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As filed with the Securities and Exchange Commission on October 21, 1998.
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
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.)
1345 Avenue of the Americas
New York, NY
10105-0196
(Address of principal executive offices)
AVON PRODUCTS, INC. DEFERRED COMPENSATION PLAN
(Full title of the Plan)
WARD M. MILLER, JR., Esq.
Senior Vice President,
General Counsel and Secretary
Avon Products, Inc.
1345 Avenue of the Americas
New York, NY 10105-0196
(Name and address of agent for service)
(212) 282-5000
(Telephone number, including Area Code,
of Agent for Service)
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Copies of Communications to:
KATHERINE M. KOOPS, Esq.
Powell, Goldstein, Frazer & Murphy LLP
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
(404) 572-6600
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CALCULATION OF REGISTRATION FEE
Title of Securities Amount Proposed Maximum Proposed Maximum
Amount of
to be to be Offering Price per Aggregate Offering Registration
Registered Registered Unit Price Fee
Avon Products, Inc. $75,000,000(1) 100%(2) $75,000,000(2) $22,125 (2)
(1) The Avon Products, Inc. Deferred Compensation Plan Obligations are
unsecured obligations of the Registrant to pay benefits in the
future in accordance with the terms of The Avon Products, Inc.
Deferred Compensation Plan (the "Plan") for a select group of
eligible employees.
(2) Estimated solely for the purpose of determining the registration
fee.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(A)
PROSPECTUS
The documents containing the information specified in Part I of the
Instructions to the Registration Statement on Form S-8 will be sent or
given to employees of the Registrant as required by Rule 428(b)(1)
promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
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PART II
Item 3. Incorporation of Certain Documents by Reference.
The following documents previously filed by the Company with the
Securities and Exchange Commission (the "Commission") pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
incorporated herein by reference:
(1) Annual Report on Form 10-K for the year ended December 31, 1997
( Commission File No. 1-04881);
(2) Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998
(Commission File No. 1-04881);
(3) Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998
(Commission File No. 1-04881); and
(4) Current Report on Form 8-K filed with the Commission on
March 18, 1998
(Commission File No. 1-04881).
All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the date upon which this offering is terminated shall be deemed
to be incorporated by reference herein and to be part hereof from the
date any such document is filed.
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Item 4. Description of Securities.
The Deferred Compensation Plan Obligations (the "Obligations") are
unsecured general obligations of the Registrant to pay benefits in the
future in accordance with the terms of the Registrant's Deferred
Compensation Plan (the "Plan").
Under the Plan, a participant may elect to defer a portion of his
or her compensation otherwise payable to the participant. Deferred
amounts will be credited with rates of return selected by the
participant, including a Registrant stock fund rate of return, in
accordance with investment elections made by a participant.
Benefits under the Plan are generally payable upon termination of
employment, retirement or death. The form of payment will be selected
by the participants of the Plan and will be in either a lump sum or
annual installments. Benefits will be paid in cash.
Under the Plan, a participant's right to the Obligations cannot be
transferred, assigned, subject to garnishment, attachment or other legal
equitable process without the prior written consent of the Company or by
operation of law. The Obligations are not convertible into another
security of the Registrant. No trustee has been appointed having the
authority to take action with respect to the Obligations and each
participant will be responsible for acting independently with respect
to, among other things, the making of investment elections and
giving of notices.
The Registrant may modify, amend or terminate the Plan at any time.
No such modifications or amendment shall have the effect of
retroactively changing or depriving any participants of benefits already
accrued under the Plan.
All benefits provided under the Plan will be paid from the general
assets of the Registrant and no separate fund has been established to
secure payment.
Item 5. Interests of Named Experts and Counsel.
Powell, Goldstein, Frazer & Murphy LLP, Atlanta, Georgia, has
rendered an opinion regarding the legality of the Obligations registered
hereby.
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Item 6. Indemnification of Directors and Officers.
Article XII of the By-Laws of Avon Products, Inc. provides as
follows:
Section 1. Indemnification-Third Party and Derivative Actions.
(a) The corporation shall indemnify any person made, or threatened to be
made, a party to an action or proceeding, whether civil or criminal
(other than one by or in the right of the corporation to procure a
judgment in its favor), including an action by or in the right of any
other corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other
enterprise, which any director, officer or employee of the corporation
served in any capacity at the request of the corporation, by reason of
the fact that he is or was a director or officer of the corporation, or
is or was serving such other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity,
against judgments, fines, including excise taxes, amounts paid in
settlement and expenses, including attorney's fees, incurred in
connection with any such action or proceeding, or any appeal therein,
provided that no indemnification may be made to or on behalf of such
person if a judgment or other final adjudication adverse to such person
establishes that (i) his acts were committed in bad faith or were the
result of his active or deliberate dishonesty and were material to such
action or proceeding or (ii) he personally gained in fact a financial
profit or other advantage to which he was not legally entitled.
(b) The corporation shall indemnify any person made, or threatened
to be made, a party to an action by or in the right of the corporation
to procure a judgment in its favor by reason of the fact that he is or
was a director or officer of the corporation, or is or was serving at
the request of the corporation as a director or officer of any other
corporation of any type or kind, domestic or foreign, or of any
partnership, joint venture, trust, employee benefit plan or other
enterprise, against amounts paid in settlement and expenses, including
attorneys' fees, incurred in connection with such action, or any appeal
therein, provided that no indemnification may be made to or on behalf of
such person if (i) his acts were committed in bad faith or were the
result of his active and deliberate dishonesty and were material to such
action or (ii) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
(c) The termination of any civil or criminal action or proceeding by
judgment, settlement, conviction or upon a plea of nolo contendere,
or its equivalent, shall not in itself create a presumption that any
such person has not met the standard of conduct set forth in this
Section 1.
Section 2. Payment of Indemnification; Repayment. (a) A person
who has been successful, on the merits or otherwise, in the defense of a
civil or criminal action or proceeding of the character described in
Section 1 of this Article shall be entitled to indemnification as
authorized in such Section.
(b) Any indemnification under Section 1 of this Article, unless
ordered by a court, shall be made by the corporation in such manner as
provided by law.
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(c) Expenses incurred by a person referred to in Section 1 of this
Article in defending a civil or criminal action or proceeding shall be
paid by the corporation in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by or on behalf of
such person to repay such amount in case he is ultimately found, in
accordance with this Article, not to be entitled to indemnification or,
where indemnity is granted, to the extent the expenses so paid exceed
the indemnification to which he is entitled.
(d) Any indemnification of a person under Section 1 of this
Article, or advancement of expenses under Section 2(c) of this Article,
shall be made promptly, and in any event within 60 days, upon the
written request of such person.
Section 3. Enforcement; Defenses. The right to indemnification or
advancement of expenses granted by this Article shall be enforceable by
the person in question in any court of competent jurisdiction if the
corporation denies such request, in whole or in part, or if no
disposition thereof is made within 60 days. Such person's expenses
incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the corporation. It shall be a defense to any such
action (other than an action brought to enforce a claim for the
advancement of expenses under Section 2(c) of this Article where the
required undertaking has been received by the corporation) that the
claimant has not met the standard of conduct set forth in Section 1 of
this Article, but the burden of proving such defense shall be on the
corporation. Neither the failure of the corporation to have made a
determination that indemnification of the claimant is proper, nor the
fact that there has been an actual determination by the corporation that
indemnification of the claimant is not proper, shall be a defense to the
action or create a presumption that the claimant is not entitled to
indemnification.
Section 4. Survival; Savings Clause; Preservation of Other
Rights. (a) The foregoing indemnification provisions shall be deemed to
be a contract between the corporation and each person who serves in such
capacity at any time while these provisions as well as the relevant
provisions of the New York Business Corporation Law are in effect and
any repeal or modification thereof shall not affect any right or
obligation then existing with respect to any state of facts then or
previously existing or any action or proceeding previously or thereafter
brought or threatened based in whole or in part upon any such state of
facts. Such a contract right may not be modified retroactively without
the consent of such person.
(b) If this Article or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, then the corporation
shall nevertheless indemnify each such person against judgments, fines,
amounts paid in settlement and expenses, including attorneys'
fees incurred in connection with any actual or threatened action by or
in the right of the corporation, or any appeal therein, to the full
extent permitted by any applicable portion of this Article that shall
not have been invalidated and to the full extent permitted by applicable
law.
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(c) The indemnification provided by this Article shall not be
deemed exclusive of any other rights to which those indemnified may be
entitled under any by-law, agreement, vote of shareholders or directors
or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer or employee of
the corporation and shall inure to the benefit of the heirs, executors
and administrators of such a person. The corporation is hereby
authorized to provide further indemnification if it deems it advisable
by resolution of shareholders or directors, by amendment of these
by-laws or by agreement.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The following exhibits are filed herewith or incorporated by
reference herein:
Exhibit
Number
Description
3(a) Restated Certificate of Incorporation. [Incorporated
herein by reference to Exhibit 3.1 to Registrant's
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996 (File No.1-04881).]
3(b) By-laws, as restated, effective June 6, 1996.
[Incorporated herein by reference to Exhibit 3.2 to
Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996 (File No.1-04881).]
4(a) Restated Certificate of Incorporation, filed as Exhibit
3(a), and By-laws of Registrant, as restated, effective
June 6, 1996, filed as Exhibit 3(b), are incorporated
herein by reference.
4(b) Form of Avon Products, Inc. Deferred Compensation Plan.
5 Opinion of Powell, Goldstein, Frazer & Murphy LLP.
23(a) Consent of Powell, Goldstein, Frazer & Murphy LLP (included
in Exhibit 5)
23(b) Consent of PricewaterhouseCoopers L.L.P.
24 Power of Attorney (see signature pages to this Registration
Statement).
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Item 9. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
Provided, however, that paragraphs (1)(i) and (1)(ii)
do not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference
in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the Registrant's annual report pursuant to section 13(a) or section
15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to
the securities offered herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
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Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction to
the questions whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York,
on this the 21st day of October, 1998.
AVON PRODUCTS, INC.
By: /s/ Ward M. Miller, Jr.
Ward M. Miller, Jr.
Senior Vice President,
General Counsel and Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints WARD M. MILLER, JR. as his or her
true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Commission, granting unto
said attorney-in-fact and agent, full power and authority to
do and perform each and every act and thing required or necessary to be
done in and about the premises, as fully to all intents and purposes as
he or she might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute, could
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
Signature Title
/s/ James E. Preston Chairman of the Board Date: October 21, 1998
James E. Preston and Chief Executive
Officer
/s/ Charles R. Perrin Vice Chairman of the Date: October 21, 1998
Charles R. Perrin Board and Chief
Operating Officer
/s/ Andrea Jung Director and President Date: October 21, 1998
Andrea Jung
/s/ Susan J. Kropf Director, Executive Date: October 21, 1998
Susan J. Kropf Vice President and
President, North America
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/s/ Robert J. Corti Executive Vice President, Date: October 21, 1998
Robert J. Corti Chief Financial Officer
and Controller (principal
financial officer and
principal accounting officer)
/s/ Brenda C. Barnes Director Date: October 21, 1998
Brenda C. Barnes
/s/ Richard S. Barton Director Date: October 21, 1998
Richard S. Barton
/s/ Edward T. Fogarty Director Date: October 21, 1998
Edward T. Fogarty
/s/ Stanley C. Gault Director Date: October 21, 1998
Stanley C. Gault
/s/ George V. Grune Director Date: October 21, 1998
George V. Grune
/s/ Charles S. Locke Director Date: October 21, 1998
Charles S. Locke
/s/ Ann S. Moore Director Date: October 21, 1998
Ann S. Moore
/s/ Remedios Diaz Oliver Director Date: October 21, 1998
Remedios Diaz Oliver
/s/ Paula Stern Director Date: October 21, 1998
Paula Stern
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EXHIBIT INDEX
Exhibit
Number
Description
3(a) Restated Certificate of Incorporation. [Incorporated herein
by reference to Exhibit 3.1 to Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1996 (File No.1-
04881).]
3(b) By-laws, as restated, effective June 6, 1996. [Incorporated
herein by reference to Exhibit 3.2 to Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996 (File
No.1-04881).]
4(a) Restated Certificate of Incorporation, filed as Exhibit 3(a),
and By-laws of Registrant, as restated, effective June 6, 1996,
filed as Exhibit 3(b), are incorporated herein by reference.
4(b) Form of Avon Products, Inc. Deferred Compensation Plan.
5 Opinion of Powell, Goldstein, Frazer & Murphy LLP.
23(a) Consent of Powell, Goldstein, Frazer & Murphy LLP (included in
Exhibit 5)
23(b) Consent of PricewaterhouseCoopers L.L.P.
24 Power of Attorney (see signature page to this Registration
Statement).
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AVON DEFERRED COMPENSATION PLAN
(Restated as of January 1, 1998)
(1) Purpose: Subject to the terms of the Avon Products, Inc.
Deferred Compensation Plan (the "Plan"), an eligible employee of Avon
Products, Inc. (the "Company") may elect to defer receipt of some or all of
the following forms of compensation:
(a) All or part of his or her annual bonus awarded under the
Company's Management Incentive Plan, U.S. Incentive Plan or
other specified annual incentive awards (collectively referred
to as "Annual Bonus");
(b) All or part of his or her cash award component otherwise payable
under the Company's 1997 Long Term Incentive Plan or successor
long term incentive plans (collectively referred to as "LTIP
bonus");
(c) If a Participant in the Company's qualified (401(k)) Personal
Savings Plan, up to 6% of any Base Salary in excess of
the limitation on compensation that is eligible for pre-tax
contributions under a qualified Section 401(k) savings plan; and
(d) Effective July 1, 1998, up to 50% of Base Salary.
(2) Eligibility: Any employee of the Company may participate in the
Plan who is both on the U.S. payroll and eligible to participate in the
Company's 1997 LTIP or successor long term incentive plan (collectively
referred to as "Participants").
3. Deferral of Annual Bonus: A Participant may elect to defer all
or a portion of his Annual Bonus for each calendar year. The amount or
percentage of the Annual Bonus to be deferred for a calendar year is at the
discretion of the Participant, except that the elected amount or percentage
must be at least equal to the lesser of $5,000 or 100% of such Bonus. An
election by a Participant to defer all or part of such Bonus must be made
prior to the end of the calendar year for which the Annual Bonus is paid by
completing, signing and returning an election form provided by the Company by
no later than a date established by the Company at its discretion. (For
example, the Annual Bonus for 1998 will be paid in 1999, but the election t
<PAGE>
defer has to be made by October 1, 1998.) Each such election is only valid
for the calendar year in which it is made and a new election must be made for
each subsequent calendar year in which the Participant chooses to defer an
annual bonus.
4. LTIP Bonus A participant may elect to defer all or a portion of
his or her cash award earned and payable as an LTIP Bonus, provided, that the
elected amount or percentage must be at least equal to the lesser of $5,000 or
100% of such bonus. Such election must be made prior to the end of the
performance period for which an LTIP bonus is payable, by completing, signing
and returning an election form provided by the Company by no later than a date
established by the Company at its discretion.
5. Deferral of Excess Personal Savings Account Plan Contributions:
A Participant (i) may elect to defer receipt of all or a portion of the
Before-Tax Participant Contributions as defined in the Personal Savings
Account Plan ("Savings Plan") which would have been permitted to be made as
"Basic Contributions" under such plan for a Plan year, as if subsections (a)
through (c) below applied, in excess of the Before-Tax Participant
Contributions actually made by such Participant to the Savings Plan for such
Plan Year, and (ii) shall be concurrently credited with those Company matching
contributions which would have been made under the Savings Plan in excess of
those matching contributions actually made to that Plan for such Plan Year, as
if
(a) the limitations of Code Section 415 were not applicable, and
(b) the limitations of Code Section 401(a)(17) were not applicable,
and
(c) the limitations of Code Section 402(g) were not applicable.
Any election to defer pursuant to this Section 5 must be made
independently from any bonus deferral election pursuant to Sections 3 or 4,
and prior to the year in which the performance of the services to which the
compensation deferral relates. Each such election is valid only for the
calendar year for which it was made, and a new election must be made in
advance for each year thereafter in which the Participant chooses to make
deferrals under Section 5.
6. Deferral of Base Salary: A Participant may elect to defer up to
Fifty Percent (50%) of his or her regular bi-weekly Base Salary payable on and
after July 1, 1998 subject to a minimum annual deferral of $5,000 ($2,500 for
1998). Such deferral would be implemented through regular payroll deductions
of up to 50% of the gross amount of each regular paycheck, as soon as
practicable after the Company's receipt of a properly completed and signed
approved deferral election form provided by the Company. An elected deferral
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of Base Salary will remain in effect until and unless the Participant submits
a signed approved form electing to discontinue such deferral which
discontinuance would take place as of the beginning of the next calendar
quarter.
7. Crediting of Deferred Amounts: The Company shall establish and
maintain individual accounts under the name of each Participant who elects to
defer compensation under the Plan. Bonus deferrals under the Plan will be
credited effective as of the date the Bonus would otherwise be payable.
Deferred compensation under Sections 5 or 6 will be credited effective as of
the applicable dates of payroll withholding.
8. Distribution Accounts. At the time each deferral election is
made, a Participant shall also irrevocably designate that his or her deferred
compensation is to be allocated, in whole or in part, to one or both of two
distribution accounts: a "Retirement/Termination Distribution Account",
distributions from which are subject to the terms of Section 12 of the Plan,
or an "In-Service Distribution Account", distributions from which are subject
to the terms of Section 13 of the Plan. Separate accounts will be maintained
for each type of distribution allocation and amounts may not be transferred
from one distribution account to the other. Allocations of any form of
deferred compensation between the two accounts shall be in 10% increments. In
the event no allocation has been elected, deferred compensation shall be
wholly credited to a Retirement/Termination Distribution Account.
9. Investment Credit Accounts. Effective on and after July 1, 1998,
all deferred compensation, whether allocated to a Retirement/Termination
Distribution Account or an In-Service Distribution Account, shall be deemed
invested in one or more of three optional investment credit accounts described
below, as elected by the Participant. All investment credits are hypothetical
in that no funds are actually invested. Compensation deferred under the Plan
prior to July 1, 1998 was credited with an amount of interest determined in
accordance with the provisions of the Fixed Income Account. Effective on and
after July 1, 1998, a Participant may elect to have compensation deferred
prior to that date thereafter alternatively credited, in whole or in part, to
one of the other two investment credit accounts. The three investment credit
account options are as follows:
(a) Fixed Income Account Deferred compensation amounts allocated to
this account will be credited, at the end of each quarter, with
imputed interest at an annualized rate of 7%, or if higher, the
market interest rate payable on 30 year U.S. Treasury Bonds in
effect on the last day of the prior quarter. Compensation
deferred prior to the year 1990 that continuously remains
credited to the Fixed Income Account will be credited with a
special enhanced interest rate, namely a rate based on Moody's
Composite Bond Average, determined as of the end of each calendar
quarter, plus an additional four percentage points, compounded
annually. If pre-1990 deferred compensation is moved to a
different account, such special enhanced rate will no longer be
applicable when and if moved back to the Fixed Income Account.
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(b) Standard & Poors 500 Stock Index Account Deferred compensation
amounts allocated to this account will be treated as if
hypothetically invested in a manner that is closely linked
to changes in the S&P 500 Index over the course of each
calendar quarter. The Company will enter into a series of
quarterly financial "swap" contracts intended to closely
replicate the return provided by an investment in actual S&P 500
Index stocks over the term of such contract.
(c) Avon Stock Unit Account Deferred compensation amounts allocated
to this account will be treated as if hypothetically invested at
the beginning of each quarter in the Company's Common Stock. The
Company will enter into a series of quarterly financial "swap"
contracts intended to closely replicate the return provided by an
investment in the Company's Common Stock over the term of such
contracts.
The Company reserves the right to discontinue the use of swap
contracts in which event the investment return credit for a
quarter may be linked to the changes in the actual S&P 500 Index
or prices of the Company's Stock, as reported in the Wall Street
Journal.
The aggregate balances credited to Participants' investment credit
accounts on the first day of each calendar quarter will be sum of (1) the
value of the specific account's balance, if any, updated as of the end of the
prior quarter, (2) the value of any other investment account balances, updated
as of the end of the prior quarter that are now, at the Participant's
election, being initially transferred to the new account, and (3) compensation
initially deferred during the immediately preceding quarter, together with an
interest credit accrued from the effective date of such a deferral to the end
of such quarter based on the applicable rate determined for the Fixed Income
Account.
10. Investment Elections: Investment elections for each calendar
quarter shall be made by submitting an Investment Election Change Form
provided by the Company at least 10 days prior to the first day of the quarter
for which it is to become effective. In the absence of any change in
election, the Participant's deferred compensation, including any newly added
deferred amounts, shall continue to be invested in the same accounts, with the
same percentage allocations, as are in effect for the immediately preceding
quarter.
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The allocation of investment elections among more than one
investment account shall be in increments of one percent until and unless a
new Investment Election Change Form is timely submitted. Separate elections
can be made with respect to past and future deferrals. All investment
election changes shall be effective only as of the beginning of a calendar
quarter.
Following retirement or termination of employment, if installment
payments have been elected, a Participant may continue to make investment
election changes each quarter subject to Section 10 of the Plan. Similarly,
beneficiaries who continue to receive installment payments after a
Participant's death will have such election option, provided, that if there is
more than one beneficiary, all must sign any Investment Election Change Form.
All distributions of deferred compensation will be payable in
cash less applicable tax withholding. Accordingly, distributions derived from
an S&P 500 Account or Avon Stock Unit Account will be converted to a cash
amount on the basis of the account's value determined as of the end of the
prior quarter.
11. Early Withdrawals: At any time prior to the date distributions
of deferred compensation are otherwise scheduled to be made, a Participant may
request, on 30 days written notice, an early withdrawal of all or a portion of
his or her total deferred compensation account subject to the following
conditions:
(a) Hardship An early withdrawal request based on the Participant's
personal financial hardship must meet the hardship eligibility
requirements of the Savings Plan as well as such other
requirements as the Company may establish in its discretion.
No hardship withdrawal may be for less than $10,000. If
approved, a hardship withdrawal will be provided without any
forfeiture penalty.
(b) Non-Hardship An early withdrawal that does not qualify as a
hardship withdrawal will be subject to an irrevocable forfeiture
of a deferred amount equal to 10% of the withdrawn amount. Any
non-hardship withdrawal may be for no less than $25,000.
When an early withdrawal is made, a Participant's participation
in the Plan will be suspended for a period of 12 months, provided that any
unwithdrawn deferred balance shall continue to be subject to the Plan. No
more than one early withdrawal may be made in any 12 month period.
<PAGE>
12. Distribution Upon Retirement/Termination. A Participant's
entire Retirement/Termination Distribution Account will be payable in cash in
a single payment on or about January 15 of the first calendar year following
severance of employment or, if so elected, and the account is at least $5,000,
in annual installments commencing on or about January 15 of the first calendar
year following severance of employment with additional installments continuing
to be paid on or about each subsequent January 15 for the period elected. For
purposes of this Plan, severance of employment means severance for any reason
including, but not limited to, death, retirement, resignation or permanent
disability under the Company's Long Term Disability Plan. In the event of
disability, as defined under the Company's Long Term Disability Plan, the
Participant, with the Company's consent, may elect to receive all or a portion
of his or her deferred compensation as soon as practical after the
commencement of such Disability; otherwise, the Participant's account will not
become payable until after final separation from the Company.
A Participant may elect to receive such account in up to fifteen
(15)annual installments. Such election must be made, or changed, by written
election at least 12 months prior to the date a full lump sum amount would
otherwise be payable. Any new installment payment election made subsequent to
such 12 month notice period would be effective only with the consent of the
Company, which principally would be considered in situations of involuntary
termination of employment on less than 12 months notice to the Participant.
Should a Participant elect installment payments, the amount of the
first installment payment will be a fraction of the value of the Participant's
account as of the end of the year immediately preceding the date at which the
installment is to be paid, the numerator of which is one (1) and the
denominator of which is the total number of annual installments elected. The
amount of each subsequent payment will be a fraction of the remaining value of
the Participant's account as of the end of the year preceding each subsequent
installment date, the numerator of which is one (1) and the denominator of
which is the total number of installments elected minus the number of
installments previously paid. Investment credits or losses shall continue to
accrue on the unpaid balance of the account.
(13). In-Service Distribution Accounts: Deferred compensation
allocated to an In-Service Distribution Account will be distributed on or
about January 15 of a future year as designated by the Participant at the time
of deferred election. Such designated year must be no earlier than the second
calendar year following the year in which the applicable deferred election was
made. It is generally anticipated that the Participant would still be
<PAGE>
employed by the Company at the designated time of distribution. In the event
that the Participant in fact should terminate employment with the Company for
any reason prior thereto, the account will be distributed on or about January
15 of the year next following the date of termination.
Only one In-Service Distribution Account may be maintained at any one
time. All distributions from such an account will be in one lump sum.
14. Death of a Participant: In the event of a Participant's death
at any time prior to severance of employment, the Participant's entire
deferred account will be payable in a lump sum to his or her designated
beneficiary or beneficiaries as soon as practicable following the date of
death. If, however, the Participant had elected to have his or her
Retirement/ Termination Distribution Account distributed in installments, such
account will be distributed to such beneficiary or beneficiaries in accordance
with such election commencing January 15th of the year next following the date
of death. If a Participant dies after severance of employment but prior to
the payout of all installments, such installments will continue to be paid for
the balance of the elected period to such beneficiary or beneficiaries.
Investment gains or losses will continue to accrue on all account balances.
A beneficiary may elect to accelerate a full distribution of the deceased
Participant's entire account upon submission of a hardship withdrawal request
to the Company within 60 days of the date of death. If there is more than one
designated beneficiary, all must sign the request.
The Company reserves the right to temporarily delay
distribution(s) to any beneficiary other than a surviving spouse if it has
information that there may be disputes or claims affecting the account
including tax claims or tax waivers.
In the event that a Participant is not survived by a designated
beneficiary, or such designated beneficiary subsequently dies before all
installment payments have been made, remaining account payments will be made
to the Participant's surviving spouse, if any, otherwise to the Participant's
estate.
15. Deferral of Other Forms of Compensation: With the written
consent of the Company, a Participant may defer the receipt of other forms of
compensation including, but not limited to, lump sum non-qualified retirement
benefits. Any such deferral election must be in accordance with the terms and
conditions established at the Company's sole discretion and any election would
have to be submitted in writing prior to the year in which the payment of such
compensation would otherwise be due. Any amount so deferred would thereafter
be subject to all terms and conditions of the Plan otherwise applicable to
deferred Annual Bonuses.
<PAGE>
Severance compensation payable in the form of salary continuation,
and disability compensation, may not be deferred.
16. Change of Control: Upon the occurrence of a Change of Control
as defined in the Company's 1993 Stock Incentive Plan approved by the
Company's shareholders, the Plan shall terminate and all deferred compensation
account balances will be distributed to Participants, or the designated
beneficiaries of any deceased Participants, as soon as practicable after the
end of the calendar quarter in which such Change of Control occurs.
17. Tax Withholding: All distributions of deferred compensation of
any type shall be subject to all applicable Federal, state and local income
tax withholding requirements. It is anticipated that all distributions will
be fully taxable at ordinary income tax rates.
18. Administration of the Plan: The Company shall be the
administrator of the Plan and shall have the discretionary authority to
determine all questions arising in connection with the Plan including its
interpretation, and may adopt procedural rules and may employ and rely on such
legal counsel, accountants, and agents as it may deem advisable to assist in
the administration of the Plan. Decisions of the Company shall be conclusive
and binding on all persons.
19. Amendment or Termination of the Plan: The Company reserves the
right, at any time, and from time to time, and retroactively as deemed
necessary or appropriate, to amend or modify in whole or in part any or all of
the provisions of the Plan, including the right to discontinue contributions,
provided that no such amendment or modification shall adversely affect the
benefits accrued under the Plan prior to the effective date of such amendment
or modification. The Company may terminate the Plan for any reason at any
time, provided that such termination shall not adversely affect the benefits
accrued under the Plan prior to such effective date of such termination.
20. No Employment Rights: The existence of the Plan or of a deferral
agreement does not constitute a contract for continued employment between a
Participant and the Company. The Company reserves the right to modify a
Participant's compensation and to terminate a Participant for any reason at
any time, notwithstanding the existence of this program or of a deferral
agreement.
21. Segregation of Monies Not Required: Nothing contained in this
Plan or in a deferral agreement shall require the Company to segregate any
monies from their general funds, or to create any trusts, or to make any
special deposits for any amounts to be paid to any Participant, beneficiary or
contingent beneficiary. Neither the Participant, his or her beneficiary,
<PAGE>
contingent beneficiary, heirs or personal representatives shall have any
right, title or interest in or to any funds of the Company on account of this
program or on account of having completed a deferral agreement.
22. Restriction on Transfer: The right to receive any benefits
under this Plan may not be transferred, assigned, subject to garnishment,
attachment or other legal equitable process without the prior written consent
of the Company.
23. Application of Law: The provisions of this Plan shall be
construed in accordance with the Employee Retirement Income Security Act of
1974, as amended, and to the extent not superseded thereby, in accordance with
the laws of the State of New York.
<PAGE>
[POWELL, GOLDSTEIN, FRAZER & MURPHY LLP letterhead]
October 21, 1998
Avon Products, Inc.
1345 Avenue of the Americas
New York, New York 10105-0196
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have served as counsel for Avon Products, Inc., a New York
corporation (the "Company"), in connection with the registration under
the Securities Act of 1933, as amended, pursuant to a Registration
Statement on Form S-8 (the "Registration Statement") of an aggregate of
$75 million of obligations ("Obligations") of the Company pursuant to
the Avon Products, Inc. Deferred Compensation Plan (the "Plan").
We have examined and are familiar with originals or copies
(certified, photostatic or otherwise identified to our satisfaction) of
such documents, corporate records and other instruments relating to the
Company and the adoption of the Plan as we have deemed necessary and
advisable.
In all such examinations, we have assumed the genuineness of all
signatures on all originals and copies of documents we have examined,
the authenticity of all documents submitted to us as originals and the
conformity to original documents of all certified, conformed or
photostatic copies. As to questions of fact material and relevant to
our opinion, we have relied upon certificates or representations of
Company officials and of appropriate state, local and federal officials.
We express no opinion as to matters under or involving laws
other than the Business Corporation Law of the State of New York.
Based upon and subject to the foregoing and having regard for
such legal considerations as we have deemed relevant, it is our opinion
that the Obligations, when issued by the Company in the manner provided
for in the Plan, will be legally issued, fully paid and non-assessable,
and will constitute the valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject,
as to enforcement, (i) to bankruptcy, insolvency, reorganization,
<PAGE>
moratorium and other laws of general applicability relating to or
affecting creditors' rights, and (ii) to general principles of equity,
whether such enforcement is considered in a proceeding in equity or law.
We hereby consent to the filing of this opinion as Exhibit 5 to
the Registration Statement.
Very truly yours,
POWELL, GOLDSTEIN, FRAZER & MURPHY
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of our reports
dated February 5, 1998 included and incorporated by reference in Avon
Products, Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1997 and to all references to our Firm in this
Registration Statement.
PricewaterhouseCoopers L.L.P
New York, New York
October 21, 1998
