AVON PRODUCTS, INC.
1993 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
______________________________
DATE OF GRANT: JUNE 4, 1998
1. Grant of Option. Pursuant to the provisions of its 1993 Stock
Incentive Plan (the Plan), Avon Products, Inc. (the Company), on the
above date has granted to Xxxxxxx X. Xxxxxx (the Optionee) the right
and option to purchase from the Company a total of 75,000 shares of
Common Stock of the Company at the exercise price of $80.3125 per share
(the Option). This Option is subject to the terms and conditions of
the Plan and those set forth in this Agreement. All capitalized terms
used herein shall have the meaning set forth in the Plan, unless the
context requires a different meaning.
2. Exercise of Option
(a) This Option shall be exercisable in full on and after June 4,
2004. It may be exercisable sooner, on and after June 4, 1999, however,
subject to the following conditions:
(i) One-half of the shares subject to the option may be exercisable
subsequent to the date at which the closing price of the
Company's Common Stock, as reported on the New York Stock
Exchange, first exceeds $100 for not less than 20 out of 30
consecutive trading days, and
(ii) All of the shares subject to the option may be exercisable
subsequent to the date at which the closing price of the
Company's Common Stock, as reported in the New York Stock
Exchange, first exceeds $120 for not less than 20 out of 30
consecutive trading days.
The above price targets will be appropriately adjusted to lower
amounts after the effective date of any stock split.
(b) In accordance with the Plan this entire Option shall be
immediately cashed out effective as of the date of any "Change
in Control", regardless of whether or not any portion is otherwise
exercisable. For this purpose, the "Change in Control Price" shall be
the higher of (i) the highest price paid for a share of Stock as reported
on the New York Stock Exchange Composite Tape during the 12 month period
ending with the effective date of Change in Control or (ii) the highest
cash tender offer price for a share of Stock during such period. In the
event that a tender offer for Stock consists of a combination of cash and
securities, the Change in Control Price calculated under (ii) would be
based solely on the cash price equivalent of such offer.
(c) Shares may be purchased by giving the Company's Corporate
Secretary or Assistant Secretary written notice of exercise,
specifying the number of shares to be purchased. The notice of
exercise shall designate one of the following methods of purchase:
(i) tender to the Company of a check for the full exercise price of
the shares with respect to which such Option or portion thereof
is exercised, or
(ii) instructions to the Company to deliver all the shares being
exercised to a broker-dealer with whom an arrangement has been
made to deliver the full exercise price to the Company. The
Company may establish special terms and conditions for this
"cashless" exercise, and at any time may terminate availability
of this form of purchase.
3. Expiration of Option. The Option shall expire or terminate and
may not be exercised to any extent by the Optionee as of the first to
occur of the following events:
(a) The tenth anniversary of the Date of Grant, or such earlier
time as the Company may determine is necessary or appropriate in light of
applicable foreign tax laws; or
(b) The second anniversary of the date of the Optionee's
Termination of Employment by reason of death, Permanent Disability or
Retirement; or
(c) The Optionee's Termination of Employment for Cause (as defined
below); or
(d) The date that is ninety days after Termination of Employment of
the Optionee for a reason other than for Cause, death, Permanent
Disability or Retirement.
(e) The Optionee's violation of any non-disclosure or non-compete
covenant applicable to the Optionee as set forth in his or her severance
agreement, employment contract or any Company policy, regardless of
whether or not the Optionee has terminated employment due to Permanent
Disability or Retirement, provided that expiration of the Option may not
be effective prior to the date of Termination of Employment.
In the event of Termination of Employment because of death,
Permanent Disability or Retirement, the entire Option shall immediately
become exercisable as to all shares, notwithstanding Section 2(a) of this
Agreement. "Retirement" means retirement at or after attainment of age
55. "Permanent Disability" shall have the same meaning as that provided
by the Company's Long Term Disability Plan regardless of whether or not
the Optionee is covered by such plan.
"Cause" shall have the same meaning as that provided by the Company
Severance Pay Plan applicable to the Optionee or his or her employment
contract, or severance agreement, if any. In addition, termination for
cause shall include any termination due to acts of dishonesty or gross
misconduct on the part of the Optionee which results, or is intended to
result, in damage to the Company's business reputation.
4. Tax Withholding. No distribution of shares may be made to the
Optionee until the Company has received all amounts required for federal,
state or local tax withholding. The method of discharging such
withholding obligation shall be elected with the notice of exercise and
may include (i) payment by check, or (ii) use of a 'cashless exercise'
using a broker-dealer in a manner similar to that described in Section
2(c)(ii) hereof. The method of withholding shall be subject to such
rules as the Company may adopt from time to time. It is recognized by
both parties that, based on current laws, the difference between the Fair
Market Value of the shares purchased by an option exercise and the
exercise price of such shares generally will constitute ordinary taxable
income for federal income and "Medicare" tax purposes and for most state
and local income tax purposes.
5. Notice. Any notices required to be given hereunder to the
Company shall be addressed to the Secretary or Assistant Secretary of the
Company at the Company's headquarters offices in New York City, New York.
Any notice required to be given hereunder to the Optionee shall be
addressed to the Optionee at his or her current address shown on the
Company's records. Notice shall be sent by mail, express delivery or, if
practical, by hand delivery.
6. Other Provisions. The provisions set forth in Section 5 of the
Plan are specifically incorporated by reference in this Agreement,
including but not limited to those pertaining to the following matters:
a. Changes in Capitalization; Merger; Liquidation
b. Right to Terminate Employment
c. Non-alienation of Benefits
d. Choice of Law
AVON PRODUCTS, INC.
/s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Senior Vice President, Human
Resources and Corporate Affairs
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx. Xxxxxx
3
