Avon 2015 Annual Report Download - page 34

PART I
Cleveland Investor will be able to exercise significant influence over us, including through its
ability to elect up to three members of our Board of Directors, including the Chairman.
Holders of Series C Preferred Stock will be entitled to vote generally with holders of our common stock on an as-converted basis (subject to
an agreement to vote in favor of the slate of directors nominated by the Board of Directors, so long as the 25% Ownership Requirement is
met and subject to certain exceptions). Therefore, the issuance of the Series C Preferred Stock to Cleveland Investor will effectively reduce
the relative voting power of the holders of our common stock. Upon closing of the Investment Transactions, the shares of Series C Preferred
Stock owned by Cleveland Investor will represent approximately 16.6% of the voting rights of our common stock on an as-converted basis
(an estimate based on the amount of our common stock outstanding at the time we entered into the Investment Agreement). As a result,
Cleveland Investor will have the ability to significantly influence the outcome of any matter submitted for the vote of our shareholders. In
addition, provided Cleveland Investor has maintained certain levels of beneficial ownership of Series C Preferred Stock and/or common
stock, Cleveland Investor will have consent rights over certain actions taken by us, including increasing the size of the Board of Directors,
reinstating our quarterly common stock dividend and incurring indebtedness in excess of certain thresholds.
In addition, we will grant Cleveland Investor certain rights to designate directors to serve on our Board of Directors (one of whom will act as
the Chairman so long as the 50% Ownership Requirement (as defined below) is met). Cleveland Investor will continue to be entitled to
elect: (i) three directors to the Board of Directors, so long as Cleveland Investor continues to beneficially own shares of Series C Preferred
Stock and/or shares of common stock that represent, on an as-converted basis, at least 75% of Cleveland Investor’s initial shares of Series C
Preferred Stock on an as-converted basis, (ii) two directors to the Board of Directors, so long as Cleveland Investor continues to beneficially
own shares of Series C Preferred Stock and/or common stock that represent, on an as-converted basis, at least 50% but less than 75% of
Cleveland Investor’s initial shares of Series C Preferred Stock on an as-converted basis (the “50% Ownership Requirement”) and (iii) one
director to the Board of Directors, so long as Cleveland Investor continues to beneficially own shares of Series C Preferred Stock and/or
common stock that represent, on an as-converted basis, at least 25% but less than 50% of Cleveland Investor’s initial shares of Series C
Preferred Stock on an as-converted basis (the “25% Ownership Requirement”). Until Cleveland Investor no longer meets the 25%
Ownership Requirement, subject to certain exceptions and to satisfaction by such director designees of independence and other customary
qualifications, Cleveland Investor will have the right to have one of its director designees serve on each committee of the Board of Directors.
Notwithstanding the fact that all directors will be subject to fiduciary duties and applicable law, the interests of the directors appointed by
Cleveland Investor may differ from the interests of holders of our common stock as a whole or of our other directors.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
Our principal properties worldwide consist of manufacturing facilities for the production of Beauty products, distribution centers where
administrative offices are located and where finished merchandise is packed and shipped to Representatives in fulfillment of their orders, and
one principal research and development facility located in Suffern, NY.
We also lease an office space in New York City for our executive and administrative offices, and we own property in Rye, NY that is
predominantly for Global IT. In October 2012, we consolidated our New York City offices into one location at 777 Third Avenue. Our
previous executive office location at 1345 Avenue of the Americas has been vacated and subleased. We also have a distribution center in the
U.S. which is inactive and currently listed for sale.
In addition to the facilities noted above, other principal properties measuring 50,000 square feet or more include the following:
• four manufacturing facilities, eleven distribution centers and two administrative offices in Latin America;
• two manufacturing facilities in Europe, primarily servicing Europe, Middle East & Africa;
• thirteen distribution centers and five administrative offices in Europe, Middle East & Africa; and
• four manufacturing facilities, six distribution centers and one administrative office in Asia Pacific, of which one manufacturing facility is
inactive.
We consider all of these properties to be in good repair, to adequately meet our needs and to operate at reasonable levels of productive
capacity.
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