AVON PRODUCTS, INC.
1993 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
DATE OF GRANT: DECEMBER 10, 1997
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 Charles R. Perrin (the 'Optionee') the right
and option to purchase from the Company a total of 100,000 shares of
Common Stock of the Company at the exercise price of $60.50 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
This option shall be in two sections having different exercise
rights, with Option Grant A covering 37,500 shares and Option Grant B
covering 62,500 shares.
(a) Option Grant A (37,500 shares) This Option shall be
exercisable in three installments of 12,500 shares each. The first
installment shall be exercisable on December 10, 1998, the second on
December 10, 1999 and the third on December 10, 2000, with all 37,500
shares fully exercisable thereafter. To the extent that any of the
above installments is not exercised when it becomes exercisable, it
shall not expire, but shall continue to be exercisable at any time
thereafter until this Option shall terminate, expire or be surrendered.
(b) Option Grant B (62,500 shares) This Option shall also be
exercisable in three installments, with the first installment of 20,833
shares exercisable on December 10, 2000. The second installment of
20,833 shares shall be exercisable on December 10, 2001 and the final
installment of 20,834 shares exercisable on December 10, 2002, with all
62,500 shares fully exercisable thereafter. To the extent that any of
the above installments is not exercised when it becomes exercisable, it
shall not expire, but shall continue to be exercisable at any time
thereafter until this Option shall terminate, expire or be surrendered
(c) In accordance with the Plan this entire Option (both portions)
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.
(d) 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 (both portions) 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. If the Optionee's employment is involuntarily
terminated by the Company other than for Cause, however, the option may
be extended for up to an additional 270 days at the discretion of the
Company, or
(e) The Optionee's violation of any non-disclosure or non-compete
covenant applicable to the Optionee as set forth in his 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 of this
Agreement. 'Retirement' means retirement at or after completion of five
(5) years of service with the Company. '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
Optionee's employment contract. 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(d)(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 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
IN WITNESS WHEREOF, the Company, by its duly authorized officer,
and the Optionee, have entered this Agreement as of the Date of Grant
first above written.
/S/ Charles R. Perrin
Charles R. Perrin
AVON PRODUCTS, INC.
/s/ Ward M. Miller
Ward M. Miller, Jr.
Senior Vice President, General
Counsel and Secretary
Stock Option Agreement - Avon Products Inc. and Charles R. Perrin
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