
Letter of Credit, the collective reference to all the Multi-Currency
Lenders, other than the Issuing Lender with respect to such Operating
Letter of Credit (or, to the extent that the Issuing Lender is an affiliate
of a Multi-Currency Lender, such Multi-Currency Lender);
"Operating L/C Reimbursement Obligations" shall mean the obligation of
the Company to reimburse the Issuing Lender(s) pursuant to subsection 7.4
for amounts drawn under Operating Letters of Credit;
"Operating Letters of Credit" shall have the meaning assigned to such
term in subsection 7.1;
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36
"Parent" shall have the meaning assigned to such term in subsection
13.8;
"Participants" shall have the meaning assigned to such term in
subsection 17.7(b);
"Patent" shall, as to the Company or any Domestic Subsidiary, have the
meaning assigned to such term in the Company Patent Security Agreement or
the Subsidiary Patent Security Agreement, as the case may be;
"Payment Obligations" shall mean (a) all principal, interest, fees,
charges, expenses, attorneys' fees and disbursements, indemnities and any
other amounts payable by any Person under any Credit Document (including,
without limitation, the L/C Obligations and the aggregate, undiscounted,
face amount of Drafts) and (b) any amount in respect of any of the
foregoing that the Administrative Agent, the Documentation Agent, the
Syndication Agent or any Lender, in its sole discretion, may elect to pay
or advance under this Agreement on behalf of such Person after the
occurrence and during the continuance of a Default or an Event of Default;
"Payment Sharing Notice" shall mean a written notice from any Borrower
or any Lender informing the Administrative Agent that an Event of Default
has occurred and is continuing and directing the Administrative Agent to
allocate payments thereafter received from the Borrowers in accordance with
the provisions of subsection 10.16;
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA;
"Permitted Intercompany Transfers" shall mean any
(i) merger or consolidation of any Subsidiary of the Company with
or into the Company;
(ii) merger or consolidation of any Subsidiary of the Company
with or into any one or more wholly-owned Subsidiaries of the Company
(or to any Person which, after giving effect to such merger or
consolidation and to any other concurrent merger or consolidation
involving the Company or any of its Subsidiaries that is permitted
under subsection 14.5, is a wholly-owned Subsidiary of the Company);
(iii) any liquidation and distribution by any Subsidiary of the
Company of its assets to the Company or to any one or more
wholly-owned Subsidiaries of the Company (or to any Person which,
after giving effect to such liquidation and distribution and to any
other concurrent liquidation and distribution involving the Company or
any of its Subsidiaries that is permitted under subsection 14.5, is a
wholly-owned Subsidiary of the Company);
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37
(iv) any sale, lease, assignment, transfer or any other
disposition by the Company of, in one transaction or a series of
related transactions, all or any part of its business or assets to any
wholly-owned Subsidiary of the Company;
(v) any sale, lease, assignment, transfer or any other
disposition by any Subsidiary of, in one transaction or a series of
related transactions, all or any part of its business or assets to the
Company or to any one or more wholly-owned Subsidiaries of the
Company; or
(vi) the sale, lease, assignment, transfer or other disposal by
the Company or any of its Subsidiaries of any Disposition Assets
(including, without limitation, capital stock constituting Disposition
Assets) to the Company or any of its Subsidiaries or the merger or
consolidation or liquidation with or into the Company or any of its
Subsidiaries of any Subsidiary of the Company listed on Schedule IV as
being scheduled for dissolution;
provided, however, that, after giving effect to any such Permitted
Intercompany Transfer, the Administrative Agent shall maintain a security
interest in any property so transferred in which it had a security interest
prior to such Permitted Intercompany Transfer;
"Permitted Joint Venture" shall mean a joint venture arrangement
(whether structured as a corporation, partnership or other contractual
relationship) between the Company or any of its Subsidiaries, on the one
hand, and a third party who is not directly or indirectly controlled by
Ronald O. Perelman, on the other hand, the primary business of which joint
venture is the development, manufacture, distribution and/or sale
(including marketing and advertising) of products relating to the beauty,
skin care, fragrance, personal care and/or glass decorating businesses or
otherwise derived from the proprietary intellectual property of the Company
and its Subsidiaries (or of holding properties incidental to such
businesses);
"Permitted Special L/C Obligation" shall mean an obligation of the
Company or any of its Subsidiaries in respect of (a) security for payment
of workers' compensation or other insurance, (b) security for the
performance of tenders, contracts (other than contracts for the payment of
borrowed money) or leases in the ordinary course of business, (c) deposits
to secure public or statutory obligations, or in lieu of surety or appeal
bonds entered into in the ordinary course of business, (d) security for
surety, appeal, reclamation, performance or other similar bonds and (e)
security for Hedging Obligations (as defined in the Indentures);
"Person" shall mean an individual, a partnership, a corporation, a
business trust, a joint stock company, a limited liability company, a
trust, an unincorporated association, a joint venture, a Governmental
Authority or any other entity of whatever nature;
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38
"Petroleum Products" shall mean gasoline, diesel fuel, motor oil,
waste or used oil, heating oil, kerosene and any other petroleum products,
including crude oil or any fraction thereof;
"Plan" shall mean at any particular time, any employee benefit plan
which is covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan was terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA;
"Pledge Agreements" shall mean (a) the Affiliate Pledge Agreements,
(b) the Revlon Pledge Agreement, (c) the Company Pledge Agreements, (d) the
Subsidiary Pledge Agreements and (e) each Pledge and Security Agreement
delivered pursuant to subsection 13.11, as each of the same may be amended,
supplemented or otherwise modified from time to time; individually, a
"Pledge Agreement";
"Pledged Stock" shall have the meaning assigned to such term (or any
analogous term) in the Pledge Agreements;
"Pledged Subsidiaries" shall mean the Directly Pledged Subsidiaries
and the Subsidiaries of the Directly Pledged Subsidiaries;
"Pledgors" shall be the collective reference to the pledgors parties
to the Pledge Agreements; individually, a "Pledgor";
"Potential Withdrawal Liability" shall have the meaning assigned to
such term in subsection 11.8;
"Prime Rate" shall mean the rate of interest from time to time
announced by Chase at its principal office, presently located at 270 Park
Avenue, New York, New York 10017, as its prime rate for loans in Dollars;
"Purchasing Lenders" shall have the meaning assigned to such term in
subsection 17.7(c)(ii);
"Qualified Foreign Lender" shall have the meaning assigned to such
term in subsection 10.13(b)(y);
"QFL Term Loan Note" shall have the meaning assigned to such term in
subsection 17.11(a);
"Refunded Revolving Credit Loan" shall have the meaning assigned to
such term in subsection 5.5(a);
"Refunded Revolving Credit Loan Participation Certificate" shall mean
a certificate, substantially in the form of Exhibit L-2;
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39
"Refunded Swing Line Loans" shall have the meaning assigned to such
term in subsection 6.1(c);
"Register" shall have the meaning assigned to such term in subsection
17.7(d);
"Reimbursement Obligations" shall mean the Operating L/C Reimbursement
Obligations or the Special L/C Reimbursement Obligations, as the context
shall require;
"Related Fund" shall mean, with respect to any Lender that is a fund
which invests in loans, any other fund that invests in loans and is managed
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
"Reorganization" shall mean with respect to any Multiemployer Plan,
the condition that such Plan is in reorganization within the meaning of
such term as used in Section 4241 of ERISA;
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the 30-day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC
Reg. ss. 2615;
"Required Lenders" at any date shall mean the holders (including, in
any event, the Agents) of at least a majority of the Aggregate Commitment
(excluding any portions thereof held by any Non-Funding Lender); provided
that, for purposes of determining the "Required Lenders," Swing Line Loans
shall be deemed to be held ratably by the Multi-Currency Lenders and not
by the Swing Line Lender;
"Requirement of Law" for any Person shall mean the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation, or determination of
an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its material property
or to which such Person or any of its material property is subject;
"Resale Transaction" shall mean the sale, transfer or other
disposition by the Company or any of its Subsidiaries of any asset acquired
by it after the date hereof pursuant to an Investment; provided that,
within 180 days following the consummation of such Investment, the
Administrative Agent receives written notice from the Company identifying
such asset (with reasonable specificity) and stating that such asset is
being held for disposition in a Resale Transaction;
"Responsible Officer" shall mean any officer at the level of Vice
President or higher of the relevant Person or, with respect to financial
matters, the Chief Financial Officer, Treasurer or Controller of the
relevant Person;
"Restricted Payment" shall mean (a) any payment by the Company of a
dividend (other than a dividend payable solely in common stock of the
Company) or distribution
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40
on, or any payment by the Company or any of its Subsidiaries on account of
the purchase, redemption or retirement of, or any other distribution on,
any shares of any class of stock of the Company (including any such payment
or distribution in cash or in property or obligations of the Company or any
of its Subsidiaries), (b) any loan or advance, or the making of any other
investment, by the Company or any of its Subsidiaries to or in any
Affiliate of the Company, (c) the payment by the Company or any of its
Subsidiaries of any management or administrative fee (including, without
limitation, any management consulting and financial services fees) to any
Affiliate of the Company or of any salary, bonus or other form of
compensation (other than in the ordinary course of business) to any Person
who is a significant stockholder or principal officer of any Affiliate of
the Company, (d) any payment by the Company or any of its Subsidiaries to
any Affiliate of the Company pursuant to the Company Tax Sharing Agreement
or any similar agreement or (e) any payment by the Company or any of its
Subsidiaries of principal or interest in respect of amounts from time to
time outstanding under any Subordinated Intercompany Note, any Capital
Gains Note or any Capital Contribution Note; provided that any amounts paid
from time to time to Revlon to finance the actual payment by Revlon of
expenses and obligations incurred by Revlon to Persons other than
Affiliates of Revlon (or officers or employees of any such Affiliate) shall
not be "Restricted Payments" to the extent that such expenses and
obligations, if they had been incurred by the Company, would not have been
prohibited hereunder and were incurred by Revlon without violating the
provisions of Section 15(s);
"Revlon" shall mean Revlon, Inc., a Delaware corporation and the
immediate Parent of the Company;
"Revlon Guarantee" shall mean the Amended and Restated Guarantee, to
be executed and delivered by Revlon, substantially in the form of Exhibit
E-1, as the same may be amended, supplemented or otherwise modified from
time to time;
"Revlon Holdings" shall mean Revlon Holdings Inc., a Delaware
corporation;
"Revlon Holdings Operating Agreement" shall mean the Second Amended
and Restated Operating Services Agreement, dated as of June 24, 1992 (as
amended and restated as of January 1, 1996), by and among Revlon Holdings,
Revlon and the Company, as the same may be amended, supplemented or
otherwise modified from time to time;
"Revlon Holdings Support Parties" shall mean each Pledged Subsidiary
of Revlon Holdings, other than the Company and its Subsidiaries;
"Revlon Pledge Agreement" shall mean the Amended and Restated Pledge
and Security Agreement, to be executed and delivered by Revlon,
substantially in the form of Exhibit E-2, as the same may be amended,
supplemented or otherwise modified from time to time;
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41
"Revolving Credit Loan" and "Revolving Credit Loans" shall have the
meanings assigned to such terms in subsection 5.1;
"Revolving Credit Note" shall have the meaning assigned to such term
in subsection 5.2(c);
"RGI" shall mean Revlon Group Incorporated, a Delaware corporation;
"ROP" shall have the meaning assigned to such term in Section 15(h);
"Roppongi Building" shall mean the real property and improvements
owned by Revlon Real Estate K.K. which are located in the Roppongi district
of Tokyo, Japan and which serve as collateral security on the date hereof
for the Yen Credit Agreement;
"S&P" shall mean Standard & Poor's Corporation (and any successor
thereto);
"Scheduled Acquisition Currency" shall mean Japanese Yen,
Deutschemarks, French Francs, Spanish Pesetas and Pounds Sterling;
"Security Agreements" shall be the collective reference to each
Amended and Restated Security Agreement, Security Agreement and analogous
document described in Schedule VI and each Security Agreement delivered
pursuant to subsection 13.12, as each of the same may be amended,
supplemented or otherwise modified from time to time; individually, a
"Security Agreement";
"Security Documents" shall mean the Collateral Agency Agreements, the
Guarantees, the Pledge Agreements, the Security Agreements, the
Intellectual Property Security Agreements, the Mortgages and all other
security documents hereafter delivered to the Administrative Agent granting
a security interest in any asset or assets of any Person to secure the
Payment Obligations of any Borrower hereunder, under the Notes and/or under
any Draft, or to secure any guarantee of any such Payment Obligations;
"Shortfall Amount" shall have the meaning assigned thereto in the Yen
Credit Agreement;
"Significant Trademark" shall mean each Trademark of the Company and
its Domestic Subsidiaries on the Closing Date and each other Trademark from
time to time which, in either case, is of such a nature that the Company or
its Subsidiaries in accordance with its ordinary business practice then
obtaining would file an application for trademark registration in the
United States Patent and Trademark Office;
"Single Employer Plan" shall mean any Plan (other than a Multiemployer
Plan) which is covered by Title IV of ERISA;
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42
"Sinking Fund Debentures" shall mean the 10-7/8% Sinking Fund
Debentures of Revlon Holdings (and assumed by the Company), due 2010,
issued and outstanding under the Indenture, dated as of July 15, 1980,
between Revlon and First National Bank of Minneapolis (as successor to The
Chase Manhattan Bank, N.A.), as trustee, as said Sinking Fund Debentures
and said Indenture may be amended, supplemented or otherwise modified from
time to time to the extent permitted by subsection 14.9;
"Special Acquisition Currency" shall mean, with respect to any
Acquisition Loan made by any Acquisition Lender, the currency (other than
Dollars or any Scheduled Acquisition Currency) which is reflected in the
notice of borrowing with respect to such Acquisition Loan and in which such
Acquisition Lender has agreed to fund such Acquisition Loan;
"Special L/C Commitment" of any Special L/C Lender at any date shall
mean the obligation of such Special L/C Lender at such date to issue or
participate in Special Letters of Credit in an aggregate face amount (net
of participating interests held by the Special L/C Participants, with
respect to any Special Letter of Credit issued by such Special L/C Lender)
at any one time outstanding not to exceed the amount set forth opposite
such Special L/C Lender's name on Schedule II; collectively, as to all such
Special L/C Lenders, the "Special L/C Commitments";
"Special L/C Commitment Percentage" means, with respect to any Special
L/C Lender at any date, the percentage which the Special L/C Commitment of
such Special L/C Lender constitutes of the Aggregate Special L/C Commitment
then in effect (or, if no Aggregate Special L/C Commitment is then in
effect, the percentage which the aggregate outstanding amount of Special
L/C Obligations of such Special L/C Lender constitutes of the aggregate
amount of all Special L/C Obligations then outstanding);
"Special L/C Lender" means, at any date, each bank and other financial
institution which holds a Special L/C Commitment;
"Special L/C Obligations" shall mean, at any time, an amount equal to
the sum of (a) the aggregate amount of Undrawn Special L/C Obligations then
outstanding and (b) the aggregate amount of then unreimbursed Special L/C
Reimbursement Obligations;
"Special L/C Participants" shall be, with respect to any Special
Letter of Credit, the collective reference to all the Special L/C Lenders,
other than the Issuing Lender with respect to such Special Letter of Credit
(or, to the extent that the Issuing Lender is an affiliate of a Special L/C
Lender, such Special L/C Lender);
"Special L/C Reimbursement Obligations" shall mean the obligation of
the Company to reimburse the Issuing Lender(s) pursuant to subsection 4.4
for amounts drawn under Special Letters of Credit;
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43
"Special Letter of Credit" shall have the meaning assigned to such
term in subsection 4.1;
"Specified Default" shall mean any Default by the Company and its
Subsidiaries in the observance or performance of any covenant or agreement
contained in subsection 13.10, 13.11, 13.12, 13.13 or 13.14;
"Specified Dispositions" shall mean the sale, transfer or other
disposition of (a) the capital stock of Subsidiaries constituting
Disposition Assets, (b) assets of any Subsidiary constituting a Disposition
Asset, (c) any assets (including, without limitation, capital stock)
directly relating to the brands constituting Disposition Assets and (d) any
other asset which constitutes a Disposition Asset;
"Stand-Alone ERISA Amount" shall mean the amount (not to exceed
$60,000,000) equal to (a) the sum of the Unfunded Pension Amount and the
Potential Withdrawal Liability of Revlon and its Subsidiaries on the date
upon which Revlon ceases to be under common control with MacAndrews &
Forbes Holdings Inc. within the meaning of Section 4001 of ERISA or ceases
to be part of a group which includes MacAndrews & Forbes Holdings Inc. and
which is treated as a single employer under Section 414 of the Code plus
(b) 25% of such amount;
"Standby Letter of Credit" shall have the meaning assigned to such
term in subsection 7.1;
"Subordinated Intercompany Notes" shall mean the promissory notes made
by the Company in favor of Revlon Holdings in an aggregate principal amount
not to exceed $30,410,000, in the form of Exhibit Q-2, as the same may be
amended, supplemented or otherwise modified from time to time in accordance
with the terms hereof;
"Subordinated Notes" shall mean the 10-1/2% Senior Subordinated Notes
of the Company, due 2003, issued and outstanding under the Indenture, dated
as of February 15, 1993, between the Company and The Bank of New York, as
trustee, as each of said Subordinated Notes and said Indenture may be
amended, supplemented or otherwise modified from time to time to the extent
permitted by subsection 14.9;
"Subsidiaries Guarantee" shall mean (a) the Amended and Restated
Guarantee, to be executed and delivered by certain Subsidiaries of the
Company, substantially in the form of Exhibit G-1, and (b) each other
guarantee from time to time executed and delivered (including, without
limitation, pursuant to subsection 13.10) by any Subsidiary of the Company
to the Administrative Agent, as each of the same may be amended,
supplemented or otherwise modified from time to time;
"Subsidiary" of any Person shall mean a corporation or other entity of
which shares of stock or other ownership interests having ordinary voting
power (other than stock or other ownership interests having such power only
by reason of the happening of
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44
a contingency) to elect a majority of the directors of such corporation, or
other Persons performing similar functions for such entity, are owned,
directly or indirectly, by such Person; provided that, (a) unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Company, (b)
unless otherwise qualified, all references to a "wholly owned Subsidiary"
or to "wholly pledged Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Company of which the Company directly or
indirectly owns all of the capital stock or other equity interests (other
than directors' qualifying shares) and (c) CCI and each of its Subsidiaries
shall be deemed not to constitute a "Subsidiary" of the Company for any
purpose under this Agreement or any other Credit Document (including,
without limitation, the calculation of compliance with the financial
covenants contained in subsection 14.1), other than:
(x) the representations and warranties contained in
subsections 11.7, 11.8, 11.24, 11.28;
(y) the Defaults and Events of Default contained in Section
15(g), (m), (n) and (o); and
(z) the provisions of subsections 10.4 (solely in respect of
any sale, lease, transfer or other disposition of any equity
securities of CCI which constitute Collateral pursuant to the
Company Pledge Agreement) and 13.11 (with respect to capital
stock or other equity interests of CCI, but not of any
Subsidiaries thereof);
"Subsidiary IP Security Agreements" shall be the collective reference
to (a) each Subsidiary Patent Security Agreement and Subsidiary Trademark
Security Agreement, in each case as executed and delivered by any
Subsidiary of the Company on February 28, 1995 and as each of the same has
been and further may be amended, supplemented or otherwise modified from
time to time and (b) each other security agreement, substantially in the
form of a Security Agreement described in clause (a) above, and each
Subsidiary Copyright Security Agreement, in each case, which is from time
to time executed and delivered by any Subsidiary of the Company as
collateral security for any obligations owing hereunder and as each of the
same may be amended, supplemented or otherwise modified from time to time;
"Subsidiary Pledge Agreement (International)" shall mean each Amended
and Restated Pledge and Security Agreement, substantially in the form of
Exhibit G-3, to be executed and delivered (including, without limitation,
pursuant to subsection 13.11(c)) by each Domestic Subsidiary of the Company
which has as a direct Subsidiary any Foreign Subsidiary, as the same may be
amended, supplemented or otherwise modified from time to time;
"Subsidiary Pledge Agreements" shall be the collective reference to
(a) each Amended and Restated Pledge and Security Agreement and each Pledge
Agreement
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45
listed on Schedule V as being executed and delivered by a Domestic
Subsidiary of the Company, substantially in the form of Exhibit G-2, (b)
each Pledge and Security Agreement and each Pledge Agreement listed on
Schedule V as being executed and delivered by a Foreign Subsidiary of the
Company, (c) each Subsidiary Pledge Agreement (International) and (d) each
other pledge agreement from time to time executed and delivered (including,
without limitation, pursuant to subsection 13.11) by any Subsidiary of the
Company to the Administrative Agent or any Fronting Lender, substantially
in the form of Exhibit G-2, as each of the same may be amended,
supplemented or otherwise modified from time to time;
"Subsidiary Security Agreements" shall be the collective reference to
the Amended and Restated Security Agreements and the Security Agreements,
to be executed and delivered (including, without limitation, pursuant to
subsection 13.12) by the Domestic Subsidiaries of the Company,
substantially in the form of Exhibit G-4, as the same may be amended,
supplemented or otherwise modified from time to time; each, a "Subsidiary
Security Agreement";
"Surplus Assets" shall mean personal property of the Company and its
Subsidiaries which has been used in the business of the Company and its
Subsidiaries for not less than one year and which is sufficiently
immaterial to the conduct of the business of the Company and its
Subsidiaries that the contribution thereof to any Permitted Joint Venture
would not result in the acquisition by the Company or any of its
Subsidiaries of a substantially similar item of personal property during
the period of one year following the date of such contribution;
"Swing Line Commitment" of the Swing Line Lender at any date shall
mean the obligation of the Swing Line Lender to make Swing Line Loans
pursuant to subsection 6.1 in the amount referred to therein;
"Swing Line Lender" shall mean Chase;
"Swing Line Loan Participation Certificate" shall mean a certificate,
substantially in the form of Exhibit K;
"Swing Line Loans" shall have the meaning assigned to such term in
subsection 6.1(a);
"Swing Line Note" shall have the meaning assigned to such term in
subsection 6.1(b);
"Syndicated Acquisition Loan" or "Syndicated Acquisition Loans" shall
have the meanings assigned to such terms in subsection 9.1(a);
"Syndicated Lender" shall mean each Lender, other than the Fronting
Lenders (acting in their respective capacities as such); collectively, the
"Syndicated Lenders";
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46
"Syndicated Loan" shall mean an Initial Term Loan, a Deferred Draw
Term Loan, a Revolving Credit Loan, a Swing Line Loan or a Syndicated
Acquisition Loan, as the context shall require; collectively, the
"Syndicated Loans";
"Syndication Agent" shall have the meaning assigned to such term in
the preamble hereto;
"Taxable Lender" shall have the meaning assigned to such term in
subsection 10.13(d);
"Taxes" shall have the meaning assigned to such term in subsection
10.13(a);
"Termination Date" shall mean the date (which shall be a Business Day)
which is five years from the Closing Date;
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in
effect on such day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board of Governors of the Federal Reserve
System (the "Board") through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current
practices of the Board, be published in Federal Reserve Statistical Release
H.15(519) during the week following such day), or, if such rate shall not
be so reported on such day or such next preceding Business Day, the average
of the secondary market quotations for three-month certificates of deposit
of major money center banks in New York City received at approximately
10:00 A.M., New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the Administrative
Agent from three New York City negotiable certificate of deposit dealers of
recognized standing selected by it;
"Trademark" shall, as to the Company or any Domestic Subsidiary, have
the meaning assigned to such term in the Company Trademark Security
Agreement or the Subsidiary Trademark Security Agreement, as the case may
be;
"Tranche" shall be the collective reference to Eurodollar Loans or
Eurocurrency Loans, the Interest Periods with respect to all of which begin
on the same date and end on the same later date (whether or not such
Eurodollar Loans or Eurocurrency Loans, as the case may be, shall
originally have been made on the same day);
"Transferee" shall have the meaning assigned to such term in
subsection 17.7(f);
"Undrawn L/C Obligations" shall mean the Undrawn Operating L/C
Obligations and/or the Undrawn Special L/C Obligations, as the context
shall require;
"Undrawn Operating L/C Obligations" shall mean the portion, if any, of
the Payment Obligations constituting the contingent obligation of the
Company to reimburse
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47
each Issuing Lender in respect of the then undrawn and unexpired portions
of the Operating Letters of Credit issued by such Issuing Lender pursuant
to subsection 7.4;
"Undrawn Special L/C Obligations" shall mean the portion, if any, of
the Payment Obligations constituting the contingent obligation of the
Company to reimburse each Issuing Lender in respect of the then undrawn and
unexpired portions of the Special Letters of Credit issued by such Issuing
Lender pursuant to subsection 4.4;
"Unfunded Pension Amount" shall have the meaning assigned to such term
in subsection 11.8;
"Uniform Customs" shall mean the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time;
"Unpledged International Property" shall mean (a) the portion (if any)
of the capital stock of each first-tier Foreign Subsidiary of the Company
which is not pledged to the Administrative Agent pursuant to a Pledge
Agreement, (b) any patents, trademarks and copyrights of the Foreign
Subsidiaries of the Company and (c) any patents, trademarks and copyrights
of the Company and its Subsidiaries which are registered outside of the
United States of America;
"Voting Stock" shall have the meaning assigned to such term in
subsection 13.11(b);
"Work" shall mean any work which is or may be subject to copyright
protection pursuant to Title 17 of the United States Code;
"Working Day" shall mean any Business Day other than a Business Day on
which commercial banks in London, England are authorized or required by law
to close;
"Worldwide" shall mean Revlon Worldwide Corporation, a Delaware
corporation;
"Worldwide Indenture" shall mean the Indenture, dated as of March 15,
1993, between Worldwide and The First National Bank of Boston, as trustee,
governing the Senior Secured Discount Notes and the Series B Senior Secured
Discount Notes, due 1998, of Worldwide;
"Worldwide Merger" shall mean the merger of Worldwide into Worldwide
(Parent), as described in the final offering memorandum dated February 28,
1997, relating to the Senior Secured Discount Notes due 2001 issued and
sold by Worldwide (Parent) pursuant to the Worldwide (Parent) Indenture;
"Worldwide (Parent)" shall mean Revlon Worldwide (Parent) Corporation,
a Delaware corporation;
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48
"Worldwide (Parent) Indenture" shall mean the Indenture, dated as of
March 1, 1997, between Worldwide (Parent) and The Bank of New York, as
trustee, governing the Senior Secured Discount Notes due 2001 of Worldwide
(Parent); and
"Yen Credit Agreement" shall mean the Second Amended and Restated
Credit Agreement, dated as of December 22, 1994, between Pacific Finance &
Development Corp. and The Long-Term Credit Bank of Japan, Ltd. (or any
subsequent amended and restated version thereof which contains terms and
conditions substantially similar to those set forth on Exhibit Y hereto)
and each other document, instrument and agreement executed and delivered in
connection therewith.
1.2 Other Definitional Provisions. (a) All terms defined in this
Agreement shall have the defined meanings when used in the Notes, the Security
Documents, any other Credit Document or any certificate or other document made
or delivered pursuant hereto or thereto unless otherwise defined therein.
(b) As used herein, in the Notes, in the Security Documents, in the
other Credit Documents and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in
subsection 1.1, and accounting terms partly defined in subsection 1.1 to the
extent not defined, shall have the respective meanings given to them under
GAAP. To the extent that the definitions of accounting terms herein are
inconsistent with the meanings of such terms under GAAP, the definitions
contained herein shall control.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement, the Notes, any Security Documents or any
other Credit Document shall refer to this Agreement, such Note, such Security
Document or such other Credit Document, as the case may be, as a whole and not
to any particular provision of this Agreement, such Note, such Security
Document or such other Credit Document, as the case may be; and Section,
subsection, Schedule and Exhibit references contained in this Agreement are
references to Sections, subsections, Schedules and Exhibits in or to this
Agreement, unless otherwise specified.
SECTION 2. AMOUNTS AND TERMS OF INITIAL TERM LOAN COMMITMENT
2.1 Initial Term Loan Commitments. Subject to the terms and conditions
of this Agreement, each Initial Term Loan Lender severally agrees to make a
term loan in Dollars (individually, an "Initial Term Loan"; collectively, the
"Initial Term Loans") to the Company on or (to the extent that such amount is
outstanding under the Existing Agreement on the Closing Date) prior to the
Closing Date in an aggregate principal amount at any one time outstanding equal
to such Initial Term Loan Lender's Initial Term Loan Commitment as of such
date. The Initial Term Loans may from time to time be (a) Eurodollar Loans, (b)
Alternate Base Rate Loans or (c) a combination thereof, as determined by the
Company and notified to the Administrative Agent in accordance with subsections
2.3 and 10.8; provided that the Initial Term
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49
Loans shall initially be made as Alternate Base Rate Loans. Amounts borrowed
under this subsection 2.1 and repaid or prepaid may not be reborrowed.
2.2 Obligations of the Company. (a) The Company agrees that each
Initial Term Loan made by each Initial Term Loan Lender pursuant hereto shall
constitute the promise and obligation of the Company to pay to the
Administrative Agent, for the benefit of such Initial Term Loan Lender, at the
office of the Administrative Agent located at 270 Park Avenue, New York, New
York 10017, in lawful money of the United States of America and in immediately
available funds the aggregate unpaid principal amount of the Initial Term Loans
made by such Initial Term Loan Lender pursuant to subsection 2.1, which amounts
shall be due and payable (whether at maturity or by acceleration) as set forth
in this Agreement and, in any event, on the Termination Date.
(b) The Company agrees that each Initial Term Loan Lender is
authorized to record (i) the date and amount of the Initial Term Loan made by
such Initial Term Loan Lender pursuant to subsection 2.1, (ii) the date of each
interest rate conversion pursuant to subsection 10.8 and the principal amount
subject thereto, (iii) the date and amount of each payment or prepayment of
principal of each Initial Term Loan and (iv) in the case of each Eurodollar
Loan, the interest rate and Interest Period, in the books and records of such
Initial Term Loan Lender and in such manner as is reasonable and customary for
such Initial Term Loan Lender and a certificate of an officer of such Initial
Term Loan Lender, setting forth in reasonable detail the information so
recorded, shall constitute prima facie evidence of the accuracy of the
information so recorded; provided that the failure to make any such recording
shall not in any way affect the Payment Obligations of the Company hereunder.
(c) The Company agrees that, upon the request to the Administrative
Agent by any Initial Term Loan Lender at any time, the Initial Term Loan of
such Initial Term Loan Lender shall be evidenced by a promissory note of the
Company, substantially in the form of Exhibit A-1 with appropriate insertions
as to date and principal amount (an "Initial Term Loan Note"), payable to the
order of such Initial Term Loan Lender and representing the obligation of the
Company to pay a principal amount equal to the amount of the Initial Term Loan
Commitment of such Initial Term Loan Lender or, if less, the aggregate unpaid
principal amount of the Initial Term Loan made by such Initial Term Loan
Lender, with interest on the unpaid principal amount thereof from time to time
outstanding under such Initial Term Loan Note as prescribed in subsection 10.6.
Upon the request to the Administrative Agent by any Initial Term Loan Lender at
any time, the Company shall execute and deliver to such Initial Term Loan
Lender two Initial Term Loan Notes, one of which shall evidence the Eurodollar
Loans of such Initial Term Loan Lender, and the other of which shall evidence
the Alternate Base Rate Loans of such Initial Term Loan Lender.
2.3 Procedure for Borrowing Initial Term Loans. (a) The Company may
request a borrowing under the Initial Term Loan Commitments on the Closing Date
(which date shall be a Business Day) by giving irrevocable notice to the
Administrative Agent at least one Business Day prior thereto, which notice
shall specify (i) the aggregate principal amount to be borrowed and (ii) the
requested borrowing date. Upon receipt of any such notice, the Administrative
Agent
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50
will promptly notify each Initial Term Loan Lender thereof. Each Initial Term
Loan Lender will make available to the Administrative Agent in immediately
available funds at the office of the Administrative Agent specified in
subsection 17.3 (or at such other location as the Administrative Agent may
direct), by 1:00 P.M., New York City time, on the Closing Date, the amount (if
any) which is necessary such that the sum of the amount so made available on
the Closing Date and the aggregate principal amount of any Term Loans then
outstanding under (and as defined in) the Existing Agreement is equal to such
Initial Term Loan Lender's Initial Term Loan Commitment. From and after the
Closing Date, such existing Term Loans (as defined in the Existing Agreement)
and the Initial Term Loans (as defined herein) made on the Closing Date all
shall constitute Initial Term Loans (as defined herein) hereunder. The proceeds
of the Initial Term Loans received by the Administrative Agent hereunder on the
Closing Date shall promptly be made available to the Company by the
Administrative Agent's crediting the account of the Company designated to the
Administrative Agent with the aggregate amount actually received by the
Administrative Agent from the Initial Term Loan Lenders and in like funds as
received by the Administrative Agent.
(b) The failure of any Initial Term Loan Lender to make the Initial
Term Loan to be made by it on the Closing Date shall not relieve any other
Initial Term Loan Lender of its obligation hereunder to make its Initial Term
Loan on the Closing Date, but no Initial Term Loan Lender shall be responsible
for the failure of any other Initial Term Loan Lender to make the Initial Term
Loan to be made by such other Initial Term Loan Lender on the Closing Date.
2.4 Amortization of Initial Term Loans. (a) On May 31 of each year
(commencing with May 31, 1998), the Company shall repay $575,000 in principal
amount of the Initial Term Loans.
(b) Any Initial Term Loans then outstanding shall be repaid in full
(together with accrued interest and other amounts owing on account thereof) on
the Termination Date.
2.5 Use of Proceeds of Initial Term Loans. The proceeds of the Initial
Term Loans hereunder shall be used by the Company for the purpose of
refinancing certain outstanding Indebtedness of the Company and its
Subsidiaries under the Existing Agreement, repurchasing or redeeming the
Sinking Fund Debentures and for general corporate purposes of the Company and
its Subsidiaries (other than the financing of Investments).
SECTION 3. AMOUNTS AND TERMS OF DEFERRED DRAW TERM LOAN COMMITMENT
3.1 Deferred Draw Term Loan Commitments. Subject to the terms and
conditions of this Agreement, each Deferred Draw Term Loan Lender severally
agrees to make a term loan in Dollars (individually, a "Deferred Draw Term
Loan"; collectively, the "Deferred Draw Term Loans") to the Company from time
to time during the Deferred Draw Term Loan Commitment Period in an aggregate
principal amount at any one time outstanding equal to such
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51
Deferred Draw Term Loan Lender's Deferred Draw Term Loan Commitment as of such
date. Amounts borrowed under this subsection 3.1 and repaid or prepaid may not
be reborrowed.
3.2 Obligations of the Company. (a) The Company agrees that each
Deferred Draw Term Loan made by each Deferred Draw Term Loan Lender pursuant
hereto shall constitute the promise and obligation of the Company to pay to the
Administrative Agent, for the benefit of such Deferred Draw Term Loan Lender,
at the office of the Administrative Agent located at 270 Park Avenue, New York,
New York 10017, in lawful money of the United States of America and in
immediately available funds the aggregate unpaid principal amount of the
Deferred Draw Term Loans made by such Deferred Draw Term Loan Lender pursuant
to subsection 3.1, which amounts shall be due and payable (whether at maturity
or by acceleration) as set forth in this Agreement and, in any event, on the
Termination Date.
(b) The Company agrees that each Deferred Draw Term Loan Lender is
authorized to record (i) the date and amount of the Deferred Draw Term Loan
made by such Deferred Draw Term Loan Lender pursuant to subsection 3.1, (ii)
the date of each interest rate conversion pursuant to subsection 10.8 and the
principal amount subject thereto, (iii) the date and amount of each payment or
prepayment of principal of each Deferred Draw Term Loan and (iv) in the case of
each Eurodollar Loan, the interest rate and Interest Period, in the books and
records of such Deferred Draw Term Loan Lender and in such manner as is
reasonable and customary for such Deferred Draw Term Loan Lender and a
certificate of an officer of such Deferred Draw Term Loan Lender, setting forth
in reasonable detail the information so recorded, shall constitute prima facie
evidence of the accuracy of the information so recorded; provided that the
failure to make any such recording shall not in any way affect the Payment
Obligations of the Company hereunder.
(c) The Company agrees that, upon the request to the Administrative
Agent by any Deferred Draw Term Loan Lender at any time, the Deferred Draw Term
Loan of such Deferred Draw Term Loan Lender shall be evidenced by a promissory
note of the Company, substantially in the form of Exhibit A-2 with appropriate
insertions as to date and principal amount (a "Deferred Draw Term Loan Note"),
payable to the order of such Deferred Draw Term Loan Lender and representing
the obligation of the Company to pay a principal amount equal to the amount of
the Deferred Draw Term Loan Commitment of such Deferred Draw Term Loan Lender
or, if less, the aggregate unpaid principal amount of the Deferred Draw Term
Loan made by such Deferred Draw Term Loan Lender, with interest on the unpaid
principal amount thereof from time to time outstanding under such Deferred Draw
Term Loan Note as prescribed in subsection 10.6. Upon the request to the
Administrative Agent by any Deferred Draw Term Loan Lender at any time, the
Company shall execute and deliver to such Deferred Draw Term Loan Lender two
Deferred Draw Term Loan Notes, one of which shall evidence the Eurodollar Loans
of such Deferred Draw Term Loan Lender, and the other of which shall evidence
the Alternate Base Rate Loans of such Deferred Draw Term Loan Lender.
3.3 Procedure for Borrowing Deferred Draw Term Loans. (a) The Company
may request a borrowing of Deferred Draw Term Loans during the Deferred Draw
Term Loan Commitment Period on any Working Day, if the Deferred Draw Term Loans
to be borrowed are
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52
Eurodollar Loans, or on any Business Day, if the Deferred Draw Term Loans to be
borrowed are Alternate Base Rate Loans, by giving irrevocable notice to the
Administrative Agent, specifying (i) the aggregate principal amount to be
borrowed, (ii) the requested borrowing date, (iii) whether the Deferred Draw
Term Loans to be borrowed are to be Eurodollar Loans or Alternate Base Rate
Loans or a combination thereof and, if a combination, the respective aggregate
amount of each type of borrowing and (iv) if the Deferred Draw Term Loans to be
borrowed are Eurodollar Loans, the length of the Interest Period or Interest
Periods applicable thereto; provided that any Deferred Draw Term Loans to be
made to the Company on the Closing Date shall be made as Alternate Base Rate
Loans. Any such notice of borrowing must be received by the Administrative
Agent prior to 11:00 A.M., New York City time, three Working Days prior to the
requested borrowing date, in the case of Eurodollar Loans, and one Business Day
prior to the requested borrowing date, in the case of Alternate Base Rate
Loans. Each borrowing of Deferred Draw Term Loans shall, subject to subsection
10.8(h), be in an aggregate principal amount equal to (x) $10,000,000 or a
whole multiple of $1,000,000 in excess thereof (in the case of Eurodollar
Loans) or (y) the lesser of $5,000,000 or a whole multiple of $1,000,000 in
excess thereof (in the case of Alternate Base Rate Loans). Upon receipt of any
such notice, the Administrative Agent will promptly notify each Deferred Draw
Term Loan Lender thereof. Each Deferred Draw Term Loan Lender will make
available to the Administrative Agent at the office of the Administrative Agent
specified in subsection 16.3 (or at such other location as the Administrative
Agent may direct), by 1:00 P.M., New York City time, on the requested borrowing
date, an amount equal to the Deferred Draw Term Loan Commitment Percentage of
such Deferred Draw Term Loan Lender times the aggregate principal amount of the
Deferred Draw Term Loans requested to be borrowed, in funds immediately
available to the Administrative Agent. The proceeds of such Deferred Draw Term
Loans received by the Administrative Agent hereunder shall promptly be made
available to the Company by the Administrative Agent's crediting the account of
the Company designated to the Administrative Agent with the aggregate amount
actually received by the Administrative Agent from the Deferred Draw Term Loan
Lenders and in like funds as received by the Administrative Agent.
(b) The failure of any Deferred Draw Term Loan Lender to make the
Deferred Draw Term Loan to be made by it on any requested borrowing date shall
not relieve any other Deferred Draw Term Loan Lender of its obligation
hereunder to make its Deferred Draw Term Loan on such requested borrowing date,
but no Deferred Draw Term Loan Lender shall be responsible for the failure of
any other Deferred Draw Term Loan Lender to make the Deferred Draw Term Loan to
be made by such other Deferred Draw Term Loan Lender on such requested
borrowing date.
3.4 Amortization of Deferred Draw Term Loans. (a) On May 31 of each
year (commencing with May 31, 1998), the Company shall repay $425,000 in
principal amount of the Deferred Draw Term Loans.
(b) Any Deferred Draw Term Loans then outstanding shall be repaid in
full (together with accrued interest and other amounts owing on account
thereof) on the Termination Date.
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53
3.5 Use of Proceeds of Deferred Draw Term Loans. The proceeds of the
Deferred Draw Term Loans hereunder shall be used by the Company for the purpose
of refinancing certain outstanding Indebtedness of the Company and its
Subsidiaries under the Existing Agreement, repurchasing or redeeming the
Sinking Fund Debentures and for general corporate purposes of the Company and
its Subsidiaries (other than the financing of Investments).
SECTION 4. AMOUNT AND TERMS OF SPECIAL LETTER OF CREDIT FACILITY
4.1 Special Letter of Credit Facility. (a) Subject to the terms and
conditions hereof, each Issuing Lender, in reliance upon the representations
and warranties contained herein and in the other Credit Documents and upon the
agreements of the other Special L/C Lenders set forth in subsections 4.3(a) and
(b), agrees to issue any letter of credit ("Special Letters of Credit")
requested to be issued by it and so issued by it for the account of the Company
on any Business Day during the Commitment Period in such form as may be
approved from time to time by such Issuing Lender; provided that such Issuing
Lender shall have no obligation to issue such Special Letter of Credit if,
after giving effect to such issuance, the Special L/C Obligations would exceed
the Aggregate Special L/C Commitment. Each Special Letter of Credit shall (i)
be denominated in Dollars, (ii) be a standby letter of credit issued to support
a Permitted Special L/C Obligation and (iii) expire no later than one year from
the date of issue; provided that the Undrawn Special L/C Obligations in respect
of each Special Letter of Credit which expires after the last day of the
Commitment Period shall be Fully Secured from and after such day.
(b) Each Special Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the State of
New York.
(c) No Issuing Lender shall at any time be obligated to issue any
Special Letter of Credit hereunder to the extent that such issuance would
conflict with, or cause such Issuing Lender or any Special L/C Participant to
exceed any limits imposed by, any applicable Requirement of Law.
4.2 Procedure for Issuance of Special Letters of Credit. The Company
may from time to time request that the Administrative Agent designate an
Issuing Lender with respect to any Special Letter of Credit which the Company
seeks to have issued. In the event that the Administrative Agent is able to
designate an Issuing Lender with respect to such Special Letter of Credit, the
Company shall request that such Issuing Lender issue a Special Letter of Credit
by delivering to such Issuing Lender at its address for notices specified
herein an Application therefor, completed to the satisfaction of such Issuing
Lender, and such other certificates, documents and other papers and information
as such Issuing Lender reasonably may request. Upon receipt of any Application,
such Issuing Lender will process such Application and the certificates,
documents and other papers and information delivered to it in connection
therewith in accordance with its customary procedures and shall promptly issue
the Special Letter of Credit requested thereby (but in no event shall such
Issuing Lender be required to issue any Special
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Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such
Special Letter of Credit to the beneficiary thereof or as otherwise may be
agreed by such Issuing Lender and the Company. Such Issuing Lender shall notify
the Administrative Agent (who shall promptly forward such notice to the Special
L/C Participants) promptly following the request for and following the issuance
of the Special Letter of Credit and furnish a copy of such Special Letter of
Credit to the Company and to the Administrative Agent promptly following the
issuance thereof.
4.3 Special L/C Participations. (a) The Issuing Lender with respect to
each Special Letter of Credit irrevocably agrees to grant and hereby grants to
each Special L/C Participant, and, to induce such Issuing Lender to issue
Special Letters of Credit hereunder, each Special L/C Participant irrevocably
agrees to accept and purchase, and hereby accepts and purchases, from such
Issuing Lender, on the terms and conditions hereinafter stated, for such
Special L/C Participant's own account and risk an undivided interest equal to
such Special L/C Participant's Special L/C Commitment Percentage in such
Issuing Lender's obligations and rights under each Special Letter of Credit
issued hereunder and the amount of each draft paid by such Issuing Lender
thereunder. Each Special L/C Participant unconditionally and irrevocably agrees
with such Issuing Lender that, if a draft is paid under any Special Letter of
Credit issued by it for which such Issuing Lender is not reimbursed in full by
the Company in accordance with the terms of this Agreement, such Special L/C
Participant shall pay to such Issuing Lender upon demand at such Issuing
Lender's address for notices specified herein an amount equal to such Special
L/C Participant's Special L/C Commitment Percentage of the amount of such
draft, or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any Special L/C Participant
to an Issuing Lender pursuant to subsection 4.3(a) in respect of any
unreimbursed portion of any payment made by such Issuing Lender under any
Special Letter of Credit issued by it is paid to such Issuing Lender within
three Business Days after the date such payment is due, such Special L/C
Participant shall pay to such Issuing Lender on demand an amount equal to the
product of (i) such amount, times (ii) the daily average Federal funds rate, as
quoted by such Issuing Lender, during the period from and including the date
such payment is required to the date on which such payment is immediately
available to such Issuing Lender, times (iii) a fraction the numerator of which
is the number of days that elapse during such period and the denominator of
which is 360. If any such amount required to be paid by any Special L/C
Participant pursuant to subsection 4.3(a) is not in fact made available to such
Issuing Lender by such Special L/C Participant within three Business Days after
the date such payment is due, such Issuing Lender shall be entitled to recover
from such Special L/C Participant, on demand, such amount with interest thereon
calculated from such due date at the rate per annum applicable to Alternate
Base Rate Loans hereunder. A certificate of the relevant Issuing Lender
submitted to any Special L/C Participant with respect to any amounts owing
under this subsection 4.3(b) shall be conclusive in the absence of manifest
error.
(c) Whenever, at any time after any Issuing Lender has made payment
under any Special Letter of Credit issued by it and has received from any
Special L/C Participant its pro
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55
rata share of such payment in accordance with subsection 4.3(a), such Issuing
Lender receives any payment related to such Special Letter of Credit (whether
directly from the Company or otherwise, including proceeds of collateral
applied thereto by such Issuing Lender), or any payment of interest on account
thereof, such Issuing Lender promptly will distribute to such Special L/C
Participant its pro rata share thereof; provided, however, that in the event
that any such payment received by such Issuing Lender shall be required to be
returned by such Issuing Lender, such Special L/C Participant shall return to
such Issuing Lender the portion thereof previously distributed by such Issuing
Lender to it.
(d) Notwithstanding anything to the contrary contained in this
subsection 4.3, the failure of any Special L/C Participant to make any payment
due by it under this subsection 4.3 in a timely manner shall not relieve any
other Special L/C Participant of its obligation hereunder to make its own
payment in a timely manner, but no Special L/C Participant shall be responsible
for the failure of any other Special L/C Participant to make any payment
pursuant to this subsection 4.3 owing by such other Special L/C Participant on
any date.
4.4 Reimbursement Obligation of the Company. The Company agrees to
reimburse each Issuing Lender on each date on which such Issuing Lender
notifies the Company of the date and amount of a draft presented under any
Special Letter of Credit issued and paid by such Issuing Lender for the amount
of (a) such draft so paid and (b) any taxes, fees, charges or other costs or
expenses incurred by such Issuing Lender in connection with such payment. Each
such payment shall be made to the relevant Issuing Lender at its address for
notices specified herein in lawful money of the United States of America and in
immediately available funds. Interest shall be payable on any and all amounts
remaining unpaid by the Company under this subsection 4.4 from the date such
amounts become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the rate which would be payable on any
outstanding Alternate Base Rate Loans which were then overdue.
4.5 Obligations Absolute. The Company's obligations under this Section
4 shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which the
Company may have or have had against the relevant Issuing Lender, any
beneficiary of a Special Letter of Credit, any Lender or any other Person. The
Company also agrees with each Issuing Lender with respect to a Special Letter
of Credit that such Issuing Lender shall not be responsible for, and the
Company's Special L/C Reimbursement Obligations under subsection 4.4 shall not
be affected by, among other things, the validity or genuineness of documents or
of any endorsements thereon, even though such documents shall in fact prove to
be invalid, fraudulent or forged, or any dispute between or among the Company
and any beneficiary of any Special Letter of Credit or any other party to which
such Special Letter of Credit may be transferred or any claims whatsoever of
the Company against any beneficiary of such Special Letter of Credit or any
such transferee. No Issuing Lender shall be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Special Letter of Credit
issued by it, except for errors or omissions caused by such Issuing Lender's
gross negligence or willful misconduct. The Company agrees that any action
taken or omitted by any Issuing Lender under or in connection with any Special
Letter of Credit issued by such Issuing
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56
Lender or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards of care
specified in the Uniform Commercial Code of the State of New York, shall be
binding on the Company and shall not result in any liability of such Issuing
Lender to the Company.
4.6 Special Letter of Credit Payments. If any draft shall be presented
for payment under any Special Letter of Credit, the Issuing Lender in respect
of such Special Letter of Credit shall promptly notify the Company of the date
and amount thereof. The responsibility of such Issuing Lender to the Company in
connection with any draft presented for payment under any Special Letter of
Credit issued by it shall, in addition to any payment obligation expressly
provided for in such Special Letter of Credit, be limited to determining that
the documents (including each draft) delivered under such Special Letter of
Credit in connection with such presentment are in conformity with such Special
Letter of Credit.
4.7 Application. To the extent that any provision of any Application
related to any Special Letter of Credit is inconsistent with the provisions of
this Section 4, the provisions of this Section 4 shall apply.
4.8 Cash Collateral for Special Letters of Credit. (a) (i) If the
Special L/C Lenders holding the majority of the Aggregate Special L/C
Commitment shall so request at any time and from time to time when an Event of
Default has occurred and is continuing or (ii) at any time and from time to
time when the Required Lenders so request, the Company shall promptly deposit
in a cash collateral account opened and maintained by the Administrative Agent
(which cash collateral account shall be separate from that which is opened and
maintained pursuant to subsection 7.8) an amount at least equal to the
aggregate amount of all Undrawn Special L/C Obligations.
(b) The Company hereby grants to the Administrative Agent, for the
ratable benefit of the Special L/C Lenders, as collateral security for the
payment in full of all Payment Obligations of the Company on account of Special
Letters of Credit owing to the Special L/C Lenders, a security interest in all
amounts from time to time held in the cash collateral account maintained
pursuant to paragraph (a) above. Amounts held therein shall at all times be
under the sole dominion and control of the Administrative Agent and the
Administrative Agent shall at all times have the exclusive right of withdrawal
with respect thereto; provided that the Administrative Agent hereby agrees that
it shall withdraw amounts from such cash collateral account only in accordance
with the provisions of clauses (c) and (d) below.
(c) Amounts held in the cash collateral account maintained pursuant to
paragraph (a) above shall be applied by the Administrative Agent to the payment
of unreimbursed Special L/C Reimbursement Obligations, with the unused portion
thereof (if any) after all such Special Letters of Credit shall have expired or
been fully drawn upon and reimbursed (i) during such time as an Event of
Default has occurred and is continuing, being applied to pay other Payment
Obligations of the Company on account of amounts outstanding under the
Aggregate Initial Term Loan Commitment, the Aggregate Deferred Draw Term Loan
Commitment, the Aggregate Multi-Currency Commitment, the Aggregate Acquisition
Loan Commitment and the Aggregate
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Special L/C Commitment and (ii) otherwise, being returned to the Company in
accordance with the provisions of subsection 4.8(d).
(d) Without diminishing the sole dominion and control of the
Administrative Agent over amounts from time to time on deposit in the cash
collateral account maintained pursuant to clause (a) above, the Administrative
Agent shall from time to time return to the Company amounts on deposit in such
cash collateral account as follows:
(i) after all outstanding Special Letters of Credit shall have expired
or been fully drawn upon and reimbursed, the Administrative Agent shall
return to the Company all amounts on deposit in such cash collateral
account; provided that no Default or Event of Default has occurred and is
then continuing;
(ii) to the extent that the amounts on deposit exceed the amount of
Special L/C Obligations then outstanding, the Administrative Agent shall
return to the Company such excess amounts which are on deposit in such cash
collateral account; provided that no Default or Event of Default has
occurred and is then continuing;
(iii) after all Payment Obligations of the Company have been Fully
Satisfied, the Administrative Agent shall return to the Company all amounts
then on deposit in such cash collateral account which are in excess of the
amount necessary to cause the Payment Obligations then outstanding to be
Fully Satisfied; and
(iv) to the extent required pursuant to subsection 10.3(a).
4.9 Existing Special Letters of Credit. Notwithstanding anything to
the contrary contained in this Agreement or any Security Document, each of the
letters of credit described on Schedule IX as a "Special Letter of Credit"
shall, from and after the Closing Date, be deemed to have been issued pursuant
to subsection 4.1(a) of this Agreement, with the Special L/C Lender set forth
in said Schedule IX as the issuing bank for each such existing letter of credit
being deemed to be the Issuing Lender in respect of such Special Letter of
Credit hereunder and with each other Special L/C Lender being deemed to be a
Special L/C Participant with respect to such Special Letter of Credit for
purposes of this Agreement and the Security Documents. The Company shall pay to
the Administrative Agent, for the accounts of the relevant Issuing Lender and
Special L/C Participants, the fees and commissions described in subsection 10.7
with respect to each such Special Letter of Credit. The Company hereby
represents and warrants that each letter of credit described on Schedule IX as
a "Special Letter of Credit" supports a Permitted Special L/C Obligation.
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SECTION 5. AMOUNT AND TERMS OF REVOLVING CREDIT SUB-FACILITY
5.1 Revolving Credit Commitments. (a) Subject to the terms and
conditions of this Agreement, each Multi-Currency Lender severally agrees to
make loans in Dollars to the Company (individually, a "Revolving Credit Loan";
collectively, the "Revolving Credit Loans") under the Aggregate Multi-Currency
Commitment from time to time during the Commitment Period in an aggregate
principal amount at any one time outstanding not to exceed such Multi-Currency
Lender's Multi-Currency Commitment Percentage of the amount equal to the
Aggregate Multi-Currency Commitment; provided that at no time (after giving
effect to the making of such Revolving Credit Loans and the use of the proceeds
thereof) may (i) the sum of the Aggregate Outstanding Multi-Currency Extensions
of Credit exceed the Aggregate Multi-Currency Commitment or (ii) the Available
Multi-Currency Commitment be less than zero. During the Commitment Period, the
Company may use the Aggregate Multi-Currency Commitment by borrowing Revolving
Credit Loans, repaying the Revolving Credit Loans in whole or in part and
reborrowing, all in accordance with the terms and conditions hereof.
5.2 Obligations of Company. (a) The Company hereby agrees that each
Revolving Credit Loan made by each Multi-Currency Lender to the Company
pursuant hereto shall constitute the promise and obligation of the Company to
pay to such Multi-Currency Lender, at the office of the Administrative Agent
listed in subsection 17.3, in Dollars and in immediately available funds, the
aggregate unpaid principal amount of all Revolving Credit Loans made by such
Multi-Currency Lender pursuant to subsection 5.1, which amounts shall be due
and payable (whether at maturity or by acceleration) as set forth in this
Agreement and, in any event, on the Termination Date.
(b) The Company hereby agrees that each Multi-Currency Lender is
authorized to record (i) the date and amount of each Revolving Credit Loan made
by such Multi-Currency Lender pursuant to subsection 5.1, (ii) the date of each
interest rate conversion pursuant to subsection 10.8 which is applicable to
such Revolving Credit Loan and the principal amount subject thereto, (iii) the
date and amount of each payment or prepayment of principal of each Revolving
Credit Loan made by the Company to such Multi-Currency Lender and (iv) in the
case of each Revolving Credit Loan which bears interest at a rate based upon
the Eurodollar Rate, the interest rate and Interest Period, in the books and
records of such Multi-Currency Lender and in such manner as is reasonable and
customary for it and a certificate of an officer of such Multi-Currency Lender,
setting forth in reasonable detail the information so recorded, shall
constitute prima facie evidence of the accuracy of the information so recorded;
provided that the failure to make any such recording shall not in any way
affect the Payment Obligations of the Company hereunder.
(c) The Company agrees that, upon the request to the Administrative
Agent by any Multi-Currency Lender at any time, the Revolving Credit Loans of
such Multi-Currency Lender shall be evidenced by a promissory note of the
Company, substantially in the form of Exhibit B with appropriate insertions as
to date and principal amount (a "Revolving Credit Note"), payable to the order
of such Multi-Currency Lender and representing the obligation of
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the Company to pay a principal amount equal to the amount of the Aggregate
Multi-Currency Commitment of such Multi-Currency Lender or, if less, the
aggregate unpaid principal amounts of the Revolving Credit Loans made by such
Multi-Currency Lender, with interest on the unpaid principal amount thereof
from time to time outstanding under such Revolving Credit Note as prescribed in
subsection 10.6. Upon the request to the Administrative Agent by any Multi-
Currency Lender at any time, the Company shall execute and deliver to such
Multi-Currency Lender two Revolving Credit Notes, one of which shall evidence
the Eurodollar Loans of such Multi-Currency Lender, and the other of which
shall evidence the Alternate Base Rate Loans of such Multi-Currency Lender.
5.3 Procedure for Borrowing Revolving Credit Loans. (a) The Company
may request a borrowing of Revolving Credit Loans during the Commitment Period
on any Working Day, if the Revolving Credit Loans to be borrowed are Eurodollar
Loans, or on any Business Day, if the Revolving Credit Loans to be borrowed are
Alternate Base Rate Loans, by giving irrevocable notice to the Administrative
Agent, specifying (i) the aggregate principal amount to be borrowed, (ii) the
requested borrowing date, (iii) whether the Revolving Credit Loans to be
borrowed are to be Eurodollar Loans or Alternate Base Rate Loans or a
combination thereof and, if a combination, the respective aggregate amount of
each type of borrowing and (iv) if the Revolving Credit Loans to be borrowed
are Eurodollar Loans, the length of the Interest Period or Interest Periods
applicable thereto; provided that any Revolving Credit Loans to be made to the
Company on the Closing Date shall be made as Alternate Base Rate Loans. Any
such notice of borrowing must be received by the Administrative Agent prior to
11:00 A.M., New York City time, three Working Days prior to the requested
borrowing date, in the case of Eurodollar Loans, and one Business Day prior to
the requested borrowing date, in the case of Alternate Base Rate Loans. Each
borrowing of Revolving Credit Loans shall, subject to subsection 10.8(h), be in
an aggregate principal amount equal to (x) $10,000,000 or a whole multiple of
$1,000,000 in excess thereof (in the case of Eurodollar Loans) or (y) the
lesser of $5,000,000 (or, if less, the maximum amount which is then available
to the Company pursuant to subsection 5.1(a)) or a whole multiple of $1,000,000
in excess thereof (in the case of Alternate Base Rate Loans). Upon receipt of
any such notice, the Administrative Agent will promptly notify each
Multi-Currency Lender thereof. Each Multi-Currency Lender will make available
to the Administrative Agent at the office of the Administrative Agent specified
in subsection 17.3 (or at such other location as the Administrative Agent may
direct), by 1:00 P.M., New York City time, on the requested borrowing date, an
amount equal to the Multi-Currency Commitment Percentage of such Multi-
Currency Lender times the aggregate principal amount of the Revolving Credit
Loans requested to be borrowed in Dollars, in funds immediately available to
the Administrative Agent. The proceeds of such Revolving Credit Loans received
by the Administrative Agent hereunder shall promptly be made available to the
Company by the Administrative Agent's crediting the account of the Company
designated to the Administrative Agent with the aggregate amount actually
received by the Administrative Agent from the Multi-Currency Lenders and in
like funds as received by the Administrative Agent.
(b) The failure of any Multi-Currency Lender to make the Revolving
Credit Loan to be made by it on any requested borrowing date shall not relieve
any other Multi-Currency Lender of its obligation hereunder to make its
Revolving Credit Loan on such borrowing date,
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but no Multi-Currency Lender shall be responsible for the failure of any other
Multi-Currency Lender to make the Revolving Credit Loan to be made by such
other Multi-Currency Lender on such borrowing date.
5.4 Use of Proceeds of Revolving Credit Loans. The proceeds of the
Revolving Credit Loans hereunder shall be used for the purpose of refinancing
certain outstanding Indebtedness of the Company and its Subsidiaries under the
Existing Agreement, repurchasing or redeeming the Sinking Fund Debentures and
for general corporate purposes (other than to finance Investments with respect
to which the Investment Consideration is more than $5,000,000 in the
aggregate).
5.5 Refunded Revolving Credit Loans. (a) At any time and from time to
time when the aggregate principal amount (net of amounts previously refunded
under this subsection 5.5) of Revolving Credit Loans and Swing Line Loans which
have been used to finance Investments is more than $5,000,000, the
Administrative Agent shall (on behalf of the Company) request a borrowing of
Syndicated Acquisition Loans (which shall be made as Alternate Base Rate Loans)
from the Acquisition Direct Lenders under the Aggregate Acquisition Loan
Commitment in the amount of such Revolving Credit Loans and Swing Line Loans
(the "Refunded Revolving Credit Loan") outstanding on the date such notice is
given.
(b) Unless any of the events described in paragraph (m) of Section 15
shall have occurred (in which event the procedures of clause (c) of this
subsection 5.5 shall apply) each Acquisition Direct Lender shall make the
proceeds of its Syndicated Acquisition Loan available to Administrative Agent,
for the accounts of the Revolving Credit Lenders and the Swing Line Lender (as
the case may be), at the office of the Administrative Agent specified in
subsection 17.3 prior to 11:00 A.M. (New York City time) in funds immediately
available on the Business Day next succeeding the date such notice is given.
The proceeds of such Syndicated Acquisition Loans shall be immediately applied
to repay the Refunded Revolving Credit Loan.
(c) If, prior to the making of a Syndicated Acquisition Loan pursuant
to clause (b) above, one of the events described in paragraph (m) of Section 15
shall have occurred, each Acquisition Direct Lender will, on the date such
Syndicated Acquisition Loan was to have been made, purchase an undivided
participating interest in the Refunded Revolving Credit Loan in an amount equal
to its Acquisition Loan Commitment Percentage of such Refunded Revolving Credit
Loan. Each Acquisition Direct Lender will immediately transfer to the
Administrative Agent (for the accounts of the Revolving Credit Lenders or the
Swing Line Lender, as the case may be), in immediately available funds, the
amount of its participation and upon receipt thereof the Administrative Agent
will (on behalf of the Swing Line Lender or the relevant Revolving Credit
Lenders, as the case may be) deliver to such Acquisition Direct Lender a
Refunded Revolving Credit Loan Participation Certificate dated the date of
receipt of such funds and in such amount. Whenever, at any time after the
Administrative Agent has received from any Acquisition Direct Lender such
Acquisition Direct Lender's participating interest in a Refunded Revolving
Credit Loan pursuant to this clause (c), the Administrative Agent receives any
payment on account thereof, the Administrative Agent will distribute to such
Acquisition Direct Lender its participating interest in such amount
(appropriately adjusted, in the case of interest
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payments, to reflect the period of time during which such Acquisition Direct
Lender's participating interest was outstanding and funded) in like funds as
received; provided, however, that in the event that such payment received by
the Administrative Agent is required to be returned, such Acquisition Direct
Lender will return to the Administrative Agent any portion thereof previously
distributed by the Administrative Agent to it in like funds as such payment is
required to be returned by the Administrative Agent.
SECTION 6. AMOUNT AND TERMS OF SWING LINE SUB-FACILITY
6.1 Swing Line Commitments. (a) Subject to the terms and conditions
hereof, the Swing Line Lender agrees to make swing line loans (individually, a
"Swing Line Loan"; collectively, the "Swing Line Loans") to the Company under
the Aggregate Multi-Currency Commitment from time to time during the Commitment
Period in an aggregate principal amount at any one time outstanding not to
exceed $30,000,000, provided that at no time (after giving effect to the making
of such Swing Line Loan and the use of the proceeds thereof) may (i) the sum of
the Aggregate Outstanding Multi-Currency Extensions of Credit exceed the
Aggregate Multi-Currency Commitment or (ii) the Available Multi-Currency
Commitment be less than zero. Amounts borrowed by the Company under this
subsection 6.1 may be repaid and, up to but excluding the last day of the
Commitment Period, reborrowed. All Swing Line Loans shall be made as Alternate
Base Rate Loans and shall not be entitled to be converted into Eurodollar
Loans. The Company shall give the Swing Line Lender irrevocable notice (which
notice must be received by the Swing Line Lender prior to 11:00 A.M., New York
City time) on the requested borrowing date specifying the amount of each
requested Swing Line Loan, which shall be in a minimum amount of $500,000 or a
whole multiple of $100,000 in excess thereof. The proceeds of each Swing Line
Loan will be made available by the Swing Line Lender to the Company by
crediting the account of the Company designated to the Swing Line Lender with
such proceeds.
(b) The Swing Line Loans shall be evidenced by a promissory note of
the Company substantially in the form of Exhibit C, with appropriate insertions
(the "Swing Line Note"), payable to the order of the Swing Line Lender and
representing the obligation of the Company to pay the aggregate unpaid
principal amount of the Swing Line Loans, with interest thereon as prescribed
in subsection 10.6. The Swing Line Lender is hereby authorized to record the
borrowing date, the amount of each Swing Line Loan and the date and amount of
each payment or prepayment of principal thereof, on the schedule annexed to and
constituting a part of the Swing Line Note and, in the absence of manifest
error, any such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded, provided that the failure of the Swing
Line Lender to make such recordation (or any error in such recordation) shall
not affect the Payment Obligations of the Company hereunder or under such Note.
The Swing Line Note shall (a) be dated the Closing Date, (b) be stated to
mature on the Termination Date and (c) bear interest for the period from the
Closing Date on the unpaid principal amount thereof from time to time
outstanding at the applicable interest rate per annum determined as provided
in, and payable as specified in, subsection 10.6.
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(c) The Swing Line Lender, at any time in its sole and absolute
discretion, may, and at any time as there shall be $25,000,000 in aggregate
principal amount of Swing Line Loans outstanding shall, on behalf of the
Company (which hereby irrevocably directs the Swing Line Lender to act on its
behalf) request each Multi-Currency Lender, including Chase, to make a
Revolving Credit Loan in an amount equal to such Multi-Currency Lender's
Multi-Currency Commitment Percentage of the amount of the Swing Line Loans (the
"Refunded Swing Line Loans") outstanding on the date such notice is given.
Unless any of the events described in paragraph (m) of Section 15 shall have
occurred (in which event the procedures of paragraph (d) of this subsection 6.1
shall apply) each Multi-Currency Lender shall make the proceeds of its
Revolving Credit Loan available to the Swing Line Lender for its own account at
the office specified for Chase in subsection 17.3 prior to 11:00 A.M. (New York
City time) in funds immediately available on the Business Day next succeeding
the date such notice is given. The proceeds of such Revolving Credit Loans
shall be immediately applied to repay the Refunded Swing Line Loans.
(d) If, prior to the making of a Revolving Credit Loan pursuant to
paragraph (c) of subsection 6.1, one of the events described in paragraph (m)
of Section 15 shall have occurred, each Multi-Currency Lender will, on the date
such Revolving Credit Loan was to have been made, purchase an undivided
participating interest in the Refunded Swing Line Loan in an amount equal to
its Multi-Currency Commitment Percentage of such Refunded Swing Line Loan. Each
Multi-Currency Lender will immediately transfer to the Swing Line Lender, in
immediately available funds, the amount of its participation and upon receipt
thereof the Swing Line Lender will deliver to such Multi-Currency Lender a
Swing Line Loan Participation Certificate dated the date of receipt of such
funds and in such amount.
(e) Whenever, at any time after the Swing Line Lender has received
from any Multi-Currency Lender such Multi-Currency Lender's participating
interest in a Refunded Swing Line Loan pursuant to clause (d) above, the Swing
Line Lender receives any payment on account thereof, the Swing Line Lender will
distribute to such Multi-Currency Lender its participating interest in such
amount (appropriately adjusted, in the case of interest payments, to reflect
the period of time during which such Multi-Currency Lender's participating
interest was outstanding and funded) in like funds as received; provided,
however, that in the event that such payment received by the Swing Line Lender
is required to be returned, such Multi-Currency Lender will return to the Swing
Line Lender any portion thereof previously distributed by the Swing Line Lender
to it in like funds as such payment is required to be returned by the Swing
Line Lender.
(f) Notwithstanding the foregoing, no Multi-Currency Lender shall be
required to make such a Revolving Credit Loan to the Company for the purpose of
refunding a Swing Line Loan pursuant to clause (c) above or to purchase a
participating interest in a Swing Line Loan pursuant to clause (d) above if,
prior to the making by the Swing Line Lender of such Swing Line Loan, the Swing
Line Lender has received written notice from such Multi-Currency Lender
specifying that such Multi-Currency Lender believes in good faith that a
Default or Event of Default has occurred and is continuing, describing the
nature of such Default or Event of Default and stating that, as a result
thereof, such Multi-Currency Lender shall cease to make such Revolving Credit
Loans or purchase such participating interests, as the case may be; provided
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that the obligation of such Multi-Currency Lender to make such Revolving Credit
Loans and to purchase such participating interests shall be reinstated upon the
earlier to occur of (i) the date upon which such Multi-Currency Lender notifies
the Swing Line Lender that its prior notice has been withdrawn and (ii) the
date upon which the Default or Event of Default specified in such notice no
longer is continuing (it being understood that, in the event that such Default
or Event of Default was not continuing at the time that the Swing Line Lender
received such notice, such Multi-Currency Lender shall be obligated to make its
Revolving Credit Loan or purchase its participating interest in such Swing Line
Loan promptly upon discovery that its good faith belief was erroneous).
6.2 Participations. Each Multi-Currency Lender's obligation to
purchase participating interests pursuant to paragraph (d) of subsection 6.1
shall (except to the extent expressly set forth in subsection 6.1(f)) be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (a) any set-off, counterclaim, recoupment,
defense or other right which such Multi-Currency Lender may have against the
Swing Line Lender, the Company or any other Person for any reason whatsoever;
(b) the occurrence or continuance of an Event of Default; (c) any adverse
change in the condition (financial or otherwise) of the Company or any other
Person; (d) any breach of this Agreement by the Company or any other
Multi-Currency Lender; or (e) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
6.3 Use of Proceeds of Swing Line Loans. The proceeds of the Swing
Line Loans hereunder shall be used by the Company for any purpose for which the
proceeds of Revolving Credit Loans may be used.
SECTION 7. AMOUNT AND TERMS OF OPERATING LETTER OF CREDIT
SUB-FACILITY
7.1 Operating Letter of Credit Facility. (a) Subject to the terms and
conditions hereof, each Issuing Lender, in reliance upon the representations
and warranties contained herein and in the other Credit Documents and upon the
agreements of the other Multi-Currency Lenders set forth in subsections 7.3(a)
and (b), agrees to issue under the Aggregate Multi-Currency Commitment any
letter of credit (each, an "Operating Letter of Credit") requested to be issued
by it and so issued by it for the account of the Company on any Business Day
during the Commitment Period in such form as may be approved from time to time
by such Issuing Lender; provided that such Issuing Lender shall have no
obligation to issue such Operating Letter of Credit if, after giving effect to
such issuance, (i) the Operating L/C Obligations would exceed $25,000,000 or
(ii) the Available Multi-Currency Commitment would be less than zero. Each
Operating Letter of Credit shall (i) be denominated in Dollars, (ii) be either
(x) a standby letter of credit issued to support obligations of the Company or
any of its Subsidiaries, contingent or otherwise, which are of a type for which
Revolving Credit Loans (if the obligations were then due and payable) or
Special Letters of Credit would be available (a "Standby Letter of Credit"), or
(y) a documentary letter of credit in respect of the purchase of goods or
services by the Company or any of its Subsidiaries in the ordinary course of
business (a "Commercial Letter of
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Credit") and (iii) expire no later than one year from the date of issue;
provided that the Undrawn Operating L/C Obligations in respect of each
Operating Letter of Credit which expires after the last day of the Commitment
Period shall be Fully Secured from and after such day.
(b) Each Operating Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the State of
New York.
(c) No Issuing Lender shall at any time be obligated to issue any
Operating Letter of Credit hereunder to the extent that such issuance would
conflict with, or cause such Issuing Lender or any Operating L/C Participant to
exceed any limits imposed by, any applicable Requirement of Law.
7.2 Procedure for Issuance of Operating Letters of Credit. The Company
may from time to time request that the Administrative Agent designate an
Issuing Lender with respect to any Operating Letter of Credit which the Company
seeks to have issued. In the event that the Administrative Agent is able to
designate an Issuing Lender with respect to such Operating Letter of Credit,
the Company shall request that such Issuing Lender issue an Operating Letter of
Credit by delivering to such Issuing Lender at its address for notices
specified herein an Application therefor, completed to the satisfaction of such
Issuing Lender, and such other certificates, documents and other papers and
information as such Issuing Lender reasonably may request. Upon receipt of any
Application, such Issuing Lender will process such Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall
promptly issue the Operating Letter of Credit requested thereby (but in no
event shall such Issuing Lender be required to issue any Operating Letter of
Credit earlier than three Business Days after its receipt of the Application
therefor and all such other certificates, documents and other papers and
information relating thereto) by issuing the original of such Operating Letter
of Credit to the beneficiary thereof or as otherwise may be agreed by such
Issuing Lender and the Company. Such Issuing Lender shall (i) in the case of
each Standby Letter of Credit, notify each Operating L/C Participant and the
Administrative Agent promptly following the request for and following the
issuance of the Standby Letter of Credit and furnish a copy of such Standby
Letter of Credit to the Company and to the Administrative Agent promptly
following the issuance thereof and (ii) in the case of Commercial Letters of
Credit, provide to each Operating L/C Participant and the Administrative Agent,
promptly following the end of each calendar month during which it has issued
Commercial Letters of Credit, a monthly activity report of the Commercial
Letters of Credit issued by it during such month.
7.3 Operating L/C Participations. (a) The Issuing Lender with respect
to each Letter of Credit irrevocably agrees to grant and hereby grants to each
Operating L/C Participant, and, to induce such Issuing Lender to issue Letters
of Credit hereunder, each Operating L/C Participant irrevocably agrees to
accept and purchase, and hereby accepts and purchases, from such Issuing
Lender, on the terms and conditions hereinafter stated, for such Operating L/C
Participant's own account and risk an undivided interest equal to such
Operating L/C Participant's Multi-Currency Commitment Percentage in such
Issuing Lender's obligations and rights under each Operating Letter of Credit
issued hereunder and the amount of each draft paid
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by such Issuing Lender thereunder. Each Operating L/C Participant
unconditionally and irrevocably agrees with such Issuing Lender that, if a
draft is paid under any Operating Letter of Credit issued by it for which such
Issuing Lender is not reimbursed in full by the Company in accordance with the
terms of this Agreement, such Operating L/C Participant shall pay to such
Issuing Lender upon demand at such Issuing Lender's address for notices
specified herein an amount equal to such Operating L/C Participant's
Multi-Currency Commitment Percentage of the amount of such draft, or any part
thereof, which is not so reimbursed.
(b) If any amount required to be paid by any Operating L/C Participant
to an Issuing Lender pursuant to subsection 7.3(a) in respect of any
unreimbursed portion of any payment made by such Issuing Lender under any
Operating Letter of Credit issued by it is paid to such Issuing Lender within
three Business Days after the date such payment is due, such Operating L/C
Participant shall pay to such Issuing Lender on demand an amount equal to the
product of (i) such amount, times (ii) the daily average Federal funds rate, as
quoted by such Issuing Lender, during the period from and including the date
such payment is required to the date on which such payment is immediately
available to such Issuing Lender, times (iii) a fraction the numerator of which
is the number of days that elapse during such period and the denominator of
which is 360. If any such amount required to be paid by any Operating L/C
Participant pursuant to subsection 7.3(a) is not in fact made available to such
Issuing Lender by such Operating L/C Participant within three Business Days
after the date such payment is due, such Issuing Lender shall be entitled to
recover from such Operating L/C Participant, on demand, such amount with
interest thereon calculated from such due date at the rate per annum applicable
to Alternate Base Rate Loans hereunder. A certificate of the relevant Issuing
Lender submitted to any Operating L/C Participant with respect to any amounts
owing under this subsection 7.3(b) shall be conclusive in the absence of
manifest error.
(c) Whenever, at any time after any Issuing Lender has made payment
under any Operating Letter of Credit issued by it and has received from any
Operating L/C Participant its pro rata share of such payment in accordance with
subsection 7.3(a), such Issuing Lender receives any payment related to such
Operating Letter of Credit (whether directly from the Company or otherwise,
including proceeds of collateral applied thereto by such Issuing Lender), or
any payment of interest on account thereof, such Issuing Lender promptly will
distribute to such Operating L/C Participant its pro rata share thereof;
provided, however, that in the event that any such payment received by such
Issuing Lender shall be required to be returned by such Issuing Lender, such
Operating L/C Participant shall return to such Issuing Lender the portion
thereof previously distributed by such Issuing Lender to it.
(d) Notwithstanding anything to the contrary contained in this
subsection 7.3, the failure of any Operating L/C Participant to make any
payment due by it under this subsection 7.3 in a timely manner shall not
relieve any other Operating L/C Participant of its obligation hereunder to make
its own payment in a timely manner, but no Operating L/C Participant shall be
responsible for the failure of any other Operating L/C Participant to make any
payment pursuant to this subsection 7.3 owing by such other Operating L/C
Participant on any date.
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7.4 Reimbursement Obligation of the Company. The Company agrees to
reimburse each Issuing Lender on each date on which such Issuing Lender
notifies the Company of the date and amount of a draft presented under any
Operating Letter of Credit issued and paid by such Issuing Lender for the
amount of (a) such draft so paid and (b) any taxes, fees, charges or other
costs or expenses incurred by such Issuing Lender in connection with such
payment. Each such payment shall be made to the relevant Issuing Lender at its
address for notices specified herein in lawful money of the United States of
America and in immediately available funds. Interest shall be payable on any
and all amounts remaining unpaid by the Company under this subsection 7.4 from
the date such amounts become payable (whether at stated maturity, by
acceleration or otherwise) until payment in full at the rate which would be
payable on any outstanding Alternate Base Rate Loans which were then overdue.
7.5 Obligations Absolute. The Company's obligations under this Section
7 shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which the
Company may have or have had against the relevant Issuing Lender, any
beneficiary of an Operating Letter of Credit, any Lender or any other Person.
The Company also agrees with each Issuing Lender that such Issuing Lender shall
not be responsible for, and the Company's Operating L/C Reimbursement
Obligations under subsection 7.4 shall not be affected by, among other things,
the validity or genuineness of documents or of any endorsements thereon, even
though such documents shall in fact prove to be invalid, fraudulent or forged,
or any dispute between or among the Company and any beneficiary of any
Operating Letter of Credit or any other party to which such Operating Letter of
Credit may be transferred or any claims whatsoever of the Company against any
beneficiary of such Operating Letter of Credit or any such transferee. No
Issuing Lender shall be liable for any error, omission, interruption or delay
in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Operating Letter of Credit issued by it,
except for errors or omissions caused by such Issuing Lender's gross negligence
or willful misconduct. The Company agrees that any action taken or omitted by
any Issuing Lender under or in connection with any Operating Letter of Credit
issued by such Issuing Lender or the related drafts or documents, if done in
the absence of gross negligence or willful misconduct and in accordance with
the standards of care specified in the Uniform Commercial Code of the State of
New York, shall be binding on the Company and shall not result in any liability
of such Issuing Lender to the Company.
7.6 Operating Letter of Credit Payments. If any draft shall be
presented for payment under any Operating Letter of Credit, the Issuing Lender
in respect of such Operating Letter of Credit shall promptly notify the Company
of the date and amount thereof. The responsibility of such Issuing Lender to
the Company in connection with any draft presented for payment under any
Operating Letter of Credit issued by it shall, in addition to any payment
obligation expressly provided for in such Operating Letter of Credit, be
limited to determining that the documents (including each draft) delivered
under such Operating Letter of Credit in connection with such presentment are
in conformity with such Operating Letter of Credit.
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7.7 Application. To the extent that any provision of any Application
related to any Operating Letter of Credit is inconsistent with the provisions
of this Section 7, the provisions of this Section 7 shall apply.
7.8 Cash Collateral for Operating Letters of Credit. (a) (i) If the
Lenders holding the majority of the Aggregate Multi-Currency Commitment shall
so request at any time and from time to time when an Event of Default has
occurred and is continuing or (ii) at any time and from time to time when the
Required Lenders so request, the Company shall promptly deposit in a cash
collateral account opened and maintained by the Administrative Agent (which
cash collateral account shall be separate from that which is opened and
maintained pursuant to subsection 4.8) the amount equal to the lesser of (x)
the sum of the aggregate amount of all Undrawn Operating L/C Obligations and
(y) the amount equal to the Benefited Multi-Currency Portion then in effect
(such lesser amount, the "Deposit Requirement"). The Company further agrees
that, from and after any such request for cash collateralization, the Company
will deposit from time to time into such cash collateral account any such
additional amounts as shall be necessary to cause the amount on deposit therein
to be not less than the amount of the Deposit Requirement then in effect.
(b) The Company hereby grants to the Administrative Agent, for the
ratable benefit of the Multi-Currency Lenders, as collateral security for the
payment in full of all Payment Obligations of the Company on account of the
Benefited Facilities, a security interest in all amounts from time to time held
in the cash collateral account maintained pursuant to paragraph (a) above.
Amounts held therein shall at all times be under the sole dominion and control
of the Administrative Agent and the Administrative Agent shall at all times
have the exclusive right of withdrawal with respect thereto; provided that the
Administrative Agent hereby agrees that it shall withdraw amounts from such
cash collateral account only in accordance with the provisions of clauses (c)
and (d) below.
(c) Following the occurrence and during the continuance of any Event
of Default, the Administrative Agent may apply amounts held in the cash
collateral account maintained pursuant to paragraph (a) above to the payment of
the Payment Obligations on account of the Benefited Facilities in such order as
the Administrative Agent shall elect, with any amounts remaining on deposit
therein after giving effect to such application being returned to the Company.
(d) Without diminishing the sole dominion and control of the
Administrative Agent over amounts from time to time on deposit in the cash
collateral account maintained pursuant to clause (a) above, the Administrative
Agent shall from time to time (upon the request of the Company) promptly return
to the Company any amounts on deposit in such cash collateral account which are
in excess of the amount of the Deposit Requirement then in effect and, prior to
such return to the Company, the Administrative Agent shall not have any Lien on
or security interest in any such excess amounts.
7.9 Existing Operating Letters of Credit. Notwithstanding anything to
the contrary contained in this Agreement or any Security Document, each of the
letters of credit
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described on Schedule IX as an "Operating Letter of Credit" shall, from and
after the Closing Date, be deemed to have been issued pursuant to subsection
7.1(a) of this Agreement, with the Multi-Currency Lender set forth in said
Schedule IX as the issuing bank for each such existing letter of credit being
deemed to be the Issuing Lender in respect of such Operating Letter of Credit
hereunder and with each other Multi-Currency Lender being deemed to be an
Operating L/C Participant with respect to such Operating Letter of Credit for
purposes of this Agreement and the Security Documents. The Company shall pay to
the Administrative Agent, for the accounts of the relevant Issuing Lender and
Operating L/C Participants, the fees and commissions described in subsection
10.7 with respect to each such Operating Letter of Credit.
SECTION 8. AMOUNT AND TERMS OF LOCAL LOAN SUB-FACILITY
8.1 Local Loan Commitments. Subject to the terms and conditions of
this Agreement, each Local Fronting Lender severally agrees to make loans (and,
to the extent provided in subsection 8.9, to create Acceptances) under the
Aggregate Multi-Currency Commitment in Dollars and in the Denomination Currency
set forth opposite its name on Schedule III to the Company and to the Local
Subsidiary for such Denomination Currency from time to time during the
Commitment Period (individually, a "Local Loan"; collectively, the "Local
Loans"); provided that, after giving effect to the making and the use of
proceeds thereof, the aggregate amount of the Local Outstandings of such Local
Fronting Lender shall not exceed the amount equal to its Currency Sublimit then
in effect. The Local Loans made by each Local Fronting Lender generally shall
be made by such Local Fronting Lender from a lending office which is located
within the jurisdiction of its respective Denomination Currency; provided that,
in the event that the Company or the relevant Local Subsidiary so requests and
the relevant Local Fronting Lender (in its sole discretion) so agrees, any
Local Loans to be made by such Local Fronting Lender may be made from a lending
office of such Local Fronting Lender which is not located in the jurisdiction
of its Denomination Currency. During the Commitment Period, the Local Borrowers
may use the Aggregate Multi-Currency Commitment by borrowing Local Loans and
Acceptances, repaying the Local Loans and Acceptances in whole or in part and
reborrowing, all in accordance with the terms and conditions hereof.
8.2 Obligations of Local Borrowers. (a) Each Local Borrower hereby
agrees that each Local Loan made by each Local Fronting Lender to such Local
Borrower pursuant hereto shall constitute the promise and obligation of such
Local Borrower to pay to such Local Fronting Lender, at the office of such
Local Fronting Lender listed on Schedule III hereto (or, if such Local Fronting
Lender has notified such Local Borrower that a Local Loan was funded by a
different lending office of such Local Fronting Lender, the lending office from
which such Local Loan was funded), in lawful money of the Denomination Currency
(or, with respect to Local Loans which are Dollar Loans, in Dollars) and in
immediately available funds the aggregate unpaid principal amount of all Local
Loans made by such Local Fronting Lender pursuant to subsection 8.1, which
amounts shall be due and payable (whether at maturity or by acceleration) as
set forth in this Agreement and, in any event, on the Termination Date.
Notwithstanding anything to the contrary contained herein, no Local Subsidiary
shall be obligated under any
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Credit Document to pay any amounts owing by or on account of the Company or any
other Local Subsidiary pursuant to this Agreement or any other Credit Document.
(b) Each Local Borrower hereby agrees that each Local Fronting Lender
is authorized to record (i) the date, amount and currency of each Local Loan
made by such Local Fronting Lender to such Local Borrower pursuant to
subsection 8.1, (ii) the date of each interest rate conversion pursuant to
subsection 10.8 which is applicable to such Local Loan and the principal amount
subject thereto, (iii) the date and amount of each payment or prepayment of
principal of each Local Loan made by such Local Borrower to such Local Fronting
Lender and (iv) in the case of each Local Loan which bears interest at a rate
based upon the relevant Eurocurrency Rate or Eurodollar Rate or (if it is
customary in the relevant jurisdiction for Local Rate Loans to be subject to
Interest Periods) Local Loan Rate, the interest rate and Interest Period, in
the books and records of such Local Fronting Lender and in such manner as is
reasonable and customary for it and a certificate of an officer of such Local
Fronting Lender, setting forth in reasonable detail the information so
recorded, shall constitute prima facie evidence of the accuracy of the
information so recorded; provided that the failure to make any such recording
shall not in any way affect the Payment Obligations of the relevant Local
Borrower hereunder.
8.3 Procedure for Borrowing Local Loans. Each Local Borrower may
request a borrowing of Local Loans under the Aggregate Multi-Currency
Commitment in Dollars or in the relevant Denomination Currency from the
applicable Local Fronting Lender during the Commitment Period on any Working
Day, if the Local Loans to be borrowed are Eurodollar Loans or Eurocurrency
Loans, or on any Business Day, if the Local Loans to be borrowed are Alternate
Base Rate Loans or Local Rate Loans, by giving irrevocable notice to the
relevant Local Fronting Lender (with a copy to the Administrative Agent),
specifying (i) the aggregate principal amount of the relevant currency to be
borrowed, (ii) the requested borrowing date, (iii) whether the Local Loans to
be borrowed are to be Eurodollar Loans or Alternate Base Rate Loans (in the
case of Dollar Loans) or Eurocurrency Loans or Local Rate Loans (in the case of
other Local Loans) or (in either case) a combination thereof and, if a
combination, the respective aggregate amount of each type of borrowing and (iv)
if the Local Loans to be borrowed are Eurodollar Loans or Eurocurrency Loans or
(if it is customary in the relevant jurisdiction for Local Rate Loans to be
subject to Interest Periods) Local Rate Loans, the length of the Interest
Period or Interest Periods applicable thereto; provided that any Local Loans to
be made to the Company or a Local Subsidiary on the Closing Date shall be made
as Local Rate Loans. Any such notice of borrowing must be received by the
relevant Local Fronting Lender prior to 11:00 A.M., local time, three Working
Days prior to the requested borrowing date (or such shorter period prior
thereto as such Local Fronting Lender may agree) in the case of Eurodollar
Loans or Eurocurrency Loans, and on the requested borrowing date, in the case
of Alternate Base Rate or Local Rate Loans (with the presentation by any third
party of any check or draft drawn on the account of the relevant Local Borrower
or any other borrowing by way of overdraft being deemed to constitute a notice
of borrowing of Local Rate Loans in the amount of such check, draft or other
borrowing, to the extent that insufficient funds are then available for the
payment thereof in the account of such Local Borrower with the relevant Local
Fronting Lender); provided, however, that the Administrative Agent may, at any
time and from time to time in its
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sole discretion, suspend the right of the Local Borrowers with respect to any
one or more Denomination Currencies to borrow Alternate Base Rate Loans or
Local Rate Loans on the basis of same-day notice by providing written notice of
such suspension to the Company and the affected Local Subsidiaries (with a copy
to the relevant Local Fronting Lender) not less than two Business Days prior to
the effectiveness thereof (or, during such time as any Default or Event of
Default has occurred and is continuing, on the date of such effectiveness), in
which event any such notice of borrowing (other than any notice of borrowing
deemed to be made on account of a check, draft or other customary means of
borrowing by way of overdraft drawn by such Local Borrower prior to the date of
such notice of suspension) of Alternate Base Rate Loans or Local Rate Loans
must (until such notice of suspension has been revoked by the Administrative
Agent) be received by the Local Fronting Lender prior to 11:00 A.M., local
time, one Business Day prior to the requested borrowing date. In the event that
the relevant Local Fronting Lender determines on the requested borrowing date
that the making of such requested Local Loan will not cause the Local
Outstandings of such Local Fronting Lender to exceed the amount equal to its
Currency Sublimit then in effect (in each case, as has been notified to such
Local Fronting Lender by the Administrative Agent pursuant to subsection
8.8(b)), such Local Fronting Lender will make the requested Local Loan
available to the relevant Local Borrower, at the principal lending office of
such Local Fronting Lender in the relevant jurisdiction, by 1:00 P.M., local
time, on the requested borrowing date, in funds immediately available to such
Local Borrower. Promptly following the making of each such Local Loan, such
Local Fronting Lender shall provide notice to the Administrative Agent of the
amount thereof. The minimum amount of each borrowing of Local Loans shall,
subject to subsection 10.8(h), be in an aggregate principal amount (not to
exceed the relevant Currency Sublimit) to be mutually agreed upon by the
relevant Local Fronting Lender and the relevant Local Borrower. Notwithstanding
anything to the contrary contained in this subsection 8.3, no Local Fronting
Lender shall be obligated hereunder to advance any Local Loan by way of an
overdraft, but rather shall provide overdrafts only if it elects (in its sole
discretion) to do so. Notwithstanding the foregoing, any Local Loans (as
defined in the Existing Agreement) which are outstanding on the Closing Date
from a Local Fronting Lender hereunder shall be deemed to be "Local Loans" (as
defined herein) which are outstanding hereunder.
8.4 Currency Conversion and Contingent Funding Agreement. (a) Each
Multi-Currency Lender hereby unconditionally and irrevocably agrees to
purchase (in Dollars) an undivided participating interest in its ratable share
of such Local Loans and Acceptances made by such Local Fronting Lenders as the
Administrative Agent may at any time request; provided that:
(i) the Administrative Agent hereby agrees that, unless an Event of
Default has occurred and is continuing, it will not request any such
purchase of participating interests unless the Administrative Agent has
given to the Company and the relevant Local Subsidiary three Business Days'
prior notice thereof;
(ii) the Administrative Agent hereby agrees that it promptly will
request that the Multi-Currency Lenders purchase such participating
interest in all Local Loans and Acceptances made by any Local Fronting
Lender which provides to the Administrative
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Agent a written certification that an Event of Default described in Section
15(a) is continuing with respect to the Local Loans or Acceptances made by
such Local Fronting Lender and requesting that such request be made by the
Administrative Agent;
(iii) in the event that any of the events specified in clauses (i),
(ii) or (iii) of Section 15(m) shall have occurred with respect to any
Local Borrower, each Multi-Currency Lender shall be deemed to have
purchased, automatically and without request, such participating interest
in the Local Loans and Acceptances made to such Local Borrower; and
(iv) General Electric Capital Corporation's obligation to purchase
participating interests from the Local Fronting Lender for France shall be
subject to the provisions of clause (e) below.
Any such request by the Administrative Agent shall be made in writing to each
Multi-Currency Lender and shall specify the amount of Dollars (based upon the
actual exchange rate at which the Administrative Agent anticipates being able
to obtain the relevant Denomination Currency, with any excess payment being
refunded to the Multi-Currency Lenders and any deficiency remaining payable by
the Multi-Currency Lenders) required from such Multi-Currency Lender in order
to effect the purchase by such Multi-Currency Lender of a participating
interest in the amount equal to its Multi-Currency Commitment Percentage times
the aggregate then outstanding principal amount (in the Denomination Currency)
of the relevant Local Loans and Acceptances (together with accrued interest
thereon and other amounts owing in connection therewith) in such Denomination
Currency. Promptly upon receipt of such request, each Multi-Currency Lender
shall deliver to the Administrative Agent (in immediately available funds) the
amount so specified by the Administrative Agent. The Administrative Agent shall
convert such amounts into the relevant Denomination Currency and shall promptly
deliver the proceeds of such conversion to the relevant Local Fronting Lender
in immediately available funds. Promptly following receipt thereof, such Local
Fronting Lender will deliver to each Multi-Currency Lender (through the
Administrative Agent) a Local Loan Participation Certificate dated the date of
receipt of such funds and in such amount. From and after such purchase, (i) the
outstanding Local Loans and Acceptances in which the Multi-Currency Lenders
have purchased such participations shall be deemed to have been converted into
Alternate Base Rate Loans denominated in Dollars (with such conversion
constituting, for purposes of subsection 10.12, a prepayment of such Local
Loans and Acceptances before the last day of the Interest Period with respect
thereto), (ii) any further Local Loans to be made to such Borrower shall be
made in Dollars, with each Multi-Currency Lender purchasing a participating
interest therein in the manner described in the foregoing provisions of this
subsection 8.4(a) immediately upon the making thereof in the amount equal to
such Multi-Currency Lender's Multi-Currency Commitment Percentage thereof (with
the Administrative Agent hereby agreeing to provide prompt notice to each such
Multi-Currency Lender of its receipt from the relevant Local Fronting Lender of
a notice of borrowing and of making the relevant Local Loan), (iii) no further
Acceptances shall be created for the account of such Borrower, (iv) all amounts
from time to time accruing, and all amounts from time to time payable, on
account of such Local Loans and Acceptances (including, without limitation, any
interest and other amounts which were accrued
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but unpaid on the date of such purchase) shall be payable in Dollars as if such
Local Loan or Acceptance, as the case may be, had originally been made in
Dollars and shall (other than with respect to the portion of the Applicable
Margin which, pursuant to subsection 8.6, is expressly stated to be paid for
the account of the Local Fronting Lender) be distributed by the relevant Local
Fronting Lender to the Administrative Agent, for the accounts of the
Multi-Currency Lenders, on account of such participating interests.
Notwithstanding anything to the contrary contained in this subsection 8.4, the
failure of any Multi-Currency Lender to purchase its participating interest in
any Local Loan or Acceptance shall not relieve any other Multi-Currency Lender
of its obligation hereunder to purchase its participating interest in a timely
manner, but no Multi-Currency Lender shall be responsible for the failure of
any other Multi-Currency Lender to purchase the participating interest to be
purchased by such other Multi-Currency Lender on any date.
(b) If any amount required to be paid by any Multi-Currency Lender
pursuant to subsection 8.4(a) is paid to the Administrative Agent within three
Business Days following the date upon which such Multi-Currency Lender receives
notice from the Administrative Agent that the Local Loan or Acceptance in which
such Multi-Currency Lender has purchased a participating interest has been made
or created (as the case may be), such Multi-Currency Lender shall pay to the
Administrative Agent on demand an amount equal to the product of (i) such
amount, times (ii) the daily average Federal funds rate, as quoted by the
Administrative Agent, during the period from and including the date such
payment is required to the date on which such payment is immediately available
to the Administrative Agent, times (iii) a fraction the numerator of which is
the number of days that elapse during such period and the denominator of which
is 360. If any such amount required to be paid by any Multi-Currency Lender
pursuant to subsection 8.4(a) is not in fact made available to the
Administrative Agent within three Business Days following the date upon which
such Multi-Currency Lender receives notice from the Administrative Agent that
the Local Loan or Acceptance in which such Multi-Currency Lender has purchased
a participating interest has been made or created (as the case may be), the
Administrative Agent shall be entitled to recover from such Multi-Currency
Lender, on demand, such amount with interest thereon calculated from such due
date at the rate per annum applicable to Alternate Base Rate Loans hereunder. A
certificate of the Administrative Agent submitted to any Multi-Currency Lender
with respect to any amounts owing under this subsection 8.4(b) shall be
conclusive in the absence of manifest error. Amounts payable by any
Multi-Currency Lender pursuant to this subsection 8.4(b) shall be paid to the
Administrative Agent, for the account of the relevant Local Fronting Lender;
provided that, if the Administrative Agent (in its sole discretion) has elected
to fund on behalf of such Multi-Currency Lender the amounts owing to such Local
Fronting Lender, then the amounts shall be paid to the Administrative Agent,
for its own account.
(c) Whenever, at any time after the relevant Local Fronting Lender has
received from any Multi-Currency Lender such Multi-Currency Lender's
participating interest in a Local Loan or Acceptance pursuant to clause (b)
above, the Local Fronting Lender receives any payment on account thereof, such
Local Fronting Lender will distribute to the Administrative Agent, for the
account of such Multi-Currency Lender, such Multi-Currency Lender's
participating interest in such amount (appropriately adjusted, in the case of
interest payments, to
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reflect the period of time during which such Multi-Currency Lender's
participating interest was outstanding) in like funds as received; provided,
however, that in the event that such payment received by such Local Fronting
Lender is required to be returned, such Multi-Currency Lender will return to
such Local Fronting Lender any portion thereof previously distributed by such
Local Fronting Lender to such Multi-Currency Lender in like funds as such
payment is required to be returned by such Local Fronting Lender.
(d) Each Multi-Currency Lender's obligation to purchase participating
interests pursuant to clause (a) above shall be absolute and unconditional and
shall not be affected by any circumstance, including, without limitation, (a)
any set-off, counterclaim, recoupment, defense or other right which such
Multi-Currency Lender may have against the relevant Local Fronting Lender, the
relevant Local Borrower or any other Person for any reason whatsoever; (b) the
occurrence or continuance of an Event of Default; (c) any adverse change in the
condition (financial or otherwise) of the relevant Local Borrower or any other
Person; (d) any breach of this Agreement by the relevant Local Borrower, any
other Local Borrower or any other Lender; or (e) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing;
provided that no Multi-Currency Lender shall be obligated to purchase
participating interests in any Local Loans made by a Local Fronting Lender to
the extent that such Local Loans (at the time when made) caused the amount of
Local Loans outstanding from such Local Fronting Lender to be in excess of the
Currency Sublimit then in effect with respect to such Local Fronting Lender.
(e) Notwithstanding anything to the contrary contained in herein,
General Electric Capital Corporation ("GE Capital") shall have no obligation,
and shall not, purchase participating interests pursuant to this subsection 8.4
from the Local Fronting Lender for France and such participating interests as
otherwise would have been purchased by GE Capital (the "GE Share") shall
instead be purchased from such Local Fronting Lender by Citibank. In connection
with such obligation to purchase the GE Share, Citibank shall have all rights
which otherwise would be attributable to GE Capital hereunder with respect to
the GE Share (including, without limitation, the right to receive interest and
other amounts accruing on account thereof); provided, however, that, for
purposes of voting under this Agreement and the other Credit Documents, GE
Capital shall be deemed to hold the GE Share and shall be entitled to exercise
voting rights on account thereof.
8.5 Designation of Additional Denomination Currencies. (a) The Company
may from time to time request that any one or more additional freely available
currencies which are freely transferable and freely convertible into Dollars be
designated as "Denomination Currencies" hereunder by providing written notice
to the Administrative Agent specifying (i) the relevant Local Subsidiary for
such currency (which need not be an existing Local Subsidiary), (ii) the
requested amount of the Currency Sublimit for such Denomination Currency and
(iii) specifying the Multi-Currency Lender who has agreed to serve as Local
Fronting Lender with respect thereto and the Maximum Sublimit to be inserted in
Schedule III for such Local Fronting Lender; provided that in no event shall
the sum of all Currency Sublimits (after giving effect to the requested
designation of an additional Denomination Currency and any concurrent
reallocation of the Currency Sublimits pursuant to subsection 8.6) exceed the
Aggregate Multi-
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Currency Commitment then in effect. The Administrative Agent shall promptly
forward to each Multi-Currency Lender a copy of any such notice. Within ten
Business Days following the receipt of such notice, each Multi-Currency Lender
shall notify the Administrative Agent in writing whether such designation is
acceptable to such Multi-Currency Lender (in its sole discretion) and the
Administrative Agent promptly shall notify the Company thereof.
(b) In the event that such designation is acceptable to the Lenders
holding the majority of the Aggregate Multi-Currency Commitment, the Company
shall cause the requested Local Subsidiary to deliver to the Administrative
Agent (i) a Borrowing Subsidiary Joinder Agreement, (ii) such of the Security
Documents contemplated by subsections 13.10, 13.11 and 13.12 and/or such other
documents, instruments, agreements and legal opinions as the Agents reasonably
may request (including, in any event, an opinion of local counsel in the
relevant jurisdiction to the effect that no Multi-Currency Lender, other than
the relevant Local Fronting Lender, shall be deemed to be doing business in the
relevant jurisdiction, or otherwise shall be subject to regulation or taxation
therein, solely as a result of the agreements set forth herein; with such legal
opinions to be in form and substance reasonably acceptable to the
Multi-Currency Lenders holding at least a majority of the Aggregate
Multi-Currency Commitment (including, in any event, General Electric Capital
Corporation so long as it is a Multi-Currency Lender, but other than any
Non-Funding Lenders)) and (iii) a Local Fronting Lender Joinder Agreement from
the Multi-Currency Lender who has agreed to serve as Local Fronting Lender.
(c) From and after the date upon which the Administrative Agent has
received the documents (all of which shall be in form and substance reasonably
satisfactory to the Agents) described in subsection 8.5(b), Schedule III hereto
shall be deemed to be amended to reflect (i) the designation of such currency
as a Denomination Currency, (ii) the aggregate amount of the Currency Sublimit
and Maximum Sublimit with respect thereto and (iii) the name and applicable
local lending office of the relevant Local Fronting Lender with respect thereto
and (iv) the name of the relevant Local Subsidiary.
(d) The Administrative Agent shall give prompt notice to the
Multi-Currency Lenders of the effectiveness of such designation and shall
deliver to each Multi-Currency Lender and the Company a revised version of
Schedule III which reflects such amendment.
8.6 Re-Allocation of Currency Sublimits. (a) The Company (on its own
behalf and as agent of the Local Subsidiaries) may from time to time (but,
unless the Administrative Agent shall otherwise agree, not more frequently than
one time per calendar month) request that the amount of any one or more
Currency Sublimits be increased and/or the amount of any one or more Currency
Sublimits be decreased by delivering a written request for such re-allocation
to the Administrative Agent. Each such request shall specify the amount (in
Dollars) of the increase or decrease, as the case may be, applicable to each
affected Currency Sublimit. The Administrative Agent shall deliver to each
affected Local Fronting Lender a copy of such request promptly following
receipt thereof.
(b) Unless the revised Currency Sublimit of any Local Fronting Lender
will, after giving effect to the requested re-allocation of Currency Sublimits,
be in excess of the Maximum
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Sublimit then in effect for such Local Fronting Lender, then the Currency
Sublimits shall be deemed to be so re-allocated and Schedule III shall be
deemed to be amended to reflect such reallocation; provided that (i) no Local
Fronting Lender shall be required to lend more than its Currency Sublimit (as
in effect prior to the effectiveness of such re-allocation) until such Local
Fronting Lender has received notice from the Administrative Agent of the
effectiveness of such re-allocation (which notice the Administrative Agent
agrees to deliver promptly upon such effectiveness) and (ii) after giving
effect to such re-allocation, the Aggregate Outstanding Multi-Currency
Extensions of Credit will not exceed the Aggregate Multi-Currency Commitment
then in effect. Promptly following the effectiveness of such re-allocation, the
Administrative Agent shall deliver to each Multi-Currency Lender and the
Company a revised Schedule III which reflects such amendment.
(c) In the event that the revised Currency Sublimit of any Local
Fronting Lender will (after giving effect to the requested re-allocation of
Currency Sublimits) be in excess of the Maximum Sublimit specified for such
Local Fronting Lender on Schedule III, then such Local Fronting Lender and the
Administrative Agent shall have ten Business Days to determine whether (in
their sole discretion) to approve such increase. In the event that such Local
Fronting Lender and the Administrative Agent approve such increase (which
approval shall be delivered in writing to the Company and, in the case of the
approval of such Local Fronting Lender, to the Administrative Agent) then the
Currency Sublimit and the Maximum Sublimit of such Local Fronting Lender shall
be re-allocated to such higher amounts requested for such Local Fronting Lender
in the request delivered to the Administrative Agent pursuant to subsection
8.6(a). In the event that such Local Fronting Lender and the Administrative
Agent do not approve such increase in accordance with the foregoing terms of
this subsection 8.6(c), then the Currency Sublimit of such Local Fronting
Lender shall be increased only to its existing Maximum Sublimit on the date
upon which either such Local Fronting Lender or the Administrative Agent
notifies the Company that such increase has not been approved (or, if no such
notice is given, at the end of such ten day approval period). Promptly
following the effectiveness of any such reallocation, the Administrative Agent
shall deliver to each Multi-Currency Lender and the Company a revised Schedule
III which reflects such amendment. The Company or the relevant Local Subsidiary
shall pay any stamp, recording or other similar tax payable under the laws of
the local jurisdiction which is required as a result of any such increase in
the Maximum Sublimit of its relevant Local Fronting Lender.
(d) In connection with any re-allocation made in accordance with this
subsection 8.6, the Company may designate that the Currency Sublimit applicable
to any Local Fronting Lender is to be reduced to zero and that the relevant
Local Subsidiary is to cease to be a "Local Subsidiary" hereunder. From and
after any such designation, such Local Subsidiary shall cease to be a Borrower
hereunder, such Local Fronting Lender shall cease to be the "Local Fronting
Lender" for the relevant Denomination Currency and (except to the extent that
the provisions of subsection 8.5 subsequently are complied with) no further
Local Loans or Acceptances shall be made to any Borrower in such Denomination
Currency.
(e) Notwithstanding anything to the contrary contained herein, no such
reallocation shall be permitted if, after giving effect thereto, the Aggregate
Outstanding Multi-
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Currency Extensions of Credit will exceed the Aggregate Multi-Currency
Commitment then in effect.
8.7 Resignation or Removal of a Local Fronting Lender. (a) In the
event that the Multi-Currency Commitment of a Local Fronting Lender shall at
any time terminate (otherwise than on termination of the Aggregate Commitment)
or a Local Fronting Lender shall assign all of its Multi-Currency Commitment in
accordance with the provisions of subsection 17.7(c) or a Local Fronting Lender
shall otherwise so elect, such Local Fronting Lender shall resign as Local
Fronting Lender by giving written notice of its resignation to the Company, the
relevant Local Subsidiary and the Administrative Agent, with such resignation
becoming effective on the date which is the earlier of (i) the date upon which
a Multi-Currency Lender reasonably acceptable to the Administrative Agent and
the Company (on its own behalf and as agent for the relevant Local Subsidiary)
is designated as a substitute Local Fronting Lender in accordance with the
provisions of subsection 8.7(c) and (ii) such other date upon which such Local
Fronting Lender, the Company and the relevant Local Subsidiary otherwise agree;
provided that such effective date shall in no event be later than the date
which is 30 days following the date upon which such written notice is delivered
to the Company. Any Local Loans and Acceptances made by such Local Fronting
Lender which are outstanding on such termination date shall be due and payable
on such termination date.
(b) The Company (on its own behalf and as agent for the relevant Local
Subsidiary) at any time may request that any Local Fronting Lender cease to be
designated as such by giving written notice of such request to the
Administrative Agent (which notice the Administrative Agent promptly shall
deliver to such Local Fronting Lender and to each Multi-Currency Lender).
Immediately upon receipt of such request, such Local Fronting Lender shall
cease to make any additional Local Loans and cease to create any additional
Acceptances, and all Local Loans and Acceptances then maintained by such Local
Fronting Lender shall be due and payable on the date requested by the Company
(which date shall be not earlier than (i) the earlier of (A) 30 days following
delivery of such notice, in the case of Alternate Base Rate Loans, Local Rate
Loans and Acceptances and (B) the last day of the Interest Period then in
effect with respect thereto, in the case of Eurocurrency Loans or Eurodollar
Loans, as the case may be, and (ii) such other date upon which such Local
Fronting Lender, the Company and the relevant Local Subsidiary otherwise
agree). From and after the date upon which all such Local Loans and Acceptances
are repaid (together with accrued interest and other amounts owing to such
Local Fronting Lender on account thereof), such Local Fronting Lender shall
cease to be a "Local Fronting Lender" with respect to such Denomination
Currency.
(c) In the event that the Local Fronting Lender with respect to any
Denomination Currency shall cease to serve as such pursuant to subsection
8.7(a) or (b), the Company (on its own behalf and as agent of the relevant
Local Subsidiary) may designate another Multi-Currency Lender reasonably
acceptable to the Administrative Agent to serve as "Local Fronting Lender" with
respect to such Denomination Currency; provided that no Multi-Currency Lender
shall be so designated without its agreement (in its sole discretion) to serve
as the "Local Fronting Lender" with respect to such Denomination Currency
hereunder. Upon any such designation and the receipt by the Administrative
Agent of a Local Fronting Lender Joinder Agreement, duly
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executed and delivered by such designated Local Fronting Lender, such
Multi-Currency Lender shall be deemed to be the "Local Fronting Lender" with
respect to such Denomination Currency for all purposes under this Agreement and
the other Credit Documents.
(d) During any period when no substitute Local Fronting Lender has
been duly appointed in accordance with the terms of subsection 8.7(c), the
right of the Borrowers to borrow in such Denomination Currency shall be
suspended.
8.8 Reports. (a) Each Local Fronting Lender shall deliver to the
Administrative Agent on the first Business Day of each calendar week and on the
first Business Day of each calendar month (and at any time and from time to
time when the Administrative Agent may so request) a statement, substantially
in the form of Exhibit S-1, showing (i) the aggregate principal amount of Local
Loans in the relevant Denomination Currency outstanding from such Local
Fronting Lender as of the close of business on each Business Day during the
prior week (or portion thereof), (ii) the aggregate principal amount of Local
Loans in Dollars outstanding from such Local Fronting Lender as of the close of
business on each Business Day during the prior week (or portion thereof), (iii)
the aggregate undiscounted face amount of Acceptances outstanding from such
Local Fronting Lender as of the close of business on each Business Day during
the prior week (or portion thereof) and (iv) such other matters as are
contained therein. The Administrative Agent hereby agrees to deliver a copy of
each such statement to the Company promptly following its receipt thereof and
of any such statement to any Multi-Currency Lender promptly upon its request
therefor.
(b) Promptly following any change in the Currency Sublimit in effect
for any Local Fronting Lender, the Administrative Agent shall deliver to such
Local Fronting Lender a statement indicating the new Currency Sublimit in
effect for such Local Fronting Lender.
8.9 Bankers' Acceptances. (a) Notwithstanding anything to the contrary
contained herein, any Local Fronting Lender may agree (in its sole discretion
from time to time) to create bankers' acceptances under its Currency Sublimit
by way of the acceptance and discount of Drafts (the "Acceptances") pursuant to
this subsection 8.9; provided that no Local Fronting Lender shall have any
obligation to create and/or discount Acceptances, regardless of any prior
practice of doing so for the account of such Local Subsidiary. Any Acceptances
created pursuant to this subsection 8.9 shall be denominated in the
Denomination Currency for the relevant Local Fronting Lender (and not in
Dollars), and shall be for such tenor and in such amount as may be mutually
agreed upon by the relevant Fronting Lender and Local Subsidiary; provided that
in no event shall any Acceptance mature after the date which is 30 days prior
to the Termination Date.
(b) Unless the relevant Local Subsidiary and Local Fronting Lender
otherwise agree, the relevant Local Subsidiary shall give to the relevant Local
Fronting Lender not less than two Business Days' prior written notice of its
intent to borrow by way of Acceptances from any Local Fronting Lender which has
agreed to accept and discount Drafts for the account of such Local Subsidiary,
which notice shall be accompanied by (i) a Draft which has been completed,
executed and delivered by a duly authorized officer of such Local Subsidiary
and (ii) such other documents, instruments and certificates as such Local
Fronting Lender reasonably may request;
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provided that, after giving effect to the creation of such Acceptance, the
Local Outstandings owing to such Local Fronting Lender shall not exceed the
amount equal to its Currency Sublimit then in effect. On the requested
borrowing date, the relevant Fronting Lender will accept such Draft and
discount such accepted Draft in accordance with the provisions of subsection
8.9(c).
(c) Any Local Fronting Lender may, in its sole discretion, elect to
discount Drafts of the relevant Local Subsidiary on the date upon which such
Local Fronting Lender accepts such Drafts by discounting such Draft at the rate
per annum equal to the Local Rate (which may be a different rate than the Local
Rate then payable on account of Local Loans in such Denomination Currency) then
in effect plus the Applicable Margin then in effect for Local Rate Loans;
provided that, unless the relevant Local Fronting Lender and Local Subsidiary
otherwise agree, such discount shall be calculated by, first, discounting the
aggregate face amount of such Draft at the rate per annum equal to the Local
Rate then in effect and, second, discounting the result thereof at the rate per
annum equal to the Applicable Margin then in effect for Local Rate Loans.
Promptly following such discounting (and, in any event, on the date thereof),
such Local Fronting Lender shall make available to such Local Subsidiary the
amount equal to the discounted face amount of such Draft in the manner in which
such Local Fronting Lender makes available Local Loans pursuant to subsection
8.3(b).
(d) Each Local Subsidiary hereby unconditionally agrees to pay to the
relevant Local Fronting Lender the aggregate, undiscounted face amount of each
Draft accepted by such Local Fronting Lender hereunder on the maturity date
thereof (or on such earlier date upon which the obligations of such Local
Subsidiary under this Agreement shall become or shall have been declared due
and payable pursuant to the terms and conditions of this Agreement). Interest
shall accrue on any amount owing pursuant to this subsection 8.9(d) which is
not paid when due (whether by scheduled maturity, mandatory prepayment,
acceleration or otherwise) from the date such amount becomes due until paid in
full at a fluctuating rate per annum equal to the rate which would then be
payable on any overdue Local Rate Loans and shall be payable by such Local
Subsidiary upon demand by such Local Fronting Lender.
(e) Each Multi-Currency Lender hereby unconditionally and irrevocably
agrees to purchase undivided participating interests in the Acceptances created
by each Local Fronting Lender in accordance with the provisions of subsection
8.4.
(f) Notwithstanding anything to the contrary contained herein, the
indefeasible prepayment by the relevant Local Subsidiary to the relevant Local
Fronting Lender of all or a portion of any outstanding Acceptance shall be
deemed to constitute a prepayment of such portion of such Acceptance for all
purposes hereunder, regardless of whether the relevant Local Fronting Lender
has distributed such amount to the holder of the underlying Draft.
8.10 Use of Proceeds of Local Loans and Acceptances. The proceeds of
the Local Loans and Acceptances hereunder shall be used by the relevant
Borrower for the purpose of refinancing certain outstanding Indebtedness of
such Borrower and its Subsidiaries under the Existing Agreement, repurchasing
or redeeming the Sinking Fund Debentures and for general corporate purposes of
such Borrower and its Subsidiaries (other than to finance Investments).
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8.11 Existing Local Loans and Acceptances. Each Local Fronting Lender
party hereto which also is a Fronting Lender under (and as defined in) the
Existing Agreement hereby acknowledges that the identity of the Lenders who
have agreed to purchase participating interests in any Local Loans and
Acceptances made by such Local Fronting Lender under the Existing Agreement
which are outstanding on the Closing Date (and the ratable interest of such
Lenders in such Local Loans) will be modified on the Closing Date. Each Local
Fronting Lender hereby acknowledges and agrees that, from and after the Closing
Date, it shall be entitled to seek the purchase of participating interests
pursuant to subsection 8.4 only from the Multi-Currency Lenders hereunder and
only in accordance with their respective Commitment Percentages of the
Aggregate Multi-Currency Commitment, with any Lender who has agreed to purchase
a participating interest in such Local Loans and Acceptances pursuant to the
Existing Agreement being hereby released from such obligation to the extent
that it does not hold a Multi-Currency Commitment hereunder.
SECTION 9. AMOUNT AND TERMS OF ACQUISITION FACILITY
9.1 Acquisition Loan Commitments. (a) Subject to the terms and
conditions of this Agreement, each Acquisition Direct Lender severally agrees
to make loans in Dollars and Approved Acquisition Currencies (individually, a
"Syndicated Acquisition Loan"; collectively, the "Syndicated Acquisition
Loans") to the Acquisition Borrowers from time to time during the Commitment
Period.
(b) Subject to the terms and conditions of this Agreement, each
Acquisition Fronting Lender severally agrees to make loans to the relevant
Acquisition Borrower from time to time during the Commitment Period in Dollars,
in Scheduled Acquisition Currencies and, if approved pursuant to subsection
9.3, in Special Acquisition Currencies (individually, a "Fronted Acquisition
Loan"; collectively, the "Fronted Acquisition Loans").
(c) Notwithstanding anything to the contrary contained herein, no
Acquisition Loan shall be requested or made to the extent that, after giving
effect thereto and to the use of proceeds thereof:
(i) the Aggregate Outstanding Acquisition Extensions of Credit shall
exceed the Aggregate Acquisition Loan Commitment then in effect;
(ii) the Available Acquisition Loan Commitment shall be less than
zero; or
(iii) the Acquisition Loan Commitment of any Acquisition Direct Lender
shall be less than the sum of (A) the aggregate principal amount of
Syndicated Acquisition Loans made by such Acquisition Direct Lender which
are denominated in Dollars, (B) the amount equal to 105% of the Equivalent
in Dollars of the aggregate principal amount of Syndicated Acquisition
Loans made by such Acquisition Direct Lender in Approved Acquisition
Currencies, (C) the amount equal to such Acquisition Direct Lender's
Acquisition Loan Commitment Percentage of the aggregate principal amount of
Fronted
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Acquisition Loans which are denominated in Dollars and (D) the amount equal
to such Acquisition Direct Lender's Acquisition Loan Commitment Percentage
of the amount equal to 105% of the Equivalent in Dollars of the aggregate
principal amount of Fronted Acquisition Loans which are denominated in
Approved Acquisition Currencies.
(d) During the Commitment Period, the Acquisition Borrowers may use
the Aggregate Acquisition Loan Commitment by borrowing Acquisition Loans,
repaying the Acquisition Loans in whole or in part and reborrowing, all in
accordance with the terms and conditions hereof.
9.2 Obligations of the Company. (a) Each Acquisition Borrower agrees
that each Acquisition Loan made by each Acquisition Lender pursuant hereto to
such Acquisition Borrower shall constitute the promise and obligation of such
Acquisition Borrower to pay:
(i) in the case of Syndicated Acquisition Loans, to the Administrative
Agent, for the benefit of such Acquisition Direct Lenders, at the office of
the Administrative Agent, 270 Park Avenue, New York, New York 10017, in
lawful money of the currency in which such Syndicated Acquisition Loan is
being maintained and in immediately available funds, the aggregate unpaid
principal amount of all Syndicated Acquisition Loans made by such
Acquisition Direct Lender to such Acquisition Borrower pursuant to
subsection 9.1(a); and
(ii) in the case of Fronted Acquisition Loans, to the relevant
Acquisition Fronting Lender, for its own account, at the office which such
Acquisition Fronting Lender has notified such Acquisition Borrower is the
funding office with respect to such Fronted Acquisition Loans, in lawful
money of the currency in which such Fronted Acquisition Loan is being
maintained and in immediately available funds, the aggregate unpaid
principal amount of all Fronted Acquisition Loans made by such Acquisition
Fronting Lender to such Acquisition Borrower pursuant to subsection 9.1(b).
All such amounts shall be due and payable (whether at maturity or by
acceleration) as set forth in this Agreement and, in any event, on the
Termination Date. Notwithstanding anything to the contrary contained herein, no
Acquisition Subsidiary shall be obligated under any Credit Document to pay any
amounts owing by or on account of any other Acquisition Borrower pursuant to
this Agreement or any other Credit Document.
(b) Each Acquisition Borrower agrees that each Acquisition
Lender is authorized to record (i) the date and amount of each Acquisition Loan
made by such Acquisition Lender to such Acquisition Borrower pursuant to
subsection 9.1, (ii) the date and amount of each payment or prepayment of
principal of each such Acquisition Loan and (iii) in the case of each
Eurodollar Loan or Eurocurrency Loan, the interest rate and Interest Period, in
the books and records of such Acquisition Lender and in such manner as is
reasonable and customary for such Acquisition Lender and a certificate of an
officer of such Acquisition Lender, setting forth in reasonable detail the
information so recorded, shall constitute prima facie evidence of the accuracy
of the
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information so recorded; provided that the failure to make any such recording
shall not in any way affect the Payment Obligations of any Acquisition Borrower
hereunder.
9.3 Procedure for Borrowing Syndicated Acquisition Loans. (a) The
Company may from time to time request a borrowing of Syndicated Acquisition
Loans which are denominated entirely in Dollars and/or in Scheduled Acquisition
Currencies by giving irrevocable notice to the Administrative Agent, specifying
(i) the aggregate principal amount to be borrowed (which amount shall be
denominated in Dollars), (ii) the requested borrowing date, which borrowing
date shall be a Working Day, if the Syndicated Acquisition Loans to be borrowed
are Eurodollar Loans or Eurocurrency Loans, or a Business Day, if the
Syndicated Acquisition Loans to be borrowed are Alternate Base Rate Loans,
(iii) whether the Syndicated Acquisition Loans to be borrowed are to be
denominated in Dollars, Scheduled Acquisition Currencies or a combination
thereof and, if a combination, the respective aggregate amount of each type of
borrowing, (iv) whether the Syndicated Acquisition Loans to be borrowed are to
be Eurocurrency Loans, Eurodollar Loans or Alternate Base Rate Loans or a
combination thereof and, if a combination, the respective aggregate amount of
each type of borrowing and (v) if the Syndicated Acquisition Loans to be
borrowed are Eurocurrency Loans or Eurodollar Loans, the length of the Interest
Period or Interest Periods applicable thereto. Any such notice of borrowing
must be received by the Administrative Agent prior to 11:00 A.M., New York City
time, four Working Days prior to the requested borrowing date (unless such
requested Syndicated Acquisition Loans are to be denominated solely in Dollars,
in which event such notice must be received by the Administrative Agent prior
to 11:00 A.M., New York City time, (x) one Business Day prior to the requested
borrowing date, if such Syndicated Acquisition Loans are to be comprised
entirely of Alternate Base Rate Loans and (y) three Business Days prior the
requested borrowing date, otherwise). Upon receipt of any such notice, the
Administrative Agent will promptly notify each Acquisition Direct Lender
thereof.
(b) (i) The Company may from time to time request a borrowing of
Syndicated Acquisition Loans which are denominated, in whole or in part, in a
Special Acquisition Currency by giving notice to the Administrative Agent,
specifying (A) the aggregate principal amount to be borrowed (which amount
shall be denominated in Dollars) and the Special Acquisition Currencies in
which such amount is to be borrowed, (B) the requested borrowing date, which
borrowing date shall be a Working Day, (C) whether the Syndicated Acquisition
Loans to be borrowed are to be denominated in Dollars, Scheduled Acquisition
Currencies, Special Acquisition Currencies or a combination thereof and, if a
combination, the respective aggregate amount of each type of borrowing, (D)
whether the Syndicated Acquisition Loans to be borrowed are to be Eurocurrency
Loans, Eurodollar Loans or Alternate Base Rate Loans or a combination thereof
and, if a combination, the respective aggregate amount of each type of
borrowing and (E) if the Syndicated Acquisition Loans to be borrowed are
Eurocurrency Loans or Eurodollar Loans, the length of the Interest Period or
Interest Periods applicable thereto. Any such notice of borrowing must be
received by the Administrative Agent prior to 11:00 A.M., New York City time,
not less than 15 Working Days prior to the requested borrowing date.
(ii) Upon receipt of any such notice, the Administrative Agent will
promptly notify each Acquisition Direct Lender thereof and each Acquisition
Direct Lender shall (prior to 11:00 A.M.,
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New York City time, on the fifth Working Day prior to the requested borrowing
date) notify the Administrative Agent if it has any objection to providing such
Special Acquisition Currency (which objection shall be based solely upon the
good faith determination by such Acquisition Direct Lender that such proposed
Special Acquisition Currency is not readily available to such Lender in
accordance with its customary funding operations for loans which are
denominated in currencies other than Dollars). On the third Working Day prior
to the requested borrowing date (the "determination date"), the Administrative
Agent shall give written notice (the "determination notice") to the Company and
to each Acquisition Direct Lender specifying:
(A) in the event that each Acquisition Direct Lender has agreed
to provide such Special Acquisition Currency (or, in the event that
any Acquisition Direct Lender does not so agree, but one or more other
Acquisition Direct Lenders has agreed to purchase Direct Acquisition
Participations in the full amount of such Acquisition Direct Lender's
ratable share of the proposed Syndicated Acquisition Loan, in which
event the Direct Acquisition Lender who does not so agree shall be
obligated to sell such Direct Acquisition Participations), that such
Syndicated Acquisition Loan is to be made; or
(B) otherwise, that such Syndicated Acquisition Loan is not to be
made.
(iii) In the event that the Administrative Agent specifies in the
determination notice that such Syndicated Acquisition Loan is to be made, such
Syndicated Acquisition Loan shall be made on the date specified in such notice
of borrowing; provided that the Company may, at any time on or prior to the
fourth Working Day prior to the requested borrowing date (as such borrowing
date may be postponed from time to time pursuant to clause (B) below), either
(A) withdraw such borrowing request or (B) postpone the requested borrowing
date to a specified date which is not more than 90 days following the
originally requested borrowing date. The Administrative Agent shall give prompt
notice to the Acquisition Direct Lenders of any such withdrawal or postponement
notice received from the Company and, in the event that any such postponement
notice is given and the new requested borrowing date is more than 45 days
following the date requested by the Company in its original notice of
borrowing, each Acquisition Direct Lender shall be entitled to withdraw its
agreement to provide the relevant Special Acquisition Currency (which
withdrawal shall be based solely upon the good faith determination by such
Acquisition Direct Lender that such proposed Special Acquisition Currency has
ceased to be readily available to such Lender in accordance with its customary
funding operations for loans which are denominated in currencies other than
Dollars) by providing written notice to the Administrative Agent not less than
five Working Days prior to the requested borrowing date. Unless the borrowing
request has been withdrawn or postponed, or any Acquisition Direct Lender has
withdrawn its agreement to provide the relevant Special Acquisition Currency
(and other Acquisition Direct Lenders have not agreed to purchase Direct
Acquisition Participations in the full amount of such Acquisition Direct
Lender's ratable share of the proposed Syndicated Acquisition Loan), as set
forth above on or prior to the fourth Working Day prior to such requested
borrowing date, such borrowing request shall become irrevocable on the third
Working Day prior to such requested borrowing date.
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(iv) In the event that the Administrative Agent specifies in the
determination notice that such Syndicated Acquisition Loan is not to be made,
the Company's borrowing request shall be deemed to be withdrawn.
(c) (i) The Company (on behalf of any of its wholly-owned Foreign
Subsidiaries) may from time to time request a borrowing by such wholly-owned
Foreign Subsidiary of Syndicated Acquisition Loans which are denominated, in
whole or in part, in Dollars or an Approved Acquisition Currency by giving
notice to the Administrative Agent, specifying (A) the name and jurisdiction of
organization of such wholly-owned Foreign Subsidiary, (B) the jurisdiction in
which such proposed Acquisition Subsidiary intends to borrow, (C) the aggregate
principal amount to be borrowed (which amount shall be denominated in Dollars)
and the Approved Acquisition Currencies (if any) in which such amount is to be
borrowed, (D) the requested borrowing date, which borrowing date shall be a
Working Day (unless such Syndicated Acquisition Loans are to be made entirely
as Alternate Base Rate Loans, in which case such borrowing date shall be a
Business Day), (E) whether the Syndicated Acquisition Loans to be borrowed are
to be denominated in Dollars, Scheduled Acquisition Currencies, Special
Acquisition Currencies or a combination thereof and, if a combination, the
respective aggregate amount of each type of borrowing, (F) whether the
Syndicated Acquisition Loans to be borrowed are to be Eurocurrency Loans,
Eurodollar Loans or Alternate Base Rate Loans or a combination thereof and, if
a combination, the respective aggregate amount of each type of borrowing and
(G) if the Syndicated Acquisition Loans to be borrowed are Eurocurrency Loans
or Eurodollar Loans, the length of the Interest Period or Interest Periods
applicable thereto. Any such notice of borrowing must be received by the
Administrative Agent prior to 11:00 A.M., New York City time, not less than 10
Working Days (or, in the event that the requested currencies include one or
more Special Acquisition Currencies, not less than 15 Working Days) prior to
the requested borrowing date.
(ii) Upon receipt of any such notice, the Administrative Agent will
promptly notify each Acquisition Direct Lender thereof and each Acquisition
Direct Lender shall (prior to 11:00 A.M., New York City time, on the fifth
Working Day prior to the requested borrowing date) notify the Administrative
Agent if it has any objection to providing such proposed Special Acquisition
Currency (which objection shall be based solely upon the good faith
determination by such Acquisition Direct Lender that such proposed Special
Acquisition Currency is not readily available to such Lender in accordance with
its customary funding operations for loans which are denominated in currencies
other than Dollars) or to making Syndicated Acquisition Loans to such proposed
Acquisition Subsidiary (with such Acquisition Direct Lenders approval of such
proposed Acquisition Subsidiary not to be unreasonably withheld). On the third
Working Day prior to the requested borrowing date (the "determination date"),
the Administrative Agent shall give written notice (the "determination notice")
to the Company and to each Acquisition Direct Lender specifying:
(x) in the event that each Acquisition Direct Lender has agreed
to provide such proposed Special Acquisition Currency or to make
Syndicated Acquisition Loans to such proposed Acquisition Subsidiary
(or, in the event that any Acquisition Direct Lender does not so
agree, but one or more other Acquisition Direct Lenders has agreed to
purchase
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Direct Acquisition Participations in the full amount of such
Acquisition Direct Lender's ratable share of the proposed Syndicated
Acquisition Loan, in which event the Direct Acquisition Lender who
does not so agree shall be obligated to sell such Direct Acquisition
Participations), that such Syndicated Acquisition Loan is to be made;
or
(y) otherwise, that such Syndicated Acquisition Loan is not to be
made.
(iii) In the event that the Administrative Agent specifies in the
determination notice that such Syndicated Acquisition Loan is to be made, such
Syndicated Acquisition Loan shall be made on the date specified in such notice
of borrowing; provided that the Company (on behalf of the relevant wholly-owned
Foreign Subsidiary) may, at any time on or prior to the fourth Working Day
prior to the requested borrowing date (as such borrowing date may be postponed
from time to time pursuant to clause (B) below), either (A) withdraw such
borrowing request or (B) postpone the requested borrowing date to a specified
date which is not more than 90 days following the originally requested
borrowing date. The Administrative Agent shall give prompt notice to the
Acquisition Direct Lenders of any such withdrawal or postponement notice
received from the Company and, in the event that any such postponement notice
is given and the new requested borrowing date is more than 45 days following
the date requested by the Company in its original notice of borrowing, each
Acquisition Direct Lender shall be entitled to withdraw its agreement to
provide any relevant Special Acquisition Currency (which withdrawal shall be
based solely upon the good faith determination by such Acquisition Direct
Lender that such proposed Special Acquisition Currency has ceased to be readily
available to such Lender in accordance with its customary funding operations
for loans which are denominated in currencies other than Dollars) or to make
Syndicated Acquisition Loans to any relevant proposed Acquisition Subsidiary
(with the maintenance by each Acquisition Direct Lender of its approval of such
proposed Acquisition Subsidiary not to be unreasonably withdrawn) by providing
written notice to the Administrative Agent not less than five Working Days
prior to the requested borrowing date. Unless the borrowing request has been
withdrawn or postponed, or any Acquisition Direct Lender has withdrawn its
agreement to provide the relevant Special Acquisition Currency or to make
Syndicated Acquisition Loans to such proposed Acquisition Subsidiary (and other
Acquisition Direct Lenders have not agreed to purchase Direct Acquisition
Participations in the full amount of such Acquisition Direct Lender's ratable
share of the proposed Syndicated Acquisition Loan), as set forth above on or
prior to the fourth Working Day prior to such requested borrowing date, such
borrowing request shall become irrevocable on the third Working Day prior to
such requested borrowing date.
(iv) In the event that the Administrative Agent specifies in the
determination notice that such Syndicated Acquisition Loan is not to be made,
the Company's borrowing request shall be deemed to be withdrawn.
(d) In the event that the requested Syndicated Acquisition Loans
are to be made on the requested borrowing date, each Acquisition Direct Lender
will make available to the Administrative Agent at the office of the
Administrative Agent specified in subsection 17.3 (or at such other location as
the Administrative Agent may direct), by 1:00 P.M., local time in the relevant
jurisdiction in which such funds are to be made available to the Administrative
Agent,
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on the requested borrowing date, an amount in the requested currency equal to
the Acquisition Commitment Percentage of such Acquisition Direct Lender times
the aggregate principal amount of the Syndicated Acquisition Loans requested to
be borrowed, in Dollars or the relevant Approved Acquisition Currency (as the
case may be) and in funds immediately available to the Administrative Agent.
Syndicated Acquisition Loan proceeds received by the Administrative Agent
hereunder shall promptly be made available to relevant Acquisition Borrower by
the Administrative Agent's crediting the account of such Acquisition Borrower
designated to the Administrative Agent with the aggregate amount actually
received by the Administrative Agent from the Acquisition Direct Lenders and in
like funds as received by the Administrative Agent.
(e) Each borrowing of Syndicated Acquisition Loans under the
Acquisition Loan Commitments shall, subject to subsection 10.8(h) and except in
the case of Acquisition Loans made in response to an Acquisition Loan
Conversion Notice and Acquisition Loans made pursuant to subsection 5.5 to
refund any Refunded Revolving Credit Loans, be in an aggregate principal amount
equal to (x) $10,000,000 or a whole multiple of $1,000,000 in excess thereof
(in the case of Eurocurrency Loans and Eurodollar Loans) or (y) the lesser of
$5,000,000 (or a whole multiple of $1,000,000 in excess thereof) or the
Available Acquisition Loan Commitment (in the case of Alternate Base Rate
Loans); provided that amounts denominated in an Approved Acquisition Currency
shall be in an aggregate principal amount equal to the Equivalent in such
Approved Acquisition Currency of the amounts set forth above, as rounded
upwards to the nearest 100,000 units (e.g., DM100,000, (pound)100,000 or
(Y)100,000) of the relevant Approved Acquisition Currency.
(f) Notwithstanding anything to the contrary contained in this
subsection 9.3, GE Capital shall not have any right to approve any Special
Acquisition Currencies (which right shall instead be vested in Citibank with
respect to GE Capital's Acquisition Loan Commitment Percentage of any requested
borrowing thereof) and shall have no obligation to, and shall not, fund any
Syndicated Acquisition Loans which are denominated in Approved Acquisition
Currencies. Any portion of a borrowing of Syndicated Acquisition Loans (other
than, except with the consent of Citibank, any such portion which is
attributable to the increased portion of the Aggregate Acquisition Loan
Commitment pursuant to subsection 9.7) which is made in an Approved Acquisition
Currency which would, in the absence of the provisions of this clause (f), have
been funded by GE Capital (the "GE Portion") shall instead be funded by
Citibank. In connection with such obligation to fund the GE Portion, Citibank
shall have all rights which otherwise would be attributable to GE Capital
hereunder with respect to the GE Portion (including, without limitation, the
right to receive interest and other amounts accruing on account thereof);
provided, however, that, for purposes of voting under this Agreement and the
other Credit Documents, GE Capital shall be deemed to hold the GE Portion and
shall be entitled to exercise voting rights on account thereof.
(g) The failure of any Acquisition Direct Lender to make the
Syndicated Acquisition Loan to be made by it on any requested borrowing date
shall not relieve any other Acquisition Direct Lender of its obligation
hereunder to make its Syndicated Acquisition Loan on such borrowing date, but
no Acquisition Direct Lender shall be responsible for the failure of
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any other Acquisition Direct Lender to make the Syndicated Acquisition Loan to
be made by such other Acquisition Direct Lender on such borrowing date.
9.4 Procedure for Borrowing Fronted Acquisition Loans. (a) The Company
may from time to time request a borrowing of Fronted Acquisition Loans by
giving irrevocable notice to the Administrative Agent, specifying (i) the
aggregate principal amount to be borrowed (which amount shall be denominated in
Dollars), (ii) the requested borrowing date, which borrowing date shall be a
Working Day, if the Fronted Acquisition Loans to be borrowed are Eurodollar
Loans or Eurocurrency Loans, or a Business Day, if the Fronted Acquisition
Loans to be borrowed are Alternate Base Rate Loans, (iii) whether the Fronted
Acquisition Loans to be borrowed are to be denominated in Dollars, Scheduled
Acquisition Currencies, Special Acquisition Currencies or a combination thereof
and, if a combination, the respective aggregate amount of each type of
borrowing, (iv) whether the Fronted Acquisition Loans to be borrowed are to be
Eurocurrency Loans, Eurodollar Loans or Alternate Base Rate Loans or a
combination thereof and, if a combination, the respective aggregate amount of
each type of borrowing and (v) if the Fronted Acquisition Loans to be borrowed
are Eurocurrency Loans or Eurodollar Loans, the length of the Interest Period
or Interest Periods applicable thereto. Such notice of borrowing also shall
identify the relevant Acquisition Fronting Lender and the relevant Acquisition
Borrower with respect thereto and provide any relevant wire transfer
instructions and other funding information with respect thereto. Any such
notice of borrowing must be received by the Administrative Agent prior to 11:00
A.M., New York City time, four Working Days prior to the requested borrowing
date, in the case of Eurocurrency Loans and Eurodollar Loans, and two Business
Days prior to the requested borrowing date, in the case of Alternate Base Rate
Loans. Upon receipt of any such notice, the Administrative Agent will promptly
notify the relevant Acquisition Fronting Lender thereof. Each Acquisition
Fronting Lender will make the requested Fronted Acquisition Loan available to
the relevant Acquisition Borrower, at the principal lending office of such
Acquisition Fronting Lender in the relevant jurisdiction, by 1:00 P.M., local
time, on the requested borrowing date, in Dollars or the relevant Approved
Acquisition Currencies (as the case may be) and in funds immediately available
to such Acquisition Borrower. The minimum amount of each borrowing of Fronted
Acquisition Loans shall, subject to subsection 10.8(h), be in an aggregate
principal amount to be mutually agreed upon by the relevant Acquisition
Fronting Lender and the relevant Acquisition Borrower.
(b) Notwithstanding anything to the contrary contained herein, no
Acquisition Direct Lender shall have any obligation to serve as an Acquisition
Fronting Lender and any such appointment of an Acquisition Direct Lender as an
Acquisition Fronting Lender shall be made only to the extent that such
Acquisition Direct Lender consents (in its sole discretion) thereto.
9.5 Matters Relating to Syndicated Acquisition Loans. (a) Upon the
occurrence and during the continuance of any Default or Event of Default, the
Administrative Agent may (or, upon the request of the Lenders holding the
majority of the Aggregate Acquisition Loan Commitment, shall) request from time
to time that any one or more of the Acquisition Loans made in Approved
Acquisition Currencies be converted into Dollars, by delivering to the
Acquisition Lenders and the relevant Acquisition Borrower (and, if such
Acquisition Borrower is an Acquisition Subsidiary, to the Company) a notice to
such effect (an "Acquisition Loan
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Conversion Notice"); provided that, in the event that any of the events
specified in Section 15(m) has occurred and is continuing, no actual
Acquisition Loan Conversion Notice shall be required, but rather such
Acquisition Loan Conversion Notice shall be deemed to have been delivered
(automatically and without any action by any Person) immediately prior to the
occurrence of such event.
(b) In the event that an Acquisition Loan Conversion Notice is
delivered or deemed to be delivered, all Acquisition Loans specified therein
promptly shall be converted by each Acquisition Lender into Dollars at the
actual exchange rate at which such Acquisition Lender would be able to obtain
the applicable amount of the relevant Approved Acquisition Currency. Promptly
following such conversion, each Acquisition Lender shall notify the
Administrative Agent of the exchange rate utilized by it in making its
conversion (which rate shall be deemed to be correct, in the absence of
manifest error) and the amount in Dollars of its relevant Acquisition Loans
(after giving effect to such conversion). The Administrative Agent promptly
shall notify each Acquisition Lender and the relevant Acquisition Borrower
(and, if such Acquisition Borrower is an Acquisition Subsidiary, the Company)
of the aggregate outstanding principal amount (in Dollars) of such converted
Acquisition Loan and shall provide the relevant Acquisition Borrower (and, if
such Acquisition Borrower is an Acquisition Subsidiary, the Company) with the
conversion data provided to the Administrative Agent by each Acquisition
Lender. From and after such conversion, (i) all such specified Acquisition
Loans shall be deemed to be outstanding in Dollars as Alternate Base Rate Loans
and (ii) all amounts from time to time accruing, and all amounts from time to
time payable, on account of such converted Acquisition Loans (including,
without limitation, any interest and other amounts which were accrued but
unpaid on the date of such conversion) shall be payable in Dollars as if such
Acquisition Loan originally had been made in Dollars.
9.6 Matters Relating to Fronted Acquisition Loans. (a) Each
Acquisition Direct Lender hereby unconditionally and irrevocably agrees to
purchase (in Dollars) an undivided participating interest in its ratable share
of such Fronted Acquisition Loans made by such Acquisition Fronting Lenders as
the Administrative Agent may at any time request; provided that:
(i) the Administrative Agent hereby agrees that, unless an Event of
Default has occurred and is continuing, it will not request any such
purchase of participating interests unless the Administrative Agent has
given to the Company and the relevant Acquisition Subsidiary (if any) three
Business Days' prior notice thereof;
(ii) the Administrative Agent hereby agrees that it promptly will
request that the Acquisition Direct Lenders purchase such participating
interest in all Fronted Acquisition Loans made by any Acquisition Fronting
Lender which provides to the Administrative Agent a written certification
that an Event of Default described in Section 15(a) is continuing with
respect to the Fronted Acquisition Loans made by such Acquisition Fronting
Lender and requesting that such request be made by the Administrative
Agent;
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(iii) in the event that any of the events specified in clauses (i),
(ii) or (iii) of Section 15(m) shall have occurred with respect to any
Acquisition Borrower, each Acquisition Direct Lender shall be deemed to
have purchased, automatically and without request, such participating
interest in the Fronted Acquisition Loans made to such Acquisition
Borrower; and
(iv) Any Restricted Lender's obligation to purchase participating
interests from an Acquisition Fronting Lender shall be subject to the
provisions of clause (e) below.
Any such request by the Administrative Agent shall be made in writing to each
Acquisition Direct Lender and shall specify the amount of Dollars (based upon
the actual exchange rate at which the Administrative Agent anticipates being
able to obtain the relevant Approved Acquisition Currency, with any excess
payment being refunded to the Acquisition Direct Lenders and any deficiency
remaining payable by the Acquisition Direct Lenders) required from such
Acquisition Direct Lender in order to effect the purchase by such Acquisition
Direct Lender of a participating interest in the amount equal to its
Acquisition Loan Commitment Percentage times the aggregate then outstanding
principal amount (in the Approved Acquisition Currency) of the relevant Fronted
Acquisition Loans (together with accrued interest thereon and other amounts
owing in connection therewith) in such Approved Acquisition Currency. Promptly
upon receipt of such request, each Acquisition Direct Lender shall deliver to
the Administrative Agent (in immediately available funds) the amount of Dollars
so specified by the Administrative Agent. The Administrative Agent shall
convert such amounts into the relevant Approved Acquisition Currency and shall
promptly deliver the proceeds of such conversion to the relevant Acquisition
Fronting Lender in immediately available funds. Promptly following receipt
thereof, such Acquisition Fronting Lender will deliver to each Acquisition
Direct Lender (through the Administrative Agent) an Acquisition Loan
Participation Certificate dated the date of receipt of such funds and in such
amount. From and after such purchase, (i) the outstanding Syndicated
Acquisition Loans in which the Acquisition Direct Lenders have purchased such
participations shall be deemed to have been converted into Alternate Base Rate
Loans (with such conversion constituting, for purposes of subsection 10.12, a
prepayment of such Fronted Acquisition Loans before the last day of the
Interest Period with respect thereto) and (ii) all amounts from time to time
accruing, and all amounts from time to time payable, on account of such Fronted
Acquisition Loans (including, without limitation, any interest and other
amounts which were accrued but unpaid on the date of such purchase) shall be
payable in Dollars as if such Fronted Acquisition Loan had originally been made
in Dollars and shall (other than with respect to the portion of the Applicable
Margin which, pursuant to subsection 10.6, is expressly stated to be paid for
the account of the Fronting Lender) be distributed by the relevant Acquisition
Fronting Lender to the Administrative Agent, for the accounts of the
Acquisition Direct Lenders, on account of such participating interests.
Notwithstanding anything to the contrary contained in this subsection 9.6, the
failure of any Acquisition Direct Lender to purchase its participating interest
in any Fronted Acquisition Loan shall not relieve any other Acquisition Direct
Lender of its obligation hereunder to purchase its participating interest in a
timely manner, but no Acquisition Direct Lender shall be responsible for the
failure of any other Acquisition Direct Lender to purchase the participating
interest to be purchased by such other Acquisition Direct Lender on any date.
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(b) If any amount required to be paid by any Acquisition Direct Lender
pursuant to subsection 9.6(a) is paid to the Administrative Agent within three
Business Days following the date upon which such Acquisition Direct Lender
receives notice from the Administrative Agent that the Fronted Acquisition Loan
in which such Acquisition Direct Lender has purchased a participating interest
has been made or created (as the case may be), such Acquisition Direct Lender
shall pay to the Administrative Agent on demand an amount equal to the product
of (i) such amount, times (ii) the daily average Federal funds rate, as quoted
by the Administrative Agent, during the period from and including the date such
payment is required to the date on which such payment is immediately available
to the Administrative Agent, times (iii) a fraction the numerator of which is
the number of days that elapse during such period and the denominator of which
is 360. If any such amount required to be paid by any Acquisition Direct Lender
pursuant to subsection 9.6(a) is not in fact made available to the
Administrative Agent within three Business Days following the date upon which
such Acquisition Direct Lender receives notice from the Administrative Agent
that the Fronted Acquisition Loan in which such Acquisition Direct Lender has
purchased a participating interest has been made or created (as the case may
be), the Administrative Agent shall be entitled to recover from such
Acquisition Direct Lender, on demand, such amount with interest thereon
calculated from such due date at the rate per annum applicable to Alternate
Base Rate Loans hereunder. A certificate of the Administrative Agent submitted
to any Acquisition Direct Lender with respect to any amounts owing under this
subsection 9.6(b) shall be conclusive in the absence of manifest error. Amounts
payable by any Acquisition Direct Lender pursuant to this subsection 9.6(b)
shall be paid to the Administrative Agent, for the account of the relevant
Acquisition Fronting Lender; provided that, if the Administrative Agent (in its
sole discretion) has elected to fund on behalf of such Acquisition Direct
Lender the amounts owing to such Acquisition Fronting Lender, then the amounts
shall be paid to the Administrative Agent, for its own account.
(c) Whenever, at any time after the relevant Acquisition Fronting
Lender has received from any Acquisition Direct Lender such Acquisition Direct
Lender's participating interest in a Fronted Acquisition Loan pursuant to
clause (b) above, the Acquisition Fronting Lender receives any payment on
account thereof, such Acquisition Fronting Lender will distribute to the
Administrative Agent, for the account of such Acquisition Direct Lender, such
Acquisition Direct Lender's participating interest in such amount
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Acquisition Direct Lender's participating
interest was outstanding) in like funds as received; provided, however, that in
the event that such payment received by such Acquisition Fronting Lender is
required to be returned, such Acquisition Direct Lender will return to such
Acquisition Fronting Lender any portion thereof previously distributed by such
Acquisition Fronting Lender for the account of such Acquisition Direct Lender
in like funds as such payment is required to be returned by such Acquisition
Fronting Lender.
(d) Each Acquisition Direct Lender's obligation to purchase
participating interests pursuant to clause (a) above shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (a) any set-off, counterclaim, recoupment, defense or other right
which such Acquisition Direct Lender may have against the relevant Acquisition
Lender, the relevant Acquisition Borrower or any other Person for any reason
whatsoever; (b) the
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occurrence or continuance of an Event of Default; (c) any adverse change in the
condition (financial or otherwise) of the relevant Acquisition Borrower or any
other Person; (d) any breach of this Agreement by the relevant Acquisition
Borrower, any other Acquisition Borrower or any other Lender; or (e) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
(e) Notwithstanding anything to the contrary contained in herein, if
any Acquisition Direct Lender certifies at any time that such Lender believes
in good faith (after reasonable investigation) that the purchase by it of a
participating interest in any Acquisition Fronting Lender's Fronted Acquisition
Loans could reasonably be expected to cause such Acquisition Direct Lender to
be in violation of any applicable Requirement of Law of the jurisdiction in
which such Fronted Acquisition Loan is to be funded, such Acquisition Direct
Lender may, in lieu of committing to purchase such participating interest,
instead provide to the relevant Acquisition Fronting Lender a standby letter of
credit (from an issuer reasonably acceptable to such Acquisition Fronting
Lender) in the amount of such Acquisition Direct Lender's ratable share of such
Fronted Acquisition Loans, with any fees or other amounts payable by such
Acquisition Direct Lender on account of such standby letter of credit being for
the account of the relevant Acquisition Borrower. Each Acquisition Direct
Lender which provides such standby letter of credit (a "Restricted Lender") may
submit directly to the relevant Acquisition Borrower periodic invoices for the
amounts payable on account of such standby letter of credit (which invoice
shall be deemed to be correct in the absence of manifest error) and such
Acquisition Borrower hereby agrees to pay such amounts directly to such
Acquisition Direct Lender within 10 Business Days following such Acquisition
Borrower's receipt of such invoice.
(f) In the event that (i) the Acquisition Loan Commitment of an
Acquisition Fronting Lender shall at any time terminate (otherwise than on
termination of the Aggregate Acquisition Loan Commitment), (ii) an Acquisition
Fronting Lender shall assign all of its Acquisition Loan Commitment in
accordance with the provisions of subsection 17.7(c), (iii) an Acquisition
Fronting Lender shall elect to resign as such or (iv) the Company (on its own
behalf or as agent for the relevant Acquisition Subsidiary, as the case may be)
shall request that an Acquisition Fronting Lender do so, such Acquisition
Fronting Lender shall resign as Acquisition Fronting Lender by giving written
notice of its resignation to the Company, the relevant Acquisition Subsidiary
(if any) and the Administrative Agent, with such resignation becoming effective
on the date which is the earlier of (x) the date upon which an Acquisition
Direct Lender reasonably acceptable to the Administrative Agent and the Company
(on its own behalf and as agent for the relevant Acquisition Subsidiary) is
designated as a substitute Acquisition Fronting Lender in accordance with the
provisions of subsection 9.6(g) and such proposed Acquisition Fronting Lender
executes and delivers an Acquisition Fronting Lender Joinder Agreement and (y)
such other date upon which such resigning Acquisition Fronting Lender, the
Company and the relevant Acquisition Subsidiary otherwise agree; provided that
such effective date shall in no event be later than the date which is 30 days
following the date upon which such written notice of resignation is delivered
to the Company. Any Fronted Acquisition Loans made by such Acquisition Fronting
Lender which are outstanding on such termination date shall (unless such
Fronted Acquisition Loans are then being assigned to another Acquisition
Fronting Lender in
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accordance with the provisions of clause (x) above and all amounts then owing
to such resigning Acquisition Fronting Lender on account of its Fronted
Acquisition Loans are then paid to it in full) be due and payable on such
termination date.
(g) Each Acquisition Fronting Lender shall deliver to the
Administrative Agent on the first Business Day of each calendar month and on
any other date when any Fronted Acquisition Loan is repaid in whole or in part
a statement, substantially in the form of Exhibit S-3, showing (i) the
aggregate principal amount of Fronted Acquisition Loans denominated in Approved
Acquisition Currencies which are outstanding from such Fronting Lender as of
the close of business on the Business Day immediately preceding the date of
such statement, (ii) the aggregate principal amount of Local Loans denominated
in Dollars which are outstanding from such Fronting Lender as of the close of
business on the Business Day immediately preceding the date of such statement
and (iii) the exchange rate utilized by such Acquisition Fronting Lender on the
Business Day immediately preceding the date of such statement in calculating
the Equivalent in Dollars of the aggregate amount of Fronted Acquisition Loans
which are outstanding from such Lender. The Administrative Agent hereby agrees
to deliver a copy of each such statement to the Company promptly following its
receipt thereof and of any such statement to any Acquisition Direct Lender
promptly upon its request therefor.
9.7 Aggregate Acquisition Loan Commitment Increases. (a) At any time
when no Default or Event of Default has occurred and is continuing and with the
written consent of the Required Lenders the Company may elect to increase the
Aggregate Acquisition Loan Commitment. Upon written consent of the Required
Lenders to the amount (the "Offered Increase Amount") of such proposed
increase, the Company may, at its election, (i) offer one or more of the
Lenders the opportunity to participate in all or a portion of the Offered
Increase Amount pursuant to paragraph (c) below and/or (ii) offer one or more
additional banks, financial institutions or other entities (a "Prospective
Lender") the opportunity to assume all or a portion of the Offered Increase
Amount pursuant to paragraph (b) below; provided that any such offer to a
Prospective Lender which is not an Eligible Assignee shall require the consent
of the Administrative Agent (which consent shall not be unreasonably withheld).
(b) Any Prospective Lender which the Company selects to offer the
right to assume a portion of the Offered Increase Amount and which elects to
become a party to this Agreement and obtain an Acquisition Loan Commitment in
an amount so offered and accepted by it pursuant to subsection 9.7(a)(ii) shall
execute a New Lender Supplement with the Company and the Administrative Agent,
whereupon such Prospective Lender shall become an Acquisition Direct Lender for
all purposes and to the same extent as if originally an Acquisition Direct
Lender party hereto and shall be bound by and entitled to the benefits of this
Agreement, and Schedule II shall be deemed to be amended to add the name and
Acquisition Loan Commitment of such new Acquisition Direct Lender.
(c) Any Lender which accepts (in its sole discretion) an offer to it
by the Company to participate in all or a portion of the Offered Increase
Amount pursuant to subsection 9.7(a)(i) shall, in each case, execute an
Acquisition Loan Commitment Supplement with the Company and the Administrative
Agent, whereupon such Lender shall be bound by and entitled
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to the benefits of this Agreement with respect to the portion of the Offered
Increase Amount in which it has agreed to participate, and Schedule II shall be
deemed to be amended to reflect the Acquisition Loan Commitment of such Lender.
(d) Notwithstanding anything to the contrary in this subsection 9.7,
the Aggregate Acquisition Loan Commitment may be increased only in integral
multiples of $15,000,000 and in an aggregate amount not exceeding $200,000,000.
9.8 Mandatory Reduction of Aggregate Acquisition Loan Commitment. The
Aggregate Acquisition Loan Commitment shall be reduced on each date set forth
below by the amount set forth opposite such date:
Date Amount
---- ------
December 31, 1999 $25,000,000
June 30, 2000 30,000,000
December 31, 2000 30,000,000
June 30, 2001 45,000,000
December 31, 2001 45,000,000
Termination Date 25,000,000
provided that any voluntary reductions of the Aggregate Acquisition Loan
Commitment pursuant to subsection 10.1 shall be applied to satisfy the
commitment reductions otherwise required under this subsection 9.8 in the order
of the scheduled occurrences of such mandatory reductions and provided,
further, that in the event the Aggregate Acquisition Loan Commitment is
increased pursuant to subsection 9.7, each reduction of the Aggregate
Acquisition Loan Commitment set forth in this subsection 9.8 scheduled to occur
after the date of such increase shall be increased by an amount equal to the
product of (x) the amount of such increase in the Aggregate Acquisition Loan
Commitment and (y) a fraction, the numerator of which is the amount of such
reduction of the Aggregate Acquisition Loan Commitment and the denominator of
which is the sum of the remaining reductions of the Aggregate Acquisition Loan
Commitment scheduled to occur after the date of such increase.
9.9 Use of Proceeds of Acquisition Loans. The proceeds of the
Acquisition Loans hereunder shall be used by the relevant Acquisition Borrower
to (a) finance the Investment Consideration for Investments which are permitted
hereunder, (b) refinance the Investment Consideration for Investments which are
permitted hereunder and are made after the date hereof and (c) pay fees and
expenses relating thereto.
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SECTION 10. PROVISIONS RELATING TO CERTAIN EXTENSIONS OF CREDIT; FEES
AND PAYMENT
10.1 Voluntary Termination or Reduction of Aggregate Commitment. The
Company (on its own behalf and as agent for the Borrowing Subsidiaries) shall
have the right at any time, upon not less than five Business Days' notice to
the Administrative Agent, to terminate or, from time to time, permanently
reduce any Commitment, subject to the provisions of subsections 10.8(h) and
10.12, with any such voluntary reduction (a) being in an amount equal to
$5,000,000 or a whole multiple of $1,000,000 in excess thereof, (b) reducing
permanently the amount of such Commitment then in effect and (c) being applied,
in the case of reductions of the Aggregate Acquisition Loan Commitment, to the
remaining scheduled reductions thereof in order of their scheduled occurrence.
10.2 Optional Prepayments. (a) The Company and each Acquisition
Subsidiary may, subject to subsection 10.12, at any time and from time to time,
prepay any Initial Term Loans, Deferred Draw Term Loans, Revolving Credit
Loans, Swing Line Loans or Syndicated Acquisition Loans borrowed by it which
are then outstanding, in whole or in part, without premium or penalty, upon at
least three Working Days' irrevocable notice to the Administrative Agent, in
the case of Eurodollar Loans or Eurocurrency Loans and one Business Day's
irrevocable notice to the Administrative Agent, in the case of Alternate Base
Rate Loans, specifying (i) the date and amount of such prepayment, (ii) the
principal amount to be prepaid, (iii) whether the prepayment is of Initial Term
Loans, Deferred Draw Term Loans, Revolving Credit Loans, Swing Line Loans or
Acquisition Loans or a combination thereof, and, if of a combination thereof,
the amount of prepayment allocable to each (and, in the case of prepayments of
the Acquisition Loans denominated in Approved Acquisition Currencies, the
relevant Approved Acquisition Currency being prepaid) and (iii) whether the
prepayment is of Eurodollar Loans, Eurocurrency Loans or Alternate Base Rate
Loans or a combination thereof, and, if of a combination thereof, the amount of
prepayment allocable to each (and, with respect to such Eurodollar Loans and
Eurocurrency Loans, each Tranche thereof). Upon receipt of any such notice, the
Administrative Agent will promptly notify each affected Lender thereof. If any
such notice is given, the Company will make the prepayment specified therein,
and such prepayment shall be due and payable on the date specified therein.
Each partial prepayment pursuant to this subsection 10.2 shall be in an amount
equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof (or, in
the case of Swing Line Loans, $500,000 or a whole multiple of $100,000 in
excess thereof) and shall comply with subsection 10.8(h). Any such optional
prepayments of the Initial Term Loans or the Deferred Draw Term Loans shall be
applied to the remaining installments thereof in inverse order of their
scheduled maturities (to be applied first to the payments due under subsection
2.4(b) or subsection 3.4(b), as the case may be).
(b) The Company and each Local Subsidiary may, subject to subsection
10.12, at any time and from time to time, prepay any Local Loans borrowed by it
or Acceptances created for its account which are then outstanding, in whole or
in part, without premium or penalty, upon at least three Working Days'
irrevocable notice to the relevant Local Fronting Lender (with a copy to the
Administrative Agent), in the case of Eurodollar Loans or Eurocurrency Loans,
and two Business Day's irrevocable notice to such Local Fronting Lender, in the
case of Alternate
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Base Rate Loans, Local Rate Loans or Acceptances, specifying (i) the date and
amount of such prepayment, (ii) whether the amounts prepaid are on account of
Acceptances or Local Loans (and, if on account of Local Loans, whether such
Local Loans to be prepaid are denominated in Dollars or in a Denomination
Currency, as the case may be) or a combination thereof, and, if a combination
thereof, the amount of prepayment allocable to each and (iii) whether the
prepayment is of Eurodollar Loans or Alternate Base Rate Loans (in the case of
any prepayment of any such Loans denominated in Dollars) or Eurocurrency Loans
or Local Rate Loans (otherwise) or (in either case) a combination thereof, and,
if of a combination thereof, the amount of prepayment allocable to each (and,
with respect to such Eurodollar Loans, Eurocurrency Loans or, to the extent
applicable, Local Rate Loans, each Tranche thereof); provided, however, that
Local Loans borrowed by way of overdrafts may be repaid on same-day notice
without regard to any minimum amount of repayment required by this subsection
10.2(b), with any deposit of funds (whether by clearance of a check, receipt of
a wire transfer or otherwise) in the account of the relevant Local Subsidiary
maintained by the Local Fronting Lender with respect to such overdrafts being
deemed to constitute such notice of prepayment. If any such notice is given,
the relevant Local Borrower will make the prepayment specified therein, and
such prepayment shall be due and payable on the date specified therein. Each
partial prepayment of the Local Loans pursuant to this subsection 10.2 shall be
in such minimum amount as may be mutually agreed upon by the relevant Local
Fronting Lender and the relevant Borrower and shall comply with subsection
10.8(h); provided that in no event shall such minimum amount be greater than
$500,000 or the Equivalent thereof in the relevant Denomination Currency.
(c) The Company and each Acquisition Subsidiary may, subject to
subsection 10.12, at any time and from time to time, prepay any Fronted
Acquisition Loans borrowed by it which are then outstanding, in whole or in
part, without premium or penalty, upon at least three Working Days' irrevocable
notice to the relevant Acquisition Fronting Lender (with a copy to the
Administrative Agent), in the case of Eurodollar Loans or Eurocurrency Loans,
and two Business Day's irrevocable notice to such Acquisition Fronting Lender,
in the case of Alternate Base Rate Loans, specifying (i) the date and amount of
such prepayment, (ii) to the extent applicable, whether the amounts to be
prepaid are on account of Fronted Acquisition Loans which are denominated in
Dollars, Approved Acquisition Currencies or a combination thereof, and, if a
combination thereof, the amount of prepayment allocable to each and (iii)
whether the prepayment is of Eurodollar Loans or Alternate Base Rate Loans (in
the case of any prepayment of any such Loans denominated in Dollars) or a
combination thereof, and, if of a combination thereof, the amount of prepayment
allocable to each (and, with respect to such Eurodollar Loans and Eurocurrency
Loans, each Tranche thereof). If any such notice is given, the relevant
Acquisition Borrower will make the prepayment specified therein, and such
prepayment shall be due and payable on the date specified therein. Each partial
prepayment of the Fronted Acquisition Loans pursuant to this subsection 10.2(c)
shall be in such minimum amount as may be mutually agreed upon by the relevant
Fronting Lender and the relevant Borrower and shall comply with subsection
10.8(h); provided that in no event shall such minimum amount be greater than
$500,000 or the Equivalent thereof in the relevant Approved Acquisition
Currency.
10.3 Mandatory Prepayments. (a) If, at any time and from time to time,
the Aggregate Commitment is temporarily or permanently reduced pursuant to the
terms of this
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95
Agreement and, on the date of such reduction, the Company would not be able to
satisfy the conditions precedent to borrowing set forth in subsection 12.3, the
Company shall (and, if applicable, shall cause the Borrowing Subsidiaries to),
on the date of such reduction, repay the relevant Loans and/or Reimbursement
Obligations (and, to the extent necessary, cause the relevant then outstanding
Undrawn L/C Obligations to be Fully Secured) in accordance with the provisions
of subsections 10.5 by the amount of such reduction (or, if less, the amount of
the Payment Obligations then outstanding). In the event that, at any time after
the Company has caused then outstanding Undrawn L/C Obligations to be Fully
Secured pursuant to this subsection 10.3(a), the Company is able to satisfy the
conditions precedent to borrowing set forth in subsection 12.3 and the
Aggregate Multi-Currency Commitment or the Aggregate Special L/C Commitment, as
the case may be, then equals or exceeds the Aggregate Outstanding Multi-
Currency Extensions of Credit or the aggregate amount of Special L/C
Obligations, as the case may be, the amounts deposited by the Company in order
to cause such Undrawn L/C Obligations to be Fully Secured shall be promptly
returned to the Company.
(b) If, at any time and from time to time, the Aggregate Outstanding
Multi-Currency Extensions of Credit exceed the Aggregate Multi-Currency
Commitment then in effect, the Company and/or the Local Subsidiaries shall
immediately repay the Revolving Credit Loans, the Swing Line Loans, the Local
Loans, the Acceptances and/or the Operating L/C Reimbursement Obligations (and,
to the extent necessary, cause the then outstanding Undrawn Operating L/C
Obligations to be Fully Secured) in accordance with the provisions of
subsection 10.5 by the amount equal to such excess.
(c) If, at any time and from time to time, the then outstanding
Special L/C Obligations exceed the Aggregate Special L/C Commitment then in
effect, the Company shall immediately repay the Special L/C Obligations (and,
to the extent necessary, cause the then outstanding Undrawn Special L/C
Obligations to be Fully Secured) by the amount equal to such excess.
(d) If, at any time and from time to time, (i) the sum of (A) the
aggregate outstanding principal amount of the Syndicated Acquisition Loans
which are denominated in Dollars, (B) the aggregate outstanding principal
amount of the Fronted Acquisition Loans which are denominated in Dollars, (C)
the Equivalent in Dollars of 105% of the aggregate principal amount of then
outstanding Syndicated Acquisition Loans which are denominated in Approved
Acquisition Currencies and (D) the Equivalent in Dollars of 105% of the
aggregate principal amount of then outstanding Fronted Acquisition Loans which
are denominated in Approved Acquisition Currencies exceeds (ii) the Aggregate
Acquisition Loan Commitment then in effect, the Acquisition Borrowers shall
immediately repay the Acquisition Loans by the amount equal to such excess.
(e) If, at any time and from time to time, the sum of (i) the
aggregate outstanding principal amount of Local Loans denominated in Dollars
which are owing by the Local Borrowers to a Local Fronting Lender, (ii) the
Equivalent in Dollars of 105% of the aggregate outstanding principal amount of
Local Loans denominated in the relevant Denomination Currency which are owing
by the Local Borrowers to such Local Fronting Lender and (iii) the
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Equivalent in Dollars of 105% of the aggregate undiscounted face amount of
Acceptances in the relevant Denomination Currency which are owing by the
relevant Local Subsidiary to such Local Fronting Lender, exceeds the Currency
Sublimit for such Local Fronting Lender, such Local Borrowers shall, within
three Business Days, repay the Local Loans and Acceptances owing by them to
such Local Fronting Lender by the amount equal to such excess.
(f) Notwithstanding the provisions of subsection 10.3(a) above, the
Initial Term Loans owing to each Initial Term Loan Lender and the Deferred Draw
Term Loans owing to each Deferred Draw Term Loan Lender shall be repaid to the
extent required by subsection 10.5(a); provided that any Initial Term Loan
Lender or any Deferred Draw Term Loan Lender may elect to waive its right to
any payment owing to it pursuant to this subsection 10.3(f) and, if any Initial
Term Loan Lender or any Deferred Draw Term Loan Lender so elects, the amounts
otherwise payable to such Initial Term Loan Lender or such Deferred Draw Term
Loan Lender, as the case may be, shall instead be applied ratably to repay the
other Initial Term Loan Lenders or Deferred Draw Term Loan Lenders, as the case
may be (or, if no other Initial Term Loans or Deferred Draw Term Loans, as the
case may be, are then outstanding or payable to Initial Term Loan Lenders or
Deferred Draw Term Loan Lenders, as the case may be, who have not so waived
such payment, to reduce the Aggregate Acquisition Loan Commitment).
(g) The Acquisition Loans owing to the Acquisition Lenders promptly
(and in any event within one Business Day following receipt by the relevant
Person of such Net Proceeds) shall be repaid by the amount equal to the Net
Proceeds from any Net Proceeds Event in respect of a Resale Transaction;
provided that no such prepayment shall be required pursuant to this subsection
10.3(g) to the extent that (i) the Investment Consideration paid by the Company
and its Subsidiaries to acquire the assets being sold pursuant to such Resale
Transaction was financed entirely with Excess Cash Flow of the Company and its
Subsidiaries (a "Designated Resale Transaction") and (ii) the aggregate amount
of such Net Proceeds from all such Designated Resale Transactions does not
exceed $15,000,000.
(h) On the Termination Date, the Aggregate Commitment shall terminate
and the Borrowers shall cause all Payment Obligations to be Fully Satisfied.
10.4 Mandatory Commitment Reductions. (a) Unless the Lenders then
holding more than 85% of the Aggregate Commitment (excluding any portions
thereof held by any Non-Funding Lender) then in effect otherwise agree, the
Aggregate Commitment shall be promptly (and in any event on the date of receipt
by Revlon Holdings, any Revlon Holdings Support Party, the Company or any
Subsidiary of the Company of such Net Proceeds) permanently reduced by the
amount equal to the amount of Net Proceeds from any Net Proceeds Event (other
than a Net Proceeds Event described in clause (b) below) which has the effect
of releasing any material collateral provided for in any Security Document.
(b) Unless the Required Lenders otherwise agree, the Aggregate
Commitment shall be promptly (and in any event within one Business Day
following receipt by the relevant Person of such Net Proceeds) permanently
reduced by the amount equal to:
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(i) the aggregate amount of Net Proceeds received from Net Proceeds
Events in respect of the incurrence by any Revlon Holdings Support Party,
the Company or any of its Subsidiaries of Indebtedness for borrowed money;
(ii) the amount equal to the portion of the aggregate amount of Net
Proceeds (other than the Net Proceeds with respect to Net Proceeds Events
constituting Resale Transactions) received by Revlon Holdings, any Revlon
Holdings Support Parties, the Company and its Subsidiaries from all Net
Proceeds Events in respect of (A) the sale, transfer or other disposition
of capital stock or other equity interests of Revlon Holdings or any Revlon
Holdings Support Party, (B) the sale, lease, transfer or other disposition
of assets of Revlon Holdings or any Revlon Holdings Support Party and (C)
the sale, lease, transfer or other disposition of assets of the Company and
its Subsidiaries (including, without limitation, any primary issuance and
sale of equity securities) which (in the case of this clause (C) only) does
not have the effect of releasing material collateral provided for in any
Security Document; provided, however, that (x) no such reduction of the
Aggregate Commitment shall be required pursuant to this subsection
10.4(b)(ii) during any year ending on an anniversary of the date hereof to
the extent that the aggregate amount of such Net Proceeds, together with
all other Net Proceeds described in this subsection 10.4(b)(ii) received
during such year, is less than $10,000,000 or the Equivalent in any other
currency thereof, (y) no such reduction of the Aggregate Commitment shall
be required pursuant to this subsection 10.4(b)(ii) with respect to the Net
Proceeds from any Net Proceeds Event in respect of a Resale Transaction,
which Net Proceeds shall instead be applied in accordance with the
provisions of subsection 10.3(g), and (z) for purposes of this subsection
10.4(b)(ii) only, the term "Net Proceeds" shall not include the Net
Proceeds from any Specified Disposition to the extent that the aggregate
amount of Net Proceeds from all Specified Dispositions since the date
hereof does not exceed $25,000,000;
(iii) the amount equal to the aggregate amount of Net Proceeds
received by the Company and its Subsidiaries from any Net Proceeds Events
(other than those otherwise described in this subsection 10.4) of the
Company and its Subsidiaries; and
(c) Unless the Required Lenders otherwise agree, the Aggregate
Commitment shall be promptly (and in any event within one Business Day
following receipt by the Administrative Agent of the financial statements
contemplated by subsection 13.1(a) for such year) permanently reduced by the
amount equal to the Net Excess Cash Flow of the Company and its Subsidiaries
for the fiscal year of the Company covered by such financial statements
(commencing with the fiscal year ending December 31, 1997); provided that if
the Leverage Ratio of the Company and its Subsidiaries for the period of four
consecutive fiscal quarters ending on the last day of the fiscal year of the
Company covered by such financial statements is less than or equal to 4.25 to
1.0, the Aggregate Commitment shall not be required to be so reduced.
(d) If, any Borrower would incur costs pursuant to subsection 10.12 as
a result of any payment due pursuant to subsection 10.3 which result from any
commitment reduction
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required to be made pursuant to this subsection 10.4, such Borrower may deposit
the amount of such payment with the Administrative Agent, for the benefit of
the relevant Lenders, in a cash collateral account, until the end of the
applicable Interest Period at which time such payment shall be made (provided
that such deposit does not violate any provision of any Indenture). Each
Borrower hereby grants to the Administrative Agent, for the benefit of such
Lenders, a security interest in all amounts in which such Borrower has any
right, title or interest which are from time to time on deposit in such cash
collateral account and expressly waives all rights (which rights such Borrower
hereby acknowledges and agrees are vested exclusively in the Administrative
Agent) to exercise dominion or control over any such amounts.
10.5 Application of Payments and Commitment Reductions. (a) Any
reduction of the Aggregate Commitment required pursuant to subsection 10.4
shall be applied:
(i) ratably to the repayment of the Initial Term Loans and the
Deferred Draw Term Loans then outstanding and the reduction of the
Available Deferred Draw Term Loan Commitment and the Aggregate Acquisition
Loan Commitment (with any such reduction of the Aggregate Acquisition Loan
Commitment being applied ratably to the then remaining scheduled reductions
thereof);
(ii) to the extent that no Initial Term Loans or Deferred Draw Term
Loans remain outstanding, the Available Deferred Draw Term Loan Commitment
is zero and the Aggregate Acquisition Loan Commitment has been terminated,
to the reduction of the Aggregate Multi-Currency Commitment; and
(iii) to the extent that no Initial Term Loans or Deferred Draw Term
Loans remain outstanding, the Available Deferred Draw Term Loan Commitment
is zero and each of the Aggregate Acquisition Loan Commitment and the
Aggregate Multi-Currency Commitment has been terminated to the reduction of
the Aggregate Special L/C Commitment.
(b) To the extent that any reduction of the Aggregate Multi-Currency
Commitment necessitates the prepayment of amounts outstanding thereunder
pursuant to subsection 10.3, such prepayment shall be applied, first, to the
Swing Line Loans then outstanding; second, to the Revolving Credit Loans then
outstanding; third, to the reimbursement of all outstanding Operating L/C
Reimbursement Obligations; fourth, to the Local Loans and Acceptances then
outstanding; and, fifth, to causing the then outstanding Undrawn Operating L/C
Obligations to be Fully Secured.
(c) To the extent that any reduction of the Aggregate Multi-Currency
Commitment necessitates the prepayment of Local Loans and Acceptances
outstanding thereunder pursuant to subsection 10.3, such prepayment shall be
applied, first, to the Local Loans of such Local Borrowers as the Company (on
its own behalf and as agent of the Local Subsidiaries) may elect and, second,
to the Acceptances; provided that, during such time as an Event of Default has
occurred and is continuing, such prepayment shall be applied to the Local Loans
and (to the extent relevant) Acceptances of such Local Borrowers as the Agents
may elect.
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(d) To the extent that any reduction of the Aggregate Acquisition Loan
Commitment necessitates the prepayment of Acquisition Loans outstanding
thereunder pursuant to subsection 10.3, such prepayment shall be applied in
such manner as the Company (or, following the occurrence and during the
continuance of any Default or Event of Default, the Administrative Agent) may
elect;
(e) Any prepayment of the Initial Term Loans or the Deferred Draw Term
Loans required pursuant to subsection 10.3 or 10.4 shall be applied to the
outstanding installments thereof in inverse order of their scheduled maturities
(to be applied first to the payment due under subsection 2.4(b) or subsection
3.4(b), as the case may be).
10.6 Interest Rate and Payment Dates; Risk Participation Fees; Local
Administrative Fee. (a) The Eurodollar Loans shall bear interest on the unpaid
principal amount thereof for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate for such day plus the
Applicable Margin.
(b) The Alternate Base Rate Loans shall bear interest on the unpaid
principal amount thereof at a rate per annum equal to the Alternate Base Rate
plus the Applicable Margin.
(c) Each Eurocurrency Loan shall bear interest on the unpaid principal
amount thereof for each day during each Interest Period with respect thereto at
a rate per annum equal to the Eurocurrency Rate applicable to the relevant
Denomination Currency or Approved Acquisition Currency, as the case may be, for
such day plus the Applicable Margin.
(d) Each Local Rate Loan shall bear interest on the unpaid principal
amount thereof at a rate per annum equal to the Local Rate applicable to the
relevant Denomination Currency plus the Applicable Margin.
(e) If all or a portion of any amount owing hereunder shall not be
paid when due, all of the aggregate unpaid principal amount of the Loans,
Acceptances and unpaid Reimbursement Obligations, and (to the extent permitted
by applicable law) any overdue interest, fees and other amounts due under the
Credit Documents, shall (i) bear interest at a rate per annum which is equal to
the higher of (A) 2% above the rate which would otherwise be applicable thereto
pursuant to this subsection 10.6 and (B) the Alternate Base Rate plus 2-3/4%
and (ii) if such amount is on account of a Eurodollar Loan or a Eurocurrency
Loan, be converted to an Alternate Base Rate Loan or a Local Rate Loan, as the
case may be, at the end of the Interest Period applicable thereto.
(f) Interest on each Syndicated Loan accrued to but not including each
Interest Payment Date applicable thereto shall be payable in arrears on each
such Interest Payment Date; provided, however, that interest accruing on the
principal of or (to the extent permitted by applicable law) interest or any
other amount payable in connection with any such Syndicated Loan not paid when
due (whether at stated maturity, by acceleration or otherwise), shall be
payable from time to time upon demand of the Administrative Agent acting on the
affected Lenders' behalf.
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(g) Interest on each Fronted Loan accrued to but not including each
Interest Payment Date applicable thereto shall be payable in arrears to the
relevant Fronting Lender on each such Interest Payment Date; provided, however,
that interest accruing on the principal of, or (to the extent permitted by
applicable law) interest or any other amount payable in connection with, any
Fronted Loan not paid when due (whether at stated maturity, by acceleration or
otherwise), shall be payable from time to time upon demand of the
Administrative Agent acting on the affected Fronting Lender's behalf. Interest
on each Fronted Loan shall be payable to the relevant Fronting Lender in the
Denomination Currency or Approved Acquisition Currency applicable to it (or,
with respect to Fronted Loans which are denominated in Dollars, in Dollars). On
each Interest Payment Date (including, without limitation, each Interest
Payment Date with respect to Acceptances), the Fronting Lender shall deliver to
the Administrative Agent, the Company and the relevant Borrowing Subsidiary an
Interest Allocation Statement, substantially in the form of Exhibit S-2 or S-3
(as applicable), and the Company and the relevant Borrowing Subsidiary shall
(in the absence of manifest error) pay the amount specified therein on such
Interest Payment Date.
(h) As promptly as is practicable following each date upon which a
Local Fronting Lender receives a payment of interest under this Agreement on
account of Local Loans and/or Acceptances, such Local Fronting Lender shall
convert into Dollars (at the exchange rate then applicable to it) the amount
equal to (i) the portion of such payment which constitutes the Applicable
Margin thereon (or, with respect to each Multi-Currency Lender which funded the
purchase of a participating interest in such Local Loan or Acceptance pursuant
to subsection 8.4(a), as the case may be, such Multi-Currency Lender's
Multi-Currency Commitment Percentage of the full amount of such interest
payment) minus (ii) 1/4 of 1% per annum on the aggregate undiscounted face
amount of the extensions of credit on account of which such interest payment
was made (which unconverted amount shall be retained by such Local Fronting
Lender for its own account). In consideration of the agreement of the
Multi-Currency Lenders to purchase participating interests in the Local Loans
and Acceptances, each Local Fronting Lender hereby agrees to pay to the
Administrative Agent, for the ratable account of each Multi-Currency Lender, a
risk participation fee in the amount equal to the proceeds received by such
Local Fronting Lender from such conversion (other than any such proceeds
payable for the account of a Non-Funding Lender, which proceeds shall be
retained by such Local Fronting Lender for its own account) or, if no such
conversion is required, the amount which would have been converted if such
interest had been paid in a Denomination Currency; provided, however, that, in
the event that the Multi-Currency Lenders have funded the purchase of
participating interests in the extensions of credit on account of which such
interest payment was made pursuant to subsection 8.4(a), such Local Fronting
Lender shall instead pay to the Administrative Agent, for the account of each
Multi-Currency Lender which has so funded such purchase, the amount equal to
such Multi-Currency Lender's Multi-Currency Commitment Percentage of the
proceeds received by such Local Fronting Lender from such conversion. Such
amount shall be payable to the Administrative Agent in Dollars on the date upon
which such Local Fronting Lender receives the proceeds of such conversion. For
purposes of this subsection 10.6(h), interest shall be deemed to have been
received by the Local Fronting Lender on account of an Acceptance on the last
day of the calendar month in which such Acceptance matures.
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(i) On each date upon which any Local Borrower pays interest to a
Local Fronting Lender hereunder on account of any Local Loan and on each date
upon which any Acceptance is created by a Local Lender for the account of a
Local Borrower hereunder, such Local Borrower shall pay to such Local Fronting
Lender (for its own account) a local administrative fee in the amount equal to
1/4 of 1% per annum on the aggregate principal amount of the Local Loans with
respect to which such interest is being paid or on the aggregate undiscounted
face amount of such Acceptance, as the case may be.
(j) As promptly as is practicable following each date upon which an
Acquisition Fronting Lender receives a payment of interest under this Agreement
on account of Fronted Acquisition Loans, such Acquisition Fronting Lender shall
(if necessary) convert into Dollars (at the exchange rate then applicable to
it) the amount equal to the portion of such payment which constitutes the
Applicable Margin thereon (or, with respect to each Acquisition Direct Lender
which funded the purchase of a participating interest in such Fronted
Acquisition Loan pursuant to subsection 9.6(a), such Acquisition Direct
Lender's Acquisition Loan Commitment Percentage of the full amount of such
interest payment). In consideration of the agreement of the Acquisition Direct
Lenders to purchase participating interests in the Fronted Acquisition Loans,
each Acquisition Fronting Lender hereby agrees to pay to the Administrative
Agent, for the ratable account of each Acquisition Direct Lender, a risk
participation fee in the amount equal to the proceeds received by such
Acquisition Fronting Lender from such conversion (other than any such proceeds
payable for the account of a Non-Funding Lender, which proceeds shall be
retained by such Acquisition Fronting Lender for its own account). Such amount
shall be payable to the Administrative Agent in Dollars on the date upon which
such Acquisition Fronting Lender receives the proceeds of such conversion.
(k) On each date upon which any Acquisition Borrower pays interest to
an Acquisition Fronting Lender hereunder on account of any Fronted Acquisition
Loan, such Acquisition Borrower shall pay to such Acquisition Fronting Lender
(for its own account) a local administrative fee in the amount agreed upon
between such Acquisition Fronting Lender and such Acquisition Borrower at the
time such Acquisition Fronting Lender agreed to make such Fronted Acquisition
Loan.
10.7 Letter of Credit Fees, Commissions and Other Charges. (a) The
Company shall pay to the Administrative Agent, for the account of the relevant
Issuing Lender and the applicable L/C Participants with respect to each Letter
of Credit, a letter of credit commission with respect to such Letter of Credit
in an amount per annum equal to (i) the Applicable Margin applicable to
Eurodollar Loans on the date of payment of such letter of credit commission (of
which 1/4 of 1% per annum shall be for the account of the relevant Issuing
Lender and the remainder of such fee shall be for the accounts of the relevant
L/C Participants and such Issuing Lender to be shared ratably among them in
accordance with their respective Special L/C Commitment Percentages or
Multi-Currency Commitment Percentages, as applicable) times (ii) the undrawn
face amount of such Letter of Credit; provided that in no event shall such
letter of credit commission in respect of any Commercial Letter of Credit be
less than the amount which would be paid in respect of such Commercial Letter
of Credit if it had a tenor of 120 days.
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(b) Letter of credit commissions which are payable pursuant to clause
(a) above shall be non-refundable and shall be payable to the Administrative
Agent:
(i) with respect to any Commercial Letter of Credit having a tenor of
less than 120 days, in advance on the date of issuance of such Letter of
Credit on account of the period of 120 days; and
(ii) with respect to any other Letter of Credit, in arrears on account
of the period from the issuance date with respect thereto through the day
immediately preceding the next L/C Fee Payment Date (or, if earlier, the
expiry date for such Letter of Credit) and on each succeeding L/C Fee
Payment Date on account of the period from such L/C Fee Payment Date
through the day immediately preceding the next L/C Fee Payment Date (or, if
earlier, the expiry date for such Letter of Credit).
(c) In addition to the foregoing fees and commissions, the Company
shall pay or reimburse the relevant Issuing Lender directly (and not through
the Administrative Agent) in respect of each Letter of Credit for such normal
and customary costs and expenses as are incurred or charged by such Issuing
Lender in issuing, effecting payment under, amending or otherwise administering
any Letter of Credit issued by it.
(d) The Administrative Agent shall pay to each applicable L/C
Participant and the relevant Issuing Lender all fees and commissions
(including, without limitation, any fees and commissions paid to the
Administrative Agent for the account of each such L/C Participant and such
Issuing Lender on the issuance date of any Letter of Credit) received from time
to time by the Administrative Agent for their respective accounts pursuant to
this subsection 10.7 within one day following each L/C Fee Payment Date.
10.8 Conversion Options, Minimum Tranches and Maximum Interest
Periods. (a) The Borrowers may elect from time to time to convert outstanding
Syndicated Loans from Eurodollar Loans to Alternate Base Rate Loans by giving
the Administrative Agent at least one Business Day's prior irrevocable notice
of such election. The Borrowers may elect from time to time and at any time to
convert outstanding Syndicated Loans from Alternate Base Rate Loans to
Eurodollar Loans by giving the Administrative Agent at least three Working
Days' irrevocable notice of such election; provided that no Syndicated Loan may
be converted into a Eurodollar Loan when any Event of Default has occurred and
is continuing and the Administrative Agent has or the Required Lenders have
determined that such a conversion is not appropriate. Upon receipt of such
notice, the Administrative Agent shall promptly notify each affected Syndicated
Lender thereof. On the date on which such conversion is being made, each such
affected Syndicated Lender shall take such action as is necessary to effect
such conversion. All or any part of the outstanding Syndicated Loans may be
converted as provided herein.
(b) Any Syndicated Loans which are Eurodollar Loans may be continued
as such upon the expiration of an Interest Period with respect thereto by
giving the Administrative Agent at least three Working Days' irrevocable notice
for continuation thereof; provided that no such Eurodollar Loan may be
continued as such when any Event of Default has occurred and is
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continuing and the Administrative Agent has or the Required Lenders have
determined that such a continuation is not appropriate, and, instead, such
Eurodollar Loans shall be automatically converted to an Alternate Base Rate
Loan on the last day of the Interest Period for which a Eurodollar Rate was
determined by the Administrative Agent prior to the Administrative Agent's
obtaining knowledge of such Default or Event of Default. The Administrative
Agent shall notify each affected Syndicated Lender promptly that such automatic
conversion shall occur.
(c) Each Borrower may elect from time to time to convert outstanding
Fronted Loans from Eurodollar Loans to Alternate Base Rate Loans (in the case
of Fronted Loans which are in Dollars) by giving (or causing the Company to
give) the relevant Fronting Lender at least two Business Days' prior
irrevocable notice of such election. Each Local Borrower may elect from time to
time to convert outstanding Local Loans from Eurocurrency Loans to Local Rate
Loans (in the case of Local Loans which are in a Denomination Currency) by
giving (or causing the Company to give) the relevant Local Fronting Lender at
least two Business Days' prior irrevocable notice of such election. Each
Borrower may elect from time to time and at any time to convert outstanding
Fronted Loans from Alternate Base Rate Loans to Eurodollar Loans (in the case
of Fronted Loans which are in Dollars) by giving (or causing the Company to
give) the relevant Fronting Lender at least three Working Days' irrevocable
notice of such election; provided that no Alternate Base Rate Loans may be
converted to Eurodollar Loans when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Required Lenders have
determined that such a conversion is not appropriate. Each Local Borrower may
elect from time to time and at any time to convert outstanding Local Rate Loans
to Eurocurrency Loans (in the case of Local Loans which are in a Denomination
Currency) by giving (or causing the Company to give) the relevant Local
Fronting Lender at least three Working Days' irrevocable notice of such
election; provided that no Local Rate Loans may be converted to Eurocurrency
Loans when any Event of Default has occurred and is continuing and the
Administrative Agent has or the Required Lenders have determined that such a
conversion is not appropriate. Upon receipt of such notice, such Fronting
Lender shall promptly notify the Administrative Agent thereof. On the date on
which such conversion is being made, the relevant Fronting Lender shall take
such action as is necessary to effect such conversion. All or any part of the
outstanding Fronted Loans may be converted as provided herein.
(d) Any Local Loans which are Eurodollar Loans or Eurocurrency Loans
or (to the extent applicable) Local Rate Loans may be continued as such upon
the expiration of an Interest Period with respect thereto by giving the
relevant Local Fronting Lender at least three Working Days' irrevocable notice
for continuation thereof; provided that no such Eurodollar Loan or Eurocurrency
Loan may be continued as such when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Required Lenders have
determined that such a continuation is not appropriate, and, instead, such
Eurodollar Loans shall be automatically converted to Alternate Base Rate Loans
and such Eurocurrency Loans shall be automatically converted to Local Rate
Loans on the last day of the Interest Period for which a Eurodollar Rate or a
Eurocurrency Rate, as the case may be, was determined by the relevant Local
Fronting Lender prior to its obtaining knowledge of such Default or Event of
Default. The Administrative Agent shall notify the relevant Local Fronting
Lenders promptly that such automatic conversion shall occur.
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(e) Any Acquisition Loans which are Eurocurrency Loans shall be
continued as such for a new Interest Period of one month upon the expiration of
an Interest Period with respect thereto unless the relevant Acquisition
Borrower shall have given to:
(i) the Administrative Agent (in the case of Eurocurrency Loans which
are Syndicated Acquisition Loans) at least three Working Days' irrevocable
notice to the contrary; or
(ii) the relevant Acquisition Fronting Lender (in the case of
Eurocurrency Loans which are Fronted Acquisition Loans) at least four
Working Days' irrevocable notice to the contrary;
provided that, unless such Acquisition Loans are to be repaid upon the
expiration of such Interest Period or to become Converted Acquisition Loans,
any continuation of Syndicated Acquisition Loans which occurs when the
Administrative Agent has knowledge that any Default or Event of Default has
occurred and is continuing, and any continuation of Fronted Acquisition Loans
which occurs when the relevant Acquisition Fronting Lender has knowledge
thereof, shall be for an Interest Period of one month. Any Acquisition Loans
which are Eurocurrency Loans shall be converted into another Type of Loan only
in accordance with the provisions of subsection 10.16.
(f) In the event that a timely notice of conversion or continuation
with regard to Syndicated Loans which are Eurodollar Loans is not given in
accordance with this subsection 10.7, then, unless the Administrative Agent
shall have received timely notice from the Company in accordance with
subsection 10.2 that such Eurodollar Loans are to be prepaid on the last day of
such Interest Period, the Company shall be deemed irrevocably to have requested
that such Eurodollar Loans be converted into Alternate Base Rate Loans on the
last day of such Interest Period.
(g) In the event that a timely notice of conversion or continuation
with regard to Local Loans which are Eurodollar Loans or Eurocurrency Loans is
not given in accordance with this subsection 10.7, then, unless the relevant
Local Fronting Lender shall have received timely notice from the relevant
Borrower in accordance with subsection 10.2 that such Eurodollar Loans or
Eurocurrency Loans, as the case may be, are to be prepaid on the last day of
such Interest Period, such Borrower shall be deemed irrevocably to have
requested that such Eurodollar Loans be converted into Alternate Base Rate
Loans or such Eurocurrency Loans be converted into Local Rate Loans, as the
case may be, on the last day of such Interest Period. In the event that a
timely notice of continuation with regard to Local Rate Loans which are subject
to an Interest Period is not given in accordance with this subsection 10.7,
then, unless the relevant Local Fronting Lender shall have received timely
notice from the relevant Borrower in accordance with subsection 10.2 that such
Local Rate Loans are to be converted into Eurocurrency Loans or prepaid on the
last day of such Interest Period, such Borrower shall be deemed irrevocably to
have requested that such Local Rate Loans be continued as such on the last day
of such Interest Period for a new Interest Period which is the shortest such
Interest Period available to such Borrower from the relevant Local Fronting
Lender.
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(h) Any borrowing or continuation of Eurodollar Loans or Eurocurrency
Loans, or conversion to or from Eurodollar Loans or Eurocurrency Loans, or
payments or prepayments of Eurodollar Loans or Eurocurrency Loans, shall be in
such amounts and be made pursuant to such elections so that, after giving
effect thereto, (i) the aggregate principal amount of each Tranche of
Syndicated Loans which are Eurodollar Loans or Eurocurrency Loans shall be
$10,000,000 or a whole multiple (to the extent possible) of $1,000,000 in
excess thereof, provided that (A) Syndicated Acquisition Loans which are made
to refund any Refunded Revolving Credit Loans shall be in a minimum aggregate
principal amount of $5,000,000 and (B) Syndicated Acquisition Loans which are
denominated in an Approved Acquisition Currency shall be in an aggregate
principal amount equal to the Equivalent in such Approved Acquisition Currency
of the amounts set forth above, as rounded upwards to the nearest 100,000 units
(e.g., DM100,000, (pound)100,000 or (Y)100,000) of the relevant Approved
Acquisition Currency; (ii) the aggregate principal amount of each Tranche of
Local Loans which are Eurodollar Loans, Alternate Base Rate Loans, Eurocurrency
Loans and Local Rate Loans in each Denomination Currency shall be in such
amount as may be mutually agreed upon by the relevant Local Fronting Lender and
the relevant Borrower, (iii) the aggregate principal amount of each Tranche of
Fronted Acquisition Loans shall be in such amount as may be mutually agreed
upon by the relevant Acquisition Fronting Lender and the relevant Acquisition
Borrower, (iv) the aggregate principal amount of all Syndicated Loans which are
Alternate Base Rate Loans (other than Swing Line Loans) shall be $5,000,000 or
a whole multiple (to the extent possible) of $1,000,000 in excess thereof and
(v) there shall not be more than (A) twelve Tranches of Syndicated Loans which
are Eurodollar Loans at any one time outstanding, (B) two Tranches (or such
other number of Tranches as may be mutually agreed upon by the relevant
Fronting Lender and the relevant Borrowers) of Local Loans which are Eurodollar
Loans, Eurocurrency Loans and (to the extent that an Interest Period is
applicable thereto) Local Rate Loans in each Denomination Currency at any one
time outstanding and (C) two Tranches (or such other number of Tranches as may
be mutually agreed upon by the relevant Acquisition Fronting Lender and the
relevant Acquisition Borrowers) of Fronted Acquisition Loans which are
Eurodollar Loans and Eurocurrency Loans from any Acquisition Fronting Lender at
any one time outstanding.
10.9 Inability to Determine Interest Rate. (a) In the event that the
Administrative Agent or the relevant Fronting Lender shall have determined
(which determination, in the absence of manifest error, shall be conclusive and
binding upon each Borrower) that by reason of circumstances affecting the
relevant interbank eurocurrency market, adequate and reasonable means do not
exist for ascertaining the Eurodollar Rate or any relevant Eurocurrency Rate
for any Interest Period with respect to (i) any proposed Loan that the relevant
Borrower has requested be made as Eurodollar Loans or Eurocurrency Loans, (ii)
a Eurodollar Loan that will result from the requested conversion of all or part
of the Alternate Base Rate Loans into Eurodollar Loans, (iv) a Eurocurrency
Loan that will result from the requested conversion of all or part of the Local
Rate Loans in any Denomination Currency into Eurocurrency Loans, (v) the
continuation of a Eurodollar Loan or a Eurocurrency Loan as such for an
additional Interest Period (any such Loan described in clauses (i), (ii),
(iii), (iv) or (v) of this subsection 10.9(a) being herein called an "Affected
Loan"), the Administrative Agent or the relevant Fronting Lender (as the case
may be) shall forthwith give telecopy or telephonic notice of such
determination, confirmed in writing, to the relevant Borrower (with a copy to
the Company, the
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Administrative Agent and any affected Lenders) at least two Business Days prior
to, as the case may be, the borrowing date for such Eurodollar Loan or
Eurocurrency Loan, the conversion date for such Alternate Base Rate Loan or
Local Rate Loan or the last day of the Interest Period applicable to such
Eurodollar Loan or Eurocurrency Loan. Unless the relevant Borrower shall have
notified the Administrative Agent (in the case of any Syndicated Loan), the
relevant Local Fronting Lender (in the case of any Local Loan) or the
Administrative Agent and the relevant Acquisition Fronting Lender (in the case
of any Fronted Acquisition Loan) promptly upon receipt of such telecopy or
telephonic notice that it wishes to rescind or modify its request regarding
such Affected Loans, then, as the case may be, (x) any requested Eurodollar
Loan shall be made as an Alternate Base Rate Loan, continued as an Alternate
Base Rate Loan or converted into an Alternate Base Rate Loan, (y) any requested
Acquisition Loan which is a Eurocurrency Loan shall be converted into an
Alternate Base Rate Loan in accordance with the provisions of subsection 10.19
or (z) any requested Local Loan which is a Eurocurrency Loan shall be made as a
Local Rate Loan, continued as a Local Rate Loan or converted into a Local Rate
Loan. Until any such notice has been withdrawn by the Administrative Agent or
the relevant Fronting Lender, as the case may be, no further Affected Loans
shall be made.
(b) In the event that the Lenders holding the majority of the relevant
Commitment determine that the rates quoted by the Eurocurrency Reference
Lenders do not accurately reflect the cost to them of making or maintaining any
Syndicated Loans that a Borrower has requested that they make or maintain as,
or convert to, Eurodollar Loans or Eurocurrency Loans, as the case may be, the
Administrative Agent shall forthwith give telecopy or telephonic notice of such
determination to such Borrower (with a copy to the Company, to the extent that
the Company is not such Borrower) on or before the requested borrowing,
conversion or continuation date for such Syndicated Loans or the next
succeeding Interest Period with respect thereto. Unless the relevant Borrower
shall have notified the Administrative Agent promptly after receipt of such
telecopy or telephonic notice that it wishes to rescind or modify its borrowing
request, then (i) any such Eurodollar Loans shall be made as or converted to
Alternate Base Rate Loans and (ii) any such Syndicated Acquisition Loans which
are Eurocurrency Loans shall be converted into Alternate Base Rate Loans in
accordance with the provisions of subsection 10.19.
10.10 Illegality. (a) Notwithstanding any other provision herein, if
any change in law, rule, regulation, treaty or directive or in the
interpretation or application thereof, shall make it unlawful for any Lender
(other than a Fronting Lender) to make or maintain Eurodollar Loans or
Eurocurrency Loans as contemplated by this Agreement or to accept deposits in
order to make or maintain such Eurodollar Loans or Eurocurrency Loans, as the
case may be, (i) such Lender shall promptly notify the Administrative Agent and
the Company thereof, (ii) the agreements of such Lender hereunder to make,
continue or convert to Eurodollar Loans or Eurocurrency Loans, as the case may
be, shall be suspended forthwith and (iii) such Lender's Syndicated Loans then
outstanding as Eurodollar Loans or Eurocurrency Loans, if any, shall (A) in the
case of Eurodollar Loans or Eurocurrency Loans (other than Acquisition Loans),
automatically become Alternate Base Rate Loans for the duration of the
respective Interest Periods applicable thereto (or, if permitted by applicable
law, at the end of such Interest Periods)
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and (B) in the case of Acquisition Loans, be converted into Alternate Base Rate
Loans in accordance with the provisions of subsection 10.19.
(b) Notwithstanding any other provision herein, if any change in law,
rule, regulation, treaty or directive or in the interpretation or application
thereof, shall make it unlawful for any Local Fronting Lender to make or
maintain Local Loans as Eurodollar Loans in Dollars or Eurocurrency Loans in
the Denomination Currency applicable to it as contemplated by this Agreement or
to accept deposits in order to make or maintain such Eurocurrency Loans, (i)
such Local Fronting Lender shall promptly notify the Administrative Agent, the
Company and the relevant Local Subsidiary thereof, (ii) the agreements of such
Local Fronting Lender hereunder to make or convert to Eurodollar Loans or
Eurocurrency Loans, as the case may be, shall be suspended forthwith, (iii)
such Local Fronting Lender's Local Loans then outstanding as (A) Eurocurrency
Loans, if any, shall automatically become Local Rate Loans for the duration of
the respective Interest Periods applicable thereto (or, if permitted by
applicable law, at the end of such Interest Periods) or (B) Eurodollar Loans,
if any, shall automatically become Alternate Base Rate Loans for the duration
of the respective Interest Periods applicable thereto (or, if permitted by
applicable law, at the end of such Interest Periods).
(c) Notwithstanding any other provision herein, if any change in law,
rule, regulation, treaty or directive or in the interpretation or application
thereof, shall make it unlawful for any Acquisition Fronting Lender to make or
maintain its Eurocurrency Loans as contemplated by this Agreement or to accept
deposits in order to make or maintain such Eurocurrency Loans, (i) such
Acquisition Fronting Lender shall promptly notify the Administrative Agent, the
Company and the relevant Acquisition Subsidiary thereof and (ii) such
Acquisition Fronting Lender's Fronted Acquisition Loans shall be converted into
Alternate Base Rate Loans in accordance with the provisions of subsection 10.19
at the end of the relevant Interest Period (or on any earlier date as may be
required by applicable law).
(d) Notwithstanding any other provision herein, if any change in law,
rule, regulation, treaty or directive or in the interpretation or application
thereof, shall make it unlawful for any Multi-Currency Lender to purchase a
participating interest in any Local Loan or Acceptance, such Multi-Currency
Lender shall use reasonable efforts (including reasonable efforts to change the
office in which it is booking such participating interest) to avoid such
prohibition; provided, however, that such efforts shall not cause the
imposition on such Multi-Currency Lender of any additional costs or legal or
regulatory burdens deemed by such Multi-Currency Lender to be material or
otherwise be deemed by such Multi-Currency Lender to be disadvantageous to it
or contrary to its policies. In the event that such efforts are not sufficient
to avoid such prohibition, (i) such Multi-Currency Lender shall be deemed to be
a Non-Funding Lender with respect to such participating interest and the Local
Loan or Acceptance, as the case may be, to which it relates (except that such
Multi-Currency Lender shall not forfeit its voting rights under this Agreement
solely as a result of becoming a Non-Funding Lender pursuant to the provisions
of this clause (d)), (ii) such Multi-Currency Lender shall promptly notify the
Administrative Agent, the relevant Fronting Lender, the Company and the
relevant Local Subsidiary thereof and (iii) the agreements of such Fronting
Lender to make further Local Loans
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(or, to the extent applicable, to make further Local Loans upon such interest
rate basis) and Acceptances hereunder shall be suspended forthwith.
(e) Notwithstanding any other provision herein, if any change in law,
rule, regulation, treaty or directive or in the interpretation or application
thereof, shall make it unlawful for any Acquisition Direct Lender to purchase a
participating interest in any Fronted Acquisition Loan, such Acquisition Direct
Lender shall use reasonable efforts (including reasonable efforts to change the
office in which it is booking such participating interest) to avoid such
prohibition; provided, however, that such efforts shall not cause the
imposition on such Acquisition Direct Lender of any additional costs or legal
or regulatory burdens deemed by such Acquisition Direct Lender to be material
or otherwise be deemed by such Acquisition Direct Lender to be disadvantageous
to it or contrary to its policies. In the event that such efforts are not
sufficient to avoid such prohibition, (i) such Acquisition Direct Lender shall
be deemed to be a Non-Funding Lender with respect to such participating
interest and the Fronted Acquisition Loan to which it relates and (ii) such
Acquisition Direct Lender shall promptly notify the Administrative Agent, the
relevant Acquisition Fronting Lender, the Company and the relevant Acquisition
Subsidiary thereof.
(f) The Company agrees promptly to pay to any Syndicated Lender, and
each Borrower agrees promptly to pay to any Fronting Lender, any additional
amounts necessary to compensate such Lender for any costs incurred by it as a
consequence of such Borrower making any repayment in accordance with this
subsection 10.10, including, without limitation, any interest or fees payable
by such Lender to lenders of funds obtained by it in order to make or maintain
its Eurodollar Loans or Eurocurrency Loans, as the case may be. A certificate
as to any such costs payable pursuant to this subsection 10.10 submitted by an
officer of any Lender, through the Administrative Agent, to the Company (on its
own behalf or as agent of the Borrower) shall be conclusive, in the absence of
manifest error.
10.11 Requirements of Law; Changes of Law. (a) In the event that the
adoption of or any change in law, rule, regulation, treaty or directive or in
the interpretation or application thereof, or compliance by any Lender with any
request or directive (whether or not having the force of law) issued after the
date hereof from any central bank or other Governmental Authority:
(i) imposes upon such Lender any tax of any kind whatsoever with
respect to this Agreement, its Notes, any Letter of Credit, any Application
or any Loan, or changes the basis of taxation of payments to such Lender of
principal, commitment fee, interest or any other amount payable hereunder
(except for (x) income and franchise taxes imposed on such Lender by the
jurisdiction under the laws of which such Lender is organized or any
political subdivision or taxing authority thereof or therein, or by the
jurisdiction of the principal office of such Lender or any political
subdivision or taxing authority thereof or therein or the office of such
Lender from which it is making its Loans or any political subdivision or
taxing authority thereof or therein, (y) taxes resulting from the
substitution of any such system by another system of taxation, provided
that the taxes payable by such Lender subject to such other system of
taxation are not generally charged to borrowers from such Lender having
loans or advances bearing interest at a rate similar to the
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Eurodollar Rate, the Eurocurrency Rate or the Local Loan Rate and (z) taxes
imposed by way of deduction or withholding, which shall be exclusively
governed by subsection 10.13);
(ii) imposes, modifies or holds applicable any reserve, special
deposit, compulsory loan or similar requirement against any Loan made, or
assets held by, or credit extended by, or deposits or other liabilities in
or for the account of, or acquisition of funds by or for the account of,
any office of such Lender, which is not otherwise included in the
determination of the Eurodollar Rate, the Eurocurrency Rate or the Local
Loan Rate, as the case may be, hereunder; or
(iii) imposes on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender
of making, renewing, maintaining or participating in advances or extensions of
credit (including, without limitation, Acceptances) or issuing or participating
in Letters of Credit or to reduce any amount receivable by it in respect of its
Eurodollar Loans, Eurocurrency Loans or Local Rate Loans, then, in any such
case, the relevant Borrower shall promptly pay such Lender any additional
amounts necessary to compensate such Lender for such additional cost or reduced
amount receivable as reasonably determined by it with respect to this Agreement
(including, without limitation, its participating interests in Letters of
Credit, Acceptances and Local Loans), its Notes or its Loans after taking into
account any amounts paid or payable pursuant to subsection 10.13(a). If a
Lender becomes entitled to claim any additional amounts pursuant to this
subsection 10.11(a), it shall promptly notify the relevant Borrower, through
the Administrative Agent, of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to the
foregoing sentence submitted by an officer of a Lender, through the
Administrative Agent, to the relevant Borrower shall be conclusive, in the
absence of manifest error.
(b) In the event that any Lender shall have determined that the
adoption of any law, rule, regulation or guideline adopted pursuant to or
arising out of the International Convergence of Capital Measurement and Capital
Standards or of any Requirement of Law otherwise regarding capital adequacy, or
any change therein or in the interpretation or application thereof or
compliance by any Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) from any central bank or
Governmental Authority, does or shall have the effect of reducing the rate of
return on such Lender's capital as a consequence of its obligations hereunder
or under any Acceptance or Letter of Credit to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's policies with respect to capital adequacy) by
an amount which is reasonably deemed by such Lender to be material, then from
time to time, promptly after submission by such Lender, through the
Administrative Agent, to the relevant Borrower of a written request therefor,
such Borrower shall promptly pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
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(c) The agreements in this subsection 10.11 shall survive the
termination of this Agreement and payment of the Loans, the Notes, the Drafts,
the Reimbursement Obligations and all other amounts payable hereunder.
10.12 Indemnity. Each Borrower agrees to promptly pay and indemnify
each Lender for, and to hold such Lender harmless from, any loss or expense
which such Lender may sustain or incur in its reemployment of funds obtained in
connection with the making or maintaining of, or converting to, Eurodollar
Loans, Eurocurrency Loans or Local Rate Loans (including, without limitation,
its participating interests therein) as a consequence of (a) any default by
such Borrower in borrowing such Eurodollar Loans, Eurocurrency Loans or Local
Rate Loans after such Borrower has given a notice in respect thereof or (b) any
default by such Borrower in converting (i) Alternate Base Rate Loans to
Eurodollar Loans or Eurocurrency Loans, (ii) Eurocurrency Loans to Local Rate
Loans or (iii) Local Rate Loans to Eurodollar Loans or Eurocurrency Loans,
after such Borrower has given a notice in respect thereof or (c) any failure by
such Borrower to prepay Eurodollar Loans, Eurocurrency Loans or Local Rate
Loans, as the case may be, after such Borrower has given notice in respect
thereof or (e) any payment, prepayment (whether optional or mandatory) or
conversion (whether optional or mandatory) of any Eurodollar Loan or
Eurocurrency Loan (or, to the extent applicable, Local Rate Loan) by such
Borrower on a day which is not the last day of an Interest Period with respect
thereto. Without limiting the effect of the foregoing, the relevant Borrower
agrees to pay to each such Lender an amount equal to the excess, if any, of (i)
the amount of interest which otherwise would have accrued on the principal
amount paid, prepaid or not borrowed for (A) the period from the date of such
payment or prepayment to the last day of the Interest Period applicable to such
Eurodollar Loan or Eurocurrency Loan (or, to the extent applicable, Local Rate
Loan), as the case may be, or (B) in the case of a failure to borrow or to
convert, the Interest Period applicable to such Eurodollar Loan or Eurocurrency
Loan or Local Rate Loan (or, to the extent applicable, Local Rate Loan), as the
case may be, which would have commenced on the date specified for such
borrowing or conversion, at the applicable rate of interest for such Eurodollar
Loan or Eurocurrency Loan (or, to the extent applicable, Local Rate Loan)
provided for herein (exclusive of any margin applicable thereto) minus (ii) the
interest component of the amount such Lender would have bid in the relevant
interbank market in respect of such Loan (or, in the case of any Local Rate
Loans, the funding costs of the relevant Fronting Lender) if such Loan were to
be made on the date of such payment, prepayment, failure to borrow or failure
to convert, as the case may be. A certificate as to any additional amounts
payable pursuant to this subsection 10.12 submitted by an officer of a Lender,
through the Administrative Agent, to the relevant Borrower shall be conclusive,
absent manifest error. The agreements in this subsection 10.12 shall survive
termination of this Agreement and payment of the Loans, the Notes, the Drafts,
the Reimbursement Obligations and all other amounts payable hereunder.
10.13 Taxes. (a) All payments made by each Borrower under this
Agreement shall be made free and clear of, and without reduction for or on
account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority,
excluding, in the case of the Administrative Agent, the Documentation Agent,
the Syndication Agent and each Lender, income and franchise taxes imposed on
the Administrative
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Agent, the Documentation Agent, the Syndication Agent or such Lender by the
jurisdiction under the laws of which it is organized or any political
subdivision or taxing authority thereof or therein, or by the jurisdiction of
the principal office of the Administrative Agent, the Documentation Agent, the
Syndication Agent or such Lender or the office of such Lender from which it is
making its Loans or any political subdivision or taxing authority thereof or
therein, but not excluding any such tax imposed on or with respect to a
Multi-Currency Lender or an Acquisition Direct Lender that is required to be
withheld by a Fronting Lender or Borrower with respect to any payments due to a
Multi-Currency Lender or an Acquisition Direct Lender, as the case may be, from
such Fronting Lender or Borrower pursuant to this Agreement (all such non-
excluded taxes being called "Taxes"). If any Taxes are required to be withheld
from any amounts payable to the Administrative Agent, the Documentation Agent,
the Syndication Agent or any Lender hereunder, under the Notes or in respect of
any Draft or Letter of Credit, the amounts so payable to it shall (without any
obligation on the part of any Borrower to pay such amounts ratably in
accordance with the provisions of subsection 10.16) be increased to the extent
necessary to yield to the Administrative Agent, the Documentation Agent, the
Syndication Agent or such Lender (after payment of all Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified
in this Agreement and the Notes. Whenever any Taxes are payable by a Borrower,
as promptly as possible thereafter, such Borrower shall send to the
Administrative Agent, for its own account or for the account of the
Documentation Agent, the Syndication Agent or such Lender, as the case may be,
a certified copy of an original official receipt showing payment thereof. If
any Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts
or other required documentary evidence, such Borrower shall indemnify the
Administrative Agent, the Documentation Agent, the Syndication Agent and the
Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent, the Documentation Agent, the Syndication
Agent or any Lender as a result of any such failure. For purposes of this
Section 10.13 all payments made by a Fronting Lender pursuant to this Agreement
shall be treated as if such payments were made by the relevant Borrower.
(b) Except as the Company shall otherwise consent, each Lender hereby
severally (but not jointly) represents that under applicable law and treaties
in effect on the date of this Agreement no United States federal taxes will be
required to be withheld by the Administrative Agent or the Company with respect
to any payments to be made to such Lender in respect of this Agreement. Each
Syndicated Lender which itself is not incorporated under the laws of the United
States of America or a state thereof or which is lending from an office that is
not incorporated under the laws of the United States of America or a state
thereof agrees severally (but not jointly) that it will:
(x) (i) prior to the Closing Date, deliver to the Company and the
Administrative Agent two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, or successor applicable
form, as the case may be, certifying in each case that such Syndicated
Lender is entitled to receive all payments under this Agreement, the
Notes and the Drafts payable to it, without deduction or withholding
of any United States federal income taxes;
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(ii) deliver to the Company and the Administrative Agent two
further copies of the said Form 1001 or 4224, or successor applicable
form, or other manner of certification, as the case may be, on or
before the date that any such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Company; and
(iii) use its best efforts to obtain such extensions or renewals
thereof as may reasonably be requested by the Company, certifying that
such Syndicated Lender is entitled to receive payments under this
Agreement without deduction or withholding of any United States
federal income taxes; or
(y) in the case of any Initial Term Loan Lender or Deferred Draw Term
Loan Lender that is not a "bank" within the meaning of Section 881(c)(3)(A)
of the Code or a "10-percent shareholder" within the meaning of Section
881(c)(3)(B) of the Code, (i) represent to the Company (for the benefit of
the Company and the Administrative Agent) that it is not a bank within the
meaning of Section 881(c)(3)(A) of the Code or a "10-percent shareholder"
within the meaning of Section 881(c)(3)(B) of the Code, (ii) agree to
furnish to the Company on or before the date of any payment by the Company,
with a copy to the Administrative Agent, (A) a certificate substantially in
the form of Exhibit U-1 hereto (any such certificate a "U.S. Tax
Compliance Certificate") and (B) two accurate and complete original signed
copies of Internal Revenue Service Form W-8, or successor applicable form
certifying to such Term Loan Lender's or such Deferred Draw Term Loan
Lender's, as the case may be, legal entitlement at the date of such
certificate to an exemption from U.S. withholding tax under the provisions
of Section 881(c) of the Code with respect to payments to be made under
this Agreement (and to deliver to the Company and the Administrative Agent
two further copies of such form on or before the date it expires or becomes
obsolete and after the occurrence of any event requiring a change in the
most recently provided form and, if necessary, obtain any extensions of
time reasonably requested by the Company or the Administrative Agent for
filing and completing such forms), and (iii) agree, to the extent legally
entitled to do so, upon reasonable request by the Company, to provide to
the Company (for the benefit of the Company and the Administrative Agent)
such other forms as may be reasonably required to establish the legal
entitlement of such Term Loan Lender or such Deferred Draw Term Loan
Lender, as the case may be, to an exemption from withholding with respect
to payments under this Agreement (any Term Loan Lender or Deferred Draw
Term Loan Lender which complies with the requirements of this subsection
10.13(b)(y), a "Qualified Foreign Lender");
unless in any such case any change in law, rule, regulation, treaty or
directive, or in the interpretation or application thereof, has occurred prior
to the date on which any such delivery would otherwise be required which
renders all such forms inapplicable or which would prevent such Syndicated
Lender from duly completing and delivering any such form with respect to it and
such Syndicated Lender advises the Company that it is not capable of receiving
payments
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without any deduction or withholding of United States federal income tax.
Notwithstanding any provision of subsection 10.13(a) to the contrary, the
Company shall have no obligation to pay any amount to or for the account of any
Syndicated Lender on account of any Taxes pursuant to subsection 10.13(a)
(including, without limitation, the second sentence thereof) to the extent that
such amount results from (i) the failure of any Lender to comply with its
obligations pursuant to this subsection 10.13(b) (or, in the case of any
Transferee, pursuant to subsection 17.7(g)) or (ii) any representation or
warranty made or deemed to be made by any Syndicated Lender pursuant to this
subsection 10.13(b) (or, in the case of any Transferee pursuant to subsection
17.7(g)) proving to have been incorrect, false or misleading in any material
respect when so made or deemed to be made.
(c) Each Lender agrees to use reasonable efforts (including reasonable
efforts to change the office in which it is booking its Loans) to avoid or to
minimize any amounts which might otherwise be payable pursuant to subsection
10.11 or this subsection 10.13; provided, however, that such efforts shall not
cause the imposition on such Lender of any additional costs or legal or
regulatory burdens deemed by such Lender to be material or otherwise be deemed
by such Lender to be disadvantageous to it or contrary to its policies.
(d) In the event that such reasonable efforts pursuant to subsection
10.13(c) are insufficient to avoid all withholding taxes which would be payable
pursuant to this subsection 10.13, then such Lender (the "Taxable Lender")
shall use its best efforts to transfer to any other Lender (which is not
subject to such withholding taxes) its Dollar Loans and its Commitments
hereunder; provided, however, that such transfer shall not be deemed by such
Taxable Lender, in its sole discretion, to be disadvantageous to it or contrary
to its policies. In the event that the Taxable Lender is unable, or otherwise
is unwilling, so to transfer its Dollar Loans and Commitments, the Company may
designate an alternate bank or other financial institution to purchase the
Taxable Lender's Dollar Loans and Commitments and, subject to the approval of
the Administrative Agent (which approval shall not be unreasonably withheld),
the Taxable Lender shall transfer its Dollar Loans and Commitments to such
alternate bank or other financial institution and such alternate bank or other
financial institution shall become a Lender hereunder.
(e) The agreements in this subsection 10.13 shall survive termination
of this Agreement and payment of the Loans, the Notes, the Drafts, the
Reimbursement Obligations and all other amounts payable hereunder.
10.14 Commitment Fee. (a) The Company agrees to pay to the
Administrative Agent, for the account of each Special L/C Lender, a commitment
fee from and including the Closing Date in the amount equal to the Commitment
Fee Rate on the amount equal to the Special L/C Commitment Percentage of such
Special L/C Lender times the amount equal to the average daily excess of the
Aggregate Special L/C Commitment over the amount of then-outstanding Special
L/C Obligations during the period for which such fee is payable.
(b) The Company agrees to pay to the Administrative Agent, for the
account of each Multi-Currency Lender, a commitment fee from and including the
Closing Date in the amount equal to the Commitment Fee Rate on the amount equal
to the Multi-Currency
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Commitment Percentage of such Multi-Currency Lender times the sum of (i)
average daily Available Multi-Currency Commitment (without reduction for any
amount of Swing Line Loans from time to time outstanding) during the period for
which such fee is payable and (ii) the average daily amount by which the sum of
the Currency Sublimits exceeds the sum of the Equivalent in Dollars (calculated
on the last day of the fiscal quarter for which payment is due) of the
aggregate principal amount of Local Loans and the aggregate, undiscounted face
amount of Acceptances outstanding on each day during the period for which such
fee is payable.
(c) The Company agrees to pay to the Administrative Agent, for the
account of each Acquisition Direct Lender, a commitment fee from and including
the Closing Date in the amount equal to the Commitment Fee Rate on the amount
equal to (i) the Acquisition Loan Commitment Percentage of such Acquisition
Direct Lender times (ii) the amount by which the average daily amount of the
Aggregate Acquisition Loan Commitment exceeds the amount equal to the sum of
(A) the aggregate principal amount of the Acquisition Loans which are
outstanding in Dollars and (B) the Equivalent in Dollars (calculated on the
last day of the fiscal quarter for which payment is due) of the aggregate
principal amount of Acquisition Loans which are outstanding in Approved
Acquisition Currencies, in each case on each day during the period for which
such fee is payable.
(d) The Company agrees to pay to the Administrative Agent, for the
account of each Deferred Draw Term Loan Lender, a commitment fee from and
including the Closing Date in the amount equal to the Commitment Fee Rate on
the amount equal to the Deferred Draw Term Loan Commitment Percentage of such
Deferred Draw Term Loan Lender times the average daily Available Deferred Draw
Term Loan Commitment during the period for which such fee is payable.
(e) Each commitment fee owing pursuant to this subsection 10.14 shall
be payable, in arrears, (x) for each fiscal quarter of the Company (or portion
thereof) following the Closing Date, on the date which is two Business Days
following the last day of each such fiscal quarter (commencing on June 30,
1997); provided, that if the Company shall not have received from the
Administrative Agent the documentation supporting calculations of such
commitment fee prior to such date, then, on the date which is two Business Days
after the date of the Company's receipt from the Administrative Agent of such
supporting documentation and (y) on the last day of the Commitment Period (or,
in the case of the commitment fee owing pursuant to clause (d) of this
subsection 10.14, on the last day of the Deferred Draw Term Loan Commitment
Period).
10.15 Computation of Interest and Fees. (a) Interest in respect of the
Alternate Base Rate Loans bearing interest at a rate based upon the Prime Rate,
Letter of Credit commissions and commitment fees shall be calculated on the
basis of a 365 or 366-day year, as the case may be, for the actual days
elapsed. Interest in respect of the Local Rate Loans and Acceptances shall be
calculated on the basis of a 365 or 366-day year, as the case may be, for the
actual days elapsed or on such other basis as may be agreed from time to time
by the relevant Fronting Lender and the relevant Borrowers to reflect customary
practices in the relevant jurisdiction. Interest in respect of the Alternate
Base Rate Loans bearing interest at a rate based
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upon the Federal Funds Effective Rate or the Base CD Rate, the Eurodollar Loans
and the Eurocurrency Loans shall be calculated on the basis of a 360-day year
for the actual days elapsed (or, in the case of Eurocurrency Loans, such other
basis as may be agreed from time to time by the relevant Fronting Lender and
the relevant Borrower to reflect customary practices in the relevant
jurisdiction). The Administrative Agent will, as soon as practicable, notify
the Company and the Syndicated Lenders of each determination of a Eurodollar
Rate with respect to Syndicated Loans and of any change in the Alternate Base
Rate with respect to Syndicated Loans and the effective date thereof. Each
Local Fronting Lender will, as soon as practicable, notify the relevant
Borrower and the Administrative Agent of each determination of a Eurocurrency
Rate for its Denomination Currency, of a Eurodollar Rate for its Local Loans
which are Dollar Loans, of any change in the Local Rate for its Denomination
Currency, of any change in the Alternate Base Rate for its Local Loans which
are Dollar Loans and (in each case) the effective date thereof. Each
Acquisition Fronting Lender will, as soon as practicable, notify the relevant
Acquisition Borrower and the Administrative Agent of each determination of a
Eurocurrency Rate or Eurodollar Rate, as the case may be, for its Fronted
Acquisition Loans, of any change therein and (in each case) the effective date
thereof. Any change in the interest rate on a Syndicated Loan which is an
Alternate Base Rate Loan resulting from a change in the Alternate Base Rate due
to a change in the Prime Rate, Base CD Rate or Federal Funds Effective Rate
shall become effective as of the opening of business on the day on which such
change in the Prime Rate, Base CD Rate or Federal Funds Effective Rate, as the
case may be, shall become effective. Any change in the interest rate on a
Fronted Loan which is an Alternate Base Rate Loan resulting from a change in
the Alternate Base Rate shall become effective as of the opening of business in
the jurisdiction of the local lending office of the relevant Fronting Lender on
the day on which such change shall become effective. Any change in the interest
rate on a Local Rate Loan resulting from a change in the Local Rate shall
become effective as of the opening of business on the day on which such change
in the Local Rate shall become effective. Any change in the interest rate on a
Loan resulting from an increase or decrease in the relevant Applicable Margin
shall become effective as of the relevant Adjustment Date (regardless, in the
case of Eurodollar Loans, Eurocurrency Loans or, to the extent applicable,
Local Rate Loans, of the interest rate determined to be applicable or payable
in respect thereof on the first day of the relevant Interest Period). Any
change in the Letter of Credit commissions resulting from an increase or
decrease in the Applicable Margin with respect to Eurodollar Loans shall become
effective as of the next L/C Fee Payment Date for which payment is due in
respect of the relevant Letter of Credit.
(b) Except as set forth in subsection 10.9, each determination of an
interest rate by the Administrative Agent or the Fronting Lender, as the case
may be, pursuant to any provision of this Agreement shall be conclusive and
binding on the relevant Borrower and the Lenders, in the absence of manifest
error.
(c) If the Multi-Currency Commitment of a Eurocurrency Reference
Lender terminates (otherwise than on termination of the Aggregate Commitment)
or all of its Syndicated Loans are assigned, prepaid or repaid for any reason
whatsoever, such Eurocurrency Reference Lender shall cease to be a Eurocurrency
Reference Lender hereunder and the Administrative Agent (after consultation
with the Company and the affected Lenders) shall, by notice to the
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Company and such Lenders, designate another Multi-Currency Lender as a
Eurocurrency Reference Lender so that there shall at all times be at least two
Eurocurrency Reference Lenders.
(d) If either of the Eurocurrency Reference Lenders shall be unable or
shall otherwise fail to provide notice of a rate to the Administrative Agent as
contemplated in the definition of "Eurodollar Rate" or "Eurocurrency Rate" in
subsection 1.1, the Eurodollar Rate or Eurocurrency Rate, as the case may be,
that was to be determined in part on the basis of such rate shall be determined
on the basis of the rate or rates provided by the remaining Eurocurrency
Reference Lender, as contemplated in the relevant definition.
10.16 Pro Rata Treatment and Payments. (a) Each borrowing by the
Company of Initial Term Loans shall be made ratably from the Initial Term Loan
Lenders in accordance with the respective Initial Term Loan Commitment
Percentages thereof. Each borrowing by the Company of Deferred Draw Term Loans
shall be made ratably from the Deferred Draw Term Loan Lenders in accordance
with the respective Deferred Draw Term Loan Commitment Percentages thereof.
Each borrowing by the Company of Revolving Credit Loans, and each purchase by
the Multi-Currency Lenders of participating interests in Local Loans and
Acceptances, shall be made ratably from the Multi-Currency Lenders in
accordance with the respective Multi-Currency Commitment Percentages thereof.
Each borrowing by any Local Borrower of Local Loans and Acceptances shall be
made from the Local Fronting Lender with respect to the relevant Denomination
Currency. Each borrowing by an Acquisition Borrower of Syndicated Acquisition
Loans shall be made ratably from the Acquisition Direct Lenders in accordance
with the respective Acquisition Loan Commitment Percentages thereof. Each
Borrowing by an Acquisition Borrower of Fronted Acquisition Loans shall be made
from the Acquisition Fronting Lender with respect thereto.
(b) Whenever any payment received by the Administrative Agent under
this Agreement or any Note is insufficient to pay in full all amounts then due
and payable to the Administrative Agent and the Lenders under this Agreement,
the Notes and the Drafts:
(i) If the Administrative Agent has not received a Payment Sharing
Notice (or if the Administrative Agent has received a Payment Sharing
Notice but the Event of Default specified in such Payment Sharing Notice
has been cured or waived in accordance with the provisions of subsection
17.1), such payment shall be distributed by the Administrative Agent and
applied by the Administrative Agent and the Lenders in the following order:
first, to the payment of fees and expenses due and payable to the
Administrative Agent under and in connection with this Agreement; second,
to the payment of all expenses due and payable under subsection 17.6,
ratably among the Lenders in accordance with the aggregate amount of such
payments owed to each such Lender; third, to the ratable payment of fees
due and payable under subsection 10.14 and to the payment of letter of
credit commissions in respect of the Letters of Credit (ratably among the
Lenders in accordance with the relevant Commitment Percentage of each
Lender) and to the payment of interest then due and payable on the Loans
(including, in any event, the payment of the portion of the face amount of
any Draft which is in excess of the discounted proceeds of the Acceptance
created therefrom) and under the Notes
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(ratably in accordance with the aggregate amount of interest owed to each
such Lender); fourth, to the payment of the principal amount of the Loans
and the Notes which is, and to the payment of any Drafts and Reimbursement
Obligations which are, then due and payable, ratably among the Lenders in
accordance with the aggregate principal amount owed to each such Lender
(provided that amounts owing to (x) the Multi-Currency Lenders shall be
applied to the ratable payment of all amounts owing in respect of
participating interests that are owed to the Swing Line Lender, each
Issuing Lender and each Local Fronting Lender by any Non-Funding Lender
before the application of such amounts to other obligations owing to the
Multi-Currency Lenders pursuant to this clause "fourth" and (y) the
Acquisition Fronting Lenders shall be applied to the ratable payment of all
amounts owing in respect of participating interests that are owed to the
relevant Acquisition Fronting Lender by any Non-Funding Lender before the
application of such amounts to other obligations owing to the Acquisition
Direct Lenders pursuant to this clause "fourth"); and fifth, to the payment
of any other outstanding Payment Obligations then due and payable, ratably
among the Lenders in accordance with the aggregate amount owed to each
Lender; and any balance shall be returned to the Company (for its own
account or as agent for the relevant Borrowing Subsidiary); or
(ii) If the Administrative Agent has received a Payment Sharing Notice
which remains in effect, all payments received by the Administrative Agent
under this Agreement or any Note shall be distributed by the Administrative
Agent and applied by the Administrative Agent and the Lenders in the
following order: first, to the payment of all amounts described in clauses
"first" through "third" of the foregoing clause (i), in the order set forth
therein; second, to the payment of the principal amount of all Loans and
Notes, and to the payment of any Acceptances and Reimbursement Obligations,
regardless of whether any such amount is then due and payable, ratably
among the Lenders in accordance with the aggregate principal amount owed to
each such Lender (provided that amounts owing to (x) the Multi-Currency
Lenders shall be applied to the ratable payment of all amounts owing in
respect of participating interests that are owed to the Swing Line Lender,
each Issuing Lender and each Local Fronting Lender by any Non-Funding
Lender before the application of such amounts to other obligations owing to
the Multi-Currency Lenders pursuant to this clause "second" and (y) the
Acquisition Fronting Lenders shall be applied to the ratable payment of all
amounts owing in respect of participating interests that are owed to the
relevant Acquisition Fronting Lender by any Non-Funding Lender before the
application of such amounts to other obligations owing to the Acquisition
Direct Lenders pursuant to this clause "fourth"); and third, to the payment
of any other Payment Obligations, ratably among the Lenders in accordance
with the aggregate amount owed to each Lender; and any balance shall be
returned to the Company (for its own account or as agent for the relevant
Borrowing Subsidiary);
provided, however, that any payments received on account of a Local Loan or an
Acceptance shall be applied to the payment of principal, interest, fees and
other amounts owing on account of such Local Loan or Acceptance, as the case
may be, with any balance after the payment in full of such Local Loan being (to
the extent permitted under applicable law) applied by the Administrative Agent
to other amounts owing hereunder.
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(c) Notwithstanding the provisions of subsection 10.16(b), on any date
when and to the extent that, in the reasonable determination of the
Administrative Agent in its sole discretion, the Borrowers would be able, under
the terms and conditions hereof, to reborrow the amount of such payment (or
otherwise obtain additional extensions of credit) under the Aggregate
Commitment and to satisfy any conditions precedent to such reborrowing (or
other extension of credit), no portion of any such payment shall be distributed
to any Lender (a "Non-Funding Lender") which has (x) failed to make a Loan or
Refunded Swing Line Loan or to purchase (or otherwise make any payment on
account of) any participating interest held by such Non-Funding Lender in any
Reimbursement Obligation, Acceptance or Local Loan or (y) given notice to the
Company, any Fronting Lender or the Administrative Agent that it will not make,
or that it has disaffirmed or repudiated any obligation to make, any Loans or
Refunded Swing Line Loans, or to purchase (or otherwise make any payment on
account of) any participating interest held by such Non-Funding Lender in any
Reimbursement Obligation, Acceptance or Local Loan, in any such case by reason
of the provisions of the Financial Institution Reform, Recovery and Enforcement
Act of 1989 or otherwise (other than as the result of a good faith belief that
the conditions precedent to borrowing set forth in subsection 12.3 have not
been satisfied).
(d) All payments (including prepayments) to be made by the Company on
account of principal, interest and fees (other than those relating to Local
Loans and Acceptances) shall be made without set-off or counterclaim and shall
be made to the Administrative Agent for the account of the relevant Lenders
(or, in the case of payments on account of Swing Line Loans, to the
Administrative Agent for the account of the Swing Line Lender) at the office of
the Administrative Agent specified in subsection 17.3, or at such other
location as the Administrative Agent may direct, on or prior to 1:00 P.M., New
York City time, in lawful money of the United States of America (or, in the
case of Acquisition Loans which are denominated in Approved Acquisition
Currencies, in such Approved Acquisition Currency) and in immediately available
funds. The Administrative Agent shall distribute such payments in accordance
with the provisions of subsection 10.16(b) promptly upon receipt in like funds
as received; provided that payments received by the Administrative Agent on
account of interest or fees on the Local Loans and Acceptances may be held by
the Administrative Agent and distributed to the Multi-Currency Lenders not less
frequently than weekly.
(e) All payments (including prepayments) to be made by any Local
Borrower on account of principal, interest and fees relating to Local Loans and
Acceptances shall be made without set-off or counterclaim and shall be made to
the Local Fronting Lender to which such amounts are owing at the office of such
Local Fronting Lender specified in Schedule III, or at such other location as
such Local Fronting Lender may direct, on or prior to 1:00 P.M., local time at
the principal lending office of such Local Fronting Lender. Each such payment
shall, to the extent that it is owing on account of Local Loans which are
Dollar Loans, be paid in Dollars and, otherwise, shall be paid in the relevant
Denomination Currency and in immediately available funds. Each Local Fronting
Lender shall give prompt notice to the Administrative Agent of amounts from
time to time received by it hereunder.
(f) All payments (including prepayments) to be made by any Acquisition
Borrower on account of principal, interest and fees relating to Fronted
Acquisition Loans shall be
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made without set-off or counterclaim and shall be made to the Acquisition
Fronting Lender to which such amounts are owing at the office of such
Acquisition Fronting Lender specified in Schedule III, or at such other
location as such Acquisition Fronting Lender may direct, on or prior to 1:00
P.M., local time at the principal lending office of such Acquisition Fronting
Lender. Each such payment shall, to the extent that it is owing on account of
Fronted Acquisition Loans which are denominated in Dollars, be paid in Dollars
and, otherwise, shall be paid in the relevant Approved Acquisition Currency and
in immediately available funds. Each Acquisition Fronting Lender shall give
prompt notice to the Administrative Agent of repayments of principal from time
to time received by it hereunder.
(g) If any payment hereunder (other than payments on Eurodollar Loans
or Eurocurrency Loans) becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension. If any payment hereunder on a
Eurodollar Loan or a Eurocurrency Loan becomes due and payable on a day other
than a Working Day, the maturity thereof shall be extended to the next
succeeding Working Day unless the effect of such extension would be to extend
such payment into another calendar month, in which event such payment shall be
made on the immediately preceding Working Day.
(h) Unless the Administrative Agent shall have been notified by
telephone, confirmed in writing, by any Syndicated Lender prior to a borrowing
date that such Lender will not make the amount which would constitute its
Commitment Percentage of the borrowing to be made on such date available to the
Administrative Agent on such borrowing date, the Administrative Agent may
assume that such Syndicated Lender has made such amount available to the
Administrative Agent and, in reliance upon such assumption, make available to
the relevant Borrower a corresponding amount. If such amount is made available
to the Administrative Agent on a date after such borrowing date, such
Syndicated Lender shall pay to the Administrative Agent on demand an amount
equal to the product of (i) the daily average Federal Funds Effective Rate
during such period as determined by the Administrative Agent times (ii) such
amount times (iii) a fraction of which the numerator is the number of days from
and including such borrowing date to the date on which such amount becomes
immediately available to the Administrative Agent and of which the denominator
is 360. A certificate of the Administrative Agent submitted to any Syndicated
Lender with respect to any amounts owing under this paragraph (g) shall be
conclusive, in the absence of manifest error. If such amount is not in fact
made available to the Administrative Agent by such Syndicated Lender within
three Business Days after such borrowing date, the Administrative Agent shall
be entitled to recover such amount, with interest thereon at the rate per annum
then applicable to Alternate Base Rate Loans hereunder, within eight Business
Days after demand, from the relevant Borrower.
10.17 Payments on Account of Loans and Fees. All payments and
prepayments hereunder shall be made in accordance with the provisions of
subsection 10.16(d) and (e).
10.18 Interest Act (Canada). For purposes of the Interest Act
(Canada), whenever any interest under this Agreement on account of Local Loans,
Acceptances or
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Acquisition Loans which are made in Canada or made to any Borrowing Subsidiary
which is organized under the laws of Canada or any Province thereof is
calculated using a rate based upon a year of 360 days, such rate determined
pursuant to such calculation, when expressed as an annual rate, is equivalent
to (x) the applicable rate based upon a year of 360 days, (y) multiplied by the
actual number of days in the calendar year in which the period for which such
interest is payable ends, and (z) divided by 360. The rates of interest
specified in this Agreement are nominal rates and all interest payments and
computations are to be made without allowance or deduction for deemed
reinvestment of interest.
10.19 Converted Acquisition Loans. (a) In the event that any
Acquisition Loan shall be required to be converted into an Alternate Base Rate
Loan pursuant to the provisions of subsection 10.9(a), 10.9(b) or 10.10(a)
(each such Acquisition Loan, a "Converted Acquisition Loan"), such Acquisition
Loan immediately shall be deemed to be repaid to the relevant Acquisition
Lenders in the Approved Acquisition Currency applicable to it and to be
immediately re-borrowed in the Equivalent in Dollars of the amount so repaid.
Any amounts so re-borrowed in Dollars shall be borrowed as Alternate Base Rate
Loans. Notwithstanding anything to the contrary contained herein, the relevant
Acquisition Borrower shall not be required to satisfy the conditions precedent
to borrowing contained in Section 12.3 with respect to such re-borrowing of
Converted Acquisition Loans. The Administrative Agent shall give prompt notice
to the Acquisition Lenders and to the relevant Acquisition Borrower (with a
copy to the Company, to the extent that it is not the relevant Acquisition
Borrower) of any such conversion.
(b) In the event that the circumstances which caused a Converted
Acquisition Loan to be so converted shall terminate, the relevant Acquisition
Borrower may request that such Converted Acquisition Loan be converted from
Dollars into the Approved Acquisition Currency from which it was originally
converted and such Converted Acquisition Loan shall be so converted into the
Equivalent in such Approved Acquisition Currency (without any requirement that
the conditions precedent to borrowing contained in Section 12.3 be satisfied
with respect to such conversion) on the date which is three Business Days
following the date of receipt by the Administrative Agent of such request;
provided that no such conversion from Dollars into the relevant Approved
Acquisition Currency shall be permitted during such time as (i) any Default or
Event of Default has occurred and is continuing or (ii) the Available
Acquisition Loan Commitment (after giving effect to such conversion) will be
less than zero.
SECTION 11. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders, the Administrative Agent, the
Documentation Agent and the Syndication Agent to enter into this Agreement and
to make the Loans and to issue or participate in Letters of Credit hereunder,
the Company hereby represents and warrants to each of them that:
11.1 Corporate Existence. Each Borrower is duly organized, validly
existing and (to the extent applicable under the laws of the jurisdiction of
its organization) in good standing
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under the laws of the jurisdiction of its incorporation, has the corporate (or
other requisite legal) power to own its assets and to transact the business in
which it is presently engaged, and is (to the extent applicable under the laws
of the relevant jurisdiction) duly qualified as a foreign corporation and (to
the extent applicable under the laws of the relevant jurisdiction) in good
standing under the laws of each jurisdiction where its ownership or lease of
property or the conduct of its business requires such qualification and where
all such failures to so qualify and be in good standing would, in the
aggregate, be reasonably likely to have a Material Adverse Effect.
11.2 Corporate Power. (a) Each Borrower has the corporate power,
authority and legal right to execute, deliver and perform this Agreement, the
Applications, the Notes, the Drafts and the Security Documents to which it is a
party and to borrow hereunder, and it has taken as of the Closing Date all
necessary corporate action to authorize its borrowings on the terms and
conditions of this Agreement and to authorize the execution, delivery and
performance of this Agreement, the Applications, the Notes, the Drafts and the
Security Documents to which it is a party.
(b) No consent of any other Person (including, without limitation,
stockholders or creditors of any Borrower or of any Parent of the Company), and
no consent, license, permit, approval or authorization of, exemption by, or
registration, filing or declaration with, any Governmental Authority is
required in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, the Applications, the Notes, the Drafts and
the Security Documents to which any Borrower is a party by or against such
Borrower, except for (i) filing of amendments to, and assignments of, the
Mortgages, (ii) any filings required under the Uniform Commercial Code, (iii)
any filings required to be made with the United States Patent and Trademark
Office and the United States Copyright Office, (iv) any filings, notices,
consents, licenses, permits, approvals, authorizations, registrations or
declarations required under the laws of jurisdictions other than the United
States or any political subdivision thereof in connection with the pledge of
stock or assets of Foreign Subsidiaries, (v) with respect to any consent
required or purportedly required in connection with the execution, delivery and
performance of any Security Document, any such consents the absence of which,
in the aggregate, would not be reasonably likely to have a material adverse
effect on the value of such category of the Collateral and (vi) any consents,
licenses, permits, approvals or authorizations, exemptions, registrations,
filings or declarations that have already been obtained and remain in full
force and effect.
(c) This Agreement has been, and the Notes, the Drafts, the
Applications and the Security Documents to which it is a party will be,
executed and delivered by a duly authorized officer of each Borrower. This
Agreement constitutes, and the Notes, the Drafts, the Applications and the
Security Documents to which it is a party, when executed and delivered by it
and the other parties thereto, will constitute, the legal, valid and binding
obligations of each Borrower, enforceable against it in accordance with their
respective terms except as enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
creditors' rights generally and except as enforceability may be limited by
general principles of equity.
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11.3 No Legal Bar to Loans. The execution, delivery and performance by
each Borrower of this Agreement, the Notes and the Drafts to which it is a
party, and by each Borrower and each of its Subsidiaries of each Security
Document to which it is a party, will not violate any Contractual Obligation
(subject to, with respect to the Yen Credit Agreement, the execution and
delivery by the Collateral Agent (as defined in the Intercreditor Agreement) of
the Intercreditor Agreement in accordance with the terms thereof) or material
Requirement of Law to which such Borrower or any of its Subsidiaries is a
party, or, to the best knowledge of the Company, any Parent of the Company is a
party or by which such Borrower or any of its Subsidiaries or, to the best
knowledge of the Company, any Parent of the Company or any of their respective
material properties or assets may be bound, and will not result in the creation
or imposition of any Lien (other than under the Security Documents) on any of
their respective material properties or assets pursuant to the provisions of
any Contractual Obligation.
11.4 No Material Litigation. No litigation, investigation or
administrative proceeding of or before any court, arbitrator or Governmental
Authority is presently pending or, to the knowledge of any Borrower, threatened
against it, any of its Subsidiaries or Revlon, Revlon Holdings or any Revlon
Holdings Support Party, or any of its or their properties or assets, (a) with
respect to this Agreement, any Note, any Draft, any Security Document, any
Affiliate Subordination Letter or any of the transactions contemplated hereby
or thereby, (b) with respect to the validity or enforceability of the
obligations of any Borrower under this Agreement and the other Credit Documents
to which it is a party, (c) with respect to the rights of the relevant Issuing
Lender, any L/C Participant, the Documentation Agent, the Syndication Agent or
the Administrative Agent with respect to any Application or Letter of Credit,
(d) with respect to the rights of the relevant Local Fronting Lender or the
Multi-Currency Lenders with respect to any Local Loan or Acceptance, (e) with
respect to the rights of the relevant Acquisition Fronting Lender or the
Acquisition Direct Lenders with respect to any Fronted Acquisition Loan or (f)
which would be reasonably likely to have a Material Adverse Effect, except (in
the case of this clause (f) only) for any litigation, investigation or
administrative proceeding which has been disclosed in writing to the Lenders
prior to the date of this Agreement or which arises out of the same facts and
circumstances, and alleges substantially the same complaints and damages, as
any litigation, investigation or proceeding so disclosed in writing and in
which there has been no material adverse change since the date of such
disclosure.
11.5 No Default. No Borrower nor any of its Subsidiaries is in default
in any material respect in the payment or performance of any material
obligations or in the performance of any Contractual Obligation to which it is
a party or by which it or any of its material properties or assets may be
bound, and no Default hereunder has occurred and is continuing. No Borrower nor
any of its Subsidiaries is in default under any material order, award or decree
of any court, arbitrator or Governmental Authority binding upon or affecting it
or by which any of its material properties or assets is bound or affected, and
no such order, award or decree would be reasonably likely to have a Material
Adverse Effect.
11.6 Ownership of Properties; Liens. Except as is or would be
permitted pursuant to subsection 14.3, each Borrower and its Subsidiaries has
(a) good and marketable title to all its owned, and valid leasehold interests
in all its leased, real property and (b) good title to
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all its owned, and valid leasehold interests in all its leased, personal
properties and assets, in each case subject to no Lien.
11.7 Taxes. Each Borrower and each of its Subsidiaries and, to the
best knowledge of the Company, any other member (as such term is defined in
Treasury Regulations ss.1.1502-1(b)) of the consolidated group (if any) of
which the Company is a member, has timely filed or caused to be timely filed
all material tax returns (including, without limitation, information returns)
which to the knowledge of the Company are required to be filed, and have paid
all taxes shown to be due and payable on said returns or on any assessments
made against them (other than those being contested in good faith by
appropriate proceedings for which adequate reserves (in accordance with GAAP)
have been provided on the books of such Borrower or such Subsidiary, or other
member of the consolidated group, as the case may be), and no tax Liens which
violate subsection 14.3(a) have been filed. The period within which United
States federal income taxes may be assessed against any Borrower and each of
its Subsidiaries' has expired without further extension or waiver for all
taxable years ending on or before December 31, 1985.
11.8 ERISA. No Reportable Event has occurred during the immediately
preceding six-year period with respect to any Plan that resulted or would be
reasonably likely to result in any unpaid liability that would be reasonably
likely to have a Material Adverse Effect, and each Plan (other than any
Multiemployer Plan or any multiemployer health or welfare plan) has complied
and has been administered in all material respects in compliance with
applicable provisions of ERISA and the Code. The amount by which the present
value of all accrued benefits under each Single Employer Plan maintained by
each Borrower or any Commonly Controlled Entity (based on then current
assumptions used to fund such Plan), as of the last annual valuation date
applicable thereto, exceeds the value of the assets of each such Plan allocable
to such benefits, in the aggregate for all such Plans as to which such present
value of benefits exceeds the value of its assets (the "Unfunded Pension
Amount"), when aggregated with the Potential Withdrawal Liability (as
hereinafter defined), is less than (a) during such time as the Company is under
common control with MacAndrews & Forbes Holdings Inc. within the meaning of
Section 4001 of ERISA or is part of a group which includes MacAndrews & Forbes
Holdings Inc. and which is treated as a single employer under Section 414 of
the Code, $60,000,000 and (b) thereafter, the Stand-Alone ERISA Amount. No
Borrower nor any Commonly Controlled Entity has during the immediately
preceding six-year period had a complete or partial withdrawal from any
Multiemployer Plan that resulted or would be reasonably likely to result in any
unpaid withdrawal liability under Section 4201 of ERISA that would be
reasonably likely to have a Material Adverse Effect, and the withdrawal
liability under Section 4201 of ERISA to which a Borrower or any Commonly
Controlled Entity would become subject under ERISA if such Borrower or any
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the most recent valuation date applicable thereto (the "Potential
Withdrawal Liability"), when aggregated with the Unfunded Pension Amount, is
not in excess of (a) during such time as the Company is under common control
with MacAndrews & Forbes Holdings Inc. within the meaning of Section 4001 of
ERISA or is part of a group which includes MacAndrews & Forbes Holdings Inc.
and which is treated as a single employer under Section 414 of the Code,
$60,000,000 and (b) thereafter, the Stand-Alone
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ERISA Amount. No Borrower nor any Commonly Controlled Entity has received
notice that any Multiemployer Plan is in Reorganization or Insolvent where such
Reorganization or Insolvency has resulted, or would be reasonably likely to
result in an unpaid liability that would be reasonably likely to have a
Material Adverse Effect nor, to the best knowledge of such Borrower, is any
such Reorganization or Insolvency reasonably likely to occur.
11.9 Financial Condition. The audited consolidated balance sheet of
the Company and its Subsidiaries as at December 31, 1996 and the related
audited consolidated statements of operations and stockholders' equity and cash
flows for the fiscal year ended on such date present fairly the consolidated
financial condition of the Company and its Subsidiaries as of such date, and
the consolidated results of their operations and cash flows for the fiscal year
then ended. The unaudited consolidated condensed balance sheet of the Company
and its Subsidiaries as at March 31, 1997 and the related unaudited
consolidated condensed statements of operations and stockholders' equity and
cash flows for the three-month period ended on such date present fairly the
consolidated financial condition of the Company and its Subsidiaries as of such
date, and the consolidated results of their operations and cash flows for the
three-month period then ended (subject to normal year-end audit adjustments and
the absence of footnotes). All such financial statements, have been prepared in
accordance with GAAP (subject, in the case of the financial statements for the
fiscal period ended March 31, 1997, to normal year-end audit adjustments and
the absence of footnotes) applied consistently throughout the periods presented
except as disclosed in such financial statements or in writing to the Lenders
prior to the date of this Agreement. Neither the Company nor any of its
Subsidiaries has any material Contingent Obligation or any material obligation,
liability or commitment, direct or contingent (including, without limitation,
any liability for taxes or any material forward or long-term commitment), which
is not (A) reflected in the foregoing statements or otherwise disclosed in
writing to the Lenders prior to the date hereof or (B) permitted to be incurred
under this Agreement.
11.10 No Change. Since December 31, 1996, there has been no material
adverse change in the business, condition (financial or otherwise), operations,
performance, properties or prospects of either of (a) Revlon or (b) the Company
and its Subsidiaries taken as a whole.
11.11 Federal Regulations. No Borrower nor any of its Subsidiaries is
engaged or will engage, principally or as one of its important activities, in
the business of extending credit for the purpose of "purchasing" or "carrying"
any "margin stock" within the respective meanings of each of the quoted terms
under Regulation U or G of the Board of Governors of the Federal Reserve
System. No part of the proceeds of the Loans or other extensions of credit
hereunder will be used for any purpose which violates the provisions of
Regulation G, T, U or X of said Board of Governors. In the event that any part
of the proceeds of the extensions of credit hereunder are used to "purchase" or
"carry" any such "margin stock," the Company will (and will cause its
Subsidiaries to) provide such documents and information (including, without
limitation, duly completed and executed originals of Federal Reserve Form U-1)
to the Administrative Agent and the Lenders as the Administrative Agent
reasonably may request in order to evidence that the representations and
warranties contained in this subsection 11.11 remain true and correct in all
material respects.
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11.12 Not an "Investment Company". No Borrower, nor any Guarantor,
Pledgor or Grantor is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
11.13 Matters Relating to Subsidiaries. Set forth in Schedule IV is a
complete and accurate list showing all Subsidiaries of Revlon Holdings (other
than National Health Care Group, Inc. and its Subsidiaries) as of the date of
this Agreement.
11.14 Pledge Agreements. (a) Each Pledge Agreement constitutes a
legal, valid and binding obligation of the Pledgor party thereto, enforceable
against it in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
(b) Upon delivery to the Administrative Agent of the stock
certificates evidencing the Pledged Stock of which the issuer is a corporation
organized under the laws of any jurisdiction within the United States, the
security interests granted pursuant to the Pledge Agreements will constitute a
valid, perfected first priority security interest on such Pledged Stock (except
with respect to the Pledged Stock of CCI, with respect to which such priority
shall be as described in the Intercreditor Agreement), enforceable as such
against all creditors of the respective Pledgor and any Persons purporting to
purchase any such Pledged Stock from the respective Pledgor.
(c) Except as set forth in the legal opinions provided to the
Administrative Agent by counsel in the relevant jurisdictions pursuant to
subsection 12.1(p)(vi) or subsection 13.11, the security interests in the
capital stock or other equity interests of each Directly Pledged Subsidiary
that is a Foreign Subsidiary granted pursuant to the Pledge Agreements will
constitute a valid, perfected first priority security interest on such Pledged
Stock (to the extent applicable under the relevant local laws or otherwise
reasonably acceptable to the Agents), enforceable as such against all creditors
of the respective Pledgor and any Persons purporting to purchase any such
Pledged Stock from the respective Pledgor.
11.15 Security Agreements. (a) Each Security Agreement (other than any
Security Agreement to which a Borrowing Subsidiary is a party) constitutes a
legal, valid and binding obligation of the Grantor party thereto, enforceable
against it in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
(b) Except with respect to the Collateral located in any facility
which is not owned or leased by the Company or any of its Subsidiaries or with
respect to which no filing is required pursuant to subsection 11.30(b), upon
filing by the Administrative Agent of (i) the financing statements listed on
Schedule XI hereto (and, after the Closing Date, any additional filings
required to be made pursuant to the Credit Documents), (ii) any filings
required with the United States Patent and Trademark Office and (iii) any
filings required with the United States
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Copyright Office, the security interests granted pursuant to the Security
Agreements (other than any Security Agreement to which a Borrowing Subsidiary
is a party) will constitute a valid, perfected first priority security interest
on the Collateral (as defined therein), enforceable as such against all
creditors of any Grantor and any Persons purporting to purchase any such
Collateral from any Grantor (except purchasers of Inventory in the ordinary
course of business).
11.16 Security Documents of Borrowing Subsidiaries. (a) Each Security
Document to which a Borrowing Subsidiary is a party constitutes a legal, valid
and binding obligation of such Borrowing Subsidiary, enforceable against it in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles.
(b) Except as set forth in the legal opinions provided to the
Administrative Agents by counsel in the relevant jurisdictions pursuant to
subsection 12.1(p)(vi) or subsection 13.12, as the case may be, the security
interests granted pursuant to each Security Document to which a Borrowing
Subsidiary is a party constitute valid, perfected first priority security
interests on the collateral security provided pursuant thereto (to the extent
that the concept of "perfection" is applicable pursuant to applicable local
law), enforceable as such against all creditors of such Borrowing Subsidiary
and any Persons purporting to purchase any such collateral security from any
Pledgor.
11.17 Mortgages. Each Mortgage is effective to grant a legal, valid
and enforceable mortgage lien on all of the mortgagor's right, title and
interest in the Mortgaged Property thereunder. When each Mortgage is duly
recorded in the office or offices listed on Schedule I to such Mortgage and the
mortgage recording fees and taxes in respect thereof are paid and compliance is
otherwise had with the formal requirements of state law applicable to the
recording of real estate mortgages generally, such Mortgage shall constitute a
fully perfected, first-priority lien on and security interest in such Mortgaged
Property, subject only to the encumbrances and exceptions to title expressly
set forth therein and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
11.18 Guarantees. The provisions of each Guarantee are effective to
create a legal, valid, binding and enforceable guarantee of the obligations
described therein, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
11.19 Company Tax Sharing Agreement. The provisions of the Company Tax
Sharing Agreement are effective to constitute a legal, valid, binding and
enforceable contract of each party thereto, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
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11.20 Intellectual Property. The Company or a Subsidiary thereof owns,
or is licensed to use, all trademarks, tradenames, copyrights, patents,
technology, know-how and processes necessary for the conduct of its business as
currently conducted that are material to the business, condition (financial or
otherwise), operations, performance, properties or prospects of the Company and
its Subsidiaries taken as a whole (the "Intellectual Property"). Except as has
been disclosed to the Lenders in writing prior to the date hereof, no claim has
been asserted and is pending by any Person with respect to the use of any such
Intellectual Property, or challenging or questioning the validity or
effectiveness of any such Intellectual Property, and neither the Company nor
any of its Subsidiaries knows of any valid basis for any such claim, nor does
the use of such Intellectual Property by the Company and its Subsidiaries
infringe on the rights of any Person, except (in each case) to the extent that
such claims and infringements which would not (including, without limitation,
any liability arising therefrom), in the aggregate, be reasonably likely to
have a Material Adverse Effect.
11.21 Solvency. (a) The aggregate value of all of the assets of the
Company on a consolidated and an unconsolidated basis, at a fair valuation,
exceeds the total liabilities of the Company on a consolidated and an
unconsolidated basis (including contingent, subordinated, unmatured and
unliquidated liabilities). The Company has the ability to pay its debts as they
mature and it does not have unreasonably small capital with which to conduct
its business. For purposes of this subsection 11.21, the "fair valuation" of
such assets shall be determined on the basis of that amount which may be
realized within a reasonable time, in any manner through realization of the
value of or dispositions of such assets at the regular market value, conceiving
the latter as the amount which could be obtained for the property in question
within such period by a capable and diligent business person from an interested
buyer who is willing to purchase under ordinary selling conditions.
(b) Each Borrower is in compliance with all material Requirements of
Law applicable to it with respect to capitalization and, to the knowledge of
the Company or such Borrowing Subsidiary, has sufficient capital with which to
conduct its business in accordance with past practice. No Borrower is
undercapitalized to such an extent that, solely as a result of such
undercapitalization, (i) any Lender would be deemed under the laws of the
relevant jurisdiction to owe a fiduciary duty to any other creditor of such
Borrower or (ii) the Local Loans made or the Acceptances created by the
relevant Local Fronting Lender or the Acquisition Loans made by the relevant
Acquisition Lenders (as the case may be) to such Borrower would be subordinated
to any obligations of such Borrower owing to any other Person.
11.22 Environmental Matters. (a) Except as set forth in Schedule XII
hereto, and except to the extent provided in subsection (b) hereof:
(i) To the best knowledge of the Company, the Mortgaged Properties do
not contain any Hazardous Materials in concentrations which violate any
applicable Environmental Laws governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or disposal
of Hazardous Materials;
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(ii) To the best knowledge of the Company, the Mortgaged Properties
are in compliance with all Environmental Laws, including all applicable
federal, state and local standards and requirements regarding the
generation, treatment, storage, handling, use or disposal of Hazardous
Materials at the Mortgaged Properties and there is no Hazardous Materials
contamination which could materially interfere with the continued operation
of the Mortgaged Properties or materially impair the fair saleable value
thereof;
(iii) None of Revlon Holdings, any Revlon Holdings Support Party, the
Company or any Subsidiary of the Company has received, or is aware of, any
existing or contemplated notice of violation or advisory action by any
regulatory agency regarding environmental control matters or permit
compliance with regard to the Mortgaged Properties;
(iv) To the best knowledge of the Company, Hazardous Materials have
not been transferred from the Mortgaged Properties to any other location in
violation of any applicable Environmental Laws; and
(v) To the best knowledge of the Company, there are no governmental
administrative actions or judicial proceedings pending or contemplated
under any applicable Environmental Laws to which Revlon Holdings, any
Revlon Holdings Support Party, the Company, any Subsidiary of the Company
or any mortgagor is or will be named as a party with respect to the
Mortgaged Properties.
(b) To the best knowledge of the Company, each of the representations
and warranties set forth in subsection 11.22(a) are true and correct with
respect to each parcel of real property owned or operated by Revlon Holdings,
any Revlon Holdings Support Party, the Company or any of its Subsidiaries,
except to the extent that the facts and circumstances giving rise to any such
failure to be so true and correct would not be reasonably likely to have a
Material Adverse Effect.
11.23 Models. (a) The financial models and pro forma financial
statements referenced in subsection 12.1(u), together with any notes thereto,
were prepared in good faith on the basis of the assumptions stated therein,
which assumptions were reasonable in light of conditions existing at the time
of delivery of such models and pro forma financial statements, and represented,
at the time of delivery, the Company's best estimate of its future financial
performance.
(b) After giving effect to the transactions contemplated by this
Agreement, the Company and its Subsidiaries will have recorded assets and
liabilities substantially similar to the recorded assets and liabilities
contemplated for such date by the pro forma balance sheet referenced in
subsection 12.1(u).
(c) The financial models (if any) relating to the Company and provided
to each Lender pursuant to subsection 13.1(b), together with any notes thereto,
were prepared in good faith on the basis of the assumptions stated therein,
which assumptions were reasonable in light
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of conditions existing at the time of delivery of such models and represented,
at the time of delivery, the Company's best estimate of its future financial
performance.
11.24 Disclosure. No information, schedule, exhibit or report or other
document furnished by the Company, its Subsidiaries or Affiliates to the
Administrative Agent, the Documentation Agent, the Syndication Agent or any
Lender in connection with the negotiation of this Agreement and the Security
Documents or pursuant to the terms of this Agreement and the Security
Documents, as such information, schedule, exhibit or report or other document
has been amended, supplemented or superseded by any other information,
schedule, exhibit or report or other document later delivered to the same
parties receiving such information, schedule, exhibit or report or other
document, contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein,
in light of the circumstances when made, not materially misleading.
11.25 Senior Indebtedness. The obligations of the Company for the
payment of principal and interest under this Agreement and the Loans, the
Drafts and the Notes, and the obligations of the Company in respect of
Reimbursement Obligations, constitute "Senior Indebtedness" for purposes of the
Subordinated Notes.
11.26 Regulation H. No Mortgaged Property is located in an area that
has been identified by the Secretary of Housing and Urban Development as an
area having special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968.
11.27 Affiliate Obligations. Other than Indebtedness of CCI in an
aggregate principal amount equal to $13,300,000 owing to the Company on the
date hereof, trade payables, other Indebtedness in the ordinary course of
business or any interest payable from time to time in respect of and in
accordance with the terms of any such Indebtedness, no Indebtedness is owing to
the Company or any of its Subsidiaries from the Affiliates of the Company on
the Closing Date, other than amounts permitted pursuant to subsection 14.8(f).
11.28 Indebtedness Owing to Affiliates. To the best knowledge of the
Company, no Affiliate of the Company (other than California Federal Bank, A
Federal Savings Bank and officers and directors of the Company and its
Subsidiaries) holds any Indebtedness of the Company or any of its Subsidiaries
(including, without limitation, the Subordinated Notes or any Sinking Fund
Debentures, but not including any trade credit in the ordinary course of
business, any Subordinated Intercompany Note, any Capital Contribution Note or
any Capital Gains Note), except to the extent that such Affiliate has duly
executed and delivered to the Administrative Agent an Affiliate Subordination
Letter which remains in full force and effect.
11.29 No Recordation Necessary. This Agreement and each Security
Document is in proper legal form for the enforcement hereof or thereof against
the Company and each Borrowing Subsidiary under the law of the jurisdiction of
organization of such Borrower and under the law of the jurisdiction in which
the Local Loans, Acceptances or Acquisition Loans, as the case may be, are
being made to the Company and such Borrowing Subsidiary, and to ensure
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the legality, validity, enforceability, priority or admissibility in evidence
of this Agreement and the Security Documents it is not necessary that this
Agreement, the Security Documents or any other document be filed, registered or
recorded with, or executed or notarized before, any court or other authority in
the jurisdiction of organization of such Borrowing Subsidiary or in the
jurisdiction in which the Local Loans, Acceptances or Acquisition Loans, as the
case may be, are being made to the Company and it, or that any registration
charge or stamp or similar tax be paid on or in respect of this Agreement, the
Security Documents or any other document.
11.30 Accounts Receivable and Inventory. (a) Neither the Company nor
any of its Domestic Subsidiaries holds any Accounts (as defined in the Company
Security Agreement or the Subsidiary Security Agreement, as the case may be)
with respect to which the Administrative Agent does not hold a perfected, first
priority security interest, other than any such Accounts with respect to which
the Agent holds a perfected security interest which is subject only to prior
Liens which are permitted to encumber such Accounts pursuant to subsection
14.3.
(b) Neither the Company nor any of its Domestic Subsidiaries maintains
any Inventory (as defined in the Company Security Agreement or the Subsidiary
Security Agreement, as the case may be) with respect to which the
Administrative Agent does not possess a perfected, first priority security
interest, other than (i) any such Inventory with respect to which the Agent
holds a perfected security interest which is subject only to prior Liens which
are permitted to encumber such Inventory pursuant to subsection 14.3 and (ii)
any such inventory which is maintained by the Company and its Subsidiaries at a
location at which the book value of all such inventory does not exceed
$1,000,000 in the aggregate.
11.31 Intellectual Property Filings. It is the ordinary business
practice of the Company and each of its Domestic Subsidiaries to file with the
United States Patent and Trademark Office for registration or recordation, as
applicable, (i) a completed application for the registration of each trademark
and patent owned by it which is material to the business of the Company or such
Subsidiary and (ii) an appropriate assignment to the Company or any of its
Domestic Subsidiaries of the interest acquired by it in any trademark and
patent which is material to the business of the Company and its Subsidiaries
taken as a whole.
11.32 Restricted Payments. The Company has no intention on the date
hereof of making any Restricted Payments now or hereafter permitted pursuant to
subsection 14.7(a)(v) or 14.7(a)(vi).
11.33 Certain Tax Liabilities. The aggregate amount paid since January
1, 1992 by the Company and its Subsidiaries in respect of federal and state
income tax liabilities and obligations (excluding amounts paid in respect of
accrued interest thereon) related to periods prior to January 1, 1992 did not
exceed the reserves for income taxes on the books of the Company and its
Subsidiaries as of January 1, 1992.
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SECTION 12. CONDITIONS PRECEDENT
12.1 Conditions to Initial Extensions of Credit. The agreement of the
relevant Lenders to make the initial extensions of credit (regardless of
whether such extensions of credit are to be made in the form of Loans,
Acceptances or Letters of Credit) requested to be made by it hereunder shall be
subject to the satisfaction or waiver by such Lender of the following
conditions precedent (the date on which said conditions are satisfied or
waived, which date must occur on or prior to June 30, 1997, being herein called
the "Closing Date"):
(a) Effectiveness of Agreement. This Agreement shall have become
binding upon the parties hereto in accordance with subsection 17.15 and the
Administrative Agent shall have received a Local Fronting Lender Joinder
Agreement, duly executed and delivered by each Local Fronting Lender listed
on Schedule III;
(b) Notes. The Administrative Agent shall have received:
(i) for the account of each Initial Term Loan Lender which has so
requested, an Initial Term Loan Note or two Initial Term Loan Notes
(as the case may be) conforming to the requirements hereof and
executed and delivered by a duly authorized officer of the Company;
(ii) for the account of each Deferred Draw Term Loan Lender which
has so requested, a Deferred Draw Term Loan Note or two Deferred Draw
Term Loan Notes (as the case may be) conforming to the requirements
hereof and executed and delivered by a duly authorized officer of the
Company;
(iii) for the account of each Multi-Currency Lender which has so
requested, a Revolving Credit Note or two Revolving Credit Notes (as
the case may be) conforming to the requirements hereof and executed
and delivered by a duly authorized officer of the Company; and
(iv) for the account of the Swing Line Lender, a Swing Line Note
conforming to the requirements hereof and executed and delivered by a
duly authorized officer of the Company;
(c) Guarantees. The Administrative Agent shall have received each
Guarantee, duly executed and delivered by a duly authorized officer of the
Guarantor or Guarantors parties thereto;
(d) Pledge Agreements. The Administrative Agent shall have received
evidence reasonably satisfactory to it that all actions necessary to
perfect the pledge and security interests granted by each Pledge Agreement
(other than the Pledge Agreements delivered pursuant to subsection 13.11)
shall have been taken and the Administrative Agent shall have received each
document necessary to be held by it for such perfection;
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(e) Stock Certificates. The Administrative Agent shall have received
(i) the share certificates for all of the Pledged Stock in certificated
form which are delivered in connection with the Pledge Agreements delivered
pursuant to subsection 12.1(d), together with an undated stock power for
each such share certificate, duly executed in blank and delivered by a duly
authorized officer of the Pledgor of such Pledged Stock represented by such
stock certificate and (ii) with regard to the Pledged Stock issued by
Foreign Subsidiaries, the pledge of such Pledged Stock otherwise shall have
been perfected in accordance with applicable law;
(f) Mortgages. The Administrative Agent shall have received each
Mortgage, duly executed and delivered by a duly authorized officer of the
Company, and evidence of the proper filing thereof in the appropriate
jurisdictions or in the alternative, a mortgagee's title policy or
marked-up unconditional binder for such insurance as provided in subsection
12.1(g) containing "gap coverage";
(g) Title Insurance Policies. The Administrative Agent shall have
received, in respect of each Mortgage, a mortgagee's title policy or
marked-up unconditional binder for such insurance. Each such policy shall
(i) be in an amount equal to not less than 125% of the most recent
appraised value of such property; (ii) insure that the Mortgage insured
thereby creates a valid first lien on the property covered by such
Mortgage, free and clear of all defects and encumbrances except such
encumbrances that do not materially interfere with the use of any of the
Mortgaged Properties; (iii) provide affirmative mechanic's lien coverage;
(iv) name the Administrative Agent, for the benefit of the holders of the
obligations secured thereby, as the insured thereunder; (v) be in the form
of ALTA Loan Policy-1970 (amended on October 17, 1970) or ALTA Loan Policy-
1987; and (vi) contain revolving endorsements and such other endorsements
and effective coverage as the Agents may reasonably request. The
Administrative Agent also shall have received evidence that all premiums in
respect of such policies have been paid by or on behalf of the Company;
(h) Security Agreements. The Administrative Agent shall have received
evidence reasonably satisfactory to it that all actions necessary to
perfect the pledge and security interests granted by each Security
Agreement (other than the Security Agreements delivered pursuant to
subsection 13.12) shall have been taken and the Administrative Agent shall
have received each document necessary to be held by it for such perfection;
(i) Lien Searches. The Administrative Agent shall have received the
results of Lien searches, conducted by a search service reasonably
satisfactory to the Administrative Agent, and the Administrative Agent
shall be satisfied that no Liens are outstanding on the property or assets
of the Company and its Domestic Subsidiaries, other than any such Liens (i)
which are permitted pursuant to the terms of the Credit Documents or (ii)
as to which the Administrative Agent has received documentation reasonably
satisfactory to it evidencing the termination of such Liens;
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(j) Corporate Proceedings of Borrowers. The Administrative Agent shall
have received (a) certified copies of the Charter and by-laws (or analogous
organizational documents) of each Borrower (together with a certified
English translation thereof with respect to any such document which is not
in English) and (b) the resolutions (or analogous authorizations), in form
and substance reasonably satisfactory to the Agents, of the Board of
Directors of each Borrower (together with a certified English translation
thereof with respect to any such document which is not in English),
authorizing in each case (i) the execution, delivery and performance of
this Agreement, the Notes and the other Credit Documents to which such
Borrower is a party and (ii) the granting by it of the mortgages, pledges
and security interests granted by it pursuant to the Security Documents to
which such Borrower is a party, in each case certified by the Secretary or
an Assistant Secretary of such Borrower as of the Closing Date and each
such certificate shall state that the resolutions thereby certified have
not been amended, modified, revoked or rescinded as of the date of such
certificate;
(k) Incumbency Certificates for Borrowers. The Administrative Agent
shall have received a certificate of the Secretary or an Assistant
Secretary (or analogous officer) of each Borrower dated the Closing Date,
as to the incumbency and signature of the officers of such Borrower
executing each of this Agreement, the Notes and each other Credit Document
to which such Borrower is a party, and any certificate or other documents
to be delivered by it pursuant thereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary as the case may be;
(l) Corporate Proceedings of Pledgors and Grantors. The Administrative
Agent shall have received a copy of the resolutions (or analogous
authorizations), in form and substance reasonably satisfactory to the
Agents, of the Board of Directors of each Pledgor and each Grantor (other
than the Pledgors and Grantors parties to the Pledge Agreements and
Security Agreements to be delivered pursuant to subsections 13.11 and 13.12
and other than the Borrowers), authorizing (i) the execution, delivery and
performance of the Security Documents to which it is a party and (ii) the
granting by it of the pledges and/or security interests granted by it
pursuant to such Security Documents, in each case certified by the
Secretary or Assistant Secretary of such Pledgor or Grantor (as the case
may be) as of the Closing Date and each such certificate shall state that
the resolutions thereby certified have not been amended, modified, revoked
or rescinded as of the date of such certificate;
(m) Incumbency Certificates for Pledgors and Grantors. The
Administrative Agent shall have received a certificate of the Secretary or
an Assistant Secretary of each Pledgor and each Grantor (other than the
Pledgors and Grantors parties to the Pledge Agreements and Security
Agreements to be delivered pursuant to subsections 13.11 and 13.12 and
other than the Borrowers), dated the Closing Date, as to the incumbency and
signature of the officers of such Pledgor or Grantor, as the case may be,
executing the Security Documents to which it is a party and any certificate
or other documents to be delivered by it pursuant thereto, together with
evidence of the incumbency of such Secretary or Assistant Secretary as the
case may be;
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(n) Guarantor Corporate Proceedings. The Administrative Agent shall
have received a copy of the resolutions, in form and substance reasonably
satisfactory to the Agents, of the Board of Directors of each of the
Guarantors (other than the Guarantors parties to the Guarantees to be
delivered pursuant to subsection 13.10 and other than the Borrowers),
authorizing the execution, delivery and performance of the Guarantee to
which it is a party, in each case certified by the Secretary or Assistant
Secretary of such Guarantor as of the Closing Date and each such
certificate shall state that the resolutions thereby certified have not
been amended, modified, revoked or rescinded as of the date of such
certificate;
(o) Guarantor Incumbency Certificates. The Administrative Agent shall
have received a certificate of the Secretary or an Assistant Secretary of
each of the Guarantors (other than the Guarantors parties to the Guarantees
to be delivered pursuant to subsection 13.10 and other than the Borrowers),
dated the Closing Date, as to the incumbency and signature of the officers
of such Guarantor executing the Guarantee to which it is a party and any
certificate or other documents to be delivered by it pursuant thereto,
together with evidence of the incumbency of such Secretary or Assistant
Secretary as the case may be;
(p) Certain Legal Opinions. The Administrative Agent shall have
received executed legal opinions of:
(i) Paul, Weiss, Rifkind, Wharton & Garrison, as counsel to the
Company and as special New York counsel to the Borrowing Subsidiaries,
substantially in the form of Exhibit M-1;
(ii) the Senior Vice President and General Counsel of the
Company, substantially in the form of Exhibit M-2;
(iii) Simpson Thacher & Bartlett, as counsel to the
Administrative Agent, substantially in the form of Exhibit M-3;
(iv) each of the domestic local counsel listed on Schedule XIII,
in form and substance reasonably acceptable to the Agents; and
(v) each of the international local counsel listed on Schedule
XIV, in form and substance reasonably acceptable to the Agents.
Each of the foregoing legal opinions shall be accompanied by copies of the
legal opinions, if any, upon which such counsel rely, and in each case
shall contain such changes thereto as may be approved by, and as shall
otherwise be in form and substance reasonably satisfactory to, the Agents
and shall cover such other matters incident to the transactions
contemplated by the Credit Documents as the Agents may reasonably require.
Each of the counsel delivering the foregoing legal opinions is expressly
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instructed to deliver its opinion for the benefit of each of the
Administrative Agent and each Lender;
(q) Fees. The Administrative Agent shall have received, for the
accounts of the Lenders, the Administrative Agent, the Documentation Agent,
the Syndication Agent, the Arranger and each Co-Agent, all accrued fees and
expenses owing hereunder or in connection herewith to such Persons
(including, without limitation, accrued fees and disbursements of primary
counsel, local counsel and special counsel to the Administrative Agent, the
Documentation Agent and the Syndication Agent), to the extent that such
fees and expenses have been presented for payment a reasonable time prior
to the Closing Date;
(r) Legal Investment. The making of the Loans and other extensions of
credit hereunder shall be permitted on the Closing Date as a legal
investment by the laws, rules and regulations of the State of New York and
by each jurisdiction to which the Lenders may be subject (without resort to
any so-called "basket" provision of such laws, including without limitation
Section 1405(8) of the New York Insurance Laws); and the Lenders shall have
received such certificates or other evidence as they may reasonably request
demonstrating the legality of such purchase under such laws, rules and
regulations;
(s) Corporate Structure. The Administrative Agent shall have received
a corporate structure chart of Revlon Holdings and its Subsidiaries (other
than National Health Care Group, Inc. and its Subsidiaries) as of the date
hereof, which corporate structure chart (and the corporate structure
described therein) shall be in form and detail reasonably satisfactory to
the Agents;
(t) Indentures. The Administrative Agent shall have received a true
and correct copy of each of the Indentures, together with a copy of each
amendment, supplement and other modification to each thereof through the
date hereof;
(u) Financial Models. The Administrative Agent shall have received
financial models and pro forma financial statements relating to the Company
and its Subsidiaries (which financial models and pro forma financial
statements shall be in form and substance reasonably satisfactory to the
Lenders), certified by a Responsible Officer of the Company as (i) being
the financial models and pro forma financial statements referenced in said
subsection 11.23(a) and (ii) having been delivered to each Lender not less
than five Business Days prior to the date of execution by such Lender of
this Agreement;
(v) Financial Statements. The Administrative Agent shall have received
copies of the financial statements referenced in subsection 11.9;
(w) Revlon Holdings Operating Agreement. The Administrative Agent
shall have received a photocopy of the Revlon Holdings Operating Agreement
(together with
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each amendment, supplement and other modification thereto), executed and
delivered by a duly authorized officer of each party thereto;
(x) Compliance with Indentures. The making of the extensions of credit
hereunder and the granting of the Liens under the Security Documents shall
not violate any provisions of the Indentures, and the Administrative Agent
shall have received a certificate of a Responsible Officer of the Company
(which certificate shall be in form and substance reasonably satisfactory
to the Agents) demonstrating that the transactions contemplated hereby do
not necessitate the sharing (on an equal and ratable basis or otherwise) of
collateral security granted pursuant to the Security Documents with any
trustee or holder of Indebtedness under the Indentures (other than the
sharing of the Mortgage on certain real property of the Company located in
Phoenix, Arizona, with the Trustee under, and holders of, the Sinking Fund
Debentures);
(y) Additional Matters. All corporate and other proceedings, and all
documents, instruments and other legal, diligence and financial matters in
connection with the transactions contemplated by the Credit Documents shall
be reasonably satisfactory in form and substance to the Agents and their
counsel.
12.2 Conditions to Each Acquisition Loan. The agreement of each
Acquisition Lender to make any Acquisition Loan (other than any Acquisition
Loan which constitutes a Converted Acquisition Loan) requested to be made by it
on any date is subject to the satisfaction of the following conditions
precedent:
(a) To the extent that the Acquisition Borrower with respect to such
Acquisition Loans is an Acquisition Subsidiary, such Acquisition Subsidiary
shall (to the extent not already party to a Borrowing Subsidiary Joinder
Agreement) have executed and delivered to the Administrative Agent a
Borrowing Subsidiary Joinder Agreement;
(b) To the extent that the Acquisition Lender with respect to such
Acquisition Loan is an Acquisition Fronting Lender, such Acquisition
Fronting Lender shall have executed and delivered to the Administrative
Agent an Acquisition Fronting Lender Joinder Agreement with respect to such
Acquisition Loan;
(c) The Administrative Agent and (to the extent applicable) the
relevant Acquisition Fronting Lender shall have received such other
instruments, documents and agreements as reasonably may have been requested
by it to evidence the authority of the relevant Acquisition Borrower to
request such borrowing of Acquisition Loans and enforceability of such
Acquisition Loans against such Acquisition Borrower; and
(d) The Administrative Agent and each Acquisition Lender shall have
received an opinion of independent counsel to the relevant Acquisition
Borrower with respect to (i) the enforceability of this Agreement and the
Acquisition Loan to be made to such Acquisition Borrower against such
Acquisition Borrower, (ii) withholding and other tax obligations, (iii) the
absence of the imposition of any material Requirements of Law
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being imposed upon the Acquisition Lenders as a result of the making of
such Acquisition Loan or the enforcement thereof and (iv) such other
matters as the Administrative Agent and (to the extent applicable) the
relevant Acquisition Fronting Lender reasonably shall request; provided
that (unless the Administrative Agent or the Required Lenders otherwise
shall reasonably request) no such opinion of independent counsel shall be
required with respect to any Syndicated Acquisition Loan made to the
Company in Dollars; and any such opinion of independent counsel shall be in
form and substance reasonably acceptable to (A) the Administrative Agent
and (to the extent applicable) the relevant Acquisition Fronting Lender,
with respect to Acquisition Loans which are made solely in Dollars to the
Company and (B) otherwise, the Acquisition Direct Lenders holding at least
a majority of the Aggregate Acquisition Loan Commitment (including, in any
event, General Electric Capital Corporation so long as it is an Acquisition
Direct Lender, but other than any Non-Funding Lenders) and (to the extent
applicable) the relevant Acquisition Fronting Lender.
12.3 Conditions to Each Extension of Credit. The agreement of each
Lender to make any Loan (other than any Revolving Credit Loan the proceeds of
which are to be used exclusively to repay Refunded Swing Line Loans and other
than any Acquisition Loan which constitutes a Converted Acquisition Loan)
requested to be made by it on any date, the agreement of each Local Fronting
Lender to create any Acceptances to be created by it on any date and the
agreement of the Issuing Lender to issue any Letter of Credit to be issued by
it on any date (including, without limitation, its initial extension of
credit), are subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by each party to each Credit Document in or pursuant to
this Agreement or any other Credit Document, or contained in any
certificate or financial statement (other than estimates and projections
which are (x) identified as such and (y) contained in any financial
statement) furnished at any time under or in connection with this Agreement
or any other Credit Document shall be true and correct in all material
respects on and as of such date as if made on and as of such date (except
to the extent that such representations and warranties relate to a
particular date, in which case such representations and warranties shall be
true and correct in all material respects on and as of such date), both
before and after giving effect to such Loan, the creation of such
Acceptance or the issuance of such Letter of Credit, as the case may be,
and to all other extensions of credit to be made on such date and the use
of the proceeds thereof; and
(b) No Default. No Event of Default and no Default shall have occurred
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
Each borrowing by, and Letter of Credit issued on behalf of, a Borrower
hereunder (including, without limitation, each borrowing effected through the
creation of an Acceptance) shall constitute a representation and warranty by
the Company and (to the extent that such Borrower is
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not the Company) such Borrower, as of the date of such borrowing or other
extension of credit, that the conditions contained in paragraphs (a) and (b) of
this subsection 12.3 have been satisfied.
SECTION 13. AFFIRMATIVE COVENANTS
The Company hereby agrees that, until the Payment Obligations have
been Fully Satisfied:
13.1 Financial Statements. The Company will furnish to each Lender,
through the Administrative Agent:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Company, a copy of the consolidated balance
sheet of the Company and its Subsidiaries as at the end of such fiscal year
and the related consolidated statements of operations and stockholders'
equity and cash flows for such year, setting forth in each case in
comparative form (to the extent that such information has not previously
been provided to the Lenders in form substantially similar to that required
pursuant to this subsection 13.1(a)) the figures for the previous year,
certified without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by KPMG Peat Marwick
or other independent certified public accountants of nationally recognized
standing reasonably acceptable to the Agents;
(b) as soon as available, but in any event within 60 days after the
end of each fiscal year of the Company, a copy of (i) the annual business
plan of the Company and its Subsidiaries for the next succeeding fiscal
year, including model quarterly balance sheets and statements of operations
and of cash flow, (ii) a five-year model (including, without limitation,
model annual balance sheets and statements of operations and of cash flow)
for the Company and its Subsidiaries and (iii) a five-year model
(including, without limitation, model annual balance sheets and statements
of operations and of cash flow) for Revlon and its Subsidiaries, and all of
the foregoing shall be in form and detail reasonably satisfactory to the
Agents and shall be certified by a Responsible Officer of the Company;
(c) as soon as available, but in any event within 45 days after the
end of each of the first three fiscal quarters of each fiscal year of the
Company, a copy of (i) the unaudited consolidated, condensed balance sheets
of the Company and its Subsidiaries as at the end of each such quarter,
(ii) the related unaudited consolidated, condensed statements of operations
and of cash flows for the portion of the fiscal year through such date and
(iii) the related unaudited consolidated, condensed statements of
operations for such quarterly period, setting forth in each case in
comparative form (to the extent that such information has not previously
been provided to the Lenders in form substantially similar to that required
pursuant to this subsection 13.1(c)) the figures for the corresponding
fiscal period of the previous year (other than the balance sheets, which
shall present such corresponding figures at the last day of the previous
fiscal year),
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certified (subject to normal year-end audit adjustments) by a Responsible
Officer of the Company;
(d) as soon as available, but in any event within 90 days after the
end of each fiscal year of CCI, a copy of the consolidated balance sheet of
CCI and its Subsidiaries as at the end of such fiscal year and the related
consolidated statements of operations and stockholders' equity and cash
flows for such year, setting forth in each case in comparative form (to the
extent that such information has not previously been provided to the
Lenders in form substantially similar to that required pursuant to this
subsection 13.1(d)) the figures for the previous year, certified without a
"going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, by independent certified public
accountants of nationally recognized standing; and
(e) as soon as available, but in any event within 45 days after the
end of each of the first three fiscal quarters of each fiscal year of CCI,
a copy of (i) the unaudited consolidated, condensed balance sheets of CCI
and its Subsidiaries as at the end of each such quarter, (ii) the related
unaudited consolidated, condensed statements of operations and of cash
flows for the portion of the fiscal year through such date and (iii) the
related unaudited consolidated, condensed statements of operations for such
quarterly period, setting forth in each case in comparative form (to the
extent that such information has not previously been provided to the
Lenders in form substantially similar to that required pursuant to this
subsection 13.1(e)) the figures for the corresponding fiscal period of the
previous year (other than the balance sheets, which shall present such
corresponding figures at the last day of the previous fiscal year),
certified (subject to normal year-end audit adjustments) by a Responsible
Officer of CCI;
all such financial statements to be prepared in reasonable detail and (except
as approved by such accountants or Responsible Officer, as the case may be, and
disclosed therein) in accordance with GAAP applied consistently throughout the
periods reflected therein (subject, in the case of interim periods, to normal
year-end adjustments and the absence of notes).
13.2 Certificates; Other Information. The Company will furnish to each
Lender, through the Administrative Agent:
(a) concurrently with the delivery of its financial statements
referred to in subsection 13.1(a), a certificate of the independent
certified public accountants certifying such financial statements stating
that in making the examination necessary therefor, no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate;
(b) within five days after the delivery of its financial statements
referred to in subsections 13.1(a) and (c), a certificate of a Responsible
Officer of the Company, substantially in the form of Exhibit O-1;
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(c) within five days after the same are sent, copies of all financial
statements and reports which the Company or any of its Subsidiaries and any
Parent of the Company sends to holders of its publicly traded debt or
equity securities, and within five days after the same are filed, copies of
all financial statements and reports (including copies of all registration
statements, proxy statements and regular and periodic reports, if any)
which any of such Persons may make to, or file with, the Securities and
Exchange Commission or any successor thereto;
(d) within 10 days following the last day of each fiscal quarter of
the Company, a schedule listing (i) all Subsidiaries of the Company as of
the last day of the fiscal quarter most recently ended, (ii) all
Subsidiaries of the Company which have been acquired or created during the
fiscal quarter then ended and (iii) all Persons which have ceased to be
Subsidiaries of the Company during such prior fiscal quarter of the
Company; and
(e) promptly, such additional documents and financial and other
information (including, without limitation, amendments to the Certificate
of Incorporation and ByLaws of such Person) relating to Worldwide and its
Subsidiaries or, following the consummation of the Worldwide Merger,
Worldwide (Parent) and its Subsidiaries (or, at any time when Worldwide
(Parent) ceases to have any significant Indebtedness, Revlon and its
Subsidiaries) as either Agent, or any Lender acting through the
Administrative Agent, may from time to time reasonably request.
13.3 Payment of Obligations. The Company will, and will cause each of
its Subsidiaries to, pay, discharge or otherwise satisfy at or before maturity
or before they become delinquent, as the case may be, all its Indebtedness and
other material obligations of whatever nature, except when the amount or
validity thereof is then being contested in good faith by appropriate
proceedings and reserves with respect thereto to the extent, if any, required
by GAAP have been provided on the books of the Company or such Subsidiary, as
the case may be. Notwithstanding anything to the contrary in the foregoing
sentence, the Company shall not be in default under this subsection 13.3 unless
the aggregate amount of non-contested Indebtedness or obligations which it and
its Subsidiaries have so failed to pay, discharge or satisfy before they become
delinquent and which remain delinquent at the time of determination is more
than $5,000,000 (or, with respect to any other currency, the Equivalent
thereof) in the aggregate.
13.4 Conduct of Business and Maintenance of Existence. Except as
permitted by this Agreement, the Company will continue to engage in business of
the same general type as now conducted by it; and, except as permitted by this
Agreement, the Company will, and will cause each of its Subsidiaries to,
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business, except as
otherwise permitted pursuant to subsections 14.5 and 14.6, and comply with all
Contractual Obligations and Requirements of Law except to the extent that all
failures to comply therewith would not in the aggregate, be reasonably likely
to have a Material Adverse Effect. The Company will not make any material
change in its present method of conducting business. The Company will cause
each of its Subsidiaries which is a Directly Pledged Subsidiary on the Closing
Date to engage primarily in
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no business other than the business of developing, manufacturing, distributing
and/or selling (including marketing and advertising) beauty, skin care,
fragrance, personal care and/or related products (or of holding properties
incidental to such businesses).
13.5 Maintenance of Property; Insurance. The Company will, and will
cause each of its Subsidiaries to, (a) keep all property useful and necessary
in its business in good working order and condition, except where the failure
to do so would not, in the aggregate, be reasonably likely to have a Material
Adverse Effect and (b) maintain with financially sound and reputable insurance
companies insurance on such of its property and against such liabilities in at
least such amounts and against at least such risks as are customarily insured
against in the same general area by companies engaged in the same or a similar
business and furnish to the Agents, upon written request, and to each Lender
which makes a written request through the Administrative Agent, reasonable
information as to the insurance carried.
13.6 Inspection of Property; Books and Records; Discussions. The
Company will, and will cause each of its Subsidiaries to, (a) keep proper books
of accounts and records in which entries in conformity in all material respects
with all Requirements of Law shall be made of all dealings and transactions in
relation to its businesses and activities and which shall permit the
preparation of financial statements in conformity with GAAP and (b) permit
representatives of any Lender or any Agent to visit and inspect such of its
properties during normal business hours as such Lender reasonably may request
through the Administrative Agent or such Agent reasonably may request and
(during such visit or inspection, or otherwise upon request through the
Administrative Agent) examine and make abstracts from such of its books and
records as it may reasonably request at any reasonable time and as often as may
reasonably be desired, and to discuss the business, condition (financial or
otherwise), performance, properties and prospects of the Company and its
Subsidiaries with officers and employees of the Company and its Subsidiaries
and with its then independent certified public accountants.
13.7 Notices. The Company will promptly give notice to the Agents and
each Lender, through the Administrative Agent:
(a) of the occurrence of any Default or Event of Default;
(b) of any default or event of default by the Company or any of its
Subsidiaries under any Contractual Obligation of the Company or any of its
Subsidiaries or the institution of, or the occurrence of any material
adverse change, in the status or likely result of, any litigation,
investigation or proceeding which may exist at any time between the Company
or any of its Subsidiaries and any Governmental Authority or any other
Person which, in any of the foregoing cases, would be reasonably likely to
have a Material Adverse Effect;
(c) of any default or event of default by Worldwide (or, following the
consummation of the Worldwide Merger, Worldwide (Parent)), Revlon or Revlon
Holdings, or (to its actual knowledge) Mafco, M&FH, M&FG, RGI, Revlon
Guarantor Corp., Revlon Finance Corporation or Revlon Worldwide Holdings
under any
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agreements or other instruments governing Indebtedness of such Person
involving an aggregate amount in excess of $5,000,000 (or, with respect to
any other currency, the Equivalent thereof);
(d) of (i) any violation or noncompliance by the Company or any of its
Subsidiaries or, to the best of its knowledge, any other Person of any
Environmental Laws which would be reasonably likely to have a Material
Adverse Effect or (ii) any liability or potential liability to the Company
or any of its Subsidiaries or, to the best of its knowledge, to any other
Person under, any Environmental Laws which would be reasonably likely to
have a Material Adverse Effect;
(e) of any of the following events, as soon as possible, and in any
event, within 30 days after the Company knows or has reason to know
thereof:
(i) the occurrence or expected occurrence of any Reportable Event
with respect to any Plan; or
(ii) the institution of proceedings or the taking or expected
taking of any other action by PBGC or the Company or any Commonly
Controlled Entity to terminate, withdraw or partially withdraw from
any Plan and with respect to a Multiemployer Plan, the Reorganization
or Insolvency of such Plan;
if such Reportable Event, termination, withdrawal or partial withdrawal
(and, in the case of any Multiemployer Plan, its Reorganization or
Insolvency) would be reasonably likely to result in liability to the
Company and the Guarantors, in the aggregate, in excess of $1,000,000;
(f) of a material adverse change in the business, condition (financial
or otherwise), operations, performance, properties or prospects of the
Company and its Subsidiaries taken as a whole, or of any event which would
be reasonably likely to materially adversely affect the ability of the
Company and its Subsidiaries taken as a whole to perform the obligations of
the Borrowers under the Credit Documents;
(g) solely during the period that the Sinking Fund Debentures remain
outstanding, of the acquisition or construction, or of the commencement of
construction, of any property of the Company or any of its Subsidiaries
which is, or upon completion will be, a "Principal Property" and of any
other property of the Company or of its Subsidiaries for any reason
becoming or being designated as a "Principal Property" (as such term may be
defined for purposes of the Sinking Fund Debentures);
(h) of the consummation of any transaction permitted by subsection
14.8(e), and the consummation of any transaction contemplated by subsection
10.4(b)(iii), which notices shall, in any event, be given within five
Business Days thereafter; and
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(i) of the intention by the Company to make any Restricted Payment
permitted pursuant to subsection 14.7(a)(v) or 14.7(a)(vi), which notice
shall, in any event, be given not less than 10 days prior to the making of
such Restricted Payment.
Each notice pursuant to this subsection 13.7 shall be accompanied by a
statement of a Responsible Officer of the Company setting forth details of the
occurrence referred to therein and stating what action the Company proposes to
take with respect thereto.
13.8 Maintenance of Corporate Identity. The Company will operate its
businesses, and will cause its Subsidiaries to operate their respective
businesses, and maintain their records, independently from any Person (a
"Parent") which, directly or indirectly, is in control (as defined in Rule
12b-2 under the Securities Exchange Act of 1934, as amended) of the Company and
independently from any Subsidiary of such Parent other than the Company and its
Subsidiaries; and the Company will maintain bank accounts separate from the
bank accounts of each Parent of the Company and act solely in its own corporate
name and through its own authorized officers and agents.
13.9 Environmental Laws. The Company will, and will cause each of its
Subsidiaries to:
(a) Comply with and require compliance by all tenants and subtenants,
if any, with all Environmental Laws and obtain and comply in all material
respects with and maintain, and require that all tenants and subtenants
obtain and comply with and maintain, any and all licenses, approvals,
registrations or permits required by Environmental Laws, except to the
extent that the failure to do so would not be reasonably likely to have a
Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all
lawful orders and directives of all Governmental Authorities respecting
Environmental Laws, except (i) to the extent that the failure to perform
any of the obligations contained in this clause (b) would not be reasonably
likely to have a Material Adverse Effect or (ii) to the extent that such
obligations are being contested in good faith by appropriate proceedings
and the pendency of such proceedings would not be reasonably likely to have
a Material Adverse Effect; and
(c) Defend, indemnify and hold harmless the Administrative Agent, the
Documentation Agent, the Syndication Agent, the Arranger and the Lenders,
and their respective employees, agents, officers and directors, from and
against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature, known or unknown,
contingent or otherwise, arising out of, or in any way relating to the
violation of or noncompliance with any Environmental Laws by the Company or
any of its Subsidiaries, or any orders, requirements or demands of
Governmental Authorities related thereto, including without limitation
reasonable attorney and consultant fees, investigation and laboratory fees,
court costs and litigation
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expenses, except to the extent that any of the foregoing arise out of the
gross negligence or willful misconduct of the party seeking indemnification
therefor.
13.10 Additional Guarantees. The Company will from time to time cause
each Domestic Subsidiary thereof which has not previously done so to execute
and deliver to the Administrative Agent a Subsidiaries Guarantee, substantially
in the form of Exhibit G-1. Each such Subsidiaries Guarantee shall be
accompanied by such resolutions, incumbency certificates and legal opinions as
are reasonably requested by either Agent and are in form and substance
reasonably satisfactory to the Administrative Agent.
13.11 Additional Stock Pledges. (a) The Company will, and will cause
each of its Domestic Subsidiaries to, pledge to the Administrative Agent 100%
of the issued and outstanding capital stock or other equity interests (other
than directors' qualifying shares) of each Domestic Subsidiary of the Company
which has not previously been pledged hereunder. Such pledge shall be granted
pursuant to a Pledge and Security Agreement substantially in the form of
Exhibit F-2 or G-2, as the case may be.
(b) The Company will, and will cause each of its Domestic Subsidiaries
to, pledge to the Administrative Agent in accordance with the laws of the
jurisdiction of organization of the issuer thereof 66% (rounded downward to
eliminate any fraction of a share) of the issued and outstanding shares of each
class of capital stock or other ownership interests entitled to vote (within
the meaning of Treasury Regulations ss.1.956-2(c)(2)) ("Voting Stock") and 100%
of the issued and outstanding shares of each class of capital stock or other
ownership interests not entitled to vote (within the meaning of such
Regulation) ("Non-Voting Stock") of each first-tier Foreign Subsidiary of the
Company which (in each case) is owned of record by the Company or such Domestic
Subsidiary and which has not previously been pledged hereunder. Each such
pledge shall be granted pursuant to a Pledge Agreement in such form as (x) may
be reasonably required in order to perfect a security interest in the Pledged
Stock delivered thereto under the laws of the jurisdiction in which the issuer
of such Pledged Stock is organized and (y) is in form and substance reasonably
satisfactory to the Administrative Agent. Notwithstanding the foregoing, unless
either the Administrative Agent or the Required Lenders shall at any time
otherwise reasonably request, no such pledge shall be required pursuant to this
subsection 13.11(b) with respect to the capital stock or other equity interests
of any first-tier Foreign Subsidiary listed on Schedule IV which is not pledged
on the Closing Date or is acquired or formed after the date hereof and either
(A) is listed on Schedule IV as being slated for dissolution or (B) does not
have assets in excess of $5,000,000 (or, with respect to any other currency,
the Equivalent thereof).
(c) The Company will, and will cause each of its Domestic Subsidiaries
to, pledge to the Administrative Agent pursuant to a Generic Pledge Agreement
66% (rounded downward to eliminate any fraction of a share) of the issued and
outstanding shares of each class of capital stock or other ownership interests
entitled to vote (within the meaning of Treasury Regulations ss.1.956-2(c)(2))
("Voting Stock") and 100% of the issued and outstanding shares of each class of
capital stock or other ownership interests not entitled to vote (within the
meaning of such Regulation) ("Non-Voting Stock") of each first-tier Foreign
Subsidiary of the Company
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which (in each case) is owned of record by the Company or such Domestic
Subsidiary and (except to the extent pledged pursuant to subsection 13.11(b),
which shall not impair the requirement that a pledge complying with this
subsection 13.11(c) also be granted) which has not previously been pledged
hereunder. Each such pledge shall be granted pursuant to a Generic Pledge
Agreement substantially in the form of Exhibit F-3 or G-3, as the case may be.
(d) Each Pledge Agreement required to be executed and delivered
pursuant to this subsection 13.11 shall be promptly executed and delivered
after the organization, acquisition or identification of any such Subsidiary or
first-tier Foreign Subsidiary and shall be accompanied by share certificates
evidencing the Pledged Stock thereunder (to the extent that such Pledged Stock
is certificated), together with an undated stock power for each such share
certificate (duly executed in blank and delivered by a duly authorized officer
of the Pledgor of the Pledged Stock represented by such certificate). Each
Pledge Agreement executed and delivered pursuant to this subsection 13.11
(other than any Generic Pledge Agreement) shall be accompanied by (i) in the
case of the pledge of capital stock or other ownership interests of any Foreign
Subsidiary, evidence of the taking of all such other actions as may be
necessary or appropriate for the perfection and first priority of such pledge,
and (ii) in the case of any Subsidiary, such resolutions, incumbency
certificates and legal opinions as are reasonably requested by the Agents or
the Administrative Agent and shall otherwise be in form and substance
reasonably satisfactory to the Administrative Agent.
(e) Each Borrowing Subsidiary in the United Kingdom and Canada which
is designated as such after the date hereof will pledge to the Administrative
Agent 100% of the issued and outstanding capital stock or other ownership
interests (other than directors' qualifying shares) of each direct Subsidiary
of such Borrowing Subsidiary which has not previously been pledged hereunder
(except to the extent that the Agents, in their reasonable judgment, determine
that the transaction costs, regulatory burdens and operational restrictions
resulting from such pledge are not justified by the value of the capital stock
to be pledged). Each such pledge shall be granted pursuant to a Pledge
Agreement in such form as (x) may be reasonably required in order to perfect a
security interest in the Pledged Stock delivered thereto under the laws of the
jurisdiction in which the issuer of such Pledged Stock is organized and (y) is
in form and substance reasonably satisfactory to the Administrative Agent.
Notwithstanding the foregoing, each pledge granted pursuant to this subsection
13.11(e) shall secure only the obligations of such Local Subsidiary on account
of the Local Loans and Acceptances made to it.
(f) In the event that there shall be a change in law that
substantially eliminates the adverse tax consequences to the Company or any of
its Subsidiaries that would have resulted on the date hereof from the pledge of
more than 66-2/3% of the Voting Stock of any Foreign Subsidiary, the Company
will, and will cause each of its Subsidiaries to, (i) pledge such additional
amount of shares of such Voting Stock (with respect to each Foreign Subsidiary
the Voting Stock of which then is pledged hereunder) and (ii) notwithstanding
the provisions of subsection 13.11(b) and (c), pledge the maximum amount of
shares of such Voting Stock (with respect to each Foreign Subsidiary the Voting
Stock of which is pledged thereafter), in each case which can be so pledged
without the incurrence of adverse tax consequences and take or cause to be
taken such further action as the Administrative Agent may reasonably request
(including,
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without limitation, the delivery of legal opinions) in order to perfect its
security interest in such stock.
13.12 Additional Security Agreements. (a) The Company will cause each
of its Domestic Subsidiaries which has not previously done so to execute and
deliver to the Administrative Agent a Subsidiary Security Agreement,
substantially in the form of Exhibit G-4, and (to the extent applicable) any
Intellectual Property Security Agreements and to take such other action as
reasonably shall be necessary or as the Administrative Agent reasonably shall
request to grant to the Administrative Agent a first priority perfected
security interest in all collateral described in such Security Agreement
(subject to any Liens contemplated by subsection 14.3(l)). Each such Security
Agreement shall be accompanied by such evidence of the taking of all actions as
may be necessary or appropriate for the perfection and first priority of such
security interest (including, without limitation, the filing of any necessary
Uniform Commercial Code financing statements) and such resolutions, incumbency
certificates and legal opinions as are reasonably requested by the Agents or
the Administrative Agent, all of which shall be in form and substance
reasonably satisfactory to the Administrative Agent.
(b) Each Borrowing Subsidiary in the United Kingdom and Canada which
is designated as such after the date hereof will take such action as reasonably
shall be necessary or as the Administrative Agent reasonably shall request to
grant to the Administrative Agent a first priority, perfected security interest
in all material accounts receivable, inventory and property, plant and
equipment of such Borrowing Subsidiary (except to the extent that (i) such
assets are subject on the date hereof to Liens which are permitted under
subsection 14.3, in which case no such security interests need be granted
pursuant to this clause (b) while such existing Liens, and the Indebtedness
secured thereby on the date hereof, remain in effect, or (ii) the Agents, in
their reasonable judgment, determine that the transaction costs, regulatory
burdens and operational restrictions resulting from such grant are not
justified by the value of the assets to be encumbered). Each such security
interest shall be granted pursuant to a Security Agreement in such form as (x)
may be reasonably required in order to perfect a security interest in the
relevant assets pledged pursuant thereto and (y) is in form and substance
reasonably satisfactory to the Administrative Agent. Notwithstanding the
foregoing, each security interest granted pursuant to this subsection 13.12(b)
shall secure only the obligations of such Borrowing Subsidiary on account of
the Local Loans and Acceptances made to it.
13.13 Asset Transfers. (a) The Company will grant to the
Administrative Agent a first priority, perfected security interest (subject to
any Liens thereon which are permitted to encumber the relevant asset pursuant
to subsection 14.3) in all properties and assets (whether tangible or
intangible) of a type that constitutes Collateral under (and as defined in) any
Security Agreement or Pledge Agreement to which the Company or any of its
Domestic Subsidiaries is a party which are sold, transferred, conveyed or
otherwise distributed to the Company (including, without limitation, by way of
merger or consolidation) from any of its Subsidiaries simultaneously with the
effectiveness of such sale, transfer, conveyance or other distribution.
(b) Each Domestic Subsidiary of the Company will take such action from
time to time as is necessary (or otherwise reasonably requested by the
Administrative Agent) to ensure
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that the Administrative Agent at all times holds a perfected security interest
in all Collateral under (and as defined in) the Security Documents.
13.14 Intellectual Property. (a) The Company will, and will cause each
of its Domestic Subsidiaries to, take such action as is necessary (or as
otherwise is reasonably requested by the Administrative Agent) in order to
grant to the Administrative Agent a first priority, perfected security interest
in any copyright registration in which the Company or any of its Domestic
Subsidiaries may from time to time obtain any interest. Such security interest
shall be granted pursuant to a Copyright Security Agreement (substantially in
the form of the Copyright Security Agreement delivered on the date hereof) or
such other form reasonably acceptable to the Administrative Agent which is in
proper form for recordation in the United States Copyright Office.
(b) The Company will, to the extent permitted by Title 15 of the
United States Code, submit, and will cause each of its Domestic Subsidiaries to
submit, to the United States Patent and Trademark Office for registration or
recordation, as applicable:
(i) a completed application for trademark registration, in such class
or classes as is in conformity with its ordinary business practice then
obtaining, of each Trademark acquired or adopted and used or intended to be
used by it, with respect to any mark which, in the Company's reasonable
judgment, is a Significant Trademark; provided that within 30 days after
receipt of notice from the Administrative Agent, the Company shall, or
shall cause the applicable Domestic Subsidiary to, submit to the United
States Patent and Trademark Office for registration a completed application
for trademark registration, in such class or classes as is in conformity
with its ordinary business practice then obtaining, of any Trademark
acquired or adopted and used or intended to be used by it, with respect to
any mark which the Required Lenders reasonably deem to be of such
significance as to require the Company or such Domestic Subsidiary to take
such steps as may be necessary or desirable to grant to the Administrative
Agent a perfected, first priority security interest in such Trademark to
the extent that it has any ownership interest in such Trademark which is
registerable by it under trademark or other applicable law; and
(ii) with respect to any interest acquired after the date hereof by
the Company or any of its Subsidiaries in a Significant Trademark, any
appropriate assignment to the Company or such Domestic Subsidiary of the
interest acquired by it in the United States in such Significant Trademark,
including, without limitation, all previously unrecorded assignments to the
Company's or such Domestic Subsidiary's predecessors-in-interest of which
the Company or any Domestic Subsidiary is or becomes aware.
The Company will, and will cause each of its Domestic Subsidiaries to, use its
respective best efforts to comply with all requirements of the Lanham Act and
the rules and regulations thereunder, as from time to time in effect, or other
applicable law necessary in order to validly register and maintain the
registration of any such Significant Trademark with the United States Patent
and Trademark Office, except as permitted pursuant to subsections 13.4, 14.5
and 14.6
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hereof. The Company will submit, and will cause each of its Domestic
Subsidiaries to submit, to the Administrative Agent, by each January 31 and
July 31 of each year following the Closing Date, commencing January 31, 1998
(or, if the Administrative Agent reasonably so requests in writing, more often;
provided that, except during such time as a Default or Event of Default has
occurred and is continuing, the Administrative Agent shall not so request more
frequently than monthly), a document confirming the security interest of the
Administrative Agent in any Trademark acquired or with respect to which the
Company or any Domestic Subsidiary filed an application for trademark
registration during the two prior calendar quarters, duly executed and in
proper form for recordation in the United States Patent and Trademark Office.
(c) The Company will, to the extent permitted by Title 35 of the
United States Code, submit, and will cause each of its Domestic Subsidiaries to
submit, to the United States Patent and Trademark Office for issuance or
recordation, as applicable:
(i) an application for letters patent for each patentable invention
acquired by or invented by or for it which invention is of such a nature
that the Company or its Subsidiaries in accordance with its ordinary
business practice then obtaining would file an patent application in the
United States Patent and Trademark Office with respect to it; and
(ii) with respect to any interest acquired after the date hereof by
the Company or any of its Subsidiaries in a Patent, any appropriate
assignment to the Company or such Domestic Subsidiary of the interest
acquired by it in the United States in such Patent, including, without
limitation, all previously unrecorded assignments to the Company's or such
Domestic Subsidiary's predecessors-in-interest of which the Company or any
Domestic Subsidiary is or becomes aware.
The Company will, and will cause each of its Domestic Subsidiaries to, use its
respective best efforts to comply with all requirements of the United States
Patent Act and the rules and regulations thereunder, as from time to time in
effect, or other applicable law necessary in order to validly obtain and
maintain any Patent with the United States Patent and Trademark Office, except
as permitted pursuant to subsections 13.4, 14.5 and 14.6 hereof. The Company
will submit, and will cause each of its Domestic Subsidiaries to submit, to the
Administrative Agent, by each January 31 and July 31 of each year following the
Closing Date, commencing January 31, 1998 (or, if the Administrative Agent
reasonably so requests in writing, more often; provided that, except during
such time as a Default or Event of Default has occurred and is continuing, the
Administrative Agent shall not so request more frequently than monthly), a
document confirming the security interest of the Administrative Agent in any
Patent acquired or with respect to which the Company or any Domestic Subsidiary
filed an application for letters patent during the two prior calendar quarters,
duly executed and in proper form for recordation in the United States Patent
and Trademark Office.
(d) Notwithstanding anything to the contrary contained in this
subsection 13.14, the Company and its Subsidiaries shall have the right to
license their respective Patents and Trademarks to third parties on an arms'
length basis (and, during such time as no Default or
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Event of Default has occurred and is continuing, to retain the proceeds
thereof); provided, except with respect to Trademarks and Patents which
constitute Disposition Assets or with respect to which the only substantial use
by the Company and its Subsidiaries is in connection with a business
constituting a Disposition Asset, that any such license of (i) a Trademark
shall be for use with respect to products which are not reasonably likely to be
competitive with those produced and/or marketed by the Company and its
Subsidiaries and (ii) a Patent shall be for applications which would not be
reasonably likely to diminish the value of any product line of the Company and
its Subsidiaries. Each Agent and each Lender hereby acknowledges and agrees
that any security interest held by the Administrative Agent in any Patent or
Trademark which is licensed in accordance with the provisions of this
subsection 13.14(d) shall be subordinate to such license agreement and each
Lender hereby instructs the Administrative Agent to execute and deliver such
instruments, documents and agreements as the Company reasonably may request in
order to confirm such subordination.
SECTION 14. NEGATIVE COVENANTS
The Company hereby agrees that, until the Payment Obligations are
Fully Satisfied:
14.1 Financial Covenants. The Company will not:
(a) Maintenance of Interest Coverage Ratio. Permit the ratio of (i)
the amount equal to EBITDA of the Company and its Subsidiaries on a
consolidated basis for any period of four consecutive fiscal quarters ending on
each date set forth below to (ii) Net Interest Expense for such period of four
consecutive fiscal quarters to be less than the ratio set forth opposite such
date:
Date Ratio
---- -----
June 30, 1997 1.75 to 1.0
September 30, 1997 1.75 to 1.0
December 31, 1997 1.75 to 1.0
March 31, 1998 2.00 to 1.0
June 30, 1998 2.00 to 1.0
September 30, 1998 2.25 to 1.0
December 31, 1998 2.25 to 1.0
March 31, 1999 2.50 to 1.0
June 30, 1999 2.50 to 1.0
September 30, 1999 2.50 to 1.0
December 31, 1999 2.50 to 1.0
March 31, 2000 3.00 to 1.0
June 30, 2000 3.00 to 1.0
September 30, 2000 3.00 to 1.0
December 31, 2000 3.00 to 1.0
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March 31, 2001 3.00 to 1.0
June 30, 2001 3.00 to 1.0
September 30, 2001 3.00 to 1.0
December 31, 2001 3.00 to 1.0
March 31, 2002 3.00 to 1.0
(b) Leverage Ratio. Permit the Leverage Ratio of the Company and its
Subsidiaries for the period of four consecutive fiscal quarters ending on each
date set forth below to be more than the amount set forth opposite such date:
Date Amount
---- ------
June 30, 1997 6.25 to 1.0
September 30, 1997 6.25 to 1.0
December 31, 1997 5.50 to 1.0
March 31, 1998 5.50 to 1.0
June 30, 1998 5.50 to 1.0
September 30, 1998 5.50 to 1.0
December 31, 1998 5.00 to 1.0
March 31, 1999 5.00 to 1.0
June 30, 1999 5.00 to 1.0
September 30, 1999 5.00 to 1.0
December 31, 1999 4.50 to 1.0
March 31, 2000 4.50 to 1.0
June 30, 2000 4.50 to 1.0
September 30, 2000 4.50 to 1.0
December 31, 2000 4.50 to 1.0
March 31, 2001 4.50 to 1.0
June 30, 2001 4.50 to 1.0
September 30, 2001 4.50 to 1.0
December 31, 2001 4.50 to 1.0
March 31, 2002 4.50 to 1.0
(c) Maximum Capital Expenditures. Permit the aggregate amount of
Capital Expenditures of the Company and its Subsidiaries during any fiscal year
of the Company to be more than $75,000,000; provided, however, that any such
amount permitted by this subsection 14.1(c) for Capital Expenditures during any
fiscal year, if not so expended during such fiscal year may be carried over for
expenditure in the following fiscal year and any amounts so carried over shall
be deemed to be the last amounts expended in such following fiscal year; and
provided, further, that the purchase price for any property or asset acquired
to replace a Surplus Asset within one year from the date upon which it was
contributed by the Company or any of its Subsidiaries to a Permitted Joint
Venture shall be deemed not to constitute a "Capital Expenditure" for purposes
of this subsection 14.1(c) to the extent that the purchase price of such
replacement asset has been treated as an "Investment" for purposes of
subsection 14.8(e).
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14.2 Indebtedness. The Company will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness,
except for:
(a) Indebtedness in respect of the Loans, the Notes, the Drafts and
the L/C Obligations;
(b) Indebtedness existing on the date of this Agreement which is set
forth in Schedule VII; and any Indebtedness resulting from the refinancing
of any such Indebtedness, provided that (i) the primary obligor with
respect to any such refinancing Indebtedness is the same as the primary
obligor on the Indebtedness refinanced thereby and any contingent obligor
of such refinancing Indebtedness was a contingent obligor of the
Indebtedness refinanced thereby (except to the extent that such primary
obligor and/or contingent obligor may be substituted by a new primary
obligor or contingent obligor, as the case may be, which has no material
assets other than assets which, immediately prior to such substitution,
constituted the assets of the original primary obligor and/or contingent
obligor), (ii) the principal amount of any such refinancing Indebtedness
(as determined as of the date of the incurrence of such refinancing
Indebtedness in accordance with GAAP) does not exceed the principal amount
of the Indebtedness refinanced thereby together with any premium actually
paid thereon and reasonable costs and expenses (including underwriting
discounts) incurred in connection with such refinancing Indebtedness, (iii)
the effective annual interest expense applicable to such refinancing
Indebtedness (as determined as of the date of the incurrence of such
refinancing Indebtedness in accordance with GAAP) is not materially greater
than the effective annual interest expense applicable to the Indebtedness
refinanced thereby, (iv) such refinancing Indebtedness does not have any
scheduled installments of principal thereof due prior to December 31, 2002
and (v) with respect to each issue of refinancing Indebtedness in excess of
$5,000,000 (or, with respect to any other currency, the Equivalent thereof)
in the aggregate, either (A) the covenants, defaults and similar provisions
applicable to such refinancing Indebtedness or obligations are no more
restrictive, taken as a whole, than the provisions contained in this
Agreement and do not conflict with the provisions of this Agreement or (B)
such refinancing Indebtedness is otherwise upon terms and subject to
definitive documentation which is in form and substance reasonably
satisfactory to the Agents; and provided, further, that notwithstanding
anything in this subsection 14.2(b) to the contrary, any Indebtedness
resulting from the refinancing of any Indebtedness under the mortgage
securing the obligations of the Company under the Yen Credit Agreement
shall be refinanced on terms and conditions substantially similar to those
set forth on Exhibit Y hereto;
(c) Indebtedness in respect of unsecured public debt or unsecured
long-term private placement financings of the Company; provided that such
Indebtedness is in form and substance reasonably satisfactory to the
Required Lenders;
(d) Indebtedness (i) of the Company to any of its wholly-owned
Subsidiaries, (ii) of any wholly-owned Subsidiary of the Company to any
other wholly-owned Subsidiary
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of the Company and (iii) of any wholly-owned Subsidiary of the Company to
the Company;
(e) Indebtedness (including, without limitation, Indebtedness on
account of letters of credit not issued under this Agreement) incurred for
the working capital purposes of the Company or any of its Subsidiaries in
an aggregate principal amount not exceeding for the Company and its
Subsidiaries in the aggregate $60,000,000 (or, with respect to any other
currency, the Equivalent in Dollars thereof); provided that for purposes of
this subsection 14.2(e), such aggregate principal amount shall not include
(x) an amount equal to the aggregate principal amount of Indebtedness of
the Company or any of its Subsidiaries to any bank which is offset by
compensating balances at such bank (which Indebtedness shall be permitted
hereunder) and (y) Indebtedness otherwise permitted by this subsection
14.2;
(f) the Subordinated Notes, Indebtedness under the Indentures and the
Sinking Fund Debentures, and any Indebtedness resulting from the
refinancing of any of such Indebtedness; provided that (i) the primary
obligor with respect to any such refinancing Indebtedness is the same as
the primary obligor on the Indebtedness refinanced thereby (except to the
extent that such primary obligor may be substituted by a new primary
obligor which has no material assets other than assets which, immediately
prior to such substitution, constituted the assets of the original primary
obligor), (ii) the principal amount of any such refinancing Indebtedness
(as determined as of the date of the incurrence of such refinancing
Indebtedness in accordance with GAAP) does not exceed the amount equal to
the sum of the principal amount of the Indebtedness refinanced thereby
together with any premium actually paid thereon and reasonable costs and
expenses (including underwriting discounts) incurred in connection with
such refinancing Indebtedness, (iii) such refinancing Indebtedness does not
have any scheduled installments of principal thereof due prior to December
31, 2002 and is unsecured (except that any refinancing of the Sinking Fund
Debentures may be secured by a Lien on the Mortgaged Property in Phoenix
upon terms substantially similar to those existing on the date hereof),
(iv) if the Indebtedness being refinanced is subordinated, the
subordination provisions of such refinancing Indebtedness is no less
favorable to the Administrative Agent and the Lenders than the
subordination provisions of the Indebtedness refinanced thereby and (v)
either (A) the covenants, defaults and similar provisions applicable to
such refinancing Indebtedness or obligations are no more restrictive, taken
as a whole, than those in effect in the Indebtedness refinanced thereby and
do not conflict with the provisions of this Agreement or (B) such
refinancing Indebtedness is otherwise upon terms and subject to definitive
documentation which is in form and substance reasonably satisfactory to the
Required Lenders;
(g) the Subordinated Intercompany Notes and any Capital Gains Notes;
(h) Indebtedness of the Company to Affiliates in respect of Capital
Contribution Notes which evidence cash amounts actually received by the
Company from such Affiliates on account of Capital Contributions;
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(i) Indebtedness of any Person which becomes a Subsidiary of the
Company after the date of this Agreement (provided that (i) such
Indebtedness was in existence on the date such Person became a Subsidiary,
whether pursuant to a Committed Facility or otherwise and (ii) such
Indebtedness was not created in contemplation of such Person becoming a
Subsidiary) and any Indebtedness resulting from the refinancing of any such
Indebtedness;
(j) Indebtedness to employees or former employees of the Company or
any of its Subsidiaries in the nature of deferred compensation;
(k) Indebtedness which is incurred by the Company and its Subsidiaries
which constitutes Investment Consideration incurred (i) for the deferred
purchase price of capital stock, other equity interests or assets acquired
in an acquisition from a Person other than the Company and its Subsidiaries
of all or substantially all of the capital stock, other equity interests or
assets of one or more Persons or (ii) in connection with any Investment in
a Permitted Joint Venture;
(l) Indebtedness of the Company and its Subsidiaries under Interest
Rate Agreements which are in existence on the date hereof and other
Indebtedness of the Company and its Subsidiaries under Interest Rate
Agreements which (i) have a tenor which is not in excess of five years,
(ii) are not leveraged, (iii) are in an aggregate notional amount (net of
any offsetting economic positions among such Interest Rate Agreements) not
to exceed $525,000,000 at any one time outstanding (including, without
limitation, all Interest Rate Agreements in effect on the date hereof) and
(iv) have the sole purpose of netting the economic position and obligations
of the Company and its Subsidiaries;
(m) foreign exchange contracts of the Company and its Subsidiaries
entered into in the ordinary course of business of the Company and its
Subsidiaries for the purpose of providing foreign exchange for their
respective operating requirements or of hedging currency exposure;
(n) Indebtedness of the Company to Affiliates who have executed and
delivered an Affiliate Subordination Letter in respect of working capital
loans actually received in cash by the Company from such Affiliates in an
aggregate principal amount not to exceed $50,000,000 at any one time
outstanding; provided that (i) the rate of interest payable on account of
such Indebtedness is less than the rate then payable on Eurodollar Loans
hereunder and (ii) such Indebtedness shall not be repayable (and, in any
event, shall not be repaid) at any time when a Default or Event of Default
has occurred and is continuing (or would result therefrom); and
(o) Indebtedness of the Company or any of its Subsidiaries in the
nature of guarantees as referred to in clause (k) of the definition of
"Indebtedness" in subsection 1.1 which is permitted by subsection 14.4;
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154
provided, however, that in no event may the Company or any of its Subsidiaries
incur any Indebtedness to Worldwide or Worldwide (Parent).
14.3 Limitation on Liens. The Company will not, and will not permit
any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon any of their properties, assets (including shares of stock) or revenues,
whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of the Company or any of its
Subsidiaries, as the case may be, in accordance with GAAP;
(b) carriers', warehousemens', mechanics', materialmens', repairmens'
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 30 days or which are being contested
in good faith and by appropriate proceedings, provided that no such Lien
shall encumber any Collateral (as defined in any Security Document) under
any of the Security Documents (other than inventory and real property) or
any of the Unpledged International Property;
(c) pledges or deposits in connection with workmen's compensation,
unemployment insurance and other social security legislation, provided that
no such Lien shall encumber any Collateral (as defined in any Security
Document) under any of the Security Documents or any of the Unpledged
International Property;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business, provided that no such Lien shall encumber
any Collateral (as defined in any Security Document) under any of the
Security Documents or any of the Unpledged International Property;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of the Company or any
of its Subsidiaries;
(f) Liens in favor of the United States of America for amounts paid by
the Company or any of its Subsidiaries as progress payments under
government contracts entered into by them, provided that no such Lien shall
encumber any Collateral (as defined in any Security Document) under any of
the Security Documents or any of the Unpledged International Property;
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(g) Liens existing on the date of this Agreement which (i) secure
Indebtedness set forth in Schedule VII or any Contingent Obligations with
respect to such Indebtedness as permitted by subsection 14.4 and any
replacement Liens securing any Indebtedness resulting from the refinancing
of any such Indebtedness as permitted by subsection 14.2(b) or securing any
Contingent Obligations with respect to such Indebtedness as permitted by
subsection 14.4, provided that no such Lien is spread to cover any
additional property (except for additional property in the nature of
improvements to property already subject to any such Lien or additions to
accounts receivable or inventory, as the case may be, already subject to
such Lien), and provided, further, that no such Lien (other than any such
Lien on account of (A) the Yen Credit Agreement or (B) Indebtedness or
Contingent Obligations constituting Bank Obligations or Mortgage
Obligations (as defined in the Security Documents)) shall encumber any
Collateral (as defined in any Security Document) under any of the Security
Documents or any of the Unpledged International Property or (ii) are
disclosed in the title insurance policies delivered pursuant to subsection
12.1(g);
(h) Liens under the Security Documents (including, without limitation,
Liens which secure Bank Obligations and Mortgage Obligations as provided
for, and as defined in, the Collateral Agency Agreements);
(i) attachment, judgment or other similar Liens arising in connection
with court or arbitration proceedings, provided that the same are
discharged, or that execution or enforcement thereof is stayed pending
appeal, within 30 days or (in the case of any execution or enforcement
pending appeal) such lesser time during which such appeal may be taken;
(j) other Liens incidental to the conduct of the business of the
Company and its Subsidiaries or the ownership of any of their assets not
incurred in connection with Indebtedness or Contingent Obligations, which
Liens do not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business of
the Company or any of its Subsidiaries, provided that no such Lien shall
encumber any Collateral (as defined in any Security Document) under any
Security Document or any of the Unpledged International Property;
(k) Liens securing any Indebtedness of any Subsidiary of the Company
permitted under subsection 14.2(e) or any Contingent Obligation with
respect to such Indebtedness permitted by subsection 14.4 or any Liens
replacing such permitted Liens, provided that (i) no such Lien (other than
any such Lien securing reimbursement obligations under letters of credit
not issued under this Agreement) shall encumber any asset of the Company or
any of its Subsidiaries organized under the laws of a jurisdiction within
the United States (other than any Lien on assets of a foreign branch of any
Domestic Subsidiary of the Company, which assets are themselves located
outside of the United States) or any Collateral (as defined in any Security
Document) under any Security Document or any of the Unpledged International
Property and (ii) any such Lien which secures reimbursement obligations
under letters of credit not issued under this Agreement
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shall be limited to (A) the assets acquired or shipped with the support of
such letter of credit and (B) any assets of the Company or such Subsidiary
which are in the care, custody or control of such issuer of such letter of
credit in the ordinary course of business;
(l) any Lien securing any Indebtedness permitted under subsection
14.2(i) or under a Committed Facility which was in existence on the date
such Person became a Subsidiary or such acquisition or Investment was made
or any Contingent Obligation with respect to such Indebtedness permitted by
subsection 14.4 or any Liens replacing such permitted Liens, provided that
(i) such Lien existed on the date on which the Person owing such
Indebtedness became a Subsidiary or such acquisition or Investment was made
(or that such Lien replaced such a Lien), was not created in contemplation
of its becoming a Subsidiary or acquisition or Investment being made and
has not been spread to cover any additional property (except for additional
property in the nature of improvements to property already subject to such
Lien or additions to accounts receivable or inventory, as the case may be,
already subject to such Lien) and (ii) the amount of Indebtedness secured
thereby is not increased (except for any increase in such Indebtedness
representing additional borrowings or the like under the same Committed
Facility or permitted replacement thereof pursuant to which such
Indebtedness was incurred and such Committed Facility existed on such
date), and provided, further, that no such Lien shall encumber any of the
Unpledged International Property;
(m) any Lien securing any working capital Indebtedness of any
Subsidiary or any Contingent Obligation with respect to such Indebtedness,
where such Indebtedness represents an increase in the aggregate principal
amount of working capital Indebtedness and the Lien or Liens securing such
Indebtedness are permitted by paragraph (g) or (l) of this subsection 14.3
(including the requirement that no such Lien is spread to cover any
additional property (except for additional property in the nature of
improvements to property already subject to such Lien or additions to
accounts receivable or inventory, as the case may be, already subject to
such Lien)), provided that (i) such increase is generally attributable to
an increase in the working capital needs of such Subsidiary, (ii) such
Indebtedness is permitted under subsection 14.2(e) and (iii) such
Indebtedness is not guaranteed by the Company and provided, further, that
no such Lien shall encumber any Collateral (as defined in any Security
Document) under any of the Security Documents or any of the Unpledged
International Property;
(n) Liens in the nature of counterpart deposits or pledges of cash
deposits of the Company or any of its Subsidiaries to secure Indebtedness
of Subsidiaries of the Company organized and principally doing business
outside of the United States, which Indebtedness is permitted pursuant to
subsection 14.2, provided that (i) any such Indebtedness is not guaranteed
by the Company (except to the extent that the pledge of such deposit, in
itself, constitutes a guarantee), (ii) the aggregate principal amount of
all such Indebtedness at any one time outstanding does not exceed
$25,000,000 (or, with respect to any other currency, the Equivalent
thereof) and (iii) the amount of any such deposit does not exceed the
amount of the Indebtedness it secures, and provided, further,
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that no such Lien shall encumber any Collateral (as defined in any Security
Document) under any of the Security Documents or any of the Unpledged
International Property;
(o) Liens in favor of Persons holding Indebtedness permitted pursuant
to subsection 14.2(k), provided that such Liens shall extend only to the
capital stock, other equity interests or assets acquired by the Company or
its Subsidiaries for such Indebtedness or the interest in the applicable
Permitted Joint Venture;
(p) possessory Liens in favor of brokers and dealers arising in
connection with the acquisition or disposition of investments of the type
permitted by subsection 14.8; provided that such Liens (i) attach only to
such investments and (ii) secure only obligations incurred in the ordinary
course and arising in connection with the acquisition or disposition of
such investments and not any obligation in connection with margin
financing; and provided, further, that such Liens attach only to the
property of the Company or its Subsidiary, as the case may be, for whose
account any such obligations have been incurred; and
(q) additional Liens incurred in the ordinary course of business of
the Company and its Subsidiaries securing Indebtedness or other obligations
of the Company and/or any of its Subsidiaries not to exceed $10,000,000
(or, with respect to any other currency, the Equivalent thereof) in the
aggregate at any one time outstanding, provided that no such Lien shall
encumber any Collateral (as defined in any Security Document) under any of
the Security Documents or any of the Unpledged International Property.
14.4 Limitation on Contingent Obligations. The Company will not, and
will not permit any of its Subsidiaries to, agree to, or assume or incur, or
otherwise in any way be or become responsible or liable, directly or
indirectly, with respect to, any Contingent Obligation, except for:
(a) the Guarantees;
(b) Contingent Obligations set forth in Schedule VIII, and any
Contingent Obligations resulting from the refinancing of any Indebtedness
or obligations supported by such Contingent Obligations, provided that (i)
the principal or face amount of any such refinancing Indebtedness or
obligations (as determined as of the date of the incurrence of such
refinancing Indebtedness or obligations in accordance with GAAP) does not
exceed the principal or face amount of the Indebtedness or obligations
refinanced thereby, (ii) the effective annual interest expense or cost
applicable to such refinancing Indebtedness or obligations (as determined
as of the date of the incurrence of such refinancing Indebtedness or
obligations in accordance with GAAP) is not materially greater than the
effective annual interest expense or cost applicable to the Indebtedness or
obligations refinanced thereby and (iii) such refinancing Indebtedness or
obligations (or any installment thereof) does not have any scheduled
principal payments which are earlier than December 31, 2002 (or, in any
case in which such Indebtedness or obligations
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had scheduled principal payments prior to such date, no earlier than the
dates of such scheduled payments);
(c) any Contingent Obligation of the Company in the nature of a
guarantee of any Indebtedness or other obligations of any of its
Subsidiaries permitted under this Agreement;
(d) any Contingent Obligation of any of the Subsidiaries of the
Company in the nature of a guarantee of any Indebtedness or other
obligations of any of the Subsidiaries of such Subsidiary permitted under
this Agreement;
(e) any Contingent Obligation of any Subsidiary of the Company in the
nature of a guarantee of Indebtedness (other than the Subordinated Notes,
the Sinking Fund Debentures or any Indebtedness referred to in subsection
14.2(b)) or other obligations of the Company or any other Subsidiary of the
Company;
(f) any Contingent Obligation of the Company arising pursuant to the
Agreement, dated as of February 7, 1994, by and among Robert B. Reich (as
the Secretary of Labor of the United States), the Company and Mafco
Holdings Inc.;
(g) any Contingent Obligation of the Company or any of its
Subsidiaries in the nature of a guarantee of Indebtedness of any Permitted
Joint Venture; provided that the incurrence of such Contingent Obligation
is permitted by subsection 14.8(e); and
(h) any Contingent Obligation of the Company or any of its
Subsidiaries in the nature of a guarantee of Indebtedness of officers and
directors of the Company and its Subsidiaries in the ordinary course of
business; provided that the sum of the aggregate principal amount of the
Indebtedness so guaranteed and the aggregate principal amount of all then
outstanding loans permitted by subsection 14.8(f) does not exceed
$1,000,000 at any one time outstanding.
14.5 Limitation on Fundamental Changes. The Company will not, and will
not permit any of its Subsidiaries to, enter into any transaction in the nature
of merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), convey, sell, lease, assign,
transfer or otherwise dispose of, in one transaction or a series of related
transactions, all or a substantial part of the business or assets of the
Company, or enter into any such transaction or series of related transactions
with regard to a group of Subsidiaries which, if merged into a single
Subsidiary, would constitute a substantial part of the business or assets of
the Company, or acquire by purchase or otherwise all or substantially all the
business or assets of, or stock or other evidences of beneficial ownership of,
any Person, except that during such time as no Specified Default or Event of
Default has occurred and is continuing (or would result therefrom):
(a) the Company and its Subsidiaries may engage in Permitted
Intercompany Transfers; and
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(b) the Company and any of its Subsidiaries may engage in transactions
permitted under subsection 14.6 or subsection 14.8(d) or (e).
14.6 Limitation on Sale of Assets. The Company will not, and will not
permit any of its Subsidiaries to, sell, lease, assign, transfer or otherwise
dispose of any of its assets (including, without limitation, receivables and
leasehold interests), whether now owned or hereafter acquired, or, in the case
of any of the Subsidiaries of the Company, issue any shares of capital stock or
other equity interests (other than any director's qualifying shares), to any
Person, except:
(a) sales, transfers and other dispositions by the Company and its
Subsidiaries of (i) obsolete or worn out property in the ordinary course of
business or (ii) contemplated by clause (a)(ii)(Y) of the definition of the
term "Net Proceeds Events";
(b) sales of property (including, without limitation, inventory) by
the Company and its Subsidiaries to third parties in the ordinary course of
business for fair market value;
(c) during such time as no Specified Default or Event of Default has
occurred and is continuing (or would result therefrom), Permitted
Intercompany Transfers;
(d) during such time as no Specified Default or Event of Default has
occurred and is continuing (or would result therefrom), any Specified
Dispositions for fair market value (which property, in the aggregate, the
Company hereby represents and warrants is not material to the conduct of
the business of the Company and its Subsidiaries);
(e) during such time as no Specified Default or Event of Default has
occurred and is continuing (or would result therefrom), sales, transfers
and other dispositions of assets of the Company and its Subsidiaries to
Permitted Joint Ventures in accordance with the provisions of subsection
14.8;
(f) during such time as no Specified Default or Event of Default has
occurred and is continuing (or would result therefrom), any Resale
Transactions to unaffiliated third parties for fair market value;
(g) other sales, transfers and other dispositions by the Company and
its Subsidiaries which are permitted by subsections 14.3 or 14.5; and
(h) transactions pursuant to and in accordance with the CCI
Agreements.
14.7 Limitation on Restricted Payments. (a) The Company will not, and
will not permit any of its Subsidiaries to, make any Restricted Payment, except
that, so long as no Default or Event of Default has occurred and is continuing
at the time such Restricted Payment is made or would result therefrom and the
representations and warranties deemed to be made pursuant to
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subsection 14.7(b) are true and correct in all material respects as of the date
such Restricted Payment is made, the following Restricted Payments may be made:
(i) Restricted Payments on account of amounts payable under the
Company Tax Sharing Agreement, with respect to state and local taxes and,
with the prior consent of the Required Lenders, federal taxes; provided,
however, that (x) any Capital Gains Amounts which are payable under the
Company Tax Sharing Agreement shall be paid exclusively by means of a
Capital Gains Note, (y) no such Restricted Payment (whether in cash or
otherwise) shall be made more than ten Business Days prior to the date upon
which Mafco's or the relevant Affiliate's related liability to the Internal
Revenue Service (or the relevant state or local taxing authority) for tax
(including estimated taxes) is paid (or, if no such taxes are payable,
ordinarily would have been due) and (z) the aggregate amount which is then
to be paid by the Company and its Subsidiaries pursuant to this subsection
14.7(a)(i) shall not be in excess of the amount which is to be paid by
Revlon to its Parents pursuant to the Company Tax Sharing Agreement;
(ii) Restricted Payments made to Permitted Joint Ventures, to the
extent that such Restricted Payments are permitted pursuant to subsection
14.8(e);
(iii) Restricted Payments on account of the application by the Company
and its Subsidiaries of amounts received by them in satisfaction of the
requirements of Section 15(r)(ii) to satisfy amounts then due and payable
to the Company and its Subsidiaries from Revlon Holdings or any Revlon
Holdings Support Party under the Revlon Holdings Operating Agreement;
(iv) Restricted Payments made from time to time to finance (A) the
purchase by Revlon of its common stock (for not more than market price) in
connection with the delivery of such common stock to grantees under any
stock option plan maintained by it upon the exercise by such grantees of
stock options or stock appreciation rights settled with common stock or
upon the grant of shares of common stock pursuant thereto and (B) the
payment by Revlon of amounts owing in respect of stock appreciation rights
and performance units under any such stock option plan; provided that (x)
the sum of (1) the aggregate amount of Restricted Payments made pursuant to
this clause (iv) and (2) the aggregate amount of open-market purchases of
common stock of Revlon, Inc. under subsection 14.8(g), does not exceed
$6,000,000 in any year and (y) amounts available pursuant to this clause
(iv) to be utilized for Restricted Payments during any year which are not
utilized during such year may be carried forward and utilized in any
succeeding year;
(v) during such time as the Worldwide (Parent) Indenture remains in
effect, Restricted Payments in an aggregate amount not to exceed the amount
equal to 25% of Consolidated Net Income (net of any extraordinary gains, to
the extent included in the calculation thereof, with capital gains being
deemed to be extraordinary gains for purposes of this Agreement) for the
period from January 1, 1995 through the last day of the most recently
completed fiscal quarter of the Company and its Subsidiaries in respect
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161
of which the Company has delivered the financial statements required
pursuant to subsection 13.1 and the related compliance certificate minus
the aggregate amount of Restricted Payments theretofore made pursuant to
this clause (v) or subsection 13.7(a)(v) of the Existing Agreement;
provided that there was Consolidated Net Income for either of the two most
recently completed fiscal quarters of the Company in respect of which the
Company has delivered the financial statements (and the related compliance
certificate) required pursuant to subsection 13.1;
(vi) at any time when the Worldwide (Parent) Indenture remains in
effect and an Equity Offering has been consummated at a price per share
which results in a market capitalization for the Person whose securities
are the subject of such Equity Offering of not less than $1,800,000,000 and
which produces gross cash consideration of not less than $50,000,000,
Restricted Payments in an aggregate amount not to exceed the lesser of (A)
$100,000,000 and (B) the aggregate amount of the proceeds received by the
Company and its Subsidiaries from Equity Offerings; and
(vii) subject to the limitations set forth in subsection 14.8(g),
Restricted Payments made from time to time to finance the investments
contemplated by subsection 14.8(g).
(b) The making of each Restricted Payment pursuant to subsection
14.7(a) shall constitute a representation and warranty by the Company that, on
and as of the date upon which such Restricted Payment is made (both before and
after giving effect to the making thereof), the representations and warranties
contained in subsections 11.10 and 11.21(a) are true and correct in all
material respects.
14.8 Limitation on Investments. The Company will not, and will not
permit any of its Subsidiaries to, make or commit to make any advance, loan,
extension of credit or capital contribution to, or purchase of any stock,
bonds, notes, debentures or other securities of, or make any other investment
in, any Person (other than the Company or any of its Subsidiaries), except as
otherwise permitted by subsection 14.10 and except that:
(a) each of the Company and its Subsidiaries may make or commit to
make investments in Cash Equivalents;
(b) each of the Company and its Subsidiaries may make or commit to
make investments in accounts, contract rights and chattel paper (as defined
in the Uniform Commercial Code), put and call foreign exchange options to
the extent necessary to hedge foreign exchange exposures or foreign
exchange spot and forward contracts, and notes receivable, arising or
acquired in the ordinary course of business and in Interest Rate
Agreements;
(c) the Company may make or commit to make any loan or advance or
purchase any securities constituting a Restricted Payment permitted by
subsection 14.7;
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(d) if in the reasonable judgment of the Company, any customer is
deemed to be in a reorganization or unable to make a timely cash payment on
Indebtedness or other obligations of such customer owing to it, each of the
Company and its Subsidiaries may invest or commit to invest in securities
issued by such customer or any Affiliate thereof (other than any Affiliate
of the Company) in lieu of cash payment; provided that the Company or such
Subsidiary, as the case may be, has paid no new consideration (other than
forgiveness of Indebtedness or other obligations) therefor;
(e) each of the Company and its Subsidiaries may make or commit to
make Investments; provided that (i) no Default or Event of Default has
occurred and is continuing at the time of such Investment (or would result
therefrom), (ii) the Company would have been in compliance, on a pro forma
basis, with each of the financial covenants contained in clauses (a) and
(b) of subsection 14.1 if such Investment had been made on the first day of
the most recently completed period of calculation thereof, (iii) the
aggregate Investment Consideration (as reduced by the amount equal to the
Net Proceeds received by the Company and its Subsidiaries from any Net
Proceeds Event on account of any Resale Transaction) with respect to all
Investments in Permitted Joint Ventures (it being understood and agreed
that for purposes of this subsection 14.8(e), Investments by the Company or
any of its Subsidiaries in CCI or any of its Subsidiaries shall be treated
as Investments in a Permitted Joint Venture) does not exceed (A)
$25,000,000 per calendar year (with amounts which are not utilized in any
calendar year being carried over to the immediately succeeding calendar
year) and (B) $50,000,000 during the period from the date hereof through
the Termination Date, and (iv) after giving effect to such Investment, the
aggregate Investment Consideration (as reduced by the amount equal to the
Net Proceeds received by the Company and its Subsidiaries from any Net
Proceeds Event on account of any Resale Transaction) for all Investments
made by the Company and its Subsidiaries after the date hereof, does not
exceed $200,000,000 (or, in the event the Aggregate Acquisition Loan
Commitment is increased pursuant to subsection 9.7, an amount equal to
$200,000,000 plus the amount of any such increase); and provided, further,
that none of the Company or any of its Subsidiaries shall commit to make
any Investment unless (x) such Investment is then permitted hereunder or
(y) such commitment is expressly subject to the receipt by the Company or
such Subsidiary, as the case may be, of any approvals required hereunder
and under each other Credit Document;
(f) each of the Company and its Subsidiaries may make or commit to
make loans to officers and directors of the Company and its Subsidiaries in
the ordinary course of business in an aggregate principal amount which, in
the aggregate with all then outstanding Contingent Obligations permitted by
subsection 14.4(h), does not exceed $1,000,000 at any one time outstanding
from the Company and its Subsidiaries to all such officers and directors;
(g) the Company may make investments in open-market purchases of
common stock of Revlon to the extent necessary to permit the Company to
satisfy its obligations under its "excess 401-(k) plan" for highly
compensated employees; provided that (i) the sum of (A) the aggregate
amount of Restricted Payments made pursuant to subsection
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14.7(a)(iv) and (B) the aggregate amount of such purchases under this
subsection 14.8(g), does not exceed $6,000,000 in any year and (ii) amounts
available pursuant to this subsection 14.8(g) to be utilized for
investments during any year which are not utilized during such year may be
carried forward and utilized in any succeeding year; and
(h) subject to the limitations set forth in subsection 14.7(a)(iv),
Investments made from time to time in connection with the transactions
contemplated by subsection 14.7(a)(iv).
14.9 Limitation on Payments on Account of Debt. The Company will not,
and will not permit any of its Subsidiaries to:
(a) amend, waive, supplement or otherwise modify in any material
respect (including, without limitation, amendments of the interest rate or
payment terms thereof) any Indenture or any agreement governing the Sinking
Fund Debentures or the Subordinated Notes, the Yen Credit Agreement, any
Indebtedness permitted pursuant to subsection 14.2(c) or any Indebtedness
not permitted pursuant to the terms of this Agreement as in effect on the
date hereof but entered into with the consent of the Required Lenders;
provided that the Company may amend or otherwise modify the Yen Credit
Agreement on terms and conditions substantially similar to those set forth
on Exhibit Y hereto;
(b) amend, waive, supplement or otherwise modify any Affiliate
Subordination Letter, any Subordinated Intercompany Note, any Capital Gains
Notes or any Capital Contribution Note; or
(c) directly or indirectly, defease, or make or commit to make any
optional prepayment of, or otherwise repurchase, any of its Indebtedness,
except:
(i) Indebtedness under this Agreement, the Notes and the Drafts;
(ii) Indebtedness which is (A) permitted by paragraphs (d), (e),
(j), and (l) through (o) of subsection 14.2, (B) permitted by
subsection 14.2(i) and has a final maturity which is earlier than the
Termination Date or (C) secured by a mortgage on the real property and
improvements owned by the Company in Jacksonville, Florida; provided
that (in each such case) any such defeasement, repayment or repurchase
of Indebtedness permitted by paragraph (h) of subsection 14.2 shall be
made only in accordance with the provisions of subsection 14.7 and
shall be made only during such time as no Default or Event of Default
has occurred and is continuing (or would result therefrom);
(iii) Indebtedness permitted by subsection 14.2(b) upon any
refinancing thereof in accordance with the provisions of said
subsection 14.2(b) and Indebtedness permitted by subsection 14.2(f)
upon any refinancing thereof in accordance with the provisions of said
subsection 14.2(f);
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(iv) the Sinking Fund Debentures or Indebtedness under the
Indentures; provided, that, any such defeasement, repayment or
repurchase shall be made only during such time as no Default or Event
of Default has occurred and is continuing (or would result therefrom);
and
(v) other Indebtedness in an aggregate principal amount not to
exceed $5,000,000 (or, with respect to any other currency, the
Equivalent thereof on the date of such payment or prepayment) prior to
the Termination Date.
14.10 Limitation on Transactions with Affiliates. The Company will
not, and will not permit any of its Subsidiaries to, (a) engage in any
transaction with any Affiliate of the Company, except upon terms no less
favorable to the Company or such Subsidiary, as the case may be, than it would
obtain in a comparable arm's length transaction with a Person, not an
Affiliate, or (b) sell, transfer, convey, assign or otherwise dispose of any
material asset to any Affiliate of the Company; provided, however, that nothing
contained in this subsection 14.10 shall prohibit (x) the Company from making
Restricted Payments permitted by subsection 14.7 or (y) the Company or any of
its Subsidiaries from engaging in any transaction pursuant to and in accordance
with the CCI Agreements, the Occupancy Agreement, dated as of January 1, 1995,
between Revlon Holdings and the Company, as occupant or the Lease, dated as of
April 2, 1993, by Revlon Holdings, as landlord, to the Company, as tenant, with
respect to the research and development facility.
14.11 Hazardous Materials. The Company will not, and will not permit
any of its Subsidiaries to, cause or knowingly permit any of the Mortgaged
Properties or any other of its assets to be used to generate, manufacture,
refine, transport, treat, store, handle, dispose, transfer, produce or process
Hazardous Materials or Petroleum Products, except in compliance in all respects
with all applicable Environmental Laws, nor release, discharge, dispose of or
permit or suffer any release or disposal as a result of any act or omission on
its part, or on the part of any tenant or subtenant, of Hazardous Materials or
Petroleum Products onto any such property or asset in violation of any
Environmental Law, except to the extent that any such failure to comply with
applicable Environmental Laws would not be reasonably likely to have a Material
Adverse Effect.
14.12 Accounting Changes. (a) The Company will not, and will not
permit any of its Subsidiaries to, make or permit to be made any change in
accounting policies affecting the presentation of financial statements or
reporting practices from those employed by the Company in the audited financial
statements contained in its Annual Report on Form 10-K for its fiscal year
ended December 31, 1996, unless (i) such changes are required or permitted by
GAAP, (ii) such changes are disclosed to the Lenders through the Administrative
Agent or otherwise and (iii) if requested by the Agents, relevant prior
financial statements are reconciled (in form and detail reasonably satisfactory
to the Agents) to show comparative results and reconciliations.
(b) Notwithstanding anything to the contrary contained herein,
compliance with the financial covenants contained in subsection 14.1 shall be
determined based upon GAAP as in
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effect as of the date of, and as used in, the preparation of the audited
consolidated financial statements of the Company and its Subsidiaries for the
fiscal year ended December 31, 1996.
14.13 Limitation on Negative Pledge Clauses. The Company will not, and
will not permit any of its Subsidiaries to, enter into any agreement (other
than the Credit Documents) with any Person which prohibits or limits the
ability of the Company or any of its Subsidiaries to create, incur, assume or
suffer to exist any Lien upon any of its properties, assets or revenues,
whether now owned or hereafter acquired; provided, however, that any of the
Company and its Subsidiaries may enter into any such agreement to the extent
that such agreement is in connection with a Lien permitted by paragraph (c),
(d), (f), (g) (to the extent that such agreement is in effect on the date
hereof), (h), (j), (k), (l) (to the extent that such agreement is in effect on
the date upon which the relevant asset is acquired), (m), (n), (o), (p) or (q)
of subsection 14.3 and any such prohibitions or limitations apply only to the
property encumbered by such Lien.
14.14 Amendment of Company Tax Sharing Agreement. The Company will
not, and will not permit any of its Subsidiaries to, amend, modify, change,
waive, cancel or terminate any term or condition of the Company Tax Sharing
Agreement in a manner adverse to the interests of the Company or the Lenders
without the prior written consent of the Required Lenders.
14.15 Amendment of Revlon Holdings Operating Agreement. The Company
will not, and will not permit any of its Subsidiaries to, amend, modify,
change, waive, cancel or terminate any material term or condition of the Revlon
Holdings Operating Agreement in a manner materially adverse to the interests of
the Company or the Lenders without the prior written consent of the Required
Lenders.
SECTION 15. EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the following
events:
(a) Payments. Failure by any Borrower to pay any principal of any
Loan, Note or Draft, or any Reimbursement Obligation, when due in
accordance with the terms thereof and hereof; or failure by any Borrower to
pay any interest on any Loan, Note or Draft, or any Reimbursement
Obligation, within five days after the date when due in accordance with the
terms thereof and hereof or any fee or other amount payable in connection
with any Credit Document within five days after the date when due; or
(b) Representations and Warranties. Any representation or warranty
made or deemed made by any Borrower, any Pledgor, any Grantor or any
Guarantor in any Credit Document or which is contained in any certificate
or financial statement furnished at any time under or in connection
herewith or therewith shall prove to have been incorrect, false or
misleading in any material respect on or as of the date when made or deemed
to have been made; or
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(c) Certain Covenants. Default by the Company in the observance or
performance of any negative covenant or agreement contained in Section 14
or the observance of any covenant or agreement contained in subsection
13.13; or
(d) Other Covenants. Default by the Company in the observance or
performance of any other covenant or agreement contained or incorporated by
reference in this Agreement and the continuance of such default unremedied
for a period of 15 days; or
(e) Security Document Covenants. Default by any Borrower, any Pledgor,
any Grantor or any Guarantor in the observance or performance of any
covenant or agreement contained or incorporated by reference in any
Security Document and such default shall continue beyond the grace period
provided in such Security Document; or
(f) Effectiveness of the Security Documents. On or after the Closing
Date, (i) for any reason (other than any act on the part of the
Administrative Agent, the Documentation Agent, the Syndication Agent or any
Lender) any Security Document ceases to be or is not in full force and
effect or any of the Liens intended to be created by any Security Document
ceases to be or is not a valid and perfected Lien having the priority
contemplated thereby or (ii) any Borrower, any Pledgor, any Grantor or any
Guarantor shall assert in writing that any Security Document has ceased to
be or is not in full force and effect; or
(g) Cross Default. Any of (i) Revlon or any of its Subsidiaries shall
Cross Default, (ii) Worldwide or Worldwide (Parent) shall fail to pay any
principal of or interest on any Indebtedness in excess of $500,000 in the
aggregate when due and payable (whether at scheduled maturity or by
required prepayment, acceleration, demand or otherwise) and such failure
shall continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness or (iii) any
Indebtedness in excess of $500,000 in the aggregate of Worldwide or
Worldwide (Parent) shall be declared to be (or shall become) due and
payable, or required to be prepaid (other than a regularly scheduled
prepayment), prior to the scheduled maturity thereof; or
(h) Control Persons. (i) Any Person (or group of Persons acting in
concert), other than Ronald O. Perelman or, in the event of his
incompetence or death, his estate, heirs, executor, administrator,
committee or other personal representative and his (or any of their)
Affiliates (collectively, "ROP"), shall "control" the Company, as such term
is used in Rule 405 promulgated under the Securities Act of 1933, as
amended, or (ii) in the event that ROP ceases to so "control" the Company,
any other Person (or group of Persons acting in concert) shall own more
than 25% of the issued and outstanding voting stock of the Company, or
(iii) the Continuing Directors shall cease to constitute at least 66-2/3%
of the board of directors of the Company; or
(i) Ownership. Revlon shall at any time for any reason cease to be the
beneficial owner of 100% of the outstanding shares of capital stock and
other equity interests of the Company; or
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(j) Tax Matters. The Company or any of its Subsidiaries shall make any
payment (whether in cash or in kind, but other than pursuant to any Capital
Gains Note) to a Parent on account of any Capital Gains Amount; or
(k) Edison Agreements. Default by Revlon Holdings in the observance or
performance of any covenant or agreement in the Mortgage to which it is a
party; or
(l) Default under Company Tax Sharing Agreement. At any time, any
party (other than the Company or any of its Subsidiaries) shall default in
its payment obligations under the Company Tax Sharing Agreement; or
(m) Commencement of Bankruptcy or Reorganization Proceeding. (i) Any
Borrower or any of its Subsidiaries shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it as bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, wind-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian or other similar official for
it or for all or any substantial part of its assets; or, (ii) there shall
be commenced against any Borrower or any of its Subsidiaries any such case,
proceeding or other action referred to in clause (i) which results in the
entry of an order for relief or any such adjudication or appointment
remains undismissed, undischarged or unbonded for a period of 60 days,
provided that each Borrower, for itself and as agent for each of its
Subsidiaries, hereby expressly authorizes the Administrative Agent, the
Documentation Agent, the Syndication Agent and each Lender to appear in any
court conducting any such case, proceeding or other action during said
60-day period to preserve, protect and defend their rights under the Credit
Documents; or (iii) there shall be commenced against any Borrower or any of
its Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an
order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or
(iv) any Borrower or any of its Subsidiaries shall take any action
authorizing, or in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth above in this paragraph
(m); or (v) any Borrower or any of its Subsidiaries shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(n) Material Judgments. (i) One or more judgments or decrees shall be
entered against the Company or any of its Subsidiaries involving in the
aggregate a liability of $5,000,000 (or, with respect to any other
currency, the Equivalent thereof) or more and all such judgments or decrees
shall not have been vacated, stayed, satisfied, discharged or bonded
pending appeal within 60 days from the entry thereof (provided that no
Event of Default shall arise under this Section 15(n) as a result of any
such judgment or decree to
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the extent that (x) it is covered by a valid policy of insurance covering
payment thereof which has been provided by an Eligible Insurer and (y) such
Eligible Insurer has been notified of, and has not disputed the claim made
for payment of, the amount of such judgment or decree) or (ii) any
non-monetary judgment or order shall be rendered against the Company or any
of its Subsidiaries that is reasonably likely to have a Material Adverse
Effect, and in the case of either clause (i) or (ii), there shall be any
period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect unless such judgment or order shall have been vacated, satisfied,
discharged or bonded pending appeal; or
(o) ERISA. (i) Any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code) involving
any Plan, (ii) any "accumulated funding deficiency" (as defined in Section
302 of ERISA), whether or not waived, shall exist with respect to any Plan,
(iii) a Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable
Event or commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Company or any Commonly Controlled Entity of the Company shall, or in the
reasonable opinion of the Required Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or
condition shall occur or exist, with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together with all
other such events or conditions, if any, would be reasonably likely to have
a Material Adverse Effect; or
(p) Matters Relating to Subordinated and Other Indebtedness. On or
after the Closing Date, (i) if for any reason (other than any act on the
part of the Administrative Agent, the Documentation Agent, the Syndication
Agent or any Lender) (A) any Affiliate Subordination Letter then required
to be delivered by an Affiliate pursuant to the terms of this Agreement
shall cease to be or shall not be in full force and effect or (B) any
Affiliate which is party to an Affiliate Subordination Letter shall assert
in writing that the Affiliate Subordination Letter to which it is a party
has ceased to be or is not in full force and effect or (ii) any
Subordinated Notes or other Indebtedness (other than trade credit in the
ordinary course of business, the Subordinated Intercompany Notes, any
Capital Contribution Note and any Capital Gains Note) of the Company or any
of its Subsidiaries shall be held by (or otherwise owing to) any Affiliate
of the Company (other than California Federal Bank, a Federal Savings Bank
and officers and directors of the Company) if such Affiliate has not
executed and delivered an agreement substantially in the form of the
Affiliate Subordination Letter within ten Business Days following the
acquisition of such Indebtedness by such Affiliate; or
(q) Additional Subsidiaries. Revlon shall create or otherwise have any
direct Subsidiary other than the Company; or
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(r) Capital Contributions. Revlon shall fail to make Capital
Contributions to the Company in a timely manner in the amount equal to the
Net Proceeds of (i) any Equity Offering or (ii) any Net Proceeds Event
relating to Revlon Holdings or any Revlon Holdings Support Party; provided,
however, that for purposes of this subsection 15(r), the term "Equity
Offering" shall not include any Equity Offering made by any Person (other
than Revlon) of all or any portion of the capital stock or other equity
interests of Revlon; or
(s) Revlon Operations. Revlon shall have any meaningful assets (other
than any Capital Gains Notes and Capital Contribution Notes) or
Indebtedness (other than Indebtedness of the type contemplated by clause
(i) of the definition of such term and other than Indebtedness in respect
of the Revlon Guarantee), or shall conduct any meaningful business, other
than (i) its ownership of the Company and (ii) such activities as are
customary for a publicly traded holding company which is not itself an
operating company; or
(t) Pledged Subsidiaries of Revlon Holdings. Any Revlon Holdings
Support Party shall incur any Indebtedness (other than trade credit in the
ordinary course of business);
then, and in any such event, (x) if such event is an Event of Default specified
in clause (i), (ii) or (iii) of paragraph (m) of this Section 15, automatically
the Commitments shall immediately terminate and the Loans hereunder (with
accrued interest thereon) and all other amounts owing under this Agreement
(including, without limitation, all amounts of L/C Obligations, whether or not
the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder), the Notes and the Drafts shall
immediately become due and payable, and (y) if such event is any other Event of
Default, either or both of the following actions may be taken: (i) with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Company (on its own behalf and as agent for the Borrowing Subsidiaries),
declare the Commitments to be terminated forthwith, whereupon the Commitments
shall immediately terminate; and/or (ii) with the consent of the Required
Lenders, the Administrative Agent may, or upon the request of the Required
Lenders, the Administrative Agent shall, by notice to the Company (on its own
behalf and as agent for the Borrowing Subsidiaries), declare all or any part of
the Loans (with accrued interest thereon) and any other amounts owing under
this Agreement (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit
shall have presented the documents required thereunder), the Notes and the
Drafts to be due and payable forthwith, whereupon the same shall immediately
become due and payable.
With respect to all Operating Letters of Credit and Special Letters of
Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to the preceding paragraph, the Company
shall at such time deposit as collateral security for such Operating Letters of
Credit or Special Letters of Credit, as the case may be, in a cash collateral
account opened by the Administrative Agent an amount of cash in Dollars equal
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to the aggregate then undrawn and unexpired amount thereof (or, with respect to
the Operating Letters of Credit, the Operating L/C Deposit Requirement in
effect at such time). Amounts held in such cash collateral account shall be
applied by the Administrative Agent (in such order as it shall elect) to the
payment of the Payment Obligations on account of the Benefited Facilities which
are then or thereafter due and payable and to cause any then-outstanding
Undrawn L/C Obligations to be Fully Secured. Following the payment of all such
Payment Obligations and the termination of all Letters of Credit, any balance
remaining in such cash collateral account shall be returned to the Company.
Except as expressly provided above in this Section 15, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 16. THE AGENTS
16.1 Appointment. Each Lender hereby irrevocably designates and
appoints Chase (and any successors thereto who are appointed in accordance with
the provisions of subsection 16.10) as the Administrative Agent under the
Credit Documents. Each Lender hereby irrevocably designates and appoints
Citibank as the Documentation Agent under the Credit Documents. Each Lender
hereby irrevocably designates and appoints Lehman as the Syndication Agent
under the Credit Documents. Each Lender hereby irrevocably authorizes Chase
(and any such successors thereto), as the Administrative Agent for such Lender,
Citibank, as the Documentation Agent for such Lender, and Lehman, as the
Syndication Agent for such Lender, to take such action, in the Administrative
Agent's, the Documentation Agent's or the Syndication Agent's discretion, as
the case may be, on its behalf under the provisions of the Credit Documents and
to exercise such powers and perform such duties as are expressly delegated to
the Administrative Agent, the Documentation Agent or the Syndication Agent, as
the case may be, by the terms of the Credit Documents, together with such other
powers as are reasonably incidental thereto. Chase hereby accepts its
appointment as the Administrative Agent and the authorization set forth above.
Citibank hereby accepts its appointment as the Documentation Agent and the
authorization set forth above. Lehman hereby accepts its appointment as the
Syndication Agent and the authorization set forth above. Notwithstanding any
provision to the contrary in the Credit Documents, neither the Administrative
Agent, the Documentation Agent nor the Syndication Agent shall have any duties
or responsibilities, except those expressly set forth in the Credit Documents,
nor any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into the Credit Documents or otherwise exist against the Administrative Agent,
the Documentation Agent or the Syndication Agent in such capacity. Except as
otherwise set forth in this Agreement or in the Security Documents, the duties
of the Administrative Agent with respect to the collateral provided pursuant to
the Security Documents shall terminate upon termination of the Commitments
under this Agreement and (x) if a Notice of an Actionable Event has been
delivered and remains in effect, on the Termination Date (as defined in the
Collateral Agency Agreements) and (y) if no such Notice of an Actionable Event
remains in effect, on the date upon which the Payment Obligations have been
Fully Satisfied; provided that nothing contained herein shall impair the rights
of the Administrative Agent to any indemnity, which rights shall survive
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the termination of the Commitments and the payment in full of all amounts owing
to the Administrative Agent, the Documentation Agent, the Syndication Agent,
the Arranger and the Lenders under this Agreement. Notwithstanding anything to
the contrary contained in this Agreement, the parties hereto hereby agree that
the Co-Agents shall have no rights, duties, responsibilities or liabilities in
their respective capacities as such and that no Co-Agent shall have the
authority to take any action hereunder in its capacity as such.
16.2 Consultation with Documentation Agent and Syndication Agent. The
Administrative Agent shall consult with each of the Documentation Agent and the
Syndication Agent with respect to any material issues related to the Borrowers
or any material provision under this Agreement, including, but not limited to,
any amendment or waiver pursuant to subsection 17.1.
16.3 Delegation of Duties. Each of the Agents may execute any of its
respective duties under the Credit Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. None of the Agents shall be responsible for
the negligence or misconduct of any agents or attorneys-in-fact selected by it
with reasonable care.
16.4 Exculpatory Provisions. None of either Agent, the Arranger, the
Swing Line Lender, any Issuing Lender or any Fronting Lender, nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates, shall be (a) liable to any of the Lenders for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
the Credit Documents (except for its or such Person's own gross negligence or
willful misconduct) or (b) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by any Borrower or
any officer thereof contained in the Credit Documents or in any certificate,
report, statement or other document referred to or provided for in, or received
by it under or in connection with, the Credit Documents or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of the
Credit Documents (other than with respect to its own due execution and delivery
thereof) or the perfection of any security interest contemplated thereby or for
any failure of any party thereto (other than such Agent in such capacity) to
perform its obligations thereunder. None of either Agent, the Arranger, the
Swing Line Lender, any Issuing Lender or any Fronting Lender shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, the Credit
Documents, or to inspect the properties, books or records of any party to any
thereof.
16.5 Reliance by the Agents. Each of the Agents, the Arranger and each
Lender (including, without limitation, the Swing Line Lender, each Fronting
Lender and each Issuing Lender) shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Company), independent
accountants and other experts selected by such Agent or Arranger, as the
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case may be. The Administrative Agent may deem and treat the payee of any Note
or on account of any Loan as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with it (in its capacity as such). Each Agent and the Arranger shall be
fully justified in failing or refusing to take any action under any Credit
Document unless it shall have received such advice or concurrence of the
Required Lenders as it deems appropriate or it shall have been expressly
indemnified to its satisfaction by the Lenders or, at its option, the Required
Lenders against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action (except that no such
indemnification need include any indemnification for any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the gross negligence or willful
misconduct of such Agent or the Arranger, as the case may be). Each Agent, the
Arranger and each Lender (including, without limitation, the Swing Line Lender,
each Fronting Lender and each Issuing Lender), and their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates, shall in all
cases be fully protected in acting, or in refraining from acting, under the
Credit Documents upon advice of counsel or in accordance with a request of the
Required Lenders (except in cases in which a greater number of Lenders is
required, in which case the Agents, the Arranger and each Lender, and their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates, shall in all cases be fully protected in acting, or in refraining
from acting, under the Credit Documents in accordance with a request of such
Lenders), and such request, and any action taken or failure to act pursuant
thereto, shall be binding upon all Lenders and all future holders of the Loans
and the Notes.
16.6 Notice of Default. None of the Agents shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default unless
the Administrative Agent has received notice from a Lender or a Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default." In the event that the
Administrative Agent receives any such notice, it shall promptly give notice
thereof to each of the Documentation Agent and the Syndication Agent (in such
capacity) and to the Lenders. The Administrative Agent shall take such action
with respect to any Default or Event of Default as shall be reasonably directed
by the Required Lenders; provided that, unless and until the Administrative
Agent shall have received any such directions, it may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
16.7 Non-Reliance on the Agents, the Arranger and the Other Lenders.
Each Lender expressly acknowledges that none of the Agents, nor the Arranger,
nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates, has made any representations or warranties to
such Lender and that no act by such Lender hereinafter taken, including any
review of the affairs of the Company or any Subsidiary or any Affiliate of any
of the foregoing, shall be deemed to constitute any representation or warranty
by the Administrative Agent, the Documentation Agent, the Syndication Agent or
the Arranger to any Lender. Each Lender represents to the Agents that it has or
will, independently and without reliance upon the either Agent, the Arranger or
any other Lender, and based on such documents and information as it has deemed
or will deem appropriate, made and will make its own appraisal of and
investigation into the business, operations, property, financial and other
condition and
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creditworthiness of the Company and its Subsidiaries and Affiliates and made
and will make its own decision to make its Loans and other extensions of credit
and enter into the Credit Documents to which it is or will be a party. Each
Lender also represents that it will, independently and without reliance upon
either Agent or the Arranger or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under the Credit Documents, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition and creditworthiness of the Company and its Subsidiaries
and Affiliates. Each Lender acknowledges that no action on the part of either
Agent or the Arranger shall relieve such Lender from performing its own credit
analysis and making its own determination prior to, and from time to time
after, its entering into this Agreement with respect to the nature of the
transaction contemplated hereby and assuming any risks or disadvantages to it
that may arise out of any such determination. Except for notices, reports and
other documents expressly required to be furnished to the Lenders, or obtained,
by the Agents or the Arranger, as the case may be, under the Credit Documents,
the Agents and the Arranger in such respective capacities shall have no duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of the Company and its Subsidiaries and Affiliates which may
come into the possession of either of them or the possession of any of their
officers, directors, employees, agents, attorneys-in-fact or affiliates. The
Administrative Agent hereby agrees that, promptly following the Closing Date,
it will provide to each Lender a copy of each of the documents required to be
furnished by the Company to the Administrative Agent prior to the Closing Date
pursuant to subsection 12.1.
16.8 Indemnification. The Lenders agree to indemnify the Agents, the
Co-Agents and the Arranger (in their respective capacities as such), the
Special L/C Lenders agree to indemnify the Issuing Lender with respect to
Special Letters of Credit and the Multi-Currency Lenders agree to indemnify the
Swing Line Lender, the Issuing Lender with respect to Operating Letters of
Credit and each Fronting Lender (in their respective capacities as such), and
(in any such case) their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates, to the extent not reimbursed by the Company
and without limiting the obligation of the Company to do so, ratably according
to the respective amounts of their pro rata shares of the Aggregate Commitment
at the time of occurrence of the event giving rise to such claim for indemnity,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever (including, without limitation, legal fees and disbursements,
but other than amounts owing by a Non-Funding Lender on account of principal,
interest or the funding of participating interests required to be purchased by
such Non-Funding Lender hereunder) which may at any time (including, without
limitation, at any time following the payment of the Loans, Notes and other
Payment Obligations) be imposed on, incurred by or asserted against any such
indemnified Person, in its respective capacity as such, in any way relating to
or arising out of the Credit Documents, or any documents contemplated by or
referred to therein or the transactions contemplated thereby or any action
taken or omitted by such indemnified Person, in its respective capacity as
such, thereunder or in connection therewith, provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses
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or disbursements resulting from the gross negligence or willful misconduct of
such indemnified Person, in its respective capacity as such, or, in the case of
a claim against either Agent or the Arranger (in its respective capacity as
such) arising from a lawsuit against such Agent or the Arranger, as the case
may be, if such Lender was not given notice of said lawsuit and an opportunity
to participate in the defense thereof at its own expense. The agreements in
this subsection 16.8 shall survive the payment of the Loans, the Notes, the
Drafts, the Reimbursement Obligations and all other amounts payable hereunder.
The Administrative Agent shall have the right to deduct any amount owed to it
by any Lender under this subsection from any payment made by it to such Lender
hereunder.
16.9 Each of the Agents and the Arranger in Its Individual Capacity.
Each of the Agents, the Co-Agents and the Arranger and their Affiliates may
make loans to, accept deposits from and generally engage in any kind of
business with the Company and any of its Subsidiaries or Affiliates as though
it were not an Agent, a Co-Agent or the Arranger, as the case may be,
hereunder. With respect to its Loans and any Notes or other promissory note
issued to it (in its capacity as a Lender), with respect to any Local Loan or
Acceptance made, created or participated in by it (in its capacity as a Lender)
and with respect to any Letter of Credit issued or participated in by it (in
its capacity as a Lender), each Agent, each Co-Agent and the Arranger, shall
have the same rights and powers under this Agreement as any Lender and may
exercise the same as though it were not an Agent, a Co-Agent or the Arranger,
as the case may be, and the terms "Lender" and "Lenders" shall include each of
the Agents, the Co-Agents and the Arranger, in its respective individual
capacity.
16.10 Successor Agents. The Administrative Agent, the Documentation
Agent or the Syndication Agent may resign as Administrative Agent,
Documentation Agent or Syndication Agent, as the case may be, upon 30 days'
notice to the Lenders and the Company (on its own behalf and as agent for the
Borrowing Subsidiaries). If the Administrative Agent shall resign as such, then
Citibank, N.A. shall be appointed (automatically and without any act on the
part of, or notice to, any Person) as successor Administrative Agent for the
Lenders; provided that, if Citibank shall have ceased to hold any portion of
the Loans or Commitments hereunder, the Required Lenders shall appoint from
among the Lenders a successor Administrative Agent for the Lenders, which
successor Administrative Agent shall be approved by the Company, such approval
not to be unreasonably withheld (or, if the Required Lenders and the Company
are unable to select such successor Administrative Agent within such 30-day
period, a successor Administrative Agent shall be selected by the Agents). From
and after such appointment of a successor administrative agent, such successor
administrative agent shall succeed to the rights, powers and duties of the
resigning Administrative Agent under all of the Credit Documents, and the term
"Administrative Agent" shall mean such successor Administrative Agent effective
upon its appointment, and the former Administrative Agent's rights, powers and
duties as the Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans, the Notes, the
Drafts or the other Payment Obligations. If the Documentation Agent, the
Syndication Agent or the Arranger shall resign as such, no successor
Documentation Agent, Syndication Agent or Arranger shall be appointed, and the
Administrative Agent shall succeed to all of the rights, powers and duties of
the resigning Documentation Agent, Syndication Agent or
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Arranger, as the case may be, under all of the Credit Documents, and the former
Documentation Agent's, Syndication Agent's or Arranger's rights, powers and
duties as Documentation Agent, Syndication Agent or Arranger, as the case may
be, shall be terminated, without any other or further act or deed on the part
of such former Documentation Agent, Syndication Agent or Arranger. After any
retiring Administrative Agent's or Documentation Agent's or Syndication Agent's
or Arranger's resignation hereunder as such, the provisions of this Section 16
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Administrative Agent or the Documentation Agent or the
Syndication Agent or the Arranger under the Credit Documents.
SECTION 17. MISCELLANEOUS
17.1 Amendments and Waivers. (a) Except as set forth in the next
succeeding sentence or otherwise expressly provided in this Agreement, the
Administrative Agent, on the one hand and the affected Borrowers or the
Pledgors or the Guarantors, as the case may be, as party thereto, on the other
hand, may from time to time with the prior written consent of the Required
Lenders enter into written amendments, supplements or modifications for the
purpose of adding, deleting or modifying any provision of any Credit Document
or changing in any manner the rights, remedies, obligations and duties of the
parties thereto, and with the written consent of the Required Lenders, the
Administrative Agent, on behalf of the Lenders, may execute and deliver a
written instrument waiving, on such terms and conditions as may be specified in
such instrument, any of the requirements applicable to such Borrowers or the
Pledgors or the Guarantors, as the case may be, party to any Credit Document,
or any Default or Event of Default and its consequences. Except as otherwise
expressly provided in this Agreement, no such waiver, amendment, supplement or
modification shall:
(i) without the prior written consent of each Lender directly affected
thereby, extend or waive any scheduled installment or the final scheduled
maturity of any of the Loans or the Notes, or reduce the rate or extend the
time of payment of interest thereon, or reduce the principal amount
thereof, or change the amount or terms (including, without limitation, fees
and commissions) of any Commitment, or consent to the assignment or
transfer by any Borrower of any of its rights and obligations under this
Agreement, or amend, modify or waive any provision of this subsection 16.1;
(ii) without the prior written consent of all Lenders (other than any
Non-Funding Lenders), reduce the respective percentages specified in the
definition of "Required Lenders" in subsection 1.1;
(iii) without the prior written consent of the Lenders (other than any
Non-Funding Lenders) holding more than 85% of the Aggregate Commitment,
(A) amend, supplement or otherwise modify the provisions of subsection
10.4(a) or (B) amend, supplement or otherwise modify the provisions of
Section 2.2.2, 2.2.3, 2.2.4, 2.2.5 or 2.2.6 of the Collateral Agency
Agreement (Bank Obligations) or any definitions used therein or (C) except
as set forth in subsection 17.2, take any action having the effect of
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releasing any of the material collateral or material guarantee obligations
provided for in any Security Document;
(iv) without the prior written consent of each (A) Acquisition Direct
Lender, amended, supplement or otherwise modify any provision of subsection
9.6 or (B) Multi-Currency Lender, amend, supplement or otherwise modify
any provision of subsection 8.4, in each such case in any manner which
would reasonably be expected to cause the Acquisition Direct Lenders to be
obligated to purchase participating interests in the Fronted Acquisition
Loans in a currency other than Dollars;
(v) without the prior written consent of each Acquisition Direct
Lender directly affected thereby, amend, supplement or otherwise modify any
provision of subsection 9.6(e);
(vi) without the prior written consent of the Issuing Lender with
respect thereto, amend, supplement or otherwise modify any provisions of or
directly applicable to any Letter of Credit;
(vii) without the prior written consent of the Swing Line Lender,
amend, supplement or otherwise modify any of the terms and provisions of
Section 6;
(viii) without the prior written consent of each Local Fronting Lender
directly affected thereby, amend, supplement or otherwise modify any of the
terms and provisions of Section 8 (other than any amendment of Schedule
III, to the extent contemplated by Section 8);
(ix) without the prior written consent of each Acquisition Fronting
Lender directly affected thereby, amend, supplement or otherwise modify any
of the terms and provisions of subsection 9.4 or 9.6; or
(x) without the prior written consent of (A) the then Administrative
Agent, the Arranger and the then Documentation Agent, amend, modify or
waive any provision of Section 16 or (B) the Swing Line Lender, each
Fronting Lender and each Issuing Lender, amend, modify or waive any
provision of Section 16 which is directly applicable thereto.
(b) Notwithstanding anything to the contrary contained herein
(including, without limitation, the provisions of subsection 17.1(a)), the
provisions of subsection 8.4(a)(iv), 8.4(e) and 9.3(f) may be amended,
supplemented or otherwise modified from time to time with the written consent
only of Citibank, General Electric Capital Corporation, the Administrative
Agent and any Fronting Lender which is directly affected thereby.
(c) Notwithstanding anything to the contrary contained herein
(including, without limitation, the provisions of subsection 17.1(a)), this
Agreement may be amended, supplemented or otherwise modified by the Company and
the Agents (with the consent of any Fronting Lender which is directly affected
thereby, but otherwise without notice to or consent of any other Lender
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or any Borrowing Subsidiary) in order to cure any ambiguity, omission, defect
or inconsistency in any of the provisions of Section 8 or 9 or otherwise
relating to the Aggregate Local Loan Commitment, the Aggregate Acquisition Loan
Commitment and the administration of either thereof. Any such amendment,
supplement or other modification pursuant to this subsection 17.1(c) shall be
made in writing and shall be distributed to each affected Lender by the
Administrative Agent promptly following the effectiveness thereof.
(d) Any waiver, amendment, supplement or modification pursuant to this
subsection 17.1 shall apply equally to each of the Lenders and shall be binding
upon the Lenders and all future holders of any of the Loans, the Notes, the
Reimbursement Obligations and all other Payment Obligations. In the case of
such waiver, the parties to the Credit Documents, the Lenders, the
Documentation Agent, the Syndication Agent and the Administrative Agent shall
be restored to their former positions and rights hereunder and under the Notes
and the Security Documents, and any Default or any Event of Default waived
shall, to the extent provided in such waiver, be deemed to be cured and not
continuing; but, no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon. The Administrative
Agent shall, as soon as practicable, furnish a copy of each such amendment,
supplement, modification or waiver to each Lender.
17.2 Releases of Collateral Security and Guarantee Obligations.
Notwithstanding anything to the contrary contained herein or in any Security
Document, upon request of the Company the Administrative Agent shall, as
promptly as possible (without any notice to or vote or consent of the
Documentation Agent, the Syndication Agent or any Lender), take action having
the effect of releasing:
(a) any collateral and or guarantee obligations provided by any
Borrowing Subsidiaries to the extent that (i) the Currency Sublimit for
such Borrowing Subsidiary has been reduced to zero, (ii) no Payment
Obligations are then owing by such Borrowing Subsidiary and (iii) the
Company has notified the Administrative Agent in writing that such
Subsidiary shall no longer constitute a "Borrowing Subsidiary"; and
(b) any collateral and/or guarantee obligations provided for in any
Security Document to the extent necessary to permit the consummation of (i)
any Specified Disposition, (ii) any Permitted Intercompany Transfer (to the
extent that any assets so released are appropriately re-pledged, to the
extent applicable, in accordance with the terms of this Agreement), (iii)
any Net Proceeds Event, (iv) any asset dispositions permitted by subsection
14.6, by the relevant Person in accordance with the provisions of this
Agreement and the Credit Documents; provided that the Net Proceeds of any
Net Proceeds Events are applied in the manner contemplated by subsections
10.3, 10.4 and 10.5 (if so required) or (v) any sale, lease, transfer or
other disposition by Revlon Holdings of the real property and improvements
covered by the Mortgage to which it is a party.
17.3 Notices. All notices, consents, requests and demands to or upon
the respective parties hereto to be effective shall be in writing and, unless
otherwise expressly
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provided herein, shall be deemed to have been duly given or made when delivered
by hand or by mail, or, in the case of telecopy notice, when sent, addressed as
follows in the case of the Company, the Documentation Agent, the Syndication
Agent and the Administrative Agent, as set forth in Schedule III (with a copy
to the Company) in the case of each Local Fronting Lender, as notified to the
Administrative Agent in the case of each Acquisition Fronting Lender and as set
forth in Schedule I hereto in the case of each of the other parties hereto, or
(in each case) to such address or other address as may be hereafter notified by
any of the respective parties hereto or any future holders of the Loans or the
Notes:
The Company: Revlon Consumer Products Corporation
625 Madison Avenue
New York, New York 10022
Attention: Treasurer
Telecopy: (212) 527-5530
with a copy (other Revlon Consumer Products Corporation
than of items 625 Madison Avenue
relating to funding New York, New York 10022
and payments) to: Attention: Vice President and
Deputy General Counsel
Telecopy: (212) 527-5693
The Documentation
Agent: Citibank, N.A.
399 Park Avenue
New York, New York 10043
Attention: James Buchanan
Telecopy: (212) 758-6278
The Syndication
Agent: Lehman Commercial Paper Inc.
3 World Financial Center
New York, New York 10285
Attention: Michelle Swanson
Telecopy: (212) 528-0819
The Administrative
Agent: The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Neil Boylan
Telecopy: (212) 270-0330
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with a copy to: The Chase Manhattan Bank Agency
Services Corp.
1 Chase Manhattan Plaza
8th Floor
New York, New York 10081
Attention: Sandra Miklave
Telephone: (212) 552-7953
Telecopy: (212) 552-5658
provided that any notice, request or demand to or upon the Administrative Agent
or any Fronting Lender pursuant to Section 2, 3, 4, 5, 6, 7, 8 or 9 shall not
be effective until received.
17.4 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent, the Documentation
Agent, the Syndication Agent or any Lender, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.
17.5 Survival of Representations and Warranties. All representations
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the Notes.
17.6 Payment of Expenses and Taxes. The Company agrees (a) to pay or
reimburse the Documentation Agent, the Syndication Agent and the Administrative
Agent for all of their reasonable and documented fees, expenses, charges and
out-of-pocket costs incurred in connection with the preparation, execution,
delivery and administration of, and any amendment, supplement or modification
to, and the obtaining of professional advice in connection with their ongoing
obligations under, any Credit Document and any other documents prepared in
connection herewith, the consummation of the transactions contemplated hereby
and thereby and the investigation, defense or participation in any legal
proceeding relating to any of the foregoing (whether or not such indemnified
person is a party thereto and regardless of whether such proceedings are
brought by you or any other person), including, in each such case and without
limitation, the reasonable and documented fees, expenses, charges and
disbursements of the single primary counsel to the Documentation Agent, the
Syndication Agent and the Administrative Agent and any additional special
counsel and local counsel to the Documentation Agent, the Syndication Agent and
the Administrative Agent, but not including any fees and expenses of counsel to
the Lenders, (b) to pay or reimburse each Lender, each Issuing Lender, the
Swing Line Lender, the Documentation Agent, the Syndication Agent and the
Administrative Agent for all its reasonable costs and expenses incurred in
connection with the enforcement or preservation of any rights under the Credit
Documents and any such other documents, including, without limitation, fees and
disbursements of counsel to the Administrative Agent, counsel to the
Syndication Agent, counsel to the Documentation Agent and the several counsel
to the Lenders, (c) to pay, indemnify, and to hold each Lender, each Issuing
Lender, the Swing Line Lender, the
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Documentation Agent, the Syndication Agent and the Administrative Agent
harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other similar taxes, if any, if legal, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
the Credit Documents and any such other documents, and (d) to pay, indemnify,
and hold each Lender, each Issuing Lender, the Swing Line Lender, the
Documentation Agent, the Syndication Agent, the Arranger and the Administrative
Agent, and the officers, directors, employees, affiliates, advisors and agents
thereof (collectively, the "indemnified persons"), harmless from and against
any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, consummation,
enforcement, performance and administration of the Credit Documents and the use
by the Borrowers of the proceeds of the Loans and other extensions of credit
hereunder (all of the foregoing, collectively, the "indemnified liabilities"),
provided that no Borrower shall have any obligation to any indemnified person
hereunder with respect to (i) indemnified liabilities which are found by a
final decision of a court of competent jurisdiction to have resulted from the
gross negligence or willful misconduct of such indemnified person, (ii) legal
proceedings commenced against any such indemnified person by any security
holder or creditor (other than the Company, its Subsidiaries and its
Affiliates) thereof arising out of and based upon rights afforded any such
security holder or creditor solely in its capacity as such, (iii) legal
proceedings commenced against any Lender, any Issuing Lender or the Swing Line
Lender (in their respective capacities as such) by any other Lender or by the
Documentation Agent, the Syndication Agent or the Administrative Agent
(provided that for purposes of this clause (iii) only, each of such other
Lender, Issuing Lender, the Swing Line Lender, the Documentation Agent, the
Syndication Agent, the Arranger and the Administrative Agent shall be entitled
to indemnity hereunder to the extent that such legal proceedings have been
commenced by it to enforce the provisions of the Credit Documents) or (iv)
amounts of the types referred to in clauses (a) through (c) above except as
provided therein. The agreements in this subsection 17.6 shall survive
repayment of the Loans, the Notes, the Drafts, the Reimbursement Obligations
and all other amounts payable hereunder.
17.7 Successors and Assigns; Loan Participations. (a) This Agreement
shall be binding upon and inure to the benefit of the Borrowers, the
Documentation Agent, the Syndication Agent, the Administrative Agent, the
Lenders, all future holders of the Loans and the Notes, and their respective
successors and assigns, except that no Borrower may assign or transfer any of
its rights or obligations under this Agreement without the prior written
consent of each Lender.
(b) Any Lender may, in accordance with applicable law, at any time
sell to one or more banks or other entities ("Participants") participating
interests in any Loan owing to such Lender, the Note held by such Lender, any
Commitment of such Lender or any other interest of such Lender hereunder or
under any other Credit Document. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely
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responsible for the performance thereof, such Lender shall remain the holder of
any such Loan, Note, Commitment or other interest for all purposes under this
Agreement and each Borrower, each Fronting Lender and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement. Each Borrower agrees
that if amounts outstanding under this Agreement and the Notes are due and
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall be deemed to have
the right of setoff in respect of its participating interest in amounts owing
under this Agreement and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement or any Note; provided, that such right of setoff shall be subject to
the obligation of such Participant to share with the Lenders, and the Lenders
agree to share with such Participant, as provided in subsection 17.8. Each
Borrower also agrees that each Participant shall be entitled to the benefits of
subsections 10.11 and 10.12 with respect to its participation in the Loans and
other Payment Obligations outstanding from time to time; provided, that no
Participant shall be entitled to receive any greater amount pursuant to such
subsections than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor
Lender to such Participant had no such transfer occurred.
(c) Any Lender may, in accordance with applicable law:
(i) at any time sell all or any part of its rights and obligations
under this Agreement and any of the Loans, the Notes, the Acceptances, the
L/C Obligations and any other Credit Document to any Lender or any
Affiliate thereof or to a Related Fund of any Lender;
(ii) at any time sell to one or more additional Lenders or financial
institutions ("Purchasing Lenders") which are Eligible Assignees, all or
any part of its rights and obligations under this Agreement and any of the
Loans, the Notes, the Acceptances, the L/C Obligations and any other Credit
Document, provided that, unless the Company (on its own behalf and as agent
for the Borrowing Subsidiaries) otherwise consents or unless the selling
Lender is selling all of its rights and obligations under this Agreement
and the Loans, any Notes, any Acceptances, any L/C Obligations and each
other Credit Document, (x) each such sale pursuant to this clause (ii)
shall be in an amount of $10,000,000 or more and (y) after giving effect to
such sale, the rights and obligations of such selling Lender under this
Agreement and the Loans, the Notes, the Acceptances, the L/C Obligations
and any other Credit Document shall be in an amount equal to no less than
$10,000,000; and
(iii) with the consent of the Company (on its own behalf and as agent
for the Borrowing Subsidiaries) (which consent shall not be unreasonably
withheld) sell to one or more Purchasing Lenders which are not Lenders,
Affiliates thereof or Eligible Assignees, all or any part of its rights and
obligations under this Agreement and the Loans, the Notes, any Acceptances,
any L/C Obligations and any other Credit Document, provided that, unless
the Company (on its own behalf and as agent for the Borrowing
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Subsidiaries) otherwise consents or unless the selling Lender is selling
all of its rights and obligations under this Agreement and the Loans, any
Notes, any Acceptances, any L/C Obligations and each other Credit Document,
(x) each such sale pursuant to this clause (iii) shall be in an amount of
$10,000,000 or more and (y) after giving effect to such sale, the rights
and obligations of such selling Lender under this Agreement and the Loans,
the Notes, the Acceptances, the L/C Obligations and any other Credit
Document shall be in an amount equal to no less than $10,000,000;
; provided that, any such sale by a Lender of all or a portion of its
Acquisition Loan Commitment or Multi-Currency Commitment which is effected
prior to the Closing Date shall be accompanied by the sale of a ratable share
of its other such Commitment. Any such sale pursuant to clause (ii) or (iii) of
this subsection 17.7(c) shall be made pursuant to a Commitment Transfer
Supplement, substantially in the form of Exhibit N (a "Commitment Transfer
Supplement"), executed by the Administrative Agent, such Purchasing Lender and
such transferor Lender (and, in the case of any such transfer made pursuant to
clause (iii), by the Company, acting on its own behalf and on as agent for any
relevant Borrowing Subsidiary), and delivered to the Administrative Agent for
its acceptance and recording in the Register (as defined below). Upon such
execution, delivery, acceptance and recording, from and after the Transfer
Effective Date (as defined in the Commitment Transfer Supplement) determined
pursuant to such Commitment Transfer Supplement, (x) the Purchasing Lender
thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
hereunder with a Commitment as set forth therein, and (y) the transferor Lender
thereunder shall, to the extent of the interest transferred, as reflected in
such Commitment Transfer Supplement, be released from its obligations under
this Agreement and the other Credit Documents (and, in the case of a Commitment
Transfer Supplement covering all or the remaining portion of a transferor
Lender's rights and obligations under this Agreement and the other Credit
Documents, such transferor Lender shall cease to be a party hereto). Such
Commitment Transfer Supplement shall be deemed to amend this Agreement
(including, without limitation, Schedule II hereto) to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of Commitment Percentages arising from the purchase by
such Purchasing Lender of all or a portion of the rights and obligations of
such transferor Lender under this Agreement and the Loans, the Notes, the
Acceptances and the L/C Obligations. On or prior to the Transfer Effective Date
determined pursuant to such Commitment Transfer Supplement, the Company, at its
own expense and upon the request of such Purchasing Lender or the transferror
Lender, shall execute and deliver (or cause the relevant Borrowing Subsidiary
to execute and deliver) to the Administrative Agent in exchange for any
surrendered Note a new Note to the order of such Purchasing Lender in an amount
equal to the Commitment assumed by it pursuant to such Commitment Transfer
Supplement and, if the transferor Lender has retained a Commitment hereunder
(and has previously requested a Note evidencing its Loans thereunder), a new
Note to the order of the transferor Lender in an amount equal to the Commitment
retained by it hereunder. Any such new Note shall be dated the date of the
original Note and shall otherwise be in the form of the Note replaced thereby.
Any Note surrendered by the transferor Lender shall be returned by the
Administrative Agent to the Company marked "canceled."
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(d) The Administrative Agent shall maintain at its address referred to
in subsection 17.3 a copy of each Commitment Transfer Supplement delivered to
it and a register (the "Register") for the recordation of the names and
addresses of the Lenders and the Commitments and Commitment Percentages of the
Loans and other obligations hereunder owing to each Lender from time to time.
The entries in the Register shall be conclusive, in the absence of manifest
error, and each Borrower, the Administrative Agent, the Documentation Agent,
the Syndication Agent and the Lenders may treat each Person whose name is
recorded in the Register as the owner of the Loan or other obligation, as the
case may be, recorded therein for all purposes of this Agreement. The Register
shall be available for inspection by any Borrower, the Documentation Agent, the
Syndication Agent or any Lender at any reasonable time and from time to time
upon reasonable prior notice.
(e) Upon its receipt of a Commitment Transfer Supplement executed by a
transferor Lender and a Purchasing Lender (and, in the case of a Purchasing
Lender that is not then a Lender or an Affiliate thereof, by the Company and
the Administrative Agent), together with payment to the Administrative Agent of
a registration and processing fee of $3,500 if the Purchasing Lender is not a
Lender prior to the execution of such supplement and $1,000 otherwise, the
Administrative Agent shall (i) promptly accept such Commitment Transfer
Supplement and (ii) on the Transfer Effective Date determined pursuant thereto
record the information contained therein in the Register and give notice of
such acceptance and recordation to the Lenders and the Company (and, to the
extent relevant, any affected Borrowing Subsidiaries).
(f) Each Borrower authorizes each Lender to disclose to any
Participant or Purchasing Lender (each, a "Transferee") and any prospective
Transferee any and all financial information in such Lender's possession
concerning the Company, its Subsidiaries and its Affiliates which has been
delivered to such Lender by or on behalf of any Borrower pursuant to this
Agreement or any other Credit Document, or which has been delivered to such
Lender by or on behalf of any Borrower in connection with such Lender's credit
evaluation of the Company, its Subsidiaries and its Affiliates prior to
becoming a party to this Agreement; provided that such Transferee or potential
Transferee shall have acknowledged that it is receiving such information
subject to the provisions of subsection 17.15(e).
(g) Unless the Company shall otherwise consent, if, pursuant to this
subsection 17.7, any interest in this Agreement or any Loan, Note, Acceptance,
Application or Letter of Credit is transferred to any Transferee which is
organized under the laws of any jurisdiction other than the United States or
any State thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, (i) to represent to the
transferor Lender (for the benefit of the transferor Lender, the Administrative
Agent and the Company) that under applicable law and treaties at the time in
effect no taxes will be required to be withheld by the Administrative Agent,
the Company or the transferor Lender with respect to any payments to be made to
such Transferee in respect of the Loans and other amounts owing under this
Agreement, (ii) to furnish to the transferor Lender (and, in the case of any
Purchasing Lender registered in the Register, the Administrative Agent and the
Company) either U.S. Internal Revenue Service Form 4224, U.S. Internal Revenue
Service Form 1001 or (in the case of a Qualified Foreign Lender)
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U.S. Internal Revenue Service Form W-8 (and accompanying U.S. Tax Compliance
Certificate), or (in any such case) any successor applicable form, as the case
may be (wherein such Transferee claims entitlement to complete exemption from
U.S. federal withholding tax on all interest payments hereunder), (iii) to
agree (for the benefit of the transferor Lender, the Administrative Agent and
the Company) to provide the transferor Lender (and, in the case of any
Purchasing Lender registered in the Register, the Administrative Agent and the
Company) a new Form 4224, Form 1001 or (in the case of a Qualified Foreign
Lender) Form W-8 (and accompanying U.S. Tax Compliance Certificate) upon the
expiration or obsolescence of any previously delivered form and comparable
statements in accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such Transferee, and to comply from
time to time with all applicable U.S. laws and regulations with regard to such
withholding tax exemption and (iv) to agree (for the benefit of the transferor
Lender, the Administrative Agent and the Company) to be bound by the provisions
of subsections 10.13(b), (c) and (d) as if such Transferee were a Lender
hereunder.
(h) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this subsection 17.7 concerning assignments of Loans and
Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law. Upon request of any
Acquisition Direct Lender from time to time, the Company will provide to such
Acquisition Direct Lender a promissory note (in form and substance reasonably
acceptable to such Acquisition Direct Lender and, in any event, in form
suitable for assignment to a Federal Reserve Bank) evidencing the Syndicated
Acquisition Loans of such Acquisition Direct Lender which are denominated in
Dollars.
17.8 Adjustments; Set-off. (a) On the date of occurrence of any Event
of Default specified in clause (i), (ii) or (iii) of Section 15(m), each Lender
shall be deemed to have purchased an interest in the Payment Obligations owing
to each other Lender (and, to the extent necessary after giving effect to any
actual recoveries on such Payment Obligations, shall actually fund such
purchase) such that, after giving effect to all such purchases or deemed
purchases, each Lender is owed directly or through such purchase or deemed
purchase the portion of the aggregate amount of Payment Obligations then
outstanding with respect to each of the Aggregate Initial Term Loan Commitment,
the Aggregate Deferred Draw Term Loan Commitment, the Aggregate Special L/C
Commitment, the Aggregate Multi-Currency Commitment and the Aggregate
Acquisition Loan Commitment equal to such Lender's ratable share of all Payment
Obligations then outstanding with respect to each such Aggregate Commitment.
Each Lender hereby acknowledges and agrees that its obligation to purchase such
Payment Obligations in accordance with the provisions of this subsection
17.8(a) shall be irrevocable and unconditional.
(b) If any Syndicated Lender (a "benefitted Lender") shall at any time
receive any payment of all or part of any of its Loans or Reimbursement
Obligations owing to it under any Commitment, or interest thereon, pursuant to
a guarantee or otherwise, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off or otherwise), in a greater proportion
than any such payment to and collateral received by any other Syndicated
Lender, if
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any, in respect of such other Lender's Loans or Reimbursement Obligations, as
the case may be, owing to it under such Commitment or interest thereon, such
benefitted Lender shall purchase for cash from the other Syndicated Lenders
such portion of each such other Syndicated Lender's similar Loans or
Reimbursement Obligations, or shall provide such other Syndicated Lenders with
the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Syndicated
Lenders which hold such Commitment; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. Each
Borrower agrees that each Lender so purchasing a portion of another Lender's
Loans or Reimbursement Obligations may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such portion
as fully as if such purchasing Lender were the direct holder of such portion.
(c) In addition to any rights and remedies of the Syndicated Lenders
provided by law, upon both the occurrence of an Event of Default and
acceleration of the obligations owing in connection with this Agreement, each
Syndicated Lender shall have the right, without prior notice to the Company,
any such notice being expressly waived to the extent permitted by applicable
law, to set off and apply against any indebtedness, whether matured or
unmatured, of the Company to such or any other Syndicated Lender any amount
owing from such Syndicated Lender to the Company at, or at any time after, the
happening of both of the above mentioned events, and such right of set-off may
be exercised by such Syndicated Lender against the Company or against any
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, custodian or execution, judgment or attachment creditor of
the Company, or against anyone else claiming through or against the Company or
such trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receivers, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Syndicated Lender prior to the making, filing or issuance, or
service upon such Syndicated Lender of, or of notice of, any such petition,
assignment for the benefit of creditors, appointment or application for the
appointment of a receiver, or issuance of execution, subpoena, order or
warrant. Each Syndicated Lender agrees promptly to notify the Company and the
Administrative Agent after any such set-off and application made by such
Syndicated Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
(d) In addition to any rights and remedies of the Fronting Lenders
provided by law, upon both the occurrence of an Event of Default and
acceleration of the obligations owing in connection with this Agreement, each
Fronting Lender shall have the right, without prior notice to any Borrower, any
such notice being expressly waived to the extent permitted by applicable law,
to set off and apply against any indebtedness, whether matured or unmatured, of
such Borrower to such Fronting Lender any amount owing from such Fronting
Lender to such Borrower at, or at any time after, the happening of both of the
above mentioned events, and such right of set-off may be exercised by such
Fronting Lender against such Borrower or against any trustee in bankruptcy,
debtor in possession, assignee for the benefit of creditors, receiver,
custodian or execution, judgment or attachment creditor of such Borrower, or
against anyone else
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claiming through or against such Borrower or such trustee in bankruptcy, debtor
in possession, assignee for the benefit of creditors, receivers, or execution,
judgment or attachment creditor, notwithstanding the fact that such right of
set-off shall not have been exercised by such Fronting Lender prior to the
making, filing or issuance, or service upon such Fronting Lender of, or of
notice of, any such petition, assignment for the benefit of creditors,
appointment or application for the appointment of a receiver, or issuance of
execution, subpoena, order or warrant. Each Fronting Lender agrees promptly to
notify such Borrower and the Administrative Agent after any such set-off and
application made by such Fronting Lender, provided that the failure to give
such notice shall not affect the validity of such set-off and application.
17.9 Delegation by each Borrowing Subsidiary. Each Borrowing
Subsidiary hereby irrevocably designates and appoints the Company as the agent
of such Borrowing Subsidiary under this Agreement and the other Credit
Documents for the purpose of giving notices and taking other actions delegated
to such Borrowing Subsidiary pursuant to the terms of this Agreement and the
other Credit Documents. In furtherance of the foregoing, each Borrowing
Subsidiary hereby irrevocably grants to the Company such Borrowing Subsidiary's
power-of-attorney, and hereby authorizes the Company, to act in place of such
Borrowing Subsidiary with respect to matters delegated to such Borrowing
Subsidiary pursuant to the terms of this Agreement and the other Credit
Documents and to take such other actions as are reasonably incidental thereto.
Each Borrowing Subsidiary hereby further acknowledges and agrees that the
Company shall receive all notices to such Borrowing Subsidiary for all purposes
of this Agreement. The Company hereby agrees to provide prompt notice to the
relevant Borrowing Subsidiary of any notices received and all action taken by
the Company under this Agreement and the other Credit Documents on behalf of
such Borrowing Subsidiary.
17.10 Judgment. The Obligations of each Borrower in respect of each
Acquisition Loan, Local Loan and Acceptance reimbursement obligation due to any
party hereto in Dollars (including, without limitation, by virtue of any
conversion of a Local Loan or Acceptance from a Denomination Currency into
Dollars pursuant to the provisions of subsection 8.4) or any holder of any bond
which is denominated in Dollars, shall, notwithstanding any judgment in a
currency (the "judgment currency") other than Dollars, be discharged only to
the extent that on the Business Day following receipt by such party or such
holder (as the case may be) of any sum adjudged to be so due in the judgment
currency such party or such holder (as the case may be) may in accordance with
normal banking procedures purchase Dollars with the judgment currency; if the
amount of Dollars so purchased is less than the sum originally due to such
party or such holder (as the case may be) in Dollars, such Borrower agrees, as
a separate obligation and notwithstanding any such judgment, to indemnify such
party or such holder (as the case may be) against such loss, and if the amount
of Dollars so purchased exceeds the sum originally due to any party to this
Agreement or any holder of Notes (as the case may be), such party or such
holder (as the case may be), agrees to remit to such Borrowing Subsidiary, such
excess.
17.11 QFL Notes. (a) Any Qualified Foreign Lender shall at the request
of the Company or the Administrative Agent, upon receipt of a copy of such a
request from the Company or the Administrative Agent, exchange any Initial Term
Loan Note or any Deferred
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Draw Term Loan Note held by it for a QFL Term Loan Note in the form attached
hereto as Exhibit U-2 (a "QFL Term Loan Note"). Any QFL Term Loan Notes issued
in exchange for any existing Initial Term Loan Notes or Deferred Draw Term Loan
Notes pursuant to this Section shall be dated the Effective Date and shall be
in issued in the same principal amounts as such existing Initial Term Loan
Notes or Deferred Draw Term Loan Notes, as the case may be. Any Initial Term
Loan Note or Deferred Draw Term Loan Note exchanged pursuant to this Section is
sometimes referred to herein as an "Exchanged Note."
(b) The Company agrees that, upon delivery of a request to a Qualified
Foreign Lender pursuant to subsection 17.11(a), it shall execute and deliver a
QFL Term Loan Note in exchange for the Exchanged Note surrendered in connection
with such request conforming to the requirements of such subsection 17.11(a).
Each Qualified Foreign Lender shall surrender its Term Loan Note or Deferred
Draw Term Loan Note, as the case may be, at the request of the Company or the
Administrative Agent in connection with any exchange pursuant to this
subsection 17.11. Once issued, QFL Term Loan Notes (i) shall be deemed to and
shall be "Notes" for all purposes under this Agreement and the other Credit
Documents, (ii) may not be exchanged for Initial Term Loan Notes or Deferred
Draw Term Loan Notes and (iii) shall at all times thereafter be QFL Term Loan
Notes, including, without limitation, following any transfer or assignment
thereof.
(c) The Administrative Agent shall separately record the names and
addresses of each Qualified Foreign Lender which holds a QFL Term Loan Note,
whether issued as a result of an exchange pursuant to this subsection 17.11 or
a transfer pursuant to subsection 17.7(c) of the Agreement, in the Register
maintained by the Administrative Agent pursuant to subsection 17.7(d) of the
Agreement. The Administrative Agent shall also record the aggregate principal
amount of Initial Term Loans or Deferred Draw Term Loans, as the case may be,
owing to such Qualified Foreign Lender in the Register.
(d) Notwithstanding anything to the contrary in the Agreement, no
assignment under subsection 17.7(c) of the Agreement of any rights or
obligations under or in respect of QFL Term Loan Notes shall be effective
unless and until the Administrative Agent shall have recorded such assignment
in the Register pursuant to subsection 17.11(c). The Administrative Agent shall
record the name of the transferor, the name of the transferee, and the amount
of the transfer in the Register after receipt of all documents required
pursuant to subsection 17.7 of this Agreement, including, without limitation,
the QFL Term Loan Note being assigned in connection with such transfer, and
such other documents as the Administrative Agent may reasonably request.
Subject to the provision of this subsection 17.11(d), assignments of and
participations in QFL Term Loan Notes shall be governed by subsection 17.7 of
this Agreement and, upon assignment of any QFL Term Loan Note, new QFL Term
Loan Notes shall be issued in accordance with the provisions of subsection 17.7
of this Agreement.
17.12 Collateral Agency Agreements and Intercreditor Agreement. (a)
Each Lender hereby acknowledges that it has fully reviewed each Collateral
Agency Agreement and agrees to be comply with the terms thereof as if it were a
direct signatory thereto.
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(b) Each Lender hereby authorizes and instructs the Administrative
Agent to execute and deliver the Intercreditor Agreement and agrees to comply
with the terms thereof as if it were a direct signatory thereto.
17.13 Certain Waivers. (a) To the extent that the execution, delivery
or performance of any Credit Document hereunder constitutes a Default or an
Event of Default under (and as defined in) the Existing Agreement, each Lender
hereunder which is a party to the Existing Agreement hereby waives such Default
or Event of Default. Each Lender hereby agrees that any Security Document under
(and as defined in) the Existing Agreement, and any financing statement or
similar filing on account thereof, which remains in effect after the date
hereof and is not required to be delivered pursuant to this Agreement shall be
deemed not to constitute a "Lien" for purposes of this Agreement to the extent
that the Company is using best efforts to terminate or cause to be terminated
such Security Document or other filing.
(b) Each Lender hereby agrees that, notwithstanding the provisions of
Section 12 of this Agreement, certain of the Pledge Agreements relating to
capital stock of Foreign Subsidiaries and certain of the Security Agreements
with respect to assets of the Company and its Subsidiaries which are located
outside of the United States may not be delivered prior to or on the Closing
Date. Each Lender hereby waives compliance with the provisions of Section 12 of
this Agreement to the extent and only to the extent necessary to permit the
Closing Date to occur without the delivery of such Pledge Agreements, Security
Agreements, and other documentation relating thereto and to permit the
Borrowers to borrow under this Agreement. The Company hereby covenants that it
shall, and shall cause its Subsidiaries to, deliver to the Administrative Agent
all such Pledge Agreements, Security Agreements and related documentation
within 30 days following the Closing Date and that the failure to deliver any
such Pledge Agreement, Security Agreement or related documentation within such
30 day period shall constitute an Event of Default hereunder; provided that,
with the consent of the Agents, such 30 day period may be extended by not more
than an additional 30 days.
17.14 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
17.15 Effectiveness; Counterparts; Confidentiality. (a) This Agreement
shall become binding upon the parties hereto (and, notwithstanding the
provisions of the proviso to this clause (a), each party hereto shall be
irrevocably obligated to perform all of its obligations hereunder from and
after the Closing Date) when the Administrative Agent shall have received one
or more counterparts of this Agreement, executed by a duly authorized officer
of each party hereto or, in the case of any Lender, telex or telecopier
confirmation to the Administrative Agent that a duly authorized officer of such
Lender has executed a counterpart of this Agreement and that such counterpart
has been sent to the Administrative Agent (the "Effective Date"); provided
that, during the period from the Effective Date to the Closing Date, the
provisions of this Agreement (other than the provisions of subsection 10.14
and, with respect to any amounts
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requested to be borrowed hereunder on or after the Closing Date, subsection
10.12) shall be of no force and effect (and the Existing Agreement shall not be
amended hereby).
(b) Upon delivery of each Security Document that is executed and
delivered prior to the Closing Date pursuant to this Agreement, such Security
Document shall become binding upon the parties thereto; provided that each such
Security Document shall become effective (without any action by or notice to
any party) on the Closing Date. The provisions of this subsection 17.15(b)
shall not affect or impair the effectiveness of any Security Documents
delivered pursuant to the Original Agreement (as defined below) or the Existing
Agreement, as the case may be, prior to or after the date hereof, which
Security Documents the Company hereby represents and warrants are and shall
remain (or, in the case of any such Security Documents delivered after the date
hereof, will be upon their delivery) in full force and effect. Each of the
parties hereto hereby agrees and acknowledges that each reference to any
section or subsection of the credit agreement executed by the Borrower and
certain of its Subsidiaries as of February 28, 1995 (the "Original Agreement")
or the Existing Agreement, as the case may be, in any Security Document, shall
be deemed a reference to such section or subsection of the Original Agreement
or the Existing Agreement, as the case may be, as amended and restated, in the
case of the Original Agreement, by the Existing Agreement and this Agreement,
and, in the case of the Existing Agreement, as amended and restated by this
Agreement.
(c) In the event that the Closing Date does not occur on or prior to
June 30, 1997 or the Company otherwise provides written notice to the
Administrative Agent prior to such date that the Company elects to terminate
the amendments contemplated hereby, this Agreement, and any amended and
restated guarantees and other security documents which are executed and
delivered pursuant hereto (but which were not executed and delivered in
connection with the Existing Agreement), shall cease to be of any further
effect (other than the obligation to pay any accrued fees and indemnities owing
hereunder or thereunder). Upon any such termination of the amendments
contemplated hereby and cessation of effectiveness of this Agreement, the
Existing Agreement and all Security Documents and other Credit Documents (in
each such case, as defined in the Existing Agreement) executed in connection
therewith shall remain in full force and effect.
(d) This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Company and the Administrative Agent.
(e) Each Lender agrees that it will not disclose Confidential
Information (as defined below) to any Person other than (i) as may be consented
to by the Company, (ii) as may be required by law or pursuant to legal process
and (iii) to prospective Participants and Purchasing Lenders and those of such
Lender's directors, officers, employees, examiners and professional advisors
who have a need to know the Confidential Information in accordance with
customary banking practices and who receive the Confidential Information having
been made aware of the restrictions of this subsection 17.15(e). As used
herein, the term "Confidential Information" means all information contained in
materials relating to the Company and its
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Subsidiaries provided to the Lenders by the Company or its representatives or
agents other than (x) information which is at the time so provided or
thereafter becomes generally available to the public other than as a result of
a disclosure by one or more Lenders, (y) information which was available to any
Lender prior to its disclosure to the Lenders by the Company, its
representatives or agents and (z) information which becomes available to one or
more Lenders from a source other than the Company, its representatives or
agents.
17.16 SUBMISSION TO JURISDICTION; WAIVERS. (a) EACH BORROWING
SUBSIDIARY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN THE CITY OF NEW
YORK AND ANY COMPETENT COURT OF THE JURISDICTION UNDER THE LAWS OF WHICH SUCH
BORROWING SUBSIDIARY IS ORGANIZED (THE "LOCAL COURT"), AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE NOTES OR ANY DRAFT. EACH BORROWING SUBSIDIARY HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT
OR LOCAL COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH
BORROWING SUBSIDIARY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY DEFENSE OF AN INCONVENIENT FORUM
TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND ANY RIGHT
OF JURISDICTION ON ACCOUNT OF THE PLACE OF RESIDENCE OR DOMICILE OF SUCH
BORROWING SUBSIDIARY. EACH BORROWING SUBSIDIARY HEREBY IRREVOCABLY AND
UNCONDITIONALLY APPOINTS THE COMPANY AS ITS AGENT TO RECEIVE ON BEHALF OF SUCH
BORROWING SUBSIDIARY AND ITS PROPERTY SERVICE OF COPIES OF THE SUMMONS AND
COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH NEW YORK STATE OR FEDERAL COURT. IN ANY SUCH ACTION OR
PROCEEDING IN SUCH NEW YORK STATE OR FEDERAL COURT SITTING IN THE CITY OF NEW
YORK, SUCH SERVICE MAY BE MADE ON SUCH BORROWING SUBSIDIARY BY DELIVERING A
COPY OF SUCH PROCESS TO SUCH BORROWING SUBSIDIARY IN CARE OF THE COMPANY AT THE
COMPANY'S ADDRESS LISTED IN SUBSECTION 17.3 AND BY DEPOSITING A COPY OF SUCH
PROCESS IN THE MAILS BY CERTIFIED OR REGISTERED AIR MAIL, ADDRESSED TO SUCH
BORROWING SUBSIDIARY (SUCH SERVICE TO BE EFFECTIVE UPON SUCH RECEIPT BY THE
COMPANY AND THE DEPOSITING OF SUCH PROCESS IN THE MAILS AS AFORESAID). EACH
BORROWING SUBSIDIARY HEREBY IRREVOCABLY AND UNCONDITIONALLY AUTHORIZES AND
DIRECTS THE COMPANY TO ACCEPT SUCH SERVICE ON ITS BEHALF. EACH BORROWING
SUBSIDIARY HEREBY AGREES THAT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN
<PAGE>
191
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW.
(b) THE COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT TO WHICH
IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND WAIVES TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL
(OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO IT AT ITS
ADDRESS SET FORTH IN SUBSECTION 17.3 OR AT SUCH OTHER ADDRESS OF WHICH THE
ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;
(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
(v) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT
MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO
IN THIS SUBSECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES.
(c) EACH BORROWER AND EACH OF THE DOCUMENTATION AGENT, THE SYNDICATION
AGENT, THE ADMINISTRATIVE AGENT, THE ARRANGER, EACH CO-AGENT AND EACH LENDER
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING REFERRED TO IN PARAGRAPH (a) ABOVE.
<PAGE>
192
17.17 Acknowledgements. Each Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Credit Documents;
(b) none of the Administrative Agent, the Documentation Agent, the
Syndication Agent, the Arranger, any Co-Agent or any Lender has any
fiduciary relationship with or duty to such Borrower arising out of or in
connection with this Agreement or any of the other Credit Documents, and
the relationship between each such Agent and Lenders, on one hand, and such
Borrower, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Credit
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among such Borrower and the Lenders.
17.18 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
<PAGE>
193
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in New York, New York by their proper and duly
authorized officers as of the day and year first above written.
REVLON CONSUMER PRODUCTS
CORPORATION
By: /s/ Steven Berns
---------------------------------------
Name: Steven Berns
Title: Vice President and Treasurer
DEUTSCHE REVLON GMBH & CO. KG, as a
Local Subsidiary
By: /s/ Steven Berns
---------------------------------------
Name: Steven Berns
Title: Vice President and Treasurer
REVLON INTERNATIONAL
CORPORATION (UK Branch), as a Local
Subsidiary
By: /s/ Steven Berns
---------------------------------------
Name: Steven Berns
Title: Vice President and Treasurer
REVLON MANUFACTURING LIMITED
(Australia Branch), as a Local Subsidiary
By: /s/ Steven Berns
---------------------------------------
Name: Steven Berns
Title: Vice President and Treasurer
<PAGE>
194
REVLON MANUFACTURING (UK)
LIMITED, as a Local Subsidiary
By: /s/ Steven Berns
---------------------------------------
Name: Steven Berns
Title: Authorized Signatory
EUROPEENNE DE PRODUITS DE BEAUTE,
as a Local Subsidiary
By: /s/ Steven Berns
---------------------------------------
Name: Steven Berns
Title: Authorized Signatory
REVLON NEDERLAND B.V., as a Local
Subsidiary
By: /s/ Steven Berns
---------------------------------------
Name: Steven Berns
Title: Authorized Signatory
REVLON K.K., as a Local Subsidiary
By: /s/ Steven Berns
---------------------------------------
Name: Steven Berns
Title: Authorized Signatory
REVLON CANADA, INC., as a Local
Subsidiary
By: /s/ Steven Berns
---------------------------------------
Name: Steven Berns
Title: Authorized Signatory
<PAGE>
195
REVLON SA, as a Local Subsidiary
By: /s/ Robert Kretzman
---------------------------------------
Name: Robert Kretzman
Title: Authorized Signatory
REVLON-REALISTIC PROFESSIONAL
PRODUCTS LTD., as a Local Subsidiary
By: /s/ Robert Kretzman
---------------------------------------
Name: Robert Kretzman
Title: Authorized Signatory
REVLON PROFESSIONAL LIMITED, as a
Local Subsidiary
By: /s/ Robert Kretzman
---------------------------------------
Name: Robert Kretzman
Title: Authorized Signatory
SIGNED, SEALED and DELIVERED by STEVEN
BERNS, duly authorized attorney for and on
behalf of REVLON (HONG KONG) LIMITED, as a
Local Subsidiary
[Affix Common Seal]
By: /s/ Robert Kretzman
---------------------------------------
Name: Robert Kretzman
Title: Authorized Signatory
EUROPEAN BEAUTY PRODUCTS S.P.A., as
a Local Subsidiary
By: /s/ Robert Kretzman
---------------------------------------
Name: Robert Kretzman
Title: Authorized Signatory
<PAGE>
196
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Lender
By: /s/ Neil Boylan
---------------------------------------
Name: Neil Boylan
Title: Vice President
CHASE SECURITIES INC., as Arranger
By: /s/ Susan F. Stevens
---------------------------------------
Name: Susan F. Stevens
Title: Managing Director
CITIBANK, N.A., as Documentation Agent and
as a Lender
By: /s/ James Buchanan
---------------------------------------
Name: James Buchanan
Title: Attorney-In-Fact
LEHMAN COMMERCIAL PAPER INC., as
Syndication Agent and as a Lender
By: /s/ Dennis J. Dee
---------------------------------------
Name: Dennis J. Dee
Title: Authorized Signatory
<PAGE>
197
Acknowledged and Agreed:
- ------------------------
ABN AMRO BANK N.V., as a Local
Fronting Lender in the Federal Republic
of Germany
By: [SIGNATURE ILLEGIBLE]
-------------------------------
Name:
Title:
By: [SIGNATURE ILLEGIBLE]
-------------------------------
Name:
Title:
BANKBOSTON, N.A., as a Local
Fronting Lender in the United Kingdom
By: /s/ Richard D. Hill, Jr.
-------------------------------
Name: Richard D. Hill, Jr.
Title: Director
BANQUE FRANCAISE DU
COMMERCE EXTERIEUR, as a Local
Fronting Lender in France
By: /s/ Frederick K. Kammler
-------------------------------
Name: Frederick K. Kammler
Title: Vice President
By: /s/ William C. Maier
-------------------------------
Name: William C. Maier
Title: VP-Group Manager
<PAGE>
198
THE SANWA BANK LTD., as a Local
Fronting Lender in Japan
By: /s/ Dominic J. Sorresso
-------------------------------
Name: Dominic J. Sorresso
Title: Vice President
BANK OF AMERICA CANADA, as a
Local Fronting Lender in Canada
By: /s/ Derrick R. Wong
-------------------------------
Name: Derrick R. Wong
Title: Vice President
CITIBANK LIMITED, as a Local
Fronting Lender in Australia
By: /s/ Tony O'Neill
-------------------------------
Name: Tony O'Neill
Title: Vice President
CITIBANK, N.A., as a Local Fronting
Lender in Hong Kong
By: /s/ James Buchanan
-------------------------------
Name: James Buchanan
Title: Attorney-In-Fact
<PAGE>
199
CITIBANK, N.A., as a Local Fronting
Lender in the Netherlands
By: /s/ James Buchanan
-------------------------------
Name: James Buchanan
Title: Attorney-In-Fact
CITIBANK, N.A., as a Local Fronting
Lender in Italy
By: /s/ James Buchanan
-------------------------------
Name: James Buchanan
Title: Attorney-In-Fact
ALLIED IRISH BANK, as a Local
Fronting Lender in Ireland
By: /s/ W. J. Strickland
-------------------------------
Name: W. J. Strickland
Title: SVP
By: /s/ Marcia Meaker
-------------------------------
Name: Marcia Meaker
Title: VP
CITIBANK, N.A., as a Local Fronting
Lender in Spain
By: /s/ James Buchanan
-------------------------------
Name: James Buchanan
Title: Attorney-In-Fact
<PAGE>
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By: /s/ Frederick K. Kammler
-------------------------------
Name: Frederick K. Kammler
Title: Vice President
By: /s/ William C. Maier
-------------------------------
Name: William C. Maier
Title: VP-Group Manager
THE SUMITOMO BANK, LIMITED
By: /s/ John C. Kissinger
-------------------------------
Name: John C. Kissinger
Title: Joint General Manager
BANKBOSTON, N.A.
By: /s/ Richard D. Hill, Jr.
-------------------------------
Name: Richard D. Hill, Jr.
Title: Director
BANK OF AMERICA ILLINOIS
By: /s/ Steve A. Aronowitz
-------------------------------
Name: Steve A. Aronowitz
Title: Managing Director
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: /s/ Patricia Loret de Mola
-------------------------------
Name: Patricia Loret de Mola
Title: Senior Vice President
THE BANK OF NEW YORK
By: /s/ Georgia Pan-Kita
-------------------------------
Name: Georgia Pan-Kita
Title: AVP
<PAGE>
ABN AMRO BANK, N.V.
New York Branch
By: [SIGNATURE ILLEGIBLE]
-------------------------------
Name:
Title:
By: [SIGNATURE ILLEGIBLE]
-------------------------------
Name:
Title:
FIRST BANK NATIONAL ASSOCIATION
By: /s/ Elliot J. Jaffee
-------------------------------
Name: Elliot J. Jaffee
Title: Vice President
THE SANWA BANK LIMITED
NEW YORK BRANCH
By: /s/ Dominic J. Sorresso
-------------------------------
Name: Dominic J. Sorresso
Title: Vice President
CREDIT LYONNAIS New York Branch
By: /s/ Attila Kan
-------------------------------
Name: Attila Kan
Title: Vice President
THE OCTAGON CREDIT INVESTORS LOAN
PORTFOLIO (A UNIT OF THE CHASE
MANHATTAN BANK)
By: /s/ Richard W. Stewart
-------------------------------
Name: Richard W. Stewart
Title: Managing Director
THE FUJI BANK, LIMITED, New York Branch
By: /s/ Teiji Teramoto
-------------------------------
Name: Teiji Teramoto
Title: Vice President & Manager
BARCLAYS BANK PLC
By: /s/ Matthew Tuck
-------------------------------
Name: Matthew Tuck
Title: Associate Director
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., Los Angeles Agency
By: /s/ Paul Clifford
-------------------------------
Name: Paul Clifford
Title: Deputy General Manager
<PAGE>
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Janet K. Williams
-------------------------------
Name: Janet K. Williams
Title: Duly Authorized Signatory
DEEPROCK & COMPANY
By EATON VANCE MANAGEMENT, as
Investment Manager
By: /s/ Scott H. Page
-------------------------------
Name: Scott H. Page
Title: Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By: /s/ Jeffrey W. Maklet
-------------------------------
Name: Jeffrey W. Maklet
Title: Senior Vice President & Director
BANQUE PARIBAS
By: /s/ John J. McCormick, III
-------------------------------
Name: John J. McCormick, III
Title: Vice President
By: /s/ Mary T. Flannagan
-------------------------------
Name: Mary T. Flannagan
Title: Group Vice President
CAISSE NATIONALE DE CREDIT AGRICOLE
By: /s/ Craig Welch
-------------------------------
Name: Craig Welch
Title: First Vice President
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By: /s/ Anne McCarthy
-------------------------------
Name: Anne McCarthy
Title: Authorized Signatory
ALLIED IRISH BANK PLC
Cayman Island Branch
By: /s/ W. J. Strickland
-------------------------------
Name: W. J. Strickland
Title: SVP
By: /s/ Marcia Meaker
-------------------------------
Name: Marcia Meaker
Title: VP
<PAGE>
NATIONAL WESTMINSTER BANK PLC
By: /s/ W. Wakefield Smith
-------------------------------
Name: W. Wakefield Smith
Title: Vice President
NATIONSBANK, N.A.
By: /s/ Ellen M. Bagnato
-------------------------------
Name: Ellen M. Bagnato
Title: Vice President
CREDIT SUISSE FIRST BOSTON
By: /s/ Joel Glodowski
-------------------------------
Name: Joel Glodowski
Title: Managing Director
By: /s/ Daniel K. Winger
-------------------------------
Name: Daniel K. Winger
Title: Associate
<PAGE>
SCHEDULE I to
Credit Agreement
----------------
LENDERS; ADDRESSES FOR NOTICES
------------------------------
ABN AMRO BANK N.V. NEW YORK BRANCH
500 Park Avenue
New York, NY 10022
Attention: Laura Fazio
Telephone: 212/446-4158
Telecopier: 212/446-4335
ALLIED IRISH BANK
405 Park Avenue
New York, NY 10022
Attention: William Murray
Telephone: 212/339-8000
Telecopier: 212/339-8007
BANK OF AMERICA ILLINOIS
231 South La Salle Street
Chicago, IL 60697
Attention: Mary Ann Patmon
Telephone: 312/828-3877
Telecopier: 312/974-9626
BANKBOSTON, N.A.
100 Federal Street, MS 01-08-05
Boston, Massachusetts 02110
Attention: Richard D. Hill, Jr.
Telephone: 617/434-4080
Telecopier: 617/434-4929
BANQUE FRANCAISE DU COMMERCE EXTERIEUR
New York Branch
645 Fifth Avenue
New York, NY 10022
Attention: William C. Maier
Telephone: 212/872-5050
Telecopier: 212/872/5045
BANQUE PARIBAS
787 Seventh Avenue
New York, NY 10019
Attention: John McCormick
Telephone: 212/841-2382
Telecopier: 212/841-2333
<PAGE>
2
BARCLAYS BANK
International Corporate Group
222 Broadway, 12th Floor
New York, NY 10038
Attention: Mathew Tuck
Telephone: 212/412-1131
Telecopier: 212/412-7590
CAISSE NATIONALE DE CREDIT AGRICOLE
520 Madison Avenue
New York, NY 10022
Attention: John McCloskey
Telephone: 212/418-2217
Telecopier: 212/418-2228
CITIBANK, N.A.
399 Park Avenue
New York, New York 10043
Attention: James Buchanan
Telephone: 212/559-5926
Telecopier: 212/758-6278
CREDIT LYONNAIS
1301 Avenue of the Americas
New York, New York 10019
Attention: Steven Yoon
Telephone: 212/261-3735
Telecopier: 212/459-3176
CREDIT SUISSE FIRST BOSTON
Eleven Madison Avenue
New York, NY 10010
Attention: Chris Horgan
Telephone: 212/325-9157
Telecopier: 212/325-8309
DEEPROCK & COMPANY
Corporate Trust Division
One Enterprise Drive
North Quincy, MA 02171
Attention: Patrick McEnroe
Telephone: 617/664-5366
Telecopier: 617/664-5367
<PAGE>
3
FIRST BANK NATIONAL ASSOCIATION
601 2nd Avenue South
Minneapolis, MN 55402
Attention: Elliot J. Jaffee
Telephone: 612/973-0543
Telecopier: 612/973-0825
GENERAL ELECTRIC CAPITAL CORPORATION
201 High Ridge Road
Stamford, Connecticut 06927
Attention: William S. Richardson
Telephone: 203/316-7589
Telecopier: 203/316-7978
LEHMAN COMMERCIAL PAPER INC.
3 World Financial Center
New York, New York 10285
Attention: Michelle Swanson
Telephone: 212/526-0330
Telecopy: 212/528-0819
MERRILL LYNCH SENIOR RATE FLOATING FUND, INC.
800 Scudders Mill Road-Area 1B
Plainsboro, New Jeresey 08536
Attention: Jim Montayne
Telephone: 609/282-3102
Telecopier: 609/282-2550
NATIONAL WESTMINISTER BANK PLC
175 Water Street
New York, NY 10038
Attention: W. Wakefield Smith
Telephone: 212/602-8969
Telecopier: 212/602-4319
NATIONSBANK, N.A.
100 N. Tryon Street, NCI-007-13-06
Charlotte, NC 28255
Attention: Mike Clark
Telephone: 704/388-5090
Telecopier: 704/386-9911
<PAGE>
4
THE BANK OF NEW YORK
One Wall Street
New York Corporate Division, 22nd Floor
New York, NY 10286
Attention: Georgia M. Pan-Kita
Telephone: 212/635-1475
Telecopier: 212/635-1480
THE CHASE MANHATTAN BANK
270 Park Avenue
New York, New York 10017
Attention: Neil Boylan
Telephone: 212/270-1410
Telecopier: 212/270-0330
THE FUJI BANK, LIMITED, NEW YORK BRANCH
Two World Trade Center, 79th Floor
New York, NY 10048
Attention: Kerri A. King
Telephone: 212/898-2122
Telecopier: 212/898-2399
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
Los Angeles Agency
350 South Grand Avenue
Suite 3000
Los Angeles, CA 90071
Attention: Shunji Sato
Telephone: 213/689-6355
Telecopier: 213/622-6908
THE MITSUBISHI TRUST AND BANKING CORPORATION
520 Madison Avenue, 26th Floor
New York, NY 10022
Attention: Jay Kato
Telephone: 212/891-8445
Telecopier: 212/644-6825
THE OCTAGON CREDIT INVESTORS LOAN PORTFOLIO
(A UNIT OF THE CHASE MANHATTAN BANK)
380 Madison Avenue
12th Floor
New York, New York 10017
Attention: Richard W. Stewart
Telephone: 212/622-3062
<PAGE>
5
Telecopier: 212/622-3797
THE SANWA BANK LIMITED - NEW YORK BRANCH
55 East 52nd Street
New York, NY 10055
Attention: Dominic Sorresso
Telephone: 212/339-6194
Telecopier: 212/754-1304
THE SUMITOMO BANK, LIMITED
277 Park Avenue, 6th Floor
New York, NY 10172
Attention: Suresh Tata
Telephone: 212/224-4129
Telecopier: 212/224-5188
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
One Parkview Plaza
Oakbrook Terrace, IL 60181
Attention: Jeffrey W. Maillet
Telephone: 630/684-6438
Telecopier: 630/684-6740 or 6741
<PAGE>
SCHEDULE II to
Credit Agreement
----------------
COMMITMENTS
-----------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Initial Initial Deferred Draw Deferred Special L/C Special L/C
Term Loan Term Loan Term Loan Draw Term Commitment Commitment
Name Commitment Commitment Commitment Loan Percentage
Percentage Commitment
Percentage
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Chase Manhattan $47,150,000.00(1) 41.00000% $34,850,000.00(2) 41.00000% $5,181,818.21 10.36363%
Bank
- -------------------------------------------------------------------------------------------------------------------------
Lehman Commercial $0.00 0.00000% $0.00 0.00000% $4,704,545.45 9.40909%
Paper Inc.
- -------------------------------------------------------------------------------------------------------------------------
Citibank, N.A. $0.00 0.00000% $0.00 0.00000% $4,704,545.45 9.40909%
- -------------------------------------------------------------------------------------------------------------------------
General Electric Capital $2,874,999.99 2.49999% $2,125,000.01 2.50000% $3,181,818.18 6.36363%
Corporation
- -------------------------------------------------------------------------------------------------------------------------
Bank of America $1,283,829.50 1.11637% $948,917.46 1.11637% $2,297,023.00 4.59404%
Illinois
- -------------------------------------------------------------------------------------------------------------------------
BankBoston, N.A. $1,283,829.50 1.11637% $948,917.46 1.11637% $2,297,023.00 4.59404%
- -------------------------------------------------------------------------------------------------------------------------
Banque Francaise du $1,283,829.50 1.11637% $948,917.46 1.11637% $2,297,023.00 4.59404%
Commerce Exterieur
- -------------------------------------------------------------------------------------------------------------------------
Credit Suisse First $1,283,829.50 1.11637% $948,917.46 1.11637% $2,297,023.00 4.59404%
Boston
- -------------------------------------------------------------------------------------------------------------------------
First Bank National $1,283,829.50 1.11637% $948,917.46 1.11637% $2,297,023.00 4.59404%
Association
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(TABLE RESTUBED FROM ABOVE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Multi- Acquisition Acquisition Percentage of
Multi- Currency Commitment Commitment Aggregate
Name Currency Commitment Percentage Commitment
Commitment Percentage
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The Chase Manhattan $31,090,909.1 10.36363% $20,727,272.68 10.36363% 17.84242%
Bank 1
- -----------------------------------------------------------------------------------------------------
Lehman Commercial $28,227,272.7 9.40909% $18,818,181.82 9.40909% 6.89999%
Paper Inc. 3
- -----------------------------------------------------------------------------------------------------
Citibank, N.A. $28,227,272.7 9.40909% $18,818,181.82 9.40909% 6.89999%
3
- -----------------------------------------------------------------------------------------------------
General Electric Capital $19,090,909.0 6.36363% $12,727,272.73 6.36363% 5.33333%
Corporation 9
- -----------------------------------------------------------------------------------------------------
Bank of America $13,782,138.0 4.59404% $9,188,092.02 4.59404% 3.66666%
Illinois 2
- -----------------------------------------------------------------------------------------------------
BankBoston, N.A. $13,782,138.0 4.59404% $9,188,092.02 4.59404% 3.66666%
2
- -----------------------------------------------------------------------------------------------------
Banque Francaise du $13,782,138.0 4.59404% $9,188,092.02 4.59404% 3.66666%
Commerce Exterieur 2
- -----------------------------------------------------------------------------------------------------
Credit Suisse First $13,782,138.0 4.59404% $9,188,092.02 4.59404% 3.66666%
Boston 2
- -----------------------------------------------------------------------------------------------------
First Bank National $13,782,138.0 4.59404% $9,188,092.02 4.59404% 3.66666%
Association 2
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------
(1) Following the Closing Date, (a) $27,025,000 of this amount is anticipated
to be transferred to Senior Debt Portfolio, (b) $2,875,000 of this amount
is anticipated to be transferred to Aeries Finance Ltd., (c) $2,875,000 of
this amount is anticipated to be transferred to Strata Funding Ltd., (d)
$2,875,000 of this amount is anticipated to be transferred to Medical
Liability Mutual Insurance Company, (e) $5,750,000 of this amount is
anticipated to be transferred to Ceres Finance Ltd. and (f) $5,750,000 of
this amount is anticipated to be transferred to Putnam Investment.
(2) Following the Closing Date, (a) $19,975,000 of this amount is anticipated
to be transferred to Senior Debt Portfolio, (b) $2,125,000 of this amount
is anticipated to be transferred to Aeries Finance Ltd., (c) $2,125,000 of
this amount is anticipated to be transferred to Strata Funding Ltd., (d)
$2,125,000 of this amount is anticipated to be transferred to Medical
Liability Mutual Insurance Company, (e) $4,250,000 of this amount is
anticipated to be transferred to Ceres Finance Ltd. and (f) $4,250,000 of
this amount is anticipated to be transferred to Putnam Investment.
<PAGE>
2
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Initial Initial Deferred Draw Deferred Special L/C Special L/C
Term Loan Term Loan Term Loan Draw Term Commitment Commitment
Name Commitment Commitment Commitment Loan Percentage
Percentage Commitment
Percentage
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Fuji Bank, Limited $1,283,829.50 1.11637% $948,917.46 1.11637% $2,297,023.00 4.59404%
- ------------------------------------------------------------------------------------------------------------------------
National Westminster $1,283,829.50 1.11637% $948,917.46 1.11637% $2,297,023.00 4.59404%
Bank PLC
- ------------------------------------------------------------------------------------------------------------------------
Credit Lyonnais, New $980,378.92 0.85250% $724,627.90 0.85250% $1,754,090.29 3.50818%
York Branch
- ------------------------------------------------------------------------------------------------------------------------
The Sumitomo Bank, $980,378.92 0.85250% $724,627.90 0.85250% $1,754,090.29 3.50818%
Limited
- ------------------------------------------------------------------------------------------------------------------------
The Long Term Credit $700,270.63 0.60893% $517,591.33 0.60893% $1,252,921.64 2.50584%
Bank of Japan, Ltd., Los
Angeles Agency
- ------------------------------------------------------------------------------------------------------------------------
Allied Irish Bank PLC $700,270.63 0.60893% $517,591.33 0.60893% $1,252,921.64 2.50584%
- ------------------------------------------------------------------------------------------------------------------------
The Bank of New York $0.00 0.00000% $0.00 0.00000% $1,363,636.37 2.72727%
- ------------------------------------------------------------------------------------------------------------------------
Banque Paribas $700,270.63 0.60893% $517,591.33 0.60893% $1,252,921.64 2.50584%
- ------------------------------------------------------------------------------------------------------------------------
Barclays Bank PLC $700,270.63 0.60893% $517,591.33 0.60893% $1,252,921.64 2.50584%
- ------------------------------------------------------------------------------------------------------------------------
Caisse Nationale de $700,270.63 0.60893% $517,591.33 0.60893% $1,252,921.64 2.50584%
Credit Agricole
- ------------------------------------------------------------------------------------------------------------------------
The Mitsubishi Trust and $700,270.63 0.60893% $517,591.33 0.60893% $1,252,921.64 2.50584%
Banking Corporation
- ------------------------------------------------------------------------------------------------------------------------
NationsBank, N.A. $700,270.63 0.60893% $517,591.33 0.60893% $1,252,921.64 2.50584%
- ------------------------------------------------------------------------------------------------------------------------
The Sanwa Bank, $700,270.63 0.60893% $517,591.33 0.60893% $1,252,921.64 2.50584%
Limited, New York
Branch
- ------------------------------------------------------------------------------------------------------------------------
ABN Amro Bank N.V. $700,270.63 0.60893% $517,591.33 0.60893% $1,252,921.64 2.50584%
New York Branch
- ------------------------------------------------------------------------------------------------------------------------
Van Kampen American $31,625,000.00 27.50000% $23,375,000.00 27.50000% $0.00 0.00000%
Capital Prime Rate
Income Trust
- ------------------------------------------------------------------------------------------------------------------------
Deeprock & Company $1,725,000.00 1.50000% $1,275,000.00 1.50000% $0.00 0.00000%
- ------------------------------------------------------------------------------------------------------------------------
The Octagon Credit $5,750,000.00 5.00000% $4,250,000.00 5.00000% $0.00 0.00000%
Investors Loan Portfolio
(a Unit of The Chase
Manhattan Bank)
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(TABLE RESTUBED FROM ABOVE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Multi- Acquisition Acquisition Percentage of
Multi- Currency Commitment Commitment Aggregate
Name Currency Commitment Percentage Commitment
Commitment Percentage
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The Fuji Bank, Limited $13,782,138.0 4.59404% $9,188,092.02 4.59404% 3.66666%
2
- -----------------------------------------------------------------------------------------------------
National Westminster $13,782,138.0 4.59404% $9,188,092.02 4.59404% 3.66666%
Bank PLC 2
- -----------------------------------------------------------------------------------------------------
Credit Lyonnais, New $10,524,541.7 3.50818% $7,016,361.16 3.50818% 2.79999%
York Branch 3
- -----------------------------------------------------------------------------------------------------
The Sumitomo Bank, $10,524,541.7 3.50818% $7,016,361.16 3.50818% 2.79999%
Limited 3
- -----------------------------------------------------------------------------------------------------
The Long Term Credit $7,517,529.84 2.50584% $5,011,686.56 2.50584% 2.00000%
Bank of Japan, Ltd., Los
Angeles Agency
- -----------------------------------------------------------------------------------------------------
Allied Irish Bank PLC $7,517,529.84 2.50584% $5,011,686.56 2.50584% 2.00000%
- -----------------------------------------------------------------------------------------------------
The Bank of New York $8,181,818.18 2.72727% $5,454,545.45 2.72727% 2.00000%
- -----------------------------------------------------------------------------------------------------
Banque Paribas $7,517,529.84 2.50584% $5,011,686.56 2.50584% 2.00000%
- -----------------------------------------------------------------------------------------------------
Barclays Bank PLC $7,517,529.84 2.50584% $5,011,686.56 2.50584% 2.00000%
- -----------------------------------------------------------------------------------------------------
Caisse Nationale de $7,517,529.84 2.50584% $5,011,686.56 2.50584% 2.00000%
Credit Agricole
- -----------------------------------------------------------------------------------------------------
The Mitsubishi Trust and $7,517,529.84 2.50584% $5,011,686.56 2.50584% 2.00000%
Banking Corporation
- -----------------------------------------------------------------------------------------------------
NationsBank, N.A. $7,517,529.84 2.50584% $5,011,686.56 2.50584% 2.00000%
- -----------------------------------------------------------------------------------------------------
The Sanwa Bank, $7,517,529.84 2.50584% $5,011,686.56 2.50584% 2.00000%
Limited, New York
Branch
- -----------------------------------------------------------------------------------------------------
ABN Amro Bank N.V. $7,517,529.84 2.50584% $5,011,686.56 2.50584% 2.00000%
New York Branch
- -----------------------------------------------------------------------------------------------------
Van Kampen American $0.00 0.00000% $0.00 0.00000% 7.33333%
Capital Prime Rate
Income Trust
- -----------------------------------------------------------------------------------------------------
Deeprock & Company $0.00 0.00000% $0.00 0.00000% 0.40000%
- -----------------------------------------------------------------------------------------------------
The Octagon Credit $0.00 0.00000% $0.00 0.00000% 1.33333%
Investors Loan Portfolio
(a Unit of The Chase
Manhattan Bank)
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
3
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Initial Initial Deferred Draw Deferred Special L/C Special L/C
Term Loan Term Loan Term Loan Draw Term Commitment Commitment
Name Commitment Commitment Commitment Loan Percentage
Percentage Commitment
Percentage
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Merrill Lynch Senior $8,625,000.00 7.50000% $6,375,000.00 7.50000% $0.00 0.00000%
Floating Rate Fund, Inc.
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $115,000,000 100% $85,000,000 100% $50,000,000 100%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(TABLE RESTUBED FROM ABOVE)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Multi- Acquisition Acquisition Percentage of
Multi- Currency Commitment Commitment Aggregate
Name Currency Commitment Percentage Commitment
Commitment Percentage
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Merrill Lynch Senior $0.00 0.00000% $0.00 0.00000% 2.00000%
Floating Rate Fund, Inc.
- -----------------------------------------------------------------------------------------------------
TOTAL $300,000,000 100% $200,000,000 100% 100%
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE III to
Credit Agreement
----------------
BORROWERS; DENOMINATION CURRENCIES; CURRENCY SUBLIMITS;
MAXIMUM SUBLIMITS; LOCAL FRONTING LENDERS
-------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Local Fronting Lender and Denomination Currency Sublimit Maximum Name of Borrower and
Local Lending Office Currency Sublimit Address for Notices
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ABN Amro Bank Deutschemarks US$14,000,000 US$18,000,000 Deutsche Revlon GmbH & Co.
Deutsche and A.G. KG
Dusseldorf Tiefenbroicher Weg 15
Germany Postfach 101953 (D-40010)
Attn: Klaus Stalz 40472 Dusseldorf, Germany
- -----------------------------------------------------------------------------------------------------------------------------------
BankBoston, N.A. Pounds US$28,000,000 US$48,000,000 Revlon International
39 Victoria Street Sterling Corporation (UK Branch)
London SW1H 0ED, England 86-88 Brook Street
Attn: Veronica Houghton London W1Y 2BA, England
- and/or -
Revlon Manufacturing (UK)
Limited
Ewenny Road
Maesteg, Mid-Glamorgan
South Wales CF34 9TU
- -----------------------------------------------------------------------------------------------------------------------------------
Banque Francaise du Commerce French Francs US$18,000,000 US$25,000,000 Europeenne de Produits de
Exterieur Beaute
21 Blvd Haussman 23 rue Boissiere
75009 Paris, France 75116 Paris, France
Attn: Philippe Silvera or
Claire Lesaffre
- -----------------------------------------------------------------------------------------------------------------------------------
Citibank, N.A. Dutch Guilders US$9,000,000 US$12,000,000 Revlon Nederland B.V.
Hoogoorddreef 54B Haverstraat 7
Amsterdam, Z.O. 1101 BE 2153 AB Nieuw Vennep
The Netherlands Netherlands
Attn: Liliana Spiteri
- -----------------------------------------------------------------------------------------------------------------------------------
The Sanwa Bank Ltd.(1) Japanese Yen US$25,000,000 US$30,000,000 Revlon K.K.
Roppongi Branch 9-12 Roppongi 6-chome
5-2-3 Roppongi Minato-ku, Tokyo 106
Minato-ku, Tokyo 106, Japan Japan
Attn: S. Yamada
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------
(1) The Long-Term Credit Bank of Japan, Ltd. shall serve as the Local Fronting
Lender for Japan until June 2, 1997, on which date The Sanwa Bank Ltd.
shall replace The Long-Term Credit Bank of Japan, Ltd. as the Local
Fronting Lender for Japan.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Local Fronting Lender and Denomination Currency Sublimit Maximum Name of Borrower and
Local Lending Office Currency Sublimit Address for Notices
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bank of America Canada Canadian US$31,500,000 US$36,000,000 Revlon Canada, Inc.
200 Front Street 9W Dollars 2501 Stanfield Road
27th Floor Mississauga, Ontario L4Y 1R9
Toronto M5V 3L2 Canada
Canada
Attn: Derrek Wong
- -----------------------------------------------------------------------------------------------------------------------------------
Citibank Limited Australian US$9,750,000 US$15,300,000 Revlon Manufacturing Limited
1 Margaret Street Dollars (Australia Branch)
Sydney, N.S.W. 2000 287 Victoria Road
Australia Rydalmere, New South Wales
Attn: Romy Suarez 2116
Australia
- -----------------------------------------------------------------------------------------------------------------------------------
Citibank, N.A. Hong Kong US$5,000,000 US$6,000,000 Revlon (Hong Kong) Limited
49/F, Citibank Tower Dollars 36th Floor, East Wing
Citibank Plaza Hennessy Centre
3 Garden Road 500 Causeway Bay
Central, Hong Kong Hong Kong
Attn: Lucia Pang
- -----------------------------------------------------------------------------------------------------------------------------------
Citibank, N.A. Italian Lira US$8,500,000 US$10,000,000 European Beauty Products
Via Abruzzi, 2/4 S.p.A.
00187 Roma, Italy Via Appia Nuova, 43-45
Attn: Silvana Rapone 00043 Ciampino
Roma, Italy
- -----------------------------------------------------------------------------------------------------------------------------------
Allied Irish Bank Irish Pounds US$1,500,000 US$2,600,000 Revlon Professional Limited
Dublin 1, Ireland Harmonstown Road
Attn: Marlon Dowd Artane, Dublin 5
Ireland
and/or
Revlon-Realistic
Professional Products Ltd.
Harmonstown Road
Artane, Dublin 5
Ireland
- -----------------------------------------------------------------------------------------------------------------------------------
Citibank, N.A. Spanish US$5,000,000 US$10,000,000 Revlon S.A.
Jose Ortega y Gasset Pesetas Colle Aragan 499
29-4th Floor 03013 Barcelona, Spain
Madrid 28006
Spain
Attn: Stephan Mulvihill
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL US$155,250,000 US$212,900,000
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE IV to
Credit Agreement
----------------
SUBSIDIARIES OF REVLON HOLDINGS INC.
------------------------------------
(OTHER THAN NATIONAL HEALTH CARE GROUP, INC. AND ITS SUBSIDIARIES)
DIRECT DOMESTIC SUBSIDIARIES OF REVLON HOLDINGS
- -----------------------------------------------
Charles of the Ritz Group Ltd.
Cosmetiques Holdings, Inc.
New Essentials Limited
Norell Perfumes, Inc.(1)
PPI Four Corporation
Visage Beaute Cosmetics, Inc.
DIRECT FOREIGN SUBSIDIARIES OF REVLON HOLDINGS
- ----------------------------------------------
Armour Farmaceutica de Colombia, S.A.(1)
Charles of the Ritz Pension Trustee Company (1987) Limited(1)
Ortran S.A.(1)
INDIRECT SUBSIDIARIES OF REVLON HOLDINGS
- ----------------------------------------
Alexandra de Markoff, Ltd.(1)
Revlon, Inc.
Revlon Consumer Products Corporation
Revlon Worldwide Corporation
Revlon Worldwide Holdings Inc.(2)
Revlon Worldwide (Parent) Corporation
DOMESTIC SUBSIDIARIES OF REVLON CONSUMER PRODUCTS CORPORATION
- -------------------------------------------------------------
Almay, Inc.
American Crew, Inc.
Applied Science & Technologies Inc.
Carrington Parfums Ltd.
Charles Revson Inc.
Creative Nail Design, Inc.
- --------------
(1) Slated for possible liquidation and dissolution.
(2) Owned 23% by Revlon Holdings Inc., 75% by National Health Care Group, Inc.
and 2% by Charles of the Ritz Group Ltd.
<PAGE>
2
Dolly Parton Inc.
Fashion & Designer Fragrance Group, Inc.
Fermodyl Professionals Inc.
General Wig Manufacturers, Inc.
North America Revsale Inc.
Oxford Properties Co.
Pacific Finance & Development Corp.
PPI Two Corporation
Prestige Fragrances, Ltd.
Realistic/Roux Professional Products Inc.
Revlon Commissary Sales, Inc.
Revlon Consumer Corp. (f/k/a Inspirations Inc.)
Revlon Government Sales, Inc.
Revlon International Corporation
Revlon Professional, Inc.
Revlon Professional Products Inc.
Revlon Receivables Subsidiary, Inc.
RIROS Corporation
RIT Inc.
Roux Laboratories, Inc.
The Cosmetic Center, Inc.(3)
FIRST TIER FOREIGN SUBSIDIARIES OF REVLON CONSUMER PRODUCTS CORPORATION
- -----------------------------------------------------------------------
Almay Cosmetics Ltd.(1)
Almay Japan Kabushiki Kaisha(1)
Bozzano-Revlon Comercial Ltda.(1)
Deutsche Revlon GmbH
Eurital S.r.l.(1)
Madison de Centro America, S.A.(1)
Madison Produtos Cosmeticos Ltda.(1)
Madison (Services) Pty. Limited(1)
Ortran Kosmetikvertrieb GmbH(1)
Revlon (Aust.) Services Pty. Limited(1)
Revlon B.V.
Revlon Canada Inc.
Revlon (Cayman) Limited
Revlon Chile S.A.
Revlon China Holdings Limited(4)
Revlon de Argentina, S.A.I.C.
Revlon Gesellschaft m.b.H.
- --------------
(3) To the extent set forth in the Company Pledge Agreement (Domestic).
(4) Owned 94.737% by Revlon International Corporation; balance owned by Sumstar
Development Limited, an unrelated third party.
<PAGE>
3
Revlon Group Limited
Revlon (Hong Kong) Limited
Revlon (Maesteg) Pension Trustee Company Limited
Revlon K.K.
Revlon (Malaysia) Sdn. Bhd.
Revlon Manufacturing Ltd.
Revlon Mauritius Limited
Revlon New Zealand Limited
Revlon Offshore Limited
Revlon Pension Trustee Company (U.K.) Limited
Revlon Professional Limited
Revlon Profesional, S.A. de C.V.(5)
Revlon (Puerto Rico) Inc.
Revlon Real Estate Kabushiki Kaisha
Revlon-Realistic International Limited
Revlon-Realistic Professional Products Limited
Revlon, S.A. [Mexico]
Revlon (Singapore) Pte. Ltd.
Revlon (Suisse) S.A.
RGI Beauty Products (Pty.) Limited(1)
RGI Limited(1)
R.O.C. Holding, C.A.
S.E.F.A.O., S.A.(1)
Technical and Marketing Services Co. Ltd.(1)
Ultima II Cosmetics GmbH
OTHER FOREIGN SUBSIDIARIES OF REVLON CONSUMER PRODUCTS CORPORATION
- ------------------------------------------------------------------
Alpha Cosmetics B.V.(1)
Beauty Fashions International Limited(1)
Becadis B.V.(1)
CEIL - Comercial Exportadora Industrial Ltda.
Cendico B.V.
Charles of the Ritz Limited
Deutsche Revlon GmbH & Co. KG
European Beauty Products S.p.A.
Europeenne de Produits de Beaute S.A.
Helmston Limited(1)
Intercosmo S.p.A.(6)
Kenma Holding B.V.(1)
Korihor (No. 1) Pty. Limited(1)
Madison Finanzgesellschaft m.b.H.(1)
- --------------
(5) Slated for possible merger or combination with or into Revlon, S.A.
[Mexico].
(6) Slated for merger or combination with or into European Beauty Products
S.p.A.
<PAGE>
4
Middows Taylor (1984) Limited(1)
Orlane (H.K.) Limited(1)
Produtos Cosmeticos de Revlon S.A.(1)
Promethean Insurance Limited
Revlon A.B.
Revlon (Aust.) Pty. Limited
Revlon Belgium N.V.
Revlon Coiffure, SNC
Revlon Cosmetics and Fragrances Limited(1)
Revlon Europe, Middle East and Africa Ltd.
Revlon (Israel) Limited
Revlon Latin America and Caribbean, Ltd.
Revlon Manufacturing (U.K.) Limited
Revlon Nederland B.V.
Revlon Overseas Corporation, C.A.
Revlon (Panama) S.A.(1)
Revlon Personal Care Kabushiki Kaisha(1)
Revlon Produtos Cosmeticos, Lda.
Revlon, S.A. [Spain]
Revlon (Shanghai) Limited(7)
Revlon South Africa (Proprietary) Limited
Revlon Superannuation Pty. Ltd.
Revlon Taiwan Limited(1)
Revlon Toiletries Kabushiki Kaisha(8)
RGI Beauty Products (Namibia) (Proprietary) Ltd.
RGI (Cayman) Limited
RGI Medical Products (Pty.) Limited(1)
RIC Pty. Limited(1)
R.I.F.C. Bank Limited
Shanghai Revstar Cosmetic Marketing Services Limited(7)
Tindafil, S.A.(1)
Ultima II Cosmetics GmbH & Still(1)
Ultima II Limited(1)
YAE Artistic Packings Industry Ltd.
YAE Press 2000 (1987) Ltd.
- --------------
(7) Owned 95% by Revlon China Holdings Limited; balance owned by Beijing
Sumstar Industrial Company Limited, an unrelated third party.
(8) Slated for disposition 6/97.
<PAGE>
Schedule V to
Credit Agreement
----------------
PLEDGE AGREEMENTS
-----------------
(a) Pledge and Security Agreement made by the Company (Bermuda)
(b) Pledge and Security Agreement made by the Company (Canada)
(c) Share Mortgage Agreement made by the Company (Cayman Islands)
(d) Stock Pledge Agreement made by the Company (Chile)
(e) Mortgage of Securities made by Company (United Kingdom)
(f) Pledge and Security Agreement made by Revlon International Corporation
(Argentina)
(g) Pledge and Security Agreement made by the Company and Revlon International
Corporation (Austria)
(h) Pledge and Security Agreement made by Revlon International Corporation
(Bermuda)
(i) Pledge and Security Agreement made by Revlon International Corporation
(Canada)
(j) Share Mortgage Agreement made by Revlon International Corporation (Cayman
Islands)
(k) Stock Pledge Agreement made by Revlon International Corporation (Chile)
(l) Share Pledge Agreement made by Revlon International Corporation (France)
(m) Deed of Mortgage made by Revlon International Corporation (Hong Kong)
(n) Stock Pledge Agreement made by Revlon International Corporation (Japan)
(o) Pledge and Security Agreement made by Revlon International Corporation
(Malaysia)
(p) Pledge and Security Agreement made by Revlon International Corporation
(Mexico)
(q) Revlon International Corporation 1997 Stock Pledge Agreement made by
Revlon International Corporation (Netherlands)
(r) Pledge and Security Agreement made by Revlon International Corporation
(New Zealand)
(s) Pledge and Security Agreement made by Revlon International Corporation
(Puerto Rico)
<PAGE>
2
(t) Charge Over Shares (Legal Mortgage) made by Revlon International
Corporation (Singapore)
(u) Amendment of Deed made by Revlon International Corporation (Spain)
(v) Revlon International Pledge Agreement made by Revlon International
Corporation (Venezuela)
(w) Share Mortgage Agreement made by PPI Two Corporation (Cayman Islands)
(x) Confirmation of Mortgage made by Roux Laboratories, Inc. (Ireland)
(y) Pledge and Security Agreement made by Roux Laboratories, Inc. (Mexico)
(z) Pledge and Security Agreement made by Revlon Manufacturing (UK) Limited
(United Kingdom)
(aa) Pledge Agreement made by Revlon Holdings Inc.
(bb) Pledge Agreement made by the Company (Domestic)
(cc) Pledge Agreement made by the Company (International)
(dd) Pledge Agreement made by Revlon Government Sales, Inc. (Domestic)
(ee) Pledge Agreement made by Revlon International Corporation (Domestic)
(ff) Pledge Agreement made by Roux Laboratories, Inc. (Domestic)
<PAGE>
Schedule VI to
Credit Agreement
----------------
SECURITY AGREEMENTS
-------------------
1. Security Agreement made by Holdings
2. Security Agreement made by the Company
3. Security Agreement made by Almay, Inc.
4. Security Agreement made by American Crew, Inc.
5. Security Agreement made by Applied Science & Technologies Inc.
6. Security Agreement made by Carrington Parfums Ltd.
7. Security Agreement made by Charles Revson Inc.
8. Security Agreement made by Creative Nail Design, Inc.
9. Security Agreement made by Dolly Parton Inc.
10. Security Agreement made by Fashion & Designer Fragrance Group, Inc.
11. Security Agreement made by Fermodyl Professionals Inc.
12. Security Agreement made by General Wig Manufacturers, Inc.
13. Security Agreement made by North America Revsale Inc.
14. Security Agreement made by Oxford Properties Co.
15. Security Agreement made by Pacific Finance & Development Corp.
16. Security Agreement made by PPI Two Corporation
17. Security Agreement made by Prestige Fragrances, Ltd.
18. Security Agreement made by Realistic/Roux Professional Products Inc.
19. Security Agreement made by Revlon Commissary Sales, Inc.
20. Security Agreement made by Revlon Consumer Corp. (f/k/a Inspirations Inc.)
21. Security Agreement made by Revlon Government Sales, Inc.
22. Security Agreement made by Revlon International Corporation
<PAGE>
2
23. Security Agreement made by Revlon Professional, Inc.
24. Security Agreement made by Revlon Professional Products Inc.
25. Security Agreement made by Revlon Receivables Subsidiary, Inc.
26. Security Agreement made by RIROS Corporation
27. Security Agreement made by RIT Inc.
28. Security Agreement made by Roux Laboratories, Inc.
29. Security Agreement made by Alexandra de Markoff, Ltd.
30. Security Agreement made by Charles of the Ritz Group Ltd.
31. Security Agreement made by New Essentials Limited
32. Security Agreement made by Visage Beaute Cosmetics, Inc.
33. Security Agreement made by Norell Perfumes, Inc.
34. Security Agreement made by Cosmetiques Holdings Inc.
35. Security Agreement made by PPI Four Corporation
36. General Assignment of Book Debts made by Revlon Canada Inc. (Canada)
37. Deed of Hypothec on a Universality of Movable Property made by Revlon
Canada Inc. (Canada)
38. Debenture Over Certain Assets of Revlon International Corporation (UK
Branch) made by Revlon International Corporation (UK Branch)
39. Debenture Over Certain Assets of Revlon Manufacturing (UK) Limited made by
Revlon Manufacturing (UK) Limited
<PAGE>
SCHEDULE VII to
Credit Agreement
----------------
INDEBTEDNESS
------------
(as of April 30, 1997)
Yen Credit Agreement (yen) 4,310,496,600
Oxford Mortgage $ 2,301,000
Jacksonville Mortgage $ 372,000
Intercosmo (General Business Purposes) Lira 2,500,000,000
<PAGE>
SCHEDULE VIII to
Credit Agreement
----------------
CONTINGENT OBLIGATIONS
----------------------
NONE
<PAGE>
SCHEDULE IX to
Credit Agreement
----------------
EXISTING SPECIAL LETTERS OF CREDIT
----------------------------------
(with face amounts determined as of April 30, 1997)
Issuer
- ------ Face Amount
-----------
The Chase Manhattan Bank $29,542,914
Citibank, N.A. $5,560,750
<PAGE>
SCHEDULE X to
Credit Agreement
----------------
DISPOSITION ASSETS (1)
----------------------
Brands Companies/Assets
- ------ ----------------
Ajee Almay Japan K.K.
Bain de Soleil Alpha Cosmetics B.V.
Bill Blass Armour Farmaceutica de Colombia, S.A.
Carrington Becadis B.V.
Charles of the Ritz Carrington Parfums Ltd.
Downtown Girl Charles of the Ritz Group Ltd.
Gatineau Cosmetiques Holdings, Inc.
Krystle New Essentials Limited
Scoundrel PPI Four Corporation
Xia Xiang General Wig Manufacturers, Inc.
Enjoli Kenma Holdings B.V.
Maroc Revlon Personal Care K.K.
Top Brass Revlon Real Estate K.K.
Visage Beaute Revlon Toiletries K.K.
Wildheart YAE Artistic Packings Industry Limited
Norell
Head Over Heels
Madly
Nude
Facilities
- ----------
Argenteuil, France (warehousing and distribution)
Ashdod, Israel (manufacturing, warehousing and office)
Bezons, France (manufacturing, warehousing and distribution)
Buenos Aires, Argentina (manufacturing, warehousing and distribution)
Barcelona, Spain (Aragon office)
Barcelona, Spain (manufacturing, warehousing, research and office)
Canberra, Australia (warehousing, distribution and office)
Caracas, Venezuela (manufacturing, distribution and office)
Dublin, Ireland (manufacturing, warehousing and office)
Dusseldorf, Germany (warehousing, distribution and office)
Holmdel, New Jersey (warehousing, distribution and office)
- --------------
(1) See Schedule IV (subsidiaries noted as slated for possible dissolution).
<PAGE>
2
Jacksonville, Florida (warehousing, distribution and office)
Mexico City, Mexico (manufacturing, warehousing, distribution and office)
Nieuw Vennep, Netherlands (warehousing, distribution and office)
Phoenix, Arizona (land)
Rydalmere, Australia (manufacturing, warehousing, distribution and office)
San Juan, Puerto Rico (manufacturing, warehousing, distribution and office)
Tokyo (Roppongi), Japan (office building)
Toronto, Canada (manufacturing, warehousing, distribution and office)
<PAGE>
SCHEDULE XI to
Credit Agreement
----------------
UCC FINANCING STATEMENTS
------------------------
MARICOPA COUNTY, ARIZONA
SECRETARY OF STATE, ARIZONA
- ---------------------------
Revlon Consumer Products Corporation
Revlon Holdings Inc.
SECRETARY OF STATE, CALIFORNIA
- ------------------------------
Creative Nail Design, Inc.
SECRETARY OF STATE, COLORADO
- ----------------------------
American Crew, Inc.
DADE COUNTY, FLORIDA
- --------------------
General Wig Manufacturers, Inc.
DUVAL COUNTY, FLORIDA
- ---------------------
Realistic/Roux Professional Products Inc.
Revlon Professional Inc.
Revlon Professional Products Inc.
Roux Laboratories, Inc.
SECRETARY OF STATE, FLORIDA
- ---------------------------
General Wig Manufacturers, Inc.
Realistic/Roux Professional Products Inc.
Revlon Professional Inc.
Revlon Professional Products Inc.
Roux Laboratories, Inc.
HONOLULU COUNTY, HAWAII
BUREAU OF CONVEYANCES, HAWAII
- -----------------------------
Revlon Consumer Products Corporation
ESSEX COUNTY, NEW JERSEY
- ------------------------
Revlon Consumer Products Corporation
MIDDLESEX COUNTY, NEW JERSEY
- ----------------------------
Revlon Consumer Products Corporation
MONMOUTH COUNTY, NEW JERSEY
- ---------------------------
Revlon Consumer Products Corporation
Revlon Holdings Inc.
<PAGE>
2
SECRETARY OF STATE, NEW JERSEY
- ------------------------------
Revlon Consumer Products Corporation
Revlon Holdings Inc.
CITY REGISTER, NEW YORK COUNTY
SECRETARY OF STATE, NEW YORK
- ----------------------------
Alexandra de Markoff, Ltd.
Almay, Inc.
Applied Science & Technologies, Inc.
Carrington Parfums Ltd.
Charles of the Ritz Group Ltd.
Charles Revson Inc.
Cosmetiques Holdings, Inc.
Dolly Parton Inc.
Fashion & Designer Fragrance Group, Inc.
Fermodyl Professionals Inc.
General Wig Manufacturers, Inc.
New Essentials Limited
Norell Perfumes, Inc.
North America Revsale Inc.
Oxford Properties Co.
Pacific Finance & Development Corp.
PPI Two Corporation
PPI Four Corporation
Prestige Fragrances, Ltd.
RIROS Corporation
RIT Inc.
Realistic/Roux Professional Products Inc.
Revlon, Inc.
Revlon Commissary Sales, Inc.
Revlon Consumer Corp.
Revlon Consumer Products Corporation
Revlon Government Sales, Inc.
<PAGE>
3
CITY REGISTER, NEW YORK COUNTY
SECRETARY OF STATE, NEW YORK (cont'd)
- -------------------------------------
Revlon Holdings Inc.
Revlon International Corporation
Revlon Professional, Inc.
Revlon Professional Products Inc.
Revlon Receivables Subsidiary, Inc.
Roux Laboratories, Inc.
Visage Beaute Cosmetics, Inc.
SECRETARY OF STATE, NORTH CAROLINA
- ----------------------------------
Revlon Consumer Products Corporation
Revlon Holdings Inc.
Revlon Receivables Subsidiary, Inc.
RIROS Corporation
GRANVILLE COUNTY, NORTH CAROLINA
- --------------------------------
Revlon Consumer Products Corporation
Revlon Holdings Inc.
Revlon Receivables Subsidiary, Inc.
RIROS Corporation
<PAGE>
SCHEDULE XII to
Credit Agreement
----------------
ENVIRONMENTAL MATTERS
---------------------
1. In 1985, the Mortgaged Property in Edison, New Jersey became subject to the
requirements of the Environmental Cleanup Responsibility Act ("ECRA"), as
amended by the Industrial Site Recovery Act. Pursuant to the requirements of
ECRA, Revlon Holdings (and, when owned by the Company, the Company) have
conducted investigations of the soil and groundwater, have undertaken certain
remedial activities with respect to the soil, and have submitted to the New
Jersey Department of Environmental Protection a proposed plan to remediate
remaining soils and groundwater. Groundwater remedial activities have
commenced. As required by ECRA, Revlon Holdings has posted financial assurance
with the Department of Environmental Protection in the amount of $5.5 million.
2. In April 1997, the Mortgaged Property in Phoenix, Arizona received a
hazardous waste inspections report, including a notice of violation. The
Company has responded to the notice of violation indicating that most of the
items identified were not violations since the materials were not hazardous and
therefore not subject to regulation. All other items have been corrected.
<PAGE>
SCHEDULE XIII to
Credit Agreement
----------------
DOMESTIC LOCAL COUNSEL
----------------------
ARIZONA
(Mortgage and Security Agreement)
---------------------------------
Gust Rosenfeld
201 North Central Avenue
33rd Floor
Phoenix, Arizona 85073
FLORIDA
(Security Agreement)
--------------------
Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A.
777 South Flagler Drive
Suite 310 East
West Palm Beach, Florida 33401
NEW JERSEY
(Mortgage and Security Agreement)
---------------------------------
Riker, Danzig, Scherer, Hyland & Perretti
Headquarters Plaza
One Speedwell Avenue
Morristown, New Jersey 07962-1981
NORTH CAROLINA
(Security Agreement)
--------------------
Smith Helms Mulliss & Moore, L.L.P.
227 North Tryon Street
Charlotte, North Carolina 28231
INTELLECTUAL PROPERTY
---------------------
Pennie & Edmonds
1155 Avenue of the Americas
New York, New York 10036
<PAGE>
SCHEDULE XIV to
Credit Agreement
----------------
INTERNATIONAL LOCAL COUNSEL
---------------------------
ARGENTINA
---------
Marval, O'Farrell & Mairal
Av. Leandro N. Alem 928
1001 Buenos Aires, Argentina
AUSTRALIA
---------
Mallesons Stephen Jaques
Governor Phillip Tower
1 Farrer Place
Sydney, New South Wales 2000
Australia
AUSTRIA
-------
Binder Grosswang & Partners
Tuchlauben 7a, A-1010
Vienna, Austria
BERMUDA
-------
Conyers Dill & Pearman
Clarendon House
No.2 Church Street, POB 666
Hamilton HM11, Bermuda
CANADA
------
Osler Hoskin & Harcourt
P.O. Box 50
1st Canadian Place
Toronto, Ontario
Canada
CAYMAN ISLANDS
--------------
Maples & Calder
Ugland House
P.O. Box 309
South Church Street
George Town
Grand Cayman, Cayman Islands
British West Indies
<PAGE>
2
CHILE
-----
Carey & Cia
Mira. Flores 222
24th Floor
Santiago, Chile
FRANCE
------
Paul, Weiss, Rifkind, Wharton & Garrison
199, Boulevard Saint-Germaine
75007 Paris, France
GERMANY
-------
Deringer Tessin Harrmann & Sedemund
Heumarkt 14, 50667 Koln
Germany
HONG KONG
---------
Deacons Graham & James
Alexandra House, Chater Road
4th Floor
Hong Kong
IRELAND
-------
Gore & Grimes
6 Cavendish Road, Parnell Square
Dublin 1, Ireland
ITALY
-----
Frere Cholmeley Bischoff
Studio Legale Associato
47 Viale Bruno Buozzi
00197 Rome, Italy
JAPAN
-----
Mori Sogo Law Offices
NKK Building
1-1-2 Marunouchi
Chiyoda-ku, Tokyo 100, Japan
MALAYSIA
--------
Shearn Delamore & Co.
Kuala Lumpur 01-02
POB 138, 2, Bonteng
Kuala Lumpur 01-19, Malaysia
<PAGE>
3
MEXICO
------
Bryan, Gonzalez Vargas y Gonzalez Baz S.C.
Termistocles 10, Piso 3
Colonia Polanco
11560 Mexico, D.F.
Mexico
NETHERLANDS
-----------
Loeff Claeys Verbeke
Apollolaan 15
Postbus 75088
1070 AB Amsterdam
Netherlands
NEW ZEALAND
-----------
Russell McVeagh McKenzie Martleet & Co.
The Shortland Centre
51-53 Shortland Street
Auckland 1, New Zealand
PUERTO RICO
-----------
McConnell Valdes Kelley Sifre Griggs & Ruiz-Suria
270 Munoz Rivera Avenue
Hato Rey, Puerto Rico
GOP 364225 San Juan, PR 00936-4225
SINGAPORE
---------
Drew & Napier
20 Raffles Place, #17-00
Ocean Towers
Singapore 0104
SPAIN
-----
J & A Garrigues
Antonio Maura 16
28014 Madrid, Spain
UNITED KINGDOM
--------------
Frere Cholmeley Bischoff
4 John Carpenter Street
London EC4Y 0NH, England
VENEZUELA
---------
Baker & McKenzie
Edificio Aldemo
Avenida Venezuela Piso 6 El Rosal
<PAGE>
4
Caracas 1010-A, Venezuela
<PAGE>
[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP]
June 4, 1997
Revlon Worldwide (Parent) Corporation
625 Madison Avenue
New York, New York 10022
Dear Ladies and Gentlemen:
In connection with the filing by Revlon Worldwide (Parent) Corporation
of Amendment No. 1 to the Registration Statement on Form S-1, No. 333-23451
(the "Registration Statement") with the Securities and Exchange Commission, you
have requested our opinion concerning certain federal income tax considerations
to persons who accept the exchange offer described therein (the "Exchange
Offer").
The facts, as we understand them, and upon which we rely in rendering
our opinion expressed herein, are set forth in the Registration Statement. In
addition, we have considered the applicable provisions of the Internal Revenue
Code of 1986, as amended, Treasury regulations, pertinent judicial authorities,
rulings of the Internal Revenue Service, and such other authorities as we have
considered relevant, in each case, in effect on the date hereof.
Based upon and subject to the (i) the accuracy of the facts as stated
in the Registration Statement and (ii) the Exchange Offer being consummated in
the manner described in the Registration Statement, the information in the
prospectus included in the Registration Statement under the heading "Certain
Federal Income Tax Considerations" while not purporting to discuss all possible
federal income tax consequences to holders whose Old Notes (as defined in the
prospectus) are tendered and accepted in the Exchange Offer, expresses our
opinion as to the material federal income tax consequences applica-
<PAGE>
Revlon Worldwide (Parent) Corporation
June 4, 1997
Page 2
ble to such holders. There can be no assurance that contrary positions may
not be asserted by the Internal Revenue Service.
This opinion is being furnished in connection with the Registration
Statement and may not be used, circulated, quoted or otherwise referred to for
any other purpose without our express written permission. In accordance with
the requirements of Item 601(b)(23) of Regulation S-K under the Securities Act,
we hereby consent to the use of our name under the caption "Certain Tax
Aspects--Certain Federal Income Tax Consequences" in the Exchange Offer and to
the filing of this opinion as an Exhibit to the Registration Statement. In
giving this consent, we do not admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act or the
rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Skadden, Arps, Slate
Meagher & Flom LLP
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
Three Months
Ended March 31, Year Ended December 31,
------------------ -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- ------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings before income taxes $ (49.4) $ 139.4 $ 126.7 $(113.9) $(140.1) $(172.3) $(209.3)
Plus: Fixed charges 70.8 67.4 269.7 269.0 250.6 208.8 128.0
-------- ------- ------- -------- -------- -------- --------
Earnings available to cover fixed charges $ 21.4 $ 206.8 $ 396.4 $ 155.1 $ 110.5 $ 36.5 $ (81.3)
-------- ------- ------- -------- -------- -------- --------
Fixed Charges:
Interest expense $ 63.1 $ 59.5 $ 240.1 $ 237.5 $ 221.2 $ 180.0 $ 102.1
Amortization of debt issuance costs 3.4 3.6 12.5 15.2 12.6 11.2 6.7
Portion of rent representative of
an interest factor 4.3 4.3 17.1 16.3 16.8 17.6 19.2
-------- ------- ------- -------- -------- -------- --------
Fixed charges $ 70.8 $ 67.4 $ 269.7 $ 269.0 $ 250.6 $ 208.8 $ 128.0
-------- ------- ------- -------- -------- -------- --------
Ratio of earnings to fixed charges 3.07 x 1.47 x
======= =======
Deficiency of earnings to fixed charges $ 49.4 $ 113.9 $ 140.1 $ 172.3 $ 209.3
======= ======= ======== ======== ========
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS AND REPORT ON SCHEDULE
The Board of Directors
Revlon Worldwide (Parent) Corporation:
The audits referred to in our report dated January 28, 1997, included the
related financial statement schedule for each of the years in the three-year
period ended December 31, 1996, included in the Registration Statement. This
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on this financial statement
schedule based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
We consent to the use of our reports included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
KPMG PEAT MARWICK LLP
New York, New York
June 3, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Mar-31-1997
<CASH> 35,600
<SECURITIES> 0
<RECEIVABLES> 416,800
<ALLOWANCES> 22,300
<INVENTORY> 305,900
<CURRENT-ASSETS> 814,000
<PP&E> 577,900
<DEPRECIATION> 203,900
<TOTAL-ASSETS> 1,944,400
<CURRENT-LIABILITIES> 500,000
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> (1,003,000)
<TOTAL-LIABILITY-AND-EQUITY> 1,944,400
<SALES> 492,500
<TOTAL-REVENUES> 492,500
<CGS> 166,200
<TOTAL-COSTS> 166,200
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,800
<INTEREST-EXPENSE> 63,100
<INCOME-PRETAX> (49,400)
<INCOME-TAX> 5,500
<INCOME-CONTINUING> (54,900)
<DISCONTINUED> 0
<EXTRAORDINARY> (43,800)
<CHANGES> 0
<NET-INCOME> (98,700)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE>
Exhibit 99.1
LETTER OF TRANSMITTAL
REVLON WORLDWIDE (PARENT) CORPORATION
OFFER FOR ALL OUTSTANDING
SENIOR SECURED DISCOUNT NOTES DUE 2001
IN EXCHANGE FOR
SERIES B SENIOR SECURED DISCOUNT NOTES DUE 2001,
PURSUANT TO THE PROSPECTUS, DATED , 1997
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON , ,
1997, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
Delivery To: The Bank of New York, Exchange Agent
<TABLE>
<CAPTION>
<S> <C> <C>
By Overnight Courier or Hand: By Facsimile in New York:
By Mail: The Bank of New York (212) 571-3080
The Bank of New York 101 Barclay Street--(7 East)
101 Barclay Street--(7 East) Reorganization Section
Reorganization Section Corporate Trust Services Window
New York, New York 10286 New York, New York 10286 Confirm by Telephone:
Attention: Arwen Gibbons Attention: Arwen Gibbons (212) 815-6333
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE,
OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated , 1997 (the "Prospectus"), of Revlon Worldwide (Parent)
Corporation, a Delaware corporation (the "Company"), and this Letter of
Transmittal (the "Letter"), which together constitute the Company's offer
(the "Exchange Offer") to exchange an aggregate principal amount at maturity
of up to $770,000,000 of its Series B Senior Secured Discount Notes due 2001,
which have been registered under the Securities Act of 1933, as amended (the
"New Notes"), of the Company for a like principal amount of the issued and
outstanding Senior Secured Discount Notes due 2001 (the "Old Notes") of the
Company from the holders thereof.
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount at maturity equal to that of the
surrendered Old Note. Because the New Notes will be treated as a continuation
of the Old Notes, which were issued at an original issue discount ("Original
Issue Discount") for federal income tax purposes, the New Notes will have
Original Issue Discount that shall accrue from March 5, 1997, the date of
original issuance of the Old Notes. If the Exchange Offer is not consummated
by September 29, 1997, interest will accrue on the Old Notes (in addition to
the accrual of Original Issue Discount) from and including such date until
but excluding the date of consummation of the Exchange Offer payable in cash
semiannually in arrears on March 15 and September 15, commencing March 15,
1998, at a rate per annum equal to .50% of the Accreted Value (as defined in
the Prospectus) of the Old Notes as of the September 15 or March 15
immediately preceding such interest payment date. Holders of Old Notes
accepted for exchange will be deemed to have waived the right to receive any
other payments or accrued interest on the Old Notes. The Company reserves the
right, at any time or from time to time, to extend the Exchange Offer at its
discretion, in which event the term "Expiration Date" shall mean the latest
time and date to which the Exchange Offer is extended. The Company shall
notify the holders of the Old Notes of any extension by oral or written
notice prior to 9:00 A.M., New York City time, on the next business day after
the previously scheduled Expiration Date.
This Letter is to be completed by a holder of Old Notes either if
certificates are to be forwarded herewith or if a tender of certificates for
Old Notes, if available, is to be made by book-entry transfer to the account
maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer -- Book-Entry Transfer" section of the Prospectus. Holders of
Old Notes whose certificates are not immediately available, or who are unable
to deliver their certificates or confirmation of the book-entry tender of
their Old Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility (a "Book-Entry Confirmation") and all other documents required by
this Letter to the Exchange Agent on or prior to the Expiration Date, must
tender their Old Notes
1
<PAGE>
according to the guaranteed delivery procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures" section of the Prospectus. See
Instruction 1. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
List below the Old Notes to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount of
Old Notes should be listed on a separate signed schedule affixed hereto.
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES 1 2 3
- -------------------------------------------------- --------------- --------------- ---------------
AGGREGATE
PRINCIPAL PRINCIPAL
AMOUNT AT AMOUNT
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE MATURITY OF AT MATURITY
(PLEASE FILL IN, IF BLANK) NUMBER(S)* OLD NOTE(S) TENDERED**
- -------------------------------------------------- --------------- --------------- ---------------
- -------------------------------------------------- --------------- --------------- ---------------
- -------------------------------------------------- --------------- --------------- ---------------
- -------------------------------------------------- --------------- --------------- ---------------
TOTAL
- -------------------------------------------------- --------------- --------------- ---------------
*Need not be completed if Old Notes are being tendered by book-entry transfer.
**Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL of the
Old Notes represented by the Old Notes indicated in column 2. See Instruction 2. Old Notes
tendered must be in denominations of principal amount at maturity of $1,000 and any integral
multiple thereof. See Instruction 1.
- --------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
--------------------------------------------
Account Number Transaction Code Number
------------- -----------------------
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name(s) of Registered Holder(s)
-----------------------------------------
Window Ticket Number (if any)
-------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
----------------------
Name of Institution which guaranteed delivery
---------------------------
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number Transaction Code Number
------------- -----------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO:
Name:
-------------------------------------------------------------------
Address:
----------------------------------------------------------------
------------------------------------------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes. If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Old Notes, it represents that the Old Notes
to be exchanged for New Notes were acquired by it as a result of
market-making or other trading activities and acknowledges that it will
deliver a prospectus in connection with any resale of such New Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act of 1933, as amended.
3
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount at
maturity of Old Notes indicated above. Subject to, and effective upon, the
acceptance for exchange of the Old Notes tendered hereby, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to such Old Notes as are being tendered
hereby.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances
and not subject to any adverse claim when the same are accepted by the
Company. The undersigned hereby further represents that any New Notes
acquired in exchange for Old Notes tendered hereby will have been acquired in
the ordinary course of business of the person receiving such New Notes,
whether or not such person is the undersigned, that neither the holder of
such Old Notes nor any such other person has an arrangement or understanding
with any person to participate in the distribution of such New Notes and that
neither the holder of such Old Notes nor any such other person is an
"affiliate," as defined in Rule 405 under the Securities Act of 1933, as
amended (the "Securities Act"), of the Company.
The undersigned also acknowledges that this Exchange Offer is being made
in reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the New Notes issued in exchange for the Old Notes pursuant to
the Exchange Offer may be offered for resale, resold and otherwise
transferred by holders thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the
Securities Act), without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course of such holders' business and such holders
have no arrangement with any person to participate in the distribution of
such New Notes. However, the Company does not intend to request the SEC to
consider, and the SEC has not considered the Exchange Offer in the context of
a no-action letter and there can be no assurance that the staff of the SEC
would make a similar determination with respect to the Exchange Offer as in
other circumstances. If the undersigned is not a broker-dealer, the
undersigned represents that it is not engaged in, and does not intend to
engage in, a distribution of New Notes and has no arrangement or
understanding to participate in a distribution of New Notes. If any holder is
an affiliate of the Company or is engaged in or intends to engage in or has
any arrangement or understanding with respect to the distribution of the New
Notes to be acquired pursuant to the Exchange Offer, such holder (i) could
not rely on the applicable interpretations of the staff of the SEC and (ii)
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. If the undersigned
is a broker-dealer that will receive New Notes for its own account in
exchange for Old Notes, it represents that the Old Notes to be exchanged for
the New Notes were acquired by it as a result of market-making or other
trading activities and acknowledges that it will deliver a prospectus in
connection with any resale of such New Notes; however, by so acknowledging
and by delivering a prospectus, the undersigned will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of
the undersigned hereunder shall be binding upon the successors, assigns,
heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and shall not be affected by, and shall
survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer -- Withdrawal Rights" section of the Prospectus.
Unless otherwise indicated in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not
exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Old Notes, please credit the account indicated above maintained
at the Book-Entry Transfer Facility. Similarly, unless otherwise indicated in
the box entitled "Special Delivery Instructions" below, please send the New
Notes (and, if applicable, substitute certificates representing Old Notes for
any Old Notes not exchanged) to the undersigned at the address shown above in
the box entitled "Description of the Old Notes."
4
<PAGE>
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES
AS SET FORTH IN SUCH BOX ABOVE.
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes not
exchanged and/or New Notes are to be issued in the name of
and sent to someone other than the person or persons whose
signature(s) appear(s) on this Letter above, or if Old
Notes delivered by book-entry transfer which are not
accepted for exchange are to be returned by credit to an
account maintained at the Book-Entry Transfer Facility
other than the account indicated above.
Issue: New Notes and/or Old Notes to:
Name(s)
---------------------------------------------------
(PLEASE PRINT)
Address
---------------------------------------------------
----------------------------------------------------------
(ZIP CODE)
(COMPLETE SUBSTITUTE FORM W-9)
[]Credit unexchanged Old Notes delivered by book-entry
transfer to the Book-Entry Transfer Facility account set
forth below.
----------------------------------------------------------
(Book-Entry Transfer Facility
Account Number, if applicable)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes not
exchanged and/or New Notes are to be sent to someone other
than the person or persons whose signature(s) appear(s) on
this Letter above or to such person or persons at an address
other than shown in the box entitled "Description of Old
Notes" on this Letter above.
Mail: New Notes and/or Old Notes to:
Name
---------------------------------------------------------
(PLEASE TYPE OR PRINT)
---------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address
------------------------------------------------------
-------------------------------------------------------------
(ZIP CODE)
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE
CERTIFICATES FOR OLD NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER
REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED
BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
5
<PAGE>
<TABLE>
<CAPTION>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FROM W-9 ON REVERSE SIDE)
<S><C>
Dated: .................................................................................................... , 1997
x .................................................................................................. , 1997
x .................................................................................................. , 1997
Signature(s) of Owner Date
Area Code and Telephone Number.....................................................................
If a holder is tendering any Old Notes, this Letter must be signed by the registered holder(s) as the name(s)
appear(s) on the certificate(s) for the Old Notes or by any person(s) authorized to become registered holder(s)
by endorsements and documents transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, officer or other person acting in a fiduciary or representative capacity, please set forth full title.
See Instruction 3.
Name(s):....................................................................................................
............................................................................................................
(Please Type or Print)
Capacity:...................................................................................................
Address:....................................................................................................
............................................................................................................
(Including Zip Code)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution:....................................................................................
(Authorized Signature)
............................................................................................................
(Title)
............................................................................................................
(Name and Firm)
Date:................................................................................................. , 1997
</TABLE>
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER FOR THE
SENIOR SECURED DISCOUNT NOTES DUE 2001 IN EXCHANGE FOR THE
SERIES B SENIOR SECURED DISCOUNT NOTES DUE 2001 OF REVLON WORLDWIDE (PARENT)
CORPORATION
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES.
This letter is to be completed by noteholders either if certificates are
to be forwarded herewith or if tenders are to be made pursuant to the
procedures for delivery by book-entry transfer set forth in "The Exchange
Offer--Book-Entry Transfer" section of the Prospectus. Certificates for all
physically tendered Old Notes, or Book-Entry Confirmation, as the case may
be, as well as a properly completed and duly executed Letter (or manually
signed facsimile hereof) and any other documents required by this Letter,
must be received by the Exchange Agent at the address set forth herein on or
prior to the Expiration Date, or the tendering holder must comply with the
guaranteed delivery procedures set forth below. Old Notes tendered hereby
must be in denominations of principal amount at maturity of $1,000 and any
integral multiple thereof.
Noteholders whose certificates for Old Notes are not immediately available
or who cannot deliver their certificates and all other required documents to
the Exchange Agent on or prior to the Expiration Date, or who cannot complete
the procedure for book-entry transfer on a timely basis, may tender their Old
Notes pursuant to the guaranteed delivery procedures set forth in "The
Exchange Offer--Guaranteed Delivery Procedures" section of the Prospectus.
Pursuant to such procedures, (i) such tender must be made through an Eligible
Institution, (ii) prior to the Expiration Date, the Exchange Agent must
receive from such Eligible Institution a properly completed and duly executed
Letter (or a facsimile thereof) and Notice of Guaranteed Delivery,
substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered,
stating that the tender is being made thereby and guaranteeing that within
three New York Stock Exchange ("NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates for all
physically tendered Old Notes, or a Book-Entry Confirmation, and any other
documents required by the Letter will be deposited by the Eligible
Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Old Notes, in proper form for transfer, or Book-Entry
Confirmation, as the case may be, and all other documents required by this
Letter, are received by the Exchange Agent within three NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Old Notes and all other
required documents is at the election and risk of the tendering holders, but
the delivery will be deemed made only when actually received or confirmed by
the Exchange Agent. If Old Notes are sent by mail, it is suggested that the
mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO NOTEHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER).
If less than all of the Old Notes evidenced by a submitted certificate are
to be tendered, the tendering holder(s) should fill in the aggregate
principal amount at maturity of Old Notes to be tendered in the box above
entitled "Description of Old Notes--Principal Amount Tendered." A reissued
certificate representing the balance of nontendered Old Notes will be sent to
such tendering holder, unless otherwise provided in the appropriate box on
this Letter, promptly after the Expiration Date. ALL OF THE OLD NOTES
DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED UNLESS
OTHERWISE INDICATED.
3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the registered bolder of the Old Notes
tendered hereby, the signature must correspond exactly with the name as
written on the face of the certificates without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint owners,
all of such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter as there are different registrations of
certificates.
When this Letter is signed by the registered holder or holders of the Old
Notes specified herein and tendered hereby, no endorsements of certificates
or separate bond powers are required. If, however, the New Notes are to be
issued, or any
7
<PAGE>
untendered Old Notes are to be reissued, to a person other than the
registered holder, then endorsements of any certificates transmitted hereby
or separate bond powers are required. Signatures on such certificate(s) must
be guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed
by an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must
be submitted.
ENDORSEMENTS ON CERTIFICATES FOR OLD NOTES OR SIGNATURES ON BOND POWERS
REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FIRM WHICH IS A MEMBER
OF A REGISTERED NATIONAL SECURITIES EXCHANGE OR A MEMBER OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. OR BY A COMMERCIAL BANK OR TRUST
COMPANY HAVING AN OFFICE OR CORRESPONDENT IN THE UNITED STATES (AN "ELIGIBLE
INSTITUTION").
SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN ELIGIBLE
INSTITUTION, PROVIDED THE OLD NOTES ARE TENDERED: (I) BY A REGISTERED HOLDER
OF OLD NOTES (WHICH TERM, FOR PURPOSES OF THE EXCHANGE OFFER, INCLUDES ANY
PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY SYSTEM WHOSE NAME APPEARS ON
A SECURITY POSITION LISTING AS THE HOLDER OF SUCH OLD NOTES) WHO HAS NOT
COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" OR "SPECIAL
DELIVERY INSTRUCTIONS" ON THIS LETTER, OR (II) FOR THE ACCOUNT OF AN ELIGIBLE
INSTITUTION.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Old Notes should indicate in the applicable box the
name and address to which New Notes issued pursuant to the Exchange Offer
and/or substitute certificates evidencing Old Notes not exchanged are to be
issued or sent, if different form the name or address of the person signing
this Letter. In the case of issuance in a different name, the employer
identification or social security number of the person named must also be
indicated. Holders tendering Old Notes by book-entry transfer may request
that Old Notes not exchanged be credited to such account maintained at the
Book-Entry Transfer Facility as such noteholder may designate hereon. If no
such instructions are given, such Old Notes not exchanged will be returned to
the name or address of the person signing this Letter.
5. TAX IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose
Old Notes are accepted for exchange must provide the Company (as payor) with
such holder's correct Taxpayer Identification Number ("TIN") on Substitute
Form W-9 below, which in the case of a tendering holder who is an individual,
is his or her social security number. If the Company is not provided with the
current TIN or an adequate basis for an exemption, such tendering holder may
be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, delivery to such tendering holder of New Notes may be subject to
backup withholding in an amount equal to 31% of all reportable payments made
after the exchange. If withholding results in an overpayment of taxes, a
refund may be obtained.
Exempt holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of
Taxpayer Identification Number on Substitute Form W-9 (the "W-9 Guidelines")
for additional instructions.
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth
below, certifying that the TIN provided is correct (or that such holder is
awaiting a TIN) and that (i) the holder is exempt from backup withholding, or
(ii) the holder has not been notified by the Internal Revenue Service that
such holder is subject to backup withholding as a result of a failure to
report all interest or dividends or (iii) the Internal Revenue Service has
notified the holder that such holder is no longer subject to backup
withholding. If the tendering holder of Old Notes is a nonresident alien or
foreign entity not subject to backup withholding, such holder must give the
Company a completed Form W-8, Certificate of Foreign Status. These forms may
be obtained from the Exchange Agent. If the Old Notes are in more than one
name or are not in the name of the actual owner, such holder should consult
the W-9 Guidelines for information on which TIN to report. If such holder
does not have a TIN, such holder should consult
8
<PAGE>
the W-9 Guidelines for instructions on applying for a TIN, check the box in
Part 2 of the Substitute Form W-9 and write "applied for" in lieu of its TIN.
Note: Checking this box and writing "applied for" on the form means that such
holder has already applied for a TIN or that such holder intends to apply for
one in the near future. If such holder does not provide its TIN to the
Company within 60 days, backup withholding will begin and continue until such
holder furnishes its TIN to the Company.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the
transfer of Old Notes to it or its order pursuant to the Exchange Offer. If
however, New Notes and/or substitute Old Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person
other than the registered holder of the Old Notes tendered hereby, or if
tendered Old Notes are registered in the name of any person other than the
person signing this Letter, or if a transfer tax is imposed for any reason
other than the transfer of Old Notes to the Company or its order pursuant to
the Exchange Offer, the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted herewith, the amount of such transfer taxes will
be billed directly to such tendering holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE OLD NOTES SPECIFIED IN THIS LETTER.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or
all conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Notes, by execution of this Letter,
shall waive any right to receive notice of the acceptance of their Old Notes
for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of
Old Notes nor shall any of them incur any liability for failure to give any
such notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES.
Any holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, may be directed to the
Exchange Agent, at the address and telephone number indicated above.
9
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYOR'S NAME: THE BANK OF NEW YORK
<TABLE>
<CAPTION>
<S> <C> <C>
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
- ---------------------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN TIN:
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY Social security number or
DEPARTMENT OF THE SIGNING AND DATING BELOW Employer Identification Number
TREASURY INTERNAL
REVENUE SERVICE
PAYOR'S REQUEST -----------------------------------------------------------------------
FOR
TAXPAYER
IDENTIFICATION PART 2--TIN Applied For []
NUMBER ("TIN")
AND CERTIFICATION
- ----------------------------------------------------------
CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY
THAT:
(1) the number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to
be issued to me).
(2) I am not subject to backup withholding either because:
(a) I am exempt from backup withholding, or (b) I have
not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a
result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding, and
(3) any other information provided on this form is true
and correct.
SIGNATURE DATE
- ----------------------------------------------------------
You must cross out item (2) of the above certification if you have been notified by the IRS
that you are subject to backup withholding because of underreporting of interest or dividends
on your tax return and you have not been notified by the IRS that you are no longer subject
to backup withholding
- ---------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 2
OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of the exchange, 31 percent of all reportable payments made to me
thereafter will be withheld until I provide a number.
--------------------------------------- -------------------------------------
Signature Date
10
<PAGE>
Exhibit 99.2
NOTICE OF GUARANTEED DELIVERY FOR
REVLON WORLDWIDE (PARENT) CORPORATION
This form or one substantially equivalent hereto must be used to accept
the Exchange Offer of Revlon Worldwide (Parent) Corporation (the "Company")
made pursuant to the Prospectus, dated , 1997 (the "Prospectus"), if
certificates for the outstanding Senior Secured Discount Notes due 2001 of
the Company (the "Old Notes") are not immediately available or if the
procedure for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to reach the Company prior to
5:00 p.m., New York City time, on the Expiration Date of the Exchange Offer.
Such form may be delivered or transmitted by telegram, telex, facsimile
transmission, mail or hand delivery to The Bank of New York (the "Exchange
Agent") as set forth below. In addition, in order to utilize the guaranteed
delivery procedure to tender Old Notes pursuant to the Exchange Offer, a
completed, signed and dated Letter of Transmittal (or facsimile thereof) must
also be received by the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date. Capitalized terms not defined herein are
defined in the Prospectus.
Delivery To: The Bank of New York, Exchange Agent
By Mail:
The Bank of New York
101 Barclay Street -- (7 East)
Reorganization Section
New York, New York 10286
Attention: Arwen Gibbons
By Overnight Courier or Hand:
The Bank of New York
101 Barclay Street -- (7 East)
Reorganization Section
Corporation Trust Services Window
New York, New York 10286
Attention: Arwen Gibbons
By Facsimile:
(212) 571-3080
Confirm by Telephone:
(212) 815-6333
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE,
OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Old Notes set froth below, pursuant to the
guaranteed delivery procedure described in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus.
Principal Amount at Maturity of Old Notes
Tendered:*
$
- -----------------------------------------------------------------------------
Certificate Nos. (if available):
- -----------------------------------------------------------------------------
Total Principal Amount at Maturity Represented by Old Notes Certificate(s):
$
- -----------------------------------------------------------------------------
If Old Notes will be delivered by book-entry transfer to The Depository Trust
Company, provide account number.
Account Number
---------------------------------------------------------------
* Must be in denominations of principal amount at maturity of $1,000 and any
integral multiple thereof.
<PAGE>
---------------------------------------------------------------------------
ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE
DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE
UNDERSIGNED HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL
REPRESENTATIVES, SUCCESSORS AND ASSIGNS OF THE UNDERSIGNED.
- -----------------------------------------------------------------------------
PLEASE SIGN HERE
X
--------------------------- ---------
X
--------------------------- ---------
Signature(s) of Owner(s) Date
or Authorized Signatory
Area Code and Telephone Number:
-------------
Must be signed by the holder(s) of Old Notes as their name(s) appear(s) on
certificates for Old Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or
other person acting in a fiduciary or representative capacity, such person
must set forth his or her full title below.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
Capacity:
------------------------------------------------------------------
Address(es):
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
GUARANTEE
The undersigned, a member of a registered national securities exchange, or
a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or correspondent in the
United States, hereby guarantees that the certificates representing the
principal amount of Old Notes tendered hereby in proper form for transfer, or
timely confirmation of the book-entry transfer of such Old Notes into the
Exchange Agent's account at The Depository Trust Company pursuant to the
procedures set forth in "The Exchange Offer--Guaranteed Delivery Procedures"
section of the Prospectus, together with a properly completed and duly
executed Letter of Transmittal (or a manually signed facsimile thereof) with
any required signature guarantee and any other documents required by the
Letter of Transmittal, will be received by the Exchange Agent at the address
set forth above, no later than three New York Stock Exchange trading days
after the date of execution hereof.
- -----------------------------------------------------------------------------
Name of Firm
- -----------------------------------------------------------------------------
Address
- -----------------------------------------------------------------------------
Zip Code
Area Code and Tel. No.
-------------------------------------------------------
- -----------------------------------------------------------------------------
Authorized Signature
- -----------------------------------------------------------------------------
Title
Name:
-----------------------------------------------------------------------
(Please Type or Print)
Dated:
-----------------------------------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. CERTIFICATES FOR
OLD NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE>
Exhibit 99.3
REVLON WORLDWIDE (PARENT) CORPORATION
OFFER FOR ALL OUTSTANDING
SENIOR SECURED DISCOUNT NOTES DUE 2001
IN EXCHANGE FOR
SERIES B SENIOR SECURED DISCOUNT NOTES DUE 2001
To: BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
Revlon Worldwide (Parent) Corporation (the "Company") is offering, upon
and subject to the terms and conditions set forth in the Prospectus, dated
, 1997 (the "Prospectus"), and the enclosed Letter of Transmittal (the
"Letter of Transmittal"), to exchange (the "Exchange Offer") its Series B
Senior Secured Discount Notes due 2001, which have been registered under the
Securities Act of 1933, as amended, for its outstanding Senior Secured
Discount Notes due 2001 (the "Old Notes"). The Exchange Offer is being made
in order to satisfy certain obligations of the Company contained in the
Registration Agreement dated March 5, 1997, by and among the Company and the
initial purchasers referred to therein.
We are requesting that you contact your clients for whom you hold Old
Notes regarding the Exchange Offer. For your information and for forwarding
to your clients for whom you hold Old Notes registered in your name or in the
name of your nominee, or who hold Old Notes registered in their own names, we
are enclosing the following documents:
1. Prospectus dated , 1997;
2. The Letter of Transmittal for your use and for the information of your
clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange Offer
if certificates for Old Notes are not immediately available or time will not
permit all required documents to reach the Exchange Agent prior to the
Expiration Date (as defined below) or if the procedure for book-entry
transfer cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose account
you hold Old Notes registered in your name or the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Exchange Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelopes addressed to The Bank of New York, the Exchange Agent
for the Old Notes.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON , , 1997, UNLESS EXTENDED BY THE COMPANY
(THE "EXPIRATION DATE"). OLD NOTES TENDERED PURSUANT TO THE EXCHANGE OFFER
MAY BE WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Exchange Agent and certificates representing the Old Notes should be
delivered to the Exchange Agent, all in accordance with the instructions set
forth in the Letter of Transmittal and the Prospectus.
If holders of Old Notes wish to tender, but it is impracticable for them
to forward their certificates for Old Notes prior to the expiration of the
Exchange Offer or to comply with the book-entry transfer procedures on a
timely basis, a tender may be effected by following the guaranteed delivery
procedures described in the Prospectus under "The Exchange Offer--Guaranteed
Delivery Procedures."
The Company will, upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding the Prospectus and the related documents to
the beneficial owners of Old Notes held by them as nominee or in a fiduciary
<PAGE>
capacity. The Company will pay or cause to be paid all stock transfer taxes
applicable to the exchange of Old Notes pursuant to the Exchange Offer,
except as set forth in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to The
Bank of New York, the Exchange Agent for the Old Notes, at its address and
telephone number set forth on the front of the Letter of Transmittal.
Very truly yours,
REVLON WORLDWIDE (PARENT) CORPORATION
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF
EITHER OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS
EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
<PAGE>
Exhibit 99.4
REVLON WORLDWIDE (PARENT) CORPORATION
OFFER FOR ALL OUTSTANDING
SENIOR SECURED DISCOUNT NOTES DUE 2001
IN EXCHANGE FOR
SERIES B SENIOR SECURED DISCOUNT NOTES DUE 2001
To Our Clients:
Enclosed for your consideration is a Prospectus, dated , 1997 (the
"Prospectus"), and the related Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") of Revlon
Worldwide (Parent) Corporation (the "Company") to exchange its Series B
Senior Secured Discount Notes due 2001, which have been registered under the
Securities Act of 1933, as amended (the "New Notes"), for its outstanding
Senior Secured Discount Notes due 2001 (the "Old Notes"), upon the terms and
subject to the conditions described in the Prospectus and the Letter of
Transmittal. The Exchange Offer is being made in order to satisfy certain
obligations of the Company contained in the Registration Agreement dated
March 5, 1997, by and among the Company and the initial purchasers referred
to therein.
This material is being forwarded to you as the beneficial owner of the Old
Notes carried by us in your account but not registered in your name. A TENDER
OF SUCH OLD NOTES MAY ONLY BE MADE BY US AS THE HOLDER OF RECORD AND PURSUANT
TO YOUR INSTRUCTIONS.
Accordingly, we request instructions as to whether you wish us to tender
on your behalf the Old Notes held by us for your account, pursuant to the
terms and conditions set forth in the enclosed Prospectus and Letter of
Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Old Notes on your behalf in accordance with
the provisions of the Exchange Offer. The Exchange Offer will expire at 5:00
p.m., New York City time, on , , 1997, unless extended by the Company.
Any Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any
time before the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Old Notes.
2. The Exchange Offer is subject to certain conditions set forth in the
Prospectus in the section captioned "The Exchange Offer--Certain Conditions
to the Exchange Offer."
3. Any transfer taxes incident to the transfer of Old Notes from the
holder to the Company will be paid by the Company, except as otherwise
provided in the Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 p.m., New York City time, on ,
, 1997, unless extended by the Company.
If you wish to have us tender your Old Notes, please so instruct us by
completing, executing and returning to us the instruction form on the back of
this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION
ONLY AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER OLD NOTES.
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by Revlon
Worldwide (Parent) Corporation with respect to its Old Notes.
This will instruct you to tender the Old Notes held by you for the account
of the undersigned, upon and subject to the terms and conditions set forth in
the Prospectus and the related Letter of Transmittal.
Please tender the Old Notes held by you for my account as indicated below:
<TABLE>
<CAPTION>
<S> <C>
AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF OLD
NOTES
---------------------------------------------
Senior Secured Discount Notes due 2001 ...
---------------------------------------------
[] Please do not tender any Old Notes held
by you for my account.
Dated: , 1997
-------------------------- ---------------------------------------------
---------------------------------------------
Signature(s)
---------------------------------------------
----------------------------------------------
---------------------------------------------
Please print name(s) here
----------------------------------------------
----------------------------------------------
Address(es)
---------------------------------------------
Area Code and Telephone Number
---------------------------------------------
Tax Identification or Social Security No(s).
</TABLE>
None of the Old Notes held by us for your account will be tendered unless
we receive written instructions from you to do so. Unless a specific contrary
instruction is given in the space provided, your signature(s) hereon shall
constitute an instruction to us to tender all the Old Notes held by us for
your account.
2
