As Filed with the Securities and Exchange Commission on September 26, 1994
Registration No. 33-55051
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE GILLETTE COMPANY
(Exact name of registrant as specified in its charter)
Delaware 04-1366970
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification Number)
Prudential Tower Building
Boston, MA 02199
(617) 421-7000
(Address, including zip code, and telephone number, including area
code, of principal executive offices)
Jill C. Richardson
Secretary
The Gillette Company
Prudential Tower Building
Boston, Massachusetts 02199
(617) 421-7000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Joseph E. Mullaney, Esq.
The Gillette Company
Prudential Tower Building
Boston, Massachusetts 02199
(617) 421-7000
Approximate date of commencement of proposed sale to the public:
From time to time after the effectiveness of the Registration Statement.
If any of the securities being registered on this
Form are being offered pursuant to dividend or interest
reinvestment plans, please check the following box.
If any of the securities being registered on thisForm are to be offered on
a delayed or continuous basispursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the
following box. XX
_____________________
The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to
delay its effective date until the Registrant shall file
a further amendment which specifically states that this
Registration Statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act of
1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
Subject to Completion, dated September 26, 1994
PROSPECTUS
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE
SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE
OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR
SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.
THE GILLETTE COMPANY
3,317,440 Shares
Common Stock
This prospectus covers up to 3,317,440 shares of
common stock, par value $1.00 per share (the "Common
Stock") of The Gillette Company which are being offered from time to time in
connection with the Company's Employee Stock Ownership Plan ("ESOP") and
related trust.
This prospectus also covers such additional shares as may be issuable
under the Plan in the event that the outstanding Common Stock of the Company
is changed or exchanged, by declaration of a stock dividend, stock
split or combination of shares, recapitalization or other capital change.
The Common Stock is traded on the New York Stock Exchange and the
Boston, Midwest, Pacific, London, Frankfurt and Zurich Exchanges.
The Company established the ESOP in 1990 and funded
the related trust with 165,872 shares of Series C
Preferred Stock (the "Series C Stock"). Each share of Series C Stock is
convertible into 20 shares of the Common Stock of the Company, subject
to adjustment for certain stock issuances. Since September 30, 1990,
Series C Stock has been allocated quarterly to the accounts of eligible
employees, generally on the basis of an equal amount per participant.
In general, regular U.S. employees participate in the ESOP after
completing one year of service with the Company. At retirement or other
termination of employment, assuming the employee has satisfied certain vesting
criteria, the employee is entitled to a distribution from the ESOP in the
form of shares of Common Stock or, at the employee's election, cash. For
a more detailed description of how the plan operates, see "Description of
ESOP Plan."
At the time the Company established the ESOP, the Company adopted a new
policy regarding payment of retiree health care benefits. To the extent any
employee who had been employed before July 1, 1990 chooses to participate
in the Company's retiree health program, he or she would
have to agree to apply all amounts held in his or her ESOP to pay the
Company's share of the employee's health insurance premiums, and would
direct that the payment of proceeds of periodic distributions from the ESOP
be made directly to the Company for the same purpose.
After the employee's ESOP account is depleted, the Company would
assume payment of the Company's share of the employee's
premiums from is own assets. Employees hired on or after
that date would be responsible for the full amount of the premiums for which
their ESOP accounts will provide a source of funds and, after their ESOP
account is depleted, the employees must arrange for payment from
other sources.
Participation in the retiree health program is
completely voluntary. Non-participants are entitled to
receive distributions from the ESOP at retirement or
other termination of employment. However, if an employee wants to participate
in the retiree health program, the
amounts in the employee's ESOP account must be used
solely for that purpose. The retiree may at any time
discontinue participation in the program and elect to receive amounts
remaining in his or her ESOP account in cash or shares of Common Stock.
To the extent that the sales pursuant to this plan may be deemed to
benefit the Company, the Company has filed a registration statement of
which this Prospectus is a part.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY
SUPPLEMENT HERETO. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1994.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information can be
inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the following regional
offices of the Commission: Seven World Trade Center, New York, New York
10048, and Northwest Atrium Center, 500
West Madison Street, Chicago, Illinois 60661. Copies of
such material can be obtained by mail at prescribed rates
from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549. In
addition, such reports, proxy statements, and other information can be
inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York;
the Boston Stock Exchange, 1 Boston Place, Boston,
Massachusetts; the Midwest Stock Exchange Incorporated,
One Financial Plaza, 440 South LaSalle Street, Chicago,
Illinois; and the Pacific Stock Exchange, 301 Pine
Street, San Francisco, California.
The Company has filed with the Commission a
registration statement on Form S-3 with respect to the
securities offered hereunder (which, together with all
amendments and exhibits, is herein referred to as the
"Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"). This Prospectus
does not contain all of the information set forth in the
Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of
the Commission. For further information, reference is
hereby made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by
the Company with the Commission (File No. I-922) are
incorporated by reference in this Prospectus:
1. The Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993.
2. The Company's Quarterly Reports on Form
10-Q for the quarters ended March 31, 1994 and June 30, 1994.
3. The Company's Current Report on Form 8-K
dated January 10, 1994.
4. The Company's Current Report on Form 8-K dated December 30,
1985, as amended by the Company's Form 8 dated January 18, 1990.
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 of this Prospectus and prior to the termination of the
offering hereunder shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of the filing of such
documents.
Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of the Registration Statement and
this Prospectus to the extent that a statement contained
herein or in any subsequently filed document which also
is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such
statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of the
Registration Statement or this Prospectus.
The Company will provide, without charge, to each person to whom this
Prospectus is delivered, on the written or oral request of any such person,
a copy of any or all of the documents which have been incorporated herein by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests
should be directed to Investor Relations Department, The
Gillette Company, Prudential Tower Building, Boston,
Massachusetts 02199, telephone: (617) 421-7000.
THE COMPANY
The Company's businesses range across several industry segments, including
blades and razors, toiletries and cosmetics, stationery products, electric
shavers, small household appliances, personal care appliances, oral care
appliances and preventive dentistry products. The Company is the world
leader in blades and razors. The Company holds a major position in North
America in sales of toiletries and is the world's top
seller of writing instruments. Braun is the number one
marketer of electric shavers in Germany and is among the
leaders in Europe, North America and Japan. Oral-B is among the top sellers
of toothbrushes in the United States and several international markets.
The Company is divided into four operating
units: the North Atlantic Group; the International
Group; the Diversified Group and the Stationery Products Group. The North
Atlantic Group manufactures and markets
the Company's shaving and personal care products in North
America and Western Europe. The International Group
produces and sells the Company's shaving, personal care
and stationery products outside North America and Western
Europe. The Diversified Group represents the Company's
nontraditional lines and consists of Braun, Oral-B and Jafra, each organized
on a worldwide product line basis. The Stationery Products Group
manufactures and markets the Company's stationery products in North America
and Western Europe.
The Company was incorporated under the laws of the State of
Delaware in 1917 as the successor of a Massachusetts corporation incorporated
in 1912 which corporation was the successor of a Maine corporation
organized in 1901 by King C. Gillette, inventor of the
safety razor. The principal office of the Company is
located at Prudential Tower Building, Boston, Massachusetts 02199, and its
telephone number is (617)421-7000.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 580,000,000
shares of Common Stock, $1.00 par value, and 5,000,000 shares of preferred
stock, without par value.
Common Stock
Subject to the preferences of any outstanding
preferred stock, the holders of Common Stock are entitled
to receive dividends when and as declared by the Board of
Directors and paid by the Company. The holders of Common
Stock are entitled to one vote per share and to share
ratably, after provision for payment of creditors and for any payments to
which the holders of any outstanding
preferred stock may be entitled, in the assets of the
Company in the event of any liquidation, dissolution or
winding-up of the Company. There is no cumulative
voting. Other than the Rights referred to below, holders
of Common Stock have no preemptive or other subscription rights, and there
are no conversion, redemption or sinking fund provisions applicable thereto.
The Board of Directors is authorized to issue from time to time all of
the authorized and unissued shares of Common Stock.
Preferred Stock
The Board of Directors is authorized to fix
the terms of one or more series of the class of preferred
stock and to issue from time to time any or all of the
authorized and unissued shares of preferred stock.
Issues of preferred stock may limit or qualify the rights of holders of
the Common Stock.
On January 17, 1990, pursuant to the Company's Employee Stock
Ownership Plan (the "ESOP"), the Company sold to the ESOP 165,872 shares
of a new issue of Series C Cumulative Convertible Preferred Stock
(the "Series C Stock") for $100 million, or $602.875 per share.
The shares of Series C Stock pay an annual dividend of 8% and will be
allocated to eligible employees over a ten-year period, which began in
September 1990. Each share of Series C Stock is entitled to vote as
if it were converted to Common Stock and is convertible into 20
shares of Common Stock at a conversion price of $30.14375
per share. Each share of Series C Stock is currently
entitled to five of the Rights referred to below.
No dividends may be paid on the Series A Stock referred to
below and the Common Stock unless full cumulative
dividends on the Series C Stock have been paid, and in
the event of the liquidation, dissolution or winding up
of the Company, no distribution may be made on the Series
A Stock or the Common Stock before a liquidating distribution equal to
$602.875 plus accumulated and unpaid dividends is made on each outstanding
share of Series C Stock.
Certain Provisions of the Certificate of Incorporation,
Bylaws and Delaware Law
Under Article 9 of the Certificate ofIncorporation of the Company and the
related provisions of Article XIII of the bylaws of the Company, the Board
of Directors of the Company is classified into three classes as nearly equal
in number as possible, with one class being elected each year for a
three-year term. A director may only be removed for cause and only by
the majority vote of the outstanding shares entitled to vote.
The affirmative vote of at least 75% of the votes of the
shares entitled to vote is required to amend or repeal
Article 9 of the Certificate of Incorporation or Article
XIII of the bylaws or to adopt any provision inconsistent
therewith.
The bylaws provide that special meetings of
stockholders may be called only by the Chief Executive
Officer or the Board of Directors of the Company. The
bylaws also provide that in general stockholder proposals
intended to be presented at a meeting of stockholders, including
proposals for the nomination of directors, must
be received by the Company 60 days in advance of the
meeting.
The Company's bylaws contain provisions
requiring the Company to indemnify any director, officer,employee or agent
to the full extent permitted under
Delaware law. The Company's Certificate of Incorporation
provides that a director of the Company shall not be
personally liable to the Company or its stockholders for
monetary damages arising out of the director's breach of
that person's fiduciary duty as a director, except to the
extent that Delaware law does not permit exemption from
such liability.
The Board of Directors is expressly authorized
to adopt, amend or repeal the bylaws of the Company,
except as provided in the Certificate of Incorporation
and subject to the power of the stockholders to adopt,
amend or repeal the bylaws.
The Company is subject to the provisions of
Section 203 of the General Corporation Law of Delaware.
In general, this statute prohibits a publicly-held
Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which
the person becomes an interested stockholder, unless the business
combination is approved in a prescribed manner.
An "interested stockholder" is a person who, together with affiliates
and associates, owns (or within the prior three years did own)
15% or more of the corporation's voting stock.
Rights Agreement
The Company has outstanding preferred stock
purchase rights (the "Rights"). Upon the occurrence of
certain events, each Right may be exercised to purchase one
two-hundredth of a share of Series A junior
participating preferred stock (the "Series A Stock") for
$160. The Rights were issued pursuant to a Rights
Agreement dated as of November 26, 1986, and amended and
restated as of January 17, 1990, between the Company and
The First National Bank of Boston (the "Rights Agreement").
The Rights only become exercisable, or
separately transferable, ten days after a person acquires
20% or more, or ten business days after a tender offer
commenced which could result in ownership by a person of
more than 30%, of the outstanding shares of Common Stock. If any
person acquires 30% or more of the outstanding
shares of Common Stock (except in an offer for all Common
Stock which has been approved by the Board of Directors),
or in the event of certain mergers of other transactions
involving a 20% or more stockholder, each Right not owned
by that person or related parties will enable its holder to purchase, at the
Right's exercise price, Common Stock (or a combination of Common Stock and
other assets) valued at $320. In the event of certain merger or asset
sale transactions with another party, similar terms would
apply to the purchase of that party's common stock.
The Rights, which have no voting power, expire
on December 9, 1996. Upon approval by the Board of
Directors, the Rights may be redeemed for $.01 each under
certain conditions which may change after any person
becomes a 20% stockholder.
A copy of the Rights Agreement has been filed
with the Securities and Exchange Commission as an Exhibit
to the Company's Form 8 dated January 18, 1990. A copy
of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does
not purport to be complete and is qualified in its
entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
DESCRIPTION OF ESOP PLAN
The ESOP was adopted on January 17, 1990, as part of the Company's
modified U.S. retiree medical benefit program. All regular U.S.
employees with at least one year of service, except those covered
by collective bargaining agreements that do not provide for participation
in the Plan, participate in the Plan.
The ESOP trust borrowed $100,000,000 to purchase 165,872 shares of
the Company's Series C ESOP Convertible Preferred Stock. The ESOP
trust is obligated to repay the loan in periodic installments over a
ten-year period, with interest on the unpaid balance currently at 8.03%
per year. The Company guaranteed these payments. The ESOP trust makes the
loan payments with the 8% per annum quarterly dividends on the preferred
stock held by the ESOP trust, investment earnings, and additional
contributions made by the Company in an amount adequate to cover any
deficit.
As the loan is repaid, a corresponding number of shares of Series C
Stock held in the trust is allocated to participant accounts. To the
extent that loan repayments are made with dividends paid on shares
standing in participant accounts, those dividends are replaced with
Series C Stock. Except for such dividends attributable to shares
previously allocated to participant accounts and subject to IRS
limitations on contributions to tax-qualified plans, allocations are made
quarterly on an equal basis to the account of each participant who
is employed on the last business day of the calendar quarter for which the
allocations is made. As of June 30, 1994, participants who have
been active participants since September 30, 1990, the date of the
initial quarterly allocation, had approximately 14.5 shares of Series
C Stock credited to their individual accounts.
In general, participant accounts vest after five years of service after
1989 or upon retirement, permanent disability, death, permanent layoff
or a change in control of the Company. For employees retiring after
January 1, 1992 who elect to participate in the Company's Retiree Medical
Program, their account balances will be used toward the payment of retiree
medical premiums. In all other cases, distributions will be made when
the employment of a participant ceases unless the participant elects
to defer receipt of payment to a date no later than April 1 of the year
after the participant reaches age 70 1/2.
On distribution, the participant may elect to receive the fair market
value of the Series C Stock in the participant's account in Common Stock
or in cash payable in a lump sum or in installments. Each share of Series
C Stock was purchased by the ESOP trust for $602.875 and is convertible
into 20 shares of common stock at $30.14375 per share. No Series C
Stock will be distributed to any participant. Instead, the Series C
Stock will either by converted into shares of Common Stock or repurchased
by the Company for its original price, whichever will yield greater value
to the participant.
Participants may instruct the Trustee, in confidence, with respect
to the voting of Series C Stock and whether or not to accept an offer for
these shares.
The Series C Stock is also redeemable upon the occurrence of certain
change in control or other events, at the option of the Company or the
holder, depending on the event, at varying prices not less than the
purchase price plus accrued dividends.
As required by the Internal Revenue Code and regulations thereunder,
the plan's assets must be invested primarily in employer securities.
Currently, the plan holds only the Series C Stock. The plan
permits the trustee to hold additional employer securities and the Company
to make additional contributions to the plan in the form of employer
securities or cash to be invested by the Trustee in employer securities.
At the present time the Company does not intend to make additional
contributions to the plan other than cash amounts necessary to enable
the plan to repay the loan described above.
The only sales of securities presently contemplated are those
necesary to make periodic distributions to pay for retiree medical
premiums and other distributions of vested account balances. Each
year for the next five years these distributions are estimated to represent
less than between 1/100th and 5/100th of 1% of the outstanding common
stock of the Company.
State Street Bank and Trust Company is the Plan's trustee, recordkeeper
and investment manager. In accordance with procedures mutually agreed upon
between the Company and the plan trustee, the trustee processes monthly
distribution requests for terminating participants with vested account
balances who do not qualify for or elect retiree health coverage on a
monthly basis. The accounts of participants requesting cash distributions
are liquidated by the Trustee once a month. In accordance with
procedures mutually agreed upon between the Trustee and the Company,
distributions in Common Stock will be made for participants who have
elected retiree health coverage on an annual basis.
PLAN OF DISTRIBUTION
The trustee of the Company's ESOP will from
time to time arrange for sales of Common Stock of the
Company on behalf of electing ESOP participants.
At the time the Company established the ESOP,
the Company adopted a new policy regarding payment of
retiree health care benefits. To the extent any employee
who had been employed before July 1, 1990 chooses to participate in the
Company's retiree health program, he
or she would have to agree to apply all amounts held in
his or her ESOP to pay the Company's share of the
employee's health insurance premiums, and would direct
that the payment of proceeds of periodic distributions
from the ESOP be made directly to the Company for the
same purpose. After the employee's ESOP account is
depleted, the Company would assume payment of the
Company's share of the employee's premiums from is own
assets. Employees hired on or after that date would be
responsible for the full amount of the premiums for which their ESOP
accounts will provide a source of funds and, after their
ESOP account is depleted, the employees must arrange for payment
from other sources.
Participation in the retiree health program is completely
voluntary. Non-participants are entitled to
receive distributions from the ESOP at retirement or
other termination of employment. However, if an employee
wants to participate in the retiree health program, the
amounts in the employee's ESOP account must be used solely for that
purpose. The retiree may at any time
discontinue participation in the program and elect to
receive amounts remaining in his or her ESOP account in
cash or shares of Common Stock.
The trustee of the Company's ESOP will from time to time
convert the Company's Series C Stock into
Common Stock on behalf of ESOP participants. Thereafter,
the Company or the trustee will arrange for the sales of
the Common Stock on behalf of electing participants.
Common Stock being offered hereby may be sold
from time to time in transactions (which may involve crosses and
block transactions) on the NYSE, or other
United States exchanges where the Common Stock of the
Company is listed, in negotiated transactions or
otherwise, at market prices prevailing at the time of the
sale or at negotiated prices. Some or all of the Common
Stock may be sold in transactions involving broker-dealers,
who may act solely as agent and/or may acquire
Common Stock as principal. Broker-dealers participating
in such transactions as agent may receive commissions
from the seller (and, if they act as agent for the
purchaser of such Common Stock, from the purchaser), such
commissions to be computed in appropriate cases inaccordance
with the applicable rules of the NYSE, which
commissions may be at negotiated rates where permissible
under such rules. Participating broker-dealers may agree
to sell a specified amount of Common Stock at a
stipulated price per share and, to the extent such
broker-dealer is unable to do so acting as an agent for
the seller, to purchase as principal any unsold Common
Stock at the price required to fulfill the broker-
dealer's commitment.
The Company will have no involvement in the
sales other than arranging for the sales to be made.
LEGAL MATTERS
The validity of the issuance of the Common
Stock offered hereby will be passed upon for the Company
by Joseph E. Mullaney, Esquire, Vice Chairman of the
Company. As of September 23, 1994, Mr. Mullaney held
47,736 shares of Common Stock, options to purchase
128,000 shares of Common Stock and, indirectly through
his interest in the ESOP, 10.1 shares of Series C Stock.
EXPERTS
The consolidated financial statements of the
Company and schedules as of December 31, 1993 and 1992,
and for each of the years in the three-year period ended
December 31, 1993, incorporated by reference herein, have
been incorporated by reference herein in reliance upon
the reports of KPMG Peat Marwick, independent certified
public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting
and auditing. The consolidated financial statements of
Parker Pen Holdings Limited as of February 28, 1993, and
for the year ended February 28, 1993, incorporated by
reference herein, have been incorporated by reference
herein in reliance upon the report of Coopers & Lybrand,
independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.*
SEC Registration Fee $78,932.19
Printing and engraving expenses 100
Accounting fees and expenses 3,000
Legal fees and expenses 5,000
Miscellaneous 1,000
________
Total $88,032.19
* All amounts except the SEC Registration Fee are estimated.
Item 15. Indemnification of Directors and Officers.
Delaware law empowers a corporation to indemnify any
person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by
or in the right of the corporation) by reason of the fact
that that person is or was a director, officer, employee
or agent of the corporation or is or was serving at the
request of the corporation as a director, officer,
employee or agent of another corporation, partnership,
joint venture, trust or other enterprise (including
employee benefits plans) against expenses (including
attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by that
person in connection with that action, suit or
proceeding, to the extent that that person (i) acted in
good faith and in a manner that person reasonably
believed to be in or not opposed to the best interests
of the corporation (including with respect to any employee
benefit plan actions in good faith and in a manner
reasonably believed to be in the interests of the
beneficiaries of that employee benefit plan), and (ii)
with respect to any criminal action or proceeding, had no
reasonable cause to believe that the conduct was unlawful.
Delaware law also empowers a corporation to
indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason
of the fact that the person acted in any of the
capacities set forth above (that is, a derivative action
or suit) against expenses (including attorneys' fees)
actually and reasonably incurred by that person in
connection with the defense or settlement of such an
action or suit if that person acted under similar
standards, except that no indemnification may be made in
respect of any claim, issue or matter as to which that
person has been adjudged to be liable to the corporation
unless and to the extent that the Court of Chancery or
the court in which the action or suit was brought
determines that, despite the adjudication of liability
but in view of all the circumstances of the case, that
person is fairly and reasonably entitled to indemnity for
such expenses as the court deems proper.
Delaware law further provides that (i) to the extent
a director, officer, employee or agent of a corporation
has been successful in the defense of any action suit or
proceeding referred to above or in the defense of any
claim, issue or matter in any such action, suit or
proceeding, that person shall be indemnified against expenses
(including attorney's fees) actually and reasonably incurred
by that person in connection with that claim, issue or matter,
(ii) indemnification provided for by Delaware law shall not be deemed
exclusive of any other rights to which the indemnified party may
be entitled, and (iii) a corporation may
purchase and maintain insurance on behalf of a director,
officer, employee or agent of a corporation against any
liability asserted against that person or incurred by
that person in any such capacity or arising out of that
person's status as such whether or not the corporation
would have the power to indemnify against such
liabilities under Delaware law.
Delaware law also provides that determinations with
respect to indemnification shall be made (i) by the board
of directors of a corporation by a majority vote of a
quorum consisting of directors who were not parties to
the action, suit or proceeding, (ii) by independent legal
counsel in a written opinion in cases where a quorum is
not obtainable, or, even if obtainable when a quorum of
disinterested directors so directs, or (iii) by the
stockholders of the corporation.
The Company's bylaws allow advances of litigation
expenses without further action by the board of
directors.
The Company's bylaws contain provisions requiring
the Company to indemnify any director, officer, employee
or agent to the full extent permitted under Delaware law
and authorizing the Company to obtain insurance on behalf
of any such director, officer, employee or agent against
liabilities, whether or not the Company would have the
power to indemnify under Delaware law and the Company's bylaws.
The Company's bylaws also specify that any right to
indemnification or advancement of expenses under them
continues as to a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of
that person's heirs, executors and administrators.
The Company has obtained Directors' and Officers'
Liability Insurance and Company Reimbursement Liability
Insurance which include insurance against certain civil
liabilities, including certain liabilities under the
federal securities laws. The Company also has Pension
and Welfare Fund Fiduciary Responsibility Insurance
policies which insure directors, officers and employees
of the Company against liabilities while acting within
the scope of their fiduciary duties on behalf of the
Company's Retirement Plan, Employees' Savings Plan and
other insured employee benefit plans.
Article 10.A of the Company's Certificate of
Incorporation provides that a director of the Company
shall not be personally liable to the Company or its
stockholders for monetary damages arising out of the
director's breach of that person's fiduciary duty as a
director, except to the extent that Delaware law does not
permit exemption from such liability. Article 10.A does
not eliminate the fiduciary duty of directors or affect
their liability to anyone other than the Company or its
stockholders; instead, Article 10.A is designed only to
limit or eliminate the personal liability of directors
for monetary damages to the Company or the stockholders
to the maximum extent permitted by Delaware law as it now
exists or may be amended in the future.
Current Delaware law contains express limitations on
the ability to limit or eliminate liability to a
corporation or its stockholders. Under these
limitations, which Article 10.A incorporates by
reference, a director remains potentially liable for
monetary damages to the corporation or the stockholders
for (i) breach of the director's duty of loyalty, (ii)
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) an improper payment
of a devidend or an improper repurchase of the corporation's stock,
as provided in Section 174 of the Delaware General Corporation Law, or
(iv) any transaction from which a director derives an
improper personal benefit.
Item 16. Exhibits.
Exhibit No. Description
4.1 - Composite Certificate of Incorporation of The
Gillette Company, as amended, filed as Exhibit
3(a) to The Gillette Company Annual Report on
Form 10-K for the year ended December 31, 1989,
Commission File No. I-922 (incorporated by reference
herein).
4.2 - The Bylaws of The Gillette Company, as amended April
15, 1993, filed as Exhibit 3(b) to The Gillette
Company Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993, Commission File No. I-922
(incorporated by reference herein).
4.3 - Rights Agreement dated as of November 26, 1986, and
amended and restated as of January 17, 1990, between
The Gillette Company and The First National Bank of
Boston, filed as Exhibit 1 to The Gillette Company
Form 8, dated January 18, 1990, Commission File
No. I-922 (incorporated by reference herein).
4.4 - Specimen of form of Common Stock Certificate
representing ownership of The Gillette Company Common
Stock $1.00 par value as adopted by the Board of
Directors of the Company on December 15, 1977, filed as
Exhibit 4(a) to The Gillette Company Annual
Report on Form 10K for the year ended December 31,
1986, Commission filed No. I-922 (incorporated by
reference herein).
5 - Opinion of Joseph E. Mullaney, Esquire (previously
filed).
23.1 - Consent of KPMG Peat Marwick (filed herewith).
23.2 - Consent of Coopers & Lybrand (filed herewith).
23.3 - Consent of Joseph E. Mullaney, Esquire is
contained in Exhibit 5.
24.1 - Power(s) of Attorney (previously filed).
99 - The Gillette Company Employee Stock Ownership Plan
(filed herewith).
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file during any period in which offers
or sales are being made of the securities registered
hereby 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 this 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 this registration
statement;
(iii) To include any material information
with respect to the plan of distribution not
previously disclosed in this registration
statement or any material change to such
information in this registration statement;
provided, however, that the undertakings set forth
in paragraphs (i) and (ii) above 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 this registration statement.
(2) That, for purposes of determining any
liability under the Securities Act of 1933, the
information omitted from the form of prospectus
filed as part of this registration statement in
reliance upon Rule 430A and contained in the form of
prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act
of 1933 shall be deemed to be part of this
registration statement as of the time it was
declared effective.
(3) That, for the purpose of determining any
liability under the Securities Act of 1933, each
post-effective amendment that contains a form of
prospectus 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.
(4) 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.
(5) 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 Securities
Exchange Act of 1934 that is incorporated by
reference in this registration statement 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.
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 provisions described in
Item 15 above, 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
Registrants 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
the question 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston,
Commonwealth of Massachusetts, on the 23rd day of September, 1994.
THE GILLETTE COMPANY
By: __________*_____________
Alfred M. Zeien
Chairman of the Board of Directors
and Chief Executive Officer
Pursuant to the requirements of the Securities Act
of 1933, this Registration Statement has been signed
below on the 23rd day of September, 1994 by the following
persons in the capacities indicated.
Principal Executive Officer:
ALFRED M. ZEIEN*
Chairman of the Board
of Directors, Chief
Executive Officer
and Director
Principal Financial Officer:
THOMAS F. SKELLY*
Senior Vice President
and Chief Financial Officer
Principal Accounting Officer:
ANTHONY S. LUCAS*
Vice President and Controller
Directors:
JOSEPH E. MULLANEY*
Vice Chairman of the Board
and Director
WARREN E. BUFFETT*
WILBUR H. GANTZ*
MICHAEL B. GIFFORD*
CAROL R. GOLDBERG*
HERBERT H. JACOBI*
RICHARD R. PIVIROTTO*
JUAN M. STETA* *By: /s/ Thomas F. Skelly
ALEXANDER B.TROWBRIDGE* Thomas F. Skelly, as
JOSEPH F. TURLEY* attorney-in-fact
Exhibit Index
Exhibit No. Description
4.1 - Composite Certificate of Incorporation of The
Gillette Company, as amended, filed as Exhibit
3(a) to The Gillette Company Annual Report on
Form 10-K for the year ended December 31, 1989,
Commission File No. I-922 (incorporated by
reference herein).
4.2 - The Bylaws of The Gillette Company, as amended April
15, 1993, filed as Exhibit 3(b) to The Gillette
Company Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993, Commission File No. I-922
(incorporated by reference herein).
4.3 - Rights Agreement dated as of November 26, 1986, and
amended and restated as of January 17, 1990, between
The Gillette Company and The First National Bank of
Boston, filed as Exhibit 1 to The Gillette Company
Form 8, dated January 18, 1990, Commission File
No. I-922 (incorporated by reference herein).
4.4 - Specimen of form of Common Stock Certificate
representing ownership of The Gillette Company Common
Stock $1.00 par value as adopted by the Board of
Directors of the Company on December 15, 1977, filed as
Exhibit 4(a) to The Gillette Company Annual
Report on Form 10K for the year ended December 31,
1986, Commission file No. I-922 (incorporated
by reference herein).
5 - Opinion of Joseph E. Mullaney, Esquire (previously filed).
23.1 - Consent of KPMG PeatMarwick (filed herewith).
23.2 - Consent of Coopers & Lybrand (filed herewith).
23.3 - Consent of Joseph E. Mullaney, Esquire is
contained in Exhibit 5.
24.1 - Power(s) of Attorney (previously filed).
99 - The Gillette Company Employee Stock Ownership Plan
(filed herewith).
Exhibit 23.1
Consent of Independent Auditors
The Stockholders and Board of Directors
The Gillette Company:
We consent to the use of our reports incorporated herein by reference
and to the reference to our firm under the heading "Experts" in
the prospectus.
/s/ KPMG Peat Marwick
KPMG Peat Marwick
Boston, Massachusetts
September 23, 1994
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
To the Stockholders and Board of Directors
of The Gillette Company:
We consent to the incorporation in the Quarterly Report of The
Gillette Company to the Securities and Exchange Commission for the
period ended 30 June 1994 on Form 10-Q, and to the incorporation in
the registration statement of The Gillette Company, relating to the
registration of 3,317,440 shares of the Common Stock of The Gillette
Company in connection with its Employee Stock Ownership Plan, of our
report dated 12 May 1993 on our audit of the consolidated financial
statements of Parker Pen Holdings Limited, as of 28 February 1993, and
for the year ended 28 February 1993.
/s/Coopers & Lybrand
Coopers & Lybrand
Maidstone, England
23 September 1994
THE GILLETTE COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
(Effective January 17, 1990)
(As Amended and Restated January 1, 1994)
THE GILLETTE COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
Table of Contents
PAGE
Article 1. Introduction 1
1.1. Purpose and nature of Plan 1
1.2. Effect of failure to qualify initially 1
Article 2. Definitions 1
2.1. "Administrator" 1
2.2. "Affiliated Company" 1
2.3. "Annual Addition" 2
2.4. "Beneficiary" 2
2.5. "Board of Directors" 2
2.6. "Break in Service" 2
2.7. "Change of Control" 2
2.8. "Code" 3
2.9. "Company" 3
2.10. "Compensation" 3
2.11. "Computation Period" 3
2.12. "Effective Date" 3
2.13. "Eligible Employee" 3
2.14. "Employee" 4
2.15. "Employer" 4
2.16. "Employment Commencement Date" 4
2.17. "Entry Date" 4
2.18. "ERISA" 4
2.19. "ESOP Loan" 4
2.20. "Hour of Service" 4
2.21. "Lender" 5
2.22. "Leveraged Stock" 6
2.23. "Limitation Year" 6
2.24. "Maximum Dollar Limitation" 6
2.25. "Participant" 6
2.26. "Participating Employer" 6
2.27. "Plan" 6
2.28. "Plan Quarter" 6
2.29. "Plan Year" 6
2.30. "Qualified Domestic Relations Order" 6
2.31. "Share of the Trust Fund" 6
2.32. "Stock" 7
2.33. "Substantial Break" 7
2.34. "Trust" 7
2.35. "Trust Fund" 7
2.36. "Trustee" 7
2.37. "Valuation Date" 7
PAGE ii
2.38. "Year of Service" 7
Article 3. Participation 7
3.1. Participation 7
3.2. Cessation of participation 8
3.3. Breaks in participation 8
Article 4. ESOP Loans & Leveraged Acquisitions 8
4.1. ESOP Loans 8
4.2. Use of ESOP Loan proceeds 8
4.3. Liability and collateral on ESOP Loan 8
4.4. Default 9
4.5. Rate of interest 9
4.6. Release of collateral for ESOP Loan 9
Article 5. Contributions to the Trust 10
5.1. Amount of Participating Employer contributions 10
5.2. Time of making Participating Employer contributions 10
5.3. Trustee not responsible for determining amount of contributions 11
5.4. Return of contributions 11
5.5. No Employee contributions 11
Article 6. Suspense Accounts and Participants' Accounts 11
6.1. Leveraged Stock suspense account 11
6.2. Individual accounts 12
6.3. Order of adjustments to accounts 12
6.4. Adjustment for income, expenses, gain or loss 13
6.5. Allocations to accounts 13
6.6. Limitations 14
6.7. Diversification of investments by certain Participants over age 5515
6.8. Report to Participants 16
Article 7. Vested Benefits 16
7.1. Normal retirement 16
7.2. Early retirement. 16
7.3. Late retirement 17
7.4. Disability retirement 17
7.5. Death 17
7.6. Qualified Layoff 17
7.7. Other termination of employment 17
7.8. Election of former vesting schedule 18
7.9. Forfeitures 18
7.10. Adjustment 19
7.11. Designation of Beneficiary 19
Article 8. Distribution of Benefits 20
8.1. Form of distribution; in general 20
8.2. Form of distribution; special rules 21
8.3. Notice to Trustee 22
PAGE iii
8.4. Timing of distributions; minimum distribution requirements 22
8.5. Put option 23
8.6. Right of first refusal 24
8.7. No withdrawals 24
Article 9. Administration 24
9.1. Administrator 24
9.2. Powers of Administrator 25
9.3. Claims and review procedures 25
9.4. Examination of records 26
9.5. Nondiscriminatory exercise of authority 26
9.6. Reliance on tables, etc. 26
9.7. Withholding of tax 26
9.8. Named Fiduciary 27
9.9. Indemnification of Administrator 27
9.10. Costs of Administration 27
Article 10. Concerning the Trust and the Trustee 27
10.1. Trust Fund 27
10.2. Tender or exchange offers 27
10.3. Voting of Stock 29
Article 11. Top Heavy Provisions 29
11.1. Definitions 29
11.2. Special contribution for top heavy plan years 30
11.3. Special top-heavy vesting 31
11.4. Adjustment to limitation on Annual Additions 31
Article 12. Amendment and Termination 32
12.1. Amendment 32
12.2. Termination 32
12.3. Distributions upon termination of the Plan 32
12.4. Merger or consolidation of Plan; transfer of Plan assets 33
Article 13. Miscellaneous 33
13.1. Limitation of rights 33
13.2. Nonalienability of benefits 33
13.3. Payment under Qualified Domestic Relations Orders 33
13.4. Information between Administrator and Trustee 33
13.5. Additional vesting rules 34
13.6. Benefits payable to incapacitated individuals, etc. 34
13.7. Governing law 34
Appendix A 35
iv
THE GILLETTE COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
(effective January 17, 1990)
(as amended and restated effective January 1, 1994)
Article 1. Introduction.
1.1. Purpose and nature of Plan. The purpose of this Plan is to
enable participating Employees to share in the development of the Company and
to provide them with an opportunity to accumulate capital for future economic
security. The Plan is intended to do this without any deductions from the
Participants' paychecks and without calling on the Participants to invest their
personal savings. The Plan is intended to qualify as a stock-bonus plan under
Section 401(a) of the Code and as an employee stock ownership plan under
Section 4975(e) of the Code. The assets held in trust under the Plan will be
invested primarily in Stock. Subject to the provisions of Sections 1.2, 5.4
and 13.3, no part of the corpus or income of the Trust maintained under the
Plan will be used for or diverted to purposes other than for the exclusive
benefit of Participants and their Beneficiaries.
1.2. Effect of failure to qualify initially. Notwithstanding any
other provision contained herein, but subject to Section 403(c)(2)(B) of ERISA,
if the Internal Revenue Service determines that the Plan or the Trust does not
initially qualify under Section 401 or 501 of the Code, or refuses in writing
to issue a determination as to whether the Plan or Trust so qualifies, all
assets then held under the Plan will be returned within one year after such
determination or refusal to issue a determination to the Company. Upon such
distribution the Plan will be considered to be rescinded and to be of no force
or effect.
Article 2. Definitions.
Wherever used herein, a pronoun in the masculine gender includes the
feminine gender, the singular includes the plural, and the following terms have
the following meanings, unless a different meaning is clearly required by the
context:
2.1. "Administrator" means the Company acting through the Committee
described in Article 9.
2.2. "Affiliated Company" means (a) any corporation (other than the
Company) after it becomes a member of a controlled group of corporations (as
defined in Section 414(b) of the Code) with the Company, (b) any trade or
business (other than the Company), whether or not incorporated, after it comes
under common control (as defined in Section 414(c) of the Code) with the
Company; (c) any trade or business (other than the Company) after that trade or
business becomes a member of an affiliated service group (as defined in Section
414(m) of the Code) of which the Company is also a member; or (iv) any other
corporation, trade or business (other than the Company) after the date as of
which it is required to be aggregated with the Company under the rules set
forth pursuant to Section 414(o) of the Code. For purposes of applying
Sections 414(b) and 414(c) of the Code to Section 6.6, relating to limitations
on annual additions, the special rule of Section 415(h) of the Code shall
apply.
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2.3. "Annual Additions" when used with respect to contributions or
allocations under this Plan, means, in the case of any Participant in any
Limitation Year, (a) the Participant's allocable share of all contributions
made for such year under Section 5.1(a), plus (b) that portion of the
contributions made under Section 5.1(b) which is allocated to the Participant's
account for such year, plus (c) any forfeitures allocated to the Participant's
account for such year under Section 6.5, subject in each case to any
adjustments for employee stock ownership plans which may be appropriate under
Section 415(c)(6) of the Code. For purposes of applying the provisions of
Section 415 of the Code to Annual Additions under the Plan, all dividends on
shares of Stock acquired with an ESOP Loan which are applied toward loan
repayments shall be treated as having been applied in their entirety, first, to
payments of principal, and only if any dividends remain, to payments of
interest. When used with respect to contributions or allocations under any
other plan maintained by the Employer, the term "Annual Addition" has the
meaning given it in Section 415(c)(2) of the Code, subject to the special rules
set forth under Section 415(c)(6) of the Code.
2.4. "Beneficiary" means the person or persons entitled under
Section 7.10 to receive benefits under the Plan upon the Participant's death.
2.5. "Board of Directors" means the Board of Directors of the
Company. The Board of Directors may designate a person or persons (including a
committee) to carry out any fiduciary responsibilities of the Company or the
Board under the Plan, any such designation to be made in accordance with
Section 405 of ERISA.
2.6. "Break in Service" means, subject to Section 2.20(d), a
Computation Period during which an Employee or Participant has not completed
more than 500 Hours of Service; provided, that a Break in Service shall not
include a Computation Period in which the Participant did not complete more
than 500 Hours of Service due to (a) an approved leave of absence due to
illness or otherwise, or (b) a quit because of pregnancy or illness, provided
the Employee is re-hired within one year from the date of the quit.
Notwithstanding anything contained in the foregoing provisions of this Section,
an Employee or Participant shall not incur a Break in Service on account of a
leave of absence covered by the Family and Medical Leave Act of 1993 and the
regulations thereunder.
2.7. "Change of Control" means the happening of any one of the
following events:
(a) Any person within the meaning of Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934 (the "1934 Act"), other than the Company or
any of its subsidiaries, has become the beneficial owner, within the meaning of
Rule 13d-3 under the 1934 Act, of 20% or more of the combined voting
securities;
(b) A tender offer or exchange offer, other than an offer by the
Company, pursuant to which shares of the Company's common stock have been
purchased;
(c) The stockholders of the Company have approved an agreement to
merge or consolidate with or into another corporation and the Company is not
the surviving corporation or an agreement to sell or otherwise dispose of all
or substantially all of the Company's assets (including a plan of liquidation);
or
(d) During any period of two consecutive years, individuals who at
the beginning of such period constituted the board of directors of the Company
cease for any reason to constitute at least a majority thereof. For this
purpose, new directors who were elected, or nominated (or approved for
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vii
nomination in the case of nomination by a Committee of the Board of Directors)
for election by shareholders of the Company, by at least two thirds of the
directors then still in office who were, or are deemed to have been directors
at the beginning of the period, shall be deemed to have been directors at the
beginning of the period.
2.8. "Code" means the Internal Revenue Code of 1986, as amended from
time to time. Reference to any section or subsection of the Code includes
reference to any comparable or succeeding provisions of any legislation which
amends, supplements or replaces such section or subsection.
2.9. "Company" means The Gillette Company, a Delaware corporation,
and any successor to all or a major portion of its assets or business which
assumes the obligations of the Company under the Plan.
2.10. "Compensation" means the Participant's wages, salaries, fees
for professional services and other amounts received for services actually
rendered in the course of employment with the Employer, but does not include
amounts which are excluded from the definition of compensation provided by the
Treasury regulations promulgated under Section 415 of the Code. The
Compensation taken into account for any Plan Year with respect to each
Participant shall not exceed the dollar limitation prescribed for such Plan
Year by Section 401(a)(17) of the Code.
2.11. "Computation Period" means (a) in determining whether an
Employee has completed a Year of Service or Break in Service when such terms
are used with reference to eligibility to become a Participant, the 12-
consecutive month period beginning with Employee's Employment Commencement
Date, the first Plan Year beginning after such Employment Commencement Date,
and each successive Plan Year or (b) in determining whether an Employee has
completed a Year of Service or a Break in Service when such terms are used with
reference to vesting, forfeitures, or eligibility for early or disability
retirement, each Plan Year (except that for purposes of determining Years of
Service for vesting purposes, Plan Years ending prior to the Effective Date
shall not be taken into account).
2.12. "Effective Date" means January 17, 1990.
2.13. "Eligible Employee" means any Employee who is employed by a
Participating Company in either a Regular or Regular Reduced Hour employment
status. The term "Eligible Employee" shall not include any (a) Employee who is
covered by a collective bargaining agreement as to which retirement benefits
were the subject of good faith bargaining, unless such agreement provides for
participation in this Plan, (b) Employee whose last day of active service
occurred prior to July 1, 1990 and who received termination settlement benefits
under the Company's termination settlement program, (c) "leased employee" (as
defined in Section 414(n) of the Code) or (d) Employee who is employed in a
Part Time Merchandiser employment status.
2.14. "Employee" means any individual who is employed by the
Employer, including, to the extent required under Section 414(n) of the Code, a
"leased employee" (as defined in Section 414(n) of the Code) performing
services for the Employer.
2.15. "Employer" means the Company and all Affiliated Companies.
2.16. "Employment Commencement Date" means, in the case of each
Employee, the date on which the Employee first performs an Hour of Service or,
in the case of an Employee who has a
vii
viii
Substantial Break, the date on which the
Employee first performs an Hour of Service after such Substantial Break.
2.17. "Entry Date" means the first day in each Plan Quarter.
2.18. "ERISA" means the Employee Retirement Income Security Act of
1974, as from time to time amended, and any successor statute or statutes of
similar import.
2.19. "ESOP Loan" means a loan for a definite term to the Plan,
either made by one or more of the Participating Employers or guaranteed by one
or more of the Participating Employers, in accordance with Article 4.
2.20. "Hour of Service means, with respect to an Employee,
(a) each hour for which the Employee is directly or indirectly
paid, or entitled to payment, for the performance of duties for the Employer,
each such hour to be credited to the Employee for the Computation Period in
which the duties were performed;
(b) each hour for which the Employee is directly or indirectly
paid, or entitled to payment, by the Employer for reasons (such as vacation,
sickness or disability) other than the performance of duties, each such hour to
be credited to the Employee for the Computation Period in which no duties are
performed to which the payment relates;
(c) each hour for which back pay, irrespective of mitigation of
damages, has been either awarded or agreed to by the Employer, each such hour
to be credited to the Employee for the Computation Period to which the award or
agreement pertains, rather than the Computation Period in which the award,
agreement or payment is made; and
(d) solely for purposes of determining whether a Break in Service
has occurred, each noncompensated hour during a period of absence from the
Employer, (i) by reason of the Employee's pregnancy, (ii) by reason of the
birth of the Employee's child, (iii) by reason of the placement of a child with
the Employee in connection with the adoption of such child by the Employee, or
(iv) for purposes of caring for such child for a period beginning immediately
following such birth or placement, subject to the following special rules:
(1) all such Hours of Service shall be credited only in the
Computation Period in which the absence begins, except that if such Hours of
Service need not be credited in that Computation Period to prevent a Break in
Service with respect to such Computation Period and the qualifying absence
continues into the next following Computation Period then the Hours of Service
for such absence will be credited in such following Computation Period;
(2) no Hour of Service shall be credited under this subsection
(d) unless the Employee furnishes the Administrator with such information as
the Administrator may reasonably require (in such form and at such time as the
Administrator may reasonably require) establishing that the absence from work
is an absence described in this subsection (d) and the number of days for which
the absence lasted; and
(3) in no event shall more than 501 Hours of Service be
credited to an Employee hereunder on account of any single continuous period of
absence.
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ix
In the case of an Employee whose compensation is based upon the number
of hours actually worked, Hours of Service shall be calculated and credited to
Computation Periods based upon the actual number of hours paid for the
performance of duties (pursuant to subsection (a) above) or for other reasons
(pursuant to subsection (b) above), the number of hours of regularly scheduled
work to which a back pay award described in subsection (c) above relates, or
the number of hours of regularly scheduled work to which an uncompensated
absence described in subsection (d) above relates, as the case may be.
In the case of an Employee, other than an Eligible Employee, whose
compensation is not based upon the number of hours actually worked, Hours of
Service shall be calculated and credited to Computation Periods based upon the
number of regularly scheduled work hours for the applicable payroll period or
periods to which the payment (for the performance of duties or otherwise), back
pay award or uncompensated absence described in subsection (d) above relates.
In the case of an Eligible Employee whose compensation is not based upon the
number of hours actually worked, Hours of Service shall be calculated and
credited to Computation Periods based upon the following equivalencies for the
applicable payroll period or periods to which the payment (for the performance
of duties or otherwise), back pay award or uncompensated absence described in
subsection (d) above relates:
Payroll Period Frequency Credited Hours of Service
Weekly 45
Bi-weekly 90
Semi-monthly 95
Monthly 190
2.21. "Lender" means any person, including a Participating Employer,
making an ESOP Loan to the Plan in accordance with Article 4.
2.22. "Leveraged Stock" means Stock which has been acquired by the
Plan by means of an ESOP Loan in accordance with Article 4.
2.23. "Limitation Year" means the Plan Year.
2.24. "Maximum Dollar Limitation" means $30,000 or, if greater, one-
fourth of the limitation in effect for the Limitation Year under Section
415(b)(1)(A) of the Code.
2.25. "Participant" means any individual who participates in the Plan
in accordance with Article 3.
2.26. "Participating Employer" means the Company or any other
Employer which is listed in Appendix A attached hereto or which adopts the Plan
with the approval of the Board of Directors.
2.27. ""Plan" means The Gillette Company Employee Stock Ownership
Plan as set forth herein, together with any and all amendments and supplements
hereto.
2.28. "Plan Quarter" means any of the calendar quarters beginning
January 1, April 1, July 1 or October 1 of each year.
2.29. "Plan Year" means the calendar year.
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2.30. "Qualified Domestic Relations Order" means any judgment, decree
or order (including approval of a property settlement agreement) which
(a) relates to the provision of child support, alimony payments,
or marital property rights to a spouse, former spouse, child or other dependent
of a Participant;
(b) is made pursuant to a state domestic relations law (including
a community property law);
(c) does not require the distribution of amounts with respect to
a Participant prior to the time the Participant has attained a nonforfeitable
interest in such amounts under the Plan; and
(d) constitutes a "qualified domestic relations order" within the
meaning of Code Section 414(p) and ERISA Section 206(d)(3)(B).
A judgment, decree or order will not fail to be a Qualified Domestic Relations
Order merely because it requires a distribution to an alternate payee (or the
segregation of accounts pending distribution to an alternate payee) before the
affected Participant is otherwise entitled to a distribution under this Plan.
2.31. "Share of the Trust Fund" means, in the case of any
Participant, that portion of the Trust's assets which is credited to the
account of the Participant in accordance with Article 6 of the Plan.
2.32. "Stock" means the common stock or convertible preferred stock
of the Company that constitutes "employer securities" within the meaning of
Section 409(l) of the Code.
2.33. "Substantial Break" means, in the case of any Employee or
Participant who has no vested right in his Share of the Trust Fund, a series of
five or more consecutive Breaks in Service.
2.34. "Trust" means The Gillette Company Employee Stock Ownership
Trust established under separate instrument as of the Effective Date by the
Company and the Trustee, together with any and all amendments and supplements
thereto.
2.35. "Trust Fund" means the property held in trust by the Trustee
for the benefit of Participants and their Beneficiaries.
2.36. "Trustee" means the person or persons who have executed this
Agreement as trustee or trustees of the Trust, any successor trustee or
trustees, and any additional trustee or trustees.
2.37. "Valuation Date" means the last business day of each Plan
Quarter and such other day or days as may be specified as Valuation Dates by
the Administrator.
2.38. "Year of Service" means, with respect to any Employee or
Participant, a Computation Period during which the Employee has completed more
than 500 Hours of Service, subject to the following rules:
(a) in the case of any Employee or Participant who has a
Substantial Break, any Year of Service before such Substantial Break will be
disregarded;
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(b) in the case of a Participant who has five consecutive Breaks
in Service, for purposes of determining the nonforfeitable percentage of the
Participant's Share of the Trust Fund derived from contributions which accrued
before such Breaks in Service, all Years of Service after such Breaks in
Service will be disregarded; and
(c) solely for purposes of determining a Participant's Years of
Service for vesting purposes under Articles 7 and 11, any Years of Service
completed prior to the Effective Date will be disregarded.
Article 3. Participation.
3.1. Participation. Any individual who had completed one Year of
Service prior to January 1, 1990 and who is an Eligible Employee on the
Effective Date shall become a Participant on the Effective Date. An individual
not described in the preceding sentence will become a Participant on the Entry
Date coinciding with or next following the later of the Effective Date or the
date on which the individual completes one Year of Service, provided the
individual is an Eligible Employee on such Entry Date.
3.2. Cessation of participation. A Participant will cease to be a
Participant as of the earlier of (a) the date on which the Participant ceases
to be an Eligible Employee, or (b) the date on which the Plan terminates.
However, a former Participant shall continue to be treated as a Participant for
purposes of Articles 6 (except for Sections 6.3(b), 6.3(c) and 6.5), 7, 8, 9,
10, 12, and 13 so long as the former Participant continues to have a Share of
the Trust Fund.
3.3. Breaks in participation. If an individual who has ceased to be
a Participant pursuant to Section 3.2 again becomes an Eligible Employee, the
individual will again become a Participant on the Entry Date coinciding with or
next following the date on which the individual again completes an Hour of
Service as an Eligible Employee.
Article 4. ESOP Loans & Leveraged Acquisitions.
4.1. ESOP Loans. This Plan and Trust, acting through the Trustee,
may, from time to time as directed by the Company, enter into an ESOP Loan,
which ESOP Loan may either be made by one or more of the Participating
Employers to the Plan or made by another Lender to the Plan and guaranteed by
one or more of the Participating Employers. An ESOP Loan may be a direct loan
of cash, a purchase-money transaction or an assumption of an obligation of the
Plan.
4.2. Use of ESOP Loan proceeds. Within a reasonable time after the
receipt of the proceeds from an ESOP Loan, such proceeds will be used by the
Trustee in one or more of the following ways, as directed by the Company:
(a) to acquire Stock at or below fair market value either from a
Participating Employer, from any other party or upon the open market;
(b) to prepay such ESOP Loan; or
(c) to repay a prior ESOP Loan.
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Leveraged Stock may not be subject to a call or other option, or buy-
sell or similar arrangement, while held by or when distributed from the Plan,
except as permitted by Sections 409(h), 409(l) and 4975 of the Code and any
regulations thereunder. The preceding sentence shall continue to apply
regardless of whether the Plan remains an employee stock ownership plan within
the meaning of Section 4975 of the Code and regardless of whether the ESOP
Loan, the proceeds of which were used to acquire such Stock, remains
outstanding.
4.3. Liability and collateral on ESOP Loan.
(a) An ESOP Loan shall be without recourse against the Plan. The
only asset of the Plan which may be given as collateral is Stock which was
either acquired with the proceeds of the ESOP Loan or used as collateral on a
prior ESOP Loan repaid with the proceeds of the ESOP Loan.
(b) No person entitled to payment under the ESOP Loan may be
given any rights to assets of the Plan other than (i) the collateral given for
the Loan, (ii) cash contributions made to the Plan pursuant to Section 5.1 in
order for it to meet its obligations under the ESOP Loan, (iii) earnings
attributable to such collateral and the investment of such cash contributions,
and (iv) such other assets, if any, to which recourse may be permitted under
Section 4975 of the Code.
(c) Payments of principal or interest on any ESOP Loan may be
made from any one or more of the following sources, as directed by the
Administrator: (i) cash contributions made to the Plan to make payments under
the ESOP Loan, (ii) earnings attributable to the investment of such
contributions, (iii) dividends received by the Trust with respect to Stock
acquired with the proceeds of the ESOP Loan (and earnings thereon), (iv) the
proceeds from a subsequent ESOP Loan, or (v) the proceeds from the disposition
of Stock acquired with the proceeds of the ESOP Loan (or a prior ESOP Loan
repaid by the proceeds of the ESOP Loan).
4.4. Default. In the event of default on an ESOP Loan, the value of
Plan assets transferred in satisfaction of the ESOP Loan must not exceed the
amount of default. If a Participating Employer or any disqualified person
(within the meaning of Section 4975 of the Code) is the Lender, the ESOP Loan
must provide for a transfer of Plan assets on default only upon, and to the
extent of, the failure of the Plan to meet the payment schedule of the ESOP
Loan.
4.5. Rate of interest. The rate of interest on an ESOP Loan shall
not be in excess of a reasonable rate.
4.6. Release of collateral for ESOP Loan. If Stock held by the Plan
is used as collateral for an ESOP Loan, the ESOP Loan must provide for the
release of the Stock as provided in either (a) or (b):
(a) For each Plan Year during the duration of the ESOP Loan, the
number of shares of Stock released shall equal the number of shares then
encumbered under the ESOP Loan multiplied by a fraction, the numerator of which
is the amount of principal and interest paid on the ESOP Loan for such Plan
Year, and the denominator of which is the sum of the numerator plus the
principal and interest to be paid under the ESOP Loan for all future years.
The number of future years under the ESOP Loan must be definitely ascertainable
and shall be determined without taking into account extensions or renewal
periods. If a variable interest rate is used, the interest to be paid in
future years shall be computed by using the rate applicable as of the end of
the Plan Year. Where ESOP Loan payments for a Plan Year are
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made in semiannual
or more frequent ("periodic") installments, the shares of Stock required to be
released for the Plan Year will likewise be released in periodic installments
reflecting such payments. The number of shares released in those installments
representing payments other than the last periodic payment in any Plan Year
shall be determined, in the case of each such payment, by reference to the
principal and interest amounts included in such payment and by determining
future payments on the basis of the interest rate applicable at the time of
such payment. The number of shares released in the last installment for the
Plan Year shall be the total number of shares required to be released for the
Plan Year less the number of shares released in prior installments during the
Plan Year.
(b) Release of Stock from encumbrance may instead be determined
solely by reference to principal payments made during the Plan Year, provided:
(i) the ESOP Loan provides for annual payments of principal and interest at a
cumulative rate that is not less rapid at any time than level annual payments
of such amounts for 10 years; (ii) the interest element included in any ESOP
Loan payment is disregarded only to the extent it would be determined to be
interest under standard loan amortization tables; and (iii) the method of
release provided in this paragraph (b) is not used from the time that, by
reason of a renewal, extension or refinancing, the sum of the expired duration
of the ESOP Loan, the renewal period, the extension period, and the duration of
the new ESOP loan exceeds 10 years.
If collateral for a given ESOP Loan includes more than one class of securities,
the number of securities of each class to be released for a Plan Year must be
determined by applying the same fraction to each class.
Article 5. Contributions to the Trust.
5.1. Amount of Participating Employer contributions.
(a) For each Plan Year during which an ESOP Loan is outstanding,
each Participating Employer shall contribute to the Trust amounts equal to its
share of the total amount of principal and interest due on such ESOP Loan which
is not paid from other sources. Such contribution shall be made in cash unless
the ESOP loan is a purchase-money loan from a Participating Employer to the
Plan, in which case such contribution may be in the form of a forgiveness of
indebtedness by such Employer.
(b) Each Participating Employer may contribute, in addition to any
amount required by paragraph (a) above, an additional amount to the Trust for
any Plan Quarter. Such contribution may be made either in Stock or in cash to
be invested in Stock. In no event will such additional Participating Employer
contribution for any Plan Quarter cause the total Participating Employer
contribution to exceed the maximum amount which the Participating Employer is
permitted to deduct for federal income tax purposes, including amounts
deductible under the carryover provisions of the Code. Every such additional
contribution hereunder is hereby conditioned on deductibility under Section 404
of the Code.
In no event will such additional Participating Employer contribution be
in an amount which would cause the Annual Addition under the Plan for any
Participant to exceed the amount permitted under Section 6.6.
5.2. Time of making Participating Employer contributions.
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(a) The Participating Employers will make the contributions
required under Section 5.1(a) in such installments as are necessary to enable
the Trust to pay timely amounts of principal and interest due under an ESOP
Loan which are not paid from other sources.
(b) Each Participating Employer will make any additional
contributions made for a Plan Quarter under Section 5.1(b) directly to the
Trustee not later than the time prescribed by law (including extensions
thereof) for filing its federal income tax return for its taxable year ending
with or in which ends the Plan Year containing such Plan Quarter.
5.3. Trustee not responsible for determining amount of
contributions. The Trustee will have no authority or responsibility to inquire
into the correctness of the amounts contributed and paid over to the Trustee,
or to determine whether any contribution is payable under this Article 5.
5.4. Return of contributions. If a contribution by a Participating
Employer to the Trust is
(a) made by reason of a good faith mistake of fact, or
(b) in the case of additional Participating Employer contributions
made under Section 5.1(b), believed by the Participating Employer in good faith
to be deductible under Section 404 of the Code, but the deduction is
disallowed,
the Trustee shall, upon direction by the Participating Employer, return to the
Participating Employer the excess of the amount contributed over the amount, if
any, that would have been contributed had there not occurred a mistake of fact
or a mistake in determining the deduction. Such excess shall be reduced by
amounts attributable thereto which have been credited to the accounts of
Participants who have since received a distribution from the Trust, except to
the extent such amounts continue to be credited to such Participants' accounts
at the time the excess is returned to the Participating Employer. Such excess
shall also be reduced by the losses of the Trust attributable thereto, if and
to the extent such losses exceed the gains and income attributable thereto. In
no event shall the return of a contribution hereunder cause the balance of the
individual account of any Participant to be reduced to less than the balance
which would have been credited to the account had the mistaken or nondeductible
amount not been contributed. No return of a contribution hereunder shall be
made more than one year after the mistaken payment of the contribution, or
disallowance of the deductions, as the case may be. The Trustee will have no
authority or responsibility to inquire into the correctness of the amounts of
any contributions returned under this Section, or to determine whether any
return of a contribution should be made under this Section.
5.5. No Employee contributions. No Employee will be required or
permitted to make contributions to the Plan.
Article 6. Suspense Accounts and Participants' Accounts.
6.1. Leveraged Stock suspense account. The Administrator will
direct the Trustee to establish and maintain a Leveraged Stock suspense account
for shares of Leveraged Stock which have not been allocated to the individual
accounts of Participants. All Leveraged Stock will be credited to the
Leveraged Stock suspense account at the time it is purchased. The
Administrator
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will direct the Trustee to use amounts received as dividends with
respect to Stock, and earnings thereon, to pay principal or interest on an ESOP
Loan, to the extent permitted by law.
With respect to each payment under an ESOP Loan, the Administrator will
direct the Trustee to release from the Leveraged Stock suspense account
(a) that number of shares of Leveraged Stock which has been
released from encumbrance with respect to such payment in accordance with
Section 4.6, and
(b) if the Leveraged Stock suspense account holds shares of
Leveraged Stock which are not pledged as collateral for an ESOP Loan, that
number of shares of such Stock which would have been required to be released
under Section 4.6(a) (or Section 4.6(b) if the Company so designates at the
time the ESOP Loan is entered into) had such Stock been pledged as collateral
for the ESOP Loan through which such Stock was financed.
The Administrator will direct the Trustee to use amounts received as dividends
with respect to Stock allocated to the accounts of Participants to make
payments of principal or interest on an ESOP Loan, to the extent permitted by
law. If dividends with respect to Stock allocated to the accounts of
Participants are used to make payments of principal or interest on an ESOP
Loan, then that number of shares of Leveraged Stock with a fair market value
equal to the amount of such dividends shall be allocated to the accounts of
such Participants for the Plan Quarter for which such dividends would otherwise
have been allocated to such account. Any shares of Leveraged Stock released
from the Leveraged Stock suspense account which are not otherwise allocated
under this paragraph shall be allocated and credited to the accounts of
Participants in accordance with Section 6.5.
6.2. Individual accounts. The Administrator will establish and
maintain an account for each Participant which will reflect
(a) his share of (i) the Stock released from the Leveraged Stock
suspense account in accordance with Section 6.1, (ii) any additional
Participating Employer contribution made in accordance with Section 5.1(b), and
(iii) any forfeitures arising under the Plan, and
(b) his share of any income, expenses, and gain or loss of the
Trust Fund.
The Administrator will establish and maintain such other accounts and records
(if any) as the Administrator decides, in the Administrator's discretion, to be
reasonably required in order to discharge the Administrator's duties under the
Plan.
6.3. Order of adjustments to accounts. As of each Valuation Date,
the Administrator will:
(a) first, adjust the balances in the individual accounts of
Participants (including Beneficiaries) to reflect the current value of the
assets of the Trust Fund as provided in Section 6.4;
(b) second, (i) in the case of a Valuation Date occurring on the
last business day of a Plan Quarter during which no shares of Stock were
released from the Leveraged Stock suspense account, adjust the individual
accounts of Participants on a provisional basis to reflect the notional
allocation described in Section 6.5(a)(i), or (ii) in the case of a Valuation
Date occurring on the last business day of a Plan Quarter during which shares
of Stock were
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released from the Leveraged Stock suspense account, credit such
shares in accordance with Section 6.5;
(c) third, credit additional Participating Employer contributions
and forfeitures, if any, which are to be credited as of such Valuation Date in
accordance with Section 6.5; and
(d) fourth, charge to the individual accounts all payments or
distributions, if any, made from such accounts as of such Valuation Date.
In the case of a Valuation Date other than the last business day of a Plan
Quarter, the Administrator may, if appropriate because distributions are to be
made, adjust only a specified account or accounts.
6.4. Adjustment for income, expenses, gain or loss.
(a) Except as otherwise provided in Sections 6.4(b) and 6.4(c), in
adjusting the individual accounts under Section 6.3(a) to reflect the current
value of the assets of the Trust Fund, the Administrator will allocate to such
accounts, in proportion to the balances therein immediately prior to such
adjustment, an amount equal to the income and expenses of the Trust and of the
gain and loss (realized and unrealized) on such assets credited to all such
accounts, valued at their fair market value.
(b) The amounts allocated under this Section 6.4 for any period
will not include (1) any Participating Employer contributions for such period
or any income, expenses, gain or loss attributable to such contributions, or
(2) any assets held in the Leveraged Stock suspense account, or any income,
expenses, gain or loss on such assets, until after such assets have been
released from the Leveraged Stock suspense account and allocated to individual
accounts in accordance with Section 6.3(b).
(c) The Administrator will adjust the individual accounts
separately for each investment option elected under Section 6.7 to reflect the
current value of the assets of the Trust Fund held in such investment option.
6.5. Allocations to accounts.
(a) For any period during which an ESOP Loan is outstanding, Stock
released from the Leveraged Stock suspense account will be allocated and
credited as follows:
(i) For each Plan Quarter during which no Stock is released from
the Leveraged Stock suspense account, the Administrator will determine a
notional allocation estimated on an assumption of ESOP Loan payments made
quarterly. For purposes of this notional allocation, the Administrator will
assume that shares available for allocation are first applied in accordance
with Section 6.1, with the remainder
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allocated equally (on a per capita basis)
among the accounts of qualified individuals (as hereinafter defined).
(ii) With respect to each other Plan Quarter, shares of Stock
released from the Leveraged Stock suspense account will first be allocated in
accordance with the notional allocations determined by the Administrator for
preceding Plan Quarters (taking into account only such Plan Quarters as
commenced after the last release of shares). Any remaining shares shall first
be allocated in accordance with Section 6.1, with the remainder allocated
equally (on a per capita basis) among the accounts of qualified individuals.
(b) As of the last business day of each Plan Quarter (whether or
not an ESOP Loan is then outstanding), additional contributions, if any, made
by Participating Employers for such Plan Quarter (adjusted for income,
expenses, gain or loss), plus any forfeitures which occurred during such Plan
Quarter and which are to be reallocated to the accounts of Participants under
Section 7.9, will be allocated by the Administrator equally (on a per capita
basis) among the accounts of qualified individuals.
(c) For purposes of paragraphs (a) and (b) above, an individual is
a "qualified individual" for a Plan Quarter if such individual is a Participant
on the last business day of such Plan Quarter.
(d) Notwithstanding the preceding provisions of this Section 6.5,
no allocation of shares released from the Leveraged Stock suspense account and
no notional allocation of such shares shall be made with respect to Plan
Quarters commencing prior to July 1, 1990. All allocations to a Participant's
account of Stock released from the Leveraged Stock suspense account shall be in
non-monetary units reflecting the Participant's interest in such Stock.
6.6. Limitations.
(a) Notwithstanding any other provisions of the Plan, the Annual
Addition to a Participant's account under the Plan for any Limitation Year,
when aggregated with the Annual Additions to the Participant's accounts under
all other defined contribution plans (if any) maintained by the Employer, must
not exceed the lesser of (i) the Maximum Dollar Limitation or (ii) 25 percent
of the Participant's Compensation for such Limitation Year.
(b) To the extent necessary to satisfy the limitation of
subsection (a) above (after first reducing the Annual Additions under The
Gillette Company Employees' Savings Plan and any other defined contribution
plans maintained by the Employer), the contribution under this Plan otherwise
allocable to the Participant's account for the applicable Limitation Year shall
be allocated instead to the accounts of other Participants. If said limitation
cannot be satisfied by eliminating the Participating Employer's contribution
allocable to the Participant's account for such Limitation Year, the
forfeitures which would otherwise be allocated to the Participant's account
will be reduced to the extent necessary to satisfy said limitation, and the
amount of the reduction will be allocated to the accounts of other Participants
not affected by said limitation. In each case, such allocations will be made
equally (on a per capita basis), except that the amount allocated to each
Participant's account must satisfy the limitation of this Section with respect
to that Participant. If, after reallocation of forfeitures as aforesaid, there
is any amount of contributions or forfeitures for the Limitation Year which
cannot be allocated to the accounts of Participants because of the aforesaid
limitations, the excess amount shall be held in a suspense account for
allocation to the accounts of Participants at the earliest time that such
allocation can be made within the limitation of subsection (a) above.
(c) If, as a result of the allocation of forfeitures, a reasonable
error in estimating a Participant's Compensation, or such other facts and
circumstances as may be permitted by the Internal Revenue Service, amounts
previously credited to a Participant's account have caused his Annual Addition
to exceed the limitations of this Section for a Limitation Year, the
Participant's account shall be reduced by the amount of the excess, and such
excess shall be
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allocated and reallocated to the accounts of other Participants
equally (on a per capita basis), except that the amount allocated to each
Participant's account must satisfy the limitations of this Section with respect
to that Participant. If, after reallocation as aforesaid, there is any amount
for the Limitation Year which cannot be allocated to the accounts of
Participants because of the aforesaid limitations, the excess amount shall be
held unallocated in the suspense account described in Section 6.6(b) above for
allocation to the accounts of Participants at the earliest time that such
allocation can be made within the limitations of this Section; provided,
however, that any excess amounts described in this subsection (c) must be used,
to the extent consistent with the qualification of the Plan and any ESOP Loan,
to reduce Employer contributions to the Plan for the next Limitation Year (and
succeeding Limitation Years, as necessary) for all Participants. No excess
amount described in this subsection may be distributed to Participants or
former Participants while it is held in a suspense account pending
reallocation.
(d) In the case of a Participant who also participates in a
defined benefit plan maintained by an Employer, the Annual Addition under the
Plan for a Limitation Year will, if necessary (after first reducing the
Participant's benefit under the defined benefit plan), be further limited in
the manner described above so that the sum of the Participant's "defined
contribution fraction" (as determined under Section 415(e) of the Code and the
regulations promulgated thereunder, including, if elected, the special
transition rule of Section 415(e)(6) of the Code and subject to the provisions
of Section 235(g)(3) of the Tax Equity and Fiscal Responsibility Act of 1982
and Section 1106(i)(6) of the Tax Reform Act of 1986) and the Participant's
"defined benefit plan fraction" (as determined under Section 415(e) of the Code
and the regulations promulgated thereunder) for such Limitation Year does not
exceed 1.0.
6.7. Diversification of investments by certain Participants over age 55.
(a) Each qualified Participant may elect, within 90 days after the
close of each Plan Year in the qualified Participant's qualified election
period, to direct the Administrator who in turn shall direct the Trustee as to
the investment of up to and including 25 percent of the qualified Participant's
Share of the Trust Fund (reduced in accordance with Section 401(a)(28) of the
Code and regulations thereunder). With respect to the last Plan Year in a
qualified Participant's qualified election period, the preceding sentence shall
be applied by substituting "50 percent" for "25 percent."
(b) The Administrator shall direct the Trustee to make at least
three investment options (not inconsistent with regulations prescribed by the
Secretary of the Treasury) available to each qualified Participant making an
election under Section 6.7(a) and within 90 days after the close of the period
during which the election may be made, the portion of the qualified
Participant's Share of the Trust Fund covered by the election shall be invested
in accordance with the election.
(c) For purposes of this Section, the term "qualified Participant"
means any Employee who has completed at least 10 years of participation under
the Plan and has attained age 55; and an individual's "qualified election
period" shall be the period consisting of the six consecutive Plan Years
beginning with the first Plan Year in which the individual first became a
qualified Participant.
(d) The Administrator shall select the investment options
described in Section 6.7(b) above and shall communicate each such option to any
qualified Participant who may make an
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election under Section 6.7(a). The
Trustee shall be under no responsibility with respect to such investment
options other than to follow the directions of the Administrator regarding the
directions of qualified Participants.
6.8. Report to Participants. The Administrator, at least annually,
will determine each Participant's Share of the Trust Fund and report the same
in writing to the Participant concerned.
Article 7. Vested Benefits.
7.1. Normal retirement. Upon attainment of normal retirement age
while an Employee, each Participant will have a fully vested and nonforfeitable
interest in 100% of the Participant's Share of the Trust Fund. For purposes of
this Article 7, "normal retirement age" means the later of (a) the date the
Participant attains age 65, or (b) the fifth anniversary of the time the
Participant first performs an Hour of Service. Retirement by a Participant
described in this Section 7.1 from the service of his Participating Employer
upon attaining normal retirement age is referred to as a normal retirement. In
the event of a normal retirement, the Participant will be entitled to receive
his Share of the Trust Fund determined as of the Valuation Date coinciding with
or immediately preceding the date distributions are to be made to him in
accordance with Article 8 below.
7.2. Early retirement. A Participant who qualifies for an early
retirement while an Employee will have a fully vested and nonforfeitable
interest in 100% of the Participant's Share of the Trust Fund. For purposes of
this Article 7, a Participant will qualify for "early retirement" if (a) he has
attained age 55 while an Employee and has completed ten years of service, or
(b) he has attained age 50 while an Employee and the sum of his attained age
and years of service equals or exceeds 80. Solely for purposes of the
preceding sentence, "service" shall be determined on the same basis as for
purposes of determining eligibility for early retirement under The Gillette
Company Retirement Plan. In the event of an early retirement, the Participant
will be entitled to receive his Share of the Trust Fund determined as of the
Valuation Date coinciding with or immediately preceding the date distributions
are to be made to him in accordance with Article 8 below.
7.3. Late retirement. If a Participant continues in the service of
a Participating Employer after attaining normal retirement age, the Participant
will continue to have a fully vested and nonforfeitable interest in 100% of the
Participant's Share of the Trust Fund. Such Participant will continue to
participate in the Plan, but will not be entitled to a distribution until the
date he establishes with his Participating Employer for his retirement. Such
retirement is referred to as a late retirement. In the event of a late
retirement, the Participant will be entitled to receive his Share of the Trust
Fund determined as of the Valuation Date coinciding with or immediately
preceding the date distributions are to be made to him in accordance with
Article 8 below.
7.4. Disability retirement. A Participant who qualifies for a total
and permanent disability retirement will have a fully vested and nonforfeitable
interest in 100% of the Participant's Share of the Trust Fund. For purposes of
this Article 7, a Participant shall qualify for a "total and permanent
disability retirement" if a medical examiner satisfactory to the Company
certifies that, as a result of mental or physical disability, he is prevented
from engaging in any occupation or employment for wage or profit, and that such
disability is likely to be permanent. Such disability may be occupational or
non-occupational in cause, but disability resulting from service in the armed
forces of any country may not be the basis of a total and permanent disability
retirement hereunder. In the event of a total and permanent disability
retirement, the Participant will be entitled to receive
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his Share of the Trust
Fund determined as of the Valuation Date coinciding with or immediately
preceding the date distributions are to be made in accordance with Article 8
below. Whether or not a Participant is disabled within the meaning of the this
Section will be determined by the Administrator on the basis of a certificate
by a medical examiner satisfactory to the Administrator.
7.5. Death. If a Participant dies while an Employee, or after
having retired or otherwise terminated employment with a fully vested benefit
but before distribution of that benefit is complete, the Participant's
designated Beneficiary will be entitled to receive the Participant's Share of
the Trust Fund determined as of the Valuation Date coinciding with or
immediately preceding the date of distribution to the Beneficiary under Article
8 below.
7.6. Qualified Layoff. Each Participant whose employment is
terminated by action of the Company or an Affiliated Company because of a
qualified layoff will have a fully vested and nonforfeitable interest in, and
will be entitled to receive, 100% of his Share of the Trust Fund determined as
of the Valuation Date coinciding with or immediately preceding the date
distributions are to be made in accordance with Article 8 below. For purposes
of the preceding sentence, a "qualified layoff" is a layoff for lack of work
(including without limitation a termination because of the closing of a plant
or division in which the Participant was employed but specifically excluding
individuals terminated otherwise than specifically because of a layoff for lack
of work and temporary employees terminated for the reason that temporary work
has been completed) if, in the opinion of the Administrator, it is not probable
that the Participant will be recalled within one year to employment with the
Company or an Affiliated Company.
7.7. Other termination of employment. If a Participant who has
completed at least 5 Years of Service after 1989 ceases to be an Employee for
any reason other than death, an early, normal, late or disability retirement,
or a qualified layoff, the Participant will have a fully vested and
nonforfeitable interest in, and will be entitled to receive, 100% of the
Participant's Share of the Trust Fund determined as of the Valuation Date
coinciding with or immediately preceding the date distributions are to be made
to him in accordance with Article 8 below. Subject to Sections 11.3 and 13.5,
if a Participant who has not completed at least 5 Years of Service after 1989
ceases to be an Employee for any reason other than death, an early, normal, or
disability retirement, or a qualified layoff, the Participant will not be
entitled to a benefit under this Plan with respect to such termination of
employment.
7.8. Election of former vesting schedule. If the Plan is amended at
any time after the Effective Date and such amendment directly or indirectly
affects the computation of a Participant's rights to the Participant's Share of
the Trust Fund, each Participant who has completed three Years of Service
(determined under Section 2.38 but without regard to the exclusion for any Year
of Service before a Substantial Break) prior to the expiration of the election
period described below and whose nonforfeitable percentage at any time after
such amendment could be less than the percentage determined without regard to
such amendment may elect during the election period to have the nonforfeitable
percentage of the Participant's Share of the Trust Fund determined without
regard to such amendment. Notwithstanding the foregoing, the provisions of
this Section shall not apply with respect to any amendment adopted prior to the
first date after the Effective Date as of which amounts are allocated to
Participant accounts under Section 6.5. The election period referred to in the
first sentence of this Section will begin on the date the amendment of the
vesting schedule is adopted and will end on the latest of the following dates:
(i) the date which is 60 days after the date on which such
amendment is adopted;
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(ii) the date which is 60 days after the date on which such
amendment becomes effective; and
(iii) the date which is 60 days after the date on which the
Participant is issued written notice of such amendment by the Administrator.
An election under this Section 7.8 may be made only by an individual who is a
Participant at the time such election is made and, once made, shall be
irrevocable.
7.9. Forfeitures. If, at a time when a Participant has less than a
100% nonforfeitable interest in the Participant's Share of the Trust Fund, the
Participant ceases to be an Employee for a reason other than death, a normal,
early, late or disability retirement, or a qualified layoff, the Participant
will be deemed to have received a complete distribution of the vested portion
of his Share of the Trust Fund, and will forfeit that portion of his Share of
the Trust Fund in which he is not vested, on the date he ceases to be an
Employee. Such forfeitures, after adjustment pursuant to Section 6.3(a), will
(to the extent not recredited under this Section to a Participant's account) be
reallocated to the accounts of Participants in accordance with Section 6.5.
Stock allocated to a Participant's account will be forfeited only after other
assets. If interests in more than one class of Stock have been allocated to
the Participant's account, the Participant will be treated as forfeiting the
same proportion of each such class.
In the event any portion of a Participant's Share of the Trust Fund is
forfeited under this Section but such Participant is reemployed by the Employer
prior to incurring a Substantial Break, then the number of shares so forfeited
(adjusted for stock splits, stock dividends and similar capital changes, but
without adjustment for cash dividends or other cash distributions or earnings
with respect to the shares) shall be recredited to the Participant's Share of
the Trust Fund. The Participant's vested interest in the amount so recredited
will thereafter be determined under the terms of the Plan as if no forfeiture
had occurred.
Amounts (if any) required to be recredited to a Participant's account
pursuant to the preceding paragraph shall be taken first from amounts forfeited
by other Participants with respect to the Plan Year in which the Participant
again becomes an Employee which have not yet been allocated in accordance with
Section 6.5; second, from any Stock released under Section 6.1 for such Plan
Year, and finally, to the extent such forfeitures and such released Stock are
insufficient, from a special Participating Employer contribution.
7.10. Adjustment. Until distributed, any amounts credited to the
account or accounts of a Participant who has ceased to be an Employee will
continue to be adjusted as of each Valuation Date under Section 6.3 to reflect
the current value of the assets of the Trust Fund.
7.11. Designation of Beneficiary. If a Participant was married at
the time of the Participant's death, the Participant shall be deemed to have
named the Participant's surviving spouse as Beneficiary unless
(a) the Participant designated as Beneficiary a person other than
the Participant's surviving spouse, such designation to be made in writing at
such time and in such manner as the Administrator shall approve or prescribe;
and
(b) either
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(i) the Participant's surviving spouse consents in writing to the
designation described in subsection (a) above, either with specific reference
to the designated Beneficiary or by permitting designations by the Participant
without further spousal consent, and such consent acknowledges the effect of
such designation (with acknowledgment, where applicable, of the specific non-
spouse beneficiary, including any class of beneficiaries or contingent
beneficiaries), and is witnessed by a notary public, or
(ii) it is established to the satisfaction of the Administrator
that the consent required under subsection (a) above may not be obtained
because there is no spouse, because the spouse cannot be located, or because of
such other circumstances as the Secretary of the Treasury may prescribe; and
(c) the non-spouse Beneficiary designated in accordance with the
provisions of this Section survives the Participant.
Any consent by a spouse under subsection (b)(i) above shall be irrevocable.
Any consent by a spouse under subsection (b)(i) above, or a determination by
the Administrator with respect to such spouse under subsection (b)(ii) above,
shall be effective only with respect to such spouse.
A Participant who is not married may designate a non-spouse as
Beneficiary provided such designation is made in writing at such time and in
such manner as the Administrator shall approve or prescribe. A Participant who
has designated a non-spouse as Beneficiary in accordance with the provisions of
this Section may change such designation at any time by giving written notice
to the Administrator, subject to the spousal-consent provisions of subsection
(a) above (if the Participant is married at the time of such change in
designation) and to such other conditions and requirements, if any, as the
Administrator may prescribe. If a Participant dies without a surviving
Beneficiary, the benefits payable in the event of the Participant's death shall
be paid to his surviving spouse, if any, or if none, to the Participant's issue
per stirpes. If there is neither surviving spouse nor issue, then the benefits
shall be paid to the Participant's estate.
Article 8. Distribution of Benefits.
8.1. Form of distribution; in general. A distribution from the Trust
will be made in one of the following forms, as the Participant or Beneficiary
elects in writing:
(a) A lump sum payment of cash equal to the fair market value of
the Stock and other assets allocated to the Participant's account; or
(b) Annual cash installments over a period selected by the
Participant (or Beneficiary), each such installment to be determined by
dividing the fair market value of the Stock and other assets allocated to the
Participant's account (determined as of the date of distribution) by the number
of installments remaining to be paid; or
(c) Installment payments made in such amounts, and payable in such
periodic installments, as are necessary to satisfy that portion of the premium
requirements for retiree health coverage elected by the Participant and offered
by the Company under its retiree health program as from time to time in effect
(the "Health Plan") which is not required to be satisfied out of other funds
available to the Participant. The form of payment of such installments (cash
or shares of Stock) shall be as required or permitted under the terms of the
Health Plan.
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For purposes of (a), (b) and (c) above, the amount distributed with respect to
allocated Stock or other assets which are required to be liquidated in order to
generate cash for the distribution shall be the amount so generated. In the
case of an installment payment under (b) or (c) above, if Stock and other
assets are allocated to the Participant's account, the Administrator shall
direct the Trustee as to which assets shall be sold or otherwise disposed of to
generate cash for the installment.
Any Participant who elects to receive his benefit in a single lump sum
payment may specify in writing that in lieu of cash, such benefit be
distributed in whole shares of common stock of the Company, with the value of
any fractional share distributed in cash. The number of shares of common stock
distributable under the preceding sentence shall be the number of such shares,
if any, then credited to the Participant's account, plus that number of shares
of common stock which is obtained by converting, whether directly or by
liquidation and reinvestment, all other assets allocated to the Participant's
account (including other Stock allocated to such account).
A Participant or surviving spouse may elect to have all or any portion
(of at least $500) of a benefit payment transferred as a direct rollover to the
trustee or custodian of an "eligible retirement plan" (within the meaning of
Section 401(a)(31)(D) of the Code) selected by the Participant or spouse;
provided that such an election may not be made with respect to (i) that portion
of a benefit payment which is a required minimum distribution pursuant to
Section 8.4(b)(ii) and (c) below and Section 401(a)(9) of the Code, (ii) any
payment which is one of a series of substantially equal periodic payments (not
less frequently than annually) made over the life expectancy of the Participant
(or spouse), the joint life expectancies of the Participant and his designated
Beneficiary or a specified period of 10 years or more, or (iii) any payment (or
portion thereof) which otherwise does not qualify as an "eligible rollover
distribution" under Section 402(c) of the Code and the Treasury Regulations
thereunder. The election by a Participant or surviving spouse to make or not
to make a direct rollover with respect to one payment of a series of periodic
payments also shall apply to all subsequent payments in the series unless the
Participant or spouse changes the previous election within a reasonable time
prior to the next scheduled payment in the series.
8.2. Form of distribution; special rules. The following special
rules shall apply to elections as to form of benefit made under Section 8.1
above:
(a) The election shall be made in writing on a form satisfactory
to the Administrator.
(b) The benefit option described in paragraph (b) of Section 8.1
shall be available only in the case of (i) a Participant retiring under Section
7.1, 7.2, or 7.3, or suffering a disability retirement under Section 7.4, or
(ii) a surviving spouse Beneficiary of a Participant whose employment
terminates, by reason of death, at a time when the Participant would have been
eligible to retire under Section 7.1, 7.2, 7.3 or 7.4. In no event shall such
option be available if the value of the Participant's Share of the Trust Fund
is $3,500 or less. If a Participant who has elected installment payments under
paragraph (b) of Section 8.1 dies prior to the complete distribution of his
Share of the Trust Fund, payments shall continue to his Beneficiary in the same
manner as they were being paid to the Participant or in such other manner (from
among the forms of payment permitted under paragraphs (a) and (b) of Section
8.1) as the Beneficiary shall designate. If the value of the account remaining
to be distributed at the Participant's death is $3,500 or less, the only
alternative benefit form the Beneficiary may designate is a lump sum payment
(in cash or shares of Stock).
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(c) The benefit option described in paragraph (c) of Section 8.1
shall be available to any Participant other than (i) a Participant who retires
on or before January 1, 1992, or (ii) a Participant who is not eligible for the
retiree health coverage offered by the Company, as determined under the terms
and provisions of the Health Plan. The benefit option described in paragraph
(c) of Section 8.1 shall not be available to the extent any modification,
curtailment or termination of the Health Plan makes the application of funds as
herein described inconsistent with such program or otherwise impracticable or
irrelevant. Except as otherwise specified by the Administrator, and subject to
the timely receipt by the Administrator of a written acknowledgment in
accordance with Treasury Regulations section 1.401(a)-13(e)(1)(ii) from the
insurer (or from the Company, if the Health Plan is self-insured), amounts
distributed under paragraph (c) of Section 8.1 shall be paid directly to the
insurer (or to the Company, if the Health Plan is self-insured). Any
Participant who elects the distribution option described in that paragraph
shall also, together with such election, execute and provide to the
Administrator all forms necessary to make possible the direct payments
described in the preceding sentence. If any Participant who has elected such
option subsequently revokes the authorization of direct payments as hereinabove
described, he shall be treated as having revoked the optional form, and the
remainder of his Share of the Trust Fund shall be distributed under paragraphs
(a) or (b), as he directs. If any Participant who has elected the option
described in paragraph (c) of Section 8.1 dies, the residue of his Share of the
Trust Fund, if any, shall be distributed to his designated Beneficiary;
provided, that to the extent consistent with the Participant's Beneficiary
designation and the Health Plan, and if so elected by the Participant's
surviving spouse or other person eligible for coverage, such residue shall
instead first be applied to provide coverage under the Health Plan for such
surviving spouse and eligible dependents.
(d) Except as provided under paragraphs (b) and (c) immediately
above, if a Participant's employment is terminated by reason of death, his
benefit shall be payable to his Beneficiary in a lump sum payment of cash or
shares of Stock, as the Beneficiary shall specify.
8.3. Notice to Trustee. The Administrator will notify the Trustee
whenever any Participant is entitled to a distribution under the Plan. In
giving such notice, the Administrator will indicate the name of the
Participant's Beneficiary, if appropriate. Upon receipt of a written notice
from the Administrator certifying that an amount is payable to a Participant or
Beneficiary, the Trustee will, as soon as reasonably practicable, distribute
such amount in accordance with the instructions of the Administrator.
8.4. Timing of distributions; minimum distribution requirements.
(a) Distributions on account of normal, late, early or disability
retirement, death, or other termination of employment will be made on or as
soon as reasonably practicable after the event giving rise to such
distribution; provided, that if the vested portion of the Participant's Share
of the Trust Fund exceeds $3,500 or if the Participant is eligible to elect the
form of distribution described in Section 8.1(c) above, distribution shall be
deferred until the earliest of (i) the Participant's death, or (ii) the date
specified in paragraph (b)(ii) below, or (iii) such earlier Valuation Date as
the Participant may specify in writing. Distribution of a Participant's
benefit under clause (iii) above may be made within 30 days of the
Participant's election, provided that such Participant has been notified of his
right to defer the distribution for a period of at least 30 days thereafter in
order to consider whether or not to elect a distribution and the particular
distribution option, and after receiving such notice affirmatively
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elects such
distribution. Distributions will not be made to a terminated Employee after he
has returned to the employ of the Employer except as may otherwise be provided
in the Plan.
(b) Notwithstanding subsection (a) above, distribution to a
Participant shall be made not later than the earlier of the dates described in
(i) and (ii) below, where
(i) is the 60th day after the close of the Plan Year in which
occurs the latest of (1) the date on which the Participant attains age 65, (2)
the tenth anniversary of the date on which the Participant commenced
participation in the Plan, and (3) the date on which the Participant ceases to
be an Employee, and
(ii) is April 1 of the calendar year first following the calendar
year in which the Employee attains age 70 1/2 (the "required beginning date").
The Participant may consent to an extension of the deadline
described in (i) above, but no such consent shall affect the Participant's
required beginning date under (ii) above.
(c) Notwithstanding any other provision of Sections 8.1 or 8.2
above, all benefits payable under the Plan shall be subject to the following
minimum distribution rules:
(i) In the case of a benefit paid to a Participant in
installments, the form of benefit payment must provide for payment over a
period not to exceed the life expectancy of the Participant or the life
expectancy of the Participant and his designated Beneficiary.
(ii) In the event a Participant dies prior to his "required
beginning date" (as that term is defined in paragraph (b)(ii) above), the
amount of the Participant's benefit remaining to be paid, if any, must be paid
(A) in full to the Participant's Beneficiary within five (5) years of the
Participant's death, or (B) commencing not later than one (1) year following
the Participant's death (or such later date as may be prescribed by the
Secretary of the Treasury or his delegate), over a period not to exceed the
life expectancy of the Participant's designated Beneficiary. Notwithstanding
the foregoing, if the Participant's designated Beneficiary is his surviving
spouse, commencement of benefits under clause (B) above may be deferred until
the date the Participant would have attained age 70 1/2; but if the surviving
spouse dies before distribution of survivor benefits begins, such spouse shall
be treated as the Participant for purposes of applying these rules.
(iii) In the event a Participant dies on or after his "required
beginning date" (as defined in paragraph (b)(ii) above), the amount of the
Participant's benefit remaining to be paid, if any, shall be paid to the
Participant's designated Beneficiary at least as rapidly as under the method of
distribution in effect with respect to the Participant.
(iv) The amount of any installment shall be not less than the
minimum amount required to be distributed under the "incidental death benefit"
rules of Section 401(a)(9) of the Code and the Treasury Regulations thereunder.
(v) The provisions of this paragraph (c) shall be construed and
applied consistent with the provisions of Section 401(a)(9) of the Code and the
Treasury Regulations thereunder.
8.5. Put option. Any Stock which is distributed pursuant to the
provisions of Section 8.1 and, at the time of such distribution, is either not
publicly traded or is subject to a trading
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limitation within the meaning of the
regulations under Section 4975 of the Code, shall be accompanied by an option
in the Participant or Beneficiary, his donees (if any), and any person to whom
Stock distributed to the Participant or Beneficiary passes by reason of the
Participant's or Beneficiary's death, to put such Stock to the Company at its
fair market value. Such an option shall be exercised by the holder thereof
notifying the Company in writing that the option is being exercised, and such
option shall be exercisable for a period of fifteen (15) months beginning on
the date the Stock is distributed. At the option of the Company, payment for
Stock put to the Company pursuant to an option described in this Section may be
deferred if adequate security and a reasonable interest rate are provided for
any credit extended and if the cumulative payments at any time are no less than
the aggregate of reasonable periodic payments as of such time. Periodic
payments are reasonable if annual installments, beginning with 30 days after
the date the put option is exercised, are substantially equal. The payment
period may not end more than five (5) years after the date the put option is
exercised. An option described in this Section may provide that the Plan may
assume the rights and obligations of the Company at the time the option is
exercised. The option described in this Section shall continue to exist
regardless of whether the Plan remains an employee stock ownership plan within
the meaning of Section 4975 of the Code and regardless of whether the ESOP Loan
the proceeds of which were used to acquire the Stock remains outstanding.
8.6. Right of first refusal. Stock distributed pursuant to the
provisions of Section 8.1 shall be subject to the right of the Plan, and then
of the Company, to purchase such Stock at fair market value prior to its sale
to any other prospective purchaser, but only if the Stock is not publicly
traded at the time such right may be exercised. The right in the Plan, and
then the Company, to purchase such Stock shall expire fourteen (14) days after
the holder of such Stock gives written notice to the Plan, and then to the
Company, that an offer by a third party to purchase the security has been
received.
8.7. No withdrawals. Distributions shall be made only in the time,
manner, and form provided in the Plan and a Participant or Beneficiary shall
have no other right to a distribution or withdrawal of his Share of the Trust
Fund.
Article 9. Administration.
9.1. Administrator. The Plan will be administered by the Company
acting through a committee (the "Committee") consisting of at least three
individuals, but not more than seven, appointed from time to time by the Board
of Directors to serve at its pleasure. Participants may be appointed to serve
as Committee members at the discretion of the Board of Directors. No person
serving on the Committee will receive any additional compensation for such
services.
The Committee may act at a meeting or in writing without a meeting.
The Committee shall appoint a Secretary, who may be but need not be a Committee
member. The Secretary shall keep a record of all meetings and forward all
communications as he deems appropriate to the Company or the Trustee. The
Committee may adopt such by-laws and regulations as it deems desirable for the
conduct of its affairs. If a meeting is called, three members shall constitute
a quorum for the transaction of business. The action of a majority of the
members of the Committee expressed in writing without a meeting and the action
of a majority of the members present at a meeting duly held shall constitute
the action of the Committee and shall have the same effect for all purposes as
if assented to by all members of the Committee at the time in office. If at
any time a majority of the individuals serving on such committee and eligible
to vote are unable to agree, any action
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required of the committee will be taken
by the Board of Directors and its decision will be final. An individual
serving on the Committee who is a Participant will not vote or act on any
matter relating solely to himself.
9.2. Powers of Administrator. The Administrator will have full
power to administer the Plan in all of its details, subject, however, to the
requirements of ERISA. For this purpose the Administrator's power will
include, but will not be limited to, the following authority:
(a) to make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of the Plan;
(b) to interpret the Plan, its interpretation thereof in good
faith to be final and conclusive on any Employee, former Employee, Participant,
former Participant or Beneficiary;
(c) to decide all questions concerning the Plan and the
eligibility of any person to participate in the Plan, to compute the amount of
benefits which will be payable to any Participant, former Participant or
Beneficiary in accordance with the provisions of the Plan, and to determine the
person or persons to whom such benefits will be paid;
(d) to maintain the individual accounts of Participants, former
Participants, and Beneficiaries;
(e) to authorize the payment of benefits;
(f) to give directions to the Trustee in accordance with the Plan;
(g) to keep such records and submit such filings, elections,
applications, returns or other documents or forms as may be required under the
Code and applicable regulations, or under state or local law and regulations;
(h) to appoint such agents, counsel, accountants and consultants
as may be required to assist in administering the Plan; and
(i) by written instrument, to allocate and delegate its fiduciary
responsibilities in accordance with Section 405 of ERISA.
9.3. Claims and review procedures.
(a) Claims procedure. If any person believes he is being denied
any rights or benefits under the Plan, such person may file a claim in writing
with the Administrator. If any such claim is wholly or partially denied, the
Administrator will notify such person of its decision in writing. Such
notification will be written in a manner calculated to be understood by such
person and will contain (i) specific reasons for denial, (ii) specific
reference to pertinent plan provisions, (iii) a description of any additional
material or information necessary for such person to perfect such claim and an
explanation of why such material or information is necessary and (iv)
information as to the steps to be taken if the person wishes to submit a
request for review. Such notification will be given within 90 days after the
claim is received by the Administrator (or within 180 days, if special
circumstances require an extension of time for processing the claim, and if
written notice of such extension and circumstances is given to such person
within the initial 90-day period). If such notification is not given within
such
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period, the claim will be considered denied as of the last day of such
period and such person may request a review of his claim.
(b) Review procedure. Within 60 days after the date on which a
person receives a written notice of a denied claim (or, if applicable, within
60 days after the date on which such denial is considered to have occurred)
such person (or his duly authorized representative) may (i) file a written
request with the Administrator for a review of his denied claim and of
pertinent documents and (ii) submit written issues and comments to the
Administrator. The Administrator will notify such person of its decision in
writing. Such notification will be written in a manner calculated to be
understood by such person and will contain specific reasons for the decision as
well as specific references to pertinent Plan provisions. The decision on
review will be made within 60 days after the request for review is received by
the Administrator (or within 120 days, if special circumstances require an
extension of time for processing the request, such as an election by the
Administrator to hold a hearing, and if written notice of such extension and
circumstances is given to such person within the initial 60-day period). If
the decision on review is not made within such period, the claim will be
considered denied.
9.4. Examination of records. The Administrator will make available
to each Participant such of its records as pertain to such Participant for
examination at reasonable times during normal business hours.
9.5. Nondiscriminatory exercise of authority. Whenever, in the
administration of the Plan, any discretionary action by the Administrator is
required, the Administrator shall exercise his authority in a nondiscriminatory
manner so that all persons similarly situated will receive substantially the
same treatment.
9.6. Reliance on tables, etc. In administering the Plan, the
Administrator will be entitled, to the extent permitted by law, to rely
conclusively on all tables, valuations, certificates, opinions and reports
which are furnished by any accountant, trustee, counsel or other expert who is
employed or engaged by the Administrator.
9.7. Withholding of tax. Unless the Administrator otherwise directs
the Trustee pursuant to the second sentence of this Section, the Administrator
will be responsible for withholding any and all amounts required by the Code
and applicable regulations to be withheld upon distributions from the Plan.
The Administrator may elect to transfer this responsibility to the Trustee by
directing the Trustee, in a separate written agreement with the Trustee and in
the manner prescribed by applicable law and regulations, to withhold the
aforesaid amounts.
9.8. Named Fiduciary. The Administrator will be a "named fiduciary"
for purposes of Section 402(a)(1) of ERISA with authority to control and manage
the operation and administration of the Plan, and will be responsible for
complying with all of the reporting and disclosure requirements of Part 1 of
Subtitle B of Title I of ERISA.
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9.9. Indemnification of Administrator. The Company agrees to
indemnify and to defend to the fullest extent permitted by law any Employee or
former Employee who serves or has served as the Administrator or as a member of
a committee designated as Administrator against all liabilities, damages, costs
and expenses (including attorney's fees and amounts paid in settlement of any
claims approved by the Company) occasioned by any act or omission to act in
connection with the Plan, if such act or omission is in good faith.
9.10. Costs of Administration. Unless paid by a Participating
Employer, all reasonable costs and expenses incurred by the Administrator and
the Trustee in administering the Plan and Trust will be paid from the Trust
Fund and will, unless allocable to the accounts of particular Participants or
the Leveraged Stock suspense account, be charged against the accounts of all
Participants and the Leveraged Stock suspense account, in such reasonable
manner as the Administrator may determine.
Article 10. Concerning the Trust and the Trustee.
10.1. Trust Fund. The Company shall appoint one or more individuals
or corporations to act as Trustee under the Plan, and may enter into a trust
agreement with the Trustee and make such amendments to such trust agreement, or
enter into such further agreements as the Company may deem necessary or
desirable to carry out the Plan.
10.2. Tender or exchange offers. The provisions of this Section
shall apply in the event a tender offer which includes Stock held in the Trust
is commenced by a person or persons. For purposes of this Section, "tender
offer" shall mean a tender or exchange offer for Stock or other bona fide offer
to purchase or acquire Stock, including but not limited to a tender offer or
exchange offer within the meaning of the Securities Exchange Act of 1934, as
from time to time amended and in effect, but not including a sale of Stock
necessary to make distributions under the Plan or for other incidental purposes
of the Plan or any offer by the Trustee to purchase Stock pursuant to the terms
of the Plan.
In the event a tender offer for Stock held in the Trust is commenced,
the Administrator, promptly after receiving notice of the commencement of any
such tender offer, shall transfer certain of the Administrator's record keeping
functions under the Plan to an independent record keeper (which if the Trustee
consents in writing, may be the Trustee). The functions so transferred shall
be those necessary to preserve the confidentiality of any directions given by
the Participants and Beneficiaries in connection with the tender offer. The
Trustee shall have no discretion or authority to sell, exchange or transfer any
of such shares of Stock pursuant to such tender offer except to the extent, and
only to the extent, that the Trustee is timely directed to do so in writing by
each Participant or Beneficiary who has Stock allocated to his account, as a
named fiduciary within the meaning of Section 403(a)(1) of ERISA, with respect
to the Stock held by the Trustee subject to such tender offer which (1) is
allocated to the account of the Participant or Beneficiary and (2) is the
portion of such Stock not allocated to the account of any Participant or
Beneficiary equal to the total amount of unallocated Stock multiplied by a
fraction the numerator of which is the amount of Stock allocated to the
Participant's or Beneficiary's account under the Plan and the denominator of
which is the total amount of Stock allocated to the accounts of all
Participants and Beneficiaries under the Plan. The independent record keeper
shall solicit confidentially from each Participant and Beneficiary the
directions described in this Section as to whether shares of Stock are to be
tendered. The independent record keeper, if different from the Trustee, shall
instruct the Trustee as to the amount of Stock to be tendered, in accordance
with the above directions.
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Following any tender offer that has resulted in the sale or exchange of
any shares of Stock held in the Trust, the record keeper shall continue to
maintain on a confidential basis the accounts of Participants and Beneficiaries
to whose accounts shares of Stock were allocated at any time during such offer,
until complete distribution of such accounts or such earlier time as the record
keeper determines that the transfer of the record keeping functions back to the
Administrator will not violate the confidentiality of the directions given by
the Participants and Beneficiaries. In the event that there is no sale or
exchange of any shares of Stock held in the Trust pursuant to the tender offer,
the record keeper shall transfer back to the Administrator the record keeping
functions, provided, however the record keeper shall keep confidential any
instructions which it may receive from Participants and Beneficiaries relating
to the tender offer.
For purposes of allocating the proceeds of any sale or exchange
pursuant to a tender offer, the Administrator or the independent record keeper,
as the case may be, shall determine the portion, expressed as a percentage, of
shares of Stock tendered by the Trustee that were actually sold or exchanged
(the "applicable percentage"). The Administrator or the independent record
keeper, as the case may be, shall then treat as having been sold or exchanged
from each of the individual accounts of Participants and Beneficiaries that
number of shares of Stock (if any) which is obtained by multiplying (i) the
applicable percentage times (ii) the total number of shares of Stock in such
account that were directed to be tendered or exchanged. Any proceeds remaining
after application of the preceding sentences shall be treated as proceeds from
the sale or exchange of unallocated shares of Stock. The adjustments to
individual accounts pursuant to the provisions of the Plan shall be made by the
Administrator or the independent record keeper, as the case may be, on
information supplied by the Company, the Administrator or the Trustee.
In the event a court of competent jurisdiction issues an order to the
Plan, the Company or the Trustee which constitutes a final judgment in that all
opportunities for appeal have expired or no further appeals may be taken, and
which, in the opinion of counsel to the Company or the Trustee, invalidates
under ERISA, in all circumstances or in any particular circumstances, any
provision or provisions of this Section regarding the determination to be made
as to whether or not Stock held by the Trustee shall be tendered pursuant to a
tender offer, then upon such order becoming final, such invalid provisions of
this Section shall be given no further force or effect. In such circumstances
the Trustee shall have no discretion to tender or not to tender Stock held in
the Trust pursuant to a tender offer unless required under such order, but
shall follow instructions received from Participants, to the extent such
instructions have not been invalidated by such order. To the extent required
by such order to exercise fiduciary responsibility with respect to a tender
offer, the Trustee first shall take into account instructions timely received
from Participants, as such instructions are most indicative of what action is
in the best interests of Participants, and next shall take into consideration
any other relevant factors.
10.3. Voting of Stock. Each Participant or Beneficiary who has been
allocated shares of Stock entitled to vote on any matter presented for a vote
by the stockholders and who timely provides instructions to the Trustee, shall,
as a named fiduciary within the meaning of Section 403(a)(1) of ERISA, direct
the Trustee with respect to (1) the vote of such shares of Stock which are
allocated to the account of the Participant or Beneficiary and (2) the number
of votes equal to the total number of votes attributable to such Stock not
allocated to the account of any Participant or Beneficiary or with respect to
which no instructions were timely received by the Trustee (whether or not
allocated to the account of any Participant or Beneficiary) multiplied by a
fraction, the numerator of which is the number of votes attributable to such
shares of Stock allocated to the Participant's or Beneficiary's account and the
denominator of which is the total number of votes attributable to such shares
of Stock allocated to the accounts of all such Participants and
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Beneficiaries
who have provided timely instructions to the Trustee under this Section. Such
directions will be held in confidence and will not be divulged or released to
any person including any officer or Employee of the Employer.
In the event a court of competent jurisdiction issues an order to the
Plan, the Company or the Trustee which constitutes a final judgment in that all
opportunities for appeal have expired or no further appeals may be taken, and
which, in the opinion of counsel to the Company or the Trustee, invalidates
under ERISA, in all circumstances or in any particular circumstances, any
provision or provisions of this Section regarding the manner in which Stock
held in the Trust shall be voted, then upon such order becoming final, such
invalid provisions of this Section shall be given no further force or effect.
In such circumstances the Trustee shall nevertheless have no discretion to vote
Stock held in the Trust unless required under such order but shall follow
instructions received from Participants, to the extent such instructions have
not been invalidated by such order. To the extent required by such order to
exercise fiduciary responsibility with respect to voting, the Trustee first
shall take into account instructions timely received from Participants, as such
instructions are most indicative of what is in the best interests of
Participants, and next shall take into consideration any other relevant
factors.
Article 11. Top Heavy Provisions.
11.1. Definitions. For purposes of this Article,
(a) "key employee" means any Employee or Beneficiary who is a "key
employee" within the meaning of Section 416(i) of the Code and the regulations
thereunder. For purposes of determining whether an individual is a key
employee, the compensation to be taken into account shall be his Compensation
(within the meaning of Section 2.10). Any Employee (or the beneficiary of any
Employee) who is not a key employee as defined above shall be treated as a non-
key employee.
(b) "top heavy plan year" means a Plan Year commencing on or after
January 1, 1984 if the sum of the present value of the total accrued benefits
of all key employees under each defined benefit plan (as of the applicable
determination date of each such plan) which is aggregated with this Plan and
the sum of the account balances of all key employees under the Plan and under
each other defined contribution plan (as of the applicable determination date
of each such plan) which is aggregated with this Plan exceeds sixty percent of
the sum of such amounts for all Employees or former Employees (other than
former key employees but including beneficiaries of deceased former Employees)
under such plans.
The following rules shall apply for purposes of the foregoing
determination:
(i) All determinations hereunder will be computed in accordance
with Section 416 of the Code and the regulations thereunder, which are
specifically incorporated herein by reference.
(ii) The term "determination date" means, with respect to the
initial plan year of a plan, the last day of such plan year and, with respect
to any other plan year of a plan, the last day of the preceding plan year of
such plan. The term "applicable determination date" means, with respect to the
Plan, the determination date for the Plan Year of reference and,
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with respect
to any other plan, the determination date for any plan year of such plan which
falls within the same calendar year as the applicable determination date of the
Plan.
(iii) There will be aggregated with this Plan
(1) any other plan of an Employer under which at least one
key employee participates and which is able to satisfy the requirements of
Sections 401(a)(4) and 410 of the Code by reason, at least in part, of the
existence of this Plan, or
(2) if at least one key employee is a Participant hereunder,
any other plan of an Employer in which a key employee participates or which
enables a plan maintained by an Employer in which a key employee participates
(including, but not limited to, the Plan) to satisfy the requirements of
Sections 401(a)(4) and 410 of the Code.
Any plan of an Employer not required to be aggregated with the Plan under the
preceding sentence may nevertheless, at the discretion of the Administrator, be
aggregated with the Plan if the benefits and coverage of all aggregated plans
would continue to satisfy the requirements of Sections 401(a)(4) and 410 of the
Code.
11.2. Special contribution for top heavy plan years. Notwithstanding
anything in the Plan to the contrary, if for any top heavy plan year the value
of the allocation under Section 6.5 to the account of any individual who is a
Participant on the last day of such year and who is not a key employee for such
year is less than three percent of such Participant's Compensation for such
year, the Participant's Participating Employer shall contribute to the Trust,
for such Participant's benefit, an additional amount sufficient to cause the
sum of all contributions made for the benefit of such Participant for such year
to equal three percent of such Participant's Compensation. Notwithstanding
the foregoing, if for such top heavy plan year the allocation to the account of
each key employee, expressed as a percentage of Compensation, is less than
three percent, the minimum contribution required under this Section for the
benefit of each Participant who is not a key employee will be limited to an
amount which, when added to the allocation to the account of such Participant,
constitutes a percentage of such Participant's Compensation not less than the
highest percentage obtained by dividing, for each key employee, the allocation
to the account of such key employee by such key employee's Compensation. In
applying the preceding sentence, there shall be aggregated with allocations
under the Plan all allocations, if any, made to the Participant's account under
all qualified defined contribution plans required to be aggregated with the
Plan pursuant to Section 11.1(b)(iii)(1) or (2), subject to the special rule of
Section 416(c)(2)(B)(ii)(II) of the Code and subject also to the limitation
expressed in Section 401(k)(4)(A) of the Code.
Any additional contribution made for the benefit of any Participant
under this Section shall be credited to such Participant's account as soon as
practicable after the close of the Plan Year for which the contribution is
made.
Notwithstanding the foregoing provisions of this Section, no
contribution hereunder shall be required for the benefit of any Participant to
the extent such contribution would result in the duplication of minimum
benefits or contributions, within the meaning of Section 416(f) of the Code and
regulations prescribed thereunder, with respect to such Participant.
11.3. Special top-heavy vesting. Notwithstanding any other provision
of the Plan, each individual who is a Participant at any time during a Plan
Year that is a top heavy plan year will
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have a fully vested and nonforfeitable
interest in not less a percentage of his Share of the Trust Fund than as set
forth in the following schedule, based on his completed whole Years of Service:
Years of Service Applicable
After 1989 Nonforfeitable Percentage
Less than 2 0
2 but less than 3 20
3 but less than 4 40
4 but less than 5 60
5 or more 100
11.4. Adjustment to limitation on Annual Additions. For any
Limitation Year which is a top heavy plan year, the adjustment described in
Section 416(h) of the Code shall apply for purposes of determining a
Participant's "defined contribution plan fraction" and "defined benefit plan
fraction" under Section 6.6 unless:
(a) the Plan and each plan with which the Plan is required to be
aggregated pursuant to Section 11.1(b)(iii)(1) or (2) satisfies the
requirements of Section 416(h)(2)(A) of the Code; and
(b) the Plan Year would not be a top heavy plan year if "ninety
percent" were substituted for "sixty Percent" in the first paragraph of Section
11.1(b).
Article 12. Amendment and Termination.
12.1. Amendment. The Company reserves the power at any time or
times, by action of the Board of Directors, to amend the provisions of the Plan
and Trust to any extent and in any manner that it may deem advisable by signing
a written instrument providing for such amendment. Upon the signing of such
instrument, such instrument will become effective in accordance with its terms
as to all Participants and all persons having or claiming any interest
hereunder; provided, however, that the Company will not have the power:
(a) to amend the Plan or Trust in such manner as would cause or
permit any part of the assets of the Trust to be diverted to purposes other
than for the exclusive benefit of Participants and their Beneficiaries, unless
such amendment is required or permitted by law, governmental regulation or
ruling;
(b) to amend the Plan or Trust retroactively in such a manner as
would deprive any Participant of any benefit to which he was entitled under the
Plan by reason of contributions made by a Participating Employer prior to the
amendment, unless such amendment is permitted by, or necessary to conform the
Trust or Plan to, any law, governmental regulation or ruling, or to permit the
Trust and the Plan to meet the requirements of Sections 401(a) and 501(a) of
the Code;
(c) to amend the Plan or Trust in such manner as would increase,
in the judgment of the Trustee, the duties or liabilities of the Trustee or
affect the Trustee's fee for services, unless the Trustee consents thereto in
writing; or
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(d) after a Change of Control, to amend any provision of the Plan
or Trust which becomes operative upon a Change of Control.
12.2. Termination. The Company has established, and each
Participating Employer has adopted, the Plan and the Trust with the bona fide
intention and expectation that contributions will be continued indefinitely,
but the Company and each Participating Employer will have no obligation or
liability whatsoever to maintain or continue participation in the Plan for any
given length of time and may discontinue contributions under the Plan or, in
the case of the Company, terminate the Plan at any time by written notice
delivered to the Trustee without any liability whatsoever for any such
discontinuance or termination.
12.3. Distributions upon termination of the Plan. Upon termination
or partial termination of the Plan for any reason or complete discontinuance of
contributions thereunder, each affected Participant (including a terminated
Participant in respect of amounts not previously forfeited) will have a fully
vested and nonforfeitable interest in 100% of his Share of the Trust Fund. In
the event of the termination of the Plan or the complete discontinuance of
contributions thereunder, the Trustee will make distributions to the
Participants or other persons entitled to distributions in accordance with the
instructions of the Administrator. Such distributions may be made in such
manner as the Administrator directs pursuant to Article 8. Upon the completion
of such distribution, the Trust will terminate, the Trustee will be relieved
from all liability under the Trust, and no Participant or other person will
have any claims thereunder, except as required by applicable law.
12.4. Merger or consolidation of Plan; transfer of Plan assets. In
case of any merger or consolidation of the Plan with, or transfer of assets and
liabilities of the Plan to, any other plan, provision must be made so that each
Participant would, if the Plan then terminated, receive a benefit immediately
after the merger, consolidation or transfer which is equal to or greater than
the benefit he would have been entitled to receive immediately before the
merger, consolidation or transfer if the Plan had then terminated.
Article 13. Miscellaneous.
13.1. Limitation of rights. Neither the establishment of the Plan
and the Trust nor any amendment thereof nor the creation of any fund or account
nor the payment of any benefits will be construed as giving to any Participant
or other person any legal or equitable right against any Participating
Employer, the Administrator or any Trustee, except as provided herein, and in
no event will the terms of employment or service of any Participant be modified
or in any way be affected hereby. It is a condition of the Plan, and each
Participant expressly agrees by his participation herein, that each Participant
will look solely to the assets held in the Trust for the payment of any benefit
to which he is entitled under the Plan.
13.2. Nonalienability of benefits. The benefits provided hereunder
will not be subject to alienation, assignment, garnishment, attachment,
execution or levy of any kind, and any attempt to cause such benefits to be so
subjected will not be recognized except to such extent as may be required by
law.
The provisions of the preceding paragraph shall apply in general to the
creation, assignment or recognition of a right to any benefit payable with
respect to a Participant pursuant to a domestic relations order (within the
meaning of Section 414(p)(1)(B) of the Code). Notwithstanding the
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foregoing,
if such order is a Qualified Domestic Relations Order, the provisions of the
preceding paragraph shall not apply.
13.3. Payment under Qualified Domestic Relations Orders.
Notwithstanding any provisions of the Plan to the contrary, if there is entered
any Qualified Domestic Relations Order that affects the payment of benefits
hereunder, such benefits shall be paid in accordance with the applicable
requirements of such Order.
13.4. Information between Administrator and Trustee. The
Administrator will furnish to the Trustee, and the Trustee will furnish to the
Administrator, such information relating to the Plan and Trust as may be
required under the Code and any regulations issued or forms adopted by the
Treasury Department thereunder or under the provisions of ERISA and any
regulations issued or forms adopted by the Labor Department thereunder.
13.5. Additional vesting rules. Notwithstanding any other provision
of the Plan, upon a Change of Control, each Participant with fewer than five
(5) Years of Service will have a fully vested and nonforfeitable interest in
100% of his Share of the Trust Fund.
13.6. Benefits payable to incapacitated individuals, etc. Whenever
the Administrator determines that a person entitled to receive any payment of a
benefit is under a legal disability or is incapacitated so as to be unable to
manage his financial affairs, the Administrator may direct the Trustee to make
payments to such person or to such person's legal representative or otherwise
to apply such payment for such person's benefit. Any payment of a benefit in
accordance with the provisions of this Section shall be a complete discharge of
any liability for the making of such payment under the provisions of the Plan.
13.7. Governing law. The Plan and Trust will be construed,
administered and enforced according to the provisions of ERISA and, to the
extent not preempted thereby, the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, The Gillette Company has caused this Plan to be
signed on its behalf by its officer thereunto duly authorized, as of the date
first above written.
THE GILLETTE COMPANY
By: /s/ William J. McMorrow
William J. McMorrow
Senior Vice President - Administration
Date:
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Appendix A to The Gillette Company
Employee Stock Ownership Plan
Adopted January 17, 1990
1. Oral-B Laboratories division of Gillette Canada Inc.
2. Oral-B Laboratories Manufacturing Corporation of Puerto Rico.
3. Jafra Cosmetics, Inc.
4. Gillette de Puerto Rico, Inc.
5. Braun Inc.
6. The Gillette Company (USA)
7. Gillette Research Institute and Gillette Medical Evaluation
Laboratories divisions of Gillette Capital Corporation
8. Compania Interamericana Gillette, S.A.
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AMENDMENTS TO
THE GILLETTE COMPANY EMPLOYEE STOCK OWNERSHIP PLAN
Pursuant to the provisions of Section 12.1 of The Gillette Company
Employee Stock Ownership Plan, as amended and restated January 1, 1994 (the
"Plan"), The Gillette Company hereby amends the Plan in the following respects:
1. Section 2.10 is amended by deleting the final sentence
thereof, and by adding at the end thereof the following paragraph::
"The Compensation taken into account for any Plan Year with respect to each
Participant shall not exceed the dollar limitation prescribed for such Plan
Year by Section 401(a)(17) of the Code. For Plan Years beginning on or after
January 1, 1989 and prior to January 1, 1994, this limitation is $200,000 as
adjusted by the Secretary of the Treasury in accordance with Section 415(d) of
the Code. For Plan Years beginning on or after January 1, 1994, this
limitation is $150,000 as adjusted by the Secretary of the Treasury in
accordance with Section 401(a)(17) of the Code. In determining the
Compensation of a Participant for purposes of this limitation, the rules of
Section 414(q)(6) of the Code shall apply, except in applying such rules, the
term 'family' shall include only the Participant's spouse and any lineal
descendants of the Participant who have not attained age 19 before the close of
the Plan Year."
2. Section 2.32 is amended by adding the following at the end
thereof:
"All valuations of Stock which is not readily tradable on an established
securities market, with respect to activities carried on by the Plan, shall be
performed by an independent appraiser (within the meaning of Section
401(a)(28)(C) of the Code)."
3. Section 11.1(a) is amended to read as follows:
"(a) 'key employee' means any Employee (or the Beneficiary of any
Employee) who is a 'key employee' within the meaning of Section 416(i) of the
Code and the regulations thereunder. For purposes of determining whether an
individual is a key employee, the compensation to be taken into account shall
have the meaning prescribed by Section 416(i)(1)(D) of the Code. Any Employee
(or the Beneficiary of any Employee) who is not a key employee as defined
above, or who formerly was a key employee, shall be treated as a non-key
employee."
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4. The first paragraph of Section 11.1(b) is amended to read as
follows:
"(b) 'top heavy plan year' means a Plan Year if the sum of the present
value of the total accrued benefits of all key employees under each defined
benefit plan (as of the applicable determination date of each such plan) which
is aggregated with this Plan and the sum of the account balances of all key
employees under the Plan and under each other defined contribution plan (as of
the applicable determination date of each such plan) which is aggregated with
this Plan exceeds sixty percent of the sum of such amounts for all Employees or
former Employees (other than former key employees but including beneficiaries
of deceased former Employees, and excluding the accrued benefits and account
balances of any individual who has not performed any services for the Employer
during the five year period ending on the applicable determination date) under
such plans."
5. Section 11.2 is amended (i) by amending the second sentence of
the first paragraph thereof to read as follows:
"Notwithstanding the foregoing, if for such top heavy plan year the allocation
to the account of each key employee (including amounts contributed pursuant to
a salary reduction agreement by such key employee), expressed as a percentage
of Compensation, is less than three percent, the minimum contribution required
under this Section for the benefit of each Participant who is not a key
employee will be limited to an amount which, when added to the allocation to
the account of such Participant, constitutes a percentage of such Participant's
Compensation not less than the highest percentage obtained by dividing, for
each key employee, the allocation to the account of such key employee by such
key employee's Compensation.",
and (ii) by adding at the end of the first paragraph thereof the following:
"The Participating Employer's contribution shall be made to the Participant
under this Section regardless of (a) the number of the Participant's Hours of
Service credited in such Plan Year, (b) the Participant's level of Compensation
for such Plan Year and (c) whether the Participant made any elective or
employee contributions to any qualified defined contribution plan for such Plan
Year."
THE GILLETTE COMPANY
Date: By:
Title:
RECEIPT ACKNOWLEDGED
STATE STREET BANK AND TRUST COMPANY
Date: By:
Title:
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