<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 17, 1997
REGISTRATION NO.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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. [ ]
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS AMOUNT TO BE MAXIMUM OFFERING OFFERING AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT PRICE(1)(2) REGISTRATION FEE
<S> <C> <C> <C> <C>
- --------------- ............... -------------- ---------------- ----------------- ------------------
Series B Senior Secured
Discount Notes due 2001....... $770,000,000 65.59% $505,043,000 $153,044
</TABLE>
- -----------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Exclusive of any accrued original issue discount.
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.
<PAGE>
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 MARCH 17, 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 the 180th
day following the Deposit Date (as defined herein), interest will accrue on
the Old Notes (in addition to the accrual of Original Issue Discount (as
defined herein)) from and including such 180th day until but excluding the
date of consummation of the Exchange Offer payable in cash seminannually in
arrears on March 15 and September 15, commencing September 15, 1997, 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 pursuant to an offering (the
"Offering"), which was exempt from registration under the Securities Act, on
March 5, 1997.
The Issue Price of each of the Old Notes was $655.90 per $1,000 principal
amount at maturity (65.59% of 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 Issue Price of each Old
Note represents a yield to maturity of 10 3/4% per annum (computed on a
semiannual bond equivalent basis) calculated from March 5, 1997.
The Old Notes were offered by the Issuer to fund, in part, the defeasance of
$1,115,760,000 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").
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 (as defined herein) of Revlon, Inc., a subsidiary of Revlon Worldwide
("Revlon, Inc."). Pursuant to the indenture governing the Revlon Worldwide
Notes, the defeasance of the Revlon Worldwide Notes is expected to be
effective on the 124th day after Revlon Worldwide irrevocably deposits (the
"Deposit") in trust money or government obligations in an amount sufficient
to pay the principal amount of the Revlon Worldwide Notes and any accrued
interest thereon due at maturity provided that certain other 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.
Prior to the date Revlon Worldwide makes the Deposit (the "Deposit Date"),
the proceeds of the Offering are being held in escrow. The Notes are subject
to mandatory redemption in the event that (i) the Deposit is not made on or
prior to June 5, 1997 or (ii) the payment of the Revlon Worldwide Notes is
accelerated prior to such date. The mandatory redemption price is equal to
the Accreted Value on the Mandatory Redemption Date (as defined herein).
Concurrently with the closing of the Offering, the Issuer deposited with an
escrow agent (the "Escrow Agent") an amount of cash or Treasury Securities
(as defined herein) sufficient to pay when due the mandatory redemption price
for the Notes. Such funds either will be used by the Issuer to make a capital
contribution to Revlon Worldwide, which capital contribution will be used to
fund, in part, the Deposit, or will be released to the Paying Agent (as
defined herein) to fund the mandatory redemption of the 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.
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. 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 of Revlon,
Inc., representing approximately 39.1% of the outstanding shares of Common
Stock of Revlon, Inc. 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
December 31, 1996, after giving pro forma effect to the Offering, the Capital
Contribution (as defined herein), the Deposit and the Revlon Worldwide
Merger, the outstanding indebtedness and other liabilities of such
subsidiaries would have been approximately $2,118.0 million. Prior to the
Revlon Worldwide Merger, the Old Notes are, and the New Notes will be,
effectively subordinated to the Revlon Worldwide Notes. See "Description of
the 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"). See "The Exchange Offer--Consequences of Exchanging Old Notes"
for a discussion of the Issuer's belief, 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, as to the transferability of the
New Notes upon satisfaction of certain conditions. 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."
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."
<PAGE>
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 17 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.
<PAGE>
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.
2
<PAGE>
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
3
<PAGE>
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 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 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
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<PAGE>
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. See "Business -- Business
Strategy."
As a result of the implementation of its strategy, the Company has
achieved 13 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 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 66.5% 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 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 32.3% 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
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 "Former Credit Agreement") and
to pay fees and expenses related to entering into 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
<PAGE>
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 (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
Upon consummation of the Offering and 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 with the Escrow Agent an amount in cash or
Treasury Securities consisting of the net proceeds of the Offering and
certain other funds provided by MacAndrews & Forbes sufficient to pay when
due the mandatory redemption price of the Notes on the Mandatory Redemption
Date. The Escrow Agent will release such escrowed funds to the Issuer upon
the satisfaction of certain conditions, including presentation of an
Officers' Certificate certifying that, among other things (i) the conditions
to covenant defeasance contained in the Revlon Worldwide Notes Indenture (as
defined herein) to be complied with on the date of the Deposit (other than
the Deposit) have been satisfied or waived, (ii) the Issuer has funds in the
amount required, when added to the escrowed funds, to make the Deposit and
(iii) following the release, such escrowed funds will be used, together with
other funds provided by MacAndrews & Forbes, to fund the Deposit.
The Issuer will contribute the escrowed funds, together with other funds
provided by MacAndrews & Forbes, to Revlon Worldwide (collectively, the
"Capital Contribution") to finance the Deposit for the Revlon Worldwide Notes
Defeasance. The Issuer expects to receive such other funds pursuant to a
capital contribution to be made by MacAndrews & Forbes no later than June 5,
1997. Immediately following the Capital Contribution, the Issuer will cause
Revlon Worldwide to make the Deposit. The Revlon Worldwide Notes Defeasance
will be effective on the 124th day following the date of the Deposit so long
as certain events of bankruptcy, insolvency or reorganization affecting
Revlon Worldwide do not exist on such 124th day.
The Issuer expects to guaranty on a non-recourse basis the obligations of
an affiliate under a credit facility (the "Non-Recourse Guaranty") and to
pledge 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 are expected to finance a portion of the capital contribution to be
made by MacAndrews & Forbes to the Issuer.
If either the Deposit is not made on or prior to June 5, 1997 or the
payment of the Revlon Worldwide Notes is accelerated prior to such date, the
escrowed funds will be used to fund the mandatory redemption of the Notes.
The mandatory redemption price is equal to the Accreted Value on the
Mandatory Redemption Date.
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. 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.
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 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.
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, see
"The Exchange Offer."
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.
FEDERAL INCOME TAX
CONSEQUENCES ................. 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 Tax Aspects."
USE OF PROCEEDS ............... There will be no proceeds to the Issuer from
the exchange pursuant to the Exchange Offer.
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
8
<PAGE>
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. 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. 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 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, 1997, 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.
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
9
<PAGE>
holder's gross income for United States
federal income tax purposes prior to
redemption or other disposition of such
holder's New Notes, whether or not such New
Notes are ultimately redeemed, sold (to the
Company or otherwise) or paid at maturity.
See "Certain Tax Aspects."
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.
SPECIAL REDEMPTION AND ESCROW
OF PROCEEDS OF OFFERING ...... The Notes are subject to mandatory
redemption in the event that (i) the Deposit
is not made on or prior to June 5, 1997 or
(ii) the payment of the Revlon Worldwide
Notes is accelerated prior to such date. The
mandatory redemption price is equal to the
Accreted Value on the Mandatory Redemption
Date. Concurrently with the closing of the
Offering, the Issuer deposited with the
Escrow Agent an amount of cash or Treasury
Securities sufficient to pay when due the
mandatory redemption price for the Notes.
Such funds either will be used by the Issuer
to make a capital contribution to Revlon
Worldwide, which capital contribution will
be used to fund, in part, the Deposit, or
will be released to the Paying Agent to fund
the mandatory redemption of the Notes. See
"Risk Factors -- Escrow of Proceeds Pending
the Deposit Date and Special Redemption" and
"Description of the Notes -- Escrow of
Proceeds; Special Mandatory Redemption."
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
10
<PAGE>
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 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. 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 December 31,
1996, after giving pro forma effect to the
Offering, the Capital Contribution, the
Deposit and the Revlon Worldwide Merger, the
outstanding indebtedness and other
liabilities of such subsidiaries, including
trade payables and accrued expenses, would
have been approximately $2,118.0 million.
Prior to the Revlon Worldwide Merger, the
Notes will also be effectively subordinated
to the Revlon Worldwide Notes. See "Risk
Factors -- Holding Company Structure and
Ability to Pay Principal of the Notes,"
"Risk Factors -- Subordination to Subsidiary
Liabilities," "Risk Factors -- Substantial
Level of Indebtedness" and "Description of
the Notes."
CERTAIN COVENANTS ............. The indenture governing the Notes (the
"Indenture") will require 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 Indenture will contain
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
11
<PAGE>
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 will
prohibit 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."
USE OF PROCEEDS ............... The Issuer will not receive any proceeds
from the Exchange Offer. The Issuer will use
the net proceeds of the Offering, which were
approximately $489.5 million, together with
a capital contribution from MacAndrews &
Forbes, to make the Capital Contribution.
Revlon Worldwide will use the proceeds of
the Capital Contribution to finance the
Deposit for 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.
12
<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 pro
forma data for the year ended December 31, 1996 give pro forma effect to the
Revlon IPO and the application of the net proceeds therefrom, the Offering,
the Capital Contribution, the Deposit and the Revlon Worldwide Merger as if
such transactions had been consummated on January 1, 1996, and the pro forma
balance sheet data as of December 31, 1996 give pro forma effect to the
Offering, the Capital Contribution, the Deposit and the Revlon Worldwide
Merger as if such transactions had been consummated on December 31, 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
"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.
13
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1996 (A) 1995 (A) 1994 (A) 1993 (A) 1992
---------- ---------- ----------- ---------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
HISTORICAL STATEMENTS OF
OPERATIONS DATA:
Net sales ....................... $2,167.0 $1,937.8 $1,732.5 $1,588.3 $1,632.2
Gross profit..................... 1,441.3 1,285.7 1,135.2 1,019.5 1,076.8
Selling, general and
administrative expenses ........ 1,241.1 1,139.1 1,026.8 969.6 996.7
Restructuring charges............ -- -- -- -- 162.7 (b)
---------- ---------- ----------- ---------- -----------
Operating income (loss).......... 200.2 146.6 108.4 49.9 (82.6)
Interest expense, net............ 236.7 232.6 214.9 171.7 94.0
Amortization of debt issuance
costs........................... 12.5 15.2 12.6 11.2 6.7
Other, net....................... 12.1 12.7 21.0 39.3 26.0
Gain on sale of subsidiary
stock(c) ....................... 187.8 -- -- -- --
---------- ---------- ----------- ---------- -----------
Income (loss) before income
taxes........................... 126.7 (113.9) (140.1) (172.3) (209.3)
Provision for income taxes ...... 25.5 25.4 22.8 19.0 14.7
---------- ---------- ----------- ---------- -----------
Income (loss) before
extraordinary item and
cumulative effect of accounting
changes......................... 101.2 (139.3) (162.9) (191.3) (224.0)
Extraordinary items--early
extinguishments of debt......... (6.6) -- -- (9.5) (2.9)
Cumulative effect of accounting
changes......................... -- -- (28.8)(d) (6.0)(e) --
---------- ---------- ----------- ---------- -----------
Net income (loss)................ $ 94.6 $ (139.3) $ (191.7) $ (206.8) $ (226.9)
========== ========== =========== ========== ===========
OTHER DATA:
Ratio of earnings to fixed
charges (f) .................... 1.47x -- -- -- --
EBITDA (g)....................... $ 282.8 $ 224.0 $ 178.8 $ 118.9 $ 150.1
Cash interest expense ........... 139.0 148.2 138.5 109.8 110.4
Ratio of EBITDA to interest
expense, net ................... 1.19x 0.96x 0.83x 0.69x 1.60x
Ratio of EBITDA to cash interest
expense ........................ 2.03x 1.51x 1.29x 1.08x 1.36x
PRO FORMA DATA (H)(I):
Operating income................. $ 200.2
Interest expense, net ........... 229.6
Net income ...................... 97.8
Ratio of earnings to fixed
charges (j) .................... --
Cash interest expense............ 136.4
Ratio of EBITDA to cash interest
expense......................... 2.07x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
---------------------------
AS ADJUSTED
ACTUAL (I)(K)
----------- --------------
(IN MILLIONS)
<S> <C> <C>
BALANCE SHEET DATA:
Total assets ............................. $ 1,626.3 $2,684.5
Long-term debt, excluding current
portion.................................. 2,321.8 2,826.8
Total stockholders' deficiency............ (1,461.3) (908.1)
</TABLE>
See Notes to Summary Historical and Pro Forma Financial Data.
14
<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 Former Credit Agreement and to pay fees and
expenses related to entering into the 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 the loss 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 $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 $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. Net cash used for operating activities was $10.2
million, $51.7 million, $1.3 million, $150.5 million and $244.9 million
for 1996, 1995, 1994, 1993 and 1992, respectively. Net cash used for
investing activities was $65.1 million, $72.5 million, $51.0 million,
$8.7 million and $48.1 million for 1996, 1995, 1994, 1993 and 1992,
respectively. Net cash provided by (used for) financing activities was
$78.5 million, $125.2 million, $(48.8) million, $266.8 million and
$286.2 million for 1996, 1995, 1994, 1993 and 1992, respectively.
(h) Reflects the reduction in interest expense of $2.6 million related to
the Revlon IPO and the application of the net proceeds therefrom, the
Offering, the Capital Contribution, the Deposit and
15
<PAGE>
related interest income on such deposit of $60.3 million (assuming a
yield to maturity of approximately 5.7%) and the Revlon Worldwide
Merger as if such transactions had occurred on January 1, 1996.
Interest expense and amortization of debt issuance costs related to the
Notes were $55.8 million and $3.9 million, respectively.
(i) 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
accreted value of the Revlon Worldwide Notes of $969.6 million at
December 31, 1996, interest expense on the Revlon Worldwide Notes of
$106.7 million and amortization of debt issuance costs of $4.2 million
were not removed from the Company's pro forma financial data as 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
January 1, 1996 and Revlon Worldwide relieved of its obligation for
such liability, interest expense, net, and net income (excluding the
impact of an extraordinary item of $78.1 million resulting from the
repayment of the Revlon Worldwide Notes), would have been $183.2
million and $148.4 million, respectively. Assuming that the Revlon
Worldwide Notes had been repaid as of January 1, 1996 and Revlon
Worldwide relieved of its obligation for such liability, pro forma
fixed charges would have exceeded Adjusted Earnings before fixed
charges by $7.3 million in 1996. Assuming that the Revlon Worldwide
Notes had been repaid as of December 31, 1996 and Revlon Worldwide
relieved of its obligation for such liability, total assets, long-term
debt (excluding current portion) and stockholders' deficiency would
have been $1,636.8 million, $1,857.2 million and $986.2 million,
respectively. See "Use of Proceeds."
(j) As adjusted to reflect the Revlon IPO and the application of the net
proceeds therefrom, the Offering, the Capital Contribution, the Deposit
and related interest income and the Revlon Worldwide Merger as if such
transactions had occurred on January 1, 1996, fixed charges would have
exceeded Adjusted Earnings before fixed charges by $57.9 million in
1996.
(k) Reflects the Offering, the Capital Contribution, the Deposit and the
Revlon Worldwide Merger as if such transactions had occurred on
December 31, 1996. The pro forma adjustments reflect (i) an increase in
other assets of $1,058.2 million, including restricted cash of $1,042.7
million (the Deposit) and debt issuance costs of $15.5 million, (ii) an
increase in debt of $505.0 million and a (iii) reduction in
stockholders' deficiency attributable to a capital contribution of
$553.2 million. See "Capitalization" and "Use of Proceeds."
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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 AND REQUIREMENTS FOR TRANSFER OF NEW
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. 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 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 (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 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, it will make this Prospectus
available to any broker-dealer for use in connection with any such resale.
See "Plan of Distribution." However, 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."
HOLDING COMPANY STRUCTURE AND ABILITY TO PAY PRINCIPAL OF NOTES
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
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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."
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 debt instruments of the Issuer or the Issuer's
subsidiaries then in effect. See "--Restrictions Imposed by the Company's
Indebtedness," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Description of Other Indebtedness."
SUBSTANTIAL LEVEL OF INDEBTEDNESS
The Company has a substantial amount of outstanding indebtedness. As of
December 31, 1996, after giving pro forma effect to the Offering, on an
unconsolidated basis the Issuer's total indebtedness (excluding the
Non-Recourse Guaranty) would have been approximately $505.0 million,
consisting of the initial accreted value of the Notes. 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."
As of December 31, 1996, after giving pro forma effect to the Offering,
the Capital Contribution, the Deposit and the Revlon Worldwide Merger, the
consolidated indebtedness of the Issuer's subsidiaries would have been
approximately $1,388.1 million. 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. However, the Company
believes that to date its subsidiaries' level of indebtedness has not
impaired their ability to obtain capital for capital expenditures,
acquisitions or investments nor has the level of indebtedness reduced their
flexibility to respond to business or economic conditions. 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" and
"Description of Other Indebtedness."
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As of December 31, 1996, the Company had an accumulated deficit of
approximately $1,461.3 million. The Company's Adjusted 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 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, assuming that the Offering, the Capital
Contribution, the Deposit and the Revlon Worldwide Merger occurred on January
1, 1996, the Company's Adjusted Earnings before fixed charges for the year
ended December 31, 1996 would have been insufficient to cover fixed charges
by $57.9 million. Assuming that the Revlon Worldwide Notes had been repaid as
of January 1, 1996 and Revlon Worldwide relieved of its obligations for such
liability, pro forma fixed charges would have exceeded Adjusted Earnings
before fixed charges by $7.3 million in 1996. 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
loss 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. As of December 31, 1996, there was approximately $379.3 million
available for borrowing under the Credit Agreement, including $200.0 million
under a revolving acquisition facility and $16.5 million under a special
standby letter of credit facility. The ability of the Company's subsidiaries
to borrow the full amount available under the Credit Agreement is not
restricted by the Company's other debt instruments, and continued borrowings
under the Credit Agreement will not affect the Company's ability to comply
with the terms of such other debt instruments. Other than the Revlon
Worldwide Notes Defeasance and the refinancing of the Company's Japanese
yen-denominated credit agreement (the "Yen Credit Agreement"), which is
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."
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
Issuer is a holding company and substantially all of the Issuer's liabilities
(other than, upon issuance, the Notes) are liabilities of its
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subsidiaries. As of December 31, 1996, after giving pro forma effect to the
Offering, the Capital Contribution, the Deposit and the Revlon Worldwide
Merger, subsidiaries of the Issuer would have had outstanding indebtedness of
$1,388.1 million and other outstanding liabilities, including trade payables
and accrued expenses, of $729.9 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."
RESTRICTIONS IMPOSED BY THE TERMS OF THE COMPANY'S INDEBTEDNESS
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 net worth, minimum EBITDA and minimum interest coverage and impose
restrictions 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."
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."
ESCROW OF PROCEEDS PENDING THE DEPOSIT DATE AND SPECIAL REDEMPTION
The Issuer expects to obtain the other funds necessary to fund the Deposit
no later than June 5, 1997. Although management believes that MacAndrews &
Forbes and its affiliates will be able to obtain the additional funding
required to defease the Revlon Worldwide Notes, there can be no assurance
that the required funding will be obtained or that the Issuer will not be
required to redeem the Notes.
Prior to the Deposit Date, the proceeds of the Offering are being held in
escrow. The Notes are subject to mandatory redemption in the event that (i)
the Deposit is not made on or prior to June 5, 1997 or (ii)
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the payment of the Revlon Worldwide Notes is accelerated prior to such date.
The mandatory redemption price is equal to the Accreted Value on the
Mandatory Redemption Date. Concurrently with the closing of the Offering, the
Issuer deposited with the Escrow Agent an amount of cash or Treasury
Securities sufficient to pay when due the mandatory redemption price for the
Notes, based on the assumption that the mandatory redemption occurs on June
25, 1997. Such funds either will be used by the Issuer to make, in part, the
Capital Contribution, which Capital Contribution will be used to fund the
Deposit, or will be released to the Paying Agent to fund the mandatory
redemption of the Notes. If the mandatory redemption of the Notes occurs
prior to June 25, 1997, however, there can be no assurance that the amounts
held in escrow will be sufficient to fund the mandatory redemption of the
Notes. See "Description of the Notes -- Escrow of Proceeds; Special Mandatory
Redemption."
SECURITY FOR THE NOTES
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 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.
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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.
CERTAIN ASPECTS OF THE NOTES
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.
IMPLEMENTATION OF 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 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 believes that
it has made progress in implementing its business strategy with respect to
the United States operations, although it is in the early stages of
implementing its business strategy with respect to its International
operations and its professional products business. As a result of the
implementation of its strategy, Revlon, Inc. has achieved increased net sales
and profitability. The Company's ability to implement its strategy
successfully will be dependent on business, financial and other factors,
including prevailing economic
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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 in selected
product categories against a number of multinational manufacturers, some of
which are larger and have substantially greater resources 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 26 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 favorably or
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. 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."
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.
23
<PAGE>
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. See "--Security for the Notes."
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 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) combinations among significant
customers or the loss, insolvency or failure to pay its debts by a
significant customer or customers; and (viii) 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 will use the net proceeds of the Offering, which are estimated to be
approximately $489.5 million, together with a capital contribution from
MacAndrews & Forbes, to make the Capital Contribution. Revlon Worldwide will
use the proceeds of the Capital Contribution to finance the Deposit for 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."
24
<PAGE>
CAPITALIZATION
The following table sets forth (i) the actual capitalization of the
Company as of December 31, 1996 and (ii) the capitalization of the Company as
of December 31, 1996, as adjusted to reflect the Offering, the Capital
Contribution, the Deposit and the Revlon Worldwide Merger. 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>
DECEMBER 31, 1996
--------------------------
ACTUAL AS ADJUSTED
----------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-term borrowings--third parties ............................. $ 27.1 $ 27.1
Current portion of long-term debt--third parties ................. 8.8 8.8
----------- -------------
$ 35.9 $ 35.9
=========== =============
Long-term debt:
Working capital lines............................................ $ 187.2 $ 187.2
Bank mortgage loan agreement due 1997............................ 41.7 41.7
9 1/2% Senior Notes due 1999..................................... 200.0 200.0
9 3/8% Senior Notes due 2001..................................... 260.0 260.0
10 1/2% Senior Subordinated Notes due 2003....................... 555.0 555.0
10 7/8% Sinking Fund Debentures due 2010......................... 79.6 79.6
Advances from Holdings .......................................... 30.4 30.4
Senior Secured Discount Notes Due 1998........................... 969.6 969.6 (a)
Senior Secured Discount Notes due 2001........................... -- 505.0 (b)
Other mortgages and notes payable (8.6%-13.0%) due through 2001 . 7.1 7.1
----------- -------------
Long-term debt including current portion ........................ 2,330.6 2,835.6
Less current portion............................................. 8.8 8.8
----------- -------------
Total long-term debt............................................ 2,321.8 2,826.8 (a)
----------- -------------
Stockholders' deficiency:
Common stock, par value $1.00 per share, 1,000 shares
authorized, issued and outstanding.............................. -- --
Capital deficiency............................................... (971.0) (417.8)
Accumulated deficit since June 24, 1992.......................... (472.1) (472.1)
Adjustment for minimum pension liability......................... (12.4) (12.4)
Currency translation adjustment.................................. (5.8) (5.8)
----------- -------------
Total stockholders' deficiency.................................. (1,461.3) (908.1)(a)
----------- -------------
Total long-term debt and stockholders' deficiency ............. $ 860.5 $1,918.7
=========== =============
</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 December 31, 1996 and Revlon Worldwide relieved
of its obligation for such liability, total long-term debt and
stockholders' deficiency would have been $1,857.2 million and $986.2
million, respectively.
(b) Reflects the issuance of the Notes, net of Original Issue Discount of
$265.0 million.
25
<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 (through March 13) ....... 42 3/8 29 5/8
</TABLE>
On March 13, 1997, the last reported sales price of the Class A Common
Stock on the New York Stock Exchange was $41 1/4 per share.
26
<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 pro
forma data for the year ended December 31, 1996 give pro forma effect to the
Revlon IPO and the application of the net proceeds therefrom, the Offering,
the Capital Contribution, the Deposit and the Revlon Worldwide Merger as if
such transactions had been consummated on January 1, 1996, and the pro forma
balance sheet data as of December 31, 1996 give pro forma effect to the
Offering, the Capital Contribution, the Deposit and the Revlon Worldwide
Merger as if such transactions had been consummated on December 31, 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
"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.
27
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1996 (A) 1995 (A) 1994 (A) 1993 (A) 1992
---------- ---------- ----------- ---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
HISTORICAL STATEMENTS OF
OPERATIONS DATA:
Net sales ...................... $2,167.0 $1,937.8 $1,732.5 $1,588.3 $1,632.2
Gross profit ................... 1,441.3 1,285.7 1,135.2 1,019.5 1,076.8
Selling, general and
administrative expenses ....... 1,241.1 1,139.1 1,026.8 969.6 996.7
Restructuring charges........... -- -- -- -- 162.7(b)
---------- ---------- ----------- ---------- ----------
Operating income (loss) ........ 200.2 146.6 108.4 49.9 (82.6)
Interest expense, net .......... 236.7 232.6 214.9 171.7 94.0
Amortization of debt issuance
costs ......................... 12.5 15.2 12.6 11.2 6.7
Other, net ..................... 12.1 12.7 21.0 39.3 26.0
Gain on sale of subsidiary
stock (c) ..................... 187.8 -- -- -- --
---------- ---------- ----------- ---------- ----------
Income (loss) before income
taxes ......................... 126.7 (113.9) (140.1) (172.3) (209.3)
Provision for income taxes .... 25.5 25.4 22.8 19.0 14.7
---------- ---------- ----------- ---------- ----------
Income (loss) before
extraordinary item and
cumulative effect of
accounting changes ............ 101.2 (139.3) (162.9) (191.3) (224.0)
Extraordinary items--early
extinguishments of debt ....... (6.6) -- -- (9.5) (2.9)
Cumulative effect of accounting
changes ....................... -- -- (28.8)(d) (6.0)(e) --
---------- ---------- ----------- ---------- ----------
Net income (loss) .............. $ 94.6 $ (139.3) $ (191.7) $ (206.8) $ (226.9)
========== ========== =========== ========== ==========
OTHER DATA:
Ratio of earnings
to fixed charges (f) .......... 1.47x -- -- -- --
EBITDA (g) ..................... $ 282.8 $ 224.0 $ 178.8 $ 118.9 $ 150.1
Cash interest expense .......... 139.0 148.2 138.5 109.8 110.4
Ratio of EBITDA to
interest expense, net ......... 1.19x 0.96x 0.83x 0.69x 1.60x
Ratio of EBITDA to cash
interest expense .............. 2.03x 1.51x 1.29x 1.08x 1.36x
PRO FORMA DATA (H)(I):
Operating income ............... $ 200.2
Interest expense, net .......... 229.6
Net income ..................... 97.8
Ratio of earnings to fixed
charges (j) ................... --
Cash interest expense .......... 136.4
Ratio of EBITDA to cash
interest expense .............. 2.07x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31,
--------------------------- -------------------------------------------------
AS ADJUSTED
ACTUAL (I)(K) 1995 1994 1993 1992
----------- -------------- ----------- ----------- ----------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets ................... $ 1,626.3 $2,684.5 $ 1,544.5 $ 1,431.5 $ 1,566.3 $1,438.3
Long-term debt, excluding
current portion ............... 2,321.8 2,826.8 2,330.4 2,095.5 1,887.3 969.0
Total stockholders' deficiency (1,461.3) (908.1) (1,555.7) (1,411.1) (1,221.2) (443.1)
</TABLE>
See Notes to Selected Historical and Pro Forma Financial Data.
28
<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 Former Credit Agreement and to pay fees and
expenses related to entering into the 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 the loss 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 $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 $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. Net cash used for operating activities was $10.2
million, $51.7 million, $1.3 million, $150.5 million and $244.9 million
for 1996, 1995, 1994, 1993 and 1992, respectively. Net cash used for
investing activities was $65.1 million, $72.5 million, $51.0 million,
$8.7 million and $48.1 million for 1996, 1995, 1994, 1993 and 1992,
respectively. Net cash provided by (used for) financing activities was
$78.5 million, $125.2 million, $(48.8) million $266.8 million and
$286.2 million for 1996, 1995, 1994, 1993 and 1992, respectively.
(h) Reflects the reduction in interest expense of $2.6 million related to
the Revlon IPO and the application of the net proceeds therefrom, the
Offering, the Capital Contribution, the Deposit and related interest
income on such deposit of $60.3 million (assuming a yield to maturity
of approximately 5.7%) and the Revlon Worldwide Merger as if such
transactions had occurred on January 1, 1996. Interest expense and
amortization of debt issuance costs related to the Notes was $55.8
million and $3.9 million, respectively.
29
<PAGE>
(i) 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
accreted value of the Revlon Worldwide Notes of $969.6 million at
December 31, 1996, interest expense on the Revlon Worldwide Notes of
$106.7 million and amortization of debt issuance costs of $4.2 million
were not removed from the Company's pro forma financial data as 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
January 1, 1996 and Revlon Worldwide relieved of its obligation for
such liability, interest expense, net and net income (excluding the
impact of an extraordinary item of $78.1 million resulting from the
repayment of the Revlon Worldwide Notes), would have been $183.2
million and $148.4 million, respectively. Assuming that the Revlon
Worldwide Notes had been repaid as of January 1, 1996 and Revlon
Worldwide relieved of its obligation for such liability, pro forma
fixed charges would have exceeded Adjusted Earnings before fixed
charges by $7.3 million in 1996. Assuming that the Revlon Worldwide
Notes had been repaid as of December 31, 1996 and Revlon Worldwide
relieved of its obligation for such liability, total assets, long-term
debt (excluding current portion) and stockholders' deficiency would
have been $1,636.8 million, $1,857.2 million and $986.2 million,
respectively. See "Use of Proceeds."
(j) As adjusted to reflect the Revlon IPO and the application of the net
proceeds therefrom, the Offering, the Capital Contribution, the Deposit
and related interest income and the Revlon Worldwide Merger as if such
transactions had occurred on January 1, 1996, fixed charges would have
exceeded Adjusted Earnings before fixed charges by $57.9 million in
1996.
(k) Reflects the Offering, the Capital Contribution, the Deposit and the
Revlon Worldwide Merger as if such transactions had occurred on
December 31, 1996. The pro forma adjustments reflect (i) an increase in
other assets of $1,058.2 million, including restricted cash of $1,042.7
million (the Deposit) and debt issuance costs of $15.5 million, (ii) an
increase in debt of $505.0 million and (iii) a reduction in
stockholders' deficiency attributable to a capital contribution of
$553.2 million. See "Capitalization" and "Use of Proceeds."
30
<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 13 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 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 Net Loss of $86.6 million for 1996. Through careful management of
working 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 32.3%
for 1996 compared with 33.2% for 1995 and 34.9% for 1994.
31
<PAGE>
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
each of the last three years:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1996 1995 1994
---------- ---------- ---------
(IN MILLIONS)
<S> <C> <C> <C>
Net sales:
United States .............................. $1,257.2 $1,113.2 $ 983.2
International .............................. 909.8 824.6 749.3
---------- ---------- ---------
$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:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Cost of sales ................................ 33.5% 33.7% 34.5%
Gross profit ................................. 66.5 66.3 65.5
Selling, general and administrative expenses 57.3 58.8 59.3
Operating income.............................. 9.2 7.5 6.2
EBITDA ....................................... 13.1 11.6 10.3
</TABLE>
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
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
32
<PAGE>
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. The aforementioned increases in sales that negatively
impacted cost of sales were, however, more profitable to the Company's
overall operating results.
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. 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.
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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 Credit Agreement and under the
Former Credit Agreement with the use of proceeds from the Revlon IPO in the
1996 period and lower interest rates under the Credit Agreement than under
the Former 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 Former Credit Agreement prior to its maturity with the
net proceeds from the Revlon IPO and borrowings under the 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 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
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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 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 and improved
productivity in 1995 compared with 1994, 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.
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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
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 $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 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
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 $65.1 million, $72.5 million
and $51.0 million for 1996, 1995 and 1994, respectively. Net cash used for
investing activities for 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
1996, 1995 and 1994 were $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 (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 1996 included the net proceeds from
the Revlon IPO, cash drawn under the Former Credit Agreement and under the
Credit Agreement, partially offset by the repayment of borrowings under the
Former Credit Agreement, the payment of fees and expenses related to the
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 Former 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 Former 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.
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In February 1995, Products Corporation entered into the Former 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 Former 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 Former 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 Former
Credit Agreement and to pay fees and expenses related to the Credit
Agreement.
In January 1996, Products Corporation entered into the Credit Agreement,
which became effective upon consummation of the Revlon IPO on March 5, 1996.
The Credit Agreement provides, 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 aggregate amount of the credit
facilities from $500 million to $600 million 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 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 December 31,
1996, Products Corporation had approximately $130.0 million outstanding under
the term loan facility, $57.2 million outstanding under the multi-currency
facility, nothing outstanding under the revolving acquisition facility and
$33.5 million outstanding under the special standby letter of credit
facility. In January 1997, the Credit Agreement was amended to, among other
things, permit the merger of Products Corporation's subsidiary, Prestige
Fragrance & Cosmetics, Inc. ("PFC"), which operates approximately 200 retail
outlet stores throughout the United States, with and into The Cosmetic
Center, Inc. ("Cosmetic Center") and to generally exclude Cosmetic Center (as
the survivor of such 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
Offering Memorandum.
A subsidiary of Products Corporation 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 and 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. Products 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, Products Corporation's obligation under the Yen
Credit Agreement has been classified as long-term as of December 31, 1996.
The $61.0 million aggregate principal amount of Products Corporation's 10
7/8% Sinking Fund Debentures due 2010 (the "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. $9.0 million aggregate principal amount of
previously purchased 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 December 31, 1996.
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."
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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 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. In addition, cash payments
related to the 1991 and 1992 restructuring charges are estimated to be
approximately $9 million for 1997. Pursuant to tax sharing agreements, Revlon
Worldwide and Revlon, Inc. may be required to make tax sharing payments to
Mafco Holdings as if Revlon Worldwide 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 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 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 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 (5.602% per annum at
February 11, 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 December 31, 1996, a
loss of approximately $3.5 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 1996 and 1995 was
approximately $3.2 million in each of the years. The remaining unamortized
gain, which is being amortized over the original lives of the agreements, is
$3.1 million 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. Based on
current interest rate levels, Products Corporation expects to have a positive
cash flow of $0.6 million from these agreements in 1997, although no
assurances can be given. 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 million (U.S. dollar equivalent). If Products Corporation
had terminated these contracts on December 31, 1996, no material gain or loss
would have been realized.
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. 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,
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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 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. 1996 Stock Plan (the "Revlon,
Inc. Stock Plan"). However, there can be no assurance that cash flow from
operations and funds from existing credit facilities and refinancing of
existing indebtedness will be sufficient to meet the Company's cash
requirements on a consolidated basis.
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 or the Issuer's subsidiaries then in effect. See "Risk Factors --
Holding Company Structure and 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 five
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 sole 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 sole 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
sole judgment of the Issuer, is or may be adverse to the Issuer, or the
Issuer shall have become aware of facts that, in the sole 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 sole 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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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 13 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 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 66.5% 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 an Adjusted Net Loss of $86.6 million for 1996. The Company has also
reduced the relative
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amount of working capital necessary to support net sales. The ratio of
average quarterly combined inventory and accounts receivable balances to net
sales was 32.3% 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
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, Claudia Schiffer 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 1997, the Company
will relaunch COLORSTAY lipcolor with a new and improved formula that
delivers moisture while retaining transfer resistance. Launched in June 1994,
COLORSTAY achieved a 13.9% 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
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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 intends to introduce 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 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.
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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. The Company does not currently have any agreements with respect to any
material acquisition other than the merger with Cosmetic Center in the PFC
Merger (as defined herein). See "--Distribution."
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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 Voila, 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, Interactives, CHR
The Nakeds
SIGNIFICANT Colorama(b), Jeanne Floid(b), Bozzano(b), Colomer(b),
REGIONAL BRANDS Juvena(b), Gatineau(b), Versace(a), Juvena(b), Intercosmo(b),
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 intends to launch
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 36.3% 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, VOILA, 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 $214.4 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 6.1% 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, Claudia Schiffer 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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<PAGE>
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.
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 $13
million for 1996. The Company intends to continue to upgrade management
information systems in
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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 through PFC, a subsidiary of Products
Corporation, approximately 200 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. 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 "PFC
Merger"). In the PFC Merger, Products Corporation would receive newly issued
Class C common stock of Cosmetic Center constituting between 74% and 84% of
Cosmetic Center's outstanding common stock. The PFC Merger is subject to a
number of significant conditions, including obtaining financing for Cosmetic
Center and the PFC Merger and approval of the transaction by Cosmetic Center
stockholders, among other conditions. Subject to satisfaction of these
conditions, the transaction is expected to close during the first quarter of
1997.
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
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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 distributors in other countries. The Company actively
sells its products through wholly owned subsidiaries in 26 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.
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 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
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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.
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
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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.
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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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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Issuer
The following table sets forth certain information (ages as of January 1,
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 62 Vice Chairman of the Board and Director
Irwin Engelman 62 Executive Vice President and Chief Financial Officer
Barry F. Schwartz 47 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 January 1, 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 52 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 48 Director
Meyer Feldberg 54 Director
Howard Gittis 62 Director
Vernon E. Jordan 61 Director
Henry A. Kissinger 73 Director
Edward J. Landau 67 Director
Linda G. Robinson 44 Director
Terry Semel 53 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 Executive Committee 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. Perelman was Chairman of the Board of Revlon, Inc.
and of Products Corporation from their respective formations in 1992 to
November 1995. Mr. Perelman has been Chairman of the Board and Chief
Executive Officer of MacAndrews Holdings and various of its affiliates for
more than the past five years. 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"), Power Control Technologies, Inc.
("PCT") and Toy Biz, Inc. ("Toy Biz") and is the Chairman of the Executive
Committee of the Board of Directors of 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"), The Coleman Company, Inc.
("Coleman"), Coleman Holdings Inc. ("Coleman Holdings"), Coleman Worldwide
Corporation ("Coleman Worldwide"), Cigar Holdings,
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Consolidated Cigar Corporation ("Consolidated Cigar"), First Nationwide
Holdings Inc. ("FN Holdings"), First Nationwide (Parent) Holdings Inc. ("FN
Parent"), Mafco Consolidated, Marvel, Marvel Holdings Inc. ("Marvel
Holdings"), Marvel (Parent) Holdings Inc. ("Marvel Parent"), Marvel III
Holdings Inc. ("Marvel III"), Meridian, PCT, Pneumo Abex Corporation ("Pneumo
Abex"), Products Corporation, Revlon, Inc., Revlon Worldwide and Toy Biz. (On
December 27, 1996, Marvel Holdings, 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. Mr. Gittis has been a Director of
Revlon, Inc. and of Products Corporation since their respective formations in
1992 and of Holdings since 1985. He has been Vice Chairman of MacAndrews
Holdings and various of its affiliates for more than five years. 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, FN Holdings, FN Parent, Mafco Consolidated, PCT, 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 & Forbes, Marvel Holdings, Marvel
Parent, Marvel III and various other affiliates of MacAndrews & Forbes since
February 1992. (On December 27, 1996, Marvel Holdings, Marvel Parent, Marvel
III and several of the subsidiaries of Marvel Holdings filed voluntary
petitions for reorganization under Chapter 11 of the United States Bankruptcy
Code.) 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.
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 & Forbes 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 Holdings, 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. 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 Acting 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, 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
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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 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 Hain Food Group, Inc., which files reports pursuant to the
Exchange Act.
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. Drapkin was a Director of the Issuer and of Revlon Worldwide from their
respective formations in 1997 and 1993 to March 1997. Mr. Drapkin has been a
Director of Revlon, Inc. and of Products Corporation since their respective
formations in 1992 and a Director of Holdings since January 1992. He has been
Vice Chairman of MacAndrews Holdings and various of its affiliates since March
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
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<PAGE>
pursuant to the Exchange Act: Algos Pharmaceutical Corporation, Andrews
Group, Coleman, Coleman Holdings, Coleman Worldwide, Cigar Holdings,
Consolidated Cigar, Marvel, Marvel Holdings, Marvel Parent, Marvel III,
Products Corporation, Revlon, Inc., Revlon Worldwide, Toy Biz and VIMRx
Pharmaceuticals Inc. (On December 27, 1996, Marvel Holdings, 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).
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.
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<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. Revlon, Inc. 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 Revlon, Inc. in respect of life
70
<PAGE>
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 Revlon, Inc. 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 Revlon,
Inc. 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, Revlon, Inc. 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 Revlon, Inc. 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
Revlon, Inc.
(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 Revlon, Inc. 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
Revlon, Inc. 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 Revlon, Inc. 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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<PAGE>
(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.
72
<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
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES VALUE YEAR-END (#) AT FISCAL YEAR-END
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE (A)($)
- ----------------------------- ------------- ---------- ---------------------- ----------------------
<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 Revlon, Inc.
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, Revlon, Inc. 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,
73
<PAGE>
respectively, and further provide that at any time on or after the second
anniversary of the effective date of the relevant agreement, Revlon, Inc. may
terminate the term by 12 months prior notice of non-renewal. All of 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 Revlon, Inc. 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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<PAGE>
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 Revlon, Inc., 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.
Marvel, a youth entertainment company, is 80% owned by MacAndrews & Forbes.
MacAndrews & Forbes is engaged through its 85% ownership of Mafco
Consolidated in the manufacture and distribution of cigars and pipe tobacco
and through its 36% ownership of PCT, in the processing of licorice and other
flavors. MacAndrews & Forbes is also in the financial services business
through its 80% ownership of California Federal. 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
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)
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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 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
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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 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 prohibited under the Credit Agreement from making tax sharing
payments to Revlon, Inc. The Credit Agreement prohibits Products Corporation
from making such tax sharing payments other than in respect of state income
taxes.
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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 Former 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") 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 Former
Credit Agreement. In connection with the execution of 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 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 Former
Credit Agreement and the average balance outstanding under working capital
borrowings from affiliates through June 30, 1996 (see "--Other"), 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"). 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 Stock held by Revlon
Worldwide (the "Revlon, Inc. Holders") have the right to require Revlon, Inc.
to
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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 expects to make the Non-Recourse Guaranty of the obligations of
an affiliate under a credit facility and to pledge as security therefor the
shares of common stock of Revlon Worldwide and after the Revlon Worldwide
Merger, the shares of Common Stock of Revlon, Inc., as the case may be, that
are owned by the Issuer and are not pledged as security for the Notes.
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 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 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
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million to Holdings, which payment 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 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 Former 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
liability was previously recorded) in three installments of $2.5 million 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,
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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 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 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 the 180th day following the Deposit Date (or if such day is not a
business day, the first business day thereafter) 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 September 15, 1997 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.
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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 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
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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 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.
ESCROW OF PROCEEDS AND OTHER AMOUNTS; SPECIAL MANDATORY REDEMPTION
Concurrently with the closing of the Offering, the Issuer entered into an
escrow and pledge agreement with The Bank of New York, as escrow agent (the
"Escrow Agent") (such agreement, the "Escrow Agreement"), pursuant to which
the Issuer deposited with the Escrow Agent an amount in cash or Treasury
Securities (as defined in the Escrow Agreement) (such cash and Treasury
Securities, together with the interest, dividends and distributions thereof,
the "Escrowed Property") in an amount sufficient to redeem in cash the Notes
at a redemption price equal to 100% of the Accreted Value of the Notes on the
Mandatory Redemption Date (such redemption price, the "Mandatory Redemption
Price" assuming such redemption occurs on the date referred to in clause (a)
of the next sentence). The "Mandatory Redemption Date" means (a) June 25,
1997 in the event that the Required Actions (as defined below) have not
occurred on or prior to June 5, 1997 (the "Deposit Deadline Date"), or (b)
the 20th day (or if such day is not a business day, the next following
business day) following the acceleration of the Revlon Worldwide Notes by the
holders thereof in the event of such acceleration prior to the release of the
Escrowed Property.
The Issuer will redeem all the Notes (the "Special Mandatory Redemption")
in the event that (a) the Required Actions have not occurred on or prior to
the Deposit Deadline Date or (b) the Revlon Worldwide Notes are accelerated
by the holders thereof prior to the release of the Escrowed Property. The
Required Actions shall include the following:
(i) the Issuer's irrevocable deposit, substantially simultaneously with
the release of the Escrowed Property, in trust with the Trustee for the
Revlon Worldwide Notes (the "Revlon Worldwide Trustee") of cash and U.S.
Government Obligations for the payment of principal and interest, if any,
on the Revlon Worldwide Notes at maturity in the amount required to permit
the issuance of the accountant's certificate described in clause (ii) of
this paragraph (the "Deposit");
(ii) the Issuer's delivery to the Trustee of a copy, certified by an
Officer of the Issuer, of the certificate from a nationally recognized
firm of independent accountants delivered to the Revlon Worldwide Trustee
expressing their opinion that the aggregate amount of (A) the payments of
principal and interest when due and without reinvestment on the U.S.
Government Obligations included in the Deposit and (B) any money without
investment included in the Deposit, will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest, if any,
when due on all the Revlon Worldwide Notes at maturity; and
(iii) the Issuer's delivery to the Trustee of an Opinion of Counsel
(relying on an Officers' Certificate as to factual matters) stating that
all conditions precedent to the Revlon Worldwide Notes Defeasance have
been satisfied other than (A) the passing of 123 days during which no
default under the bankruptcy provisions of the Revlon Worldwide Indenture
has occurred with respect to Revlon Worldwide and (B) the delivery of the
Opinion of Counsel and Officers' Certificate, each as required by the
Revlon Worldwide Indenture, stating that all conditions to the Revlon
Worldwide Notes Defeasance have been met.
If the Escrow Agent receives a notice of Special Mandatory Redemption
pursuant to the terms of the Notes, the Escrow Agent will liquidate all
Escrowed Property then held by it not later than the third
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Business Day prior to the Mandatory Redemption Date and release to the Paying
Agent for the Notes an amount of Escrowed Property equal to the aggregate
Mandatory Redemption Price of the Notes for payment to holders on the
Mandatory Redemption Date. Concurrently with such release to the Paying
Agent, the Escrow Agent will release any excess of Escrowed Property over the
Mandatory Redemption Price to the Issuer which, in turn, will be permitted to
use such funds in its discretion, including to dividend such excess to its
stockholders.
Pursuant to the Escrow Agreement, the Escrow Agent will release all
Escrowed Property to the Issuer upon the Issuer's delivery to the Trustee of
an Officers' Certificate stating that (i) the Issuer has received cash and
U.S. Government Obligations which, together with the Escrowed Property, will
provide cash at such times and in such amounts as will be sufficient to pay
principal and interest, if any, when due on all the Revlon Worldwide Notes at
maturity; (ii) all conditions precedent to the Revlon Worldwide Notes
Defeasance have been or will be satisfied immediately after the release of
the Escrowed Property, other than (A) the Deposit, (B) the passing of 123
days during which no default under the bankruptcy provisions of the Revlon
Worldwide Indenture has occurred with respect to Revlon Worldwide and (C) the
delivery of the Opinion of Counsel and Officers' Certificate, each as
required by the Revlon Worldwide Indenture, stating that all conditions to
the Revlon Worldwide Notes Defeasance have been met; (iii) no Default has
occurred and is continuing on the date of the Deposit and after giving effect
thereto; and (iv) the Issuer will immediately and irrevocably deposit the
Escrowed Property upon its release with the Revlon Worldwide Trustee.
Certain provisions relating to the Issuer's obligation to redeem Notes in
a Special Mandatory Redemption may not be waived or modified without the
written consent of the holders of all 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
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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 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.
In addition, prior to the release of the Escrowed Property, the Notes will
be secured by the pledge by the Company, pursuant to the Escrow Agreement, of
the Escrowed Property. The Escrowed Property, together with 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
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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);
(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.
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 Escrow Release and the Merger. As soon as practicable after the
receipt of the Issuer Capital Contribution, the Issuer shall deliver to the
Escrow Agent the Officers' Certificate described under "Escrow of Proceeds
and Other Amounts; Special Mandatory Redemption." Upon release of the
Escrowed Property, the Issuer shall irrevocably deposit such Escrowed
Property with the Revlon Worldwide Trustee and shall cause Revlon Worldwide
to immediately take all actions required to be taken by it for the Revlon
Worldwide Notes Defeasance in accordance with the Revlon Worldwide Notes
Indenture to the extent that such actions can be taken at such time.
The Issuer shall cause the Merger to occur as promptly as practicable
after the 123rd day after the deposit of the Escrowed Property with the
Revlon Worldwide Trustee but in any event not later than the Business Day
immediately following the 130th day after such deposit.
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,
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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.
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
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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 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
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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.
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.
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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.
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.
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"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 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
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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.
"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
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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 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.
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"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 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
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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.
"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.
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"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.
"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
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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.
"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.
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"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 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
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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 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.
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"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 the 150th day after the Deposit Date (or
if such day is not a business day, the first business day thereafter), 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 the 180th day after the
consummation of the Deposit Date (or if such day is not a business day, the
first business day thereafter), 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 the 180th day after the Deposit Date (or if such day is not a
business day, the first business day thereafter), 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 September 15, 1997, 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 pursuant to exemptions from, or in transactions not subject to, 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).
The Revlon Worldwide Notes Indenture contains various restrictive
covenants that, among other things, 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, (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 Revlon Worldwide 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.
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 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").
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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.
As a condition to the Revlon Worldwide Notes Defeasance, Revlon Worldwide
must irrevocably deposit in trust (the "defeasance trust") with the trustee
under the Revlon Worldwide Notes Indenture (the "Revlon Worldwide Notes
Trustee") money or U.S. Government Obligations (as defined in the Revlon
Worldwide Notes Indenture) for the payment of principal and interest (if any)
on the Revlon Worldwide Notes to redemption or maturity, as the case may be,
and must comply with certain other conditions, including the following: (i)
delivery to the trustee under the Revlon Worldwide Notes Indenture of a
certificate from a nationally recognized independent accounting firm that the
cash and U.S. Government Obligations constituting the Deposit will be
sufficient, without reinvestment thereof, to pay the principal and interest,
if any, when due on the maturity of the Revlon Worldwide Notes, (ii) no
Default (as defined in the Revlon Worldwide Notes Indenture) has occurred and
is continuing on the date of the Deposit and after giving effect thereto,
(iii) the Deposit does not constitute a default under any other agreement
binding on Revlon Worldwide, (iv) delivery to the Revlon Worldwide Notes
Trustee of an opinion of counsel to the effect that the trust resulting from
the Deposit does not constitute, or is qualified as, a regulated investment
company under the Investment Company Act of 1940 and (v) delivery to the
Revlon Worldwide Notes Trustee of an opinion of counsel to the effect that
the holders of the Revlon Worldwide Notes will not recognize income, gain or
loss for federal income tax purposes as a result of the Deposit and Revlon
Worldwide Notes 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
the case if the Deposit and the Revlon Worldwide Notes Defeasance had not
occurred.
CREDIT AGREEMENT
In January 1996, Products Corporation entered into a credit agreement (the
"Credit Agreement"), which became effective upon consummation of the Revlon
IPO on March 5, 1996. The Credit Agreement amended and restated the Former
Credit Agreement in its entirety.
The Credit Agreement is comprised of four senior secured facilities: a
$130.0 million term loan facility (the "Term Loan Facility"), a $220.0
million multi-currency facility (the "Multi-Currency Facility"), a $200.0
million revolving acquisition facility (the "Acquisition Facility") and a
$50.0 million 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
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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
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 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 million 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 million, $50.0 million in 1998,
$60.0 million in 1999 and $70.0 million 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 Revlon Worldwide Notes 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 million outstanding under the Term Loan
Facility, $57.2 million outstanding under the Multi-Currency Facility, none
outstanding under the Acquisition Facility and $33.5 million 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., 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 and (y) certain subsidiaries of
Holdings; (iv) domestic inventory and accounts receivable of (x) Products
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.
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 "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
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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 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 its subsidiaries and the amount of capital
expenditures.
In January 1997, the Credit Agreement was amended to, among other things,
(i) permit the merger of PFC, a wholly owned subsidiary of Products
Corporation, into Cosmetic Center and to generally exclude Cosmetic Center
(as the survivor of the PFC 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. of its common stock in
connection with the delivery of such common stock to grantees under any stock
option plan to $6.0 million 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.
"Events of Default" under the Credit Agreement include (i) a default in
the payment when due of any principal of or interest on the loans under the
Credit Agreement, (ii) a default in the payment of 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 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 January 1996 (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 or the failure of
certain dividends to be used by the recipient for certain specified purposes,
(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,
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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% 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 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 pursuant to
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exemptions from, or in transactions not subject to, 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% 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 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 pursuant to exemptions from, or in transactions
not subject to, the registration requirements of the Securities Act and
applicable state
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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 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 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 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
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Holdings under the indenture pursuant to which the Sinking Fund Debentures
were issued (the "Sinking Fund Debentures Indenture"). 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 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.
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. Products Corporation is currently
renegotiating an extension of the term of the Yen Credit Agreement. In the
event that such extension is not secured, Products Corporation is able and
intends to refinance the Yen Credit Agreement under existing long-term credit
facilities. 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
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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
of the common stock of PFC. 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 restrictive covenants, including
provisions 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.
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 TAX ASPECTS
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
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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.
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REVLON WORLDWIDE (PARENT) CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
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 Stockholders' 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
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
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 stockholders' 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 STOCKHOLDERS' 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
Stockholders' 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 stockholders' deficiency....................... (1,461.3) (1,555.7)
-------------- --------------
Total liabilities and stockholders' 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 STOCKHOLDERS' 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 stockholders' 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
stockholders' 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 stockholders' 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>
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 ........................ 17
Use of Proceeds ..................... 24
Capitalization ...................... 25
Price Range of Class A Common Stock
of Revlon, Inc. .................... 26
Selected Historical and Pro Forma
Financial Data ..................... 27
Management's Discussion and Analysis
of Financial Condition and Results
of Operations ...................... 31
The Exchange Offer................... 40
Business ............................ 47
Management .......................... 66
Ownership of Common Stock ........... 76
Relationship with MacAndrews
& Forbes ........................... 77
Description of the Notes............. 84
Description of Other Indebtedness .. 112
Certain Tax Aspects ................. 121
Book-Entry; Delivery and Form ...... 123
Plan of Distribution................. 124
Legal Matters ....................... 125
Experts.............................. 125
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
REVLON
PROSPECTUS
, 1997
<PAGE>
Appendix of Graphic Material Omitted from Prospectus
Page
No. Description
--- -----------
55 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 17.1%, 19.5% and 21.4% for 1994, 1995 and
1996, respectively.
55 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 28.9%, 33.5% and 32.6% for 1994, 1995 and 1996,
respectively.
55 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 20.1%, 22.4% and 24.7% for 1994, 1995 and 1996,
respectively.
56 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 13.0%, 15.7% and 19.1% for 1994, 1995 and 1996,
respectively.
56 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.
56 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.
57 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 36.3% 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.
5. OPINIONS.
*5.1 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison, special counsel to the Registrant.
*8.1O 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")).
10.10 Employment Agreement dated as of January 1, 1996 between Products Corporation and George
Fellows. (Incorporated by reference to Exhibit 10.11 to the Products Corporation 1995 10-K).
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).
II-4
<PAGE>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------------
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).
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).
II-5
<PAGE>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------------
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.
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>
- ------------
* 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 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 March 14, 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
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>
/s/ Ronald O. Perelman Chairman of the Board and Director March 14, 1997
--------------------------- (Principal Executive Officer)
Ronald O. Perelman
/s/ Howard Gittis Vice Chairman of the Board and March 14, 1997
--------------------------- Director
Howard Gittis
/s/ Irwin Engelman Executive Vice President and Chief March 14, 1997
--------------------------- Financial Officer
Irwin Engelman (Principal Financial Officer)
/s/ Lawrence E. Kreider Senior Vice President, Controller and March 14, 1997
--------------------------- Chief Accounting Officer (Principal
Lawrence E. Kreider Accounting Officer)
</TABLE>
*Joram C. Salig, by signing his name hereto, does hereby execute this
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.
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.
<PAGE>
PAGE
EXHIBIT NO. DESCRIPTION NO.
- ----------- ----------------------------------------------------------------------------------------- --------
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")).
10.10 Employment Agreement dated as of January 1, 1996 between Products Corporation and George
Fellows. (Incorporated by reference to Exhibit 10.11 to the Products Corporation 1995
10-K).
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).
<PAGE>
PAGE
EXHIBIT NO. DESCRIPTION NO.
- ----------- ----------------------------------------------------------------------------------------- --------
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).
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).
<PAGE>
PAGE
EXHIBIT NO. DESCRIPTION NO.
- ----------- ----------------------------------------------------------------------------------------- --------
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.
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>
- ------------
* To be filed by amendment.
<PAGE>
CERTIFICATE OF INCORPORATION
OF
REVLON WORLDWIDE HOLDINGS INC.
FIRST: The name of the Corporation is Revlon
Worldwide Holdings Inc. (hereinafter the "Corporation").
SECOND: The address of the registered office of the
Corporation in the State of Delaware is 1013 Centre Road, in the City of
Wilmington, County of New Castle. The name of its registered agent at that
address is The Prentice-Hall Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which a corporation may be organized under the
General Corporation Law of the State of Delaware as set forth in Title 8 of
the Delaware Code (the "GCL").
FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is 1,000 shares of Common Stock,
each having a par value of one dollar ($1.00).
FIFTH: The name and mailing address of the
Sole Incorporator is as follows:
Name Address
---- -------
Catherine D. Ledyard P.O. Box 636
Wilmington, DE 19899
SIXTH: The following provisions are inserted for the
management of the business and the conduct of the affairs of the Corporation,
and for further definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders:
(1) The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
<PAGE>
(2) The directors shall have concurrent power with the
stockholders to make, alter, amend, change, add to or repeal the
By-Laws of the Corporation.
(3) The number of directors of the Corporation shall be as
from time to time fixed by, or in the manner provided in, the By-Laws
of the Corporation. Election of directors need not be by written
ballot unless the By-Laws so provide.
(4) No director shall be personally liable to the
Corporation or any of its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Corporation or
its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law,
(iii) pursuant to Section 174 of the GCL or (iv) for any transaction
from which the director derived an improper personal benefit. If the
GCL is amended hereafter to authorize the further elimination or
limitation of liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the
fullest extent authorized by the GCL, as so amended. Any repeal or
modification of this Article SIXTH by the stockholders of the
Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or
modification with respect to acts or omissions occurring prior to
such repeal or modification.
(5) In addition to the powers and authority hereinbefore or
by statute expressly conferred upon them, the directors are hereby
empowered to exercise all such powers and do all such acts and things
as may be exercised or done by the Corporation, subject,
nevertheless, to the provisions of the GCL, this Certificate of
Incorporation, and any By-Laws adopted by the stockholders; provided,
however, that no By-Laws hereafter adopted by the stockholders
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shall invalidate any prior act of the directors which would have been
valid if such By-Laws had not been adopted.
SEVENTH: Meetings of stockholders may be held within or
without the State of Delaware, as the By-Laws may provide. The books of the
Corporation may be kept (subject to any provision contained in the GCL)
outside the State of Delaware at such place or places as may be designated
from time to time by the Board of Directors or in the By-Laws of the
Corporation.
EIGHTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the Sole Incorporator hereinbefore
named, for the purpose of forming a corporation pursuant to the GCL, do make
this Certificate, hereby declaring and certifying that this is my act and deed
and the facts herein stated are true, and accordingly have hereunto set my
hand this 5th day of March, 1997.
/s/ Catherine D. Ledyard
----------------------------
Catherine D. Ledyard
Sole Incorporator
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BY-LAWS
OF
REVLON WORLDWIDE (PARENT) CORPORATION
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered
office of the Corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The Corporation may also have
offices at such other places both within and without the State of Delaware as
the Board of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders
for the election of directors or for any other purpose shall be held at such
time and place, either within or without the State of Delaware as shall be
designated from time to time by the Board of Directors and stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
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Section 2. Annual Meetings. The Annual Meetings of
Stockholders shall be held on such date and at such time as shall be
designated from time to time by the Board of Directors and stated in the
notice of the meeting, at which meetings the stockholders shall elect by a
plurality vote a Board of Directors, and transact such other business as may
properly be brought before the meeting. Written notice of the Annual Meeting
stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten nor more than
sixty days before the date of the meeting.
Section 3. Special Meetings. Unless otherwise prescribed by
law or by the Certificate of Incorporation, Special Meetings of Stockholders,
for any purpose or purposes, may be called by either (i) the Chairman or any
Vice Chairman, if there be one, or (ii) the President, (iii) any Vice
President, if there be one, (iv) the Secretary or (v) any Assistant Secretary,
if there be one, and shall be called by any such officer at the request in
writing of a majority of the Board of Directors or at the request in writing
of stockholders owning a majority of the capital stock of the Corporation
issued and outstanding and entitled to vote. Such request shall
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state the purpose or purposes of the proposed meeting. Written notice of a
Special Meeting stating the place, date and hour of the meeting and the
purpose or purposes for which the meeting is called shall be given not less
than ten nor more than sixty days before the date of the meeting to each
stockholder entitled to vote at such meeting.
Section 4. Quorum. Except as otherwise provided by law or by
the Certificate of Incorporation, the holders of a majority of the capital
stock issued and outstanding and entitled to vote thereat, present in person
or represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present
or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. If the adjournment is for
more than thirty days, or if after the
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adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder entitled to vote at
the meeting.
Section 5. Voting. Unless otherwise required by law, the
Certificate of Incorporation or these ByLaws, any question brought before any
meeting of stockholders shall be decided by the vote of the holders of a
majority of the stock represented and entitled to vote thereat. Each
stockholder represented at a meeting of stockholders shall be entitled to cast
one vote for each share of the capital stock entitled to vote thereat held by
such stockholder. Such votes may be cast in person or by proxy but no proxy
shall be voted on or after three years from its date, unless such proxy
provides for a longer period. The Board of Directors, in its discretion, or
the officer of the Corporation presiding at a meeting of stockholders, in his
discretion, may require that any votes cast at such meeting shall be cast by
written ballot.
Section 6. Consent of Stockholders in Lieu of Meeting.
Unless otherwise provided in the Certificate of Incorporation, any action
required or permitted to be taken at any Annual or Special Meeting of
Stockholders of
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the Corporation, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
Section 7. List of Stockholders Entitled to Vote. The
officer of the Corporation who has charge of the stock ledger of the
Corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified
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in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected
by any stockholder of the Corporation who is present.
Section 8. Stock Ledger. The stock ledger of the Corporation
shall be the only evidence as to who are the stockholders entitled to examine
the stock ledger, the list required by Section 7 of this Article II or the
books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. The Board of
Directors shall consist of not less than one nor more than fifteen members,
the exact number of which shall initially be fixed by the Incorporator and
thereafter from time to time by the Board of Directors. Except as provided in
Section 2 of this Article, directors shall be elected by a plurality of the
votes cast at Annual Meetings of Stockholders, and each director so elected
shall hold office until the next Annual Meeting and until
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his successor is duly elected and qualified, or until his earlier resignation
or removal. Any director may resign at any time upon notice to the
Corporation. Directors need not be stockholders.
Section 2. Vacancies. Vacancies and newly created
directorships resulting from any increase in the authorized number of
directors may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director, and the directors so
chosen shall hold office until the next annual election and until their
successors are duly elected and qualified, or until their earlier resignation
or removal.
Section 3. Duties and Powers. The business of the
Corporation shall be managed by or under the direction of the Board of
Directors which may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by statute or by the Certificate of
Incorporation or by these By-Laws directed or required to be exercised or done
by the stockholders.
Section 4. Meetings. The Board of Directors of the
Corporation may hold meetings, both regular and special, either within or
without the State of Delaware. Regular meetings of the Board of Directors
may be held without notice at such time and at such place as may from
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time to time be determined by the Board of Directors. Special meetings of the
Board of Directors may be called by the Chairman, if there be one, the
President, or any directors. Notice thereof stating the place, date and hour
of the meeting shall be given to each director either by mail not less than
forty-eight (48) hours before the date of the meeting, by telephone or
telegram on twenty-four (24) hours' notice, or on such shorter notice as the
person or persons calling such meeting may deem necessary or appropriate in
the circumstances.
Section 5. Quorum. Except as may be otherwise specifically
provided by law, the Certificate of Incorporation or these By-Laws, at all
meetings of the Board of Directors, a majority of the entire Board of
Directors shall constitute a quorum for the transaction of business and the
act of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the Board of Directors. If a quorum shall not be
present at any meeting of the Board of Directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
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Section 6. Actions of Board. Unless otherwise provided by
the Certificate of Incorporation or these ByLaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.
Section 7. Meetings by Means of Conference Telephone. Unless
otherwise provided by the Certificate of Incorporation or these By-Laws,
members of the Board of Directors of the Corporation, or any committee
designated by the Board of Directors, may participate in a meeting of the
Board of Directors or such committee by means of a conference telephone or
similar communications equipment by means of which all persons participating
in the meeting can hear each other, and participation in a meeting pursuant to
this Section 7 shall constitute presence in person at such meeting.
Section 8. Committees. The Board of Directors may
designate one or more committees, each committee to consist of one or more
of the directors of the Corporation. The Board of Directors may designate
one or more
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directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of any such committee. In the absence or
disqualification of a member of a committee, and in the absence of a
designation by the Board of Directors of an alternate member to replace the
absent or disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any absent or disqualified member. Any
committee, to the extent allowed by law and provided in the resolution
establishing such committee, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation. Each committee shall keep regular minutes and
report to the Board of Directors when required.
Section 9. Compensation. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude
any director from serving the Corporation in any
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other capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like compensation for attending committee
meetings.
Section 10. Interested Directors. No contract or transaction
between the Corporation and one or more of its directors or officers, or
between the Corporation and any other corporation, partnership, association,
or other organization in which one or more of its directors or officers are
directors or officers, or have a financial interest, shall be void or voidable
solely for this reason, or solely because the director or officer is present
at or participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or transaction, or solely because his or
their votes are counted for such purpose if (i) the material facts as to his
or their relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and the
Board of Directors or committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; or
(ii) the material facts as to his or their relationship or interest and as to
the contract or transaction are dis-
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closed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the
Corporation as of the time it is authorized, approved or ratified, by the
Board of Directors, a committee thereof or the stockholders. Common or
interested directors may be counted in determining the presence of a quorum at
a meeting of the Board of Directors or of a committee which authorizes the
contract or transaction.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a President, a Secretary and a
Treasurer. The Board of Directors, in its discretion, may also choose a
Chairman of the Board of Directors (who must be a director) or one more Vice
Chairmen of the Board, Directors (who must be a director) and one or more Vice
Presidents, Assistant Secretaries, Assistant Treasurers and other officers.
Any number of offices may be held by the same person, unless otherwise
prohibited by law, the Certificate of Incorporation or these By-Laws. The
officers of
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the Corporation need not be stockholders of the Corporation nor, except in the
case of the Chairman of the Board of Directors, need such officers be
directors of the Corporation.
Section 2. Election. The Board of Directors at its first
meeting held after each Annual Meeting of Stockholders shall elect the
officers of the Corporation who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors; and all officers of the Corporation
shall hold office until their successors are chosen and qualified, or until
their earlier resignation or removal. Any officer elected by the Board of
Directors may be removed at any time by the affirmative vote of a majority of
the Board of Directors. Any vacancy occurring in any office of the Corporation
shall be filled by the Board of Directors. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors.
Section 3. Voting Securities Owned by the Corporation.
Powers of attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be execut-
ed in the name of and on behalf of the Corporation by the
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President or any Vice President and any such officer may, in the name of and
on behalf of the Corporation, take all such action as any such officer may
deem advisable to vote in person or by proxy at any meeting of security
holders of any corporation in which the Corporation may own securities and at
any such meeting shall possess and may exercise any and all rights and power
incident to the ownership of such securities and which, as the owner thereof,
the Corporation might have exercised and possessed if present. The Board of
Directors may, by resolution, from time to time confer like powers upon any
other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman
of the Board of Directors, if there be one, shall preside at all meetings of
the stockholders and of the Board of Directors. He shall be the Chief
Executive Officer of the Corporation, and except where by law the signature of
the President is required, the Chairman of the Board of Directors shall
possess the same power as the President to sign all contracts, certificates
and other instruments of the Corporation which may be authorized by the Board
of Directors. During the absence or disability of the President, the Chairman
of the Board of Directors shall exercise all the powers and discharge all
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the duties of the President. The Chairman of the Board of Directors shall also
perform such other duties and may exercise such other powers as from time to
time may be assigned to him by these By-Laws or by the Board of Directors.
Section 5. Vice Chairmen. At the request of the Chairman or
in his inability and refusal to act, the Vice Chairman or the Vice Chairmen if
there is more than one (in the order designed by the Board of Directors) shall
perform the duties of the Chairman, and when so acting, shall have all of the
powers of and be subject to all the restrictions upon the Chairman. Each Vice
Chairman shall also perform such other duties and may exercise such other
powers as from time to time may be assigned to him by these By-Laws or by the
Board of Directors.
Section 6. President. The President shall, subject to the
control of the Board of Directors and, if there be one, the Chairman of the
Board of Directors, have general supervision of the business of the
Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. He shall execute all bonds, mortgages,
contracts and other instruments of the Corporation requiring a seal, under the
seal of the Corporation, except where required or permitted by
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law to be otherwise signed and executed and except that the other officers of
the Corporation may sign and execute documents when so authorized by these
By-Laws, the Board of Directors or the President. In the absence or disability
of the Chairman of the Board of Directors, or if there be none, the President
shall preside at all meetings of the stockholders and the Board of Directors.
If there be no Chairman of the Board of Directors, the President shall be the
Chief Executive Officer of the Corporation. The President shall also perform
such other duties and may exercise such other powers as from time to time may
be assigned to him by these By-Laws or by the Board of Directors.
Section 7. Vice Presidents. At the request of the President
or in his absence or in the event of his inability or refusal to act (and if
there be no Chairman of the Board of Directors or any Vice Chairmen of the
Board of Directors), the Vice President or the Vice Presidents if there is
more than one (in the order designated by the Board of Directors) shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. Each Vice
President shall perform such other duties and have such other powers as the
Board of Direc-
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tors from time to time may prescribe. If there be no Chairman of the Board of
Directors or any Vice Chairmen of the Board of Directors and no Vice
President, the Board of Directors shall designate the officer of the
Corporation who, in the absence of the President or in the event of the
inability or refusal of the President to act, shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President.
Section 8. Secretary. The Secretary shall attend all
meetings of the Board of Directors and all meetings of stockholders and record
all the proceedings thereat in a book or books to be kept for that purpose;
the Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors,
and shall perform such other duties as may be prescribed by the Board of
Directors or President, under whose supervision he shall be. If the Secretary
shall be unable or shall refuse to cause to be given notice of all meetings of
the stockholders and special meetings of the Board of Directors, and if there
be no Assistant Secretary, then either the Board of Directors or the President
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may choose another officer to cause such notice to be given. The Secretary
shall have custody of the seal of the Corporation and the Secretary or any
Assistant Secretary, if there be one, shall have authority to affix the same
to any instrument requiring it and when so affixed, it may be attested by the
signature of the Secretary or by the signature of any such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the Corporation and to attest the affixing by his
signature. The Secretary shall see that all books, reports, statements,
certificates and other documents and records required by law to be kept or
filed are properly kept or filed, as the case may be.
Section 9. Treasurer. The Treasurer shall have the custody
of the corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation
and shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the
Board of Directors. The Treasurer shall disburse the funds of the Corporation
as may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall
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render to the President and the Board of Directors, at its regular meetings,
or when the Board of Directors so requires, an account of all his transactions
as Treasurer and of the financial condition of the Corporation. If required by
the Board of Directors, the Treasurer shall give the Corporation a bond in
such sum and with such surety or sureties as shall be satisfactory to the
Board of Directors for the faithful performance of the duties of his office
and for the restoration to the Corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control
belonging to the Corporation.
Section 10. Assistant Secretaries. Except as may be
otherwise provided in these By-Laws, Assistant Secretaries, if there be any,
shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Secretary, and in the absence of the Secretary or in
the event of his disability or refusal to act, shall perform the duties of the
Secretary, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Secretary.
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Section 11. Assistant Treasurers. Assistant Treasurers, if
there be any, shall perform such duties and have such powers as from time to
time may be assigned to them by the Board of Directors, the President, any
Vice President, if there be one, or the Treasurer, and in the absence of the
Treasurer or in the event of his disability or refusal to act, shall perform
the duties of the Treasurer, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the Treasurer. If required by the
Board of Directors, an Assistant Treasurer shall give the Corporation a bond
in such sum and with such surety or sureties as shall be satisfactory to the
Board of Directors for the faithful performance of the duties of his office
and for the restoration to the Corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control
belonging to the Corporation.
Section 11. Other Officers. Such other officers as the
Board of Directors may choose shall perform such duties and have such powers
as from time to time may be assigned to them by the Board of Directors. The
Board of Directors may delegate to any other officer of the
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Corporation the power to choose such other officers and to prescribe their
respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in
the Corporation shall be entitled to have a certificate signed, in the name of
the Corporation (i) by the Chairman of the Board of Directors, the President
or a Vice President and (ii) by the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary of the Corporation, certifying the
number of shares owned by him in the Corporation.
Section 2. Signatures. Any or all of the signatures on a
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with
the same effect as if he were such officer, transfer agent or registrar at the
date of issue.
Section 3. Lost Certificates. The Board of Directors may
direct a new certificate to be issued in
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place of any certificate theretofore issued by the Corporation alleged to have
been lost, stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate, or
his legal representative, to advertise the same in such manner as the Board of
Directors shall require and/or to give the Corporation a bond in such sum as
it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen
or destroyed.
Section 4. Transfers. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these By-Laws. Transfers
of stock shall be made on the books of the Corporation only by the person
named in the certificate or by his attorney lawfully constituted in writing
and upon the surrender of the certificate therefor, which shall be cancelled
before a new certificate shall be issued.
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Section 5. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to express consent to
corporate action in writing without a meeting, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or entitled
to exercise any rights in respect of any change, conversion or exchange of
stock, or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty days
nor less than ten days before the date of such meeting, nor more than sixty
days prior to any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
Section 6. Beneficial Owners. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound
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to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided by law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by
law, the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, such notice may be given by
mail, addressed to such director, member of a committee or stockholder, at his
address as it appears on the records of the Corporation, with postage thereon
prepaid, and such notice shall be deemed to be given at the time when the same
shall be deposited in the United States mail. Written notice may also be given
personally or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is
required by law, the Certificate of Incorporation or these By-Laws, to be
given to any director, member of a committee or stockholder, a waiver thereof
in writing, signed, by the person or persons entitled to
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said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of
the Corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors at any
regular or special meeting, and may be paid in cash, in property, or in shares
of the capital stock. Before payment of any dividend, there may be set aside
out of any funds of the Corporation available for dividends such sum or sums
as the Board of Directors from time to time, in its absolute discretion, deems
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for any proper purpose, and the Board of Directors may modify or abolish any
such reserve.
Section 2. Disbursements. All checks or demands for money
and notes of the Corporation shall be signed by such officer or officers or
such other person or persons as the Board of Directors may from time to time
designate.
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Section 3. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its organization
and the words "Corporate Seal, Delaware". The seal may be used by causing it
or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or
Proceedings other Than Those by or in the Right of the Corporation. Subject to
Section 3 of this Article VIII, the Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the Corporation) by reason of the fact that he is or was a director or officer
of the Corporation, or is or was a director or officer of the Corporation
serving at the request of the Corporation as a director or officer,
26
<PAGE>
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or
Proceedings by or in the Right of the Corporation. Subject to Section 3 of
this Article VIII, the Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threat-
27
<PAGE>
ened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he
is or was a director or officer of the Corporation, or is or was a director or
officer of the Corporation serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him
in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation; except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
28
<PAGE>
Section 3. Authorization of Indemnification. Any
indemnification under this Article VIII (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director or officer is proper in the
circumstances because he has met the applicable standard of conduct set forth
in Section 1 or Section 2 of this Article VIII, as the case may be. Such
determination shall be made (i) by a majority vote of the directors who are
not parties to such action, suit or proceeding, even though less than a
quorum, or (ii) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, or (iii) by the
stockholders. To the extent, however, that a director or officer of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding described above, or in defense of any claim, issue
or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith, without the necessity of authorization in the specific case.
Section 4. Good Faith Defined. For purposes of any
determination under Section 3 of this Article
29
<PAGE>
VIII, a person shall be deemed to have acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, or, with respect to any criminal action or proceeding, to have
had no reasonable cause to believe his conduct was unlawful, if his action is
based on the records or books of account of the Corporation or another
enterprise, or on information supplied to him by the officers of the
Corporation or another enterprise in the course of their duties, or on the
advice of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the Corporation or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Corporation or another
enterprise. The term "another enterprise" as used in this Section 4 shall mean
any other corporation or any partnership, joint venture, trust, employee
benefit plan or other enterprise of which such person is or was serving at the
request of the Corporation as a director, officer, employee or agent. The
provisions of this Section 4 shall not be deemed to be exclusive or to limit
in any way the circumstances in which a person may be deemed to have met the
30
<PAGE>
applicable standard of conduct set forth in Sections 1 or 2 of this Article
VIII, as the case may be.
Section 5. Indemnification by a Court. Notwithstanding any
contrary determination in the specific case under Section 3 of this Article
VIII, and notwith- standing the absence of any determination thereunder, any
director or officer may apply to any court of competent jurisdiction in the
State of Delaware for indemnification to the extent otherwise permissible
under Sections 1 and 2 of this Article VIII. The basis of such indemnification
by a court shall be a determination by such court that indemnification of
the director or officer is proper in the circumstances because he has met the
applicable standards of conduct set forth in Sections 1 or 2 of this Article
VIII, as the case may be. Neither a contrary determination in the specific
case under Section 3 of this Article VIII nor the absence of any determination
thereunder shall be a defense to such application or create a presumption that
the director or officer seeking indemnification has not met any applicable
standard of conduct. Notice of any application for indemnification pursuant to
this Section 5 shall be given to the Corpora- tion promptly upon the filing of
such application. If successful, in whole or in part, the director or officer
31
<PAGE>
seeking indemnification shall also be entitled to be paid the expense of
prosecuting such application.
Section 6. Expenses Payable in Advance. Expenses incurred by
a director or officer in defending or investigating a threatened or pending
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the Corporation as authorized in this Article VIII.
Section 7. Nonexclusivity of Indemnification and Advancement
of Expenses. The indemnification and advancement of expenses provided by or
granted pursuant to this Article VIII shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any By-Law, agreement, contract, vote of stockholders or
disinterested directors or pursuant to the direction (howsoever embodied) of
any court of competent jurisdiction or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, it being the policy of the Corporation that
32
<PAGE>
indemnification of the persons specified in Sections 1 and 2 of this Article
VIII shall be made to the fullest extent permitted by law. The provisions of
this Article VIII shall not be deemed to preclude the indemnification of any
person who is not specified in Sections 1 or 2 of this Article VIII but whom
the Corporation has the power or obligation to indemnify under the provisions
of the General Corporation Law of the State of Delaware, or otherwise.
Section 8. Insurance. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a director or officer
of the Corporation, or is or was a director or officer of the Corporation
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power or the obligation to
indemnify him against such liability under the provisions of this Article
VIII.
Section 9. Certain Definitions. For purposes of this Article
VIII, references to "the Corporation"
33
<PAGE>
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors or officers, so that
any person who is or was a director or officer of such constituent
corporation, or is or was a director or officer of such constituent
corporation serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, shall stand
in the same position under the provisions of this Article VIII with respect to
the resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued. For purposes
of this Article VIII, references to "fines" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and references
to "serving at the request of the Corporation" shall include any service as a
director, officer, employee or agent of the Corporation which imposes duties
on, or involves services by, such director or officer with respect to an
employee benefit plan, its participants or beneficiaries; and a person who
34
<PAGE>
acted in good faith and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests
of the Corporation" as referred to in this Article VIII.
Section 10. Survival of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VIII shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 11. Limitation on Indemnification. Notwithstanding
anything contained in this Article VIII to the contrary, except for
proceedings to enforce rights to indemnification (which shall be governed by
Section 5 hereof), the Corporation shall not be obligated to indemnify any
director or officer in connection with a proceeding (or part thereof)
initiated by such person unless such proceeding (or part thereof) was
authorized or consented to by the Board of Directors of the Corporation.
35
<PAGE>
Section 12. Indemnification of Employees and Agents. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, provide rights to indemnification and to the advancement of
expenses to employees and agents of the Corporation similar to those conferred
in this Article VIII to directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
Section 1. Amendments. These By-Laws may be altered, amended
or repealed, in whole or in part, or new By-Laws may be adopted by the
stockholders or by the Board of Directors, provided, however, that notice of
such alteration, amendment, repeal or adoption of new ByLaws be contained in
the notice of such meeting of stockholders or Board of Directors as the case
may be. All such amendments must be approved by either the holders of a
majority of the outstanding capital stock entitled to vote thereon or by a
majority of the entire Board of Directors then in office.
Section 2. Entire Board of Directors. As used in this
Article IX and in these By-Laws generally, the term "entire Board of
Directors" means the total number
36
<PAGE>
of directors which the Corporation would have if there were no vacancies.
37
<PAGE>
===================================================================
REVLON WORLDWIDE (PARENT) CORPORATION
Senior Secured Discount Notes Due 2001
and
Series B Senior Secured Discount Notes Due 2001
------------------------
INDENTURE
Dated as of March 1, 1997
------------------------
THE BANK OF NEW YORK,
Trustee
===================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
<S> <C> <C>
Definitions and Incorporation by Reference
SECTION 1.01. Definitions...................................................... 1
SECTION 1.02. Other Definitions................................................ 23
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act................................................ 24
SECTION 1.04. Rules of Construction............................................ 25
ARTICLE II
The Securities
SECTION 2.01. Form and Dating.................................................. 26
SECTION 2.02. Execution and Authentication..................................... 27
SECTION 2.03. Registrar and Paying Agent....................................... 28
SECTION 2.04. Paying Agent To Hold Money
in Trust ................................................... 29
SECTION 2.05. Securityholder Lists............................................. 29
SECTION 2.06. Transfer and Exchange............................................ 29
SECTION 2.07. Replacement Securities........................................... 30
SECTION 2.08. Outstanding Securities........................................... 31
SECTION 2.09. Temporary Securities............................................. 31
SECTION 2.10. Cancelation...................................................... 32
SECTION 2.11. CUSIP Numbers.................................................... 32
SECTION 2.12. Book-Entry Provisions for
U.S. Global Note............................................. 32
SECTION 2.13. Special Transfer Provisions...................................... 34
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee............................................... 39
SECTION 3.02. Selection of Securities To Be
Redeemed..................................................... 40
SECTION 3.03. Notice of Redemption............................................. 40
SECTION 3.04. Effect of Notice of Redemption................................... 42
SECTION 3.05. Deposit of Redemption Price...................................... 42
SECTION 3.06. Securities Redeemed in Part...................................... 42
<PAGE>
2
Page
----
ARTICLE IV
Covenants
SECTION 4.01 Payment of Securities............................................ 42
SECTION 4.02. SEC Reports...................................................... 42
SECTION 4.03. Limitation on Debt of the Company,
Revlon Worldwide and Revlon,
Inc.; Limitation on Preferred
Stock of Revlon Worldwide,
Revlon, Inc. and RCPC........................................ 43
SECTION 4.04. Limitation on Debt of RCPC
and its Subsidiaries......................................... 45
SECTION 4.05. Limitation on Restricted Payments................................ 47
SECTION 4.06. Limitation on Restrictions on
Distributions from Subsidiaries.............................. 49
SECTION 4.07. Limitation on Liens and Sales of
Assets and Subsidiary Stock.................................. 51
SECTION 4.08. Limitation on Transactions with
Affiliates................................................... 52
SECTION 4.09. Change of Control................................................ 54
SECTION 4.10. Limitation on Other Business
Activities................................................... 55
SECTION 4.11. The Escrow Release and the Merger................................ 55
SECTION 4.12. Minimum Collateral Percentage.................................... 56
SECTION 4.13. Maintenance of Non-Investment
Company Status............................................... 56
SECTION 4.14. Compliance Certificate........................................... 56
SECTION 4.15. Further Instruments and Acts..................................... 57
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer
Assets....................................................... 57
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default................................................ 58
SECTION 6.02. Acceleration..................................................... 60
SECTION 6.03. Other Remedies................................................... 61
SECTION 6.04. Waiver of Past Defaults.......................................... 61
SECTION 6.05. Control by Majority.............................................. 61
SECTION 6.06. Limitation on Suits.............................................. 62
<PAGE>
3
Page
----
SECTION 6.07. Rights of Holders to Receive
Payment...................................................... 62
SECTION 6.08. Collection Suit by Trustee....................................... 62
SECTION 6.09. Trustee May File Proofs of Claim................................. 62
SECTION 6.10. Priorities....................................................... 63
SECTION 6.11. Undertaking for Costs............................................ 63
SECTION 6.12. Waiver of Stay or Extension Laws................................. 64
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee................................................ 64
SECTION 7.02. Rights of Trustee................................................ 65
SECTION 7.03. Individual Rights of Trustee..................................... 66
SECTION 7.04. Trustee's Disclaimer............................................. 66
SECTION 7.05. Notice of Defaults............................................... 66
SECTION 7.06. Reports by Trustees to Holders................................... 67
SECTION 7.07. Compensation and Indemnity....................................... 67
SECTION 7.08. Replacement of Trustee........................................... 68
SECTION 7.09. Successor Trustee by Merger...................................... 69
SECTION 7.10. Eligibility; Disqualification.................................... 69
SECTION 7.11. Preferential Collection of Claims
Against Company.............................................. 70
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on
Securities; Defeasance....................................... 70
SECTION 8.02. Conditions to Defeasance......................................... 71
SECTION 8.03. Application of Trust Money....................................... 73
SECTION 8.04. Repayment to Company............................................. 73
SECTION 8.05. Indemnity for Government
Obligations.................................................. 73
SECTION 8.06. Reinstatement.................................................... 73
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders....................................... 74
SECTION 9.02. With Consent of Holders.......................................... 75
SECTION 9.03. Compliance with Trust Indenture
Act ........................................................ 76
<PAGE>
4
Page
----
SECTION 9.04. Revocation and Effect of Consents
and Waivers.................................................. 76
SECTION 9.05. Notation on or Exchange of
Securities................................................... 77
SECTION 9.06. Trustee To Sign Amendments....................................... 77
SECTION 9.07. Payment for Consent.............................................. 77
ARTICLE X
Security and Pledge of Collateral
SECTION 10.01. Grant of Security Interest....................................... 78
SECTION 10.02. Delivery of Collateral........................................... 79
SECTION 10.03. Representations and Warranties................................... 80
SECTION 10.04. Further Assurances............................................... 80
SECTION 10.05. Dividends; Voting Rights;
Substitution of Collateral................................... 81
SECTION 10.06. Trustee Appointed Attorney-in-Fact............................... 88
SECTION 10.07. Trustee May Perform.............................................. 88
SECTION 10.08. Trustee's Duties................................................. 88
SECTION 10.09. Remedies Upon Event of Default................................... 88
SECTION 10.10. Application of Proceeds.......................................... 89
SECTION 10.11. Continuing Lien.................................................. 90
SECTION 10.12. Certificates and Opinions........................................ 90
SECTION 10.13. Additional Agreements............................................ 90
ARTICLE XI
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls..................................... 91
SECTION 11.02. Notices.......................................................... 91
SECTION 11.03. Communication by Holders with Other
Holders...................................................... 92
SECTION 11.04. Certificate and Opinion as to
Conditions Precedent......................................... 92
SECTION 11.05. Statements Required in Certificate
or Opinion................................................... 93
SECTION 11.06. When Securities Disregarded...................................... 93
SECTION 11.07. Rules by Trustee, Paying Agent and
Registrar.................................................... 94
SECTION 11.08. Legal Holidays................................................... 94
SECTION 11.09. Governing Law.................................................... 94
SECTION 11.10. No Recourse Against Others....................................... 94
SECTION 11.11. Successors....................................................... 94
SECTION 11.12. Multiple Originals............................................... 94
SECTION 11.13. Table of Contents; Headings...................................... 94
<PAGE>
5
Page
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Exhibit A - Form of Initial Notes
Exhibit B - Form of Exchange Note
Exhibit C - Form of Certificate to Be Delivered Upon
Termination of Restricted Period
Exhibit D - Form of Certificate to Be Delivered in
Connection with Transfers to Non-QIB
Institutional Accredited Investors
Exhibit E - Form of Certificate to Be Delivered in
Connection with Transfers Pursuant to
Regulation S
Exhibit F - Form of Certificate to Be Delivered in
Connection with Transfers Pursuant to
Rule 144A
Schedule I - Pledged Shares
Schedule II - Permitted Transactions
</TABLE>
<PAGE>
INDENTURE dated as of March 1, 1997,
between REVLON WORLDWIDE (PARENT) CORPORATION, a
Delaware corporation (the "Company"), and The Bank
of New York, a New York banking corporation (the
"Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's
Senior Secured Discount Notes Due 2001 (the "Initial Notes") and the Company's
Series B Senior Secured Discount Notes due 2001 (the "Exchange Notes"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Accreted Value" as of any date (the "Specified Date")
means, with respect to each $1,000 Principal Amount at Maturity of Securities:
(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:
Semi-Annual Accrual Accreted Value
------------------- --------------
Date
-----
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
(ii) if the Specified Date occurs between two SemiAnnual
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
<PAGE>
2
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 SemiAnnual 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).
Whenever the redemption price, Due Amount or Put Amount is paid in connection
with the redemption, purchase or repurchase of a portion of a Security, the
Accreted Value of such Security is reduced by the Accreted Value of the
portion of the Security so redeemed, purchased or repurchased.
"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 Security at
any time, the greater of (i) 1.0% of the Accreted Value of such Security 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
Security, computed using a discount rate equal to the Treasury Rate plus 100
basis points, over (B) the Accreted Value of such Security 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 Company (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 Company 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 RCPC to
RCPC
<PAGE>
3
or by RCPC or a Subsidiary of RCPC to a Wholly Owned Recourse Subsidiary, (ii)
a disposition of property or assets by RCPC or its Subsidiaries at fair market
value in the ordinary course of business, (iii) a disposition by RCPC or its
Subsidiaries of obsolete assets in the ordinary course of business, (iv) a
disposition subject to or permitted by Section 4.05, (v) a disposition by the
Company of any Unrestricted Assets, (vi) a Revlon, Inc. Primary Issuance,
(vii) a disposition of (A) Capital Stock of Revlon Worldwide to the Company,
(B) Capital Stock of Revlon, Inc. to the Company or Revlon Worldwide or (C)
Capital Stock of RCPC to Revlon, Inc., (viii) an issuance of employee stock
options, (ix) a merger of Revlon, Inc. with or into RCPC or the Company, (x)
the Merger and (xi) a disposition by RCPC or any of its Subsidiaries in which
RCPC 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 RCPC 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 RCPC, the determination of which shall be conclusive
and evidenced by a resolution of the Board of Directors of RCPC.
"Bank Debt" means any and all amounts payable by RCPC or any
Subsidiary of RCPC 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 RCPC), 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 RCPC
or any Subsidiary of RCPC to Issue any Debt that is not permitted pursuant to
Section 4.04.
"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 with GAAP; the
amount of
<PAGE>
4
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.
"Change of Control" means the occurrence of any of
the following events:
(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 Company, 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 shall 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 Company, whether as a result of Issuance of securities
of the Company, any merger, consolidation, liquidation or dissolution
of the Company, any direct or indirect transfer of securities by
Parent or otherwise (for purposes of this clause (i) and clause (ii)
below, the Permitted Holders shall 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 (as so defined), directly or
indirectly, in the aggregate a majority of the voting power of the
Voting Stock of the parent corporation);
(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 (as defined in clause (i)
above), directly or indirectly, of more than 35% of the total voting
power of the Voting Stock of the Company; provided, however, that the
Permitted Holders "beneficially own" (as so defined), directly or
indirectly, in the aggregate a lesser percentage of the total voting
power of the Voting Stock of the Company than such other Person and
<PAGE>
5
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 Company (for the purposes of this clause (ii),
such other Person shall be deemed to beneficially own any Voting
Stock of a specified corporation held by a parent corporation, if
such other Person "beneficially owns" (as so defined), directly or
indirectly, more than 35% of the voting power of the Voting Stock of
such parent corporation and the Permitted Holders "beneficially own"
(as so defined), 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 Company (together with any new directors whose
election by such Board of Directors or whose nomination for election
by the shareholders of the Company was approved by a vote of 66-2/3%
of the directors of the Company 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
Company then in office; or
(iv) a "Change of Control," as defined in any RCPC
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
RCPC Indenture) of such shares.
"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
<PAGE>
6
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 Company for
that purpose and is reasonably acceptable to the Trustee.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Company" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each other
obligor on the indenture securities.
"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
RCPC or any Subsidiary of RCPC 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 shall 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 RCPC or any Subsidiary of RCPC shall have
made any Asset Disposition, EBITDA for such period shall 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 shall be
reduced by an amount equal to the Consolidated Interest Expense directly
attributable to any Debt of RCPC or any Subsidiary of RCPC Refinanced or
otherwise discharged with respect to RCPC and its continuing Subsidiaries in
connection with such Asset Dispositions for such period (or if the Capital
Stock of any Subsidiary of RCPC is sold, the Consolidated Interest Expense for
such period directly attributable to the Debt of such Subsidiary to the extent
RCPC and its continuing Subsidiaries are no longer liable for such Debt after
such sale) and (3) if since the beginning of such period RCPC or any
Subsidiary of RCPC (by merger or otherwise) shall have made an Investment in
any Subsidiary of RCPC (or any Person which becomes a Subsidiary of RCPC) or
an acquisition of assets, including any acquisition of assets occurring in
connection with a
<PAGE>
7
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 shall 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 shall be determined
in good faith by a responsible financial or accounting Officer of RCPC. If any
Debt bears a floating rate of interest and is being given pro forma effect,
the interest on such Debt shall be calculated as if the rate in effect on the
date of determination had been the applicable rate for the entire period.
"Consolidated Interest Expense" means, for any period, the
sum of (a) the interest expense of RCPC 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 RCPC or any Subsidiary of RCPC (other than a
Non-Recourse Subsidiary) held by Persons other than RCPC or a Wholly Owned
Recourse Subsidiary, plus (c) the cash contributions to an employee stock
ownership plan of RCPC 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
<PAGE>
8
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 shall 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 shall not be excluded;
provided further, however, that in calculating Consolidated Net Income of the
Company, net income of a Subsidiary of the type described in clause (v) of
this definition shall 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 RCPC, 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;
<PAGE>
9
(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 reim bursed
no later than the third Business Day following receipt by such Person
of a demand 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
RCPC, 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.
"Depositary" means The Depository Trust Company, its nominees
and successors.
<PAGE>
10
"Due Amount" as of any date means with respect to each
$1,000 Principal Amount at Maturity of Securities, the Accreted Value thereof
on such date plus any premium due and payable thereon.
"EBITDA" for any period means the Consolidated Net Income of
RCPC 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.
"Escrow Agent" means the Escrow Agent from time to time
under the Escrow Agreement.
"Escrow Agreement" means the Escrow and Pledge Agreement
dated as of March 5, 1997, between the Company and The Bank of New York, as
Escrow Agent, as amended from time to time.
"Escrowed Property" has the meaning given such term in the
Escrow Agreement.
"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 RCPC 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.
<PAGE>
11
"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" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Holder" or "Securityholder" means the Person in whose name
a Security is registered on the Registrar's books.
"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 Section 4.05, (i) "Investment" shall include a designation after
the Issue Date of a Subsidiary as a Non-Recourse Subsidiary, and such
Investment shall be valued at an amount equal to the portion (proportionate to
the Company'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 Company (or of RCPC
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.
<PAGE>
12
"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) shall 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 Initial
Notes.
"Issuer Capital Contributions" means capital contributions
made to the Company which, together with the Escrowed Property, are in an
amount sufficient to enable the Company to make the Deposit (as defined in the
Escrow Agreement) as contemplated by Section 4.11(a).
"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 or in
any place of payment.
"Lien" means any mortgage, pledge, security interest,
conditional sale or other title retention agreement or other similar lien.
"Mafco Holdings" means Mafco Holdings Inc., a Delaware
corporation.
"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
Company (the determination of which shall be conclusive and shall be evidenced
by a resolution of such Board of Directors), and (iv) as to any other
Collateral having a purported value of 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 Company.
"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
<PAGE>
13
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 RCPC (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) RCPC's percentage ownership in
such Subsidiary.
"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 NonConvertible
Capital Stock shall not include any Redeemable Stock or Exchangeable Stock.
"Non-Recourse Debt" means Debt or that portion of Debt (i)
as to which neither RCPC 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
<PAGE>
14
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
RCPC 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 RCPC (i)
which has been designated as such by RCPC, (ii) which has no Debt other than
Non-Recourse Debt and (iii) which is in the same line of business as RCPC 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 Securities when due, whether at maturity, by
acceleration, by redemption or otherwise, and all other monetary obligations
of the Company under this Indenture and the Securities and (b) the full and
punctual performance of all other obligations of the Company under this
Indenture and the Securities.
"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 Company.
"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 Company, and
delivered to the Trustee. One of the Officers signing an Officers' Certificate
delivered pursuant to Section 4.14 or 10.05(f)(i) shall be the principal
executive, financial or accounting officer of the Company.
"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 Company (or its Parent or one of its
Subsidiaries) or the Trustee.
"Parent" means Revlon Holdings Inc., a Delaware corporation,
and any other Person which acquires or owns directly or indirectly 80% or more
of the voting power of the Voting Stock of the Company.
"Permitted Affiliate Debt" means (i) Debt of RCPC
Issued to the Company or an Affiliate of the Company
<PAGE>
15
representing amounts owing by RCPC pursuant to the Tax Sharing Agreements
described under clauses (i) and (iii) of the definition of "Tax Sharing
Agreements" and (ii) Debt of RCPC Issued to the Company or an Affiliate of the
Company to the extent of cash actually received by RCPC, which cash either is
required to be advanced or contributed to RCPC pursuant to the terms of the
Credit Agreement or any Refinancing Agreement or, if not advanced or
contributed to RCPC, would lead to a default under the Credit Agreement or any
Refinancing Agreement.
"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 (i) 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 Company, Revlon
Worldwide, Revlon, Inc., RCPC or any Subsidiary of RCPC, on the one hand, and
any Affiliate of the Company or any legal or beneficial owner of 10% or more
of the voting power of Voting Stock of the Company 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 Schedule II to this Indenture and (ii) 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 Security as of any date means the Accreted
Value of the Security as of such date plus the premium, if any, payable on the
Security which is due or overdue or is to become due at the relevant time.
"Principal Amount at Maturity" of a Security means the
amount specified as such on the face of such Security.
<PAGE>
16
"Put Amount" as of any date means, with respect to each
$1,000 Principal Amount at Maturity of Securities, 101% of the Accreted Value
thereof as of the date of repurchase.
"QIB" means a "Qualified Institutional Buyer" under Rule
144A.
"RCPC" means Revlon Consumer Products Corporation, a Delaware
corporation which is a wholly owned direct Subsidiary of Revlon, Inc. on the
Issue Date, and its successors.
"RCPC 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 RCPC and the trustee thereunder, and in each case
as in effect on the Issue Date; provided, however, for purposes of interpreting
provisions of this Indenture that refer to the RCPC Indentures, the provisions
of the RCPC Indentures (but not the Debt Issued thereunder) shall be deemed to
be in effect whether or not such Indentures have been discharged.
"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 Securities 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 Securities.
"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 RCPC or any Subsidiary of RCPC Refinances,
in whole or in part, Debt of RCPC or any Subsidiary of RCPC Issued under
Section 4.04(b)(1); 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 Section 4.04(b)(1), such Refinancing
Debt shall in no 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 Section
4.04(b)(1)) $600 million.
<PAGE>
17
"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 Company and certain other parties.
"Registered Exchange Offer" has the meaning ascribed thereto
in the Registration Agreement.
"Required Actions" has the meaning ascribed thereto in the
Escrow Agreement.
"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 Company or of any direct or indirect parent of the Company
or (iii) any Investment in (A) any Affiliate of the Company other than a
Subsidiary of the Company and other than an Affiliate of the Company which will
become a Subsidiary of the Company as a result of any such Investment, or (B) a
Non-Recourse Subsidiary or (C) an Unrestricted Subsidiary.
"Revlon, Inc." means Revlon, Inc., a Delaware corporation
which is the immediate parent corporation of RCPC on the Issue Date, and its
successors.
"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
<PAGE>
18
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 Company 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 Revlon Worldwide Indenture pursuant to Section
8.01(b)(ii) thereof.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Secured Non-Recourse Guarantee" means any Guarantee by the
Company 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 Company or its Subsidiaries, other than Unrestricted Assets.
"Securities" means the Initial Notes and the Exchange Notes,
treated as a single class of securities.
<PAGE>
19
"Securities Act" means the Securities Act of 1933, as
amended.
"Semi-Annual Accrual Date" has the meaning set forth in the
definition of Accreted Value.
"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 Company which at the time of
determination either (A) had assets which, as of the date of RCPC's most recent
quarterly consolidated balance sheet, constituted at least 5% of RCPC'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 RCPC's most recent quarterly
consolidated statement of income which constituted at least 5% of RCPC's total
revenues on a consolidated basis for such period, or (iii) any Subsidiary of
the Company (other than a Non-Recourse Subsidiary and other than an
Unrestricted Subsidiary) which, if merged with all Defaulting Subsidiaries (as
defined below) of the Company, would at the time of determination either (A)
have had assets which, as of the date of RCPC's most recent quarterly
consolidated balance sheet, would have constituted at least 10% of RCPC'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 RCPC's most recent quarterly
consolidated statement of income which would have constituted at least 10% of
RCPC'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 Company (other
than a Non-Recourse Subsidiary and other than an Unrestricted Subsidiary) with
respect to which an event described under Section 6.01(6), 6.01(7), 6.01(8) or
6.01(9) 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).
<PAGE>
20
"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, Revlon Holdings
Inc., RCPC, 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 Company or any of its Subsidiaries with the Company,
Revlon Worldwide, Revlon, Inc., RCPC or any direct or indirect shareholder of
the Company with respect to consolidated or combined tax returns including the
Company or any of its Subsidiaries but only to the extent that amounts payable
from time to time by the Company or any such Subsidiary under any such
agreement do not exceed the corresponding tax payments that the Company or
such Subsidiary would have been required to make to any relevant taxing
authority had the Company or such Subsidiary not joined in such consolidated
or combined returns, but instead had filed returns including only the Company
or its Subsidiaries (provided that any such agreement may provide that, if the
Company 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 Company or such Subsidiary shall 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 Company, such Subsidiary or
any predecessor business thereof (computed as if the Company, 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 Company or such Subsidiary with respect to any
such period).
<PAGE>
21
"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 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 Company) 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.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the Issue Date.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday, other than any day on which securities are not traded on the
applicable securities exchange or in the applicable securities market.
<PAGE>
22
"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 Securities; provided,
however, that if the average life to Stated Maturity of the Securities 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 States Treasury securities for which such
yields are given, except that if the average life to Stated Maturity of the
Securities 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.
"Trustee" means the party named as such in this 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 Company,
other than Revlon, Inc. or any of its Subsidiaries, which (i) is acquired or
organized by the Company 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 Company, (B)
as to which the Company 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
<PAGE>
23
as to which would permit any holder (whether upon notice, after lapse of time
or both) of any Debt of the Company 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 obliga tions (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
RCPC (other than a Non-Recourse Subsidiary) all the Capital Stock of which
(other than directors' qualifying shares) is owned by RCPC or another Wholly
Owned Recourse Subsidiary.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Agent Members".......................................... 2.12(a)
"Applicable Collateral".................................. 10.05(g)
"Applicable Portion"..................................... 10.05(g)
"Bankruptcy Law"......................................... 6.01
"Collateral"............................................. 10.01(d)
"Collateral Release Request"............................. 10.05(f)
"covenant defeasance option"............................. 8.01(b)
"CUSIP".................................................. 2.11
"Custodian".............................................. 6.01
"Default Amount"......................................... 6.02
"Determination Date"..................................... 10.05(f)
"Event of Default"....................................... 6.01
"IAI Global Note"........................................ 2.01(b)
"IAIs"................................................... 2.01(b)
"legal defeasance option"................................ 8.01(b)
"Offshore Notes Exchange Date"........................... 2.01(c)
"Outstanding"............................................ 2.08
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24
Defined in
Term Section
---- -------
"Paying Agent"........................................... 2.03
"Permanent Offshore Physical Notes"...................... 2.01(c)
"Physical Notes"......................................... 2.01(e)
"Pledged Shares"......................................... 10.01(d)
"Pledged Securities"..................................... 10.13
"QIB Global Note"........................................ 2.01(b)
"Registrar".............................................. 2.03
"restricted period"...................................... 2.01(c)
"Revlon, Inc. Collateral"................................ 10.01(b)
"Revlon, Inc. Pledged Shares"............................ 10.01(b)
"Revlon Worldwide Collateral"............................ 10.01(a)
"Revlon Worldwide Pledged Shares"........................ 10.01(a)
"Substitute Collateral".................................. 10.01(c)
"Temporary Offshore Physical Notes"...................... 2.01(c)
"U.S. Global Note"....................................... 2.01(b)
"U.S. Physical Notes".................................... 2.01(d)
"Withdrawn Collateral"................................... 10.05(l)
"Withdrawn Shares"....................................... 10.05(l)
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined
by the TIA, defined by TIA reference to another
<PAGE>
25
statute or defined by SEC rule have the meanings assigned to them by such
definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP and all accounting calculations
will be determined in accordance with such principles;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured debt shall not be deemed to be subordinate or
junior to secured debt merely by virtue of its nature as unsecured
debt;
(7) the principal amount of any noninterest bearing or other
discount security at any date of Issuance shall be the principal
amount thereof that would be shown on a balance sheet of the issuer
dated such date prepared in accordance with GAAP and accretion of
principal on such security shall be deemed to be the Issuance of
Debt; provided, however, that the accretion of principal on such
security shall not be deemed to be the Issuance of Debt if the issuer
elects, at the time of original Issuance of such security, to treat
such accretion as if, on such date of original Issuance, there were
an additional Issuance of Debt in an aggregate principal amount equal
to the excess of the principal amount at maturity of such security
over the principal amount thereof that would be shown on a balance
sheet of the issuer dated such date prepared in accordance with GAAP
(except to the extent otherwise provided in Section 4.03(a)(1)), and,
unless repaid or redeemed, the amount of such additional Issuance of
Debt shall be treated as being outstanding for all purposes under
this Indenture until such security is paid in full;
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory
<PAGE>
26
redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater; and
(9) whenever in this Indenture or the Securities it is
provided that the Accreted Value, the Put Amount, the Due Amount or
the Principal Amount at Maturity with respect to a Security shall be
paid, such provision shall be deemed to require (whether or not so
expressly stated) the simultaneous payment of any accrued and unpaid
interest to the date of payment on such Security payable pursuant to
paragraph 1 of the Securities.
ARTICLE II
The Securities
SECTION 2.01. Form and Dating. (a) The Initial Notes and the
Trustee's certificate of authentication thereon shall be substantially in the
form of Exhibit A, which is hereby incorporated in and expressly made a part
of this Indenture, and as otherwise provided in this Article II. The Exchange
Notes and the Trustee's certificate of authentication thereon shall be
substantially in the form of Exhibit B, which is hereby incorporated in and
expressly made a part of this Indenture, and as otherwise provided in this
Article II. The Securities may have notations, legends or endorsements
required by law, stock exchange rule, agreements to which the Company is
subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Company). Each Security shall be
dated the date of its authentication. The terms of the Securities set forth in
Exhibit A and Exhibit B are part of the terms of this Indenture.
(b) The Initial Notes offered and sold in reliance on Rule
144A to QIBs or on another exemption under the Securities Act to institutional
"Accredited Investors" (as defined in Rule 501(a)(1), (2), (3) or (7) of the
Securities Act) ("IAIs") will be issued on the Issue Date in the form of two
permanent global Securities (with separate CUSIP numbers) substantially in the
form set forth in Exhibit A (each a "U.S. Global Note") deposited with the
Trustee, as custodian for the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. One U.S. Global Note
(which may be represented by more than one certificate, if so required by the
Depositary's rules regarding the maximum principal amount to be represented by
a single certificate) will represent Initial Notes sold to QIB's (the "QIB
Global Note"), and the
<PAGE>
27
other will represent Initial Notes sold to IAIs (the "IAI Global Note"). The
aggregate principal amount of each U.S. Global Note may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depositary or its nominee, as hereinafter provided. Transfers
of Initial Notes from QIBs to IAIs, and from IAIs to QIBs, will be represented
by appropriate increases and decreases to the respective amounts of the
appropriate U.S. Global Notes, as more fully provided in Section 2.13.
(c) Initial Notes offered and sold in reliance on Regulation
S, if any, shall be issued initially in the form of temporary certificated
Notes in registered form substantially in the form set forth in Exhibit A (the
"Temporary Offshore Physical Notes"). The Temporary Offshore Physical Notes
will be registered in the name of, and held by, a temporary certificate holder
designated by Chase Securities Inc. until the later of the completion of the
distribution of the Initial Notes and the termination of the "restricted
period" (as defined in Regulation S) with respect to the offer and sale of the
Initial Notes (the "Offshore Notes Exchange Date"). The Company shall promptly
notify the Trustee in writing of the occurrence of the Offshore Notes Exchange
Date and, at any time following the Offshore Notes Exchange Date, upon receipt
by the Trustee and the Company of a certificate substantially in the form set
forth in Exhibit C, the Company shall execute, and the Trustee shall
authenticate and deliver, one or more permanent certificated Notes in
registered form substantially in the form set forth in Exhibit A (the
"Permanent Offshore Physical Notes") in exchange for the Temporary Offshore
Physical Notes of like tenor and amount.
(d) Initial Notes offered and sold other than as described
in the preceding two paragraphs, if any, shall be issued in the form of
permanent certificated Notes in registered form in substantially the form set
forth in Exhibits A (the "U.S. Physical Notes").
(e) The Temporary Offshore Physical Notes, Permanent
Offshore Physical Notes and U.S. Physical Notes are sometimes collectively
herein referred to as the "Physical Notes".
SECTION 2.02. Execution and Authentication. Two Officers
shall sign the Securities for the Company by manual or facsimile signature.
The Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
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28
If an Officer whose signature is on a Security no longer
holds that office at the time the Trustee authenticates the Security, the
Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory
of the Trustee manually signs the certificate of authentication on the
Security. The signature shall be conclusive evidence that the Security has
been authenticated under this Indenture.
The Trustee shall authenticate and make available for
delivery (1) Initial Notes for original issue in an aggregate Principal Amount
at Maturity of $770,000,000 and (2) Exchange Notes from time to time for issue
only in exchange for a like principal amount of Initial Notes, in each case
upon a written order of the Company signed by two Officers or by an Officer
and either an Assistant Treasurer or an Assistant Secretary of the Company.
Such order shall specify the amount of the Securities to be authenticated, the
date on which the Securities are to be authenticated and, if such order is
being delivered other than on the Issue Date, whether the Securities are to be
Initial Notes or Exchange Notes. The aggregate Principal Amount at Maturity of
Securities outstanding at any time may not exceed that amount except as
provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by
the terms of such appointment, an authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or
agent for service of notices and demands. The Company agrees to pay to any
authenticating agent compensation for its services hereunder.
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange.
The Company may have one or more co-registrars and one or more additional
paying agents. The term "Paying Agent" includes any additional paying agent.
<PAGE>
29
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this
Indenture, which shall incorporate the terms of the TIA. The agreement shall
implement the provi sions of this Indenture that relate to such agent. The
Company shall notify the Trustee of the name and address of any such agent. If
the Company fails to maintain a Regis trar or Paying Agent, the Trustee shall
act as such and shall be entitled to appropriate compensation therefor
pursuant to Section 7.07. The Company, Revlon Worldwide, Revlon, Inc., RCPC or
any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. On or
prior to each due date of the Principal and interest, if any, on any Security,
the Company shall deposit with the Paying Agent a sum sufficient to pay such
Principal and interest when so becoming due. The Company shall require each
Paying Agent (other than the Trustee) to agree in writing that the Paying
Agent shall hold in trust for the benefit of Securityholders or the Trustee
all money held by the Paying Agent for the payment of Principal of or
interest, if any, on the Securities and shall notify the Trustee of any
default by the Company in making any such payment. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and to
account for any funds disbursed by the Paying Agent. Upon complying with this
Section, the Paying Agent shall have no further liability for the money
delivered to the Trustee.
SECTION 2.05. Securityholder Lists. The Trustee shall
preserve in as current a form as is reasonably practicable the most recent
list available to it of the names and addresses of Securityholders. If the
Trustee is not the Registrar, the Company shall furnish to the Trustee, in
writing at least five Business Days before each interest payment date, as of
the relevant record date, and at such other times as the Trustee may request
in writing, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall
be issued in registered form and shall be
<PAGE>
30
transferable only upon the surrender of a Security for registration of
transfer. When a Security is presented to the Registrar or a co-registrar with
a request to register a transfer, the Registrar shall register the transfer as
requested if the requirements of Section 8-401(l) of the Uniform Commercial
Code are met. When Securities are presented to the Registrar or a co-registrar
with a request to exchange them for an equal Principal Amount at Maturity of
Securities of other denominations, the Registrar shall make the exchange as
requested if the same requirements are met. To permit registration of
transfers and exchanges, the Company shall execute and the Trustee shall
authenticate Securities at the Registrar's or co-registrar's request. The
Company may require payment of a sum sufficient to pay all taxes, assessments
or other governmental charges in connection with any transfer or exchange
pursuant to this Section. The Company shall not be required to make and the
Registrar need not register transfers or exchanges of Securities selected for
redemption (except, in the case of Securities to be redeemed in part, the
portion thereof not to be redeemed) or any Securities for a period of 15 days
before a selection of Securities to be redeemed.
Prior to the due presentation for registration of transfer
of any Security, the Company, the Trustee, the Paying Agent, the Registrar or
any co-registrar may deem and treat the Person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of Principal of and interest, if any, on such Security and for all
other purposes whatsoever, whether or not such Security is overdue, and none
of the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar shall be affected by notice to the contrary.
Any Holder of a U.S. Global Note shall, by acceptance of
such Global Note, agree that transfers of beneficial interest in such Global
Note may be effected only through a book-entry system maintained by the Holder
of such Global Note (or its agent), and that ownership of a beneficial
interest in such Global Note shall be required to be reflected in a book
entry.
All Securities issued upon any transfer or exchange pursuant
to this Section 2.06 will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
SECTION 2.07. Replacement Securities. If a mutilated
Security is surrendered to the Registrar or if the Holder of a Security claims
that the Security has been lost,
<PAGE>
31
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security if the requirements of Section 8-405 of
the Uniform Commercial Code are met and the Holder satisfies any other
reasonable requirements of the Trustee. If required by the Trustee or the
Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee,
the Paying Agent, the Registrar and any co-registrar from any loss which any
of them may suffer if a Security is replaced. The Company and the Trustee may
charge the Holder for their expenses in replacing a Security.
In case any such mutilated, destroyed, lost or stolen
Security has become due and payable, the Company, in its discretion, may
instead of issuing a new Security, pay such Security.
Every replacement Security is an additional obligation of
the Company.
SECTION 2.08. Outstanding Securities. Securities outstanding
("Outstanding") at any time are all Securities authenticated and delivered by
the Trustee except for those canceled by it, those delivered to it for
cancelation and those described in this Section as not Outstanding. A Security
does not cease to be Outstanding because the Company or an Affiliate of the
Company holds the Security.
If a Security is paid or replaced pursuant to Section 2.07,
it ceases to be Outstanding unless the Trustee and the Company receive proof
satisfactory to them that the replaced Security is held by a bona fide
purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all Principal and interest, if any, payable on that date
with respect to the Securities (or portions thereof) to be redeemed or
maturing, as the case may be, then on and after that date such Securities (or
portions thereof) cease to be Outstanding, the Accreted Value of such
Securities ceases to increase and interest, if any, on them ceases to accrue.
SECTION 2.09. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may execute and the Trustee
shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without
unreasonable delay, the Company shall
<PAGE>
32
execute and the Trustee shall authenticate definitive Securities and deliver
them in exchange for temporary Securities upon surrender of such temporary
Securities at the office or agency of the Company, without charge to the
Holder.
SECTION 2.10. Cancelation. The Company at any time may
deliver Securities to the Trustee for cancelation. The Registrar and the
Paying Agent shall forward to the Trustee any Securities surrendered to them
for registration of transfer, exchange or payment. The Trustee and no one else
shall cancel Securities surrendered for registration of transfer, exchange,
payment or cancelation and deliver such canceled Securities to the Company
upon the Company's written request. The Company may not Issue new Securities
to replace Securities it has redeemed, paid or delivered to the Trustee for
cancelation.
SECTION 2.11. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
SECTION 2.12. Book-Entry Provisions for U.S. Global Note.
(a) Each U.S. Global Note initially shall (i) be registered
in the name of the Depositary for such U.S. Global Note or the nominee of such
Depositary and (ii) be delivered to the Trustee as custodian for such
Depositary.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any U.S.
Global Note held on their behalf by the Depositary, or the Trustee as its
custodian, or under the U.S. Global Note, and the Depositary may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such U.S. Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the
Depositary or shall impair, as between the
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Depositary and its Agent Members, the operation of customary practices
governing the exercise of the rights of a Holder of any Note.
(b) Transfers of a U.S. Global Note shall be limited to
transfers of such U.S. Global Note in whole, but not in part, to the
Depositary, its successors or their respective nominees. Interests of
beneficial owners in a U.S. Global Note may be transferred in accordance with
the rules and procedures of the Depositary and the provisions of Section 2.13.
If required to do so pursuant to any applicable law or regulation, beneficial
owners may obtain U.S. Physical Notes in exchange for their beneficial
interests in a U.S. Global Note upon written request in accordance with the
Depositary's and the Registrar's procedures. In addition, U.S. Physical Notes
shall be transferred to all beneficial owners in exchange for their beneficial
interests in a U.S. Global Note if (i) the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary for such U.S. Global
Note or the Depositary ceases to be a clearing agency registered under the
Exchange Act, at a time when the Depositary is required to be so registered in
order to act as Depositary, and in each case a successor depositary is not
appointed by the Company within 90 days of such notice or, (ii) the Company
executes and delivers to the Trustee and Note Registrar an Officers'
Certificate stating that such U.S. Global Note shall be so exchangeable or
(iii) an Event of Default has occurred and is continuing and the Registrar has
received a request from the Depositary.
(c) In connection with any transfer of a portion of the
beneficial interest in a U.S. Global Note pursuant to subsection (b) of this
Section to beneficial owners who are required to hold U.S. Physical Notes, the
Registrar shall reflect on its books and records the date and a decrease in
the Principal Amount at Maturity of such U.S. Global Note in an amount equal
to the Principal Amount at Maturity of the beneficial interest in the U.S.
Global Note to be transferred, and the Company shall execute, and the Trustee
shall authenticate and deliver, one or more U.S. Physical Notes of like tenor
and amount.
(d) In connection with the transfer of an entire U.S. Global
Note to beneficial owners pursuant to subsection (b) of this Section, such
U.S. Global Note shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall
authenticate and deliver, to each beneficial owner identified by the
Depositary in exchange for its beneficial interest in such U.S. Global Note,
an equal aggregate
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Principal Amount at Maturity of U.S. Physical Notes of authorized
denominations.
(e) Any U.S. Physical Note delivered in exchange for an
interest in a U.S. Global Note pursuant to subsection (c) or subsection (d) of
this Section shall, except as otherwise provided by paragraph (f) of Section
2.13, bear the applicable legend regarding transfer restrictions applicable to
the U.S. Physical Note set forth in Exhibit A.
(f) The registered holder of a U.S. Global Note may grant
proxies and otherwise authorize any person, including Agent Members and
persons that may hold interests through Agent Members, to take any action
which a Holder is entitled to take under this Indenture or the Notes.
SECTION 2.13. Special Transfer Provisions. Unless and until
an Initial Note is transferred or exchanged under an effective registration
statement under the Securities Act, the following provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited
Investors. The following provisions shall apply with respect to the
registration of any proposed transfer of an Initial Note to any IAI which is
not a QIB (excluding Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Initial
Note if (x) the requested transfer is at least two years after the
original issue date of the Initial Note or (y) the proposed
transferee has delivered to the Registrar a certificate substantially
in the form set forth in Exhibit D.
(ii) If the proposed transferee is an Agent Member, and the
Initial Note to be transferred consists of U.S. Physical Notes or an
interest in the QIB Global Note, upon receipt by the Registrar of (x)
the document, if any, required by paragraph (i) and (y) instructions
given in accordance with the Depositary's and the Registrar's
procedures therefor, the Registrar shall reflect on its books and
records the date and an increase in the principal amount at maturity
of the IAI Global Note in an amount equal to (x) the principal amount
at maturity of the U.S. Physical Notes to be transferred, and the
Trustee shall cancel the U.S. Physical Note so transferred or (y) the
amount at maturity of the beneficial interest in the QIB Global Note
to be so transferred (in which case the Registrar shall reflect on
its books and
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records the date and an appropriate decrease in the principal amount
at maturity of the QIB Global Note).
(iii) If the proposed transferee is entitled to receive a
U.S. Physical Note as provided in Section 2.12 and the proposed
transferor is an Agent Member holding a beneficial interest in a U.S.
Global Note, upon receipt by the Registrar of (x) the documents, if
any, required by paragraph (i) and (y) instructions given in
accordance with the Depositary's and the Registrar's procedures
therefor, the Registrar shall reflect on its books and records the
date and a decrease in the principal amount at maturity of such U.S.
Global Note in an amount equal to the principal amount at maturity of
the beneficial interest in such U.S. Global Note to be transferred,
and the Company shall execute, and the Trustee shall authenticate and
deliver, one or more U.S. Physical Notes of like tenor and amount.
(iv) If the Initial Note to be transferred consists of U.S.
Physical Notes and the proposed transferee is entitled to receive a
U.S. Physical Note as provided in Section 2.12, upon receipt by the
Registrar of the document, if any, required by paragraph (i), the
Registrar shall register such transfer and the Company shall execute,
and the Trustee shall authenticate and deliver, one or more U.S.
Physical Notes of like tenor and amount.
(v) Notwithstanding any provision herein to the contrary,
transfers by an IAI (x) which is not a QIB and (y) is an initial
investor in the Initial Notes, cannot be made to an IAI which is not
a QIB.
(b) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed transfer of an Initial Note
to a QIB (excluding Non-U.S.
Persons):
(i) If the Note to be transferred consists of U.S. Physical
Notes, Temporary Offshore Physical Notes, Permanent Offshore Physical
Notes or an interest in the IAI Global Note, the Registrar shall
register the transfer if such transfer is being made by a proposed
transferor who has provided the Registrar with a certificate
substantially in the form set forth in Exhibit F hereto.
(ii) If the proposed transferee is an Agent Member, and the
Initial Note to be transferred consists
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36
of U.S. Physical Notes, Temporary Offshore Physical Notes, Permanent
Offshore Physical Notes or an interest in the IAI Global Note, upon
receipt by the Registrar of (x) the document, if any, required by
paragraph (i) and (y) instructions given in accordance with the
Depositary's and the Registrar's procedures therefor, the Registrar
shall reflect on its books and records the date and an increase in
the principal amount at maturity of the QIB Global Note in an amount
equal to (x) the principal amount at maturity of the U.S. Physical
Notes, Temporary Offshore Physical Notes or Permanent Offshore
Physical Notes, as the case may be, to be transferred, and the
Trustee shall cancel the Physical Note so transferred or (y) the
amount at maturity of the beneficial interest in the IAI Global Note
to be so transferred (in which case the Registrar shall reflect on
its books and records the date and an appropriate decrease in the
principal amount at maturity of the IAI Global Note).
(iii) If the proposed transferee is entitled to receive a
U.S. Physical Note as provided in Section 2.12 and the proposed
transferor is an Agent Member holding a beneficial interest in a U.S.
Global Note, upon receipt by the Registrar of (x) the documents, if
any, required by paragraph (i) and (y) instructions given in
accordance with the Depositary's and the Registrar's procedures
therefor, the Registrar shall reflect on its books and records the
date and a decrease in the principal amount at maturity of such U.S.
Global Note in an amount equal to the principal amount at maturity of
the beneficial interest in such U.S. Global Note to be transferred,
and the Company shall execute, and the Trustee shall authenticate and
deliver, one or more U.S. Physical Notes of like tenor and amount.
(iv) If the Initial Note to be transferred consists of U.S.
Physical Notes, Temporary Offshore Physical Notes or Permanent
Offshore Physical Notes and the proposed transferee is entitled to
receive a U.S. Physical Note as provided in Section 2.12, upon
receipt by the Registrar of the document, if any, required by
paragraph (i), the Registrar shall register such transfer and the
Company shall execute, and the Trustee shall authenticate and
deliver, one or more U.S. Physical Notes of like tenor and amount.
(c) Transfers by Non-U.S. Persons Prior to April 14, 1997.
The following provisions shall apply with
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respect to registration of any proposed transfer of an Initial Note by a
Non-U.S. Person prior to April 14, 1997:
(i) The Registrar shall register the transfer of any Initial
Note (x) if the proposed transferee is a Non-U.S. Person and the
proposed transferor has provided the Registrar with a certificate
substantially in the form set forth in Exhibit E hereto or (y) if the
proposed transferee is a QIB and the proposed transferor has provided
the Registrar with a certificate substantially in the form set forth
in Exhibit F hereto. Unless clause (ii) below is applicable, the
Company shall execute, and the Trustee shall authenticate and
deliver, one or more Temporary Offshore Physical Notes of like tenor
and amount.
(ii) If the proposed transferee is an Agent Member in
connection with a proposed transfer of an Initial Note to a QIB, upon
receipt by the Registrar of (x) the document, if any, required by
paragraph (i) and (y) instructions given in accordance with the
Depositary's and the Registrar's procedures therefor, the Registrar
shall reflect on its books and records the date and an increase in
the principal amount at maturity of the QIB Global Note in an amount
equal to the principal amount at maturity of the Temporary Offshore
Physical Note to be transferred, and the Registrar shall cancel the
Temporary Offshore Physical Notes so transferred.
(d) Transfers by Non-U.S. Persons on or After April 14,
1997. The following provisions shall apply with respect to any transfer of an
Initial Note by a Non-U.S. Person on or after April 14, 1997:
(i)(x) If the Initial Note to be transferred is a Permanent
Offshore Physical Note, the Registrar shall register such transfer,
(y) if the Initial Note to be transferred is a Temporary Offshore
Physical Note, upon receipt of a certificate substantially in the
form set forth in Exhibit E from the proposed transferor, the
Registrar shall register such transfer and (z) in the case of either
clause (x) or (y), unless clause (ii) below is applicable, the
Company shall execute, and the Trustee shall authenticate and
deliver, one or more Permanent Offshore Physical Notes of like tenor
and amount.
(ii) If the proposed transferee is an Agent Member in
connection with a proposed transfer of an Initial Note to a QIB, upon
receipt by the Registrar of
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instructions given in accordance with the Depositary's and the
Registrar's procedures therefor, the Registrar shall reflect on its
books and records the date and an increase in the principal amount at
maturity of the QIB Global Note in an amount equal to the principal
amount at maturity of the Temporary Offshore Physical Note or of the
Permanent Offshore Physical Note to be transferred, and the Trustee
shall cancel the Physical Note so transferred.
(e) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of an Initial Note to a
Non-U.S. Person:
(i) Prior to April 14, 1997, the Registrar shall register
any proposed transfer of an Initial Note to a Non-U.S. Person upon
receipt of a certificate substantially in the form set forth in
Exhibit E from the proposed transferor and the Company shall execute,
and the Trustee shall authenticate and make available for delivery,
one or more Temporary Offshore Physical Notes.
(ii) On and after April 14, 1997, the Registrar shall
register any proposed transfer to any Non-U.S. Person (w) if the
Initial Note to be transferred is a Permanent Offshore Physical Note,
(x) if the Initial Note to be transferred is a Temporary Offshore
Physical Note, upon receipt of a certificate substantially in the
form set forth in Exhibit E from the proposed transferor, (y) if the
Initial Note to be transferred is a U.S. Physical Note or an interest
in a U.S. Global Note, upon receipt of a certificate substantially in
the form set forth in Exhibit E from the proposed transferor and (z)
in the case of either clause (w), (x) or (y), the Company shall
execute, and the Trustee shall authenticate and deliver, one or more
Permanent Offshore Physical Notes of like tenor and amount.
(iii) If the proposed transferor is an Agent Member holding
a beneficial interest in a U.S. Global Note, upon receipt by the
Registrar of (x) the document, if any, required by paragraph (i), and
(y) instructions in accordance with the Depositary's and the
Registrar's procedures therefor, the Registrar shall reflect on its
books and records the date and a decrease in the principal amount at
maturity of such U.S. Global Note in an amount equal to the principal
amount at maturity of the beneficial interest in the U.S. Global Note
to be transferred and the Company shall execute, and the Trustee
shall authenticate and deliver, one or more
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Permanent Offshore Physical Notes of like tenor and amount.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement
Legend, the Registrar shall deliver only Notes that bear the Private Placement
Legend unless either (i) the circumstances contemplated by the paragraph of
Section 2.01(c) (relating to Permanent Offshore Physical Notes) or paragraph
(a)(i)(x), (d)(i) or (e)(ii) of this Section 2.13 exist or (ii) there is
delivered to the Registrar an Opinion of Counsel reasonably satisfactory to
the Company and the Trustee to the effect that neither such legend nor the
related restrictions on transfer are required in order to maintain compliance
with the provisions of the Securities Act.
(g) General. By its acceptance of any Note bearing the
Private Placement Legend, each Holder of such a Note acknowledges the
restrictions on transfer of such Note set forth in this Indenture and in the
Private Placement Legend and agrees that it will transfer such Note only as
provided in this Indenture.
The Registrar shall retain copies of all letters, notices
and other written communications received pursuant to Section 2.12 or this
Section 2.13. The Company shall have the right to inspect and make copies of
all such letters, notices or other written communications at any reasonable
time upon the giving of reasonable written notice to the Registrar.
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities or is required to
redeem Securities pursuant to paragraph 6 of the Securities, it shall notify
the Trustee in writing of the redemption date, the Principal Amount at
Maturity of Securities to be redeemed and the paragraph of the Securities
pursuant to which the redemption will occur. If the Company is required to
redeem the Securities pursuant to paragraph 6 of the Securities, the Company
shall also so notify the Escrow Agent concurrently with its notification to
the Trustee.
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In the case of a redemption pursuant to paragraph 5 of the
Securities, the Company shall give each notice to the Trustee provided for in
this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. In the case of a redemption pursuant to
paragraph 6 of the Securities, the Company shall give such notices to the
Trustee and the Escrow Agent provided for in this Section promptly after the
event triggering the requirement to redeem the Securities. Any notice
delivered pursuant to paragraph 5 of the Securities shall be accompanied by an
Officers' Certificate to the effect that such redemption will comply with the
conditions herein. If fewer than all the Securities are to be redeemed, the
record date relating to such redemption for determining the Holders to whom
notice of redemption will be sent pursuant to Section 3.03 shall be selected
by the Company and given to the Trustee, which record date shall be not less
than 15 days after the date of notice to the Trustee unless the Trustee
consents to a shorter period.
SECTION 3.02. Selection of Securities To Be Redeemed. If
fewer than all the Securities are to be redeemed, the Trustee in its
discretion shall select the Securities to be redeemed pro rata or by lot or by
a method that complies with applicable legal and securities exchange
requirements, if any, and that the Trustee considers fair and appropriate and
in accordance with methods generally used at the time of selection by
fiduciaries in similar circumstances. The Trustee shall make the selection
from Outstanding Securities not previously called for redemption. The Trustee
may select for redemption portions of the Principal Amount at Maturity of
Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in amounts of Principal Amount at
Maturity of $1,000 or a whole multiple of $1,000. Provisions of this Indenture
that apply to Securities called for redemption also apply to portions of
Securities called for redemption. The Trustee shall notify the Company
promptly of the Securities or portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. In the case of a
redemption pursuant to paragraph 5 of the Securities, at least 30 days but not
more than 60 days before a date for redemption of Securities, the Company
shall mail a notice of redemption by first-class mail to each Holder of
Securities to be redeemed. In the case of a redemption pursuant to paragraph 6
of the Securities, the Company shall mail a notice of redemption by
first-class mail to each Holder of Securities on the date it delivers the
notice to the Trustee pursuant to Section 3.01.
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Any notice delivered pursuant to this Section 3.03 shall
identify the Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the Outstanding Securities are to be
redeemed, the identification of the particular Securities to be
redeemed as well as the aggregate Principal Amount at Maturity of
Securities to be redeemed and if any Security is being redeemed in
part, the portion of the Principal Amount at Maturity of such
Security to be redeemed and that after the redemption date and upon
surrender of such Security a new Security or Securities will be
issued having a Principal Amount at Maturity equal to the Principal
Amount at Maturity of the Security surrendered less the Principal
Amount at Maturity of the portion of the Security redeemed;
(6) that, unless the Company defaults in making such
redemption payment, the Accreted Value on Securities (or portion
thereof) called for redemption ceases to increase, and interest
thereon, if any, ceases to accrue, on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the
Securities called for redemption are being redeemed;
(8) the CUSIP number printed on the Securities being
redeemed; and
(9) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or
printed on the Securities.
At the Company's request, the Trustee shall give the notice
of redemption in the Company's name and at the Company's expense. In such
event, the Company shall provide the Trustee with the information required by
this Section.
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SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable
on the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest, if any, to the redemption
date. Failure to give notice or any defect in the notice to any Holder shall
not affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. On or prior to
the redemption date, the Company shall deposit with the Paying Agent (or, if
the Company or a Subsidiary is the Paying Agent, shall segregate and hold in
trust) money sufficient to pay the redemption price of and accrued interest,
if any, on all Securities to be redeemed on that date other than Securities or
portions of Securities called for redemption which have been delivered by the
Company to the Trustee for cancelation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender
of a Security that is redeemed in part, the Company shall execute and the
Trustee shall authenticate for the Holder (at the Company's expense) a new
Security having a Principal Amount at Maturity equal to the Principal Amount at
Maturity of the Security surrendered less the Principal Amount at Maturity of
the portion of the Security so redeemed.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Company shall
promptly pay the Principal of and interest, if any, on the Securities on the
dates and in the manner provided in the Securities and in this Indenture.
Principal and interest shall be considered paid on the date due if on such
date the Trustee or the Paying Agent holds in accordance with this Indenture
money sufficient to pay all Principal and interest then due. The Company shall
pay interest on overdue Principal at the rate specified therefor in the
Securities, and it shall pay interest on overdue installments of interest at
the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company
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
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"reporting date") (i) the effectiveness of a Registration Statement (as
defined in the Registration Agreement) or (ii) the Merger, the Company will
file or cause to be filed with the SEC and provide the Trustee and
Securityholders 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 Company shall provide the Trustee and
Securityholders information that is substantially similar to that required to
be provided to such Persons after the reporting date. The Company also will
comply with the other provisions of TIA ss.314(a).
SECTION 4.03. Limitation on Debt of the Company, Revlon
Worldwide and Revlon, Inc.; Limitation on Preferred Stock of Revlon Worldwide,
Revlon, Inc. and RCPC. (a) The Company shall not, and shall 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 Initial Notes, the Exchange Notes and Debt Issued by
the Company 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 Exchange Notes) Issued
in connection with a Refinancing, (i) the Debt so Issued shall not
provide for any payment of principal or interest in cash prior to the
Stated Maturity of the Securities, (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 shall 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
shall be later than the Stated Maturity of the Securities;
(2) Debt owed to and held by RCPC 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 RCPC or a
Wholly Owned Recourse Subsidiary) shall be deemed, in each case, to
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constitute the Issuance of such Debt by the Company, 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 RCPC'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 RCPC and its Subsidiaries permitted to
be Issued under Section 4.04;
(4) the Revlon Worldwide Notes;
(5) any Secured Non-Recourse Guarantee;
(6) Debt of the Company acquired as a result of the Merger;
and
(7) Debt of the Company that is not secured by a Lien on any
assets, property or Capital Stock owned by the Company 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 to the Company of
the Issuance of the Securities, to enable the Company to make the
Initial Deposit (as defined in the Escrow Agreement).
(b) The Company shall not permit (i) Revlon, Inc. or RCPC or
(ii) prior to the Merger, Revlon Worldwide to Issue any Preferred Stock;
provided, however, that Revlon, Inc. or RCPC 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
shall not exceed the liquidation value of the Preferred Stock so
Refinanced plus any Refinancing Costs thereof;
(2) Preferred Stock (other than Preferred Stock described in
clause (1) above) of Revlon, Inc. Issued to and held by the Company
and Preferred Stock (other than Preferred Stock described in clause
(1) above) of RCPC Issued to and held by the Company or Revlon, Inc.;
provided, however, that any subsequent transfer of such Preferred
Stock (other than to the Company or a wholly owned Subsidiary of the
Company), shall be deemed to constitute the Issuance of such
Preferred Stock by Revlon, Inc. or RCPC, as the case may be; and
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(3) Preferred Stock (other than Preferred Stock described in
clauses (1) and (2) but including the Preferred Stock referred to in
the proviso to clause (2) above) Issued by RCPC; provided, however,
that the liquidation value of any Preferred Stock Issued pursuant to
this clause (3) shall constitute Debt of RCPC for purposes of Section
4.04 and dividends on such Preferred Stock shall be included in
determining Consolidated Interest Expense for purposes of calculating
the Consolidated EBITDA Coverage Ratio under Section 4.04(a).
SECTION 4.04. Limitation on Debt of RCPC and its
Subsidiaries. (a) The Company shall not permit RCPC or any Subsidiary of RCPC
to Issue, directly or indirectly, any Debt; provided, however, that RCPC 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.
(b) Notwithstanding the foregoing, RCPC 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), shall not
exceed the sum of (i) 50% of the book value of the inventory of RCPC
and its consolidated Subsidiaries and (ii) 80% of the book value of
the accounts receivable of RCPC 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 RCPC 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
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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 RCPC Issued to and held by a Wholly Owned
Recourse Subsidiary and Debt of a Subsidiary of RCPC Issued to and
held by RCPC 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 RCPC or a Wholly Owned Recourse
Subsidiary) shall be deemed, in each case, to constitute the Issuance
of such Debt by RCPC or of such Debt by such Subsidiary;
(5) the Debt Issued pursuant to each of the RCPC 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 shall not exceed the principal amount of
the Debt so Refinanced plus any Refinancing Costs thereof;
(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
Section 4.04(a); provided, however, that, in the case of a
Refinancing, the principal amount of the Debt so Issued shall 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 twelve-month period and are not so utilized may
be utilized during any succeeding period;
(8) Debt of a Subsidiary of RCPC Issued and outstanding on
or prior to the date on which such Subsidiary was acquired by RCPC
(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
<PAGE>
47
pursuant to which such Subsidiary became a Subsidiary of RCPC or was
acquired by RCPC);
(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 shall 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 shall
be deemed for the purpose of this Section 4.04 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 Section 4.04(a)) in an aggregate principal amount
outstanding at any time not to exceed $150 million.
(c) To the extent RCPC or any Subsidiary of RCPC Guarantees
any Debt of RCPC or of a Subsidiary of RCPC, 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.
SECTION 4.05. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit (i) Revlon, Inc., RCPC or any
Subsidiary of RCPC (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 shall have occurred or be 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 Company 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
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48
Proceeds from sales of Capital Stock of the Company (other than
Redeemable Stock or Exchangeable Stock) or cash capital contributions
made to the Company (other than Issuer Capital Contributions).
(b) Section 4.05(a) shall not prohibit the following (none
of which shall 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;
(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 RCPC to the Company, Revlon Worldwide, or Revlon, Inc.
and, if Revlon, Inc. (or, after any merger or consolidation of Revlon,
Inc. and RCPC with each other, RCPC) is not wholly owned, to its other
stockholders on a pro rata basis;
(iv) dividends or distributions made by a Subsidiary of RCPC
to the Company, Revlon Worldwide, Revlon, Inc., RCPC or a Subsidiary
of RCPC and, if a Subsidiary of RCPC is not wholly owned, to its
other stockholders to the extent they are not Affiliates of the
Company;
(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 Section; provided, however,
that at the time of payment of such dividend or the making of such
Restricted Payment, no other Default shall have occurred and be
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 RCPC Indentures has
occurred and is continuing or would
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49
result from such transaction, amounts paid or property transferred
pursuant to the Permitted Transactions.
(c) The Company, Revlon Worldwide, Revlon, Inc., RCPC or any
Subsidiary of RCPC may take actions to make a Restricted Payment in
anticipation of the occurrence of any of the events described in Section
4.05(b); provided, however, that the making of such Restricted Payment shall
be conditioned upon the occurrence of such event.
SECTION 4.06. Limitation on Restrictions on Distributions
from Subsidiaries. (a) The Company shall not, and shall 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 Company
or, prior to the Merger, Revlon Worldwide, (y) make any loans or advances to
the Company or, prior to the Merger, Revlon Worldwide or (z) transfer any of
its property or assets to the Company 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 Securityholders
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 Company shall not, and shall not permit RCPC or any
Subsidiary of RCPC to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of RCPC or
any Subsidiary of RCPC to (i) pay dividends or make any other distributions on
its Capital Stock or pay any Debt owed to the Company or Revlon Worldwide,
(ii) make any loans or
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50
advances to the Company or Revlon Worldwide or (iii) transfer any of its
property or assets to the Company 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 RCPC pursuant to an agreement relating to any Debt
Issued by such Subsidiary on or prior to the date on which such
Subsidiary was acquired by RCPC (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 RCPC or was acquired by RCPC) and outstanding on such
date;
(3) any encumbrance or restriction with respect to RCPC or
any Subsidiary of RCPC 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 RCPC, an Issuance of any other Debt permitted to
be Issued under this 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 RCPC or any Subsidiary of RCPC, as the case may be, is no
less favorable to the Securityholders than the least favorable of the
encumbrances and restrictions with respect to RCPC or such Subsidiary
of RCPC, 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 RCPC or a
Subsidiary of RCPC (other than security agreements securing Debt of a
Subsidiary of RCPC 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 RCPC or a
Subsidiary of RCPC, to the extent
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51
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.
SECTION 4.07. Limitation on Liens and Sales of Assets and
Subsidiary Stock. (a) The Company shall not, and shall not permit (i) Revlon,
Inc. or (ii) prior to the Merger, Revlon Worldwide, to, make any Asset
Disposition. The Company shall not create, incur or suffer to exist a Lien on
the Collateral (other than the Lien of this Indenture), on the Escrowed
Property (other than the Lien of the Escrow Agreement) or on any Unrestricted
Assets (other than a Lien to secure a Secured Non-Recourse Guarantee).
(b) The Company shall not permit RCPC or any Subsidiary of
RCPC (other than a Non-Recourse Subsidiary) to make any Asset Disposition
unless:
(i) RCPC 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 RCPC,
the determination of which shall be conclusive and evidenced by a
resolution of the Board of Directors of RCPC (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 RCPC 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 RCPC, 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 RCPC 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
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52
of those members of the Board of Directors of RCPC 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 a financial point of view to
RCPC 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 RCPC (or such Subsidiary, as the
case may be) at RCPC's election (1) to the prepayment, repayment or
repurchase of Debt of RCPC 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 Company which is not a Subsidiary of the Company)
(whether or not the related loan commitment is permanently reduced in
connection therewith), (2) to the investment by RCPC 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 RCPC, the
determination of which shall be conclusive and evidenced by a
resolution of such Board of Directors) will be used in the businesses
of RCPC 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 Company.
Notwithstanding the foregoing provisions of this Section 4.07(b),
RCPC and its Subsidiaries shall not be required to apply any Net Available
Cash in accordance with this Section 4.07(b) except to the extent that the
aggregate Net Available Cash from all Asset Dispositions made by RCPC and its
Subsidiaries which are not applied in accordance with this Section 4.07(b)
exceed $10 million.
SECTION 4.08. Limitation on Transactions with Affiliates.
(a) The Company shall not, and shall not permit (i) Revlon, Inc., RCPC or any
Subsidiary of RCPC (other than a Non-Recourse Subsidiary) or (ii) prior to the
Merger, Revlon Worldwide, to, conduct any business or enter
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53
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 Company or any legal or beneficial owner of
10% or more of the voting power of the Voting Stock of the Company or with an
Affiliate of any such owner.
(b) The provisions of Section 4.08(a) shall not prohibit:
(i) any Restricted Payment permitted to be paid pursuant to
Section 4.05;
(ii) any transaction between the Company 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 Company, Revlon Worldwide, Revlon, Inc., RCPC or a Wholly
Owned Recourse Subsidiary) of the Company or (y) any legal or
beneficial owner of 10% or more of the voting power of the Voting
Stock of the Company or any Affiliate of such owner (other than the
Company, Revlon Worldwide, Revlon, Inc., RCPC or any Wholly Owned
Recourse Subsidiary);
(iii) any transaction between Subsidiaries of the Company;
provided, however, that no portion of any minority interest in any
such Subsidiary is owned by (x) any Affiliate (other than the
Company, Revlon Worldwide, Revlon, Inc., RCPC or a Wholly Owned
Recourse Subsidiary) of the Company or (y) any legal or beneficial
owner of 10% or more of the voting power of the Voting Stock of the
Company or any Affiliate of such owner (other than the Company,
Revlon Worldwide, Revlon, Inc., RCPC or any Wholly Owned Recourse
Subsidiary);
(iv) any transaction between Revlon, Inc., RCPC or a
Subsidiary of RCPC and its own employee stock ownership plan;
(v) any transaction with an officer or director of RCPC or
any Subsidiary of RCPC 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 Company;
(vi) any Permitted Transaction;
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54
(vii) the Merger; and
(viii) with respect to RCPC and its Subsidiaries, any
transaction permitted by paragraph (a) of the covenant limiting
transactions with Affiliates included in any of the RCPC Indentures.
SECTION 4.09. Change of Control. (a) Upon a Change of
Control, each Holder shall have the right to require that the Company
repurchase such Holder's Securities at a purchase price in cash equal to their
Put Amount as of the date of purchase, in accordance with the terms
contemplated in Section 4.09(b).
(b) Within 45 days following any Change of Control, the
Company shall mail a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such
Holder has the right to require the Company to purchase all or any
part of such Holder's Securities at a purchase price in cash equal to
their Put Amount as of the date of purchase;
(2) the circumstances and relevant facts regarding
such Change of Control;
(3) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent
with this Section, that a Holder must follow in order to have its
Securities purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed,
to the Company at the address specified in the notice at least 10 Business
Days prior to the purchase date. Holders will be entitled to withdraw their
election if the Trustee or the Company receives not later than three Business
Days prior to the purchase date, a facsimile transmission or letter setting
forth the name of the Holder, the Principal Amount at Maturity of the Security
which was delivered for purchase by the Holder and a statement that such
Holder is withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered to the Trustee for cancelation,
and the Company
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55
shall pay the purchase price to the Holders entitled thereto. Upon surrender
of a Security that is repurchased under this Section in part, the Company
shall execute and the Trustee shall authenticate for the Holder thereof (at
the Company's expense) a new Security having a Principal Amount at Maturity
equal to the Principal Amount at Maturity of the Security surrendered less the
portion of the Principal Amount at Maturity of the Security purchased.
(e) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant
to this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.10. Limitation on Other Business Activities. (a)
The Company shall 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 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 Company shall 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.
(b) Unless Revlon, Inc. and RCPC have merged with each other
or have otherwise consolidated with each other, the Company shall not permit
Revlon, Inc. to (i) engage in any trade or business other than the ownership
of the Capital Stock of RCPC or (ii) fail to own 100% of the Capital Stock of
RCPC. After any such merger or consolidation, the provisions of this Article
IV restricting the activities of Revlon, Inc. (but not RCPC) shall not be
applicable to the surviving corporation.
SECTION 4.11. The Escrow Release and the Merger. (a) As soon
as practicable after the Company's receipt of the Issuer Capital
Contributions, the Company shall deliver to the Escrow Agent the Officers'
Certificate contemplated by the first paragraph of Section 2(a) of the Escrow
Agreement. Upon the release of the Escrowed Property, the Company shall
irrevocably deposit such Escrowed Property
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56
with the Trustee (as defined in the Revlon Worldwide Indenture) and shall
cause Revlon Worldwide to immediately take all actions required to be taken by
it for the consummation of the Revlon Worldwide Notes Defeasance to the extent
such actions can be taken at such time.
(b) The Company shall cause the Merger to occur as promptly
as practicable after the 123rd day after the deposit of the Escrowed Property
with the Trustee (as defined in the Revlon Worldwide Notes Indenture), but in
any event not later than the Business Day immediately following the 130th day
after such deposit.
SECTION 4.12. Minimum Collateral Percentage. The Company
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 a
fraction, the numerator of which is the aggregate Principal Amount at Maturity
of the Securities (other than any Securities the payment of which has been
provided pursuant to clause (i) of Section 10.05(g)) Outstanding at such time,
and the denominator of which is $770,000,000.
SECTION 4.13. Maintenance of Non-Investment Company Status.
The Company 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.
SECTION 4.14. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of
the Company an Officers' Certificate stating that in the course of the
performance by the signers of their duties as Officers of the Company they
would normally have knowledge of any Default by the Company and whether or not
the signers know of any Default that occurred during such period. If they do,
the certificate shall describe the Default, its status and what action the
Company is taking or proposes to take with respect thereto. The Company also
shall comply with TIA ss. 314(a)(4). The Trustee shall have no responsibility
or obligation to monitor the Company's compliance with its obligations set
forth in Sections 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.10, 4.11, 4.12 or 4.13
or whether a Change of Control has occurred.
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57
SECTION 4.15. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.
ARTICLE V
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets. The
Company shall not consolidate with or merge with or into, or convey, transfer
or lease all or substan tially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (if not
the Company) shall be a Person organized and existing under the laws
of the United States of America, any State thereof or the District of
Columbia and such Person shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under
the Securities and this Indenture;
(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 shall have occurred and be continuing;
(iii) except in the case of the Merger, immediately after
giving effect to such transaction, the resulting, surviving or
transferee Person shall have a Consolidated Net Worth in an amount
which is not less than the Consolidated Net Worth of the Company
immediately prior to such transaction; and
(iv) the Company shall have delivered 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 this Indenture.
The resulting, surviving or transferee Person shall be the
successor Company and shall succeed to, and be substituted for, and may
exercise every right and power of,
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58
the Company under this Indenture, and thereafter, except in the case of a
lease, the Company shall be discharged from all obligations and covenants under
the Indenture and the Securities.
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default"
occurs if:
(1) the Company defaults in any payment of interest, if any,
on any Security when the same becomes due and payable and such
default continues for a period of 30 days;
(2) the Company (i) defaults in the payment of the Principal
of any Security when the same becomes due and payable at its Stated
Maturity, upon redemption, upon declaration or otherwise or (ii)
fails to redeem or purchase Securities when required pursuant to this
Indenture or the Securities;
(3) (i) the Company fails to comply with Section 5.01, (ii)
the Company fails to comply with Section 4.11, 4.12 or 4.13 or (iii)
the Trustee shall fail to have a perfected security interest in the
Revlon Worldwide Collateral or the Revlon, Inc.
Collateral;
(4) the Company fails to comply with Section 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.09 (other than a failure to purchase
Securities) or 4.10 and such failure continues for 30 days after the
notice specified below;
(5) the Company fails to comply with any of its agreements
in the Securities or this Indenture or the Escrow Agreement (other
than those referred to in (1), (2), (3) or (4) above) and such
failure continues for, or any of the Company's representations and
warranties set forth in Section 10.03 proves to have been materially
false at the time it was made and is not cured within, 60 days after
the notice specified below;
(6) Debt of the Company 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, the total
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59
principal amount of the portion of such Debt that is unpaid or
accelerated exceeds $25,000,000 or its foreign currency equivalent
and such default continues for 10 days after the notice specified
below;
(7) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of
it or for any substantial part of its property; or
(D) makes a general assignment for the benefit of
its creditors;
or takes any comparable action under any foreign laws
relating to insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or
any Significant Subsidiary or for any substantial
part of its property; or
(C) orders the winding up or liquidation of
the Company or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days; or
(9) any judgment or decree for the payment of money in
excess of $25,000,000 is entered against the Company or any
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
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default continues for 10 days after the notice specified below.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or
involuntary or is effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body.
The term "Bankruptcy Law" means Title 11, United States
Code, or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (4), (5), (6) or (9)(B) is not an
Event of Default until the Trustee or the Holders of at least 25% in Principal
Amount at Maturity of the Securities notify the Company of the Default and the
Company does not cure such Default within the time specified after receipt of
such Notice. Such Notice must specify the Default, demand that it be remedied
and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days
after the occurrence thereof, written notice in the form of an Officers'
Certificate of any event which with the giving of notice and the lapse of time
would become an Event of Default under clause (4), (5), (6) or (9), its status
and what action the Company is taking or proposes to take with respect
thereto.
SECTION 6.02. Acceleration. If an Event of Default (other
than an Event of Default specified in Section 6.01(7) or (8) with respect to
the Company) occurs and is continuing, the Trustee by notice to the Company or
the Holders of at least 25% in Principal Amount at Maturity of the Securities
by notice to the Company and the Trustee may declare the Accreted Value of and
accrued interest (if any) on all the Securities as of the date of such
declaration (the "Default Amount") to be due and payable immediately. If an
Event of Default specified in Section 6.01(7) or (8) with respect to the
Company occurs, the Default Amount on all the Securities as of the date of
such Event of Default shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Securityholders. The Holders of a majority in Principal Amount at Maturity of
the Securities by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any
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judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of Principal or interest that has become due solely
because of acceleration. No such rescission shall affect any subsequent
Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of Principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in Principal Amount at Maturity of the Securities by notice to the
Trustee may waive an existing Default and its consequences except (i) a
Default in the payment of the Principal of or interest on a Security or (ii) a
Default in respect of a provision that under Section 9.02 cannot be amended
without the consent of each Securityholder affected. When a Default is waived,
it is deemed cured, but no such waiver shall extend to any subsequent or other
Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority
in Principal Amount at Maturity of the Securities may 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. However, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture or, subject to Section 7.01, that the Trustee determines is unduly
prejudicial to the rights of other Securityholders or would involve the
Trustee in personal liability; provided, however, that the Trustee may take
any other action deemed proper by the Trustee that is not inconsistent with
such direction. Prior to taking any action hereunder, the Trustee shall be
entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action.
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SECTION 6.06. Limitation on Suits. A Securityholder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in Principal Amount at
Maturity of the Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in Principal Amount at
Maturity of the Securities do not give the Trustee a direction
inconsistent with the request during such 60- day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of Principal of and interest, if any, on the Securities
held by such Holder, on or after the respective due dates expressed in the
Securities, or to bring suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default in payment of interest or Principal specified in Section 6.01(l) or
(2) occurs and is continuing, the Trustee may recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
Principal and interest remaining unpaid (together with interest on such unpaid
interest to the extent lawful) and the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
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63
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and its counsel, and any other amounts due the Trustee
under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money
or property pursuant to this Article VI, it shall pay out the money or property
in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Securityholders for amounts due and unpaid on the
Securities for Principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for Principal and interest, respectively; and
Third: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the
Trustee a notice that states the record date, the payment date and amount to
be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a
suit by Holders of more than 10% in Principal Amount at Maturity of the
Securities.
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SECTION 6.12. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture;
and the Company (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and shall not hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same degree of care and
skill in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of such man's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture or are
contemplated to be performed by the Trustee in the Escrow Agreement,
and no implied covenants or obligations shall be read into this
Indenture or the Escrow Agreement against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, in the case of any such opinions or
certificates which by any provision hereof are specifically required
to be furnished to the Trustee, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.
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(c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(1) this paragraph does not limit the effect of
paragraph (b) of this Section;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b) and (c) of this
Section.
(e) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company.
(f) Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(h) Every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section and to the provisions of
the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on
and shall be protected in acting or refraining from acting on any document
believed by it to be genuine and to have been signed or presented by the
proper Person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an
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Opinion of Counsel. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on the Officers' Certificate or
Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel of its selection,
and the advice or opinion of counsel with respect to legal matters relating to
this Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered
by it hereunder in good faith and in accordance with the advice or opinion of
such counsel.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction.
SECTION 7.03. Individual Rights of Trustee. The Trustee in
its individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Company or its affiliates with the
same rights it would have if it were not Trustee. Any Paying Agent, Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for
any statement of the Company in this Indenture or in any document Issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and
is continuing and if it is known to the Trustee,
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the Trustee shall mail to each Securityholder notice of the Default within 90
days after it occurs and, if the Escrowed Property has not yet been released,
shall mail to the Escrow Agent notice of the Default within one Business Day
after the Trustee has knowledge of such Default. Except in the case of a
Default in payment of Principal of or interest, if any, on any Security, the
Trustee may withhold the notice to Securityholders if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the Issue
Date, and in any event prior to July 15 in each year, the Trustee shall mail
to each Securityholder a brief report dated as of May 15 if required by, and
in compliance with, TIA ss. 313(a). The Trustee also shall comply with TIA ss.
313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any)
on which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time such compensation as shall be agreed to
in writing from time to time by the Company and the Trustee for its services.
The Trustee's compensation shall not be limited by any law on compensation of
a trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts. The Company shall indemnify the Trustee against any
and all loss, liability, damage, claim or expense (including attorneys' fees
and expenses) incurred by it in connection with the acceptance or
administration of this trust and the performance of its duties hereunder. The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve
the Company of its obligations hereunder. The Company shall defend the claim
and the Trustee may have separate counsel and the Company shall pay the fees
and expenses of such counsel. The Company need not reimburse any expense or
indemnify against any loss,
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liability or expense incurred by the Trustee through the Trustee's own wilful
misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay Principal of and interest, if any, on particular Securities.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs
expenses after the occurrence of a Default specified in Section 6.01(7) or (8)
with respect to the Company, the expenses are intended to constitute expenses
of administration under the Bankruptcy Law.
The provisions of this Section shall survive the termination
of this Indenture.
SECTION 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in
Principal Amount at Maturity of the Securities may remove the Trustee by so
notifying the Trustee and may appoint a successor Trustee. The Company shall
remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company, is
removed by Holders of a majority in Principal Amount at Maturity of the
Securities and they do not promptly appoint a successor Trustee, or if a
vacancy exists in the office of Trustee for any reason (the Trustee in such
event being referred to herein as the retiring Trustee), the Company shall
promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The
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retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in Section 7.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in Principal Amount at Maturity of the
Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of
the successor to the Trustee; and in all such cases such certificates shall
have the full force which it is anywhere in the Securities or in this
Indenture provided that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee
shall at all times satisfy the requirements of TIA ss. 310(a). The Trustee
shall have a combined capital and surplus of at least $50,000,000 as set forth
in its most recent published annual report of condition. The Trustee shall
comply with TIA ss. 310(b); provided, however, that there shall be excluded
from the operation of TIA
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ss. 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company
are outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (i) the Company delivers to the Trustee all Outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancelation or (ii) all Outstanding Securities have become due and payable and
the Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity all Outstanding Securities, including interest thereon, if any (other
than Securities replaced pursuant to Section 2.07), and if in either case the
Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Sections 8.01(c) and 8.06, cease to be of further
effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate and
an Opinion of Counsel and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c), 8.02 and 8.06, the Company
at any time may terminate (i) all its obligations under the Securities and
this Indenture ("legal defeasance option") or (ii) its obligations under
Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12,
4.13, 5.01(iii) and Article X and the operation of Section 6.01(3)(ii) or
(iii), 6.01(4), 6.01(6), 6.01(7) (with respect to Significant Subsidiaries
only), 6.01(8) (with respect to Significant Subsidiaries only) and 6.01(9)
("covenant defeasance option"). The Company may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option,
payment of the Securities may not be accelerated because of an Event of
Default. If the Company exercises its covenant defeasance option, payment of
the Securities
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may not be accelerated because of an Event of Default specified in Section
6.01(3)(ii) or (iii), 6.01(4), 6.01(6), 6.01(7) (with respect to Significant
Subsidiaries only), 6.01(8) (with respect to Significant Subsidiaries only)
and 6.01(9) or because of the failure of the Company to comply with clause
(iii) of Section 5.01 or with Article X.
Upon satisfaction of the conditions set forth herein and
upon request of the Company, the Trustee shall acknowledge in writing the
discharge of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05
and 8.06 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall
survive.
SECTION 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the
Trustee money or U.S. Government Obligations for the payment of
Principal and interest, if any, on the Securities to maturity or
redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing
their opinion that the payments of principal and interest when due
and without reinvestment on the deposited U.S. Government Obligations
plus any deposited money without investment will provide cash at such
times and in such amounts as will be sufficient to pay Principal and
interest, if any, when due on all the Securities to maturity or
redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(7) or (8) with
respect to the Company occurs which is continuing at the end of the
period; provided, however, that the foregoing condition need not be
met if at the time of the deposit, the Company delivers to the
Trustee either (x) an Officers' Certificate to the effect set forth
in clause (y)(II) below together with an Opinion of Counsel (which
may rely on such Officers' Certificate as to the matters stated
therein) to the effect that such deposit would
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not constitute a preference that could be avoided under Section 547
of Title 11, United States Code, notwithstanding that 123 days have
not passed since the date of the deposit, or (y) an Officers'
Certificate to the effect that the Market Value, determined as of the
date of the deposit, of the Revlon, Inc. Collateral (I) is greater
than the Accreted Value of the then- Outstanding Securities at the
end of such 123-day period and (II) is greater than the fair market
value, determined as of the date of deposit, of the money or U.S.
Government Obligations being deposited;
(4) no Default has occurred and is continuing on the date of
such deposit and after giving effect thereto;
(5) the deposit does not constitute a default under any other
agreement binding on the Company;
(6) the Company delivers to the Trustee an Opinion of
Counsel to the effect that the trust resulting from the deposit does
not constitute, or is qualified as, a regulated investment company
under the Investment Company Act of 1940;
(7) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating
that (i) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling, or (ii) since the date of
this Indenture there has been a change in the applicable Federal
income tax law, in either case to the effect that, and based thereon
such Opinion of Counsel shall confirm that, the Securityholders will
not recognize income, gain or loss for Federal income tax purposes as
a result of such defeasance and will be subject to Federal income tax
on the same amounts, in the same manner and at the same times as
would have been the case if such defeasance had not occurred;
(8) in the case of the covenant defeasance option, the
Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Securityholders will not recognize income, gain
or loss for Federal income tax purposes as a result of such covenant
defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred; and
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(9) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the defeasance and discharge of the
Securities as contemplated by this Article VIII have been complied
with.
Notwithstanding the foregoing provisions of this Section,
the conditions set forth in the foregoing paragraphs (2), (3), (4), (5), (6),
(7) and (8) need not be satisfied so long as, at the time the Company makes
the deposit described in paragraph (1), (i) no Default under Section 6.01(l),
6.01(2), 6.01(7) or 6.01(8) has occurred and is continuing on the date of such
deposit and after giving effect thereto and (ii) either (x) a notice of
redemption has been mailed pursuant to Section 3.03 providing for redemption
of all the Securities not more than 40 days after such mailing and the
provisions of Section 3.01 with respect to such redemption shall have been
complied with or (y) the Stated Maturity of the Securities will occur within
40 days. If the conditions in the preceding sentence are satisfied, the
Company shall be deemed to have exercised its covenant defeasance option.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date
in accordance with Article III.
SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant
to this Article VIII. It shall apply the deposited money and the money from
U.S. Government Obligations through the Paying Agent and in accordance with
this Indenture to the payment of Principal of and interest, if any, on the
Securities.
SECTION 8.04. Repayment to Company. The Trustee and the
Paying Agent shall promptly turn over to the Company upon request any excess
money or securities held by them at any time.
Subject to any applicable abandoned property law, the
Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of Principal or interest, if any, that remains
unclaimed for two years, and, thereafter, Securityholders entitled to the
money must look to the Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the
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Trustee against any tax, fee or other charge imposed on or assessed against
deposited U.S. Government Obligations or the Principal and interest received on
such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent
is unable to apply any money or U.S. Government Obligations in accordance with
this Article VIII by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with this Article VIII; provided,
however, that, if the Company has made any payment of interest, if any, on or
Principal of any Securities because of the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders. The Company and
the Trustee may amend this Indenture or the Securities without notice to or
consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to
or in place of certificated Securities; provided, however, that the
uncertificated Securities are Issued in registered form for purposes
of Section 163(f) of the Code or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of
the Code;
(4) to add Guarantees with respect to the Securities or to
secure (or provide additional security for) the Securities;
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(5) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company;
(6) to provide for issuance of the Exchange Notes, which
will have terms substantially identical in all material respects to
the Initial Notes (except that the cash interest provisions and
transfer restrictions contained in the Initial Notes will be modified
or eliminated, as appropriate), and which will be treated together
with any Outstanding Initial Notes, as a single issue of securities;
(7) to comply with any requirements of the SEC in connection
with qualifying this Indenture under the TIA; or
(8) to make any change that does not adversely affect the
rights of any Securityholder.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.
SECTION 9.02. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in Principal Amount at Maturity of the Outstanding Securities.
However, without the consent of each Securityholder affected, an amendment may
not:
(1) reduce the Principal Amount at Maturity of Securities
whose Holders must consent to an amendment;
(2) reduce the rate of or extend the time for payment of
interest, if any, on any Security;
(3) reduce the Principal of or extend the Stated Maturity of
any Security or reduce the Accreted Value, Put Amount, Due Amount or
Default Amount of any Security;
(4) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article III;
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(5) make any Security payable in money other than that stated
in the Security;
(6) make any change in Article X that adversely affects such
Securityholder;
(7) make any change in Section 6.04, 6.07 or the second
sentence of this Section; or
(8) make any change to paragraph 6 of the Securities.
It shall not be necessary for the consent of the Holders
under this Section to approve the particular form of any proposed amendment,
but it shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers.
Any amendment to this Indenture or the Securities shall become effective in
accordance with its terms when executed and delivered by the Company and the
Trustee provided that the Company has received the requisite consents prior
thereto. The Company shall not be obligated to execute any such amendment
regardless of whether such consents have been received. Any waiver shall
become effective when the requisite consents have been received or such later
time as the Company may elect by notice to the Trustee. A consent to an
amendment or a waiver by a Holder of a Security shall bind the Holder and
every subsequent Holder of that Security or portion of the Security that
evidences the same debt as the consenting Holder's Security, even if notation
of the consent or waiver is not made on the Security. However, any such Holder
or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation prior to the time that the Company receives the requisite number of
consents to such proposed amendment or waiver. After an amendment or waiver
becomes effective, it shall bind every Securityholder. A consent to any
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amendment or waiver hereunder by any Holder given in connection with a tender
of such Holder's Securities shall not be rendered invalid by such tender.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to
be taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to give such consent or to revoke any
consent previously given or to take any such action, whether or not such
Persons continue to be Holders after such record date. No such consent shall
be valid or effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder
of the Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall Issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make
the appropriate notation or to Issue a new Security shall not affect the
validity of such amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article IX if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
SECTION 9.07. Payment for Consent. Neither the Company, any
Affiliate of the Company nor any Subsidiary shall, directly or indirectly, pay
or cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the
Securities unless such consideration is offered to be paid or agreed to be
paid to all Holders which so consent, waive or agree to amend in the time
frame set
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forth in solicitation documents relating to such consent, waiver or amendment.
ARTICLE X
Security And Pledge Of Collateral
SECTION 10.01. Grant of Security Interest. (a) To secure the
full and punctual payment when due and the full and punctual performance of
the Obligations, the Company hereby grants to the Trustee, for the benefit of
the Trustee and the Holders, a security interest in all its right, title and
interest in and to the following, other than such of the following which are
released from the Lien of this Indenture pursuant to Section 10.05 (the
"Revlon Worldwide Collateral"):
(i) 471 shares of Revlon Worldwide Common Stock plus 47.1%
of any additional shares of Revlon Worldwide Common Stock issued
after the Issue Date and prior to the Merger (collectively, the
"Revlon Worldwide Pledged
Shares");
(ii) all certificates representing any of the Revlon
Worldwide Pledged Shares; and
(iii) 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.
(b) To secure the full and punctual payment when due and the
full and punctual performance of the Obligations, the Company hereby grants to
the Trustee, for the benefit of the Trustee and the Holders, a security
interest in all its right, title and interest in and to the following, whether
now owned or hereafter acquired, other than such of the following which are
released from the Lien of this Indenture pursuant to Section 10.05 (the
"Revlon, Inc. Collateral"):
(i) A number of shares of Common Stock of Revlon, Inc. equal
to the Revlon, Inc. Collateral Number and delivered to the Trustee
pursuant to Section 10.04(ii) (collectively, the "Revlon, Inc. Pledged
Shares," which term shall exclude any Withdrawn Shares);
(ii) all certificates representing any of the Revlon, Inc.
Pledged Shares; and
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(iii) 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.
(c) To secure the full and punctual payment when due and the
full and punctual performance of the Obligations, the Company hereby grants to
the Trustee, for the benefit of the Trustee and the Holders, a security
interest in all its right, title and interest in and to the following, other
than such of the following which are released from the Lien of this Indenture
pursuant to Section 10.05 (the "Substitute Collateral"):
(i) all money and securities deposited with the Trustee
pursuant to Section 10.05(g); 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 the foregoing.
(d) Revlon Worldwide Collateral, Revlon, Inc. Collateral and
Substitute Collateral are hereinafter collectively referred to as "Collateral"
and Revlon Worldwide Pledged Shares and Revlon, Inc. Pledged Shares are
hereinafter collectively referred to as the "Pledged Shares".
SECTION 10.02. Delivery of Collateral. Any and all
certificates or instruments representing or evidencing Revlon Worldwide
Collateral or Revlon, Inc. Collateral shall be delivered to and held by or on
behalf of the Trustee and shall be in suitable form for transfer by delivery,
or shall be accompanied by duly executed instruments of transfer or assignment
in blank, all in form and substance satisfactory to the Trustee. The Trustee
shall have the right, at any time after the occurrence and during the
continuance of an Event of Default, in its discretion and without notice to
the Company, to transfer to or to register in the name of the Trustee or any
of its nominees any or all of the Collateral. In addition, the Trustee shall
have the right at any time to exchange certificates or instruments
representing or evidencing Collateral for certificates or instruments of
different denominations.
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SECTION 10.03. Representations and Warranties. The Company
hereby represents and warrants on the Issue Date as follows:
(a) It is the record and beneficial owner of the Revlon
Worldwide Pledged Shares described on Schedule I, free and clear of any Lien,
except for the Lien created by this Indenture; and effective as of the Merger
the Company will be the record and beneficial owner of the Revlon, Inc.
Pledged Shares described on Schedule I as revised pursuant to Section
10.04(ii), free and clear of any Lien, except for the Lien created by this
Indenture.
(b) It has full corporate power, authority and legal right
to pledge all the Collateral pledged by it pursuant to this Indenture.
(c) The Revlon Worldwide Pledged Shares described on
Schedule I have been, and the Revlon, Inc. Pledged Shares that will be
described on Schedule I as revised pursuant to Section 10.04(ii) will be, duly
authorized and are validly issued, fully paid and non-assessable.
(d) The pledge in accordance with the terms of this
Indenture creates a valid and perfected first priority Lien on the Revlon
Worldwide Collateral and, at the time of the Merger, will create a valid and
perfected first priority Lien on the Revlon, Inc. Collateral, in each case
securing the payment and performance of the Obligations.
(e) The shares described in Schedule I hereto represent
47.1% of the shares of Revlon Worldwide Common Stock owned by the Company on
the Issue Date.
(f) The number of shares of Common Stock of Revlon, Inc.
that will be described in Schedule I as revised pursuant to Section 10.04(ii)
will at the time of the Merger be sufficient to result in the Company's
compliance with Section 4.12 at such time.
SECTION 10.04. Further Assurances. The Company agrees that
at any time and from time to time, at the expense of the Company, the Company
will promptly execute and deliver all further instruments and documents and
take all further action that may be necessary or that the Trustee may
reasonably request in order to perfect and protect any Lien granted or
purported to be granted hereby or to enable the Trustee to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the foregoing, the Company shall, (i) prior to the Merger, at
the time of the issuance by Revlon Worldwide of any
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shares of Revlon Worldwide Common Stock after the Issue Date, deliver 47.1% of
such shares to the Trustee as Revlon Worldwide Collateral and provide to the
Trustee a revised Schedule I, (ii) upon consummation of the Merger, deliver to
the Trustee a number of shares of Common Stock of Revlon, Inc. equal to the
Revlon, Inc. Collateral Number and provide to the Trustee a revised Schedule I
and (iii) at the time of any release of Revlon, Inc. Pledged Shares pursuant
to Section 10.05, provide to the Trustee a revised Schedule I. The shares
delivered pursuant to Section 10.04(ii) will consist of Class A shares and
Class B shares of Revlon, Inc. Common Stock in such proportions as the Company
shall elect. Any such revised Schedule shall reflect any changes made
necessary by the applicable acquisition or release, at which time the Company
shall be deemed to make its representations and warranties set forth in
paragraphs (a)-(d) and (f) of Section 10.03 with respect to such Schedule, as
so revised.
SECTION 10.05. Dividends; Voting Rights; Substitution of
Collateral. (a) The Company shall promptly deliver to the Trustee all
dividends and other distributions paid in respect of the Pledged Shares owned
by the Company. All such dividends and other distributions shall be held by
the Trustee as Collateral and shall, if received by the Company, be received
in trust for the benefit of the Trustee, be segregated from the other property
or funds of the Company and be forthwith delivered to the Trustee as
Collateral in the same form as so received (with any necessary endorsement).
Any cash dividends or distributions delivered to or otherwise held by the
Trustee pursuant to this Section 10.05, and any other cash constituting
Collateral delivered to the Trustee, shall be invested, at the written
direction of the Company, by the Trustee in Temporary Cash Investments.
(b) Upon the occurrence and during the continuance of a
Default and upon written notice thereof from the Trustee to the Company, the
Trustee shall be entitled to receive and retain as Collateral all dividends
paid and distributions made in respect of the Pledged Shares, whether so paid
or made before or after any Default. Any such dividends shall, if received by
the Company, be received in trust for the benefit of the Trustee, be
segregated from the other property or funds of the Company and be forthwith
delivered to the Trustee as Collateral in the same form as so received (with
any necessary endorsement).
(c) As long as no Default shall have occurred and be
continuing and until written notice thereof from the Trustee to the Company,
the Company shall be entitled to
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exercise any and all voting and other consensual rights relating to Pledged
Shares or any part thereof for any purpose; provided, however, that no vote
shall be cast, and no consent, waiver or ratification given or action taken,
which would be inconsistent with or violate any provision of this Indenture or
the Securities.
(d) Upon the occurrence and during the continuance of a
Default, all rights of the Company to exercise the voting and other consensual
rights that it would otherwise be entitled to exercise pursuant to Section
10.05(c) shall cease upon notice from the Trustee to the Company and upon the
giving of such notice all such rights shall thereupon be vested in the Trustee
who shall thereupon have the sole right to exercise such voting and other
consensual rights.
(e) In order to permit the Trustee to exercise the voting
and other consensual rights which it may be entitled to exercise pursuant to
Section 10.05(d), and to receive all dividends and distributions which it may
be entitled to receive under Section 10.05(a) and 10.05(b), the Company shall,
if necessary, upon written notice of the Trustee, from time to time execute
and deliver to the Trustee such instruments as the Trustee may reasonably
request.
(f) From and after the effective time of the Merger, as long
as no Default shall have occurred and be continuing, prior to the discharge or
defeasance of this Indenture, the Company shall be entitled from time to time
to request the Trustee to release all or a portion of the Revlon, Inc.
Collateral subject to the Lien of this Indenture; provided, however, that (i)
such request (a "Collateral Release Request") must be in writing and
accompanied by an Officers' Certificate and an Opinion of Counsel stating that
all conditions precedent to the release of such Revlon, Inc. Collateral
pursuant to this Section 10.05(f) have been complied with, (ii) the date of
such Collateral Release Request (the "Determination Date") is not more than
five Business Days prior to the date of the release requested thereunder and
(iii) either (A) the conditions set forth in Section 10.05(g) are met or (B)
the conditions set forth in Section 10.05(h) are met. Any Revlon, Inc. Pledged
Shares included in the Revlon, Inc. Collateral to be released shall consist of
Class A or Class B shares of Revlon, Inc. Common Stock in such proportions as
the Company shall elect. Any such Collateral Release Request shall specify (x)
whether the Company intends to meet the conditions set forth in Section
10.05(g) or 10.05(h) and (y) how many shares of each class of Revlon,
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Inc. Common Stock are to be released. Upon satisfaction of the foregoing
conditions, the Lien of this Indenture on all Revlon, Inc. Collateral to be
released shall terminate and all such Revlon, Inc. Collateral shall be
released without any further action on the part of the Trustee or any other
Person.
(g) No Revlon, Inc. Collateral shall be released from the
Lien of this Indenture pursuant to any Collateral Release Request which
specifies that the conditions of this Section 10.05(g) are to be met unless:
(i) the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of the Principal
Amount at Maturity and interest, if any, on the Securities or
the Applicable Portion thereof;
(ii) the Company delivers to the Trustee a
certificate from a nationally recognized firm of independent
accountants expressing their opinion that the payments of
principal and interest when due and without reinvestment on
the deposited U.S. Government Obligations plus any deposited
money without reinvestment will provide cash at such times
and in such amounts as will be sufficient to pay the
Principal Amount at Maturity and any interest, if any, when
due on all the Securities or the Applicable Portion thereof
to maturity;
(iii) no Default or Event of Default has occurred
and is continuing on the date of such deposit after giving
effect thereto;
(iv) the ratio of (A) the Market Value, determined
as of the Determination Date relating to such Collateral
Release Request, of the Revlon, Inc. Collateral that will
remain, if any, subject to the Lien of this Indenture
immediately following such release to (B) the aggregate
Accreted Value of the Securities (other than the Applicable
Portion thereof and other than any Securities the payment of
which has theretofore been provided pursuant to clause (i)
of this Section 10.05(g)) Outstanding as of such
Determination Date is (x) at least equal to the ratio of the
Market Value, determined as of such Determination Date, of
the Revlon, Inc. Collateral subject to the Lien of this
Indenture immediately prior to such release to the aggregate
Accreted Value of the Securities (including the Applicable
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Portion thereof but excluding Securities the payment of
which has theretofore been provided pursuant to clause (i)
of this Section 10.05(g)) Outstanding as of such
Determination Date, but is (y) in no event less than 1.5 to
1.00;
(v) the Market Value, determined as at the
Determination Date relating to such Collateral Release
Request, of the Revlon, Inc. Collateral that will remain, if
any, subject to the Lien of this Indenture immediately
following such release is at least equal to the aggregate
Principal Amount at Maturity of the Securities (other than
the Applicable Portion thereof and other than any Securities
the payment of which has theretofore been provided pursuant
to clause (i) of this Section 10.05(g)) Outstanding as of
such Determination Date;
(vi) as of the Determination Date relating to such
Collateral Release Request, the Company will be in
compliance with Section 4.12 after giving effect to such
release and to the deposit pursuant to clause (i) of this
Section 10.05(g) with respect to the Applicable Portion of
the Securities;
(vii) unless the Company provides an Officers'
Certificate to the effect that the Market Value, determined
as of such Determination Date, of the Revlon, Inc.
Collateral to be released pursuant to such Collateral
Release Request (the "Applicable Collateral") is greater
than the fair market value, determined as of such
Determination Date, of the money or U.S. Government
Obligations being deposited, 123 days pass after the deposit
is made and during the 123-day period no Default specified
in Section 6.01(7) or (8) with respect to the Company occurs
which is continuing at the end of the period;
(viii) the Company delivers to the Trustee an
Opinion of Counsel to the effect that the Person providing
such Substitute Collateral does not constitute, or is
qualified as, a regulated investment company under the
Investment Company Act of 1940;
(ix) the deposit does not constitute a default
under any other agreement binding on the Company;
and
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(x) the Company shall have delivered to the Trustee
an Opinion of Counsel to the effect that the Securityholders
will not recognize income, gain or loss for Federal income
tax purposes as a result of such deposit of U.S. Government
Obligations and will be subject to Federal income tax on the
same amounts, in the same manner and at the same times as
would have been the case if such deposit had not occurred.
For purposes of this Section 10.05, the "Applicable Portion" shall
mean, with respect to any Collateral Release Request, Securities
having an aggregate Principal Amount at Maturity equal to the product
of (x) the aggregate Principal Amount at Maturity of Securities
Outstanding as of the Determination Date relating to such Collateral
Release Request (after deducting therefrom the aggregate Principal
Amount at Maturity of Securities the payment of which has theretofore
been provided pursuant to clause (i) of this Section 10.05(g)) and
(y) a fraction, the numerator of which is the Market Value,
determined as of such Determination Date, of the Applicable
Collateral and the denominator of which is the aggregate Market Value
of all Revlon, Inc. Collateral at such time.
(h) In connection with or after (x) any redemption
of less than all the Securities or (y) any delivery by the Company of
less than all the Securities for cancelation, as long as no Default
shall have occurred and be continuing, the Company shall be entitled
to deliver a Collateral Release Request to the Trustee to release a
portion of the Revlon, Inc. Collateral subject to this Indenture;
provided, however, that:
(i) the ratio of (A) the Market Value, determined
as of the Determination Date relating to such Collateral
Release Request, of the Revlon, Inc. Collateral that will
remain subject to the Lien of this Indenture immediately
following such release to (B) the aggregate Accreted Value
of the Securities (other than Securities the payment of
which has theretofore been provided pursuant to clause (i)
of Section 10.05(g)) Outstanding as of such Determination
Date after giving effect to such redemption or delivery for
cancelation shall be (I) at least equal to the ratio of the
Market Value, determined as of such Determination Date,
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of the Revlon, Inc. Collateral subject to the Lien of this
Indenture immediately prior to such release to the aggregate
Accreted Value of the Securities (other than Securities the
payment of which has theretofore been provided pursuant to
clause (i) of Section 10.05(g)) Outstanding as of such
Determination Date prior to giving effect to such redemption
or delivery, but shall (II) in no event be less than 1.5 to
1.00;
(ii) the Market Value, determined as at the
Determination Date relating to such Collateral Release
Request, of the Revlon, Inc. Collateral that will remain, if
any, subject to the Lien of this Indenture immediately
following such release is at least equal to the aggregate
Principal Amount at Maturity of the Securities (other than
any Securities the payment of which has theretofore been
provided pursuant to clause (i) of Section 10.05(g))
Outstanding as of such Determination Date after giving
effect to such redemption or delivery; and
(iii) as of the Determination Date relating to such
Collateral Release Request, the Company will be in
compliance with Section 4.12 after giving effect to such
release and to such redemption or delivery;
(i) After the effective time of the Merger, in
connection with a redemption of Securities pursuant to Section 5 of
the Securities, in connection with any purchase of Securities
pursuant to Section 4.09 or in connection with the payment at
maturity of the Principal Amount at Maturity of the Securities, the
Company shall be entitled to request the Trustee to release
Substitute Collateral having a fair market value on such redemption
date, purchase date or maturity date equal to an amount necessary in
whole or in part to pay the redemption price or purchase price of the
Securities to be redeemed or purchased or to pay at maturity the
Principal Amount at Maturity of the Securities. Notwithstanding the
foregoing, the Trustee shall be entitled to receive, as a condition
to any release of Substitute Collateral under this Section 10.05(i),
an Officers' Certificate to the effect that such release will not
result in a Default hereunder. Upon the release of Substitute
Collateral pursuant to this Section 10.05(i), the Principal Amount at
Maturity and Accreted Value of Securities the payment of which has
theretofore been provided pursuant
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to clause (i) of Section 10.05(g) after giving effect to such
redemption or repurchase shall be deemed to be reduced by the
Principal Amount at Maturity or Accreted Value, respectively, of the
Securities so redeemed or repurchased with such Substitute
Collateral.
(j) 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, the
Company may request the Trustee to release from the Lien of this
Indenture a number of shares of one class of Common Stock of Revlon,
Inc. upon the deposit with the Trustee of an equal number of shares
of the other class of Common Stock of Revlon, Inc. in substitution
therefor. Such substituted shares shall thereafter constitute
"Revlon, Inc. Pledged Shares" for all purposes. Upon satisfaction of
the foregoing conditions, the Lien of this Indenture on all Revlon,
Inc. Pledged Shares to be released shall terminate and all such
Collateral shall be released without any further action on the part
of the Trustee or any other Person.
(k) Notwithstanding anything to the contrary in
Section 10.05(f), (g), (h), (i) or (j), upon satisfaction by the
Company of the conditions set forth in Article VIII to its legal
defeasance option, its covenant defeasance option or to the discharge
of this Indenture, the Lien of this Indenture on all the Collateral
shall terminate and all the Collateral shall be released without any
further action on the part of the Trustee or any other Person.
(l) Any Pledged Shares which are released from the
Lien of this Indenture shall be referred to herein as "Withdrawn
Shares" and, together with any cash or instruments or other
Collateral which are released from the Lien of this Indenture
(including pursuant to the Escrow Agreement), as "Withdrawn
Collateral". Upon the release of any Collateral, the Trustee shall
execute and deliver to the Company an instrument or instruments
acknowledging the release of such Collateral from this Indenture and
the discharge of the Lien on such Collateral created by this Article
X, and will duly assign, transfer and deliver to the Company (without
recourse and without any representation or warranty) the Withdrawn
Collateral.
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(m) At the Company's reasonable request, the
Trustee will execute and deliver such documents and take such other
actions as may be reasonably requested to facilitate the release of
the Escrowed Property in accordance with the terms of the Escrow
Agreement.
SECTION 10.06. Trustee Appointed Attorney- in-Fact.
The Company hereby appoints the Trustee as the Company's
attorney-in-fact, with full authority in the place and stead of the
Company and in the name of the Company or otherwise, from time to
time in the Trustee's discretion but only after the occurrence and
during the continuance of an Event of Default, to take any action and
to execute any instrument which the Trustee may deem necessary or
advisable in order to accomplish the purposes of this Article X,
including to receive, endorse and collect all instruments made
payable to the Company representing any dividend, interest payment or
other distribution in respect of the Collateral or any part thereof
and to give full discharge for the same. This power, being coupled
with an interest, is irrevocable.
SECTION 10.07. Trustee May Perform. If the Company
fails to perform any agreement contained in this Article X, the
Trustee may itself perform, or cause performance of, such agreement,
and the expenses of the Trustee incurred in connection therewith
shall be payable by the Company under Section 7.07.
SECTION 10.08. Trustee's Duties. The powers
conferred on the Trustee under this Article X are solely to protect
its interest in the Collateral and shall not impose any duty upon it
to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Trustee shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any
Collateral.
SECTION 10.09 Remedies Upon Event of Default. If
any Event of Default shall have occurred and be continuing, the
Trustee may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies provided a secured party upon the
default of a debtor under the Uniform Commercial Code at that time,
and the Trustee may also, without notice except as specified below,
sell the Collateral or any part thereof in one or more parcels
<PAGE>
89
at public or private sale, at any exchange, broker's board or at any
of the Trustee's offices or elsewhere, for cash, on credit or for
future delivery, upon such terms as the Trustee may determine to be
commercially reasonable, and the Trustee or any Securityholder may be
the purchaser of any or all of the Collateral so sold and thereafter
hold the same, absolutely, free from any right or claim of whatsoever
kind. The Company agrees that, to the extent notice of sale shall be
required by law, at least 10 days' notice to the Company of the time
and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Trustee
shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Trustee may adjourn any public
or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. The Trustee
shall incur no liability as a result of the sale of the Collateral,
or any part thereof, at any private sale conducted in a commercially
reasonable manner. The Company hereby waives any claims against the
Trustee arising by reason of the fact that the price at which any
Collateral may have been sold at such a private sale was less than
the price which might have been obtained at a public sale, even if
the Trustee accepts the first offer received and does not offer such
Collateral to more than one offeree.
The Company recognizes that, by reason of certain
prohibitions contained in the Securities Act and applicable state
securities laws, the Trustee may be compelled, with respect to any
sale of all or any part of the Collateral, to limit purchasers to
those who will agree, among other things, to acquire such securities
for their own account, for investment, and not with a view to the
distribution or resale thereof. The Company acknowledges and agrees
that any such sale may result in prices and other terms less
favorable to the seller than if such sale were a public sale without
such restrictions and, notwithstanding such circumstances, agrees
that any such sale shall be deemed to have been made in a
commercially reasonable manner. The Trustee shall be under no
obligation to delay the sale of any of the Pledged Shares for the
period of time necessary to permit the Company to register such
securities for public sale under the Securities Act, or under
applicable state securities laws, even if the Company would agree to
do so.
<PAGE>
90
SECTION 10.10. Application of Proceeds. Upon the
occurrence and during the continuance of an Event of Default and
after the acceleration of the Securities pursuant to Section 6.02 (so
long as such acceleration has not been rescinded), any cash held by
the Trustee as Collateral and all cash proceeds received by the
Trustee in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral, shall be applied
by the Trustee in the manner specified in Section 6.10.
SECTION 10.11. Continuing Lien. Except as provided
in Section 10.05, this Indenture shall create a continuing Lien on
the Collateral that shall (i) remain in full force and effect until
payment in full of the Securities, (ii) be binding upon the Company
and its successors and assigns and (iii) enure to the benefit of the
Trustee and its successors, transferees and assigns.
SECTION 10.12. Certificates and Opinions. The
Company shall comply with (a) TIA ss. 314(b), relating to Opinions of
Counsel regarding the Lien of this Indenture and (b) TIA ss. 314(d),
relating to the release of Collateral from the Lien of this Indenture
and Officers' Certificates or other documents regarding fair value of
the Collateral, to the extent such provisions are applicable. Any
certificate or opinion required by TIA ss. 314(d) may be executed and
delivered by an Officer of the Company to the extent permitted by TIA
ss. 314(d).
SECTION 10.13. Additional Agreements. The Company
agrees that, upon the occurrence and during the continuance of a
Default hereunder, it will, at any time and from time to time, upon
the written request of the Trustee, use its best efforts to take or to
cause the issuer of the Revlon, Inc. Pledged Shares and any other
securities distributed in respect of the Revlon, Inc. Pledged Shares
(collectively with the Revlon, Inc. Pledged Shares, the "Pledged
Securities") to take such action and prepare, distribute or file such
documents, as are required or advisable in the reasonable opinion of
counsel for the Trustee to permit the public sale of such Pledged
Securities. The Company further agrees to indemnify, defend and hold
harmless the Trustee, each Holder, any underwriter and their
respective officers, directors, affiliates and controlling persons
from and against all loss, liability, expenses, costs of counsel
(including reasonable fees and expenses of legal counsel to the
Trustee), and claims (including the costs of investigation) that they
may incur insofar as
<PAGE>
91
such loss, liability, expense or claim arises out of or is based upon
any alleged untrue statement of a material fact contained in any
prospectus (or any amendment or supplement thereto) or in any
notification or offering circular, or arises out of or is based upon
any alleged omission to state a material fact required to be stated
therein or necessary to make the statements in any thereof not
misleading, except insofar as the same may have been caused by any
untrue statement or omission based upon information furnished in
writing to the Company or the issuer of such Pledged Securities by
the Trustee or any Holder expressly for use therein. The Company
further agrees, upon such written request referred to above, to use
its best efforts to qualify, file or register, or cause the issuer of
such Pledged Securities to qualify, file or register, any of the
Pledged Securities under the Blue Sky or other securities laws of
such states as may be requested by the Trustee and keep effective, or
cause to be kept effective, all such qualifications, filings or
registrations. The Company will bear all costs and expenses of
carrying out its obligations under this Section 10.13. The Company
acknowledges that there is no adequate remedy at law for failure by
it to comply with the provisions of this Section 10.13 and that such
failure would not be adequately compensable in damages, and therefore
agree that their agreements contained in this Section 10.13 may be
specially enforced.
ARTICLE XI
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls. If any
provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture
by the TIA, the required provision shall control.
SECTION 11.02. Notices. Any notice or
communication shall be in writing and delivered in Person or mailed
by first-class mail addressed as follows:
If to the Company:
Revlon Worldwide (Parent) Corporation
35 East 62nd Street
New York, NY 10021
Attention: General Counsel
Telephone: (212) 572-5170
Facsimile: (212) 572-5056
<PAGE>
92
If to the Trustee or the Escrow Agent:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attn: Corporate Trust Trustee
Administration
Telephone: (212) 815-5084
Facsimile: (212) 815-5915
The Company or the Trustee by notice to the other
may designate additional or different addresses for subsequent
notices or communications.
Any notice or communication mailed to a
Securityholder shall be sent by first-class mail to the
Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given
if so mailed within the time prescribed.
Failure to mail a notice or communication to a
Securityholder or any defect in it shall not affect its sufficiency
with respect to other Securityholders. If a notice or communication
is mailed to a Securityholder in the manner provided above, it is
duly given, whether or not the addressee receives it.
SECTION 11.03. Communication by Holders with Other
Holders. Securityholders may communicate pursuant to TIA ss. 312(b)
with other Securityholders with respect to their rights under this
Indenture or the Securities. The Company, the Trustee, the Registrar
and anyone else shall have the protection of TIA ss. 312(c).
SECTION 11.04. Certificate and Opinion as to
Conditions Precedent. Upon any request or application by the Company
to the Trustee to take or refrain from taking any action under this
Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee stating that, in the
opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed
action have been complied with; and
(2) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee
<PAGE>
93
stating that, in the opinion of such counsel, all such
conditions precedent have been complied with;
provided, however, that, in the case of such application or request
as to which the furnishing of such documents, certificates or
opinions is specifically required by any provision of this Indenture
relating to such particular application or request, no additional
certificate or opinion need be furnished.
SECTION 11.05. Statements Required in Certificate
or Opinion. Each certificate or opinion with respect to compliance
with a covenant or condition provided for in this Indenture shall
include:
(1) a statement that the Person making such
certificate or opinion has read such covenant or
condition;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(3) a statement that, in the opinion of such
Person, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied
with; and
(4) a statement as to whether or not, in the
opinion of such Person, such covenant or condition has been
complied with.
SECTION 11.06. When Securities Disregarded. In
determining whether the Holders of the required Principal Amount of
Maturity of Securities have concurred in any direction, waiver or
consent, Securities owned by the Company or by any Person directly or
indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not
to be Outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities which the Trustee knows
are so owned shall be so disregarded. Also, subject to the foregoing,
only Securities Outstanding at the time shall be considered in any
such determination.
<PAGE>
94
SECTION 11.07. Rules by Trustee, Paying Agent and
Registrar. The Trustee may make reasonable rules for action by or a
meeting of Securityholders. The Registrar and the Paying Agent may
make reasonable rules for their functions.
SECTION 11.08. Legal Holidays. If a payment date is
a Legal Holiday, payment shall be made on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the
intervening period. If a regular record date is a Legal Holiday, the
record date shall not be affected.
SECTION 11.09. Governing Law. This Indenture and
the Securities shall be governed by, and construed in accordance
with, the laws of the State of New York but without giving effect to
applicable principles of conflicts of law to the extent that the
application of the laws of another jurisdiction would be required
thereby.
SECTION 11.10. No Recourse Against Others. A
director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under
the Securities or this Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By
accepting a Security, each Securityholder shall waive and release all
such liability. The waiver and release shall be part of the
consideration for the Issue of the Securities.
SECTION 11.11. Successors. All agreements of the
Company in this Indenture and the Securities shall bind its
successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 11.12. Multiple Originals. The parties may
sign any number of copies of this Indenture. Each signed copy shall
be an original, but all of them together represent the same agreement.
One signed copy is enough to prove this Indenture.
<PAGE>
95
SECTION 11.13. Table of Contents; Headings. The
table of contents, cross-reference sheet and headings of the Articles
and Sections of this Indenture have been inserted for convenience of
reference only, are not intended to be considered a part hereof and
shall not modify or restrict any of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties have caused this
Indenture to be duly executed as of the date first written above.
REVLON WORLDWIDE
(PARENT) CORPORATION,
by /s/ Glenn P. Dickes
---------------------------
Name:
Title:
THE BANK OF NEW YORK, as
Trustee,
by /s/ Mary Jane Morrissey
---------------------------
Name: Mary Jane Morrissey
Title: Vice President
<PAGE>
EXHIBIT A
[FORM OF FACE OF INITIAL NOTE]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY,
PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH
IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY
WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY)
ONLY (1) IF IT IS AN INITIAL INVESTOR IN THE NOTES, (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION
S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER
(IF AVAILABLE) AND (2) IF IT IS A SUBSEQUENT INVESTOR IN THE NOTES,
(A) AS SET FORTH IN (1) ABOVE AND (B) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (A)(2), (A)(3)
OR (A)(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR", FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT (AND IF ACQUIRING THE
SECURITIES FROM SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR", IS
ACQUIRING SECURITIES HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS
THAN $250,000), PROVIDED THAT THE COMPANY AND THE TRUSTEE SHALL HAVE
THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO
CLAUSES (1)(D), (1)(E) OR (2)(B) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND
<PAGE>
2
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, (ii) AND IN EACH OF
THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE COMPANY AND THE TRUSTEE. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
FOR PURPOSES OF SECTION 1273 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), THIS SECURITY HAS
ORIGINAL ISSUE DISCOUNT. FOR PURPOSES OF SECTION 1273 OF THE CODE,
THE ISSUE PRICE IS $655.90 AND THE AMOUNT OF ORIGINAL ISSUE DISCOUNT
IS $344.10 IN EACH CASE PER $1,000 PRINCIPAL AMOUNT AT MATURITY OF
THIS SECURITY. FOR PURPOSES OF SECTION 1275 OF THE CODE, THE ISSUE
DATE OF THIS SECURITY IS MARCH 5, 1997. FOR PURPOSES OF SECTION 1272
OF THE CODE, THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY) IS
10-3/4%. IN ADDITION, THERE MAY BE CONTINGENT INTEREST PAYABLE ON
THIS SECURITY.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC") TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR SUCH OTHER REPRESENTATIVE OF DTC AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED
TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR
TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 2.12 AND
2.13 OF THE INDENTURE.](1)
- --------
(1) Bracketed language is the Global Note Legend to be included only on the
Global Notes.
<PAGE>
3
CUSIP
No. $
REVLON WORLDWIDE (PARENT) CORPORATION
Senior Secured Discount Note Due 2001
Principal Amount at Maturity $______________________
Revlon Worldwide (Parent) Corporation, a
Delaware corporation, promises to pay to
, or registered assigns, the
principal sum of Dollars on March 15, 2001.
<PAGE>
4
Additional provisions of this Security are set
forth on the other side of this Security.
Dated:
REVLON WORLDWIDE (PARENT)
CORPORATION,
by
--------------------------------
President
--------------------------------
Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
The Bank of New York,
as Trustee, certifies [Seal]
that this is one of
the Securities referred
to in the Indenture.
Dated:
by
--------------------
Authorized Signatory
<PAGE>
5
[FORM OF REVERSE SIDE OF INITIAL NOTE]
REVLON WORLDWIDE (PARENT) CORPORATION
Senior Secured Discount Note Due 2001
1. Interest
In the event that (1) by the 45th day following the
Deposit Date (or if such day is not a Business Day, the first
Business Day thereafter), a registration statement has not been filed
with the Securities and Exchange Commission with respect to the
proposed Registered Exchange Offer or the resale of the Initial
Notes, then Revlon Worldwide (Parent) Corporation, a Delaware
corporation (such corporation, and its successors and assigns under
the Indenture hereinafter referred to, being herein called the
"Company"), promises to pay interest on this Security from and
including the 45th day following the Deposit Date until but excluding
the earlier of (i) the date such registration statement is filed and
(ii) the 180th day following the Deposit Date (or if such day is not
a Business Day, the first Business Day thereafter) or (2) by the
180th day following the Deposit Date (or if such day is not a
Business Day, the first Business Day thereafter), neither (i) a
Registered Exchange Offer is consummated nor (ii) a Shelf
Registration Statement with respect to the resale of the Initial
Notes is declared effective, the Company promises to pay interest on
this Security from and including the 180th day following the Deposit
Date (or if such day is not a Business Day, the first Business Day
thereafter) until but excluding the earlier of (i) the consummation
of the Registered Exchange Offer and (ii) the effective date of such
Shelf Registration Statement, in each case 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 this Security as of the Semi-Annual Accrual Date immediately
preceding the date on which such interest is payable. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
Except as provided above, there will be no periodic payments of
interest. The Company shall pay interest on overdue Principal at the
rate of 11-3/4% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
<PAGE>
6
2. Method of Payment
The Company will pay interest, if any, referred to
in paragraph 1 above (except defaulted interest) on the Securities to
the persons who are registered holders of Securities (including
Exchange Notes issued in respect of Initial Notes pursuant to the
Registered Exchange Offer) at the close of business on the March 1 or
September 1 next preceding the interest payment date even if
Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying
Agent to collect Principal payments. The Company will pay Principal
in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company
may pay Principal and interest, if any, by check payable in such
money.
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking
corporation ("Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or
co-registrar without notice. The Company, Revlon Worldwide, Revlon,
Inc., RCPC or any of its domestically incorporated Wholly Owned
Recourse Subsidiaries may act as Paying Agent, Registrar,
co-registrar or transfer agent.
4. Indenture
The Company issued the Securities under an
Indenture dated as of March 1, 1997 ("Indenture"), between the
Company and the Trustee. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Capitalized terms used herein and not defined herein have the
meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Securityholders are referred to the
Indenture and the Act for a statement of those terms.
The Securities are secured obligations of the
Company limited to $770,000,000 aggregate Principal Amount at Maturity
(subject to Section 2.07 of the Indenture). This Security is one of
the Initial Notes referred to in the Indenture. The Securities
include
<PAGE>
7
the Initial Notes and any Exchange Notes issued in exchange for the
Initial Notes pursuant to the Indenture. The Initial Notes and the
Exchange Notes are treated as a single class of securities under the
Indenture. The Indenture imposes certain limitations on, among other
things, the issuance of debt and redeemable stock by the Company, the
issuance of debt and preferred stock by Revlon Worldwide, Revlon,
Inc., RCPC and its Subsidiaries, the payment of dividends and other
distributions and acquisitions or retirements of the Company's
Capital Stock, the sale or transfer of assets and Subsidiary stock
and transactions with Affiliates. In addition, the Indenture limits
the ability of the Company and its Subsidiaries to restrict
distributions and dividends from such Subsidiaries.
5. Optional Redemption
The Securities may be redeemed at the option of the
Company in connection with the occurrence of a Change of Control as a
whole at a redemption price equal to the sum of (i) the Accreted
Value thereof at the date of redemption, plus (ii) the Applicable
Premium at the date of redemption.
On and after March 15, 2000, the Securities may be
redeemed, at the option of the Company, in whole or from time to time
in part at 102.6875% of the Accreted Value thereof as of the
redemption date.
6. Mandatory Redemption
In the event that (i) the Required Actions have not
occurred on or prior to June 5, 1997 or (ii) the Revlon Worldwide
Notes have been accelerated pursuant to Section 6.02 of the Revlon
Worldwide Indenture prior to the release of the Escrowed Property,
the Company shall redeem all the Securities at a redemption price in
cash equal to 100% of the Accreted Value thereof as of the redemption
date on (a) June 25, 1997, in the event that the Required Actions
have not occurred on or prior to June 5, 1997, or (b) the 20th day
(or if such day is not a Business Day, the next following Business
Day) following the occurrence of such acceleration, in the event of
an acceleration.
<PAGE>
8
7. Notice of Redemption
Notice of redemption pursuant to paragraph 5 above
will be mailed at least 30 days but not more than 60 days before the
redemption date and notice of redemption pursuant to paragraph 6 will
be mailed promptly after June 5, 1997 or following the acceleration
of the Revlon Worldwide Notes, as applicable, to each Holder of
Securities to be redeemed at his or her registered address.
Securities in denominations larger than $1,000 Principal Amount at
Maturity may be redeemed in part but only in whole multiples of
$1,000 Principal Amount at Maturity. If money sufficient to pay the
redemption price of all Securities (or portions thereof) to be
redeemed on the redemption date is deposited with the Paying Agent on
or before the redemption date and certain other conditions are
satisfied, on and after such date Accreted Value ceases to increase,
and interest, if any, ceases to accrue, on such Securities (or such
portions thereof) called for redemption.
8. Put Provisions
Upon a Change of Control, any Holder of Securities
will have the right to cause the Company to repurchase all or any
part of the Securities of such Holder at a repurchase price equal to
the Put Amount of the Securities to be repurchased as provided in,
and subject to the terms of, the Indenture.
9. Security
To secure the due and punctual payment of the
Principal and interest, if any, on the Securities and all other
amounts payable by the Company under the Indenture and the Securities
when and as the same shall be due and payable, whether at maturity,
by acceleration or otherwise, according to the terms of the
Securities and the Indenture, the Company has granted a security
interest in the Collateral to the Trustee for the benefit of the
Holders of Securities pursuant to the Indenture. The Collateral is
subject to release from the Lien of the Indenture to the extent
provided therein.
<PAGE>
9
10. Denominations; Transfer; Exchange
The Securities are in registered form without
coupons in denominations of Principal Amount at Maturity of $1,000
and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for
redemption (except, in the case of a Security to be redeemed in part,
the portion of the Security not to be redeemed) or any Securities for
a period of 15 days before a selection of Securities to be redeemed.
11. Persons Deemed Owners
The registered Holder of this Security may be
treated as the owner of it for all purposes.
12. Unclaimed Money
If money for the payment of Principal or interest,
if any, remains unclaimed for two years, the Trustee or Paying Agent
shall pay the money back to the Company at its request unless an
abandoned property law designates another person. After any such
payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
13. Defeasance
Subject to certain conditions, the Company at any
time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee
money or U.S. Government Obligations for the payment of Principal and
interest, if any, on the Securities to redemption or maturity, as the
case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the
Indenture, (i) the Indenture or the Securities may be amended with
the written consent of the Holders of at least a majority in
Principal Amount at Maturity
<PAGE>
10
outstanding of the Securities and (ii) any default or noncompliance
with any provision may be waived with the written consent of the
Holders of a majority in Principal Amount at Maturity outstanding of
the Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Securityholder, the Company and
the Trustee may amend the Indenture or the Securities to cure any
ambiguity, omission, defect or inconsistency, or to comply with
Article V of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or
to add guarantees with respect to the Securities or to secure (or
provide additional security for) the Securities, or to add additional
covenants or surrender rights and powers conferred on the Company, or
to provide for the issuance of the Exchange Notes, or to comply with
any request of the SEC in connection with qualifying the Indenture
under the Act, or to make any change that does not adversely affect
the rights of any Securityholder. A consent to any amendment or
waiver of any provision in the Indenture or in the Securities by any
Holder given in connection with a tender of such Holder's Securities
shall not be rendered invalid by such tender.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i)
default for 30 days in payment of interest, if any, on the
Securities; (ii) default in payment of Principal on the Securities at
maturity, upon redemption pursuant to paragraph 5 or paragraph 6 of
the Securities, upon declaration or otherwise, or failure by the
Company to redeem or purchase Securities when required; (iii) failure
by the Company to comply with other agreements in the Indenture or
the Escrow Agreement or the Securities, in certain cases subject to
notice and lapse of time; (iv) certain accelerations (including
failure to pay within any grace period after final maturity) of other
Debt of the Company or any Significant Subsidiary if the total
principal amount on the portion of such Debt that is accelerated (or
so unpaid) exceeds $25,000,000 and continues for 10 days after the
required notice to the Company; (v) certain events of bankruptcy or
insolvency with respect to the Company or any Significant Subsidiary;
and (vi) certain judgments or decrees for the payment of money in
excess of $25,000,000. 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 Securities may
<PAGE>
11
declare the Default Amount of all the Securities to be due and
payable immediately. Certain events of bankruptcy or insolvency are
Events of Default which will result in the Default Amount of the
Securities being due and payable immediately upon the occurrence of
such Events of Default.
Securityholders may not enforce the Indenture or
the Securities except as provided in the Indenture. The Trustee may
refuse to enforce the Indenture or the Securities unless it receives
reasonable indemnity or security. Subject to certain limitations,
Holders of a majority in Principal Amount at Maturity of the
Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any
continuing Default (except a Default in payment of Principal or
interest) if it determines that withholding notice is in their
interest.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act,
the Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may
otherwise deal with and collect obligations owed to it by the Company
or its Affiliates and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as
such, of the Company or the Trustee shall not have any liability for
any obligations of the Company under the Securities or the Indenture
or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the
Securities.
18. Authentication
This Security shall not be valid until an
authorized signatory of the Trustee (or an authenticating agent)
manually signs the certificate of authentication on the other side of
this Security.
<PAGE>
12
19. Abbreviations
Customary abbreviations may be used in the name of
a Securityholder or an assignee, such as TEN COM (= tenants in
common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants
with rights of survivorship and not as tenants in common), CUST
(=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company
has caused CUSIP numbers to be printed on the Securities and has
directed the Trustee to use CUSIP numbers in notices of redemption as
a convenience to Securityholders. No representation is made as to the
accuracy of such numbers either as printed on the Securities or as
contained in any notice of redemption and reliance may be placed only
on the other identification numbers placed thereon.
The Company will furnish to any Securityholder upon
written request and without charge to the Securityholder a copy of
the Indenture which has in it the text of this Security in larger
type. Requests may be made to: Revlon Worldwide (Parent) Corporation,
35 East 62nd Street, New York, NY 10021, Attention: General Counsel.
<PAGE>
13
- ------------------------------------------------------------------------------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent
to transfer this Security on the books of the
Company. The agent may substitute another to
act for him.
Date:_______________ Your Signature:____________________
- ------------------------------------------------------------------------------
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES EXCEPT PERMANENT
OFFSHORE PHYSICAL NOTES]
In connection with any transfer of this Note
occurring prior to the date that is the earlier of (i) the date of an
effective registration statement with respect to the Registered
Exchange Offer or the resale of the Initial Notes and (ii) March 5,
1999, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
[ ] (a) this Note is being transferred in compliance
with the exemption from registration under the
Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in
accordance with (a) above and documents are being
furnished that comply with the conditions of
transfer set forth in this Note and the Indenture.
<PAGE>
14
If neither of the foregoing boxes is checked, the Trustee or other
Registrar shall not be obligated to register this Note in the name of
any Person other than the Holder hereof unless and until the
conditions to any such transfer of registration set forth herein and
in Section 307 of the Indenture shall have been satisfied.
Date: ____________ __________________________
NOTICE: The signature must
correspond with
the name as
written upon the
face of the
within-mentioned
instrument in
every particular,
without
alteration or any
change whatsoever.
Signature Guarantee: ______________________________________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is
purchasing this Note for its own account or an account with respect
to which it exercises sole investment discretion and that it and any
such account is a "qualified institutional buyer" within the meaning
of Rule 144A under the Securities Act of 1933, as amended, and is
aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that
the transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from registration
provided by Rule 144A.
Dated: _____________________ NOTICE: To be executed
by an executive officer.
<PAGE>
15
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased
by the Company pursuant to Section 4.09 of the Indenture, check the
box:
[ ]
If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 4.09 of the
Indenture, state the Principal Amount at Maturity: $
Date:___________________ Your Signature:_______________________
(Sign exactly as your name
appears on the other side of
the Security)
Signature Guarantee:_________________________________
<PAGE>
EXHIBIT B
[FORM OF FACE OF EXCHANGE NOTE]
FOR PURPOSES OF SECTION 1273 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE"), THIS SECURITY HAS ORIGINAL
ISSUE DISCOUNT. FOR PURPOSES OF SECTION 1273 OF THE CODE, THE ISSUE
PRICE IS $655.90 AND THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $344.10
IN EACH CASE PER $1000 PRINCIPAL AMOUNT AT MATURITY OF THIS SECURITY.
FOR PURPOSES OF SECTION 1275 OF THE CODE, THE ISSUE DATE OF THIS
SECURITY IS MARCH 5, 1997. FOR PURPOSES OF SECTION 1272 OF THE CODE,
THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY) IS 10-3/4%. IN
ADDITION, THERE MAY BE CONTINGENT INTEREST PAYABLE ON THIS SECURITY.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC") TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR SUCH OTHER REPRESENTATIVE OF DTC AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO
A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTIONS 2.12 AND
2.13 OF THE INDENTURE.](1)
- --------
(1) Bracketed language is the Global Note Legend to be included only in the
Global Notes.
<PAGE>
2
CUSIP
No. $
REVLON WORLDWIDE (PARENT) CORPORATION
Series B Senior Secured Discount Note Due 2001
Principal Amount at Maturity $_________________
Revlon Worldwide (Parent) Corporation, a Delaware
corporation, promises to pay to , or registered assigns, the
principal sum of Dollars on March 15, 2001.
<PAGE>
3
Additional provisions of this Security are set forth
on the other side of this Security.
Dated:
REVLON WORLDWIDE (PARENT)
CORPORATION,
by
--------------------
President
--------------------
Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
The Bank of New York
as Trustee, certifies
that this is one of [Seal]
the Securities referred
to in the Indenture.
Dated:
by
-------------------------
Authorized Signatory
<PAGE>
4
[FORM OF REVERSE SIDE OF EXCHANGE NOTE]
REVLON WORLDWIDE (PARENT) CORPORATION
Series B Senior Secured Discount Note Due 2001
1. Interest
There will be no periodic payments of interest. The
Company shall pay interest on overdue Principal at the rate of
11-3/4% per annum, and it shall pay interest on overdue installments
of interest at the same rate to the extent lawful.
2. Method of Payment
Holders must surrender Securities to a Paying Agent
to collect Principal payments. The Company will pay Principal in
money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company
may pay Principal and interest, if any, by check payable in such
money.
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking
corporation ("Trustee"), will act as Paying Agent and Registrar. The
Company may appoint and change any Paying Agent, Registrar or
co-registrar without notice. The Company, Revlon Worldwide, Revlon,
Inc., RCPC or any of its domestically incorporated Wholly Owned
Recourse Subsidiaries may act as Paying Agent, Registrar,
co-registrar or transfer agent.
4. Indenture
The Company issued the Securities under an
Indenture dated as of March 1, 1997 ("Indenture"), between the
Company and the Trustee. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Capitalized terms used herein and not defined herein have the
meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and
<PAGE>
5
Securityholders are referred to the Indenture and the Act for a
statement of those terms.
The Securities are secured obligations of the
Company limited to $770,000,000 aggregate Principal Amount at
Maturity (subject to Section 2.07 of the Indenture). This Security is
one of the Exchange Notes referred to in the Indenture. The
Securities include the Initial Notes and any Exchange Notes issued in
exchange for the Initial Notes pursuant to the Indenture. The Initial
Notes and the Exchange Notes are treated as a single class of
securities under the Indenture. The Indenture imposes certain
limitations on, among other things, the issuance of debt and
redeemable stock by the Company, the issuance of debt and preferred
stock by Revlon Worldwide, Revlon, Inc., RCPC and its Subsidiaries,
the payment of dividends and other distributions and acquisitions or
retirements of the Company's Capital Stock, the sale or transfer of
assets and Subsidiary stock and transactions with Affiliates. In
addition, the Indenture limits the ability of the Company and its
Subsidiaries to restrict distributions and dividends from such
Subsidiaries.
5. Optional Redemption
The Securities may be redeemed at the option of the
Company in connection with the occurrence of a Change of Control as a
whole at a redemption price equal to the sum of (i) the Accreted
Value thereof at the date of redemption, plus (ii) the Applicable
Premium at the date of redemption.
On and after March 15, 2000, the Securities may be
redeemed, at the option of the Company, in whole or from time to time
in part at 102.6875% of the Accreted Value thereof as of the
redemption date.
<PAGE>
6
6. Mandatory Redemption
In the event that (i) the Required Actions have not
occurred on or prior to June 5, 1997 or (ii) the Revlon Worldwide
Notes have been accelerated pursuant to Section 6.02 of the Revlon
Worldwide Indenture prior to the release of the Escrowed Property,
the Company shall redeem all the Securities at a redemption price in
cash equal to 100% of the Accreted Value thereof as of the redemption
date on (a) June 25, 1997, in the event that the Required Actions
have not occurred on or prior to June 5, 1997, or (b) the 20th day
(or if such day is not a Business Day, the next following Business
Day) following the occurrence of such acceleration, in the event of
an acceleration.
7. Notice of Redemption
Notice of redemption pursuant to paragraph 5 above
will be mailed at least 30 days but not more than 60 days before the
redemption date and notice of redemption pursuant to paragraph 6 will
be mailed promptly after June 5, 1997 or following the acceleration
of the Revlon Worldwide Notes, as applicable, to each Holder of
Securities to be redeemed at his or her registered address.
Securities in denominations larger than $1,000 Principal Amount at
Maturity may be redeemed in part but only in whole multiples of
$1,000 Principal Amount at Maturity. If money sufficient to pay the
redemption price of all Securities (or portions thereof) to be
redeemed on the redemption date is deposited with the Paying Agent on
or before the redemption date and certain other conditions are
satisfied, on and after such date Accreted Value ceases to increase,
and interest, if any, ceases to accrue, on such Securities (or such
portions thereof) called for redemption.
8. Put Provisions
Upon a Change of Control, any Holder of Securities
will have the right to cause the Company to repurchase all or any
part of the Securities of such Holder at a repurchase price equal to
the Put Amount of the Securities to be repurchased as provided in,
and subject to the terms of, the Indenture.
<PAGE>
7
9. Security
To secure the due and punctual payment of the
Principal and interest, if any, on the Securities and all other
amounts payable by the Company under the Indenture and the Securities
when and as the same shall be due and payable, whether at maturity,
by acceleration or otherwise, according to the terms of the
Securities and the Indenture, the Company has granted a security
interest in the Collateral to the Trustee for the benefit of the
Holders of Securities pursuant to the Indenture. The Collateral is
subject to release from the Lien of the Indenture to the extent
provided therein.
10. Denominations; Transfer; Exchange
The Securities are in registered form without
coupons in denominations of Principal Amount at Maturity of $1,000
and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for
redemption (except, in the case of a Security to be redeemed in part,
the portion of the Security not to be redeemed) or any Securities for
a period of 15 days before a selection of Securities to be redeemed.
11. Persons Deemed Owners
The registered Holder of this Security may be
treated as the owner of it for all purposes.
12. Unclaimed Money
If money for the payment of Principal or interest,
if any, remains unclaimed for two years, the Trustee or Paying Agent
shall pay the money back to the Company at its request unless an
abandoned property law designates another person. After any such
payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
<PAGE>
8
13. Defeasance
Subject to certain conditions, the Company at any
time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee
money or U.S. Government Obligations for the payment of Principal and
interest, if any, on the Securities to redemption or maturity, as the
case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the
Indenture, (i) the Indenture or the Securities may be amended with
the written consent of the Holders of at least a majority in
Principal Amount at Maturity outstanding of the Securities and (ii)
any default or noncompliance with any provision may be waived with
the written consent of the Holders of a majority in Principal Amount
at Maturity outstanding of the Securities. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture
or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article V of the Indenture, or to
provide for uncertificated Securities in addition to or in place of
certificated Securities, or to add guarantees with respect to the
Securities or to secure (or provide additional security for) the
Securities, or to add additional covenants or surrender rights and
powers conferred on the Company, or to provide for the issuance of
the Exchange Notes, or to comply with any request of the SEC in
connection with qualifying the Indenture under the Act, or to make
any change that does not adversely affect the rights of any
Securityholder. A consent to any amendment or waiver of any provision
in the Indenture or in the Securities by any Holder given in
connection with a tender of such Holder's Securities shall not be
rendered invalid by such tender.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i)
default for 30 days in payment of interest, if any, on the
Securities; (ii) default in payment of Principal on the Securities at
maturity, upon redemption pursuant to paragraph 5 or paragraph 6 of
the Securities, upon declaration or otherwise, or
<PAGE>
9
failure by the Company to redeem or purchase Securities when
required; (iii) failure by the Company to comply with other
agreements in the Indenture or the Escrow Agreement or the
Securities, in certain cases subject to notice and lapse of time;
(iv) certain accelerations (including failure to pay within any grace
period after final maturity) of other Debt of the Company or any
Significant Subsidiary if the total principal amount on the portion
of such Debt that is accelerated (or so unpaid) exceeds $25,000,000
and continues for 10 days after the required notice to the Company;
(v) certain events of bankruptcy or insolvency with respect to the
Company or any Significant Subsidiary; and (vi) certain judgments or
decrees for the payment of money in excess of $25,000,000. 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 Securities may
declare the Default Amount of all the Securities to be due and
payable immediately. Certain events of bankruptcy or insolvency are
Events of Default which will result in the Default Amount of the
Securities being due and payable immediately upon the occurrence of
such Events of Default.
Securityholders may not enforce the Indenture or
the Securities except as provided in the Indenture. The Trustee may
refuse to enforce the Indenture or the Securities unless it receives
reasonable indemnity or security. Subject to certain limitations,
Holders of a majority in Principal Amount at Maturity of the
Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any
continuing Default (except a Default in payment of Principal or
interest) if it determines that withholding notice is in their
interest.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act,
the Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may
otherwise deal with and collect obligations owed to it by the Company
or its Affiliates and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee.
<PAGE>
10
17. No Recourse Against Others
A director, officer, employee or stockholder, as
such, of the Company or the Trustee shall not have any liability for
any obligations of the Company under the Securities or the Indenture
or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the
Securities.
18. Authentication
This Security shall not be valid until an
authorized signatory of the Trustee (or an authenticating agent)
manually signs the certificate of authentication on the other side of
this Security.
19. Abbreviations
Customary abbreviations may be used in the name of
a Securityholder or an assignee, such as TEN COM (=tenants in
common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants
with rights of survivorship and not as tenants in common), CUST
(=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company
has caused CUSIP numbers to be printed on the Securities and has
directed the Trustee to use CUSIP numbers in notices of redemption as
a convenience to Securityholders. No representation is made as to the
accuracy of such numbers either as printed on the Securities or as
contained in any notice of redemption and reliance may be placed only
on the other identification numbers placed thereon.
The Company will furnish to any Securityholder upon
written request and without charge to the Securityholder a copy of
the Indenture which has in it the text of this Security in larger
type. Requests may be made to: Revlon Worldwide (Parent) Corporation,
35 East 62nd Street, New York, NY 10021, Attention: General Counsel.
<PAGE>
11
- ------------------------------------------------------------------------------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent
to transfer this Security on the books of the
Company. The agent may substitute another to act
for him.
Date:___________________ Your Signature:___________________________
- ------------------------------------------------------------------------------
<PAGE>
12
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security
purchased by the Company pursuant to Section 4.09 of the Indenture,
check the box:
[ ]
If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 4.09 of the
Indenture, state the Principal Amount at Maturity: $
Date:_______________ Your Signature:________________
(Sign exactly as
your name appears
on the other side
of the Security)
Signature Guarantee:__________________________________________
(Signature must be guaranteed)
<PAGE>
EXHIBIT C
[FORM OF CERTIFICATE TO BE DELIVERED UPON TERMINATION
OF RESTRICTED PERIOD]
On or after April 14, 1997
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Re: REVLON WORLDWIDE (PARENT) CORPORATION
(the "Company") Senior Secured Discount
Notes due 2001 (the "Initial Notes") and
Series B Senior Secured Discount Notes
due 2001 (the "Exchange Notes" and,
together with the Initial Notes, the
"Notes")
---------------------------------------
Ladies and Gentlemen:
This letter relates to Notes represented by a
temporary global note certificate (the "Temporary Certificate").
Pursuant to Section 2.01 of the Indenture dated as of March 1, 1997
relating to the Notes (the "Indenture"), we hereby certify that (1)
we are the beneficial owner of $[ ] principal amount of Initial Notes
represented by the Temporary Certificate and (2) we are a person
outside the United States to whom the Initial Notes could be
transferred in accordance with Rule 904 of Regulation S promulgated
under the Securities Act of 1933, as amended. Accordingly, you are
hereby requested to issue a Certificated Note representing the
undersigned's interest in the principal amount of Initial Notes
represented by the Temporary Certificate, all in the manner provided
by the Indenture.
You and the Company are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in
<PAGE>
2
any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate
have the meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:____________________________
Authorized Signature
<PAGE>
EXHIBIT D
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS TO
NON-QIB INSTITUTIONAL ACCREDITED INVESTORS]
[date]
Revlon Worldwide (Parent) Corporation
c/o The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
Dear Sirs:
This certificate is delivered to request a transfer
of $ aggregate principal amount at maturity of Senior Secured
Discount Notes due 2001 (the "Notes") of Revlon Worldwide (Parent)
Corporation (the "Company").
The undersigned represents and warrants to you
that:
(1) We are an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation
D under the Securities Act of 1933, as amended (the
"Securities Act")) purchasing for our own account or for the
account of such an institutional "accredited investor," and
we are acquiring the Notes not with a view to, or for offer
or sale in connection with, any distribution in violation of
the Securities Act or other applicable securities law and we
have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks
of our investment in the Notes and invest in or purchase
securities similar to the Notes in the normal course of our
business. We and any accounts for which we are acting are
each able to bear the economic risk of our or its
investment.
(2) We understand and acknowledge that the Notes
have not been registered under the Securities Act, or any
other applicable securities law and unless so registered,
may not be sold except as permitted in the following
sentence. We agree on our own behalf and on behalf of any
investor account for which we are purchasing Notes
<PAGE>
2
to offer, sell or otherwise transfer such Notes prior to the
date which is two years after the later of the date of
original issue and the last date on which the Company or any
affiliate of the Company was the owner of such Notes (or any
predecessor thereto) (the "Resale Restriction Termination
Date") only (a) if it is an initial investor in the Notes,
(i) to the Company, (ii) pursuant to a registration
statement which has been declared effective under the
Securities Act, (iii) in a transaction complying with the
requirements of Rule 144A under the Securities Act, to a
person we reasonably believe is a "Qualified Institutional
Buyer" within the meaning of Rule l44A (a "QIB") that
purchases for its own account or for the account of a QIB
and to whom notice is given that the transfer is being made
in reliance on Rule 144A, (iv) pursuant to offers and sales
that occur outside the United States within the meaning of
Regulation S under the Securities Act, or (v) pursuant to an
exemption from registration under the Securities Act
provided by Rule 144 thereunder (if available), and (b) if
it is a subsequent investor in the Notes, (i) as set forth
in (a) above and (ii) to an institutional "accredited
investor" within the meaning of subparagraphs (a)(1),
(a)(2), (a)(3) or (a)(7) of Rule 501 under the Securities
Act that is purchasing the Notes for its own account or for
the account of such an institutional "accredited investor",
in each case, in a transaction involving a minimum purchase
price of $250,000 for such Notes, subject in each of the
foregoing cases to any requirement of law that the
disposition of our property or the property of such investor
account or accounts be at all times within our or their
control and in compliance with any applicable state
securities laws. The foregoing restrictions on resale will
not apply subsequent to the Resale Restriction Termination
Date. If any resale or other transfer of the Notes is
proposed to be made pursuant to clause (b)(ii) above prior
to the Resale Restriction Termination Date, the transferor
shall deliver to the Company and the trustee under the
Indenture pursuant to which the Notes are issued a letter
from the transferee substantially in the form of this
letter, which shall provide, among other things, that the
transferee is an institutional "accredited investor" within
the meaning of subparagraphs (a)(1), (a)(2), (a)(3) or
(a)(7) of Rule 501 under the Securities Act and that it is
<PAGE>
3
acquiring such Notes for investment purposes and not for
distribution in violation of the Securities Act. We
acknowledge that the Company and the Trustee reserve the
right prior to any offer, sale or other transfer of the
Notes pursuant to clauses (a)(iv), (a)(v) or (b)(ii) above
prior to the Resale Restriction Termination Date to require
the delivery of an opinion of counsel, certifications and/or
other information satisfactory to the Company and the
Trustee.
(3) We are acquiring the Notes purchased by us for
our own account or for one or more accounts as to each of
which we exercise sole investment discretion.
(4) You are entitled to rely upon this letter and
you are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or
legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By: (Name of Purchaser)
Date:
Upon transfer the Notes would be registered in the name of the new
beneficial owner as follows:
TAXPAYER
ID
NAME ADDRESS NUMBER:
---- ------- ------
<PAGE>
EXHIBIT E
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S]
[date]
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Re: Revlon Worldwide (Parent) Corporation
(the "Company") Senior Secured Discount
Notes due 2001 (the "Notes")
---------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $________
aggregate principal amount of the Notes, we confirm that such sale
has been effected pursuant to and in accordance with Regulation S
under the United States Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a
person in the United States;
(2) either (a) at the time the buy order was
originated, the transferee was outside the United States or
we and any person acting on our behalf reasonably believed
that the transferee was outside the United States or (b) the
transaction was executed in, on or through the facilities of
a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction
has been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been
made in the United States in contravention of the
requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or
scheme to evade the registration requirements of
the Securities Act.
<PAGE>
2
In addition, if the sale is made during a
restricted period and the provisions of Rule 903(c)(3) or Rule
904(c)(1) of Regulation S are applicable thereto, we confirm that
such sale has been made in accordance with the applicable provisions
of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You and the Company are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered
hereby. Terms used in this certificate have the meanings set forth in
Regulation S.
Very truly yours,
[Name of Transferor]
By:_______________________
Authorized Signature
<PAGE>
EXHIBIT F
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS PURSUANT TO RULE 144A]
Bank of New York
101 Barclay Street, 21-W
New York, NY 10286
[date]
Re: Revlon Worldwide (Parent) Corporation
(the "Company") Senior Secured Discount
Notes due 2001 (the "Notes")
--------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $_______
aggregate principal amount at maturity of the Notes, we hereby
certify that such transfer is being effected pursuant to and in
accordance with Rule 144A under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we hereby
further certify that the Notes are being transferred to a person that
we reasonably believe is purchasing the Notes for its own account, or
for one or more accounts with respect to which such person exercises
sole investment discretion, and such person and each such account is
a "qualified institutional buyer" within the meaning of Rule 144A in
a transaction meeting the requirements of Rule 144A and such Notes
are being transferred in compliance with any applicable blue sky
securities laws of any state of the United States.
You and the Company are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered
hereby.
Very truly yours,
--------------------------
[Name of Transferor]
By:
--------------------------
Authorized Signature
<PAGE>
SCHEDULE I
Pledged Shares
--------------
Class of No. of
Issuer Security Shares
------ -------- ------
Revlon Worldwide Common Stock 471
<PAGE>
SCHEDULE II
Permitted Transactions
1. Asset Transfer Agreement by and Among Revlon,
Inc., Charles of the Ritz Group Ltd., New Revlon,
Inc. and Revlon Consumer Products Corporation
dated June 24, 1992 (and the ancillary agreements
thereto).
2. Real Property Asset Transfer Agreement by and
among Revlon, Inc., (now known as Revlon Holdings
Inc., New Revlon, Inc. (now known as Revlon, Inc.)
and Revlon Consumer Products Corporation.
3. Benefit Plans Assumption Agreement dated as of
July 1, 1992 by and among Revlon Holdings Inc.
(formerly known as Revlon, Inc.) , Revlon, Inc.,
(formerly known as New Revlon, Inc) and Revlon
Consumer Products Corporation.
4. Second Amended and Restated Operating Services
Agreement by and among Revlon Holdings Inc.,
Revlon, Inc. and Revlon Consumer Products
Corporation dated June 24, 1996 (Amended and
Restated as of January 1, 1996).
5. Reimbursement and Expense Allocation Agreement
dated May 3, 1996 by and among MacAndrews & Forbes
Holdings Inc., Revlon, Inc. and Revlon Consumer
Products Corporation.
6. Reimbursement Agreement by and among MacAndrews &
Forbes Holdings Inc., New Revlon, Inc. and Revlon
Consumer Products Corporation dated June 24, 1992.
7. Reimbursement Agreement by and among MacAndrews &
Forbes Holdings Inc. and Revlon Worldwide
Corporation dated March 25, 1993.
8. Tax Sharing Agreement by and among Mafco Holdings,
Inc., Revlon Holdings Inc., Revlon, Inc. and
Revlon Consumer Products Corporation, as amended
by the First Amendment dated as of February 28,
1995 and the Second Amendment dated as of January
1, 1997.
9. Tax Sharing Agreement between Revlon Worldwide
Corporation and Mafco Holdings Inc. dated
March 17, 1993, as amended to the Issue Date.
<PAGE>
2
10. Registration Rights Agreement dated as of March 5,
1996 between Revlon Worldwide Corporation and
Revlon, Inc.
11. Purchase and Sale Agreement, as amended, dated as
of February 18, 1993 by and between Revlon
Consumer Products Corporation and Revlon Holdings
Inc. (Transfer of Edison facility).
12. Reassignment and Release Agreement dated as of
November 4, 1993 between Revlon Consumer Products
Corporation, Revlon Holdings Inc. and SJDH Truman
Drive Trust. (Transfer of 1 Truman Drive, Edison,
New Jersey).
13. Lease Agreement between Revlon Holdings Inc. and
Revlon Consumer Products Corporation dated
April 2, 1993 (Edison R&D facility).
14. Sublease Agreement dated October 31, 1995 by and
between Revlon Consumer Products Corporation and
MacAndrews & Forbes Group Incorporated. (625
Madison Avenue)
15. Occupancy Agreement dated as of January 1, 1995
between Revlon Holdings Inc. and Revlon Consumer
Products Corporation (Administration Building,
Plant and Company store).
16. Lease Contract dated October 29, 1992 between
Revlon K.K. (now known as Revlon Real Estate K.K.)
and Marvel Entertainment Group, Inc. (as amended
April 14, 1994 and by letter agreement dated
October 13, 1994 and extension dated December 5,
1995.
17. Occupancy Memorandum dated as of February 28, 1995
between Revlon International Corporation and
MacAndrews & Forbes Group Incorporated (Occupancy
of 88 Brook Street).
18. Airplane Usage Memorandum dated November 16, 1994
between GDL Aviation Inc. and Revlon Consumer
Products Corporation.
19. Stock and Asset Purchase Agreement dated as of
January 1, 1994 by and between Revlon Consumer
Products Corporation and Revlon Holdings Inc. (New
Essentials)
20. Asset Transfer Agreement dated as of September 1,
1993 by and between Revlon Consumer Products
<PAGE>
3
Corporation and Revlon Holdings Inc. (Tarlow
Advertising Division).
21. Lipstick Assembly Agreement dated February 1, 1993
between Revlon, Inc. and Tabacalera de Garcia,
S.A. as amended by First Amendment to Lipstick
Assembly Agreement dated as of January 1, 1994
between Revlon Consumer Products Corporation and
Tabacalera de Garcia S.A.
22. License Agreement dated as of July 18, 1995
between Revlon Consumer Products Corporation and
Toy Biz, Inc.
23. Sublicense Agreement dated as of January 1, 1993
between Revlon Holdings Inc., as Sublicensor, and
Revlon Consumer Products Corporation, as
Sublicensee, (for all duty free shops throughout
the world and in all other channels of
distribution in countries of the world other than
the U.S.) (Sublicense of Bill Blass trademark)
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION
Senior Secured Discount Notes due 2001
REGISTRATION AGREEMENT
March 5, 1997
CHASE SECURITIES INC.
SMITH BARNEY INC.
c/o Chase Securities Inc.
270 Park Avenue, 4th Floor
New York, NY 10017
Dear Sirs:
Revlon Worldwide (Parent) Corporation, a Delaware
corporation (the "Company"), proposes to issue and sell to Chase Securities
Inc. and Smith Barney Inc. (the "Initial Purchasers"), upon the terms set
forth in a purchase agreement of even date herewith (the "Purchase
Agreement"), its Senior Secured Discount Notes due 2001 (the "Notes").
Capitalized terms used but not specifically defined herein are defined in the
Purchase Agreement. As an inducement to the Initial Purchasers to enter into
the Purchase Agreement and in satisfaction of a condition to your obligations
thereunder, the Company agrees with you, for the benefit of the holders of the
Notes (including the Initial Purchasers) (the "Holders"), as follows:
1. Registered Exchange Offer. The Company shall, at its
cost, prepare and, not later than 45 days following the Deposit Date (or if
the 45th day is not a business day, the first business day thereafter), shall
file with the Securities and Exchange Commission (the "Commission") a
registration statement (the "Exchange Offer Registration Statement") on an
appropriate form under the Securities Act of 1933, as amended, (the "1933
Act") with respect to a proposed offer (the "Registered Exchange Offer") to
the Holders to issue and deliver to such Holders, in exchange for the Notes, a
like principal amount of debt securities (the "Exchange Notes") of the Company
identical in all material respects to the Notes (except that the interest rate
increase provisions and the transfer restrictions will be modified or
eliminated, as appropriate), shall use its best efforts to cause the Exchange
Offer Registration Statement to become effective under the 1933 Act within 150
days of the Deposit Date (or if the 150th day is not a business day, the first
business day thereafter) and shall
<PAGE>
2
use its best efforts to keep the Exchange Offer Registration Statement
effective under the 1933 Act until the close of business on the 180th day
following the expiration of the Registered Exchange Offer (such period being
called the "Exchange Offer Registration Period") for use by Exchanging Dealers
(as defined below) as contemplated in Section 3(g) below. The Company shall be
deemed not to have used its best efforts to keep the Exchange Offer
Registration Statement effective during the Exchange Offer Registration Period
if it voluntarily takes any action that would result in Exchanging Dealers not
being able to use such Registration Statement as contemplated in such Section
3(g), unless (i) such action is required by applicable law, or (ii) such
action is taken by the Company in good faith and for valid business reasons
(not including avoidance of the Company's obligations hereunder), including
the acquisition or divestiture of assets, so long as the Company promptly
thereafter complies with the requirements of Section 3(j) hereof, if
applicable. The Exchange Notes will be issued under the Indenture.
Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer,
it being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Notes for Exchange Notes (assuming that such Holder is
not an affiliate of the Company within the meaning of the 1933 Act, acquires
the Exchange Notes in the ordinary course of such Holder's business and has no
arrangements with any person to participate in the distribution of the
Exchange Notes) to trade such Exchange Notes from and after their receipt
without any limitations or restrictions under the 1933 Act and without
material restrictions under the securities laws of a substantial proportion of
the several states of the United States. Notwithstanding the foregoing, the
Initial Purchasers and the Company acknowledge that, pursuant to current
interpretations by the Commission's staff of Section 5 of the 1933 Act, and in
the absence of an applicable exemption therefrom, (i) each Holder (including
any Initial Purchaser) which is a broker-dealer electing to exchange Notes,
acquired for its own account as a result of market making activities or other
trading activities, for Exchange Notes (an "Exchanging Dealer"), is required
to deliver a prospectus containing the information set forth in Annex A hereto
on the cover, in Annex B hereto in "The Exchange Offer" section, and in Annex
C hereto in the "Plan of Distribution" section of such prospectus in
connection with a sale of any such Exchange Notes received by such Exchanging
Dealer pursuant to the Registered Exchange Offer
<PAGE>
3
and (ii) each Initial Purchaser which elects to sell Exchange Notes acquired
in exchange for Notes constituting any portion of an unsold allotment is
required to deliver a prospectus, containing the information required by Items
507 and/or 508 of Regulation S-K under the 1933 Act, as applicable, in
connection with such a sale.
If, upon consummation of the Registered Exchange Offer, any
Initial Purchaser holds Notes constituting any portion of an unsold allotment
acquired by it as part of its initial distribution, the Company,
simultaneously with the delivery of the Exchange Notes pursuant to the
Registered Exchange Offer, shall issue and deliver to such Initial Purchaser
upon the written request of such Initial Purchaser, in exchange (the "Private
Exchange") for the Notes held by such Initial Purchaser, a like principal
amount of Exchange Notes issued under the Indenture and identical in all
material respects (including the existence of restrictions on transfer under
the 1933 Act and the securities laws of the several states of the United
States) to the Notes (the "Private Exchange Notes"; the Notes, the Exchange
Notes and the Private Exchange Notes being hereinafter referred to
collectively as the "Securities"). The Company will use reasonable efforts to
cause the Private Exchange Notes to bear the same CUSIP number as the Exchange
Notes.
In connection with the Registered Exchange Offer, the
Company shall:
(a) mail to each Holder a copy of the prospectus forming
part of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less
than 30 days after the date notice thereof is mailed to the Holders
(or longer if required by applicable law);
(c) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City
of New York;
(d) permit Holders to withdraw tendered Notes at any time
prior to the close of business, New York time, on the last business
day on which the Registered Exchange Offer shall remain open; and
<PAGE>
4
(e) otherwise comply in all respects with all
applicable laws.
As soon as practicable after the close of the Registered
Exchange Offer or the Private Exchange, as the case may be, the Company shall:
(a) accept for exchange all Notes tendered and not
validly withdrawn pursuant to the Registered Exchange
Offer and the Private Exchange;
(b) deliver to the Trustee for cancellation all
Notes so accepted for exchange; and
(c) cause the Trustee promptly to authenticate and deliver
to each Holder of the Notes, either Exchange Notes or Private
Exchange Notes, as the case may be, equal in principal amount to the
Notes of such Holder so accepted for exchange.
The Indenture will provide that the Exchange Notes will not
be subject to the transfer restrictions set forth in the Indenture and that
all the Securities will vote and consent together on all matters as one class
and that none of the Securities will have the right to vote or consent as a
class separate from one another on any matter.
Notwithstanding any other provisions hereof, the Company
shall ensure that (i) any Exchange Offer Registration Statement and any
amendment thereto and any prospectus forming part thereof and any supplement
thereto complies in all material respects with the 1933 Act and the rules and
regulations thereunder, (ii) any Exchange Offer Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Exchange Offer Registration
Statement, and any supplement to such prospectus, does not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements, in the light of the circumstances under which
they were made, not misleading.
Each Holder participating in the Registered Exchange Offer
shall be required to represent to the Company that at the time of the
consummation of the Registered Exchange Offer (i) any Exchange Notes received
by such Holder will be acquired in the ordinary course of business,
<PAGE>
5
(ii) such Holder will have no arrangements or understanding with any person to
participate in the distribution of the Notes or the Exchange Notes within the
meaning of the 1933 Act, (iii) such Holder is not an "affiliate," as defined
in Rule 405 of the 1933 Act, of the Company or if it is an affiliate, such
Holder acknowledges that it must comply with the registration and prospectus
delivery requirements of the 1933 Act to the extent applicable, (iv) if such
Holder is not a broker-dealer, that it is not engaged in, and does not intend
to engage in, a distribution of the Exchange Notes and (v) if such Holder is a
broker-dealer, that it will receive Exchange Notes for its own account in
exchange for Notes that were acquired as a result of market-making activities
or other trading activities and that it will be required to acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes.
2. Shelf Registration. If, (i) because of any change in law
or applicable interpretations thereof by the Commission's staff, the Company
determines that it is not permitted to effect the Registered Exchange Offer as
contemplated by Section 1 hereof, (ii) for any other reason the Registered
Exchange Offer is not consummated within 180 days of the Deposit Date (or if
the 180th day is not a business day, the first business day thereafter), (iii)
any Initial Purchaser so requests with respect to Notes (or Private Exchange
Notes) held by it following consummation of the Registered Exchange Offer,
(iv) any Holder (other than an Exchanging Dealer) is not eligible to
participate in the Registered Exchange Offer or, in the case of any Holder
(other than an Exchanging Dealer) or Initial Purchaser that participates in
the Registered Exchange Offer, such Holder or Initial Purchaser does not
receive freely tradeable Exchange Notes in exchange for exchanged Notes (in
the case of an Initial Purchaser constituting any portion of an unsold
allotment) (it being understood that the requirement that an Initial Purchaser
deliver a prospectus in connection with sales of Exchange Notes acquired in
the Registered Exchange Offer in exchange for Notes acquired as a result of
market-making activities or other trading activities, shall not result in such
Exchange Notes not being "freely tradeable" for purposes of this Section 2) or
(v) if the Company so elects, the following provisions shall apply:
(a) The Company shall, at its cost, as promptly as
practicable file with the Commission and thereafter shall use its
best efforts to cause to be declared effective a registration
statement on an appropriate form under the 1933 Act relating to the
offer and sale of the Notes by the Holders or the Exchange Notes or
<PAGE>
6
the Private Exchange Notes by the Initial Purchasers, as applicable,
from time to time in accordance with the methods of distribution
elected by such Holders or the Initial Purchasers, as applicable, and
set forth in such registration statement (hereafter, a "Shelf
Registration Statement" and, together with any Exchange Offer
Registration Statement, a "Registration Statement").
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be usable by Holders or the
Initial Purchasers, as applicable, for a period of two years from the
date the Shelf Registration Statement is declared effective by the
Commission or such shorter period that will terminate when all the
Securities covered by the Shelf Registration Statement have been sold
pursuant to the Registration Statement or when, in the opinion of
outside counsel to the Company, which is reasonably satisfactory in
form and substance to counsel for the Initial Purchasers, all such
Securities may be sold without registration under the 1933 Act and
unlegended certificates representing the Securities may be given to
the holders thereof (in any such case, such period being called the
"Shelf Registration Period"). The Company shall be deemed not to have
used its best efforts to keep the Shelf Registration Statement
effective during the requisite period if it voluntarily takes any
action that would result in Holders of Securities covered thereby not
being able to offer and sell such Securities during that period,
unless (i) such action is required by applicable law, or (ii) such
action is taken by the Company in good faith and for valid business
reasons (not including avoidance of the Company's obligations
hereunder), including the acquisition or divestiture of assets, so
long as the Company promptly thereafter complies with the
requirements of Section 3(j) hereof, if applicable.
(c) Notwithstanding any other provisions hereof, the Company
shall ensure that (i) any Shelf Registration Statement and any
amendment thereto and any prospectus forming part thereof and any
supplement thereto complies in all material respects with the 1933
Act and the rules and regulations thereunder, (ii) any Shelf
Registration Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
<PAGE>
7
necessary to make the statements therein not misleading and (iii) any
prospectus forming part of any Shelf Registration Statement, and any
supplement to such prospectus, does not include an untrue statement
of a material fact or omit to state a material fact necessary in
order to make the statements, in the light of the circumstances under
which they were made, not misleading.
3. Registration Procedures. In connection with any Shelf
Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to each Initial Purchaser,
prior to the filing thereof with the Commission, a copy of the
Registration Statement and each amendment thereof and each
supplement, if any, to the prospectus included therein and shall use
its best efforts to reflect in each such document, when so filed with
the Commission, such comments as the Initial Purchasers reasonably
may propose; (ii) include the information set forth in Annex A hereto
on the cover, in Annex B hereto in "The Exchange Offer" section, and
in Annex C hereto in the "Plan of Distribution" section of the
prospectus forming a part of the Exchange Offer Registration
Statement, and include the information set forth in Annex D hereto in
the Letter of Transmittal delivered pursuant to the Registered
Exchange Offer; (iii) if requested by an Initial Purchaser, include
the information required by Items 507 and/or 508 of Regulation S-K
under the 1933 Act, as applicable, in the prospectus forming a part
of the Registration Statement; and (iv) in the case of a Shelf
Registration Statement, include the names of the Holders who propose
to sell Securities pursuant to the Shelf Registration Statement, as
selling security holders.
(b) (1) The Company shall advise you (which notice pursuant
to clause (ii) shall be accompanied by an instruction to suspend the
use of the prospectus until the requisite changes have been made)
and, in the case of a Shelf Registration Statement, the Holders of
Securities included therein, and, in the case of an Exchange Offer
Registration Statement, any Exchanging Dealer which has provided in
writing to the Company a telephone or facsimile number or address for
notices, and, if requested by you or any such Holder or Exchanging
Dealer, confirm such advice in writing:
<PAGE>
8
(i) when the Registration Statement and any
amendment thereto has been filed with the Commission and
when the Registration Statement or any post-effective
amendment thereto has become effective; and
(ii) of any request by the Commission for
amendments or supplements to the Registration Statement or
the prospectus included therein or for additional
information.
(2) The Company shall advise you and, in the case of a Shelf
Registration Statement, Holders of Securities included therein, and,
in the case of an Exchange Offer Registration Statement, any
Exchanging Dealer which has provided in writing to the Company a
telephone or facsimile number or address for notices, and, if
requested by you or any such Holder or Exchanging Dealer, confirm
such advice in writing;
(i) of the issuance by the Commission of any
stop order suspending the effectiveness of the
Registration Statement or the initiation of any
proceedings for that purpose;
(ii) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Securities included therein for sale in
any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(iii) of the happening of any event that requires
the making of any changes in the Registration Statement or
the prospectus so that, as of such date, the statements
therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to
make the statements therein (in the case of the prospectus,
in light of the circumstances under which they were made)
not misleading (which advice shall be accompanied by an
instruction to suspend the use of the prospectus until the
requisite changes have been made).
(c) The Company shall make every reasonable effort to obtain
the withdrawal of any order suspending the effectiveness of any
Registration Statement at the earliest possible time.
<PAGE>
9
(d) The Company shall furnish to each Holder of Securities
included within the coverage of any Shelf Registration Statement
(including any Exchanging Dealer which so requests in writing or any
Initial Purchaser), without charge, at least one copy of such Shelf
Registration Statement and any posteffective amendment thereto,
including financial statements and schedules, and, if the Holder so
requests in writing, all exhibits (including those incorporated by
reference).
(e) The Company shall, during the Shelf Registration Period,
deliver to each Holder of Securities included within the coverage of
any Shelf Registration Statement, without charge, as many copies of
the prospectus (including each preliminary prospectus) included in
such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; and the Company
consents to the use of the prospectus or any amendment or supplement
thereto by each of the selling Holders of Securities in connection
with the offering and sale of the Securities covered by the
prospectus or any amendment or supplement thereto.
(f) The Company shall furnish to each Exchanging Dealer or
Initial Purchaser, as applicable, which so requests, without charge,
at least one copy of the Exchange Offer Registration Statement and
any post effective amendment thereto, including financial statements
and schedules, and, if the Exchanging Dealer or Initial Purchaser, as
applicable, so requests in writing, all exhibits (including those
incorporated by reference).
(g) The Company shall, during the Exchange Offer
Registration Period, promptly deliver to each broker-dealer that is
the beneficial owner (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "1934 Act")) of Exchange Notes
received by such broker-dealer in the Registered Exchange Offer (a
"Participating Broker-Dealer") and such other persons as may be
required to deliver a prospectus following the Registered Exchange
Offer, without charge, as many copies of the prospectus included in
such Exchange Offer Registration Statement and any amendment or
supplement thereto as such person may reasonably request for delivery
by such person in connection with a sale of Exchange Notes received
by it pursuant to the Registered Exchange Offer; and the Company
consents to the use of the prospectus or any amendment or
<PAGE>
10
supplement thereto by any such Participating Broker-Dealer or other
person as aforesaid.
(h) Prior to any public offering of Securities pursuant to
any Registration Statement, the Company shall register or qualify or
cooperate with the Holders of Securities included therein and their
respective counsel in connection with the registration or
qualification of such Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as any such Holder
reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable the offer and sale in such
jurisdictions of the Securities covered by such Registration
Statement; provided, however, that the Company shall not be required
to qualify generally to do business in any jurisdiction where it is
not then so qualified or to take any action which would subject it to
general service of process or to taxation in any such jurisdiction
where it is not then so subject.
(i) The Company shall cooperate with the Holders of
Securities to facilitate the timely preparation and delivery of
certificates representing Securities to be sold pursuant to any Shelf
Registration Statement free of any restrictive legends and in such
denominations and registered in such names as Holders may request
prior to sales of Securities pursuant to such Shelf Registration
Statement.
(j) Upon the occurrence of any event contemplated by
paragraph (b)(2)(iii) above, the Company shall promptly prepare a
post-effective amendment to the Registration Statement or a
supplement to the related prospectus or file any other required
document so that, as thereafter delivered to purchasers of the
Securities included therein, the prospectus will not include an
untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If the
Company notifies the Initial Purchasers, the Holders and any known
Participating Broker-Dealer in accordance with paragraphs (1)(ii) or
(2)(i) through (iii) of Section 3(b) above to suspend the use of the
prospectus until the requisite changes to the prospectus have been
made, then the Initial Purchasers, the Holders and any such
Participating Broker-Dealers shall suspend use of such prospectus.
<PAGE>
11
(k) Not later than the effective date of the applicable
Registration Statement, the Company shall provide a CUSIP number for
the Notes, the Exchange Notes or the Private Exchange Notes, as the
case may be, and provide the applicable trustee with printed
certificates for the Notes, the Exchange Notes or the Private
Exchange Notes, as the case may be, in a form eligible for deposit
with The Depository Trust Company.
(l) The Company shall comply with all applicable rules and
regulations of the Commission and shall make generally available to
its security holders as soon as practicable after the effective date
of the applicable Registration Statement an earnings statement
satisfying the provisions of Section 11(a) of the 1933 Act.
(m) The Company shall cause the Indenture to be qualified
under the Trust Indenture Act of 1939, as amended, in a timely
manner. In the event that such qualification would require the
appointment of a new trustee under the Indenture, the Company shall
appoint a new trustee thereunder pursuant to the applicable
provisions of the Indenture.
(n) The Company may require each Holder of Securities to be
sold pursuant to any Shelf Registration Statement to furnish to the
Company such information regarding the holder and the distribution of
such Securities as the Company may from time to time reasonably
require for inclusion in such Registration Statement, and the Company
may exclude from such Registration Statement the Securities of any
Holder that fails to furnish such information within a reasonable
time after receiving such request.
(o) The Company shall enter into such customary agreements
(including if requested an underwriting agreement in customary form)
and take all such other action, if any, as any Holder shall
reasonably request in order to facilitate the disposition of the
Securities pursuant to any Shelf Registration Statement.
(p) In the case of any Shelf Registration Statement, the
Company shall (i) make reasonably available for inspection by the
Holders, and any underwriter participating in any disposition
pursuant to a Registration Statement, and any attorney, accountant or
other agent retained by the Holders or any such underwriter all
relevant financial and other
<PAGE>
12
records, pertinent corporate documents and properties of the Company
and (ii) cause the Company's officers, directors and employees to
supply all relevant information reasonably requested by the Holders
or any such underwriter, attorney, accountant or agent in connection
with any such Registration Statement.
(q) In the case of any Exchange Offer Registration
Statement, the Company shall (i) make reasonably available for
inspection by the Initial Purchasers, but in each case only in such
firm's capacity as an Exchanging Dealer and with the express
understanding that each such firm shall be acting solely for itself
and not on behalf of any other party, including, without limitation,
any other Exchanging Dealer, all relevant financial and other
records, pertinent corporate documents and properties of the Company
and (ii) cause the Company's officers, directors and employees to
supply all information reasonably requested by any of them.
(r) In the case of any Shelf Registration Statement, the
Company, if requested by any Holders, shall cause (x) its counsel to
deliver an opinion relating to the Securities included within the
coverage of such Shelf Registration Statement in customary form, (y)
its officers to execute and deliver all customary documents and
certificates requested by any underwriters of the Securities and (z)
its independent public accountants to provide to the selling Holders
and any underwriter therefor a comfort letter in customary form.
(s) In the case of any Exchange Offer Registration
Statement, the Company, if requested by the Initial Purchasers, but
in each case only in such firm's capacity as an Exchanging Dealer and
with the express understanding that each such firm shall be acting
solely for itself and not on behalf of any other party, including,
without limitation, any other Exchanging Dealer, in connection with
any prospectus delivery as contemplated in paragraph (g) above, shall
use its best efforts to cause, on and as of the effective date of the
Exchange Offer Registration Statement, (x) its counsel to deliver an
opinion relating to the Exchange Offer Registration Statement and the
Exchange Notes in customary form, (y) its officers to execute and
deliver all customary documents and certificates requested and (z)
its independent public accountants to provide a comfort letter in
<PAGE>
13
customary form, subject to receipt of appropriate documentation
(including the delivery of a customary representation letter), as
contemplated by Statement on Auditing Standards No. 72.
(t) If a Registered Exchange Offer or a Private Exchange is
to be consummated, upon delivery of the Notes by Holders to the
Company (or to such other person as directed by the Company) in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be, the Company shall mark, or caused to be marked, on the
Notes so exchanged that such Notes are being canceled in exchange for
the Exchange Notes or the Private Exchange Notes, as the case may be;
in no event shall the Notes be marked as paid or otherwise satisfied.
(u) The Company shall pay interest on the Notes for failure
to comply with its obligations under Section 1 or Section 2, as
applicable, in accordance with the terms of the Notes.
4. Registration Expenses. The Company shall bear all
expenses incurred in connection with the performance of its obligations under
Sections 1, 2 and 3 hereof and, in the event of any Shelf Registration
Statement, shall reimburse the Holders for the reasonable fees and
disbursements of one firm or counsel designated by the Holders of a majority
in principal amount of the Securities to be registered thereunder to act as
counsel for the Holders in connection therewith, and, in the case of any
Exchange Offer Registration Statement, shall reimburse the Initial Purchasers,
as applicable, for the reasonable fees and disbursements of counsel in
connection therewith, whether or not the Exchange Offer Registration Statement
or a Shelf Registration Statement is filed or becomes effective.
5. Indemnification. (a) In the event of a Shelf Registration
or in connection with any prospectus delivery pursuant to a Registered
Exchange Offer by an Exchanging Dealer as contemplated in Section 3(g) above,
the Company shall indemnify and hold harmless each Holder and each person, if
any, who controls such Holder within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in any such
Registration
<PAGE>
14
Statement or any prospectus forming part thereof or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein (in the case of
any prospectus, in the light of the circumstances under which they
were made) not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental or regulatory agency or body,
commenced or threatened, or of any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue
statement or omission; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 5(c) hereof, the fees and
disbursements of counsel chosen by the indemnified party) reasonably
incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental or
regulatory agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission;
provided, however, that (i) this indemnity shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by
the indemnified party expressly for use in such Registration Statement and
(ii) such indemnity with respect to any preliminary prospectus shall not inure
to the benefit of any Holder (or any person controlling such Holder) from whom
the person asserting any such loss, claim, damage or liability purchased the
Securities which are the subject thereof if such person did not receive a copy
of the final prospectus (or the final prospectus as supplemented) at or prior
to the confirmation of the sale of such Securities to such person and (A) the
untrue statement or omission of a material fact contained in such preliminary
prospectus was corrected in the final prospectus (or the final prospectus as
supplemented) and (B) such Holder had previously been furnished by or on
behalf of the Company (prior to the date of mailing by such Holder of the
applicable confirmation) with a sufficient number of copies of the final
prospectus as so amended or supplemented.
<PAGE>
15
(b) In the event of a Shelf Registration Statement, each
Holder shall indemnify and hold harmless the Company, its directors
and officers and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in Section 5(a) hereof, as
incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration
Statement (or any amendment or supplement thereto) in reliance on and
in conformity with written information furnished to the Company by
such Holder expressly for use in the Registration Statement (or in
such amendment or supplement); provided, however, that no such Holder
shall be liable for any indemnity claims hereunder in excess of the
amount of net proceeds received by such Holder from the sale of
Securities pursuant to the Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action
commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability which it may have
otherwise than on account of this indemnity agreement, except to the
extent actually prejudiced thereby. If any such claim or action shall
be brought against an indemnified party, the indemnified party shall
notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to
the indemnified party. After notice from the indemnifying party to
the indemnified party of its election to assume the defense of such
claim or action, the indemnifying party shall not be liable to the
indemnified party under this Section 5 for any legal or other
expenses subsequently incurred by the indemnified party in connection
with the defense thereof (other than reasonable costs of
investigation); provided, however, if the defendants in any such
action include both an indemnified party and an indemnifying party
and the indemnified party shall have reasonably concluded that there
may be legal defenses available to it and/or other indemnified
parties that are different from or additional to those available to
the indemnifying party, the indemnified party or parties under this
<PAGE>
16
Section 5 shall have the right to employ not more than one counsel
(in addition to any local counsel) to represent them and, in that
event, the fees and expenses of not more than one such separate
counsel (in addition to any local counsel) shall be paid by the
indemnifying party, as such expenses are incurred. No indemnifying
party shall be liable for any settlement effected without its written
consent. An indemnifying party shall not, without the prior written
consent of the indemnified party, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) To provide for just and equitable contribution in
circumstances in which the indemnity provided for in Sections 5(a)
through (c) hereof is for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its terms,
the Company and the applicable Holder or Holders shall contribute to
the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity incurred by the Company and
such Holder or Holders, as incurred, in such proportions that the
Company is responsible for that portion represented by the percentage
that the aggregate consideration received by the Company from the
sale by it of the Securities sold by such Holder bears to the
aggregate principal amount of Securities sold by such Holder and such
Holder is responsible for the balance; provided, however, that no
person found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) by a court of competent
jurisdiction shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of
this Section 5, each person, if any, who controls a Holder within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as such Holder and each
director and officer of the Company and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company.
<PAGE>
17
(e) The agreements contained in this Section 5 shall survive
the sale of the Securities pursuant to a Registration Statement and shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation made by or on behalf of any indemnified
party.
7. Underwritten Registrations. (a) "Transfer Restricted
Notes" means each Security until (i) the date on which such Transfer
Restricted Note has been exchanged by a person other than a broker-dealer for a
freely transferrable Exchange Note in the Registered Exchange Offer, (ii)
following the exchange by a broker-dealer in the Registered Exchange Offer of
a Transfer Restricted Note for an Exchange Note, the date on which such
Exchange Note is sold to a purchaser who receives from such broker-dealer on
or prior to the date of such sale a copy of the prospectus contained in the
Exchange Offer Registration Statement, (iii) the date on which such Transfer
Restricted Note has been effectively registered under the 1933 Act and
disposed of in accordance with the Shelf Registration Statement or (iv) the
date on which such Transfer Restricted Note is distributed to the public
pursuant to Rule 144 under the 1933 Act or is saleable pursuant to Rule 144(k)
under the 1933 Act.
(b) If any of the Transfer Restricted Notes covered by any
Shelf Registration are to be sold in an underwritten offering, the investment
banker or investment bankers and manager or managers that will administer the
offering ("Managing Underwriters") will be selected by the Holders of a
majority in aggregate principal amount of such Transfer Restricted Notes to be
included in such offering.
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Notes on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
8. Miscellaneous. (a) Amendment and Waivers. The provisions
of this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of Holders of a majority in aggregate
principal amount of the Securities.
<PAGE>
18
(b) Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telex, telecopier, or air courier guaranteeing overnight
delivery:
(1) if to a Holder, at the most current address given by
such Holder to the Company in accordance with the provisions of this
Section 6(b), which address initially is, with respect to each
Holder, the address of such Holder maintained by the Registrar under
the Indenture, with a copy in like manner to the Initial Purchasers;
(2) if to the Initial Purchasers, initially at the
respective addresses set forth in the Purchase Agreement with copies
to the parties specified therein; and
(3) if to the Company, initially at its address set forth in
the Purchase Agreement, with copies to the parties specified therein.
All such notices and communications shall be deemed to have
been duly given when received.
The Initial Purchasers or the Company by notice to the other
may designate additional or different addresses for subsequent notices or
communications.
(c) Successors and Assigns. This Agreement shall be binding
upon the Company and its successors and assigns.
(d) Counterparts. This agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(e) Headings. The headings in this agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(f) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
Specified times of day refer to New York City time.
(g) Severability. If any one or more of the provisions
contained herein, or the application thereof in
<PAGE>
19
any circumstance, is held invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in every other respect and
of the remaining provisions contained herein shall not be affected or impaired
thereby.
(h) Securities Held by the Company. Whenever the consent or
approval of Holders of a specified percentage of principal amount of
Securities is required hereunder, Securities held by the Company or its
affiliates (other than subsequent Holders of Securities if such subsequent
Holders are deemed to be affiliates solely by reason of their holdings of such
Securities) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
(i) No Inconsistent Agreements. The Company has not, as of
the date hereof, entered into, nor shall it, on or after the date hereof,
enter into, any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders herein or otherwise conflicts with the
provisions hereof.
(j) Copies of Agreement. The Company shall provide a copy of
this Agreement to prospective purchasers of Notes identified to the Company by
the Initial Purchasers upon request.
<PAGE>
20
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
REVLON WORLDWIDE (PARENT)
CORPORATION
By: /s/ Glenn P. Dickes
-----------------------
Name:
Title:
CONFIRMED AND ACCEPTED
as of the date first above written:
CHASE SECURITIES INC.
By: /s/ Mark N. Lightcap
-------------------------
Name: Mark N. Lightcap
Title: Managing Director
SMITH BARNEY INC.
By: /s/ James C. Zelter
-------------------------
Name: James C. Zelter
Title: Managing Director
<PAGE>
ANNEX A TO
REGISTRATION AGREEMENT
Each broker-dealer that receives Exchange 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 Exchange 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 1933 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 Exchange Notes received in exchange for Notes where such Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities. The Company 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".
A-1
<PAGE>
ANNEX B TO
REGISTRATION AGREEMENT
Each broker-dealer that receives Exchange Notes for its own
account in exchange for Notes, where such Notes were acquired by such
broker-dealer as a result of marketmaking activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution".
B-1
<PAGE>
ANNEX C TO
REGISTRATION AGREEMENT
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange 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 Exchange 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 Exchange Notes received
in exchange for Existing Notes where such Existing Notes were acquired as a
result of market making activities or other trading activities. The Company
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
, 199 , all dealers effecting transactions in the
Exchange Notes may be required to deliver a prospectus. 1/
The Company will not receive any proceeds from any sale of
Exchange Notes by broker-dealers. Exchange 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 Exchange 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
Exchange Notes. Any broker-dealer that resells Exchange 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 Exchange Notes
may be deemed to be an "underwriter" within the meaning of the 1933 Act and
any profit on any such resale of Exchange Notes and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the 1933 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 1933 Act.
- --------
1/ The legend required by Item 502(e) of Regulation S-K must appear on
the back page of the Exchange Offer Prospectus.
C-1
<PAGE>
For a period of 180 days after the Expiration Date, the
Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Company 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 1933 Act.
C-2
<PAGE>
ANNEX D TO
REGISTRATION AGREEMENT
Rider A
[ ] 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:
----------------------------------------------------------
----------------------------------------------------------
Rider B
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
Exchange Notes. If the undersigned is a broker-dealer that will receive
Exchange Notes for its own account in exchange for Notes, it represents that
the Notes to be exchanged for Exchange Notes were acquired by it as a result
of marketmaking or other trading activities and acknowledges that it will
deliver a prospectus in connection with any resale of such Exchange 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 1933 Act.
D-1
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(dollars in millions)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings before income taxes $126.7 $(113.9) $(140.1) $(172.3) $(209.3)
Plus: Fixed charges 269.7 269.0 250.6 208.8 128.0
------ ------- ------- ------- -------
Earnings available to cover fixed charges $396.4 $155.1 $110.5 $36.5 $(81.3)
------ ------- ------- ------- -------
Fixed Charges:
Interest expense $240.1 $237.5 $221.2 $180.0 $102.1
Amortization of debt issuance costs 12.5 15.2 12.6 11.2 6.7
Portion of rent representative of
an interest factor 17.1 16.3 16.8 17.6 19.2
------ ------- ------- ------- -------
Fixed charges $269.7 $269.0 $250.6 $208.8 128.0
Ratio of earnings to fixed charges 1.47 x
======
Deficiency of earnings to fixed charges $113.9 $140.1 $172.3 209.3
====== ====== ====== ======
</TABLE>
<PAGE>
REVLON WORLDWIDE (PARENT) CORPORATION
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
Set forth below is a list of certain of the Registrant's subsidiaries.
Such subsidiaries are incorporated or organized in the jurisdictions indicated.
Revlon Worldwide Corporation is a wholly owned subsidiary of the Registrant.
Revlon, Inc. is a majority owned subsidiary of Revlon Worldwide Corporation.
Revlon Consumer Products Corporation is wholly owned by Revlon, Inc. Except as
otherwise indicated herein, each of the other listed subsidiaries is wholly
owned by Revlon Consumer Products Corporation directly, or indirectly as
indicated, and all listed subsidiaries are included in the Registrant's
consolidated financial statements. The names of the Registrant's remaining
subsidiaries have been omitted from the following list, but such omitted
subsidiaries, considered in the aggregate as a single subsidiary, would not
constitute a significant subsidiary.
DOMESTIC SUBSIDIARIES
AMERICAN CREW, INC., an Illinois corporation
ALMAY, INC., a Delaware corporation
APPLIED SCIENCE & TECHNOLOGIES INC., a Delaware corporation
CARRINGTON PARFUMS LTD., a Delaware corporation
CHARLES REVSON INC., a New York corporation
CREATIVE NAIL DESIGN, INC., a California corporation
(d/b/a CREATIVE NAIL DESIGN SYSTEMS AND CND INC. in California)
DOLLY PARTON INC., a Delaware corporation
FASHION & DESIGNER FRAGRANCE GROUP, INC., a Delaware corporation
FERMODYL PROFESSIONALS INC., a Delaware corporation
GENERAL WIG MANUFACTURERS, INC., a Florida corporation (1)
(d/b/a REVLON GENERAL WIG AND BEAUTY TRENDS in Florida)
NORTH AMERICA REVSALE INC., a New York corporation
OXFORD PROPERTIES CO., a Delaware corporation
(d/b/a OXFORD PROPERTIES OF DELAWARE in North Carolina)
PACIFIC FINANCE & DEVELOPMENT CORP., a California corporation
PPI TWO CORPORATION, a Delaware corporation
PRESTIGE FRAGRANCE & COSMETICS, INC., a Delaware corporation
(d/b/a COLOURS & SCENTS in Arizona, California, Colorado, Florida,
Georgia, Hawaii, Massachusetts, Missouri, Nevada, New Mexico, New
York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia
and Washington)
(d/b/a THE COSMETIC WAREHOUSE in Florida)
(d/b/a PFC FRAGRANCE & COSMETICS, INC. in California)
(d/b/a VISAGE in Florida)
PRESTIGE FRAGRANCES, LTD., a Delaware corporation
REALISTIC/ROUX PROFESSIONAL PRODUCTS INC., a Delaware corporation (1)
REVLON COMMISSARY SALES, INC., a Delaware corporation (2)
REVLON CONSUMER CORP., a Delaware corporation
REVLON CONSUMER PRODUCTS CORPORATION, a Delaware corporation
<PAGE>
DOMESTIC SUBSIDIARIES, CONTINUED
REVLON GOVERNMENT SALES, INC., a Delaware corporation
REVLON, INC., a Delaware corporation
REVLON INTERNATIONAL CORPORATION, a Delaware corporation
REVLON PROFESSIONAL, INC., a Delaware corporation (1)
REVLON PROFESSIONAL PRODUCTS INC., a Delaware corporation (1)
REVLON RECEIVABLES SUBSIDIARY, INC., a Delaware corporation
REVLON WORLDWIDE CORPORATION, a Delaware corporation
RIROS CORPORATION, a New York corporation
RIT INC., a Delaware corporation (4)
ROUX LABORATORIES, INC., a New York corporation
(d/b/a REVLON PROFESSIONAL in Florida and New York)
-2-
<PAGE>
FOREIGN SUBSIDIARIES
FOREIGN SUBSIDIARIES
CEIL - COMERCIAL, EXPORTADORA, INDUSTRIAL LTDA. (Brazil) (4)
CENDICO B.V. (Netherlands) (5)
COLEMAN DO BRASIL INDUSTRIA E COMERCIO LIMITADA (Brazil) (32)
DEUTSCHE REVLON GMBH (Germany) (31)
DEUTSCHE REVLON GMBH & CO. KG (Germany) (27)
EUROPEAN BEAUTY PRODUCTS S.P.A. (Italy) (21)
EUROPEENNE DE PRODUITS DE BEAUTE S.A. (France) (9)
INTERCOSMO S.P.A. (Italy) (10)
REVLON A.B. (Sweden) (11)
REVLON (AUST.) PTY. LIMITED (Australia) (12)
REVLON BELGIUM S.A. (Belgium) (29)
REVLON B.V. (Netherlands) (3)
REVLON CANADA INC. (Canada) (3)
REVLON (CAYMAN) LIMITED (Cayman Islands) (22)
REVLON CHINA HOLDINGS LIMITED (33)
REVLON COIFFURE SNC (France) (13)
REVLON COSMETICS AND FRAGRANCES LIMITED (United Kingdom) (14)
REVLON DE ARGENTINA, S.A.I.C. (Argentina) (15)
REVLON EUROPE, MIDDLE EAST AND AFRICA LTD. (Bermuda) (5)
REVLON GESELLSCHAFT M.B.H. (Austria) (16)
REVLON GROUP LIMITED (United Kingdom)
REVLON (HONG KONG) LIMITED (Hong Kong) (3)
REVLON (ISRAEL) LIMITED (Israel) (17)
REVLON K.K. (Japan) (3)
REVLON REAL ESTATE K.K. (Japan) (3)
REVLON LATIN AMERICA AND CARIBBEAN, LTD. (Bermuda) (5)
REVLON (MALAYSIA) SDN. BHD. (Malaysia) (3)
REVLON MANUFACTURING LTD. (Bermuda) (3)
REVLON MANUFACTURING (U.K.) LIMITED (United Kingdom) (18)
REVLON MAURITIUS LTD. (Mauritius) (3)
REVLON NEDERLAND B.V. (Netherlands) (8)
REVLON NEW ZEALAND LIMITED (New Zealand) (3)
REVLON OFFSHORE LIMITED (Bermuda)
REVLON OVERSEAS CORPORATION, C.A. (Venezuela) (19)
REVLON PENSION TRUSTEE COMPANY (U.K.) LIMITED (United Kingdom)
REVLON - PRODUTOS COSMETICOS, LTDA. (Portugal) (8)
REVLON PROFESIONAL, S.A. DE C.V. (Mexico) (6)
REVLON PROFESSIONAL LIMITED (Ireland) (1)
REVLON (PUERTO RICO) INC. (Puerto Rico) (3)
-3-
<PAGE>
FOREIGN SUBSIDIARIES, CONTINUED
REVLON-REALISTIC INTERNATIONAL LIMITED (Ireland) (28)
REVLON, S.A. (Mexico) (3)
REVLON, S.A. (Spain) (20)
REVLON (SHANGHAI) LIMITED (34)
REVLON (SINGAPORE) PTE. LTD. (Singapore) (3)
REVLON SOUTH AFRICA (PROPRIETARY) LIMITED (South Africa) (7)
REVLON (SUISSE) S.A. (Switzerland) (3)
REVLON TAIWAN LIMITED (Taiwan) (7)
RGI BEAUTY PRODUCTS (PROPRIETARY) LIMITED (South Africa)
RGI (CAYMAN) LIMITED (Cayman Islands) (30)
RGI LIMITED (Cayman Islands) (23)
RGI MEDICAL PRODUCTS (PTY.) LIMITED (South Africa) (24)
RIC PTY. LIMITED (Australia) (5)
R.I.F.C. BANK LIMITED (Bahamas) (7)
R.O.C. HOLDING C.A. (Venezuela) (3)
SHANGHAI REVSTAR COSMETIC MARKETING SERVICES (34)
TINDAFIL, S.A. (Uruguay) (25)
ULTIMA II COSMETICS GMBH (Germany) (26)
YAE ARTISTIC PACKINGS INDUSTRY LTD. (Israel) (17)
-4-
<PAGE>
OWNERSHIP
(1) Owned 100% by ROUX LABORATORIES INC. (New York)
(2) Owned 100% by REVLON GOVERNMENT SALES, INC. (Delaware)
(3) Owned 100% by REVLON INTERNATIONAL CORPORATION (Delaware)
(4) Owned 99% by RGI LIMITED (Cayman Islands)
and less than 1% by REVLON INTERNATIONAL CORPORATION (Delaware)
(5) Owned 100% by REVLON MANUFACTURING LIMITED (Bermuda)
(6) Owned 95% by ROUX LABORATORIES INC. (New York)
and 5% by THIRD PARTIES
(7) Owned 100% by REVLON OFFSHORE LIMITED (Bermuda)
(8) Owned 100% by REVLON, S.A. (Spain)
(9) Owned 62% by REVLON EUROPE, MIDDLE EAST AND AFRICA LTD. (Bermuda),
37% by REVLON INTERNATIONAL CORPORATION (Delaware)
and 1% by REVLON, S.A. (Spain)
(10) Owned 100% by EUROPEAN BEAUTY PRODUCTS S.P.A. (Italy)
(11) Owned 100% by REVLON B.V. (Netherlands)
(12) Owned 50% by REVLON MANUFACTURING LIMITED (Bermuda)
and 50% by RIC PTY. LIMITED (Australia)
(13) Owned 100% by EUROPEENNE DE PRODUITS DE BEAUTE, S.A. (France)
(14) Owned 100% by REVLON MANUFACTURING (UK) LIMITED (United Kingdom)
(15) Owned 94% by REVLON INTERNATIONAL CORPORATION (Delaware)
and 6% by REVLON MANUFACTURING LTD. (Bermuda)
(16) Owned 74% by REVLON INTERNATIONAL CORPORATION (Delaware)
and 26% by REVLON CONSUMER PRODUCTS CORPORATION (Delaware)
(17) Owned 99.8% by REVLON AB, the remainder by third parties (Sweden)
(18) Owned 100% by REVLON GROUP LIMITED (United Kingdom)
(19) Owned 100% by R.O.C. HOLDING C.A. (Venezuela)
(20) Owned 54% by REVLON EUROPE, MIDDLE EAST AND AFRICA LTD. (Bermuda)
and 46% by REVLON INTERNATIONAL CORPORATION (Delaware)
(21) Owned 95.45% by REVLON, S.A. (Spain)
and 4.55% by REVLON INTERNATIONAL CORPORATION (Delaware)
(22) Owned 100% by PPI TWO CORPORATION (Delaware)
(23) Owned 98% by REVLON CONSUMER PRODUCTS CORPORATION (Delaware)
and 2% by REVLON (CAYMAN) LIMITED (Cayman Islands)
(24) Owned 100% by REVLON SOUTH AFRICA (PTY.) LTD. (South Africa)
(25) Owned 100% by CEIL - COMERCIAL, EXPORTADORA, INDUSTRIAL LTDA. (Brazil)
(26) Owned 75% by REVLON INTERNATIONAL CORPORATION (Delaware)
and 25% by REVLON CONSUMER PRODUCTS CORPORATION (Delaware)
(27) Owned 50% by DEUTSCHE REVLON GMBH (Germany)
and 50% by REVLON OFFSHORE LIMITED (Bermuda)
(28) Owned 97% by REVLON PROFESSIONAL LIMITED (Ireland)
and 3% by ROUX LABORATORIES INC. (New York)
-5-
<PAGE>
(29) Owned 100% by REVLON NEDERLAND B.V. (Netherlands)
(30) Owned 100% by REVLON (CAYMAN) LIMITED (Cayman Islands)
(31) Owned 99% by REVLON CONSUMER PRODUCTS CORPORATION (Delaware)
and 1% by REVLON INTERNATIONAL CORPORATION (Delaware)
(32) Owned 83% by CEIL - COMERCIAL, EXPORTADORA, INDUSTRIAL LTDA. (Brazil),
15% by RGI LIMITED (Cayman Islands)
and 2% by REVLON INTERNATIONAL CORPORATION (Delaware)
(33) Owned 94.737% by REVLON INTERNATIONAL CORPORATION (Delaware)
and 5.263% by SUMSTAR DEVELOPMENT LIMITED (Cayman Islands),
an unrelated third party
(34) Owned 95% by REVLON CHINA HOLDINGS LIMITED
and 5% by BEIJING SUMSTAR INDUSTRIAL COMPANY LIMITED,
an unrelated third party
-6-
<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
March 13, 1997
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Glenn P. Dickes, Robert K. Kretzman, Wade H.
Nichols, William J. Fox and Joram C. Salig or any of them, each acting alone,
his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, in connection with the Revlon Worldwide (Parent) Corporation (the
"Corporation") Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), including, without limiting the generality of the foregoing, to sign
the Registration Statement in the name and on behalf of the Corporation or on
behalf of the undersigned as a director or officer of the Corporation, to sign
any amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has signed these presents
this 14th day of March, 1997.
/s/Ronald O. Perelman
------------------------
Ronald O. Perelman
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Glenn P. Dickes, Robert K. Kretzman, Wade H.
Nichols, William J. Fox and Joram C. Salig or any of them, each acting alone,
his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, in connection with the Revlon Worldwide (Parent) Corporation (the
"Corporation") Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), including, without limiting the generality of the foregoing, to sign
the Registration Statement in the name and on behalf of the Corporation or on
behalf of the undersigned as a director or officer of the Corporation, to sign
any amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has signed these presents
this 14th day of March, 1997.
/s/Howard Gittis
---------------------------
Howard Gittis
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Glenn P. Dickes, Robert K. Kretzman, Wade H.
Nichols, William J. Fox and Joram C. Salig or any of them, each acting alone,
his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, in connection with the Revlon Worldwide (Parent) Corporation (the
"Corporation") Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), including, without limiting the generality of the foregoing, to sign
the Registration Statement in the name and on behalf of the Corporation or on
behalf of the undersigned as a director or officer of the Corporation, to sign
any amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has signed these presents
this 14th day of March, 1997.
/s/Irwin Engelman
----------------------
Irwin Engelman
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Glenn P. Dickes, Robert K. Kretzman, Wade H.
Nichols, William J. Fox and Joram C. Salig or any of them, each acting alone,
his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, in connection with the Revlon Worldwide (Parent) Corporation (the
"Corporation") Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), including, without limiting the generality of the foregoing, to sign
the Registration Statement in the name and on behalf of the Corporation or on
behalf of the undersigned as a director or officer of the Corporation, to sign
any amendments and supplements relating thereto (including post-effective
amendments) under the Securities Act and to sign any instrument, contract,
document or other writing of or in connection with the Registration Statement
and any amendments and supplements thereto (including post-effective
amendments) and to file the same, with all exhibits thereto, and other
documents in connection therewith, including this power of attorney, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has signed these presents
this 14th day of March, 1997.
/s/Lawrence E. Kreider
------------------------
Lawrence E. Kreider
<PAGE>
=============================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
REVLON WORLDWIDE (PARENT) CORPORATION
(Exact name of obligor as specified in its charter)
Delaware
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
625 Madison Avenue
New York, New York 10022
(Address of principal executive offices) (Zip code)
----------------------
Series B Senior Secured Discount Notes due 2001
(Title of the indenture securities)
=============================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY
TO WHICH IT IS SUBJECT.
- ------------------------------------------------------------------------------
Name Address
- ------------------------------------------------------------------------------
Superintendent of Banks of the 2 Rector Street, New York,
State of New York N.Y. 10006, and Albany,
N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE
COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT
HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939
(THE "ACT") AND RULE 24 OF THE COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New
York (formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration
Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to
Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration
Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York,
and State of New York, on the 13th day of March, 1997.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
--------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the
Federal Reserve System, at the close of business September 30, 1996, published
in accordance with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 4,404,522
Interest-bearing balances .......... 732,833
Securities:
Held-to-maturity securities ........ 789,964
Available-for-sale securities ...... 2,005,509
Federal funds sold in domestic offices
of the bank:
Federal funds sold ................... 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ........................... 28,728,602
LESS: Allowance for loan and
lease losses ..................... 584,525
LESS: Allocated transfer risk
reserve........................... 429
Loans and leases, net of unearned
income, allowance, and reserve 28,143,648
Assets held in trading accounts ...... 1,004,242
Premises and fixed assets (including
capitalized leases) ................ 605,668
Other real estate owned .............. 41,238
Investments in unconsolidated
subsidiaries and associated
companies .......................... 205,031
Customers' liability to this bank on
acceptances outstanding ............ 949,154
Intangible assets .................... 490,524
Other assets ......................... 1,305,839
-----------
Total assets ......................... $44,043,010
===========
LIABILITIES
Deposits:
In domestic offices ................ $20,441,318
Noninterest-bearing ................ 8,158,472
Interest-bearing ................... 12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 11,710,903
Noninterest-bearing ................ 46,182
Interest-bearing ................... 11,664,721
Federal funds purchased in
domestic offices of the
bank:
Federal funds purchased ............ 1,565,288
Demand notes issued to the U.S.
Treasury ........................... 293,186
Trading liabilities .................. 826,856
Other borrowed money:
With original maturity of one year
or less .......................... 2,103,443
With original maturity of more than
one year ......................... 20,766
Bank's liability on acceptances exe-
cuted and outstanding .............. 951,116
Subordinated notes and debentures .... 1,020,400
Other liabilities .................... 1,522,884
-----------
Total liabilities .................... 40,456,160
-----------
<PAGE>
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 525,666
Undivided profits and capital
reserves .......................... 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ (2,073)
Cumulative foreign currency transla-
tion adjustments .................. (8,403)
-----------
Total equity capital ................ 3,586,850
-----------
Total liabilities and equity
capital ........................... $44,043,010
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of
our knowledge and belief has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System
and is true and correct.
J. Carter Bacot
Thomas A. Renyi } Directors
Alan R. Griffith
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 38,600
<SECURITIES> 0
<RECEIVABLES> 451,200
<ALLOWANCES> 24,900
<INVENTORY> 281,000
<CURRENT-ASSETS> 820,400
<PP&E> 580,600
<DEPRECIATION> 199,500
<TOTAL-ASSETS> 1,626,300
<CURRENT-LIABILITIES> 563,000
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> (1,461,300)
<TOTAL-LIABILITY-AND-EQUITY> 1,626,300
<SALES> 2,167,000
<TOTAL-REVENUES> 2,167,000
<CGS> 725,700
<TOTAL-COSTS> 725,700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 7,100
<INTEREST-EXPENSE> 240,100
<INCOME-PRETAX> 126,700
<INCOME-TAX> 25,500
<INCOME-CONTINUING> 101,200
<DISCONTINUED> 0
<EXTRAORDINARY> (6,600)
<CHANGES> 0
<NET-INCOME> 94,600
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
