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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1994
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ____ to ____
Commission file number 1-4881
AVON PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 13-0544597
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9 WEST 57TH STREET, NEW YORK, NEW YORK 10019-2683
(Address of principal executive offices)
(212) 546-6015
(telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No ___
The number of shares of Common Stock (par value $.50) outstanding at April
30, 1994 was 71,061,440.
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Table of Contents
Part I. Financial Information
Page
Numbers
Item 1. Financial Statements
Consolidated Statement of Operations 3
Three Months Ended March 31, 1994 and
March 31, 1993
Consolidated Balance Sheet 4
March 31, 1994 and December 31, 1993
Consolidated Statement of Cash Flows 5
Three Months Ended March 31, 1994 and
March 31, 1993
Notes to Consolidated Financial Statements 6-9
Item 2. Management's Discussion and Analysis of the 10-14
Results of Operations and Financial Condition
Part II. Other Information
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
2
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PART I. FINANCIAL INFORMATION
AVON PRODUCTS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In millions, except per share data)
Three months ended
March 31
------------------
1994 1993
---- ----
(unaudited)
Net sales........................................... $913.6 $ 841.9
------ -------
Costs, expenses and other:
Cost of sales....................................... 361.5 322.9
Marketing, distribution and administrative expenses. 489.3 462.8
Interest expense.................................... 14.5 10.1
Interest income..................................... (5.2) (9.2)
Other expense, net.................................. 4.7 14.8
------ -------
Total costs, expenses and other................... 864.8 801.4
------ -------
Income from continuing operations before taxes,
minority interest and cumulative effect of
accounting changes................................ 48.8 40.5
Income taxes........................................ 19.2 16.2
------ -------
Income from continuing operations before minority
interest and cumulative effect of accounting
changes........................................... 29.6 24.3
Minority interest................................... (.1) .3
------ -------
Income from continuing operations before cumulative
effect of accounting changes...................... 29.5 24.6
Discontinued operations, net........................ -- (10.0)
Cumulative effect of accounting changes............. (45.2) (107.5)
------ -------
Net (loss).......................................... $(15.7) $ (92.9)
====== =======
Income (loss) per share of common stock:
Income from continuing operations before
cumulative effect of accounting changes......... $ .41 $ .34
Discontinued operations........................... -- (.14)
Cumulative effect of accounting changes........... (.63) (1.49)
------ -------
Net (loss).......................................... $ (.22) $ (1.29)
====== =======
Average shares outstanding.......................... 71.92 72.03
====== =======
The accompanying notes are an integral part of this statement.
3
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AVON PRODUCTS, INC.
CONSOLIDATED BALANCE SHEET
(In millions)
March 31 December 31
1994 1993
-------- -----------
(unaudited)
ASSETS
Current assets:
Cash and equivalents........................... $ 103.6 $ 231.8
Accounts receivable............................ 351.5 329.3
Inventories.................................... 442.7 374.9
Prepaid expenses and other..................... 152.8 145.8
-------- --------
Total current assets....................... 1,050.6 1,081.8
-------- --------
Property, plant and equipment, at cost......... 1,096.0 1,070.5
Less accumulated depreciation.................. 608.2 590.0
-------- --------
487.8 480.5
-------- --------
Intangible assets.............................. 144.6 145.3
Other assets................................... 293.4 250.4
-------- --------
Total assets............................... $1,976.4 $1,958.0
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Debt maturing within one year.................. $ 195.3 $ 70.4
Accounts payable............................... 312.9 378.0
Accrued compensation........................... 75.6 68.3
Other accrued liabilities...................... 235.4 216.9
Sales and other taxes.......................... 84.3 95.8
Income taxes................................... 213.7 229.3
-------- --------
Total current liabilities.................. 1,117.2 1,058.7
-------- --------
Long-term debt................................. 125.8 123.7
Employee benefit plans......................... 354.7 295.1
Deferred income taxes.......................... 28.3 30.5
Other liabilities.............................. 130.1 136.0
Shareholders' equity:
Common stock................................... 43.3 43.3
Additional paid-in capital..................... 654.2 652.3
Retained earnings.............................. 102.7 150.6
Translation adjustments........................ (176.5) (175.3)
Treasury stock, at cost........................ (403.4) (356.9)
-------- --------
Total shareholders' equity................. 220.3 314.0
-------- --------
Total liabilities and shareholders' equity. $1,976.4 $1,958.0
======== ========
The accompanying notes are an integral part of this statement.
4
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AVON PRODUCTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
Three months ended
March 31
------------------
1994 1993
---- ----
(unaudited)
Cash flows from operating activities:
Net (loss)........................................... $ (15.7) $ (92.9)
Adjustments to reconcile net (loss) to net cash
(used) by operating activities:
Cumulative effect of accounting changes........... 45.2 107.5
Provision for discontinued operations, net........ -- 10.0
Payments for restructuring costs.................. (3.5) (6.2)
Depreciation and amortization..................... 14.9 15.3
Provision for doubtful accounts................... 14.4 11.9
Translation (gains) losses........................ (6.2) 5.6
Deferred income taxes............................. (1.3) (.3)
Other............................................. 6.7 2.6
Changes in assets and liabilities:
Accounts receivable............................. (54.5) (41.5)
Inventories..................................... (67.1) (30.9)
Prepaid expenses and other...................... (7.6) (9.5)
Accounts payable and accrued liabilities........ (23.4) (71.7)
Income and other taxes.......................... (22.2) (31.4)
Noncurrent assets and liabilities............... (32.9) (5.7)
------- -------
Net cash (used) by operating activities............... (153.2) (137.2)
------- -------
Cash flows from investing activities:
Capital expenditures.................................. (11.4) (13.3)
Disposal of assets.................................... .9 1.0
------- -------
Net cash (used) by investing activities............... (10.5) (12.3)
------- -------
Cash flows from financing activities:
Cash dividends........................................ (36.3) (31.1)
Debt, net (maturities of three months or less)........ 130.5 137.6
Proceeds from short-term debt......................... 5.8 4.9
Retirement of short-term debt......................... (2.9) (4.0)
Retirement of long-term debt.......................... (12.0) (32.4)
Repurchases of common stock........................... (46.7) --
Proceeds from exercise of stock options, net of taxes. .5 .4
------- --------
Net cash provided by financing activities............. 38.9 75.4
------- --------
Effect of exchange rate changes on cash............... (3.4) (3.8)
------- --------
Net decrease in cash and equivalents.................. (128.2) (77.9)
Cash and equivalents beginning of period.............. 231.8 147.4
------- --------
Cash and equivalents end of period.................... $ 103.6 $ 69.5
======= ========
The accompanying notes are an integral part of this statement.
5
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AVON PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share data)
1. ACCOUNTING POLICIES
The accompanying consolidated financial statements should be read in
conjunction with the Consolidated Financial Statements and the Notes thereto
contained in Avon's 1993 Annual Report to Shareholders. The interim
statements are unaudited but include all adjustments, which consisted of
only normal recurring accruals, that management considers necessary to
fairly present the results for the interim periods. Results for interim
periods are not necessarily indicative of results for a full year. The year
end balance sheet data was derived from audited financial statements, but
does not include all disclosures required by generally accepted accounting
principles.
To conform to the 1994 presentation, certain reclassifications to the
1993 balance sheet and cash flow statement were made.
2. ACCOUNTING CHANGES
Effective January 1, 1994, Avon adopted Statement of Financial Accounting
Standards Board ("FAS") No. 112, "Employers' Accounting for Postemployment
Benefits" and FAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions" for its foreign benefit plans. In addition, effective
January 1, 1994, Avon changed its method of accounting for internal systems
development costs. These development costs are being expensed as incurred,
rather than deferred and amortized over future periods.
As a result of these accounting changes, Avon recorded an aggregate
non-cash charge in the first quarter of 1994 of $45.2, or $.63 per share.
This amount reflects the cumulative effect of adjustment for FAS No. 112 of
$28.9, or $.40 per share, FAS No. 106 of $8.0, or $.11 per share, and the
systems development costs of $8.3, or $.12 per share. The proforma effect
for the change in accounting for the deferred internal systems development
costs for the three months ended March 31, 1993, had the accounting change
been adopted effective January 1, 1993, would not have been significant.
Management believes expensing internal systems development costs as
incurred will result in enhanced reporting of the Company's costs of
utilizing resources in line with today's rapidly changing technology.
Effective January 1, 1993, Avon adopted FAS No. 106 for its U.S. plans
and FAS No. 109, "Accounting for Income Taxes". For further discussion of
these accounting changes, see Note 2 of the Notes to the Consolidated
Financial Statements in the 1993 Annual Report.
6
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AVON PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In millions, except per share data)
3. INFORMATION RELATING TO THE STATEMENT OF CASH FLOWS
"Net cash (used) by operating activities" includes the following cash
payments for interest and income taxes:
Three months ended
March 31
------------------
1994 1993
---- ----
Interest............................................ $ 8.7 $ 3.7
Income taxes, net of refunds received............... 36.6 41.3
4. DISCONTINUED OPERATIONS
In March 1993, Avon recorded an additional discontinued operation
provision of $10.0 after tax, or $.14 per share, for the final settlement
and related expenses in an arbitration proceeding related to a business
previously sold.
5. INCOME (LOSS) PER SHARE
Primary income (loss) per share of common stock is based on the weighted
average number of shares outstanding. Dilution that could result from the
exercise of stock options is not material for the three month periods ended
March 31, 1994 and 1993, and accordingly, income (loss) per share assuming
full dilution has not been presented.
6. INVENTORIES
March 31 December 3l
1994 1993
-------- -----------
Raw materials.............................. $139.5 $126.8
Finished goods............................. 303.2 248.1
------ ------
$442.7 $374.9
====== ======
7. DIVIDENDS
Regular quarterly dividends of $.45 and $.40 per share of common stock
were paid on March 1, 1994 and 1993, respectively.
7
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AVON PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In millions, except per share data)
8. CONTINGENCIES
Various lawsuits and claims (asserted and unasserted) arising in the
ordinary course of business are pending or threatened against Avon. The
most significant of these are described below.
In April 1991, Wertheim Schroder & Co. Incorporated, a holder of Avon's
Preferred Equity-Redemption Cumulative Stock (the "PERCS"), filed, on behalf
of certain classes of PERCS holders, a suit against Avon in the United States
District Court for the Southern District of New York alleging various
contract and securities law claims relating to the PERCS. Avon's motion for
summary judgment was denied, except as to one claim, on April 1, 1993. Avon
rejects the assertions in this case, believes it has meritorious defenses to
the claims and is vigorously contesting this lawsuit.
In June 1988, Mallinckrodt, Inc. ("Mallinckrodt") and International
Minerals & Chemical Corporation ("IMC"), now known as Mallinckrodt Group
Inc., filed a lawsuit against Avon in the St. Louis Missouri City Circuit
Court arising from Avon's sale of Mallinckrodt to IMC in 1986. The suit
alleged that a certain patent dispute and a settlement, referred to as the
DuPont patent case, various environmental claims and numerous other lawsuits
and claims are contingent liabilities covered by an indemnification given by
Avon in connection with the sale of Mallinckrodt. In October 1991, the
Missouri Supreme Court affirmed the Circuit Court's decision that Avon has
the obligation to indemnify IMC and Mallinckrodt in connection with the
DuPont patent case, but remanded the matter for a trial on the damages, if
any, suffered by the parties. On July 27, 1992, a jury returned a verdict
in the DuPont patent case for $16.0, and a judgment for that amount plus
approximately $6.5 interest was entered. On August 11, 1992, IMC and
Mallinckrodt filed post-trial motions, including a motion for a judgment
notwithstanding the verdict or, in the alternative, a motion for a new trial.
On November 5, 1992, the St. Louis Missouri City Circuit Court granted IMC's
and Mallinckrodt's motion for a judgment notwithstanding the verdict and
directed a verdict for plaintiffs in the amount of $27.1 plus interest.
As of November 5, 1992, the interest amounted to approximately $11.7.
Avon, IMC and Mallinckrodt have appealed this decision. This issue was
argued before the Missouri Court of Appeals, Eastern District on May 11,
1994. A decision is expected during this year. Pre-trial proceedings and
discovery activities are ongoing with respect to the environmental and
general litigation portions of the case.
With respect to the environmental contingencies which constitute a part
of the indemnification litigation, the total cost to Avon cannot be
determined with certainty as a result of such factors as the preliminary
status of information relating to the sites owned by the purchaser, the
preliminary regulatory involvement, the unknown magnitude and timing of
cleanup efforts, if any, to be undertaken by the purchaser or Mallinckrodt,
the possibility of recoveries against other parties, the uncertainty of the
success of Avon's defenses, and unasserted claims, if any. However, these
factors have been assessed and will continue to be assessed by Avon in
estimating reserves to be recorded in its financial statements.
8
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AVON PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(In millions, except per share data)
The ultimate outcome and aggregate cost of resolving all of the above
contingencies will be based on a number of factors and will be determined
over a number of years. Accordingly, the total cost to Avon cannot currently
be determined with certainty. The reserves for such contingencies, at March
31, 1994, which are recorded gross without anticipation of insurance
recoveries or other third party recoveries, if any, have been estimated by
Avon's management based on its review of currently known facts and
circumstances at March 31, 1994. In the opinion of Avon's management, based
on its review of the preliminary information available at this time, the
difference, if any, between the total cost of resolving such contingencies
and reserves recorded by Avon at March 31, 1994 should not have a material
adverse impact on Avon's consolidated financial position or results of
operations, based on the current levels of such amounts. However, this
difference, if any, could have a material effect on results of operations
in a future period when resolved.
9
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AVON PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
ITEM 2. Management's Discussion and Analysis of the
Results of Operations and Financial Condition
Results of Operations--Three Months Ended March 31, 1994 and 1993.
Consolidated
Consolidated net loss for the three months ended March 31, 1994 of $15.7
million, or $.22 per share, includes a non-cash charge for accounting
changes of $45.2 million or $.63 per share. This charge is for the
cumulative effect of changes in accounting principles for the following:
postemployment benefits (FAS No. 112) of $28.9 million; postretirement
benefits (FAS No. 106) for foreign benefit plans of $8.0 million; and costs
related to the development of information systems of $8.3 million. Effective
in the first quarter of 1994, internal information systems development costs
are being expensed as incurred, rather than deferred and amortized over
future periods.
Consolidated net loss for the first three months of 1993 was $92.9
million, or $1.29 per share, which included a non-cash net charge for the
cumulative effect of changes in accounting principles of $107.5 million, or
$1.49 per share, for postretirement benefits (FAS No. 106) for U.S. plans
and income taxes (FAS No. 109) and a $10.0 million, or $.14 per share, charge
related to discontinued operations.
Income from continuing operations before cumulative effect of accounting
changes for the three months ended March 31, 1994 was $29.5 million, a 20
percent increase over the comparable period of 1993. Income per share from
continuing operations increased 21 percent to $.41 from $.34 in 1993.
Pretax income of $48.8 million increased 20 percent due to higher net sales,
an improved operating expense ratio and favorable foreign exchange primarily
in Brazil. These favorable results were partially offset by higher interest
expense and lower interest income in Brazil and a lower gross margin. Net
income was further improved by a lower effective tax rate in 1994 (39.5
percent versus 40.0 percent in 1993) resulting from the mix of international
and domestic income.
Consolidated net sales for the three months ended March 31, 1994 were
$913.6 million, a $71.7 million or 9 percent increase over the comparable
period of the prior year. The increase is primarily due to sales improvement
in Avon U.S., reflecting the launch of a new intimate apparel line and
increases in most product categories; an increase in units sold in Mexico,
Argentina and the Pacific Rim; and the favorable impact of a weaker U.S.
dollar and sales of higher-priced products in Japan. These improvements
were partially offset by lower sales in Europe due to the strength of the
dollar against most European currencies and operational declines in most
of the European countries.
10
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AVON PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND FINANCIAL CONDITION--(Continued)
Cost of sales as a percentage of sales was 39.6 percent in the first
quarter compared to 38.4 percent in the same period last year. The decline
in gross margin was primarily due to increased sales in the lower margin
intimate apparel, home entertainment and gift product lines in Avon U.S. and
more competitive pricing strategies and a change in product mix in Mexico.
Marketing, distribution and administrative expenses of $489.3 million
increased $26.5 million or 6 percent over the comparable period of 1993,
while expenses as a percentage of sales decreased 1.5 percentage points to
53.5 percent versus 55.0 percent in 1993. The higher expenses are associated
with sales increases in Argentina and Mexico, increased advertising and
government mandated salary increases in Brazil and market expansion in the
Pacific Rim markets, most significantly China. The improvement in the
expense ratio was driven by increased sales in Avon U.S., Japan, most Pacific
Rim markets and Argentina partially offset by the previously discussed
increased expenses in Brazil.
Interest expense increased $4.4 million from the comparable period of
last year primarily due to higher short-term debt levels in Brazil for
funding of working capital needs. Interest income decreased $4.0 million
primarily due to lower levels of cash and short-term investments in Brazil
in 1994 compared to 1993.
Other expense, net, of $4.7 million in 1994 decreased $10.1 million from
the comparable period of 1993. This decrease is primarily due to net
foreign exchange gains in Brazil in 1994 compared to net foreign exchange
losses in Brazil in 1993.
Avon U.S.
Net sales increased 10 percent reflecting an 8 percent increase in
Representative average order size and a 2 percent increase in the number of
Representative orders. The sales improvement reflects the introduction of a
new intimate apparel line in the first quarter of 1994 and higher sales of
home entertainment, gift and cosmetic, fragrance and toiletry product lines.
Pretax income increased 32 percent primarily due to the sales increase and a
favorable operating expense ratio, partially offset by a lower gross margin
due to the shift in sales mix to the lower margin intimate apparel, home
entertainment and gift product lines.
Avon International
Net sales increased 10 percent and pretax income increased 17 percent
over the comparable period of 1993. The increase in sales was primarily due
to increased units sold in Argentina, Mexico and the Pacific Rim and the
favorable impact of exchange rate fluctuations and sales of higher-priced
products in Japan. These favorable results were partially offset by lower
sales throughout Europe, mainly as a result of the strengthening of the
11
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AVON PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND FINANCIAL CONDITION--(Continued)
dollar against most European currencies, and increased sales of lower priced
products in Germany, France and the United Kingdom. The increase in pretax
income reflects the overall sales growth, favorable operating expense ratios
in Argentina and Japan and net foreign exchange gains in Brazil. These
improvements were partially offset by lower interest income in Brazil
reflecting lower cash and short-term investment levels, an unfavorable gross
margin and expense ratio in Mexico due to more competitive pricing strategies
and increased expenses to strengthen competitive position, increased expenses
related to expansion in China and lower operational results in most European
markets due to the continued recessionary economic environment. Profits were
lower in Europe due to the sales decline and an unfavorable gross margin
primarily due to a shift in product mix.
Retail
Giorgio's sales decreased 18 percent primarily due to a decline in
the U.S. resulting from lower sales of the women's fragrance, Wings, which
was launched in the first quarter of 1993. This decline in the U.S. retail
market was partially offset by increased sales in Europe and to international
distributors in 1994. Pretax loss was higher than the loss in the comparable
period of the prior year reflecting lower sales of the high margin Wings
fragrance partially offset by lower foreign exchange losses in 1994.
Discontinued Operations
In March 1993, Avon recorded an additional discontinued operations
provision of $10.0 million after tax, or $.14 per share, for the final
settlement and related expenses in an arbitration proceeding related to a
business previously sold.
Liquidity and Capital Resources
Cash Flows
Excluding changes in debt, net cash usage was $249.6 million in the first
quarter of 1994 compared with $184.0 million in the comparable period of 1993.
The higher cash usage reflects $46.7 million for the repurchase of common
stock, higher cash used by operations and higher dividend payments. During
the first quarter of 1994, the company purchased approximately 736,000 shares
of common stock for $41.6 million, under the previously announced stock
repurchase program and acquired approximately 88,000 shares issued under the
1991 Long-Term Incentive Plan.
12
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AVON PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND FINANCIAL CONDITION--(Continued)
For the first quarter of 1994, cash used by operations was $153.2
million, compared with $137.2 million in 1993. The higher cash usage
resulted mainly from the funding of benefit plans, which is included in
the change in noncurrent assets and liabilities on the Consolidated
Statement of Cash Flows, and increased first quarter working capital
levels in the Pacific Region due to expansion efforts in several markets.
These increases were partially offset by lower working capital levels and
higher net income in Avon U.S.
Capital Resources
Total debt increased $127.0 million to $321.1 million at March 31, 1994
from $194.1 million at December 31, 1993 principally due to normal seasonal
working capital requirements during the first three months of 1994 and
borrowings related to the stock repurchase program. Total debt at March 31,
1994 was $321.1 million compared to $324.1 million at March 31, 1993.
During March 1994, the Company entered into a $200.0 million revolving
credit agreement. The terms and conditions of this agreement are the same
as its existing $400.0 million multifacility credit agreement, except this
new facility allows the Company to use borrowings for the purchase of Avon
stock. The credit agreements contain covenants that include requirements
for minimum net worth, as defined, interest coverage and maximum borrowings.
Commercial paper borrowings supported by credit agreements at March 31,
1994 were $43.5 million. These borrowings were used to finance working
capital and to repurchase the Company's stock.
At March 31, 1994, the Company had bankers' acceptance facilities
available of $197.0 million with various banks. At March 31, 1994, there
were $25.0 million of borrowings under these facilities. In addition, at
March 31, 1994, the Company had $35.7 million of borrowings from various
banks under uncommitted lines of credit.
Management currently believes that cash from operations and available
financing alternatives are adequate to meet anticipated requirements for
working capital, dividends, capital expenditures, the stock repurchase
program and other cash needs. It is also currently anticipated that
existing debt maturing over the next five years will be paid without
refinancing.
Working Capital
As of March 31, 1994, current liabilities exceeded current assets by
$66.6 million compared with current assets exceeding current liabilities
by $23.1 million at the end of 1993. The decline from December 1993 reflects
a decrease in cash and equivalents and an increase in debt maturing within
13
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AVON PRODUCTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
RESULTS OF OPERATIONS AND FINANCIAL CONDITION--(Continued)
one year partially offset by higher investments in working assets (current
assets excluding cash and equivalents), most significantly inventory, which
reflects the seasonal pattern of Avon's operations. The increase in
inventory also is due to the introduction of new and higher-priced product
lines and higher sales volume in Avon U.S., continued business expansion in
the Pacific Rim markets and higher sales volume in Argentina.
Although current liabilities exceed current assets at March 31, 1994,
management believes it highlights the effectiveness of its working capital
management and does not adversely affect liquidity. Avon's liquidity results
from its ability to generate significant cash flows from operations and its
adequate unused borrowing capacity. Actions that would eliminate the working
capital deficit are not anticipated at this time. Avon's credit agreements
do not contain any provisions or requirements with respect to working
capital. Avon is in compliance with all financial covenants.
14
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AVON PRODUCTS, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On May 11, 1994, the DuPont patent case was argued before the Missouri
Court of Appeals, Eastern District. A decision is expected during this year,
see Note 8 - Contingencies.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
4.1 --Revolving Credit Agreement, dated as of March 11, 1994
among Avon Capital Corporation, Avon and a group of
banks.
4.2 --Second Amendment, dated as of February 24, 1994, to the
Multifacility Credit Agreement among Avon, Avon Capital
Corporation and a group of banks.
11.1 --Statement re computation of primary income (loss) per
share.
11.2 --Statement re computation of fully diluted income (loss)
per share.
18 --Letter of Coopers & Lybrand regarding change in
accounting principle.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the first quarter
of 1994.
15
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AVON PRODUCTS, INC.
(Registrant)
Date: May 12, 1994 By /s/ ROBERT J. CONOLOGUE
------------------------------
Robert J. Conologue
Group Vice President and Controller
Principal Accounting Officer
Signed both on behalf of the registrant
and as principal accounting officer.
16
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended March 31, 1994 Commission file number 1-4881
------------
AVON PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
------------
EXHIBITS
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INDEX TO EXHIBITS
Exhibit
Number Description
4.1 --Revolving Credit Agreement, dated as of March 11, 1994,
among Avon Capital Corporation, Avon and a group of banks.
4.2 --Second Amendment, dated as of February 24, 1994, to the
Multifacility Credit Agreement, among Avon Capital
Corporation, Avon and a group of banks.
11.1 --Statement re computation of primary income (loss) per share.
11.2 --Statement re computation of fully diluted income (loss) per
share.
18 --Letter of Coopers & Lybrand regarding change in accounting
principle.
EXHIBIT 4.1
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<PAGE>1 EXHIBIT 4.1
[CONFORMED COPY]
$200,000,000
REVOLVING CREDIT AGREEMENT
dated as of
March 11, 1994
among
AVON CAPITAL CORPORATION,
AVON PRODUCTS, INC.,
THE BANKS NAMED HEREIN,
and
CHEMICAL BANK,
as Administrative Agent
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Certain Definitions . . . . . . . . . . . . . . . . . . 1
(a) Terms Generally . . . . . . . . . . . . . . . . . . . . . . 1
(b) Accounting Terms . . . . . . . . . . . . . . . . . . . . . . 2
(c) Certain Other Terms . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
The Revolving Credit Loans
Section 2.01. The Revolving Credit Loans . . . . . . . . . . . . . . . 14
Section 2.02. Procedure for Revolving Credit Loans
(other than Bid Loans) . . . . . . . . . . . . . . . 14
Section 2.03. Revolving Credit Notes . . . . . . . . . . . . . . . . . 16
Section 2.04. Cancellation or Reduction of Commitments . . . . . . . . 16
Section 2.05. Prepayment of Revolving Credit Loans
(Non-Bid) . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.06. Bid Loans . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.07. Facility Fee . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.08. Utilization Fee . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III
INTEREST, METHOD OF PAYMENT, CONVERSION, ETC.
Section 3.01. Procedure for Interest Rate Determination . . . . . . . 21
Section 3.02. Interest on ABR Loans . . . . . . . . . . . . . . . . . 21
Section 3.03. Interest on CD Loans . . . . . . . . . . . . . . . . . . 21
Section 3.04. Interest on Eurodollar Loans . . . . . . . . . . . . . . 22
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Section 3.05. Interest on Bid Loans . . . . . . . . . . . . . . . . . 23
Section 3.06. Conversion . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.07. Post Maturity Interest . . . . . . . . . . . . . . . . . 24
Section 3.08. Maximum Interest Rate . . . . . . . . . . . . . . . . . 24
ARTICLE IV
DISBURSEMENT AND PAYMENT
Section 4.01. Pro Rata Treatment . . . . . . . . . . . . . . . . . . . 24
Section 4.02. Method of Payment . . . . . . . . . . . . . . . . . . . 25
Section 4.03. Compensation for Losses . . . . . . . . . . . . . . . . 25
Section 4.04. Withholding, Reserves and Additional Costs . . . . . . . 26
Section 4.05. Unavailability . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01. Representations and Warranties of Parent
and the Company . . . . . . . . . . . . . . . . . . . 30
ARTICLE VI
CONDITIONS OF LENDING
Section 6.01. Conditions to the Availability of the Commitment . . . . 34
Section 6.02. Conditions to the Initial Loan . . . . . . . . . . . . . 35
Section 6.03. Conditions to Each Revolving Credit Loan . . . . . . . . 35
Section 6.04. Satisfaction of Conditions Precedent . . . . . . . . . . 36
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ARTICLE VII
COVENANTS
Section 7.01. Affirmative Covenants of Parent and the Company . . . . 36
Section 7.02. Negative Covenants of Parent . . . . . . . . . . . . . . 41
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01. Events of Default . . . . . . . . . . . . . . . . . . . 44
Section 8.02. Notice of Default . . . . . . . . . . . . . . . . . . . 47
ARTICLE IX
THE ADMINISTRATIVE AGENT AND THE BANKS
Section 9.01. The Agency . . . . . . . . . . . . . . . . . . . . . . . 47
Section 9.02. The Administrative Agent's Duties . . . . . . . . . . . 47
Section 9.03. Sharing of Payments and Expenses . . . . . . . . . . . . 48
Section 9.04. The Administrative Agent's Liabilities . . . . . . . . . 48
Section 9.05. The Administrative Agent as a Bank . . . . . . . . . . . 49
Section 9.06. Bank Credit Decision . . . . . . . . . . . . . . . . . . 49
Section 9.07. Indemnification . . . . . . . . . . . . . . . . . . . . 50
Section 9.08. Successor Administrative Agent . . . . . . . . . . . . . 50
ARTICLE X
THE GUARANTY
Section 10.01. The Guaranty . . . . . . . . . . . . . . . . . . . . . 51
Section 10.02. Absolute Guaranty . . . . . . . . . . . . . . . . . . . 51
Section 10.03. Consents, Waivers and Renewals . . . . . . . . . . . . 52
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Section 10.04. Security. . . . . . . . . . . . . . . . . . . . . . . . 52
Section 10.05. Subrogation . . . . . . . . . . . . . . . . . . . . . . 52
Section 10.06. Continuing Guaranty . . . . . . . . . . . . . . . . . . 52
Section 10.07. Waiver of Notice . . . . . . . . . . . . . . . . . . . 53
ARTICLE XI
MISCELLANEOUS
Section 11.01. APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . 53
Section 11.02. Set-off . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 11.03. Expenses . . . . . . . . . . . . . . . . . . . . . . . 53
Section 11.04. Amendments . . . . . . . . . . . . . . . . . . . . . . 53
Section 11.05. Cumulative Rights and No Waiver . . . . . . . . . . . . 54
Section 11.06. Notices . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 11.07. Severability . . . . . . . . . . . . . . . . . . . . . 55
Section 11.08. No Assignments; Participations . . . . . . . . . . . . 55
Section 11.09. WAIVER OF RIGHT TO JURY . . . . . . . . . . . . . . . . 56
Section 11.10. Indemnity . . . . . . . . . . . . . . . . . . . . . . . 56
Section 11.11. Confidentiality . . . . . . . . . . . . . . . . . . . . 57
Section 11.12. Execution in Counterparts . . . . . . . . . . . . . . . 58
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SCHEDULES
Schedule 5.01(e) -- Certain Litigation
Schedule 7.01(c) -- Insurers Not Rated B+ or Above
EXHIBITS
Exhibit A -- Form of Bid Loan Request
Exhibit B -- Form of Bid Note
Exhibit C -- Form of Revolving Credit Note
Exhibit D -- Form of Conversion Request
Exhibit E -- Form of Revolving Credit Loan Request (Non-Bid)
Exhibit F-1 -- Form of Opinion of General Counsel of
Avon Products, Inc.
Exhibit F-2 -- Form of Opinion of Sullivan & Cromwell
Exhibit F-3 -- Form of Opinion of White & Case
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REVOLVING CREDIT AGREEMENT, dated as of March 11, 1994 (as
amended, supplemented or modified from time to time, the "Agreement"),
among AVON PRODUCTS, INC., a New York corporation ("Parent"), AVON CAPITAL
CORPORATION, a Delaware corporation (the "Company"), each of the banks
identified on the signature pages hereof (each, a "Bank" and, collectively,
the "Banks") and Chemical Bank, as Administrative Agent for the Banks (the
"Administrative Agent").
W I T N E S S E T H:
WHEREAS, Parent and the Company have requested the Banks to
commit to lend up to $200,000,000 to the Company on a revolving basis for
general corporate purposes and for the funding of the purchase, redemption
and retirement by Parent of outstanding shares of Parent's capital stock;
and
WHEREAS, the Banks have agreed to make such loans upon the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Definitions.
(a) Terms Generally. The definitions ascribed to terms in
this Section 1.01 and elsewhere in this Agreement shall apply equally to
both the singular and plural forms of the terms defined. The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation". The words "hereby", "herein", "hereof",
"hereunder" and words of similar import refer to this Agreement as a whole
(including any exhibits and schedules hereto) and not merely to the
specific section, paragraph or clause in which such word appears. All
references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules
to, this Agreement unless the context shall otherwise require. Except as
otherwise expressly provided herein, all references to "dollars" or "$"
shall be deemed references to the lawful money of the United States of
America.
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(b) Accounting Terms. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed
in accordance with GAAP, as in effect from time to time; provided, however,
that, for purposes of determining compliance with any covenant set forth in
Article VII, such terms shall be construed in accordance with GAAP as in
effect on the date of this Agreement applied on a basis consistent with the
construction thereof applied in preparing Parent's audited financial
statements referred to in Section 5.01(d). In the event there shall occur
a change in GAAP which but for the foregoing proviso would affect the
computation used to determine compliance with any covenant set forth in
Article VII, Parent, the Company and the Banks agree to negotiate in good
faith in an effort to agree upon an amendment to this Agreement that will
permit compliance with such covenant to be determined by reference to GAAP
as so changed while affording the Banks the protection afforded by such
covenant prior to such change (it being understood, however, that such
covenant shall remain in full force and effect in accordance with its
existing terms pending the execution by Parent, the Company and the Banks
of any such amendment).
(c) Certain Other Terms. The following terms shall have the
meanings ascribed to them below or in the Sections of this Agreement
indicated below:
"ABR Loans" shall mean Revolving Credit Loans, or portions
thereof, that bear interest at the rate and in the manner set forth in
Section 3.02.
"Adjusted CD Rate" shall mean, with respect to any Interest
Period, the rate per annum determined pursuant to the following formula,
which rate shall change during such Interest Period as and when the Reserve
Percentage or the Assessment Rate shall change:
CDBR
ACDR = -------- + AR
1 - RP
where:
ACDR = Adjusted CD Rate for such Interest Period for a CD
Loan
CDBR = CD Base Rate for such Interest Period for a CD Loan
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AR = Assessment Rate
RP = Reserve Percentage
"Administrative Agent" shall have the meaning ascribed to such
term in the preamble to this Agreement.
"Agreement" shall have the meaning ascribed to such term in the
preamble to this Agreement.
"Applicable Margin" shall have the following meaning:
(i) in the case of an ABR Loan, 0.0% per annum;
(ii) in the case of a CD Loan, 0.525% per annum (increasing to
0.625% per annum during any period in which the Available
Facility is less than one-half the amount of the then
existing Total Commitment); and
(iii) in the case of a Eurodollar Loan, 0.40% per annum
(increasing to 0.50% per annum during any period in which
the Available Facility is less than one-half the amount
of the then existing Total Commitment).
"Assessment Rate" shall mean, at any time, the then current
rate determining the annual assessment payable by the Administrative Agent
to the Federal Deposit Insurance Corporation (or any successor) for such
Corporation's or such successor's insuring dollar deposits made at offices
of the Administrative Agent in the United States and, when used with
respect to an Interest Period for a CD Loan, shall mean such rate as in
effect from time to time during such Interest Period.
"Available Facility" shall mean (a) on any date prior to the
Termination Date, an amount equal to the remainder of (i) the Total
Commitment on such date minus (ii) the sum of the aggregate outstanding
principal amount of Revolving Credit Loans on such date and (b) on and
after the Termination Date, $0.
"Avon Japan" shall have the meaning ascribed to such term in
Section 7.02(b)(xi).
"Bank" shall have the meaning ascribed to such term in the
preamble to this Agreement.
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"Base LIBOR" shall mean, with respect to any Interest Period
for a Eurodollar Loan, the rate per annum determined by the Administrative
Agent to be the arithmetic mean (rounded to the nearest 1/16 of 1% or, if
there is no nearest 1/16 of 1%, to the next higher 1/16 of 1%) of the
respective rates of interest communicated by the Reference Banks to the
Administrative Agent as the rate at which U.S. dollar deposits are offered
to the Reference Banks by leading banks in the London interbank deposits
market at approximately 11:00 A.M., London time, on the second full
Business Day preceding the first day of such Interest Period in an amount
substantially equal to the respective Reference Amounts for a term equal to
such Interest Period.
"Base Rate" shall mean a fluctuating interest rate per annum as
shall be in effect from time to time, which rate per annum shall on any day
be equal to the higher of:
(a) the rate of interest publicly announced by the
Administrative Agent from time to time as its prime loan rate in
effect on such day; and
(b) the sum (adjusted to the nearest 1/4 of 1% or, if there is
no nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (i) 1/2 of 1%
per annum and (ii) the Federal Funds Rate.
"Benefit Arrangement" shall mean, at any time, an employee
benefit plan within the meaning of Section 3(3) of ERISA which is not a
Plan or a Multiemployer Plan and which is maintained or otherwise
contributed to by any member of the ERISA Group.
"Bid Loans" shall mean Revolving Credit Loans, or portions
thereof, that bear interest at the rate and in the manner set forth in
Section 2.06.
"Bid Loan Request" shall mean a request by the Company to
borrow Bid Loans pursuant to the terms hereof, in substantially the form of
Exhibit A which shall specify, with respect to such requested Bid Loans,
(i) the proposed Borrowing Date therefor, (ii) the aggregate amount (which
shall not be less than $5,000,000 or in integral multiples of $1,000,000 in
excess thereof) of Bid Loans which the Company desires to borrow on such
Borrowing Date, (iii) the date for repayment of such Bid Loans (which date
shall be at least 10 days and not more than 90 days after the Borrowing
Date therefor and may not be later than the Termination Date), (iv) whether
such Bid Loans are to bear interest on the basis of the CD Base Rate, the
Adjusted CD Rate, Base LIBOR or LIBOR or otherwise, (v) if such Bid Loans
are to
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bear interest on the basis of the CD Base Rate, the Adjusted CD Rate, Base
LIBOR or LIBOR, the Interest Period therefor and (vi) any other terms to be
applicable to such proposed Bid Loans.
"Bid Notes" shall mean, collectively, the promissory notes of
the Company evidencing Bid Loans, each substantially in the form of Exhibit
B.
"Borrowing Date" shall mean (i) in the case of a Revolving
Credit Loan (other than a Bid Loan), the date set forth in each such
Revolving Credit Loan Request (Non-Bid) or (ii) in the case of a Bid Loan,
the date set forth on each Bid Loan Request as the date upon which the
Company desires to borrow such Revolving Credit Loans.
"Business Day" shall mean (i) with respect to any ABR Loan, Bid
Loan (other than a Bid Loan that bears interest on the basis of Base LIBOR
or LIBOR), CD Loan, or any payment of the Facility Fee or the Utilization
Fee, any day except a Saturday, Sunday or other day on which commercial
banks in New York City are authorized by law to close and (ii) with respect
to any Eurodollar Loan (or Bid Loan that bears interest on the basis of
Base LIBOR or LIBOR), any day on which commercial banks are open for
domestic and international business (including dealings in U.S. dollar
deposits) in London and New York City.
"Capital Lease" shall mean, with respect to any Person, any
obligation of such Person to pay rent or other amounts under a lease with
respect to any property (whether real, personal or mixed) acquired or
leased by such Person that is required to be accounted for as a liability
on a balance sheet of such Person in accordance with GAAP.
"CD Base Rate" shall mean, with respect to any Interest Period
for a CD Loan, the average of the bid rates (rounded to the nearest 1/100
of 1% or, if there is no nearest 1/100 of 1%, to the next higher 1/100 of
1%) quoted at 10:00 A.M., New York time (or as soon thereafter as is
practicable), on the first day of such Interest Period by two or more New
York certificate of deposit dealers of recognized standing, selected by the
Administrative Agent, for the purchase at face value of certificates of
deposit sold by the Reference Banks in the secondary market in an amount
substantially equal to the Reference Amount for a term equal to such
Interest Period.
"CD Loans" shall mean Revolving Credit Loans, or portions
thereof, that bear interest at the rate and in the manner set forth in
Section 3.03.
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"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commitment" shall mean, in the case of each Bank, the amount
set forth opposite such Bank's name under the heading "Revolving Credit
Commitment" on the signature pages hereof, as such amount may be reduced
from time to time pursuant to Section 2.04.
"Company" shall have the meaning ascribed to such term in the
preamble to this Agreement.
"Consolidated Debt" shall mean, at any date, the aggregate
amount of Debt of Parent and its Consolidated Subsidiaries, determined on a
consolidated basis as of such date.
"Consolidated Net Income" shall mean, for any fiscal period,
the consolidated net income of Parent and its Consolidated Subsidiaries,
including therein any items of extraordinary loss and, to the extent of
such extraordinary losses, any items of extraordinary gain.
"Consolidated Net Worth" shall mean, at any date, the
consolidated shareholders' equity of Parent and its Consolidated
Subsidiaries as of such date, without giving effect to (i) changes in
translation adjustments occurring after December 31, 1991, (ii) the
cumulative effect (from June 17, 1992) of any repurchases, redemptions,
retirements or other acquisitions of shares of its capital stock by Parent
and (iii) any accelerated recognition of costs relating to the adoption of
Financial Accounting Standards Board Statement 106; provided, however, that
in the event that the Consolidated Net Income in each of the immediately
preceding two quarters shall be less than $0, then Consolidated Net Worth
shall be calculated without reference to the exceptions set forth in
clauses (ii) or (iii) above.
"Consolidated Subsidiary" shall mean, at any date with respect
to any Person, any Subsidiary or other entity the accounts of which would
be consolidated with those of such Person in the consolidated financial
statements of such Person if such statements were prepared in accordance
with GAAP as of such date.
"Conversion Date" shall mean the date on which a conversion of
interest rates on outstanding Revolving Credit Loans (other than Bid
Loans), pursuant to a Conversion Request, shall take effect.
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"Conversion Request" shall mean a request by the Company to
convert the interest rate on all or portions of outstanding Revolving
Credit Loans (other than Bid Loans) pursuant to the terms hereof, in
substantially the form of Exhibit D, which shall specify, with respect to
such outstanding Revolving Credit Loans, (i) the requested Conversion Date,
which shall be not less than three Business Days after the date of such
Conversion Request, (ii) the aggregate amount of the Revolving Credit
Loans, from and after the Conversion Date, which are to bear interest as
ABR Loans, CD Loans or Eurodollar Loans, as the case may be, and (iii) the
term of the Interest Periods therefor, if any.
"Credit Documents" shall mean this Agreement and each of the
Notes.
"Debt" shall mean, as to any Person at any date, without
duplication, (i) all obligations of such Person for borrowed money, (ii)
all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts
payable arising in the ordinary course of business, (iv) all obligations of
such Person as lessee under Capital Leases, (v) all contingent or non-
contingent obligations of such Person to reimburse or prepay any bank or
other Person in respect of amounts paid or payable (currently or in the
future, on a contingent or non-contingent basis) under a letter of credit,
bankers' acceptance or similar instrument, other than (A) contingent
obligations relating to letters of credit issued to support trade payables
and (B) obligations up to $25,000,000 arising under stand-by letters of
credit, (vi) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, and (vii) all
Debt of others Guaranteed by such Person; provided, however, that Debt
shall not include any obligations incurred in connection with the funding
of a trust established under Section 501(c)(9) of the Code.
"Default" shall mean any event or circumstance which, with the
giving of notice or the passage of time, or both, would become an Event of
Default.
"Environmental Laws" shall mean any and all federal, state,
local and foreign statutes, laws, regulations, ordinances, rules,
franchises, licenses, agreements or other governmental restrictions
relating to the environment or to emissions, discharges or releases of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or
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wastes into the environment including, without limitation, ambient air,
surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes
or clean-up or other remediation thereof.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA Group" shall mean Parent and all members of a controlled
group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with Parent, are treated
as a single employer under Section 414 of the Code.
"Eurodollar Loans" shall mean Revolving Credit Loans, or
portions thereof, that bear interest at the rate and in the manner set
forth in Section 3.04.
"Eurodollar Reserve Percentage" shall mean, for any day, that
percentage, expressed as a decimal, which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including any
marginal, supplemental or emergency reserve requirements) for a member bank
of the Federal Reserve System in New York City with deposits exceeding one
billion dollars in respect of eurocurrency liabilities. LIBOR shall be
adjusted automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event of Default" shall mean any of the events described in
Section 8.01.
"Facility Fee" shall have the meaning ascribed to such term in
Section 2.07.
"Fee Payment Date" shall mean each February 15, May 15, August
15, November 15 and the earlier of (i) any other date on which the Total
Commitment is cancelled in full pursuant to Section 2.04 and (ii) the
Termination Date.
"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100th of 1%) equal
to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New
York on the Business Day next succeeding such
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day; provided that (i) if such day is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day,
and (ii) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate quoted
to the Administrative Agent on such day on such transactions as determined
by the Administrative Agent.
"GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such
other statements by such other entities as may be approved by a significant
segment of the accounting profession, which are applicable to the
circumstances as of the date of determination.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"Guaranty" by any Person shall mean any obligation, contingent
or otherwise, of such Person directly or indirectly guaranteeing any Debt
or other obligation of any other Person and, without limiting the
generality of the foregoing, 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
(whether arising by virtue of partnership arrangements, by agreements 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 the purpose of assuring in any other manner the
obligee of such Debt or other obligation of the payment thereof (in whole
or in part); provided that the term Guaranty 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.
"Guaranteed Obligations" shall have the meaning ascribed to
such term in Section 10.01.
"Initial Loan" shall mean the first Revolving Credit Loan which
is made pursuant to the terms hereof.
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"Interest Coverage Ratio" shall mean, as of the last day of any
fiscal quarter, the ratio of (i) Consolidated Net Income plus consolidated
tax and interest expense for Parent and its Consolidated Subsidiaries
(other than interest expense attributable to inflation-related indexation
payments and pension accruals in Brazil and Germany, respectively, and
interest payable to the Internal Revenue Service in respect of taxes) to
(ii) consolidated interest expense for Parent and its Consolidated
Subsidiaries (other than the interest expense described in the
parenthetical in clause (i) above), in each case for the period of four
fiscal quarters ending on such day.
"Interest Period" shall mean each 30, 60, 90 or 180-day period
in the case of CD Loans; each one, two, three or six-month period, in the
case of Eurodollar Loans; such period being selected by the Company
pursuant to Section 2.02 hereof and commencing on the date the relevant
Revolving Credit Loan is made or the last day of the current Interest
Period, as the case may be.
"LIBOR" shall mean, with respect to any Interest Period, the
rate per annum (rounded to the nearest 1/16 of 1% or, if there is no
nearest 1/16 of 1%, to the next higher 1/16 of 1%) determined pursuant to
the following formula:
Base LIBOR .
LIBOR =
(1 - Eurodollar Reserve Percentage)
"Lien" shall mean, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, encumbrance, charge or security interest in or
on such asset, (b) the interest of a vendor or lessor under any conditional
sale agreement, capital lease or title retention agreement relating to such
asset, and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.
"Material Plan" shall mean a Plan or Plans having aggregate
Unfunded Liabilities in excess of $5,000,000.
"Material Subsidiary" shall mean at any time Parent and any
Subsidiary which as of such time meets the definition of a "significant
subsidiary" contained as of the date hereof in Regulation S-X of the
Securities and Exchange Commission.
"Multiemployer Plan" shall mean an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member
of the ERISA Group is making or accruing an obligation to make
contributions or
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has within the preceding five plan years made contributions (including for
these purposes any Person which ceased to be a member of the ERISA Group
during such five year period) and under which liability may be imposed on
any member of the ERISA Group.
"Multifacility Credit Agreement" shall mean the Multifacility
Credit, dated as of June 17, 1992, among Parent, the Company, the banks
named therein and Bankers Trust Company and Chemical Bank, as Co-
Administrative Agents, as such agreement may be amended, modified, extended
or superseded from time to time.
"Notes" shall mean, collectively, the Revolving Credit Notes
and the Bid Notes.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Parent" shall have the meaning ascribed to such term in the
preamble to this Agreement.
"Participant" shall have the meaning ascribed to such term in
Section 11.08(b).
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, entity
or government (whether Federal, state, county, city, municipal or
otherwise, including any instrumentality, division, agency, body or
department thereof).
"Plan" shall mean an employee pension benefit plan as defined
in Section 3(2) of ERISA (including a plan which is a multiemployer plan)
which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and is maintained for employees of
Parent, its Subsidiaries or any member of a controlled group of corpora-
tions and all trades or businesses (whether or not incorporated) under
common control with Parent that, together with Parent, are treated as a
single employer under regulations of the PBGC, which are consistent and
coextensive with regulations prescribed for similar purposes by the
Secretary of the Treasury under subsections (b) and (c) of Section 414 of
the Code.
"Prescribed Forms" shall mean such duly executed form(s) or
statement(s), and in such number of copies, which may, from time to time,
be prescribed by law and which, pursuant to applicable provisions of (a) an
income tax
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<PAGE> 12
treaty between the United States and the country of residence of the Bank
providing the form(s) or statement(s), (b) the Code, or (c) any applicable
rule or regulation under the Code, permit Parent or the Company to make
payments hereunder for the account of such Bank free of deduction or
withholding for income or similar taxes.
"Pro Rata Share" shall mean, in the case of each Bank, the
proportion of such Bank's Commitment to the Total Commitment of all the
Banks or, if the Total Commitment shall have been cancelled or reduced to
$0 or expired, the proportion of the aggregate amount of such Bank's
Revolving Credit Loans then outstanding to the aggregate amount of
Revolving Credit Loans then outstanding.
"Reference Amount" shall mean, with respect to any Reference
Bank and Interest Period, (a) if that Reference Bank is a Bank, the amount
of that Bank's CD Loan or Eurodollar Loan, as the case may be, scheduled to
be outstanding during the Interest Period, or (b) if that Reference Bank is
not a Bank, the amount scheduled to be outstanding during that Interest
Period of the CD Loan or Eurodollar Loan, as the case may be, of the office
or affiliate of that Reference Bank that is a Bank, in each case, (i)
without taking into account any reduction in the amount of any Bank's Loan
through any assignment or transfer and (ii) rounded up to the nearest
integral multiple of $1,000,000.
"Reference Bank" shall mean each of Bankers Trust Company,
Chemical Bank, and J.P. Morgan Delaware.
"Required Banks" shall mean, at any date, Banks having at least
66 2/3% of the Total Commitment or, if the Total Commitment has been
cancelled or terminated, holding Notes which in the aggregate evidence at
least 66 2/3% of the aggregate unpaid principal amount of the Revolving
Credit Loans.
"Reserve Percentage" shall mean, for any day, that percentage,
expressed as a decimal, which is in effect on such day, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including any marginal,
supplemental or emergency reserve requirements) for a member bank of the
Federal Reserve System in New York City with deposits exceeding one billion
dollars in respect of new non-personal time deposits in dollars in New York
City having a maturity comparable to the relevant Interest Period and in an
amount of $100,000 or more. The Adjusted CD Rate
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<PAGE> 13
shall be adjusted automatically on and as of the effective date of any
change in the Reserve Percentage.
"Revolving Credit Loans" shall mean, collectively, all ABR
Loans, Bid Loans, CD Loans and Eurodollar Loans.
"Revolving Credit Loan Request (Non-Bid)" shall mean a request
by the Company to borrow Revolving Credit Loans (other than Bid Loans)
pursuant to the terms hereof, in substantially the form of Exhibit E, which
shall specify, (i) the requested Borrowing Date, (ii) the aggregate amount
of Revolving Credit Loans which the Company desires to borrow on such date,
(iii) whether such requested Revolving Credit Loans are to bear interest as
ABR Loans, CD Loans or Eurodollar Loans and (iv) if the requested Revolving
Credit Loans are to bear interest as CD Loans or Eurodollar Loans, the
requested term of the Interest Period therefor.
"Revolving Credit Notes" shall mean, collectively, the
promissory notes of the Company evidencing Revolving Credit Loans (other
than Bid Loans), in substantially the form of Exhibit C.
"Subsidiary" shall mean any corporation or other entity of
which securities or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by Parent.
"Taxes" shall have the meaning ascribed to such term in Section
4.04(a).
"Termination Date" shall mean March 11, 1997 or, if earlier,
the date on which all Revolving Credit Loans have been fully repaid and all
Commitments have been entirely cancelled.
"Total Commitment" shall mean the aggregate Commitments of all
the Banks, being initially $200,000,000 (subject to cancellation or
reduction pursuant to Section 2.04).
"Unfunded Liabilities" means, with respect to any Plan, the
amount (if any) by which (i) the present value of all benefit liabilities
under such Plan exceeds (ii) the fair market value of all Plan assets
allocable to such benefits (excluding any accrued but unpaid
contributions), all determined as of the then most recent valuation date
for such Plan, but only to the extent that such excess represents a
potential liability of a member of the ERISA
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<PAGE> 14
Group to the PBGC or any other Person under Title IV of ERISA.
"Utilization Fee" shall have the meaning ascribed to such term
in Section 2.08.
"Wholly owned Subsidiary" shall mean any Subsidiary all the
shares of stock of all classes of which (other than directors' qualifying
shares) at the time are owned directly or indirectly by the Company and/or
one or more Wholly owned Subsidiaries of Parent.
ARTICLE II
THE REVOLVING CREDIT LOANS
Section 2.01. The Revolving Credit Loans. Prior to the
Termination Date, and subject to the terms and conditions of this
Agreement, upon the request of the Company, and upon the satisfaction of
the conditions precedent contained in Article VI applicable thereto, each
of the Banks, severally and not jointly with the other Banks, agrees to
make one or more Revolving Credit Loans to the Company from time to time in
an aggregate principal amount at any one time outstanding not to exceed
such Bank's Commitment and, so long as, the aggregate outstanding Revolving
Credit Loans (including Bid Loans) shall not exceed the Total Commitment.
Section 2.02. Procedure for Revolving Credit Loans (other than
Bid Loans). (a) The Company may borrow Revolving Credit Loans (other than
Bid Loans) by delivering a Revolving Credit Loan Request (Non-Bid) to the
Administrative Agent not later than 10:30 A.M. New York time on the
Borrowing Date therefor with respect to any ABR Loan, at least two Business
Days before the Borrowing Date therefor with respect to any CD Loan and at
least three Business Days before the Borrowing Date with respect to any
Eurodollar Loan. Such Revolving Credit Loans shall be in the minimum
aggregate amount of $10,000,000 or in integral multiples of $1,000,000 in
excess thereof (except that such borrowing may be in the aggregate amount
of the unused portion of the Total Commitment) and shall be made (except in
the case of Bid Loans) by each of the several Banks in proportion to its
respective Pro Rata Share.
(b) Upon receipt of any Revolving Credit Loan Request (Non-
Bid) from the Company, the Administrative Agent shall forthwith give notice
to each Bank of the substance thereof. Not later than 2:00 P.M. New York
time on the
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<PAGE> 15
Borrowing Date specified in such Revolving Credit Loan Request (Non-Bid),
each Bank shall make available to the Administrative Agent in immediately
available funds at the office of the Administrative Agent at its address
set forth on the signature pages hereof, such Bank's Pro Rata Share of the
Revolving Credit Loans requested.
(c) Upon receipt by the Administrative Agent of all such funds
and upon the satisfaction of each of the conditions precedent contained in
Article VI applicable thereto, the Administrative Agent shall disburse to
the Company on the requested Borrowing Date the Revolving Credit Loans
requested in such Revolving Credit Loan Request (Non-Bid). The
Administrative Agent may, but shall not be required to, advance on behalf
of any Bank such Bank's Pro Rata Share of such Revolving Credit Loans on a
Borrowing Date unless such Bank shall have notified the Administrative
Agent prior to such Borrowing Date that it does not intend to make
available its Pro Rata Share of such Revolving Credit Loans on such date.
If the Administrative Agent makes such an advance, the Administrative Agent
shall be entitled to recover such amount on demand from the Bank on whose
behalf such advance was made, and if such Bank does not pay the
Administrative Agent the amount of such advance on demand, the Company
shall promptly repay such amount to the Administrative Agent, acting for
the Banks. Until such amount is repaid to the Administrative Agent by such
Bank or the Company, such advance shall be deemed for all purposes to be a
Revolving Credit Loan made by the Administrative Agent. The Administrative
Agent shall be entitled to recover from the Bank or the Company, as the
case may be, interest on the amount advanced by it for each day from the
Borrowing Date therefor until repaid to the Administrative Agent at a rate
per annum equal to (i) in the case of an amount recovered from any Bank,
the Federal Funds Rate or (ii) in the case of an amount recovered from the
Company, the higher of the Federal Funds Rate or the interest rate
applicable thereto pursuant to Section 3.01.
(d) In lieu of delivering the written notice described above,
the Company may give the Administrative Agent telephonic notice of any
request for borrowing by the time required under this Section 2.02;
provided, that such telephonic notice shall be confirmed by delivery of a
written notice to the Administrative Agent by no later than 4:00 P.M. New
York time on the date of such telephonic notice. Without limiting any
obligation of the Company to confirm in writing such telephonic notice
hereunder, the Administrative Agent may act without liability upon the
basis of any such telephonic notice believed in good faith by the
Administrative Agent to be from an authorized officer
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of the Company prior to receipt of such written confirmation.
Section 2.03. Revolving Credit Notes. The Company's
obligation for Revolving Credit Loans (other than Bid Loans) shall be
evidenced by Revolving Credit Notes, one such payable to the order of each
Bank. The Revolving Credit Note of each Bank shall (i) be in the principal
amount of such Bank's Commitment, (ii) be dated on or prior to the date of
the Initial Loan and (iii) be stated to mature on the Termination Date and
bear interest from its date until maturity on the principal balance (from
time to time outstanding thereunder) payable at the rates and in the manner
provided herein. Each Bank is authorized to indicate upon the grid
attached to its Revolving Credit Note all Revolving Credit Loans made by it
pursuant to this Agreement, interest elections and payments of principal
and interest thereon. Such notations shall be presumptive as to the
aggregate unpaid principal amount of all Revolving Credit Loans made by
such Bank, and interest due thereon, but the failure by any Bank to make
such notations or the inaccuracy or incompleteness of any such notations
shall not affect the obligations of the Company hereunder or under the
Revolving Credit Notes.
Section 2.04. Cancellation or Reduction of Commitments. The
Company shall have the right, upon not less than five Business Days'
written notice to the Administrative Agent and upon payment of the Facility
Fee accrued through the date of such cancellation or reduction, to cancel
the Total Commitment in full or to reduce the amount thereof; provided,
however, that the Total Commitment may not be canceled so long as any
Revolving Credit Loan remains outstanding; and provided, further, that the
amount of any partial reduction in the Total Commitment shall not exceed
the Available Facility. Partial reductions of the Total Commitment shall
be in the amount of $10,000,000 or in integral multiples of $1,000,000 in
excess thereof (or, if the Available Facility is less than $10,000,000,
then all of such lesser amount). All such cancellations or reductions
shall be permanent.
Section 2.05. Prepayment of Revolving Credit Loans (Non-Bid).
The Company shall have the right, on not less than three Business Days'
notice to the Administrative Agent in the case of CD Loans or Eurodollar
Loans, and not less than one Business Day's notice to the Administrative
Agent in the case of ABR Loans, to prepay such Revolving Credit Loans
bearing interest on the same basis and having the same Interest Periods, if
any, in whole or in part, without premium or penalty, in the aggregate
principal
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<PAGE> 17
amount of $10,000,000 or integral multiples of $1,000,000 in excess thereof
(or, if the outstanding aggregate amount of such loan is less than
$10,000,000, then all of such lesser amount), together with accrued
interest on the principal being prepaid to the date of prepayment and, in
the case of CD Loans and Eurodollar Loans, the amounts required by Section
4.03. Subject to the terms and conditions hereof, Revolving Credit Loans
prepaid under this Section may be reborrowed.
Section 2.06. Bid Loans. (a) Prior to the Termination Date,
the Company may request that the Banks make offers to make Revolving Credit
Loans in the form of Bid Loans on the terms and conditions hereinafter set
forth; provided, however, that the aggregate outstanding principal amount
of Revolving Credit Loans (including such Bid Loans) shall not at any one
time exceed the Total Commitment and the Company may not request Bid Loans
prior to the fifth Business Day after the date on which all the conditions
specified in Article VIII applicable thereto shall have been satisfied or
waived in writing by each of the Banks. Each Bank may, but shall have no
obligation to, make such offers and the Company may, but shall have no
obligation to, accept any such offers in the manner set forth in this
Section 2.06.
(b) The Company may request Bid Loans under this Section 2.06
by delivering a Bid Loan Request to the Administrative Agent not later than
10:30 A.M. New York time one Business Day (four Business Days in the case
of a Bid Loan bearing interest on the basis of Base LIBOR or LIBOR) prior
to the Borrowing Date therefor. The Administrative Agent shall promptly
notify each Bank of each Bid Loan Request received by it from the Company
and of the terms contained therein.
(c) Each Bank may, if in its sole discretion it elects so to
do, irrevocably offer to make a Bid Loan to the Company at a rate or rates
of interest specified by such Bank in its sole discretion, by notifying the
Administrative Agent (which shall give prompt notice thereof to the
Company), before 9:30 A.M. New York time on the specified Borrowing Date
with respect to such Bid Loan (or three Business Days before such Borrowing
Date in the case of a Bid Loan bearing interest on the basis of Base LIBOR
or LIBOR), of the maximum and minimum amounts of the Bid Loan which such
Bank would be willing to make (which amount may, subject to the proviso to
Section 2.06(a), exceed such Bank's Commitment, but shall be not less than
$5,000,000 or in integral multiples of $1,000,000 in excess thereof), the
rate or rates of interest therefor (and whether reserves are
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<PAGE> 18
included therein) and any other terms and conditions required by such Bank;
provided, that if the Administrative Agent in its capacity as a Bank shall
elect to make any such offer, it shall notify the Company of such offer
before 9:00 A.M. New York time on such date. If any Bank shall fail to
notify the Administrative Agent before 9:30 A.M. New York time (or, in the
case of the Administrative Agent in its capacity as a Bank, if the
Administrative Agent shall fail to notify the Company before 9:00 A.M. New
York time) on the specified date with respect to such Bid Loan, that it
elects to make such an offer, such Bank shall be deemed to have elected not
to make such an offer.
(d) The Company shall, before 10:30 A.M. New York time on the
specified Borrowing Date with respect to such Bid Loan, either
(A) cancel the Bid Loan Request by giving the Administrative
Agent notice to that effect, or
(B) accept one or more of the offers made by any Bank or Banks
pursuant to Section 2.06(c), in its sole discretion, by giving notice
to the Administrative Agent of the amount of each Bid Loan (which
amount shall be equal to or greater than the minimum amount offered
by such Bank and equal to or less than the maximum amount offered by
such Bank for such Bid Loan pursuant to Section 2.06(c)), to be made
by each Bank, and reject any remaining offers, by giving the
Administrative Agent notice to that effect; provided that the
aggregate amount of such offers accepted by the Company shall be not
less than $5,000,000 or in integral multiples of $1,000,000 in excess
thereof; provided that (i) the failure by the Company to give such
notice in a timely fashion shall be deemed to be a rejection of all
the bids, (ii) the Company shall not accept a bid made at a
particular interest rate (or margin) if the Company has decided to
reject a bid made at a lower interest rate (or margin), (iii) the
aggregate amount of the bids accepted by the Company shall not exceed
the principal amount specified in the Bid Loan Request, (iv) if the
Company shall accept a bid or bids made at a particular interest rate
(or margin) but the amount of such bid or bids shall cause the total
amount of bids to be accepted by the Company to exceed the amount
specified in the Bid Loan Request, then the Company shall
(notwithstanding the minimum bid acceptance amount required by
clause (vi) below) accept a portion of such bid in an amount equal to
the amount specified in the Bid Loan Request less the amount of all
other bids accepted with respect to such Bid Loan
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<PAGE> 19
Request; (v) if the Company shall accept bids made at a particular interest
rate (or margin) but shall be restricted by other conditions hereof from
borrowing the principal amount of Bid Loans specified in the Bid Loan
Request in respect of which bids at such rate (or margin) have been made or
if the Company shall accept bids made a particular interest rate (or
margin) but the aggregate amount of bids made at such interest rate (or
margin) shall exceed the amount specified in the Bid Loan Request, then the
Company shall accept a pro rata portion of each bid made at such interest
rate (or margin) aggregating the portion of Bid Loans with respect to which
bids at such interest rate (or margin) have been received (provided further
that if the available principal amount of Bid Loans to be so allocated is
not sufficient to enable Bid Loans to be so allocated to each such Bank in
a principal amount not less than $5,000,000 or in an integral multiple of
$1,000,000 in excess thereof, the Company shall select the Banks to be
allocated such Bid Loans in a principal amount not less than $5,000,000 but
may round up allocations to the next higher integral multiple of $1,000,000
if necessary) and (vi) except as provided in clauses (iv) and (v) above, no
bid shall be accepted for a Bid Loan unless such Bid Loan is in a principal
amount not less than $5,000,000 or an integral multiple of $1,000,000 in
excess thereof.
(e) If the Company notifies the Administrative Agent that the
Bid Loan Request is cancelled in accordance with Section 2.06(d)(A), the
Administrative Agent shall give prompt notice thereof to the Banks.
(f) If the Company accepts one or more of the offers made by
any Bank or Banks in accordance with Section 2.06(d)(B), the Administrative
Agent shall promptly (A) notify each Bank that has made an offer pursuant
to Section 2.06(c) of the date and aggregate amount of such Bid Loan(s),
the interest rate (or margin) thereon and whether or not any offer or
offers made by such Bank pursuant to Section 2.06(c) have been accepted by
the Company, (B) notify each Bank whose offer (or a portion thereof) to
make a Bid Loan has been accepted by the Company, of the amount of the Bid
Loan to be made by such Bank and the date for repayment thereof, together
with a confirmation of the interest rate and any other terms applicable to
such Bid Loan and (C) notify each Bank of the principal amounts and
interest rates (or margins) specified in each of the bids submitted in
response to the related Bid Loan Request.
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(g) Following any acceptance by the Company and notification
by the Administrative Agent pursuant to clause (f) above, and upon
satisfaction by the Company or waiver by each Bank whose offer to make a
Bid Loan has been accepted by the Company of each of the conditions
precedent contained in Article VI applicable thereto, the Administrative
Agent shall disburse to the Company on the specified Borrowing Date, Bid
Loans in the aggregate amount accepted by the Company, in the manner and
subject to the same terms and conditions set forth in Section 2.02(c) with
respect to ABR Loans, mutatis mutandis.
(h) The Company's obligation to repay the Bid Loans shall be
evidenced by Bid Notes, one such payable to the order of each Bank which
makes Bid Loans, if any, hereunder. The Bid Note of each Bank shall (i) be
in the principal amount of the Bid Loan made by such Bank, (ii) be dated as
of the Borrowing Date therefor, (iii) be stated to mature on the maturity
date for such Bid Loan and bear interest from its date until maturity on
the principal balance (from time to time outstanding thereunder) payable at
the rates and in the manner provided herein and (iv) not be prepayable by
the Company.
Section 2.07. Facility Fee. On each Fee Payment Date, the
Company shall pay, in arrears, to the Administrative Agent for the account
of the Banks, a fee on the Total Commitment (the "Facility Fee"). The
Facility Fee shall accrue for each day in the immediately preceding
quarterly period at the rate of .20% per annum (on the basis of a 365-day
year (366 days in the case of a leap year) for the actual number of days
involved) of the average aggregate amount of the Total Commitment,
commencing on the date hereof to but excluding the applicable Fee Payment
Date.
Section 2.08. Utilization Fee. On each Fee Payment Date, if
the average amount of Revolving Credit Loans outstanding during the
immediately preceding quarterly period shall have exceeded one half of the
then existing Total Commitment, then the Company shall pay, in arrears, to
the Administrative Agent for the account of the Banks, a utilization fee on
the daily amount of the Total Commitment (the "Utilization Fee"). The
Utilization Fee shall accrue for each day in the immediately preceding
quarterly period at the rate of .10% per annum (on the basis of a 365-day
year (366 days in the case of a leap year) for the actual number of days
involved) of the average aggregate amount of the Total Commitment,
commencing on the date hereof to but excluding the applicable Fee Payment
Date.
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ARTICLE III
INTEREST, METHOD OF PAYMENT, CONVERSION, ETC.
Section 3.01. Procedure for Interest Rate Determination. (a)
Unless the Company shall request in a Revolving Credit Loan Request (Non-
Bid) or in a Conversion Request that the Revolving Credit Loans (or
portions thereof) bear interest as CD Loans or Eurodollar Loans, Revolving
Credit Loans shall bear interest as ABR Loans.
(b) Each Bid Loan shall bear interest on the basis, or at the
rate per annum, determined pursuant to Section 2.06.
Section 3.02. Interest on ABR Loans. Each ABR Loan shall bear
interest from the date of such ABR Loan until maturity, or the beginning of
any relevant Interest Period, as the case may be, payable in arrears on the
last day of each month, commencing with the first such date after the date
hereof, and on the date such ABR Loan is repaid, at a rate per annum (on
the basis of (i) a 365-day year (366 days in the case of a leap year) if
the Base Rate is calculated based on the prime rate and (ii) a 360-day year
if the Base Rate is calculated based on the Federal Funds Rate, for the
actual number of days involved) equal to the sum of (i) the Applicable
Margin with respect to ABR Loans and (ii) the Base Rate in effect from time
to time, which rate shall change as and when said Base Rate shall change.
Section 3.03. Interest on CD Loans. (a) Each CD Loan shall
bear interest from the date of such CD Loan until maturity, payable in
arrears (A) on the last day of each successive Interest Period with respect
thereto, and (B) if such Interest Period is longer than 90 days, on the
date which occurs 90 days after the first day of such Interest Period and
any successive 90-day period thereafter, at a rate per annum (on the basis
of a 360-day year for the actual number of days involved), determined by
the Administrative Agent with respect to each Interest Period with respect
to CD Loans, equal to the sum of (i) the Applicable Margin with respect to
CD Loans and (ii) the Adjusted CD Rate.
(b) The Interest Period for each CD Loan shall be selected by
the Company at least two Business Days prior to the beginning of such
Interest Period. If the Company fails to notify the Bank of the Interest
Period for a subsequent CD Loan at least two Business Days prior to the end
of the then current Interest Period of an outstanding CD Loan, then
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such outstanding CD Loan shall become an ABR Loan at the end of such
current Interest Period.
(c) Notwithstanding the foregoing: (i) if any Interest
Period for a CD Loan would otherwise end on a day which is not a Business
Day, such Interest Period shall be extended to the next succeeding Business
Day and (ii) no Interest Period for a CD Loan may extend beyond the
Termination Date.
Section 3.04. Interest on Eurodollar Loans. (a) Each
Eurodollar Loan shall bear interest from the date of such Eurodollar Loan
until maturity, payable in arrears (A) on the last day of each successive
Interest Period with respect thereto, and (B) if such Interest Period is
longer than three months, on the date which occurs three months after the
first day of such Interest Period and any successive three month period
thereafter, and on the last day of each successive Interest Period with
respect thereto, at a rate per annum (on the basis of a 360-day year for
the actual number of days involved), determined by the Administrative Agent
with respect to each Interest Period with respect to Eurodollar Loans,
equal to the sum of (i) the Applicable Margin with respect to Eurodollar
Loans and (ii) LIBOR.
(b) The Interest Period for each Eurodollar Loan shall be
selected by the Company at least three Business Days prior to the beginning
of such Interest Period. If the Company fails to notify the Administrative
Agent of the Interest Period for a subsequent Eurodollar Loan at least
three Business Days prior to the last day of the then current Interest
Period of an outstanding Eurodollar Loan, then such outstanding Eurodollar
Loan shall become an ABR Loan at the end of such current Interest Period.
(c) Notwithstanding the foregoing: (i) if any Interest Period
for a Eurodollar Loan would otherwise end on a day which is not a Business
Day, such Interest Period shall be extended to the next succeeding Business
Day unless the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period
shall end on the immediately preceding Business Day; (ii) any Interest
Period that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last Business
Day of a calendar month; and (iii) no Interest Period for a Eurodollar Loan
may extend beyond the Termination Date.
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<PAGE> 23
(d) Eurodollar Loans shall be made by each Bank from its
branch or affiliate identified as its Eurodollar Lending Office on the
signature page hereto, or such other branch or affiliate as it may
hereafter designate to the Company and the Administrative Agent as its
Eurodollar Lending Office.
Section 3.05. Interest on Bid Loans. Each Bid Loan shall bear
interest from the date of such Bid Loan until maturity, payable in arrears
in accordance (mutatis mutandis) with (i) the payment provisions set forth
in Section 3.03(a) if such Bid Loan bears interest on the basis of the CD
Base Rate (or Adjusted CD Rate), (ii) the payment provisions set forth in
Section 3.04(a) if such Bid Loan bears interest on the basis of Base LIBOR
(or LIBOR) and (iii) the payment provisions set forth in Section 3.02 if
such Bid Loan bears interest on any other basis than the CD Base Rate or
Base LIBOR.
Section 3.06. Conversion. (a) The Company may request, by
delivery to the Administrative Agent of a written Conversion Request not
less than three Business Days prior to a requested Conversion Date, that
all or portions of the outstanding Revolving Credit Loans (other than Bid
Loans), in the aggregate amount of $10,000,000 or in integral multiples of
$1,000,000 in excess thereof (or, if the aggregate amount of outstanding
Revolving Credit Loans is less than $10,000,000, then all such lesser
amount), bear interest from and after the Conversion Date as either ABR
Loans, CD Loans or Eurodollar Loans, as the case may be.
(b) Upon receipt of any such Conversion Request from the
Company, the Administrative Agent shall forthwith give notice to each Bank
of the substance thereof. Effective on such Conversion Date and upon
payment by the Company of the amounts, if any, required by Section 3.03,
the Revolving Credit Loans or portions thereof as to which the Conversion
Request was made shall commence to accrue interest as set forth in this
Article III for the interest rate selected by the Company.
(c) In lieu of delivering the above described notice, the
Company may give the Administrative Agent telephonic notice hereunder by
the required time under this Section 3.06; provided, that such telephonic
notice shall be confirmed by delivery of a written notice to the
Administrative Agent by no later than 4:00 P.M. New York time on the date
of such telephonic notice. Without limiting any obligation of the Company
to confirm in writing such telephonic notice hereunder, the Administrative
Agent may act without liability upon the basis of any such telephonic
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<PAGE> 24
notice believed in good faith by the Administrative Agent to be from an
authorized officer of the Company prior to receipt of such written
confirmation.
Section 3.07. Post Maturity Interest. After maturity (whether
by acceleration or otherwise) of any Revolving Credit Loan or any
installment thereof, such Revolving Credit Loan shall bear interest,
payable on demand, at a rate per annum (on the basis of a 360-day year for
the actual number of days involved) equal to the sum of (i) 2% and (ii) the
rate of interest then applicable to ABR Loans, changing as and when said
rate shall change.
Section 3.08. Maximum Interest Rate. (a) Nothing in this
Agreement, the Revolving Credit Notes or the Bid Notes shall require either
Parent or the Company to pay interest at a rate exceeding the maximum rate
permitted by applicable law. Neither this Section nor Section 11.01 is
intended to limit the rate of interest payable for the account of any Bank
to the maximum rate permitted by the laws of the State of New York (or any
other applicable law) if a higher rate is permitted with respect to such
Bank by supervening provisions of U.S. federal law.
(b) If the amount of interest payable for the account of any
Bank on any interest payment date in respect of the immediately preceding
interest computation period, computed pursuant to this Article III, would
exceed the maximum amount permitted by applicable law to be charged by such
Bank, the amount of interest payable for its account on such interest
payment date shall automatically be reduced to such maximum permissible
amount.
ARTICLE IV
DISBURSEMENT AND PAYMENT
Section 4.01. Pro Rata Treatment. Each payment of the
Facility Fee, the Utilization Fee and each reduction of the Total Commit-
ment, as the case may be, shall be apportioned among the Banks in
proportion to each Bank's Pro Rata Share. Except as provided in Section
4.04 or 4.05, the Revolving Credit Notes (other than Bid Notes) or portions
thereof as to which a Conversion Request has been made pursuant to Section
3.06 hereof shall at all times bear interest on the same basis (as ABR
Loans, CD Loans and Eurodollar Loans, as the case may be) and the Interest
Periods applicable thereto, if any, shall be of the same duration.
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<PAGE> 25
Section 4.02. Method of Payment. (a) Each of Parent and the
Company shall make payments of principal of, and interest on, outstanding
Revolving Credit Loans to the Administrative Agent and make payments of
Facility Fees and Utilization Fees, as the case may be, not later than 2:00
P.M. New York time on the date when due, in Federal or other funds immedi-
ately available in New York City, to the address set forth on the signature
pages hereof. The Administrative Agent shall promptly distribute to each
Bank its ratable share, if any, of each such payment received by the
Administrative Agent for the account of the Banks. Whenever any payment of
principal of, or interest on such Revolving Credit Loans or fees shall be
due on a day which is not a Business Day, the date for payment thereof
shall be extended to the next succeeding Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Administrative Agent shall have received notice
from either Parent or the Company, as the case may be, prior to the date on
which any payment is due to the Banks hereunder that Parent or the Company
will not make such payment in full, the Administrative Agent may assume
that Parent or the Company has made such payment in full to the Admini-
strative Agent on such date and the Administrative Agent may, in reliance
upon such assumption, but shall not be obligated to, cause to be
distributed to each Bank on such due date an amount equal to the amount
then due such Bank. If and to the extent that Parent or the Company shall
not have so made such payment, each Bank shall repay to the Administrative
Agent forthwith on demand such amount distributed to such Bank together
with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Administrative Agent, at the Federal Funds Rate.
(c) Any and all payments made by Parent or the Company to the
Administrative Agent or the Banks hereunder shall be made without right of
set-off, counterclaim or other defenses.
Section 4.03. Compensation for Losses. (a) In the event that
either Parent or the Company makes a prepayment under Section 2.05 or 2.06
(other than in respect of ABR Loans) or in the event a Conversion Date
selected pursuant to Section 3.06 falls on a day other than the last day of
the Interest Period for the amount so prepaid or as to which a conversion
is made, or in the event that either Parent or the Company revokes any
notice given under Sec
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<PAGE> 26
tion 2.02 or 2.06 (other than in respect of ABR Loans or Bid Loans that
bear interest on the basis of the Base Rate) or 3.06, or in the event
Eurodollar Loans or CD Loans or portions thereof are converted into ABR
Loans pursuant to Section 4.05, or the Revolving Credit Loans shall be
declared to be due and payable prior to the scheduled maturity thereof
pursuant to Section 8.01, either Parent or the Company, as the case may be,
shall pay to each Bank promptly after its demand an amount which will
compensate such Bank for any resulting loss or expense incurred by such
Bank, including, without limitation, any loss incurred in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment or failure to borrow.
(b) Each Bank shall promptly notify either Parent or the
Company, as the case may be, with a copy to the Administrative Agent, upon
becoming aware that Parent or the Company may be required to make any
payment pursuant to this Section 4.03. When requesting payment pursuant to
this Section 4.03, each Bank shall provide to Parent or the Company, as the
case may be, with a copy to the Administrative Agent, a certificate, signed
by an officer of such Bank, setting forth the amount required to be paid by
Parent or the Company to such Bank and the computations made by such Bank
to determine such amount. In the absence of manifest error, such
certificate shall be conclusive and binding on Parent or the Company as to
the amount so required to be paid by Parent or the Company, to such Bank.
Section 4.04. Withholding, Reserves and Additional Costs.
(a) Withholding. To the extent permitted by law, all payments under this
Agreement and under the Notes (including payments of principal and
interest) shall be payable to each Bank free and clear of any and all
present and future taxes, levies, imposts, duties, deductions,
withholdings, fees, liabilities and similar charges (collectively,
"Taxes"); provided, that "Taxes" shall not include taxes imposed on or
measured by the overall net income of any Bank by the United States of
America or any political subdivision or taxing authority thereof or
therein, or taxes on or measured by the overall net income of any foreign
office, branch or subsidiary of such Bank by any foreign country or
subdivision thereof in which such office, branch or subsidiary is doing
business. If any Taxes are required to be withheld or deducted from any
amount payable under this Agreement or any Note, then the amount payable
under this Agreement or such Note shall be increased to the amount which,
after deduction from such increased amount of all Taxes required to be
withheld or deducted therefrom, will yield to such Bank the amount stated
to be payable under
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<PAGE> 27
this Agreement or such Note. Either Parent or the Company, as the case may
be, shall execute and deliver to any Bank upon its request such further
instruments as may be necessary or desirable to give full force and effect
to any such increase, including a new Note issued by either Parent or the
Company, as the case may be, in exchange for any Note theretofore issued.
Parent and the Company shall also hold each Bank harmless and indemnify it
for any stamp or other taxes with respect to the preparation, execution,
delivery, recording, performance or enforcement of the Credit Documents
(all of which shall be included within "Taxes"). If any of the Taxes
specified in this Section 4.04(a) are paid by any Bank, Parent or the
Company, as the case may be, shall, upon demand of such Bank, promptly
reimburse such Bank for such payments, together with any interest, penal-
ties and expenses incurred in connection therewith. Either Parent or the
Company, as the case may be, shall deliver to the Administrative Agent
certificates or other valid vouchers for all Taxes or other charges
deducted from or paid with respect to payments made by Parent or the
Company hereunder. Notwithstanding the foregoing, each of Parent and the
Company shall be entitled, to the extent it is required to do so by law, to
deduct or withhold (and shall not be required to make payments as otherwise
required in this Section on account of such deductions or withholdings)
income or other similar taxes imposed by the United States of America from
interest, fees or other amounts payable hereunder for the account of any
Bank other than a Bank (i) who is a U.S. Person for U.S. Federal income tax
purposes or (ii) who has the Prescribed Forms on file with either Parent or
the Company for the applicable year to the extent deduction or withholding
of such taxes is not required as a result of such filing of such Prescribed
Forms; provided, that if either Parent or the Company shall so deduct or
withhold any such taxes, it shall provide a statement to the Administrative
Agent and such Bank, setting forth the amount of such taxes so deducted or
withheld, the applicable rate and any other information or documentation
which such Bank may reasonably request for assisting such Bank to obtain
any allowable credits or deductions for the taxes so deducted or withheld
in the jurisdiction or jurisdictions in which such Bank is subject to tax.
(b) Change in Law or Regulation. (i) Reserves. If after the
date hereof (or after the date of submitting an offer to make a Bid Loan
pursuant to Section 2.06, in the case of a Bid Loan, unless such Bid Loan
was specified as including reserves), any change in any law or regulation
or in the interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof or the
enactment of any law or regulation shall
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<PAGE> 28
either (1) impose, modify or deem applicable any reserve, special deposit
or similar requirement against the Banks' Commitments or the Revolving
Credit Loans or (2) impose on any Bank any other condition regarding this
Agreement, its Commitment or the Revolving Credit Loans and the result of
any event referred to in clause (1) or (2) of this clause (b) shall be to
increase the cost to any Bank of maintaining its Commitment or such
Revolving Credit Loans or reduce the amounts received or receivable
hereunder in respect of such Revolving Credit Loans (which increase in cost
or reduction in amounts received or receivable hereunder shall be
calculated in accordance with each Bank's internal policies (which may
include any reasonable averaging and attribution method) by an amount
deemed by such Bank to be material, then, upon written demand (with a copy
to the Administrative Agent) by such Bank, either Parent or the Company, as
the case may be, shall pay to such Bank within 15 days of such written
demand an amount equal to such increase in cost; provided, that in respect
of any Revolving Credit Loan no such compensation shall be payable to the
extent that, in the reasonable opinion of such Bank, the interest rate on
such Revolving Credit Loans has been adjusted to account for such increased
cost.
(ii) Capital. If any Bank shall have determined that the
adoption of any applicable law, rule, regulation or guideline regarding
capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof (including any such adoption or change made prior to
the date hereof but not effective until after the date hereof (or after the
date of submitting an offer to make a Bid Loan pursuant to Section 2.06, in
the case of such Bid Loan)) or compliance by any Bank with any request or
directive regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on capital for any such Bank
or any corporation controlling such Bank as a consequence of its
obligations under this Agreement to a level below that which such Bank or
such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's or such corporation's
policies with respect to capital adequacy), by an amount deemed by such
Bank to be material, then from time to time, within 15 days after demand by
such Bank (with a copy to the Administrative Agent), either Parent or the
Company, as the case may be, shall pay to such Bank such additional amount
or amounts as will compensate such Bank for such reduction.
<PAGE>
<PAGE> 29
(c) Alternate Office. Before giving any notice to either
Parent or the Company pursuant to this Section 4.04, each Bank shall, if
possible, designate a different lending office if such designation will
avoid the need for giving such notice and will not, in the judgment of such
Bank, be otherwise materially disadvantageous to such Bank.
(d) Certificate. Each Bank shall promptly notify Parent or
the Company, with a copy to the Administrative Agent, upon becoming aware
that either Parent or the Company may be required to make any payment
pursuant to this Section 4.04. When requesting payment pursuant to this
Section 4.04, each Bank shall provide to Parent or the Company, as the case
may be, with a copy to the Administrative Agent, a certificate, signed by
an officer of such Bank, setting forth the amount required to be paid by
Parent or the Company to such Bank and the computations made by such Bank
to determine such amount. Determinations and allocations by such Bank for
purposes of this Section 4.04 shall be conclusive, provided that such
determinations and allocations are made on a reasonable basis and are
mathematically accurate. In the absence of manifest error, such
certificate shall be conclusive and binding on each of Parent and the
Company as to the amount so required to be paid by Parent or the Company to
such Bank. Anything herein notwithstanding, no Bank shall have the right
to demand compensation under this Section 4.04 (i) for reductions in a rate
of return during any period more than 180 days prior to the date it has
made a demand upon Parent or the Company pursuant to this Section 4.04 and
(ii) in the case of a demand under Section 4.04(b), unless such demand is
made in accordance with a policy of the Bank being applied to all borrowers
similarly situated.
Section 4.05. Unavailability. If at any time any Bank shall
have determined in good faith (which determination shall be conclusive)
that the making or maintenance of all or any part of such Bank's CD Loans
or Eurodollar Loans has been made impracticable or unlawful because of
compliance by such Bank in good faith with any law or guideline or
interpretation or administration thereof by any official body charged with
the interpretation or administration thereof or with any request or
directive of such body (whether or not having the effect of law), because
certificates of deposit in the amount and requested maturity of such CD
Loans are not marketable in the New York certificate of deposit market,
because U.S. dollar deposits in the amount and requested maturity of such
Eurodollar Loans are not available to the Bank in the London Eurodollar
interbank market, or because of any other reason, then the Administrative
Agent, upon notification to it of such determination by
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<PAGE> 30
such Bank, shall forthwith advise the other Banks, Parent and the Company
thereof. Upon such date as shall be specified in such notice and until
such time as the Administrative Agent, upon notification to it by such
Bank, shall notify Parent or the Company and the other Banks that the
circumstances specified by it in such notice no longer apply,
(i) notwithstanding any other provision of this Agreement, such CD Loans or
Eurodollar Loans shall automatically and without requirement of notice by
either Parent or the Company be converted to ABR Loans and (ii) the obliga-
tion of such Bank (and only such Bank) to allow borrowing, elections and
renewals of CD Loans or Eurodollar Loans, as the case may be, shall be sus-
pended, and, if the Company shall request in a Revolving Credit Loan
Request (Non-Bid) or Conversion Request that such Bank make a CD Loan or
Eurodollar Loan, as the case may be, the loan requested to be made by such
Bank shall instead be made as an ABR Loan. If the Administrative Agent is
advised by the Reference Banks that deposits in dollars (in the requested
amount and maturity) are not being offered to the Reference Banks, the
Administrative Agent shall forthwith give notice thereof to the Company and
the Banks, whereupon until the Administrative Agent notifies the Company
that the circumstances giving rise to such unavailability no longer exist,
the obligations of the Banks to make CD Loans or Eurodollar Loans, as the
case may be, shall be suspended.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01. Representations and Warranties of Parent and the
Company. Parent and the Company represent and warrant that:
(a) Corporate Existence and Power. Each of Parent and the
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as presently
conducted.
(b) Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by Parent and the
Company of this Agreement, and by the Company of the Notes, are within the
corporate powers of Parent or the Company, as the case may be, and have
been duly authorized by all necessary corporate action, require no action
by or in respect of, or filing with, any governmental
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<PAGE> 31
body, agency or official and do not contravene in any material respect, or
constitute a material default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the Company
or Parent, as the case may be, or of any agreement, judgment, injunction,
order, decree or other instrument binding upon the Company or Parent or
result in the creation or imposition of any Lien on any asset of the
Company or Parent or any of their Subsidiaries.
(c) Binding Effect. This Agreement constitutes a valid and
binding agreement of Parent and the Company, and the Notes will constitute
valid and binding agreements of the Company when executed and delivered in
accordance with this Agreement, in each case enforceable in accordance with
their respective terms, subject to limitations imposed by bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or other
similar laws relating to or affecting creditors' rights generally, and to
general equity principles, regardless of whether considered in a proceeding
in equity or at law.
(d) Financial Information. (i) The consolidated balance
sheet of Parent and its Consolidated Subsidiaries as of December 31, 1992
and the related consolidated statements of operations and cash flows for
the fiscal year then ended, reported on by Coopers & Lybrand and set forth
in Parent's Annual Report on Form 10-K for the fiscal year ended December
31, 1992, copies of which have been delivered to each of the Banks, fairly
present, in conformity with GAAP, the consolidated financial position of
Parent and its Consolidated Subsidiaries as of such date and its
consolidated results of operations and cash flows for such fiscal year.
The balance sheet of the Company as of December 31, 1992 and the related
statements of operations and cash flows for the fiscal year then ended,
copies of which have been delivered to each of the Banks, fairly present
the Company's financial position as of such date and its results of
operations and cash flows for such fiscal year.
(ii) The unaudited balance sheet of Parent and its
Consolidated Subsidiaries as of September 30, 1993 and the related
unaudited consolidated statements of income and cash flows for the three-
month period then ended, set forth in Parent's quarterly report for the
fiscal quarter ended September 30, 1993 as filed with the Securities and
Exchange Commission on Form 10-Q, copies of which have been delivered to
each of the Banks, fairly present, in conformity with generally accepted
accounting principles applied on a basis consistent with the financial
statements of Parent referred to in Section 5.01(d)(i), the consolidated
financial
<PAGE>
<PAGE> 32
position of Parent and its Consolidated Subsidiaries as of such date and
its consolidated results of operations and cash flows for such three-month
period (subject to normal year-end adjustments). The unaudited balance
sheet of the Company as of September 30, 1993 and the related unaudited
statements of operations and cash flows for the three month period then
ended, copies of which have been delivered to each of the Banks, fairly
present, on a basis consistent with the financial statements of the Company
referred to in Section 5.01(d)(i), the Company's financial position as of
such date and its results of operations and cash flows for such three month
period (subject to normal year-end adjustments).
(iii) Since December 31, 1992, there has been no material
adverse change in the business, consolidated financial position or
consolidated results of operations of Parent and its Consolidated
Subsidiaries, considered as a whole.
(e) Litigation. Except as disclosed in the reports or
financial statements referred to in Section 5.01(d), or in Schedule
5.01(e), there is no action, suit or proceeding pending, or to the
knowledge of Parent or the Company reasonably likely to be commenced,
against Parent or any of its Subsidiaries before any court or arbitrator or
any governmental body, agency or official in which there is a reasonable
possibility of an adverse decision which could materially adversely affect
the business, consolidated financial position or consolidated results of
operations of Parent and its Consolidated Subsidiaries, considered as a
whole, or which in any manner seeks to avoid the obligations of Parent or
the Company to repay Revolving Credit Loans outstanding under any Note or
this Agreement or obligations of Parent under Article VIII.
(f) Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and
the Code with respect to each Plan and is in compliance in all material
respects with the presently applicable provisions of ERISA and the Code
with respect to each Plan. No member of the ERISA Group has (i) sought a
waiver of the minimum funding standard under Section 412 of the Code in
respect of any Plan, (ii) failed to make any contribution or payment to any
Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or
made any amendment to any Plan or Benefit Arrangement, which has resulted
or could result in the imposition of a Lien or the posting of a bond or
other security under ERISA or the Code or (iii) incurred any liability
under Title IV
<PAGE>
<PAGE> 33
of ERISA other than a liability to the PBGC for premiums under Section 4007
of ERISA.
(g) Taxes. United States federal income tax returns of Parent
and its domestic Subsidiaries have been examined and closed through the
fiscal year ended December 31, 1984. Parent and its Subsidiaries have
filed all United States Federal income tax returns and all other material
tax returns which are required to be filed by them and have paid all taxes
due pursuant to such returns or pursuant to any assessment received by
Parent or any Subsidiary, except for assessments being contested in good
faith by appropriate proceedings and as to which Parent or such Subsidiary
has set aside adequate reserves on its books. The charges, accruals and
reserves on the books of Parent and its Subsidiaries in respect of taxes or
other governmental charges are, in the opinion of Parent, adequate.
(h) Material Subsidiaries. Each Material Subsidiary is a
corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, and has all corporate powers
and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
(i) Investment Company Act. Neither the Company nor Parent is
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(j) Disclosure. All information heretofore furnished by
Parent or any Subsidiary to the Administrative Agent or any Bank for
purposes of or in connection with this Agreement or any transaction
contemplated hereby was, and all such information hereafter furnished by
Parent or any Subsidiary to the Administrative Agent or any Bank will be,
true and accurate in all material respects or based on reasonable estimates
on the date as of which such information is stated or certified. Parent
has disclosed to the Banks in writing any and all facts known to any
officer of Parent which materially and adversely affect or may materially
and adversely affect (to the extent Parent can now reasonably foresee) the
business, properties, consolidated financial position or consolidated
results of operations of Parent and its Consolidated Subsidiaries,
considered as a whole.
(k) Environmental Matters. In the ordinary course of its
business, Parent conducts an ongoing review of the effect of Environmental
Laws on the business, operations and properties of Parent and its
Subsidiaries, in the course
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<PAGE> 34
of which it identifies and evaluates associated liabilities and costs
(including, without limitation, any capital or operating expenditures
required for clean-up or closure of properties presently or previously
owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law
or as a condition of any license, permit or contract, any related
constraints on operating activities, including any periodic or permanent
shutdown of any facility or reduction in the level of or change in the
nature of operations conducted thereat and any actual or potential
liabilities to third parties, including employees, and any related costs
and expenses). On the basis of this review, Parent has reasonably
concluded that Environmental Laws are unlikely to have a material adverse
effect on the business, consolidated financial condition, or consolidated
results of operations of Parent and its Consolidated Subsidiaries,
considered as a whole.
(l) Federal Reserve Regulation. After giving effect to the
application of the proceeds of each Revolving Credit Loan, not more than
25% of the value of the consolidated assets of Parent or the Company (based
on book value or another reasonable measure) will consist of or be
represented by "margin stock" within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System.
ARTICLE VI
CONDITIONS OF LENDING
Section 6.01. Conditions to the Availability of the
Commitment. The obligations of each Bank hereunder are subject to, and the
Banks' Commitments shall not become available until the date on which each
of the following conditions precedent shall have been satisfied or waived
in writing by each of the Banks:
(a) Credit Agreement. The Administrative Agent shall have
received this Agreement, duly executed and delivered by each of the
Banks, Parent and the Company.
(b) Evidence of Corporate Action. The Administrative Agent
shall have received certified copies of all corporate action taken by
each of Parent and the Company to authorize this Agreement and each
of the other Credit Documents.
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<PAGE> 35
(c) Arrangement Fee. The Administrative Agent shall have
received, for the accounts of the Banks, an arrangement fee in an
aggregate amount of $100,000.
(d) Other Documents. The Administrative Agent shall have
received such other certificates and documents as the Administrative
Agent and the Banks reasonably may require.
Section 6.02. Conditions to the Initial Loan. The obligations
of each Bank in connection with the Initial Loan are subject to the
conditions precedent that, on the date of such Initial Loan and after
giving effect thereto, each of the following conditions precedent shall
have been satisfied or waived in writing by each Bank, and upon such
satisfaction or waiver each Bank will give a written confirmation of the
same to Parent on request:
(a) Opinions of Counsel for Parent and the Company. The
Administrative Agent shall have received favorable written opinions
of Siri S. Marshall, General Counsel of Parent, and Sullivan &
Cromwell, special counsel for Parent and the Company, dated the date
hereof, in substantially the forms of Exhibits F-1 and F-2,
respectively.
(b) Opinion of Counsel for the Banks. The Administrative
Agent shall have received a favorable written opinion of special
counsel for the Banks, dated the date hereof, in substantially the
form of Exhibit F-3.
(c) Officer's Certificate. The Administrative Agent shall
have received from Parent and the Company a certificate, dated the
date hereof, to the effect set forth in Section 6.03(c) and (d),
signed by an authorized officer of Parent and the Company.
(d) Insurance Certificate. The Administrative Agent shall have
received the certificate, dated the date hereof, referred to in
Section 7.01(c)(ii).
Section 6.03. Conditions to Each Revolving Credit Loan. The
obligations of each Bank in connection with each Revolving Credit Loan
(including the Initial Loan) are subject to the conditions precedent that,
on the date of each such Revolving Credit Loan and after giving effect
thereto, each of the following conditions precedent shall have been
satisfied or waived in writing by each Bank, and upon such satisfaction or
waiver each Bank will give a written confirmation of the same to Parent on
request:
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<PAGE> 36
(a) Notes. In the case of any Revolving Credit Loan (other
than a Bid Loan), the Administrative Agent on behalf of the Banks
shall have received the relevant Revolving Credit Notes, duly
executed and delivered by the Company, and in the case of any Bid
Loan, the Administrative Agent on behalf of the relevant Banks shall
have received the relevant Bid Notes, duly executed and delivered by
the Company.
(b) Loan Request. In the case of any Revolving Credit Loan
(other than a Bid Loan), the Administrative Agent shall have received
a Revolving Credit Loan Request (Non-Bid), in the form and manner set
forth herein for such requests, and in the case of any Bid Loan, the
Administrative Agent shall have received a Bid Loan Request, in the
form and manner set forth herein for such requests.
(c) Absence of Defaults. No Default or Event of Default
shall have occurred and be continuing.
(d) Representations and Warranties. The representations and
warranties contained in Article V shall have been true when made and
shall be true and correct with the same effect as though such repre-
sentations and warranties had been made at the time of such Loan; and
each of Parent and the Company shall have complied with all of its
covenants and agreements under this Agreement.
Section 6.04. Satisfaction of Conditions Precedent. Delivery
by the Company of a Revolving Credit Loan Request (Non-Bid) or a Bid Loan
Request, as the case may be, pursuant to Section 6.03(b) shall be deemed to
constitute a certification of the Company that each of the foregoing
conditions precedent in this Article VI has been satisfied or waived in
writing by each Bank.
ARTICLE VII
COVENANTS
Section 7.01. Affirmative Covenants of Parent and the Company.
Parent (and, in the case of Sections 7.01(b) and (g), the Company) agrees
that, so long as any Bank has any Commitment hereunder or any amount
payable under any Note remains unpaid:
(a) Parent Information. Parent will deliver to each of the
Banks:
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<PAGE> 37
(i) as soon as available and in any event within 90 days
after the end of each fiscal year of Parent, a consolidated balance
sheet of Parent and its Consolidated Subsidiaries as of the end of
such fiscal year and the related consolidated statements of income
and cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all
reported on in a manner acceptable to the Securities and Exchange
Commission by Coopers & Lybrand or other independent public
accountants of nationally recognized standing;
(ii) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each fiscal year
of Parent, a consolidated balance sheet of Parent and its
Consolidated Subsidiaries as of the end of such quarter and the
related consolidated statements of income and cash flows for such
quarter and for the portion of Parent's fiscal year ended at the end
of such quarter, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion
of Parent's previous fiscal year, all certified (subject to normal
year-end adjustments) as to fairness of presentation, GAAP and
consistency by the Treasurer, chief financial officer or chief
accounting officer of Parent;
(iii) simultaneously with the delivery of each set of financial
statements referred to in clauses (i) and (ii) above, a certificate
of the Treasurer or the chief financial officer of Parent (A) setting
forth in reasonable detail the calculations required to establish
whether Parent was in compliance with the requirements of Sections
7.02(a) through 7.02(d), inclusive, on the date of such financial
statements and (B) stating whether any Default or Event of Default
exists on the date of such certificate and, if any Default or Event
of Default then exists, setting forth the details thereof and the
action which Parent is taking or proposes to take with respect
thereto;
(iv) simultaneously with the delivery of each set of financial
statements referred to in clause (i) above, a statement of the firm
of independent public accountants which reported on such statements
(A) whether anything has come to their attention to cause them to
believe that any Default or Event of Default existed on the date of
such statements and (B) confirming the calculations set forth in the
officer's
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<PAGE> 38
certificate delivered simultaneously therewith pursuant to clause (iii)
above;
(v) within five days of any officer of the Company or Parent
obtaining knowledge of any Default or Event of Default, if such
Default or Event of Default is then continuing, a certificate of the
Treasurer or the chief financial officer of Parent stating that such
certificate is a "Notice of Default" and setting forth the details
thereof and the action which Parent is taking or proposes to take
with respect thereto;
(vi) promptly upon the mailing thereof to the shareholders of
Parent generally, copies of all financial statements, reports and
proxy statements so mailed;
(vii) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) which Parent or the
Company shall have filed with the Securities and Exchange Commission;
(viii) if and when any member of the ERISA Group (A) gives or is
required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which
might constitute grounds for a termination of such Plan under Title
IV of ERISA, or knows that the plan administrator of any Plan has
given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be
given to the PBGC; (B) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any
Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (C) receives notice from the PBGC
under Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA) in respect of,
or appoint a trustee to administer any Plan, a copy of such notice;
(D) applies for a waiver of the minimum funding standard under
Section 412 of the Code, a copy of such application; (E) gives notice
of intent to terminate any Plan under Section 4041(c) of ERISA, a
copy of such notice and other information filed with the PBGC; (F)
gives notice of withdrawal from any Plan pursuant to Section 4063 of
ERISA, a copy of such notice; or (G) fails to make any payment or
contribution to any Plan or Multiemployer Plan or in
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<PAGE> 39
respect of any Benefit Arrangement or makes any amendment to any Plan or
Benefit Arrangement which has resulted or could result in the imposition of
a Lien or the posting of a bond or other security, a certificate of the
Treasurer or chief financial officer of Parent setting forth details as to
such occurrence and action, if any, which Parent or applicable member of
the ERISA Group is required or proposes to take; and
(ix) from time to time such additional information regarding
the financial position or business of Parent or the Company as the
Administrative Agent, at the request of any Bank, may reasonably
request.
(b) Company Information. The Company will deliver to each of
the Banks:
(i) as soon as available and in any event within 90 days
after the end of each fiscal year of the Company, a balance sheet of
the Company as of the end of such fiscal year and the related
statements of operations and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous
fiscal year, all certified as to fairness of presentation and
consistency by the Treasurer, the chief financial officer or the
chief accounting officer of the Company;
(ii) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each fiscal year
of the Company, a balance sheet of the Company as of the end of such
quarter and the related statements of operations and cash flows for
such quarter and for the portion of the Company's fiscal year ended
at the end of such quarter, setting forth in each case in comparative
form the figures for the corresponding quarter and the corresponding
portion of the Company's previous fiscal year, all certified (subject
to normal year-end adjustments) as to fairness of presentation and
consistency by the Treasurer, the chief financial officer or the
chief accounting officer of the Company; and
(iii) from time to time such additional information regarding
the financial position or business of the Company as the
Administrative Agent, at the request of any Bank, may reasonably
request.
(c) Maintenance of Property. (i) Parent will keep, and will
cause each Subsidiary to keep, all property
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<PAGE> 40
useful and necessary in its business in good working order and condition,
ordinary wear and tear excepted.
(ii) Parent will maintain, and will cause each Subsidiary to
maintain, (A) physical damage insurance on all real and personal property
on an all risks basis (including the perils of flood and quake), covering
the repair and replacement cost of all such property and consequential loss
coverage for business interruption and extra expense, (B) public liability
insurance (including products/completed operations liability coverage) in
an amount not less than $100,000,000 and (C) such other insurance coverage
in such amounts and with respect to such risks (including without
limitation risks relating to assets or businesses sold by Parent and its
Subsidiaries) as the Required Banks may reasonably request. All such
insurance shall be provided by insurers having an A.M. Best policyholders
rating of not less than B+ or insurers listed in Schedule 7.01(c) or
otherwise approved in writing by the Required Banks. Parent will deliver
to the Banks (A) on the date hereof, a certificate dated such date showing
the amount of coverage as of such date, (B) upon request of any Bank
through the Administrative Agent from time to time full information as to
the insurance carried, (C) within five days of receipt of notice by Parent
(but not later than 15 days after receipt by any Subsidiary of any such
notice) from any insurer a copy of any notice of cancellation or material
change in coverage from that existing on the date of this Agreement and (D)
forthwith, notice of any cancellation or nonrenewal of coverage by Parent.
(d) Continuation of Business. Parent and its Subsidiaries
will continue to engage in business of the same general type as conducted
by Parent and its Subsidiaries on the date hereof, considered as a whole.
Except as permitted in Section 7.02(a), Parent will preserve, renew and
keep in full force and effect, and will cause each Subsidiary to preserve,
renew and keep in full force and effect their respective corporate
existence and their respective rights, privileges and franchises necessary
or desirable in the normal conduct of business.
(e) Compliance with Law. Parent will comply, and cause each
Subsidiary to comply, with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities (including,
without limitation, Environmental Laws, ERISA and the rules and regulations
thereunder) except where the necessity of compliance therewith is contested
in good faith by appropriate proceedings or where failure so to comply
would not have a material adverse effect on the business, consolidated
financial
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<PAGE> 41
position or consolidated results of operations of Parent and its
Consolidated Subsidiaries, considered as a whole.
(f) Books, Records and Inspection. Parent will keep, and will
cause each Subsidiary to keep, proper books of record and account in which
full, true and correct entries in conformity with GAAP shall be made of all
dealings and transactions in relation to its business and activities; and
will permit, and will cause each Subsidiary to permit, representatives of
any Bank at such Bank's expense to visit and inspect any of its properties,
to examine and make abstracts from any of its books and records and to
discuss its affairs, finances and accounts with its officers, employees and
independent public accountants, all at such reasonable times and as often
as may reasonably be desired.
(g) Use of Proceeds. The proceeds of the Revolving Credit
Loans will be used (i) for general corporate purposes and/or (ii) directly
or indirectly, for the purpose, whether immediate, incidental or ultimate,
of funding or making payments on account of the purchase, redemption and
retirement by Parent of any shares of capital stock of Parent or any
related option, warrant or similar right. The proceeds of any Revolving
Credit Loan will not be used by Parent or the Company in violation of any
applicable law or regulation, including Regulation U and Regulation X of
the Board of Governors of the Federal Reserve System.
Section 7.02. Negative Covenants of Parent. Parent agrees
that, so long as any Bank has any Commitment hereunder or any amount
payable under any Note remains unpaid:
(a) Consolidations and Mergers. Parent will not, and will not
permit the Company to, consolidate or merge with or into, or acquire all or
substantially all the assets of, any other Person, except by merger of a
Consolidated Subsidiary into Parent or into a Wholly owned Subsidiary.
(b) Negative Pledge. Parent will not and will not permit any
Subsidiary to create, assume or suffer to exist any Lien on any asset
(including, without limitation, any stock of any Subsidiary) now owned or
hereafter acquired by it, except:
(i) Liens existing on the date hereof securing obligations
not exceeding $26,000,000 in aggregate amount;
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<PAGE> 42
(ii) Liens arising in the ordinary course of its business
which (A) do not secure Debt and (B) do not in the aggregate
materially detract from the value of its assets or materially impair
the use thereof in the operation of its business;
(iii) any Lien on any assets securing Debt incurred or assumed
for the purpose of financing all or any part of the cost of acquiring
such asset, provided that such Lien attaches to such asset
concurrently with or within 90 days after the acquisition thereof;
(iv) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by any
of the foregoing clauses of this Section 7.02(b), provided that such
Debt is not increased and is not secured by any additional assets;
(v) any Lien existing on any asset prior to the acquisition
thereof by Parent or a Consolidated Subsidiary and not created in
contemplation of such acquisition;
(vi) Liens for taxes or assessments and similar charges either
(A) not delinquent or (B) being contested in good faith by
appropriate proceedings and as to which adequate reserves have been
set aside on the books of Parent and its Subsidiaries;
(vii) Liens arising out of judgments or awards against Parent
or any Consolidated Subsidiary with respect to which Parent or such
Consolidated Subsidiary shall in good faith be prosecuting an appeal
or proceedings for review, provided that (A) Parent or such
Consolidated Subsidiary, as the case may be, shall have secured,
within 60 days after the creation thereof, an effective stay of
execution pending such appeal or review, and (B) the aggregate amount
of such judgments and awards shall not exceed $200,000,000;
(viii) Liens for minor survey exceptions, or minor encumbrances,
easements or reservations of, or rights of others for, rights of way,
sewers, electric lines, telegraph and telephone lines and other
similar purposes, or zoning or other restrictions as to the use of
real properties, which encumbrances, easements, reservations, rights
and restrictions do not in the aggregate materially detract from the
value of the real properties of Parent and the Consolidated
Subsidiaries, considered as a whole, or materially impair their use
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<PAGE> 43
in the operation of the business of Parent or the Consolidated
Subsidiary owning the same;
(ix) Liens of Consolidated Subsidiaries securing Debt of such
Consolidated Subsidiaries to Parent;
(x) Liens in favor of the Banks;
(xi) Liens securing Debt of up to an aggregate principal
amount of (YEN)12,500,000,000 owing by Avon Products Company Limited, an
indirect Japanese subsidiary of Parent ("Avon Japan"), to the
Industrial Bank of Japan without recourse to Parent or any Subsidiary
(other than Avon Japan), pursuant to the Credit Agreement, dated
November 27, 1990, between Avon Japan and Industrial Bank of Japan (a
copy of which, as in effect on the date hereof, has been delivered to
the Banks), as such Credit Agreement may be amended or otherwise
modified from time to time in accordance with its terms, provided
that in any event the tenor of such Debt and the security, if any,
provided therefor shall be as set forth in such Credit Agreement as
in effect on the date hereof;
(xii) Liens arising under the Pledge Agreement, dated as of
June 17, 1992 (as such agreement may be amended, modified, extended
or superseded from time to time), between Parent and Bankers Trust
Company, as Collateral Agent, with respect to the proceeds of certain
borrowings by Parent under the Multifacility Credit Agreement (as
such agreement may be amended, modified, extended or superseded from
time to time); and
(xiii) any other Liens incurred in the ordinary course of
business, provided that the aggregate amount of all such other Liens
incurred in the ordinary course of business shall not exceed
$20,000,000 at any time outstanding.
(c) Ownership of the Company. Parent will at no time own less
than 100% of each outstanding class of capital stock of the Company.
(d) Interest Coverage Ratio. As of the last day of each
fiscal quarter of Parent, the Interest Coverage Ratio will not be less than
4:1.
(e) Consolidated Net Worth. Consolidated Net Worth will on no
date be less than $150,000,000, provided, however, that in the event that
the Consolidated Net Income
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<PAGE> 44
in each of the two quarters immediately preceding the date of determination
shall be less than $0, then Consolidated Net Worth on no date thereafter
shall be less than $100,000,000.
(f) Consolidated Debt. Consolidated Debt will on no date be
greater than $800,000,000.
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01. Events of Default. If one or more of the
following events (each, an "Event of Default") shall have occurred and be
continuing:
(a) Either of Parent or the Company shall fail to pay when due
any principal of any Revolving Credit Loan or shall fail to pay
within 2 Business Days after the date when due any interest, fee or
other amount payable hereunder;
(b) Either of Parent or the Company shall fail to observe or
perform any of its covenants contained in Section 7.01(g) or Section
7.02;
(c) Either of Parent or the Company shall fail to observe or
perform any of its covenants or agreements contained in this
Agreement (other than those covered by clause (a) or (b) above) for
10 days after written notice thereof has been given to Parent or the
Company by the Administrative Agent at the request of any Bank;
(d) Any representation, warranty, certification or statement
made by Parent or the Company in this Agreement or in any
certificate, financial statement or other document delivered pursuant
hereto shall prove to have been incorrect in any material respect
when made (or deemed made) (it being understood that good faith
projections that are reasonable when made shall not be considered
representations, warranties, certifications or statements for
purposes of this Section 8.01(d));
(e) Parent or any Subsidiary shall fail to make any payment in
respect of Debt (other than the Notes) having an aggregate principal
(or face) amount of $10,000,000 or more when due or within any
applicable grace period;
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<PAGE> 45
(f) Any event or condition shall occur which results in the
acceleration of the maturity of Debt having an aggregate principal
(or face) amount of $10,000,000 or more of Parent or any Subsidiary
of Parent or enables (or, with the giving of notice or lapse of time
or both, would enable), the holder of such Debt or any Person acting
on such holder's behalf to accelerate the maturity thereof;
(g) Parent, the Company or any Material Subsidiary shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against
it, or shall make a general assignment for the benefit of creditors,
or shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
(h) An involuntary case or other proceeding shall be commenced
against Parent, the Company or any Material Subsidiary seeking
liquidation, reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, and such involuntary case or
other proceeding shall remain undismissed and unstayed for a period
of 60 days; or an order for relief shall be entered against Parent,
the Company or any Material Subsidiary under the Federal bankruptcy
laws as now or hereafter in effect;
(i) Any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $5,000,000 which it
shall have become liable to pay under Title IV of ERISA; or notice of
intent to terminate a Plan which is then a Material Plan shall be
filed under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate, to
impose liability (other than for premiums under
<PAGE>
<PAGE> 46
Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Plan which is then a Material Plan; or a
condition specified in Section 4042(a)(1) of ERISA, shall exist by
reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Plan which is then a Material Plan must be
terminated; or there shall occur a complete or partial withdrawal
from, or a default, within the meaning of Section 4219(c)(5) of
ERISA, with respect to, one or more Multiemployer Plans which could
cause one or more members of the ERISA Group to incur a current
payment obligation in excess of $5,000,000;
(j) Judgments or orders for the payment of money in excess of
$10,000,000 in the aggregate shall be rendered against Parent or any
Subsidiary and such judgments or orders shall continue unsatisfied
and unstayed for a period of 10 days; or
(k) Any Person or group of Persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 promulgated by the Securities and Exchange Commission
under said Act) of 20% or more of the outstanding shares of voting
stock of Parent; or, during any period of 24 consecutive calendar
months, individuals who were directors of Parent on the first day of
such period shall cease to constitute a majority of the board of
directors of Parent;
then, and in every such event, the Administrative Agent shall (i) if
requested by the Required Banks, by notice to both Parent and the Company,
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by the Required Banks, by notice to both Parent and the Company,
declare the Notes (together with accrued interest thereon) to be, and such
Notes shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by Parent and the Company; provided that in the case of any
of the Events of Default specified in clause (g) or (h) above with respect
to either Parent or the Company, without any notice to either Parent or the
Company or any other act by the Administrative Agent or the Banks, the
Commitments shall thereupon terminate and the Notes (together with accrued
interest thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by Parent and the Company, as the case may be.
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<PAGE> 47
Section 8.02. Notice of Default. The Administrative Agent
shall give notice to both Parent and the Company of the occurrence of any
Event of Default under Section 8.01(c) promptly upon being requested to do
so by any Bank and shall thereupon notify all the Banks thereof.
ARTICLE IX
THE ADMINISTRATIVE AGENT AND THE BANKS
Section 9.01. The Agency. Each Bank appoints Chemical Bank as
its Administrative Agent hereunder and irrevocably authorizes Chemical Bank
to take such action on its behalf and to exercise such powers hereunder and
thereunder as are specifically delegated to the Administrative Agent by the
terms hereof and thereof, together with such powers as are reasonably
incidental hereto and thereto, including the exercise by the Administrative
Agent of powers delegated to the Administrative Agent and the Banks
thereby, and Chemical Bank hereby accepts such appointment subject to the
terms hereof. The relationship between the Administrative Agent and the
Banks shall be that of agent and principal only and nothing herein or
therein shall be construed to constitute the Administrative Agent a trustee
for any Bank nor to impose on the Administrative Agent duties or
obligations other than those expressly provided for herein.
Section 9.02. The Administrative Agent's Duties. The
Administrative Agent shall promptly forward to each Bank copies, or notify
each Bank as to the contents, of all notices and other communications
received from Parent or the Company pursuant to the terms of this Agreement
and the other Credit Documents. As to any other matter not expressly
provided for herein or therein, the Administrative Agent shall have no duty
to act or refrain from acting with respect to Parent or the Company, except
upon the written instructions of the Required Banks. The Administrative
Agent may deem and treat the payee of any Note as the owner thereof for all
purposes hereof until it shall have received from the payee of such Note
written notice of the transfer of the transfer thereof. The Administrative
Agent shall in all cases be fully protected in acting, or refraining from
acting, in accordance with written instructions signed by the Required
Banks and, except as otherwise specifically provided for herein, such
instructions and any action or inaction pursuant thereto shall be binding
on all the Banks and each subsequent holder of any Note. The
Administrative Agent shall not be bound by any waiver, amendment, supple-
ment, or modification of this Agreement or the other Credit
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<PAGE> 48
Documents which affects its duties hereunder and thereunder, unless it
shall have given its prior written consent thereto. The Administrative
Agent shall have no duty to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements binding
on Parent or the Company pursuant to this Agreement or any other Credit
Document nor shall it be deemed to have knowledge of the occurrence of any
Default or Event of Default, unless it shall have received written notice
from Parent, the Company or a Bank specifying such Default or Event of
Default and stating that such notice is a "Notice of Default".
Section 9.03. Sharing of Payments and Expenses. All funds for
the account of the Banks received by the Administrative Agent in respect of
payments made by Parent or the Company pursuant to, or from any Person on
account of, this Agreement or any other Credit Document shall be
distributed forthwith by the Administrative Agent among the Banks, in like
currency and funds as received, ratably in proportion to their respective
interests therein. In the event that any Bank shall receive from Parent or
the Company or any other source any payment of, on account of, or for or
under this Agreement or any other Credit Document (whether received
pursuant to the exercise of any right of set-off, banker's lien,
realization upon any security held for or appropriated to such obligation
or otherwise as permitted by law) other than in proportion to its Pro Rata
Share, then such Bank shall purchase from each other Bank so much of its
interest in obligations of Parent or the Company as shall be necessary in
order that each Bank shall share such payment with each of the other Banks
in proportion to each Bank's Pro Rata Share. In the event that any pur-
chasing Bank shall be required to return any excess payment received by it,
the purchase shall be rescinded and the purchase price restored to the
extent of such return, but without interest.
Section 9.04. The Administrative Agent's Liabilities. Each of
the Banks, Parent and the Company agrees that (i) neither the
Administrative Agent in such capacity nor any of its officers or employees
shall be liable for any action taken or omitted to be taken by any of them
hereunder except for its or their own gross negligence or wilful
misconduct, (ii) neither the Administrative Agent in such capacity nor any
of its officers or employees shall be liable for any action taken or
omitted to be taken by any of them in good faith in reliance upon the
advice of counsel, independent public accountants or other experts selected
by the Administrative Agent and (iii) the Administrative Agent in such
capacity shall be entitled to rely upon any notice, consent, certificate,
statement or other
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<PAGE> 49
document (including any telegram, cable, telex, facsimile or telephone
transmission) believed by it to be genuine and correct and to have been
signed and/or sent by the proper Persons.
Section 9.05. The Administrative Agent as a Bank. The
Administrative Agent shall have the same rights and powers hereunder as any
other Bank and may exercise the same as though it were not an
Administrative Agent, and the terms "Bank" or "Banks", unless the context
otherwise indicated, include the Administrative Agent in its individual
capacity. The Administrative Agent may maintain deposits or credit
balances for, invest in, lend money to and generally engage in any kind of
banking business with Parent or any Subsidiary or affiliate of Parent as if
it were any other Bank and without any duty to account therefor to the
other Banks.
Section 9.06. Bank Credit Decision. Neither the
Administrative Agent nor any of its officers or employees has any respons-
ibility for, gives any guaranty in respect of, nor makes any representation
to the Banks as to, (i) the condition, financial or otherwise, of Parent or
any Subsidiary thereof or the truth of any representation or warranty given
or made herein or in any other Credit Document, or in connection herewith
or therewith or (ii) the validity, execution, sufficiency, effectiveness,
construction, adequacy, enforceability or value of this Agreement or any
other Credit Document or any other document or instrument related hereto or
thereto. Except as specifically provided herein and in the other Credit
Documents to which the Administrative Agent is a party, the Administrative
Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Bank with any credit or other information
with respect to the operations, business, property, condition or credit-
worthiness of Parent or any of its Subsidiaries, whether such information
comes into the Administrative Agent's possession on or before the date
hereof or at any time thereafter. Each Bank acknowledges that it has,
independently and without reliance upon the Administrative Agent or any
other Bank, based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will independently and
without reliance upon the Administrative Agent or any other Bank, based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement or any other Credit Document.
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<PAGE> 50
Section 9.07. Indemnification. Each Bank agrees (which
agreement shall survive payment of the Revolving Credit Loans and the
Notes) to indemnify the Administrative Agent, to the extent not reimbursed
by either Parent or the Company, ratably in accordance with its respective
Commitment (as of the time of the incurrence of the liability being
indemnified against), from and against any and all liabilities,
obligations, losses, claims, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by, or asserted against the Administrative Agent in
any way relating to or arising out of this Agreement or any other Credit
Document, or any action taken or omitted to be taken by the Administrative
Agent hereunder or thereunder; provided, that no Bank shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
the gross negligence or wilful misconduct of the Administrative Agent or
any of its respective officers or employees. Without limiting the
foregoing, each Bank agrees to reimburse the Administrative Agent promptly
upon demand for its Pro Rata Share of any out-of-pocket expenses (including
counsel fees) incurred by the Administrative Agent in such capacity in
connection with the preparation, execution or enforcement of, or legal
advice in respect of rights or responsibilities under, this Agreement or
any other Credit Document or any amendments or supplements hereto or
thereto, to the extent that the Administrative Agent is not reimbursed for
such expenses by either Parent or the Company.
Section 9.08. Successor Administrative Agent. The
Administrative Agent may resign at any time by giving written notice
thereof to the Banks and Parent, and the Administrative Agent may be
removed at any time by the Required Banks by giving written notice thereof
to the Administrative Agent, the other Banks and Parent at least
10 Business Days prior to the effective date of such removal. Upon any
such resignation or removal, Parent shall have the right to appoint a
successor Administrative Agent which shall be a commercial bank organized
under the laws of the United States of America or any State thereof and
having a capital and surplus of at least $250,000,000 (a "Qualified Admini-
strative Agent"). If no such successor Administrative Agent shall have been
so appointed by Parent and shall have accepted such appointment within 30
days after the resigning Administrative Agent's giving of notice of resig-
nation, or the Required Banks' giving notice of removal, as the case may
be, the resigning or removed Administrative Agent may, on behalf of the
Banks, appoint a successor Administrative Agent, which shall be a Qualified
Administrative Agent as
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<PAGE> 51
set forth in this Section 9.08. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the resigned or
removed Administrative Agent, and the resigned or removed Administrative
Agent shall be discharged from its duties and obligations in such capacity
under this Agreement and any other Credit Documents. After any
Administrative Agent's resignation or removal hereunder as Administrative
Agent, the provisions of this Article IX shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement.
ARTICLE X
THE GUARANTY
Section 10.01. The Guaranty. Parent unconditionally and
irrevocably guarantees to the Banks and their respective successors,
endorsees and assigns, the prompt payment when due of all present and
future obligations and liabilities of all kinds of the Company to the Banks
including any and all obligations of the Company under the Notes, this
Agreement or any other Credit Documents, whether incurred by the Company as
maker, endorser, drawer, acceptor, guarantor, accommodation party or
otherwise, and whether due or to become due, secured or unsecured, absolute
or contingent, joint or several, and howsoever or whenever incurred by the
Company (the "Guaranteed Obligations").
Section 10.02. Absolute Guaranty. Parent's obligations
hereunder shall not be affected by the genuineness, validity, regularity or
enforceability of the Guaranteed Obligations or any instrument evidencing
the Guaranteed Obligations or by the existence, validity, enforceability,
perfection, or extent of any collateral therefor or by any other
circumstance relating to the Guaranteed Obligations which might otherwise
constitute a defense to this Guaranty. The Banks make no representation or
warranty in respect of any such circumstance and have no duty or
responsibility whatsoever to Parent in respect to the management or
maintenance of the Guaranteed Obligations or any collateral therefor. The
Banks shall not be obligated to file any claim relating to the Guaranteed
Obligations in the event that the Company becomes subject to a bankruptcy,
reorganization or similar proceeding, and the failure of the Banks so to
file shall not affect Parent's obligations hereunder. In the event that
any payment to the Banks in respect of any Guaranteed Obligation is
rescinded
<PAGE>
<PAGE> 52
or must otherwise be returned for any reason whatsoever, Parent shall
remain liable hereunder in respect of such Guaranteed Obligation as if such
payment had not been made.
Section 10.03. Consents, Waivers and Renewals. Parent agrees
that the Banks may at any time and from time to time, either before or
after the maturity thereof, without notice to or further consent of Parent,
extend the time of payment of, exchange or surrender any collateral for, or
renew any Guaranteed Obligations, and may also make any agreement with the
Company or with any other party to or person liable on any Guaranteed
Obligations, or interested therein, for the extension, renewal, payment,
compromise, discharge or release thereof, in whole or in part, or for any
modification of the terms thereof or of any agreement between the Banks and
the Company or any such other party or person, without in any way impairing
or affecting this Guaranty. Parent agrees that the Banks may resort to
Parent for payment of any Guaranteed Obligations, whether or not the Banks
shall have resorted to any collateral security, or shall have proceeded
against any other obligor principally or secondarily obligated with respect
to any of the Guaranteed Obligations.
Section 10.04. Security. Without limiting any other right of
each Bank, whenever any of the Guaranteed Obligations shall become due
(whether by acceleration or otherwise) and whenever such Bank has the right
to declare any of the Guaranteed Obligations to be immediately due and
payable (whether or not it has so declared), such Bank at its sole election
may set off against the Guaranteed Obligations all moneys then standing to
the credit of Parent on the books of such Bank.
Section 10.05. Subrogation. Parent will not exercise any
rights which it may acquire by way of subrogation or by any indemnity,
reimbursement or other agreement, and shall have no right of recourse to
any assets or property of the Company held for the payment and performance
of the Guaranteed Obligations. If any amount shall be paid to Parent in
violation of the preceding sentence, such amount shall be held in trust for
the benefit of the Banks and shall forthwith be paid to the Administrative
Agent to be credited and applied to the Guaranteed Obligations, whether
matured or unmatured.
Section 10.06. Continuing Guaranty. Parent's obligations
hereunder shall remain in full force and effect until the principal of and
interest on the Notes and all other amounts payable by the Company under
this Agreement shall have been paid in full. If at any time any payment of
<PAGE>
<PAGE> 53
the principal of or interest on the Notes or any other amount payable by
the Company under this Agreement is rescinded or must otherwise be restored
or returned upon the insolvency, bankruptcy or reorganization of the
Company or otherwise, Parent's obligations hereunder with respect to such
payment shall be reinstated as though such payment had been due but not
made at such time.
Section 10.07. Waiver of Notice. Parent waives notice of the
acceptance of this Guaranty and of the making of any loans or extensions of
credit to the Company, presentment to or demand or payment from anyone
whomsoever liable upon any of the Guaranteed Obligations, presentment,
demand, notice of dishonor, protest, notice of any sale of collateral
security and all other notices whatsoever.
ARTICLE XI
MISCELLANEOUS
Section 11.01. APPLICABLE LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
Section 11.02. Set-off. As security for its obligations
hereunder, each of Parent and the Company hereby grants to each Bank a
security interest in, lien upon, and right of set-off against any moneys
standing to the credit of Parent or the Company, as the case may be, on the
books of such Bank in any deposit or other account maintained with any
branch of such Bank.
Section 11.03. Expenses. Parent and the Company each jointly
and severally agrees to pay all out-of-pocket expenses incurred by the
Administrative Agent and any Bank, including the reasonable fees and
disbursements of one firm of counsel chosen from time to time to represent
the Banks as a group in connection with the execution and delivery of this
Agreement, the Credit Documents and related closing documentation and, if
necessary, in connection with the execution, administration and enforcement
of any provisions of this Agreement and the other Credit Documents.
Section 11.04. Amendments. Any provision of this Agreement or
the Notes may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by each of Parent, the Company and the
Required Banks (and, if the rights or duties of the Administrative Agent
are affected thereby, by the Administrative Agent); provided, that no such
amendment, waiver or modification shall, unless
<PAGE>
<PAGE> 54
signed by all the Banks, (i) increase or decrease the Commitment of any
Bank or subject any Bank to any additional obligation, (ii) reduce the
principal of or rate of interest on any Loan or any fees hereunder,
(iii) postpone the date fixed for any payment of principal of or interest
on any Revolving Credit Loan or any fees hereunder or for any reduction or
termination of any Commitment, (iv) change the percentage of any of the
Commitments or of the aggregate unpaid principal amount of the Notes or the
number of Banks, which shall be required for the Banks or any of them to
take any action under this Section or any other provision of this
Agreement, (v) amend or modify or release Article X or (vi) amend or waive
the provisions of this Section 11.04 or the definition of "Required Banks".
Section 11.05. Cumulative Rights and No Waiver. Each and
every right granted to the Administrative Agent and the Banks hereunder or
under any other document delivered hereunder or in connection herewith, or
allowed them by law or equity, shall be cumulative and may be exercised
from time to time. No failure on the part of the Administrative Agent or
any Bank to exercise, and no delay in exercising, any right will operate as
a waiver thereof, nor will any single or partial exercise by the
Administrative Agent or any Bank of any right preclude any other or future
exercise thereof or the exercise of any other right.
Section 11.06. Notices. Any communication, demand or notice
to be given hereunder or with respect to the Notes will be duly given when
delivered in writing or by telecopy to a party at its address as indicated
below, except that notices from the Company pursuant to Section 2.02, 2.04,
2.05 or 2.06 will not be effective until received by the Administrative
Agent.
A communication, demand or notice given pursuant to this
Section 11.06 shall be addressed:
If to Parent or the Company, at
Avon Products, Inc.
9 West 57th Street
New York, New York 10019
Telex: 423899 or 23560
Answerback: AVON UR
Telephone: (212) 546-8492
Telecopy: (212) 546-8752
Attention: Mr. John E. Donaldson, Jr.
Vice President and Treasurer
<PAGE>
<PAGE> 55
If to the Administrative Agent or any Bank, at its address as
indicated on the signature pages hereof.
Unless otherwise provided to the contrary herein, any notice
which is required to be given in writing or by telephone pursuant to the
terms of this Agreement may be given by telex, telecopy or facsimile
transmission.
Section 11.07. Severability. In case any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect under any law, the validity, legality and
enforceability of the remaining provisions contained herein shall not in
any way be affected or impaired thereby.
Section 11.08. No Assignments; Participations. (a) This
Agreement shall be binding upon and inure to the benefit of Parent, the
Company and the Banks and their respective successors. Except as permitted
in Section 11.08(c), no interest in the Commitment of any Bank or any Loan
or Note hereunder, nor any right of a Bank hereunder, may be assigned to
any Person that was not, prior to such assignment, a Bank hereunder.
Neither Parent nor the Company shall assign or delegate any of its
respective rights or obligations hereunder, without the prior written
consent of all the Banks.
(b) Any Bank may at any time grant to one or more banks or
other institutions (each a "Participant") participating interests in its
Commitment or any or all of its Revolving Credit Loans. In the event of
any such grant by a Bank of a participating interest to a Participant,
whether or not upon notice to Parent, the Company and the Administrative
Agent, such Bank shall remain responsible for the performance of its
obligations hereunder, and Parent, the Company and the Administrative Agent
shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement. Any
agreement pursuant to which any Bank may grant such a participating
interest shall provide that such Bank shall retain the sole right and
responsibility to enforce the obligations of Parent and the Company
hereunder including the right to approve any amendment, modification or
waiver of any provision of this Agreement; provided, that such
participation agreement may provide that such Bank will not agree to any
modification, amendment or waiver of this Agreement described in clauses
(i) through (vi), inclusive, of Section 11.04 without the consent of the
Participant. Each of Parent and the Company agrees that each Participant
shall be entitled to the benefits of Sections 4.03, 4.04 and
<PAGE>
<PAGE> 56
11.04 with respect to its participating interest; provided, that (i) all
amounts payable to a Bank for the account of a Participant under Sections
4.03, 4.04 and 11.04 shall be determined as if such Bank had not granted
such participation to the Participant and (ii) no Participant shall be
entitled to receive any greater payment under Section 4.03 or 4.04 than
such Bank would have been entitled to receive with respect to the rights
participated, unless such transfer is made with Parent's prior written
consent or by reason of the provisions of Section 4.04 requiring such Bank
to designate a different lending office under certain circumstances or at a
time when the circumstances giving rise to such payment did not exist.
(c) Any Bank may, with the prior written consent of Parent
(which consent shall not be unreasonably withheld), assign all or a portion
of its Commitment and its related rights and obligations under this
Agreement or any Note to another bank all the voting securities of which
are owned, directly or indirectly, by a bank holding company of which such
Bank is a subsidiary; and any such bank shall upon such assignment become a
Bank. In addition, any Bank may at any time assign all or a portion of its
rights (but not its obligations) under this Agreement, or any Note to a
Federal Reserve Bank; provided that no such assignment shall release such
Bank from any obligation it may have hereunder or thereunder. As set forth
herein, any Bank may at any time assign all or a portion of its rights or
obligations under this Agreement to any institution that is a "Bank" under
this Agreement or the Multifacility Credit Agreement.
(d) Notwithstanding any other provision of this Agreement, no
Bank may sell, assign or participate all or any portion of its Commitment
or Revolving Credit Loans hereunder to any "broker" or "dealer" (as defined
in Sections 3(a)(4) and 3(a)(5) of the Securities Exchange Act of 1934) or
any other person which is a "creditor" as defined in Regulation T of the
Board of Governors of the Federal Reserve System.
Section 11.09. WAIVER OF RIGHT TO JURY. PARENT, THE COMPANY,
THE ADMINISTRATIVE AGENT AND EACH OF THE BANKS HEREBY WAIVES TRIAL BY JURY
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, THE NOTES OR THE
RELATIONSHIPS ESTABLISHED HEREUNDER.
Section 11.10. Indemnity. Parent and the Company, jointly and
severally, agree to indemnify the Administrative Agent and each of the
Banks and their respec
<PAGE>
<PAGE> 57
tive directors, officers, employees, agents and controlling persons (each
such person being called an "Indemnitee") against, and to hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities
and related expenses, including reasonable counsel fees and expenses,
incurred by or asserted against any Indemnitee arising out of, in any way
connected with, or as a result of (i) the execution or delivery of this
Agreement or any other Credit Document or any agreement or instrument
contemplated hereby or thereby, the performance by the parties thereto of
their respective obligations hereunder or thereunder or the consummation of
the transactions and the other transactions contemplated hereby or thereby,
(ii) the use of the proceeds of the Revolving Credit Loans or (iii) any
claim, litigation, investigation or proceeding relating to any of the fore-
going, whether or not any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of
any Indemnitee.
The provisions of this Section 11.10 shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Revolving Credit Loans, the reduction or
cancellation of the Total Commitment, the invalidity or unenforceability of
any term or provision of this Agreement or any Note, or any investigation
made by or on behalf of the Banks. All amounts due under this
Section 11.10 shall be payable in immediately available funds upon written
demand therefor.
Section 11.11. Confidentiality. Except as may be required to
enforce the rights and duties established hereunder (including establishing
and maintaining the Bank's perfected security interest in the Collateral),
the parties hereto shall preserve in a confidential manner all information
received from any other party pursuant to this Agreement, the Notes and the
transactions contemplated hereunder and thereunder, and shall not disclose
such information except to those persons with which a confidential
relationship is maintained (including regulators, legal counsel,
accountants, or designated agents), or where required by law.
<PAGE>
<PAGE> 58
Section 11.12. Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by the different parties
hereto on separate counterparts, each of which when so executed and
delivered shall be an original, but all the counterparts shall together
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
AVON CAPITAL CORPORATION
By: /s/ JOHN E. DONALDSON, JR.
Name: John E. Donaldson, Jr.
Title: Vice President and
Treasurer
AVON PRODUCTS, INC.
By: /s/ JOHN E. DONALDSON, JR.
Name: John E. Donaldson, Jr.
Title: Vice President and
Treasurer
CHEMICAL BANK, as Administrative Agent
By: /s/ LAURA E. THORNE
Name: Laura Thorne
Title: Vice President
Address for Notices:
Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Ms. Laura Thorne
Telecopy: (212) 270-7138
Telephone: (212) 270-7213
<PAGE>
<PAGE> 59
Revolving Credit BANK OF AMERICA NATIONAL
Commitment: $ 25,000,000 TRUST & SAVINGS ASSOCIATION
By: /s/ JOHN POCALYKO
Name: John Pokalyko
Title: Vice President
Address for Notices:
Bank of America NT & SA
1850 Gateway Boulevard
Concord, California 94520
Attention: Ms. Carolyn Pewitt
Telecopy: (510) 675-7531
Telephone: (510) 675-7755
Eurodollar Lending Office:
Bank of America NT & SA
1850 Gateway Boulevard
Concord, California 94520
<PAGE>
<PAGE> 60
Revolving Credit THE CHASE MANHATTAN BANK, N.A.
Commitment: $ 25,000,000
By: /s/ RUTH I. DREESSEN
Name: Ruth I. Dreessen
Title: Managing Director
Address for Notices:
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
Attention: Ms. Ruth I. Dreessen
Telecopy: (212) 552-1457
Telephone: (212) 552-6121
Eurodollar Lending Office:
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
<PAGE>
<PAGE> 61
Revolving Credit CHEMICAL BANK, as a Bank
Commitment: $ 25,000,000
By: /s/ LAURA E. THORNE
Name: Laura Thorne
Title: Vice President
Address for Notices:
Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Ms. Laura Thorne
Telecopy: (212) 270-7138
Telephone: (212) 270-7213
Eurodollar Lending Office:
Chemical Bank
270 Park Avenue
New York, New York 10017
<PAGE>
<PAGE> 62
Revolving Credit DEUTSCHE BANK AG - NEW YORK
Commitment: $ 25,000,000 AND/OR CAYMAN ISLANDS BRANCHES
By: /s/ JEFFREY N. WIESER
Name: Jeffrey N. Weiser
Title: Director
By: /s/ ROSS A. HOWARD
Name: Ross A. Howard
Title: Assistant Vice President
Address for Notices:
Deutsche Bank AG
New York Branch
31 West 52nd Street, 24th Floor
New York, New York 10019
Attention: Mr. Jeffrey N. Wieser
Telecopy: (212) 474-8212
Telephone: (212) 474-8233
Eurodollar Lending Office:
Deutsche Bank AG
Cayman Islands Branch
c/o Deutsche Bank AG
New York Branch
31 West 52nd Street, 24th Floor
New York, New York 10019
<PAGE>
<PAGE> 63
Revolving Credit NATIONSBANK OF NORTH CAROLINA, N.A.
Commitment: $ 25,000,000
By: /s/ MICHAEL J. CERMINARO
Name: Michael J. Cerminaro
Title: Senior Vice President
Address for Notices:
NationsBank of North Carolina, N.A.
1 NationsBank Plaza, NCI-002-06-19
Charlotte, North Carolina 28255
Attention: Ms. Donna Cox
Telecopy: (704) 386-8694
Telephone: (704) 386-3933
Eurodollar Lending Office:
NationsBank of North Carolina, N.A.
1 NationsBank Plaza, NCI-002-06-19
Charlotte, North Carolina 28255
<PAGE>
<PAGE> 64
Revolving Credit SWISS BANK CORPORATION
Commitment: $ 25,000,000 NEW YORK BRANCH
By: /s/ MARCIA L. THATCHER
Name: Marcia L. Thatcher
Title: Director,
Merchant Banking
By: /s/ JEROME J. GOODMAN
Name: Jerome J. Goodman
Title: Director,
Merchant Banking
Address for Notices:
Swiss Bank Corporation
New York Branch
222 Broadway - 4th Floor
New York, New York 10008
Attention: Mr. Filippe M. Goossens
Telecopy: (212) 574-4395
Telephone: (212) 574-3110
Eurodollar Lending Office:
Swiss Bank Corporation
Cayman Islands Branch
Swiss Bank Corporation
New York Branch
222 Broadway - 4th Floor
New York, New York 10008
<PAGE>
<PAGE> 65
Revolving Credit THE BANK OF TOKYO TRUST COMPANY
Commitment: $ 25,000,000
By: /s/ JEFFREY D. MILLAR
Name: Jeffrey D. Millar
Title: Vice President
Address for Notices:
The Bank of Tokyo Trust Company
1251 Avenue of the Americas
12th Floor
New York, New York 10116-3138
Attention: Mr. Jeffrey D. Millar
Telecopy: (212) 782-6445
Telephone: (212) 782-4308
Eurodollar Lending Office:
The Bank of Tokyo Trust Company
1251 Avenue of the Americas
12th Floor
New York, New York 10116-3138
<PAGE>
<PAGE> 66
Revolving Credit THE TORONTO-DOMINION BANK
Commitment: $ 25,000,000
By: /s/ KATHERINE LUCEY
Name: Katherine Lucey
Title: Director
Address for Notices:
The Toronto-Dominion Bank
31 West 52nd Street - 20th Floor
New York, New York 10019-6101
Attention: Ms. Katherine Lucey
Telecopy: (212) 262-1926
Telephone: (212) 468-0573
Eurodollar Lending Office:
The Toronto-Dominion Bank
31 West 52nd Street
New York, New York 10019-6101
<PAGE>
<PAGE> 67
SCHEDULE 5.01(e)
Certain Litigation
- None -
<PAGE>
<PAGE> 68
SCHEDULE 7.01(c)
Insurers Not Rated B+ or Above
(1) X.L. Insurance Company, Ltd.
(2) A.C.E. Insurance Company, Ltd.
<PAGE>
<PAGE> 1
EXHIBIT A
Form of Bid Loan Request
____________, 199_
Chemical Bank, as Administrative
Agent
140 East 45th Street
29th Floor
New York, New York 10017
Attention: Mr. James Halka
[Tel.: (212) 622-0756
Fax: (212) 622-0002]
Re: Bid Loan Request
Dear Sirs:
We hereby refer to the Revolving Credit Agreement, dated as of
March 11, 1994 (the "Credit Agreement"), among Avon Products, Inc., Avon
Capital Corporation, each of the banks identified on the signature pages
thereof and Chemical Bank, as Administrative Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to
such terms in the Credit Agreement.
AVON CAPITAL CORPORATION hereby gives you notice pursuant to
Section 2.06(b) of the Credit Agreement that it requests a Bid Loan under
the Credit Agreement, and in that connection sets forth below the terms on
which such Bid Loan is requested to be made:
(A) Borrowing Date1/ _________________________
(B) Principal Amount2/ $
(C) Date for Repayment3/ _________________________
1/ Must be a Business Day.
2/ Must be an amount not less than $5,000,000 or an integral multiple of
$1,000,000 in excess thereof.
3/ At least 10 days and not more than 90 days after the Borrowing Date.
<PAGE>
<PAGE> 2
(D) Interest Rate or Basis4/ _________________________
(E) Interest Period, if any5/ _________________________
Very truly yours,
AVON CAPITAL CORPORATION
By:_______________________
Title:
4/ State interest rate index, if any, and any margin in excess thereof.
Interest rate index may be CD Base Rate, Adjusted CD Rate, Base LIBOR
or LIBOR.
5/ 30, 60, 90 or 180 days with respect to CD Base Rate or Adjusted CD
Rate index, 1, 2, 3 or 6 months with respect to Base LIBOR or LIBOR.
Not applicable with respect to other indices.
<PAGE>
<PAGE> 1
EXHIBIT B
Form of Bid Note
$___,000,000 _______________, 199_
AVON CAPITAL CORPORATION, a Delaware corporation (the
"Company"), for value received, promises to pay to the order of [BANK] (the
"Bank"), on [MATURITY], the principal sum of [AMOUNT] ($___,000,000)
pursuant to that certain Revolving Credit Agreement, dated as of March 11,
1994 (as amended, extended or otherwise modified from time to time, the
"Credit Agreement"), among Avon Products, Inc., the Company, each of the
banks identified on the signature pages thereof and Chemical Bank, as
Administrative Agent.
The Company also promises to pay interest on the unpaid
principal amount hereof from time to time outstanding from the date hereof
until maturity (whether by acceleration or otherwise) and, after maturity,
until paid, at the rate or rates per annum and on the date or dates
specified in or determined pursuant to the Credit Agreement.
Payments of both principal and interest are to be made in
lawful money of the United States of America in same day or immediately
available funds to the Bank at its office as specified on the signature
pages of the Credit Agreement, or at such other office or offices as may be
designated by the Bank pursuant to the Credit Agreement.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive diligence, presentment, demand, protest and notice of any
kind whatsoever. The failure or forbearance by the holder to exercise any
of its rights hereunder in any particular instance shall in no event
constitute a waiver thereof.
This Note is one of the Bid Notes referred to in the Credit
Agreement which, among other things, contains provisions for the
acceleration of the maturity hereof upon the happening of certain events
and for the amendment or waiver or certain provisions of the Credit
Agreement, all upon the terms and conditions therein specified. Terms used
and not otherwise defined herein have the meanings ascribed thereto in the
Credit Agreement.
THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER, GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
<PAGE> 2
Pursuant to the Credit Agreement, payment in full of principal
and interest on this Note is unconditionally guaranteed by Avon Products,
Inc. a New York corporation.
AVON CAPITAL CORPORATION
By:_____________________
Title:
<PAGE>
<PAGE> 1
EXHIBIT C
Form of Revolving Credit Note
$___,000,000 March 11, 1994
AVON CAPITAL CORPORATION, a Delaware corporation (the
"Company"), for value received, promises to pay to the order of [BANK] (the
"Bank"), on March 11, 1997, the principal sum of [AMOUNT] ($___,000,000)
or, if less, the aggregate principal amount of the Revolving Credit Loans
(other than Bid Loans) made by the Bank pursuant to that certain Revolving
Credit Agreement, dated as of March 11, 1994 (as amended, extended or
otherwise modified from time to time, the "Credit Agreement"), among Avon
Products, Inc., the Company, each of the banks identified on the signature
pages thereof and Chemical Bank, as Administrative Agent.
The Company also promises to pay interest on the unpaid
principal amount hereof from time to time outstanding from the date hereof
until maturity (whether by acceleration or otherwise) and, after maturity,
until paid, at the rate or rates per annum and on the date or dates
specified in the Credit Agreement.
Payments of both principal and interest are to be made in
lawful money of the United States of America in same day or immediately
available funds to the Bank at its office specified on the signature pages
of the Credit Agreement, or at such other office or offices as may be
designated by the Bank pursuant to the Credit Agreement.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive diligence, presentment, demand, protest and notice of any
kind whatsoever. The failure or forbearance by the holder to exercise any
of its rights hereunder in any particular instance shall in no event
constitute a waiver thereof.
All borrowings evidenced by this Note and all payments and
prepayments of the principal hereof and interest hereon and the respective
dates thereof shall be endorsed by the holder of this Note on the schedule
attached hereto and made a part hereof, or on a continuation thereof which
shall be attached hereto and made a part hereof, or shall be recorded by
the holder of this Note in its internal records; provided, however, that
any failure of the holder of this Note to make such a notation or any error
in such notation shall in no manner affect the obligation of the
<PAGE>
<PAGE> 2
Company to make payments of principal and interest in accordance with the
terms of this Note and the Credit Agreement.
This Note is one of the Revolving Credit Notes referred to in
the Credit Agreement, which among other things, contains provisions for the
acceleration of the maturity hereof upon the happening of certain events,
for optional prepayment of the principal hereof prior to the maturity
thereof and for the amendment or waiver of certain provisions of the Credit
Agreement, all upon the terms and conditions therein specified. Terms used
and not otherwise defined herein have the meanings ascribed thereto in the
Credit Agreement.
THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER, GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
Pursuant to the Credit Agreement, payment in full of principal
and interest on this Note is unconditionally guaranteed by Avon Products,
Inc., a New York corporation.
AVON CAPITAL CORPORATION
By: __________________________
John E. Donaldson, Jr.
Vice President & Treasurer
<PAGE>
<PAGE> 1
REVOLVING CREDIT LOANS (OTHER THAN BID LOANS)
AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
Amount of Revolving Amount of Principal Amount of Unpaid
Credit Loans Made Repaid Principal Balance
Euro Interest Euro Euro
ABR CD dollar Period (if ABR CD dollar ABR CD dollar Notation
Date Loan Loan Loan applicable) Loan Loan Loan Loan Loan Loan Total Made By
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
<PAGE> 1
EXHIBIT D
Form of Conversion Request
________________, 199_
Chemical Bank, as Administrative
Agent
140 East 45th Street
29th Floor
New York, New York 10017
Attention: Mr. James Halka
[Tel.: (212) 622-0756
Fax: (212) 622-0002]
Re: Conversion Request
Dear Sirs:
We hereby refer to the Revolving Credit Agreement, dated as of
March 11, 1994 (as amended, extended or modified from time to time, the
"Credit Agreement"), among Avon Products, Inc., Avon Capital Corporation,
each of the banks identified on the signature pages thereof and Chemical
Bank, as Administrative Agent. Capitalized terms used herein but not
otherwise defined herein shall have the meanings ascribed to such terms in
the Credit Agreement.
AVON CAPITAL CORPORATION (the "Company") hereby requests
pursuant to Section 3.06(a) of the Credit Agreement that on ____________,
199_,
(1) $___,000,000 of the presently outstanding principal amount
of Revolving Credit Loans originally made on ___________, 19__ [and
$_________ of the presently outstanding principal amount of the
Revolving Credit Loans originally made on ________, 19__],
(2) presently being maintained as [ABR Loans] [CD Loans]
[Eurodollar Loans],
(3) be [converted into] [continued as],
<PAGE>
<PAGE> 2
(4) [CD Loans having an Interest Period of [30][60][90][180]
days] [Eurodollar Loans having an Interest Period of
[one][two][three][six] months] [ABR Loans].
Very truly yours,
AVON CAPITAL CORPORATION
By:_____________________
Title:
<PAGE>
<PAGE> 1
EXHIBIT E
Form of Revolving Credit Loan Request (Non-Bid)
________________, 199_
Chemical Bank, as Administrative
Agent
140 East 45th Street
29th Floor
New York, New York 10017
Attention: Mr. James Halka
[Tel.: (212) 622-0756
Fax: (212) 622-0002]
Re: Revolving Credit Loan
Request (Non-Bid)
Dear Sirs:
We hereby refer to the Revolving Credit Agreement, dated as of
March 11, 1994 (as amended, extended or modified from time to time, the
"Credit Agreement"), among Avon Products, Inc., Avon Capital Corporation,
each of the banks identified on the signature pages thereof and Chemical
Bank, as Administrative Agent. Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to such terms in
the Credit Agreement.
AVON CAPITAL CORPORATION (the "Company") hereby gives you
notice pursuant to Section 2.02(a) of the Credit Agreement that it requests
a Revolving Credit Loan (other than a Bid Loan) under the Credit Agreement,
and in that connection sets forth below the terms on which such Revolving
Credit Loan is requested to be made:
(A) Borrowing Date1/
(B) Principal Amount2/ $
(C) Interest Rate Basis3/
(D) Interest Period and the
1/ Must be a Business Day.
2/ Must be an amount not less than $10,000,000 or an integral multiple
of $1,000,000 in excess thereof.
3/ May be: ABR Loan, CD Loan or Eurodollar Loan.
<PAGE>
<PAGE> 2
last day thereof4/
Very truly yours,
AVON CAPITAL CORPORATION
By:
Title:
4/ 30, 60, 90 or 180 days in the case of CD Loans, 1, 2, 3 or 6 months
in the case of Eurodollar Loans. Not applicable to ABR Loans.
<PAGE>
<PAGE> 1
EXHIBIT F-1
Form of Opinion of General Counsel of Parent
March 11, 1994
To the Banks and the Administrative Agent
Parties to the Revolving Credit Agreement
Referred to Below
c/o Chemical Bank, as
Administrative Agent
270 Park Avenue
New York, New York 10017
Dear Sirs:
I am the General Counsel of Avon Products, Inc., a New York
corporation ("Parent"), and have acted as counsel for Parent and Avon
Capital Corporation (the "Company") in connection with the Revolving Credit
Agreement, dated as of March 11, 1994 (the "Credit Agreement"), among
Parent, the Company and each of the banks named on the signature pages
thereof (the "Banks") and Chemical Bank, as Administrative Agent.
Capitalized terms used but not defined herein are used with the meanings
given them in the Credit Agreement. In that connection I have examined
executed counterparts of the Credit Agreement, the executed Revolving
Credit Notes, and originals or copies certified to my satisfaction of such
corporate documents and records of Parent and the Company to render the
opinion hereinafter set forth. I have assumed for purposes of such opinion
that the Credit Agreement has been duly executed and delivered by each of
you pursuant to due authority. As to questions of fact relating to Parent
and the Company material to the opinion hereinafter set forth, I have
relied upon certifications of appropriate officers of Parent and the
Company.
Based on the foregoing, I am of the opinion that:
1. Parent has been duly incorporated and is an existing
corporation in good standing under the laws of the State of New York,
and has all corporate powers required to carry on its business as
presently conducted. The Company has been duly incorporated and is
an existing corporation in good standing under the laws of the State
of Delaware, and has all corporate powers required to carry on its
business as presently conducted.
<PAGE>
<PAGE> 2
2. The execution, delivery and performance by Parent and the
Company of the Credit Agreement and the execution, delivery and
performance by the Company of the Revolving Credit Notes are within
the corporate powers of Parent or the Company, as the case may be,
and, in each case, have been duly authorized by all necessary
corporate action on their respective parts, require no action by or
in respect of, or filing (other than routine informational filings)
with, any governmental body, agency or official of the United States
or the State of New York or pursuant to the General Corporation Law
of the State of Delaware, do not to my knowledge contravene any
applicable provision of United States Federal or New York State law
or the General Corporation Law of the State of Delaware and do not
contravene, or constitute a default under the respective certificate
of incorporation or by-laws of Parent or the Company or under any
agreement, judgment, injunction, order, decree or other instrument
binding upon Parent or the Company, as the case may be, or result in
the creation or imposition of any Lien on any asset of Parent or any
Subsidiary.
3. Except as disclosed in the reports or financial statements
referred to in Section 5.01(d) of the Credit Agreement, or in
Schedule 5.01(e) thereto, there is no action, suit or proceeding
pending against, or to the best of my knowledge threatened, against
or affecting Parent or any Subsidiary before any court or arbitrator
or any governmental body, agency or official, in which there is a
reasonable possibility of an adverse decision which could materially
adversely affect the business, consolidated financial position or
consolidated results of operations of Parent and its Consolidated
Subsidiaries, considered as a whole, or which in any manner seeks to
avoid the obligations of Parent or the Company to repay Revolving
Credit Loans outstanding under any Note, the Credit Agreement or
obligations of Parent under Article VIII of the Credit Agreement.
4. Each of Parent's Material Subsidiaries has been duly
incorporated and is an existing corporation in good standing under
the laws of its jurisdiction of incorporation, and has all corporate
powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as presently
conducted.
The foregoing opinion is limited to the Federal laws of the
United States, the laws of the State of New York
<PAGE>
<PAGE> 3
and the General Corporation Law of the State of Delaware, and I am
expressing no opinion as to the effect of the laws of any other
jurisdiction. In addition I am expressing no opinion as to the effect, if
any, of any law of any jurisdiction (except the State of New York) in which
any Bank is located which limits the rate of interest that may be charged
or collected by a bank.
With your approval, I have relied as to certain matters on
information obtained from public officials, officers of Parent and the
Company and other sources believed by me to be responsible, and I have
assumed that the Credit Agreement has been duly authorized, executed and
delivered by the parties thereto other than Parent and the Company, as the
case may be, and that the signatures on all documents examined by me (other
than those of persons signing on behalf of Parent or the Company) are
genuine, assumptions which I have not independently verified.
This opinion is furnished by me as General Counsel for Parent
and the Company pursuant to Section 6.02(a) of the Agreement to you as
Banks and the Administrative Agent and is solely for your benefit.
Very truly yours,
Siri S. Marshall
<PAGE>
<PAGE> 1
EXHIBIT F-2
Form of Opinion of Sullivan & Cromwell,
Special Counsel for Parent and Company
March 11, 1994
To the Banks and the Administrative Agent
Parties to the Revolving Credit Agreement
Referred to Below,
c/o Chemical Bank, as
Administrative Agent,
270 Park Avenue
New York, New York 10017.
Dear Sirs:
We have acted as special counsel for Avon Products, Inc., a New
York corporation ("Parent"), and Avon Capital Corporation, a Delaware
corporation (the "Company"), in connection with the Revolving Credit
Agreement, dated as of March 11, 1994 (the "Credit Agreement"), among
Parent, the Company, the banks listed on the signature pages thereof (the
"Banks") and Chemical Bank, as Administrative Agent. Terms defined in the
Credit Agreement are used herein as defined therein.
In such capacity, we have examined such corporate records,
certificates and other documents, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion. Upon
the basis of such examination, it is our opinion that:
1. Parent has been duly incorporated and is an existing
corporation in good standing under the laws of the State of New York,
and has all corporate powers required to carry on its business as
presently conducted. The Company has been duly incorporated and is
an existing corporation in good standing under the laws of the State
of Delaware, and has all corporate powers required to carry on its
business as presently conducted.
2. The execution, delivery and performance by Parent and the
Company of the Credit Agreement and the execution, delivery and
performance by the Company of the Revolving Credit Notes are within
the corporate powers of Parent or the Company, as the case may be,
<PAGE>
<PAGE> 2
and, in each case, have been duly authorized by all necessary corporate
action on their respective parts, require no action by or in respect of, or
filing (other than routine information filings) (a) with any governmental
body, agency or official of the United States or the State of New York or
(b) pursuant to the General Corporation Law of the State of Delaware, and
do not contravene any applicable provision of United States Federal or New
York State law or regulation, including, without limitation, Regulation U
and Regulation X of the Board of Governors of the Federal Reserve System or
the General Corporation Law of the State of Delaware or of the respective
certificate of incorporation or by-laws of Parent or the Company.
3. Each of the Credit Agreement and the Revolving Credit Notes
constitutes the valid and legally binding obligation of the Company
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
4. The Credit Agreement constitutes the valid and legally
binding obligation of Parent enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
The foregoing opinion is limited to the Federal laws of the
United States, the laws of the State of New York and the General
Corporation Law of the State of Delaware, and we are expressing no opinion
as to the effect of the laws of any other jurisdiction. In addition we are
expressing no opinion as to the effect, if any, of any law of any
jurisdiction (except the State of New York) in which any Bank is located
which limits the rate of interest that may be charged or collected by a
bank.
As contemplated by the qualifications set forth
in paragraphs (3) and (4) above, in rendering the foregoing opinion, we are
expressing no opinion as to Federal or state laws relating to fraudulent
transfers or to the redemption or repurchase of stock.
In expressing the opinion set forth in paragraph (2) above with
respect to the non-contravention of applicable United States Federal or New
York State law or
<PAGE>
<PAGE> 3
regulation or the Delaware General Corporation law, we are not passing upon
the adequacy of any disclosure made or to be made in connection with the
Credit Agreement or the transactions contemplated thereby.
In expressing the opinions set forth in paragraphs (2), (3) and
(4) above, we express no opinion as to the validity, binding effect or
enforceability of any contractual provisions purporting to provide
indemnification.
With your approval, we have relied as to certain matters on
information obtained from public officials, officers of Parent and the
Company and other sources believed by us to be responsible, and we have
assumed that the Credit Agreement has been duly authorized, executed and
delivered by the parties thereto other than Parent and the Company, as the
case may be, and that the signatures on all documents examined by us are
genuine, assumptions which we have not independently verified.
This opinion is furnished pursuant to Section 6.02(a) of the
Credit Agreement by us as special counsel for Parent and the Company to you
as Banks and the Administrative Agent and is solely for your benefit.
Very truly yours,
<PAGE>
<PAGE> 1
EXHIBIT F-3
Form of Opinion of Special Counsel for the Banks
March 11, 1994
To the Banks and the Administrative Agent
Parties to the Revolving Credit Agreement
Referred to Below
c/o Chemical Bank, as
Administrative Agent
270 Park Avenue
New York, New York 10017
Dear Sirs:
We have reviewed the Revolving Credit Agreement, dated as of
March 11, 1994 (the "Credit Agreement"), among Avon Products, Inc., a New
York corporation ("Parent"), Avon Capital Corporation, a Delaware
corporation (the "Company"), the banks listed on the signature pages
thereof (the "Banks"), and Chemical Bank, as Administrative Agent, and have
acted as special counsel for the Administrative Agent and the Banks for the
purpose of rendering this opinion. In such capacity, we have examined such
corporate records, certificates and other documents, and such questions of
law, as we have considered necessary or appropriate for the purposes of
this opinion. Upon the basis of such examination, we advise you that in
our opinion:
1. The Credit Agreement and the Revolving Credit Notes
constitute valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
2. The Credit Agreement constitutes the valid and legally
binding obligations of Parent enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
<PAGE>
<PAGE> 2
As contemplated by the qualifications set forth in paragraphs
(1) and (2) above, in rendering the foregoing opinion, we are expressing no
opinion as to Federal or state laws relating to fraudulent transfers or to
the redemption or repurchase of stock.
In expressing the opinions set forth in paragraphs (1) and (2)
above, we express no opinion as to the validity, binding effect or
enforceability of any contractual provisions purporting to provide
indemnification.
With your approval, we have relied as to certain matters on
information obtained from public officials, officers of Parent and the
Company and other sources believed by us to be responsible, and we have
assumed that the Credit Agreement and the Revolving Credit Notes each has
been duly authorized, executed and delivered by the parties thereto, as the
case may be, and that the signatures on all documents examined by us are
genuine, assumptions which we have not independently verified.
The foregoing opinion is limited to the Federal laws of the
United States, the laws of the State of New York and the General
Corporation Law of the State of Delaware, and we are expressing no opinion
as to the effect of the laws of any other jurisdiction. In addition, we
are expressing no opinion as to the effect, if any, of any law of any
jurisdiction (except the State of New York) in which any Bank is located
which limits the rate of interest that such Bank may charge or collect.
Terms defined in the Credit Agreement are used herein as defined therein.
This opinion is furnished by us as your special counsel
pursuant to Section 6.02(b) of the Credit Agreement to you as Banks and the
Administrative Agent and is solely for your benefit.
Very truly yours,
EXHIBIT 4.2
<PAGE>
<PAGE> 1 EXHIBIT 4.2
[CONFORMED COPY]
SECOND AMENDMENT, dated as of February 24, 1994
(this "Amendment"), to (1) the MULTIFACILITY CREDIT AGREEMENT,
dated as of June 17, 1992 and amended as of April 15, 1993 (as
further amended or supplemented or modified from time to time,
the "Agreement"), among AVON PRODUCTS, INC., a New York
corporation ("Parent"), AVON CAPITAL CORPORATION, a Delaware
corporation (the "Company"), each of the banks identified on
the signature pages thereof and BANKERS TRUST COMPANY and
CHEMICAL BANK, as Co-Administrative Agents for the Banks (the
"Co-Administrative Agents") and (2) the PLEDGE AGREEMENT,
dated as of June 17, 1992 and amended as of April 15, 1993 (as
further amended or supplemented or modified from time to time,
the "Pledge Agreement"), among Parent and BANKERS TRUST
COMPANY, as Collateral Agent (the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, in 1993 the Board of Directors and
shareholders of Parent approved the Avon Products, Inc. 1993
Stock Incentive Plan (as amended, supplemented or modified
from time to time, the "1993 Stock Plan"); and
WHEREAS, pursuant to the 1993 Stock Plan, effective
as of January 1, 1994, Parent adopted the Avon Products, Inc.
Long Term Incentive Plan, which is a Stock Incentive Program
(as defined in the 1993 Stock Plan); and
WHEREAS, the First Amendment, dated as of April 15,
1993, to the Agreement provided that Special Parent Loans were
to be available for payment of obligations under Stock
Incentive Agreements (as defined in the 1993 Stock Plan) and
Stock Incentive Programs adopted pursuant to the 1993 Stock
Plan; and
WHEREAS, a technical amendment to Section 9.01(g) of
the Agreement is necessary and appropriate in order to give
effect to the intent of the parties reflected in said First
Amendment;
NOW, THEREFORE, the parties hereby agree as follows:
Section 1. Definitions; References. Unless
otherwise specifically defined herein, each term used herein
which is defined in the Agreement shall have the meaning
assigned to such term in the Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other
similar reference contained in the Agreement shall, from and
<PAGE>
<PAGE> 2
after the date hereof, refer to the Agreement as amended
hereby.
Section 2. Amendment of Section 9.01(g) of the
Agreement. The third sentence of Section 9.01(g) of the
Agreement is amended to read in its entirety as follows:
"The proceeds of the Special Parent Loans will be
placed into the Account and, in accordance with the terms
and the conditions set forth in the Pledge Agreement,
such proceeds shall be applied toward payments required
pursuant to Section 13(a)(iii) of the Avon Products, Inc.
1970 Stock Option Incentive Plan or Section 3.1(d) of the
Avon Products, Inc. 1993 Stock Option Incentive Plan, as
amended, supplemented or modified from time to time, or
pursuant to a provision of a Stock Incentive Agreement or
Stock Incentive Program issued thereunder, including
payments for the repurchase of certain stock, stock
options and performance units held by certain employees
upon a change in control."
Section 3. Amendment of Section 14 of the Pledge
Agreement. Parent and the Collateral Agent, by their
respective execution and delivery hereof, effective as of the
date hereof, hereby amend Section 14 of the Pledge Agreement
to replace the term "certificate" wherever it shall occur
therein with the term "written notice".
Section 4. Representations and Warranties. Parent
and the Company each represents and warrants to the Banks that
the execution and delivery of this Amendment by it has been
duly authorized by all necessary corporate action and
constitutes the valid and legally binding obligation of Parent
and the Company, respectively, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, reorganization,
fraudulent transfer and other similar laws relating to or
affecting creditors' rights generally and to general equity
principles.
Section 5. Governing Law. This Amendment shall be
governed by and construed in accordance with the internal laws
of the State of New York.
Section 6. Counterparts; Effectiveness. This
Amendment may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
Except as provided in Section 3 hereof, this Agreement shall
become effective as of the earliest date on which the
Administrative Agent shall have received duly executed
counterparts hereof signed by Parent, the Company
<PAGE>
<PAGE> 3
and the Required Banks (or, in the case of any party as to
which an executed counterpart shall not have been received, a
Co-Administrative Agent shall have received telegraphic, telex
or other written confirmation from such party of execution of
a counterpart hereof by such party).
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be duly executed as of the date first above
written.
AVON PRODUCTS, INC.
By: /s/John E. Donaldson, Jr.
Name: John E. Donaldson, Jr.
Title: Vice President and
Treasurer
AVON CAPITAL CORPORATION
By: /s/John E. Donaldson, Jr.
Name: John E. Donaldson, Jr.
Title: Vice President and
Treasurer
BANKERS TRUST COMPANY, as
Co-Administrative Agent and as a Bank
By: /s/June C. George
Name: June C. George
Title: Vice President
CHEMICAL BANK, as
Co-Administrative Agent and as a Bank
By: /s/ Robert C. Kennedy
Name: Robert C. Kennedy
Title: Vice President
<PAGE>
<PAGE> 4
THE BANK OF TOKYO TRUST COMPANY
By: /s/Jeffrey Millar
Name: Jeffrey Millar
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/J.W. Campbell
Name: J.W. Campbell
Title: Vice President & Agent
THE CHASE MANHATTAN BANK, N.A.
By: /s/Ruth I. Dreessen
Name: Ruth I. Dreessen
Title: Managing Director
CITIBANK, N.A.
By: /s/W. Dwight Raiford
Name: W. Dwight Raiford
Title: Vice President
CONTINENTAL BANK, N.A.
By: /s/Kathryn W. Robinson
Name: Kathryn W. Robinson
Title: Vice President
<PAGE>
<PAGE> 5
DEUTSCHE BANK AG -
NEW YORK BRANCH AND/OR
CAYMAN ISLAND BRANCH
By:________________________
Name:
Title:
By:_________________________
Name:
Title:
THE FIRST NATIONAL BANK OF BOSTON
By: /s/Cindy C. Chen
Name: Cindy L. Chen
Title: Vice President
J.P. MORGAN DELAWARE
By: /s/David J. Morris
Name: David J. Morris
Title: Vice President
NATIONSBANK OF NORTH CAROLINA, N.A.
By: /s/William Casperson
Name: William Casperson
Title: Assistant Vice President
<PAGE>
<PAGE> 6
THE SUMITOMO BANK, LIMITED -
NEW YORK BRANCH
By: /s/Yoshinori Kawamura
Name: Yoshinori Kawamura
Title: Joint General Manager
THE TORONTO-DOMINION BANK
By: /s/Katherine Lucey
Name: Katherine Lucey
Title: Director
BANCO SANTANDER - NEW YORK BRANCH
By: /s/G.K. Greathouse
Name: G.K. Greathouse
Title: Manager Corp. Banking
THE NORTHERN TRUST COMPANY
By: /s/Merlon J. Schuneman
Name: Merlon J. Schuneman
Title: Vice President
EXHIBIT 11.1
<PAGE>
<PAGE>
EXHIBIT 11.1
AVON PRODUCTS, INC.
COMPUTATION OF PRIMARY INCOME (LOSS) PER SHARE
(In millions, except per share data)
Three months ended
March 31
------------------
1994 1993
---- ----
Weighted average shares of common stock:
Weighted average shares outstanding during the period. 71.92 72.03
Common stock equivalents*............................. -- --
------ -------
Weighted average shares for primary income per share
computation......................................... 71.92 72.03
====== =======
Income (loss) per share of common stock:
Income from continuing operations before
cumulative effect of accounting changes............. $ 29.5 $ 24.6
Discontinued operations, net.......................... -- (10.0)
Cumulative effect of accounting changes............... (45.2) (107.5)
------ -------
Net (loss)............................................ $(15.7) $ (92.9)
====== =======
Primary income (loss) per share of common stock:
Income from continuing operations before
cumulative effect of accounting changes............. $ .41 $ .34
Discontinued operations............................... -- (.14)
Cumulative effect of accounting changes............... (.63) (1.49)
------ -------
Net (loss)............................................ $ (.22) $ (1.29)
====== =======
- - ----------
*Common stock equivalents are not reported because they result in less than
three percent dilution.
EXHIBIT 11.2
<PAGE>
<PAGE>
EXHIBIT 11.2
AVON PRODUCTS, INC.
COMPUTATION OF FULLY DILUTED INCOME (LOSS) PER SHARE
(In millions, except per share data)
Three months ended
March 31
------------------
1994 1993
---- ----
Weighted average shares of common stock:
Weighted average shares outstanding during the
period............................................ 71.92 72.03
Common stock equivalents............................ .17 .10
------ -------
Weighted average shares for fully diluted income
per share computation............................. 72.09 72.13
====== =======
Income (loss) per share of common stock:
Income from continuing operations before
cumulative effect of accounting changes........... $ 29.5 $ 24.6
Discontinued operations, net........................ -- (10.0)
Cumulative effect of accounting changes............. (45.2) (107.5)
------ -------
Net (loss).......................................... $(15.7) $ (92.9)
====== =======
Fully diluted income (loss) per share of common stock:
Income from continuing operations before
cumulative effect of accounting changes........... $ .41 $ .34
Discontinued operations............................. -- (.14)
Cumulative effect of accounting changes............. (.63) (1.49)
------ -------
Net (loss).......................................... $ (.22) $ (1.29)
====== =======
EXHIBIT 18
<PAGE>
<PAGE>
EXHIBIT 18
[CONFORMED COPY]
May 11, 1994
Ms. Edwina D. Woodbury
Senior Vice President
and Chief Financial Officer
Avon Products, Inc.
9 West 57th Street
New York, NY 10019-2683
Dear Ms. Woodbury:
We are providing this letter to you for inclusion as an exhibit to your
Form 10-Q filing pursuant to Item 601 of Regulation S-K.
We have read management's justification for the change in accounting from
the deferral method of accounting for internal systems development costs to
expensing such costs as incurred contained in the Company's Form 10-Q for
the quarter ended March 31, 1994. Based on our reading of the data and
discussions with Company officials of the business judgment and business
planning factors relating to the change, we believe management's
justification to be reasonable. Accordingly, (in reliance on management's
determination as regards elements of business judgment and business
planning), we concur that the newly adopted accounting principle described
above is preferable in the Company's circumstances to the method previously
applied.
We have not audited any financial statements of Avon Products, Inc. as of
any date or for any period subsequent to December 31, 1993, nor have we
audited the application of the change in accounting principle disclosed in
Form 10-Q of Avon Products, Inc. for the three months ended March 31, 1994;
accordingly, our comments are subject to revision on the completion of an
audit of the financial statements that include the accounting change.
/s/COOPERS & LYBRAND
