<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934 (NO FEE REQUIRED)
COMMISSION FILE NO. I-922
<TABLE>
THE GILLETTE COMPANY
(Exact name of registrant as specified in its charter)
<S> <C>
INCORPORATED IN DELAWARE 04-1366970
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
PRUDENTIAL TOWER BUILDING, BOSTON, MASSACHUSETTS 02199
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA
CODE 617-421-7000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
</TABLE>
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
- --------------------------------------- -------------------------
<S> <C>
COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE
BOSTON STOCK EXCHANGE
MIDWEST STOCK EXCHANGE
PACIFIC STOCK EXCHANGE
</TABLE>
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (sec.229.405 of this chapter) is not contained herein, and
will not be contained to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K [ ].
The aggregate market value of Gillette Common Stock held by non-affiliates
as of March 1, 1994 was approximately $11,906,000,000.*
The number of shares of Gillette Common Stock outstanding as of March 1,
1994 was 220,979,835.
<TABLE>
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the following documents have been incorporated by
reference into the 10-K Parts indicated:
<CAPTION>
DOCUMENTS 10-K PARTS
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<S> <C> <C>
1. The Gillette Company 1993 Annual Report to Stockholders (The "1993
Annual Report")............................................................ Parts I and II
2. The Gillette Company 1994 Proxy Statement (The "1994 Proxy Statement")..... Part III
</TABLE>
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* This amount does not include the value of 164,216.1969 shares of Series C
ESOP Convertible Preferred Stock issued for $602.875 per share. For purposes
of this calculation only, Gillette Common Stock held by Executive Officers or
directors of the Company has been treated as owned by affiliates.
<PAGE> 2
PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
The Gillette 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.
A description of the Company and its businesses appears in the 1993 Annual
Report on the inside of the front cover and at pages 3 through 5 under the
caption "Letter to Stockholders" and at page 42 under the caption "Principal
Divisions and Subsidiaries," the texts of which are incorporated by reference.
See also Item 7, Management's Discussion.
BUSINESS SEGMENTS
The approximate percentages of consolidated net sales and segment profit
from operations during the last five years for each of the Company's business
segments appear in the 1993 Annual Report at page 39 under the caption,
"Business Segments," and are incorporated by reference.
"Financial Information by Business Segment," and "Segment and Area
Commentary" containing information on net sales, profit from operations,
identifiable assets, capital expenditures and depreciation for each of the last
three years, appear in the 1993 Annual Report at page 37 and are incorporated by
reference.
The Company's businesses range across several industry segments, including
blades and razors, toiletries and cosmetics, stationery products, electric
shavers, small household appliances, hair care appliances, oral care appliances
and oral care products. Descriptions of those businesses appear in the 1993
Annual Report at pages 6 through 15, the text of which is incorporated by
reference.
DISTRIBUTION
In the Company's major markets, traditional Gillette product lines are sold
to wholesalers, chain stores and large retailers and are resold to consumers
primarily through food, drug, discount, stationery, tobacco and department
stores. Jafra skin care products are sold directly to consumers by independent
consultants, primarily at classes in the home. Waterman and Parker products are
sold to wholesalers and retailers and are resold to consumers through fine
jewelry, fine stationery and department stores, pen specialists and other retail
outlets. Braun products are sold to wholesalers and retailers and are resold to
consumers mainly through department, discount, catalogue and specialty stores.
In many small Gillette International and Braun markets, products are distributed
through local distributors and sales agents. Oral-B products are marketed
directly to dental professionals for distribution to patients and also are sold
to wholesalers, chain stores and large retailers for resale to consumers through
food, drug and discount stores.
PATENTS
Certain of the Company's patents and licenses in the blade and razor
segment are of substantial value and importance when considered in the
aggregate. Additionally, the Company holds significant patents in the toiletries
and cosmetics, writing instruments and Braun business segments. No patent or
license held by the Company is considered to be of material importance when
judged from the standpoint of the Company's total business. Gillette has
licensed many of its blade and razor patents to other manufacturers. In all
these categories, Gillette competitors also have significant patent positions.
The patents and licenses held by the Company are of varying remaining durations.
TRADEMARKS
In general, the Company's principal trademarks have been registered in the
United States and throughout the world where the Company's products are sold.
Gillette products are marketed outside
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the United States under various trademarks, many of which are the same as those
used in the United States. The trademark Gillette is of principal importance to
the Company. In addition, a number of other trademarks owned by the Company and
its subsidiaries have significant importance within their business segments. The
Company's rights in these trademarks endure for as long as they are used or
registered.
COMPETITION
The blades and razors segment is marked by competition in product
performance, innovation and price, as well as by competition in marketing,
advertising and promotion to retail outlets and to consumers. The Company's
major competitors worldwide are Warner-Lambert Company, with its Schick and
Wilkinson Sword (in North America and Europe) product lines, and Societe Bic
S.A., a French company. Additional competition in the United States is provided
by the American Safety Razor Company, Inc. under its own brands and a number of
private label brands. The toiletries and cosmetic segment is highly competitive
in terms of price, product innovation and market positioning, with frequent
introduction of new brands and marketing concepts, especially for products sold
through retail outlets, and with product life cycles typically shorter than in
the other business segments of the Company. Competition in the stationery
products segment, particularly in the writing instruments market, is marked by a
high degree of competition from domestic and foreign suppliers and low entry
barriers, and is focused on a wide variety of factors including product
performance, design and price, with price an especially important factor in the
commercial sector. Competition in the electric shaver, small household, hair
care and oral care appliances segments is based primarily on product
performance, innovation and price, with numerous competitors in the small
household and hair care appliances segments. Competition in the oral care
product segment is focused on product performance, price and dental profession
endorsement.
EMPLOYEES
At year-end, Gillette employed 33,400 persons, three-quarters of them
outside the United States.
RESEARCH AND DEVELOPMENT
In 1993, research and development expenditures were $133.1 million,
compared with $123.8 million in 1992 and $108.9 million in 1991.
RAW MATERIALS
The raw materials used by Gillette in the manufacture of products are
purchased from a number of outside suppliers, and substantially all such
materials are readily available.
OPERATIONS BY GEOGRAPHIC AREA
The following table indicates the geographic sources of consolidated net
sales and profit from operations of the Company for the last three years:
<TABLE>
<CAPTION>
1993 1992 1991
------------------ ---------------- ----------------
NET NET NET
SALES PROFIT SALES PROFIT SALES PROFIT
------ ------- ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
United States......................... 33% 29% 31% 30% 32% 31%
Foreign............................... 67% 71% 69% 70% 68% 69%
</TABLE>
"Financial Information by Geographic Area" and "Segment and Area
Commentary" containing information on net sales, profit from operations and
identifiable assets for each of the last three years appear in the 1993 Annual
Report under the same captions at page 37 and are incorporated by reference.
ITEM 2. DESCRIPTION OF PROPERTY
The Company owns and leases manufacturing facilities and other important
properties in the United States and abroad consisting of approximately
14,041,000 square feet of floor space, of which 76%, or about 10,690,000 square
feet, is devoted to the Company's principal manufacturing operations.
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Additional premises, such as sales and administrative offices, research
laboratories, and warehouse, distribution and other manufacturing facilities
account for about 24% of Gillette's principal property holdings, or about
3,370,000 square feet. Gillette's executive offices are located in the
Prudential Center, Boston, Massachusetts, where the Company holds a long-term
lease covering approximately 300,000 square feet.
<TABLE>
In the United States, Gillette's principal manufacturing facilities consist
of the following:
<CAPTION>
APPROXIMATE
AREA
BUSINESS SEGMENT LOCATION (SQUARE FEET)
-------------------------- -------------
<S> <C> <C>
Blades and Razors Boston, Massachusetts 1,450,000
Toiletries and Cosmetics Andover, Massachusetts 593,000
St. Paul, Minnesota 833,000
Westlake Village,
California 181,000
Stationery Products Santa Monica, California 320,000
Janesville, Wisconsin 215,000
Oral-B Products Iowa City, Iowa 258,000
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Total 3,850,000
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</TABLE>
Approximately 84% of these U.S. manufacturing facilities and the land they
occupy are owned by Gillette. The Santa Monica property is leased in its
entirety and 308,000 square feet of the St. Paul facility is located on leased
land.
Foreign manufacturing subsidiaries of Gillette, excluding Braun and Oral-B,
operate plants with an aggregate of approximately 4.7 million square feet of
floor space, about 87% of which is on land owned by Gillette. Many of the
international facilities are engaged in the manufacture of products from two or
more of the Company's major business segments.
<TABLE>
Braun's executive offices are located in Kronberg, Germany, and the
locations and approximate areas of its principal manufacturing facilities are as
follows:
<CAPTION>
APPROXIMATE
AREA
(SQUARE
LOCATION FEET)
------------
<S> <C>
Germany (3 facilities)............................ 1,200,000
Spain............................................. 400,000
Ireland........................................... 200,000
Mexico............................................ 300,000
France............................................ 30,000
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Total................................... 2,130,000
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------------
</TABLE>
Approximately 85% of these facilities and 94% of the land they occupy are
owned by Braun.
Oral-B's executive offices are in leased space in Redwood City, California.
In addition to its Iowa City plant, it owns or leases approximately 200,000
square feet of manufacturing facilities in four countries outside the United
States.
Miscellaneous manufacturing operations in North Chicago, Illinois and other
locations account for approximately 80,000 square feet.
The above facilities are in good repair, adequately meet the Company's
needs and operate at reasonable levels of production capacity.
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ITEM 3. LEGAL PROCEEDINGS
The Company is subject to legal proceedings and claims arising out of its
business, which cover a wide range of matters, including antitrust and trade
regulation, product liability, contracts, environmental issues, patent and
trademark matters and taxes. Management, after review and consultation with
counsel considers that any liability from all of these legal proceedings and
claims would not materially affect the consolidated financial position or
results of operations of the Company.
The previously reported class action titled In re Gillette Securities
Litigation filed in the Federal District Court in Boston has been settled
subject to the final approval of the court. The previously reported derivative
action titled Albert B. Evans v. Colman M. Mockler, Jr., et al. filed in the
same court has been dismissed with prejudice.
The previously reported environmental suits filed in the Federal District
Court in Boston titled United States v. Charles George Trucking Company, Inc.,
et al. and Commonwealth of Massachusetts v. Charles George Trucking Company,
Inc., et al. have been settled and consent decrees have been entered. Certain
parties have appealed the settlements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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<TABLE>
EXECUTIVE OFFICERS OF REGISTRANT
Information regarding the Executive Officers of the Company as of March 17,
1994 is set out below.
<CAPTION>
NAME AND CURRENT POSITION FIVE-YEAR BUSINESS HISTORY AGE
------------------------- -------------------------- ---
<S> <C> <C>
Alfred M. Zeien Chairman of the Board and Chief Executive Officer 64
Chairman of the Board and Chief since February 1991; President and Chief
Executive Officer Operating Officer, January 1991 - February 1991;
Vice Chairman of the Board,
International/Diversified Operations, November
1987 - January 1991
Joseph E. Mullaney Vice Chairman of the Board since November 1990; 60
Vice Chairman of the Board Senior Vice President, Legal, April 1977 -
November 1990; Vice President, September 1973 -
April 1977; General Counsel, September 1973 -
September 1990
Jacques Lagarde Executive Vice President, Diversified Group since 55
Executive Vice President October 1993; Vice President, February 1990 -
September 1993; Chairman, Board of Management,
Braun AG, February 1990 - September 1993; Deputy
Chairman, Board of Management, Braun AG, July
1989 - January 1990; President, Oral-B
Laboratories, Inc., November 1985 - June 1989
Michael C. Hawley Executive Vice President, International Group 55
Executive Vice President since December 1993; President, Oral-B
Laboratories, Inc., May 1989 - November 1993;
Vice President, Administrative Services, January
1989 - April 1989
Robert J. Murray Executive Vice President, North Atlantic Group 52
Executive Vice President since January 1991; Vice President, October
1987 - January 1991; Chairman, Board of
Management, Braun AG, November 1985 - January
1990
William J. McMorrow Senior Vice President, Administration since 62
Senior Vice President December 1987
Thomas F. Skelly Senior Vice President, Finance since May 1980 60
Senior Vice President
Anthony S. Lucas Vice President since July 1983; Controller since 61
Vice President and Controller June 1980
</TABLE>
The Executive Officers hold office until the first meeting of the Board of
Directors following the annual meeting of the stockholders and until their
successors are respectively elected or appointed and qualified, unless a shorter
period shall have been specified by the terms of their election or appointment,
or until their earlier resignation, removal or death.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The information required by this item appears in the 1993 Annual Report on
the inside back cover and at page 39 under the caption, "Quarterly Financial
Information," and is incorporated by reference. As of March 1, 1994, the record
date for the 1994 Annual Meeting, there were 29,067 Gillette stockholders of
record.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item appears in the 1993 Annual Report at
pages 40 and 41 under the caption, "Historical Financial Summary," and is
incorporated by reference.
5
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item appears in the 1993 Annual Report at
pages 23 through 25 under the caption, "Management's Discussion," and is
incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
The following Financial Statements and Supplementary Data for The Gillette
Company and Subsidiary Companies appear in the 1993 Annual Report at the pages
indicated below and are incorporated by reference.
<S> <C> <C>
(1) Independent Auditors' Report..................................... Page 38
(2) Consolidated Statement of Income and Earnings Reinvested in the
Business for the Years Ended December 31, 1993, 1992 and 1991.... Page 26
(3) Consolidated Balance Sheet at December 31, 1993 and 1992......... Page 27
(4) Consolidated Statement of Cash Flows for the Years Ended
December 31, 1993, 1992 and 1991................................. Page 28
(5) Notes to Consolidated Financial Statements....................... Pages 29
through 37
(6) Quarterly Financial Information.................................. Page 39
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The information required by this item with respect to the Directors of the
Company appears in the 1994 Proxy Statement at pages 1 through 4, at page 7
under the caption "Certain Transactions with Directors and Officers" and at page
24 under the caption "Compliance with Section 16(a) of the Exchange Act," the
texts of which are incorporated by reference.
The information required for Executive Officers of the Company appears at
the end of Part I of this report at page 5.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item appears in the 1994 Proxy Statement
at page 8 under the caption "Compensation of Directors" and at pages 11 through
17 under the captions "Compensation of Chief Executive Officer" and "Executive
Compensation" and is incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item concerning the security ownership of
certain beneficial owners and management appears in the 1994 Proxy Statement at
pages 6 through 7 under the caption, "Stock Ownership of Certain Beneficial
Owners and Management," and is incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item appears in the 1994 Proxy Statement
at page 7 under the caption "Certain Transactions with Directors and Officers"
and at page 8 under the caption "Compensation of Directors" and is incorporated
by reference.
6
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K
A. FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
<TABLE>
FINANCIAL STATEMENTS
The following appear in the 1993 Annual Report at the pages indicated below
and are incorporated into Part II by reference.
<S> <C> <C>
(1) Independent Auditors' Report..................................... Page 38
(2) Consolidated Statement of Income and Earnings Reinvested in the
Business for the Years Ended December 31, 1993, 1992 and 1991.... Page 26
(3) Consolidated Balance Sheet at December 31, 1993 and 1992......... Page 27
(4) Consolidated Statement of Cash Flows for the Years Ended
December 31, 1993, 1992 and 1991................................. Page 28
(5) Notes to Consolidated Financial Statements....................... Pages 29
through 37
</TABLE>
<TABLE>
SCHEDULES
The following schedules appear at pages 11 through 15 of this report:
<S> <C>
V. Property, Plant and Equipment
VI. Accumulated Depreciation and Obsolescence of Property, Plant and Equipment
VIII. Valuation and Qualifying Accounts
IX. Short-Term Borrowings
X. Supplementary Income Statement Information
</TABLE>
Schedules other than those listed above are omitted because they are either
not required or not applicable.
<TABLE>
EXHIBITS
<S> <C>
3(a) 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.
(b) 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
period ended March 31, 1993, incorporated by reference herein.
4(a) Specimen of form of 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 10-K for the year ended December 31, 1986,
Commission File No. I-922, incorporated by reference herein.
(b) Form of Certificate of Designation, Preferences and Rights of Series A
Junior Participating Preferred Stock of the Gillette Company filed as
Exhibit A to Exhibit 1 to The Gillette Company Current Report on Form 8-K,
dated December 30, 1985, Commission File No. I-911, incorporated by
reference herein.
(c) 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, incorporated by reference herein.
(d) Certificate of Designation of the Series C ESOP Convertible Preferred Stock
of The Gillette Company, dated January 17, 1990, filed as Exhibit 4(e) 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.
(e) Certificate of Amendment relating to an increase in the amount of
authorized shares of preferred stock and common stock, filed as Exhibit
3(e) to The Gillette Company Annual Report on Form 10-K for the year ended
December 31, 1991, Commission File No. I-922, incorporated by reference
herein.
</TABLE>
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<TABLE>
<S> <C>
(f) Instruments relating to long-term debt.
Credit agreement dated August 19, 1988, amended and restated as of October
16, 1989, and amended as of December 10, 1990 among The Gillette Company
and a group of United States and international banks, filed as Exhibit 4(f)
to The Gillette Company Annual Report on Form 10-K for the year ended
December 31, 1990, Commission File No. I-922, incorporated by reference
herein.
Form of $150,000,000 4.75% note due August 15, 1996 issued pursuant to
Registration Statement No. 33-54974 of The Gillette Company, filed November
24, 1992, as amended May 14, 1993 and June 24, 1993 filed herewith, and the
Trust Indenture filed therewith as Exhibit 4.1, incorporated by reference
herein.
Form of $150,000,000 6.25% note due August 15, 2003, issued pursuant to
Registration Statement No. 33-54974 of The Gillette Company, filed November
24, 1992, as amended May 14, 1993 and June 24, 1993 filed herewith, and the
Trust Indenture filed therewith as Exhibit 4.1, incorporated by reference
herein.
Form of $150,000,000 and $50,000,000 5.75% notes due October 15, 2005,
issued pursuant to Registration Statement No. 33-50303 of The Gillette
Company, filed September 17, 1993 filed herewith, and the Trust Indenture
filed as Exhibit 4.1 to Registration Statement No. 33-54974 of The Gillette
Company, as amended May 14, 1993 and June 24, 1993, incorporated by
reference herein.
(Others not filed, but the registrant agrees to file a copy of such
instruments upon the request of the Securities and Exchange Commission.)
10 Material Contracts
*(a) The Gillette Company 1971 Stock Option Plan, as amended, subject to the
approval of the stockholders at their annual meeting on April 21, 1994,
filed herewith.
*(b) The Gillette Company Stock Equivalent Unit Plan, as amended, subject to the
approval of the stockholders at their annual meeting on April 21, 1994,
filed herewith.
*(c) The Gillette Company Incentive Bonus Plan, as amended, filed herewith.
*(d) The Gillette Company Outside Directors' Stock Ownership Plan, subject to
the approval of the stockholders at their annual meeting on April 21, 1994,
filed herewith.
*(e) Description of The Gillette Company Executive Life Insurance Program, filed
as Exhibit 10(d) to The Gillette Company Annual Report on Form 10-K for the
year ended December 31, 1991, Commission File No. I-922, incorporated by
reference herein.
(f) Directors and Officers and Company Reimbursement Indemnity Insurance and
Pension and Welfare Fund Fiduciary Responsibility Insurance policy, filed
herewith.
*(g) The Retirement Plan for Directors of The Gillette Company, as amended,
filed as Exhibit 10(f) to The Gillette Company Annual Report on Form 10-K
for the year ended December 31, 1987, Commission File No. I-922,
incorporated by reference herein.
*(h) The Deferred Compensation Plan for Directors of The Gillette Company, as
amended, filed herewith.
(i) Stock Purchase Agreement dated November 24, 1986, between The Gillette Com-
pany and a group of entities consisting of Revlon Group Incorporated,
MacAndrews & Forbes, Incorporated and certain of their affiliates, filed as
Exhibit No. 28.2 to The Gillette Company Current Report on Form 8-K dated
November 24, 1986, Commission File No. I-922, incorporated by reference
herein.
*(j) Description of severance pay and benefit arrangements for employees in the
event of a change in control, filed as Exhibit 10(j) to The Gillette
Company Annual Report on Form 10-K for the year ending December 31, 1989,
Commission File No. I-922, incorporated by reference herein.
(k) Letter Agreement, dated July 20, 1989, between The Gillette Company and
Berkshire Hathaway Inc., filed as Exhibit 4(a) to The Gillette Company
Current Report on Form 8-K, dated July 20, 1989, Commission File No. I-922,
incorporated by reference herein.
</TABLE>
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<TABLE>
<S> <C>
*(l) Description of agreement between The Gillette Company and Gaston R. Levy
dated December 27, 1993, filed herewith.
*(m) Description of agreement between The Gillette Company and Lorne R. Waxlax
dated September 30, 1993, filed herewith.
*(n) Description of The Gillette Company Estate Preservation Plan, filed
herewith.
*(o) Description of The Gillette Company Estate Planning Program, filed
herewith.
11 Computation of per share earnings, filed herewith.
13 Portions of the 1993 Annual Report to Stockholders of The Gillette Company
incorporated by reference in this Form 10-K.
22 List of subsidiaries of The Gillette Company, filed herewith.
23 Independent Auditors' Consent.
24 Power of Attorney.
- ---------------
<FN>
* Filed pursuant to Item 14(c).
</TABLE>
B. REPORTS ON FORM 8-K
There were no reports on Form 8-K filed by the Company during the last
quarter of the period covered by this report.
OTHER MATTERS
For the purposes of complying with the amendments to the rules governing
Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the
undersigned registrant hereby undertakes as follows, which undertaking shall be
incorporated by reference into the following Registration Statements of the
registrant on Form S-8 (1) No. 33-27916, filed April 10, 1989, and amended
thereafter, which incorporates by reference therein Registration Statements on
Form S-8 Nos. 2-90276, 2-63951 and 1-50710, and all amendments thereto, all
relating to shares issuable and deliverable under The Gillette Company 1971
Stock Option Plan and 1974 Stock Purchase Plan and on Form S-7 No.
2-41016 relating to shares issuable and deliverable under The Gillette Company
1971 Stock Option Plan; (2) No. 33-9495, filed October 20, 1986, and all
amendments thereto, relating to shares and plan interests in The Gillette
Company Employees' Savings Plan; (3) No. 2-93230, filed September 12, 1984, and
all amendments thereto, relating to shares and plan interests in the Oral-B
Laboratories Savings Plan; (4) No. 33-56218, filed December 23, 1992, relating
to shares and plan interests in The Gillette Company Employees' Savings Plan;
and (5) No. 33-52465, filed March 1, 1994, and all amendments thereto, relating
to shares issuable and deliverable under The Gillette Company Global Employee
Stock Ownership Plan.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant, 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 Securities Act of 1933 and is, therefore, unenforceable. In
the event a claim for indemnification against such liabilities (other than the
payments by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer, or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction 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.
9
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INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
of The Gillette Company:
Under date of January 27, 1994, we reported on the consolidated balance
sheet of The Gillette Company and subsidiary companies as of December 31, 1993
and 1992, and the related consolidated statements of income and earnings
reinvested in the business and cash flows for each of the years in the
three-year period ended December 31, 1993, as contained in the 1993 Annual
Report to Stockholders. These consolidated financial statements and our report
thereon are incorporated by reference in the annual report on Form 10-K for the
year 1993. In connection with our audits of the aforementioned consolidated
financial statements, we also have audited the related financial statement
schedules listed on page 7 of this report. These financial statement schedules
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
KPMG PEAT MARWICK
Boston, Massachusetts
January 27, 1994
10
<PAGE> 12
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
<TABLE>
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
(MILLIONS OF DOLLARS)
<CAPTION>
BALANCE RETIRE- OTHER BALANCE
AT MENTS CHANGES AT
BEGINNING ADDITIONS OR ADD END OF
CLASSIFICATION OF YEAR AT COST SALES (DEDUCT) YEAR
-------------- ------- --------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
1993
$ 1.6 (A)
Land............................. $ 28.2 $ .4 $ .1 (.9)(B) $ 29.9
.7 (C)
10.8 (A)
Buildings........................ 388.7 34.0 2.1 (24.1)(B) 420.5
13.2 (C)
(12.4)(A)
Machinery and equipment.......... 1,996.7 317.6 74.4 (129.0)(B) 2,125.5
27.0 (C)
-------- ------ ------ -------- --------
Total....................... $2,413.6 $352.0 $ 76.6 $ (113.1) $2,575.9
-------- ------ ------ -------- --------
-------- ------ ------ -------- --------
1992
$ -- (A)
Land............................. $ 24.7 $ 2.0 $ .1 .2 (B) $ 28.2
1.4 (C)
5.0 (A)
Buildings........................ 328.7 41.1 3.9 12.8 (B) 388.7
5.0 (C)
(5.0)(A)
Machinery and equipment.......... 1,771.6 278.3 101.0 46.0 (B) 1,996.7
6.8 (C)
-------- ------ ------ -------- --------
Total....................... $2,125.0 $321.4 $105.0 $ 72.2 $2,413.6
-------- ------ ------ -------- --------
-------- ------ ------ -------- --------
1991
$ -- (A)
Land............................. $ 20.2 $ 5.7 $ .6 (.7)(B) $ 24.7
.1 (C)
.1 (A)
Buildings........................ 319.8 21.5 3.8 (9.5)(B) 328.7
.6 (C)
(.1)(A)
Machinery and equipment.......... 1,646.1 258.8 67.5 (70.8)(B) 1,771.6
5.1 (C)
-------- ------ ------ -------- --------
Total....................... $1,986.1 $286.0 $ 71.9 $ (75.2) $2,125.0
-------- ------ ------ -------- --------
-------- ------ ------ -------- --------
</TABLE>
- ---------------
(A) -- Transfers between accounts.
(B) -- Foreign currency exchange fluctuations from beginning of year to end of
year.
(C) -- Acquisitions.
11
<PAGE> 13
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
<TABLE>
SCHEDULE VI -- ACCUMULATED DEPRECIATION AND OBSOLESCENCE OF
PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
<CAPTION>
ADDITIONS
CHARGED
TO BALANCE
BALANCE AT PROFIT OTHER AT
BEGINNING AND RETIREMENTS CHANGES END OF
DESCRIPTION OF YEAR LOSS OR SALES ADD (DEDUCT) YEAR
--------- --------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C>
1993
$ 3.2 (A)
Buildings..................... $ 164.3 $ 14.7 $ .8 (10.3)(B) $ 171.1
(3.2)(A)
Machinery and equipment....... 1,173.9 174.3 65.0 (89.7)(B) 1,190.3
-------- ------- ------ -------- --------
Total.................... $1,338.2 $ 189.0 $ 65.8 $ (100.0) $1,361.4
-------- ------- ------ -------- --------
-------- ------- ------ -------- --------
1992
$ (.5)(A)
Buildings..................... $ 149. 0 $ 12.0 $ 2.8 6.6 (B) $ 164.3
.5 (A)
Machinery and equipment....... 1,044.6 176.0 89.9 42.7 (B) 1,173.9
-------- ------- ------ -------- --------
Total.................... $1,193.6 $ 188.0 $ 92.7 $ 49.3 $1,338.2
-------- ------- ------ -------- --------
-------- ------- ------ -------- --------
1991
$ 3.4 (A)
Buildings..................... $ 139.0 $ 13.0 $ 1.5 (4.9)(B) $ 149.0
(3.4)(A)
Machinery and equipment....... 985.5 159.4 55.1 (41.8)(B) 1,044.6
-------- ------- ------ -------- --------
Total.................... $1,124.5 $ 172.4 $ 56.6 $ (46.7) $1,193.6
-------- ------- ------ -------- --------
-------- ------- ------ -------- --------
</TABLE>
- ---------------------
<TABLE>
<S> <C>
(A) -- Transfers between accounts.
(B) -- Foreign currency exchange fluctuations from beginning of year to end of year.
</TABLE>
Note -- Depreciation is computed primarily on a straight-line basis over the
estimated useful lives of assets which are as follows:
<TABLE>
<S> <C>
Buildings and land improvements......... 10 to 50 years
Furniture and fixtures.................. 5 to 15 years
Machinery, equipment and vehicles....... 3 to 15 years
</TABLE>
12
<PAGE> 14
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
<TABLE>
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
<CAPTION>
ADDITIONS DEDUCTIONS
--------------------- ----------
BALANCE CHARGED LOSSES BALANCE
AT TO CHARGED CHARGED AT
BEGINNING PROFIT TO TO END OF
DESCRIPTION OF YEAR AND LOSS OTHER RESERVES YEAR
----------- --------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
1993
Reserves deducted from assets:
Receivables...................... $41.8 $18.0 $ 2.5* $ 16.4 $45.9
----- ----- ----- ------ -----
----- ----- ----- ------ -----
1992
Reserves deducted from assets:
Receivables...................... $50.7 $ 8.2 $ -- $ 17.1 $41.8
----- ----- ----- ------ -----
----- ----- ----- ------ -----
1991
Reserves deducted from assets:
Receivables...................... $46.1 $19.5 $ -- $ 14.9 $50.7
----- ----- ----- ------ -----
----- ----- ----- ------ -----
</TABLE>
* Acquisition balances
13
<PAGE> 15
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
<TABLE>
SCHEDULE IX -- SHORT-TERM BORROWINGS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
<CAPTION>
WEIGHTED
YEAR END AVERAGE
BALANCE WEIGHTED MAXIMUM AVERAGE INTEREST
AT END AVERAGE OUTSTANDING OUTSTANDING RATE
OF INTEREST DURING DURING DURING
YEAR RATE THE YEAR THE YEAR THE YEAR
------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1993
Banks and Financial
Institutions................. $341.0 5% $ 236.9 $ 260.7 7%
Commercial Paper................ 54.0 3 477.0 140.2 3
------ -- ------- ------- --
Total................... $395.0 4% $ 713.9 $ 400.9 5%
------ -- ------- ------- --
------ -- ------- ------- --
1992
Banks and Financial
Institutions................. $265.2 9% $ 265.2 $ 186.1 10%
Commercial Paper................ 42.0 4 42.0 55.4 4
------ -- ------- ------- --
Total................... $307.2 8% $ 307.2 $ 241.5 8%
------ -- ------- ------- --
------ -- ------- ------- --
1991
Banks and Financial
Institutions................. $194.4 10% $ 297.4 $ 233.5 18%
Commercial Paper................ 13.0 5 26.0 33.5 6
------ -- ------- ------- --
Total................... $207.4 10% $ 323.4 $ 267.0 17%
------ -- ------- ------- --
------ -- ------- ------- --
</TABLE>
- ---------------
NOTE: Short-term borrowings, excluding commercial paper, represent primarily
foreign currency debt. The maximum and average amounts outstanding during
the year are based on quarter-end total outstanding balances and are
representative of the year. Average interest rates on short-term
borrowings in all three years have been materially impacted by high
interest rates in the hyperinflationary economies. Borrowings in these
economies have been significantly reduced compared with 1991.
14
<PAGE> 16
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
<TABLE>
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
<CAPTION>
1993 1992 1991
------- ------ ------
<S> <C> <C> <C>
Maintenance and repairs...................................... $ 42.3 $ 47.8* $ 47.3*
------ ------ ------
------ ------ ------
Taxes, other than payroll and income taxes................... $ 42.6 $ 39.3 $ 34.9
------ ------ ------
------ ------ ------
Advertising costs............................................ $428.0 $446.8 $402.2
------ ------ ------
------ ------ ------
</TABLE>
- ---------------
* Restated to reflect reported years on a comparable basis.
15
<PAGE> 17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE GILLETTE COMPANY
(Registrant)
By THOMAS F. SKELLY
-------------------------------
Thomas F. Skelly
Senior Vice President and Chief
Financial Officer
Date: March 22, 1994
<TABLE>
Pursuant to the requirement of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
ALFRED M. ZEIEN Chairman of the Board March 22, 1994
----------------------------------------- of Directors, Chief Executive
Alfred M. Zeien Officer and Director
JOSEPH E. MULLANEY Vice Chairman of the Board and March 22, 1994
----------------------------------------- Director
Joseph E. Mullaney
THOMAS F. SKELLY Senior Vice President and March 22, 1994
----------------------------------------- Chief Financial Officer
Thomas F. Skelly
ANTHONY S. LUCAS Vice President, March 22, 1994
----------------------------------------- Controller and Principal
Anthony S. Lucas Accounting Officer
WARREN E. BUFFETT Director March 22, 1994
-----------------------------------------
Warren E. Buffett
LAWRENCE E. FOURAKER Director March 22, 1994
-----------------------------------------
Lawrence E. Fouraker
WILBUR H. GANTZ Director March 22, 1994
-----------------------------------------
Wilbur H. Gantz
MICHAEL B. GIFFORD Director March 22, 1994
-----------------------------------------
Michael B. Gifford
CAROL R. GOLDBERG Director March 22, 1994
-----------------------------------------
Carol R. Goldberg
HERBERT H. JACOBI Director March 22, 1994
-----------------------------------------
Herbert H. Jacobi
RICHARD R. PIVIROTTO Director March 22, 1994
-----------------------------------------
Richard R. Pivirotto
JUAN M. STETA Director March 22, 1994
-----------------------------------------
Juan M. Steta
ALEXANDER B. TROWBRIDGE Director March 22, 1994
-----------------------------------------
Alexander B. Trowbridge
JOSEPH F. TURLEY Director March 22, 1994
-----------------------------------------
Joseph F. Turley
</TABLE>
By THOMAS F. SKELLY
--------------------------
Thomas F. Skelly
as Attorney-In-Fact
16
<PAGE> 1
Exhibit 4(f)
[FACE OF NOTE]
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
Unless and until it is exchanged in whole or in part for Notes in definitive
registered form, this Note may not be transferred except as a whole by the
Depositary to the nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another Depositary or by the Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary.
CUSIP No. 375766AB8
No.__ $150,000,000.00
The Gillette Company
4.75% Note due August 15, 1996
The Gillette Company, a Delaware corporation (the "Issuer"), for value
received, hereby promises to pay to Cede & Co. or registered assigns, at the
office or agency of the Issuer in the Borough of Manhattan, The City of New
York, the principal sum of One Hundred Fifty Million ($150,000,000.00) Dollars
on August 15, 1996.
Interest Payment Dates: February 15 and August 15,
commencing February 15, 1994.
Record Dates: February 1 and August 1.
Reference is made to the further provisions of this Note set forth on
the reverse hereof. Such further provisions shall for all purposes have the
same effect as though fully set forth at this place.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by the
Trustee under the Indenture referred to on the reverse hereof.
<PAGE> 2
IN WITNESS WHEREOF, The Gillette Company has caused this instrument to
be signed by its duly authorized officers and has caused its corporate seal to
be affixed hereunto or imprinted hereon.
Dated: August 16, 1993
The Gillette Company
By /s/ Lloyd B. Swaim
-------------------------------
By /s/ Anthony S. Lucas
---------------------------------
-2-
<PAGE> 3
[TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities of the series designated herein referred
to in the within-mentioned Indenture.
Morgan Guaranty Trust Company of
New York, as Trustee
By
---------------------------------
Authorized Signature
[REVERSE OF NOTE]
The Gillette Company
4.75% Note due August 15, 1996
This Note is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Issuer (hereinafter called the
"Securities") of the series hereinafter specified, all issued or to be issued
under and pursuant to an indenture dated as of November 23, 1992 (herein called
the "Indenture"), duly executed and delivered by the Issuer to Morgan Guaranty
Trust Company of New York, as Trustee (herein called the "Trustee"), to which
Indenture and all indentures supplemental thereto reference is hereby made for
a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Issuer and the holders of the
Securities. The Securities may be issued in one or more series, which
different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest (if any) at different rates, may
be subject to different redemption provisions (if any), may be subject to
different sinking, purchase or analogous funds (if any) and may otherwise vary
as in the Indenture provided. The Note is one of a series designated as the
4.75% Notes due August 15, 1996 of the Issuer, limited in aggregate principal
amount to $150,000,000.00.
The Issuer promises to pay interest on the principal amount of this Note at the
rate per annum shown above. Interest will be payable semiannually on February
15 and August 15 of each year, commencing February 15, 1994, on said principal
sum at the office or agency of the Issuer in the Borough of Manhattan, The City
of New York, and will accrue at the rate per annum shown above, from the most
recent date to which interest has been paid, or if no interest has been paid
on these Notes, from August 16, 1993, until payment of said principal sum has
been made or duly provided for; provided, that payment of interest may be made
at the option of the Issuer by check mailed to the address of the person
entitled thereto as such address shall appear on the
-3-
<PAGE> 4
Security register. Notwithstanding the foregoing, if the date of this Note is
after the 1st day of February or August, as the case bay be, and before the
immediately following February 15 or August 15, this Note shall bear interest
from such February 15 or August 15; provided, that if the Issuer shall default
in the payment of interest due on such February 15 or August 15, then this Note
shall bear interest from the immediately preceding February 15 or August 15, to
which interest has been paid or, if no interest has been paid on these Notes,
from August 16, 1993. The interest so payable on any February 15 or August 15
will, subject to certain exceptions provided in the Indenture referred to
herein, be paid to the person in whose name this Note is registered at the
close of business on the February 1 or August 1, as the case may be, next
preceding such February 15 or August 15. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
In case an Event of Default with respect to the 4.75% Notes due August
15, 1996, as defined in the Indenture, shall have occurred and be continuing,
the principal hereof may be declared, and upon such declaration shall become,
due and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The Indenture contains provisions permitting the Issuer and the Trustee, with
the consent of the Holders of not less than a majority in aggregate principal
amount of the Securities at the time Outstanding (as defined in the Indenture)
of all series to be affected (voting as one class), evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
Holders of the Securities of each such series; provided, however, that no such
supplemental indenture shall (i) extend the final maturity of any Security, or
reduce the principal amount thereof or any premium thereon, or reduce the
rate or extend the time of payment of any interest thereon, or impair or affect
the rights of any Holder to institute suit for the payment thereof, without the
consent of the Holder of each Security so affected, or (ii) reduce the
aforesaid percentage of Securities the Holders of which are required to consent
to any such supplemental indenture, without the consent of the Holder of each
Security affected. It is also provided in the Indenture that, with respect to
certain defaults or Events of Default regarding the Securities of any series,
prior to any declaration accelerating the maturity of such securities, the
Holders of a majority in aggregate principal amount Outstanding of the
Securities of such series may on behalf the Holders of all the Securities of
such series waive any such past default or Event of Default and its
consequences. The preceding sentence shall not, however, apply to a default in
the payment of the principal of or premium, if any, or interest on
-4-
<PAGE> 5
any of the Securities. Any such consent or waiver by the Holder of this Note
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Note and any
Notes which may be issued in exchange or substitution herefor, irrespective of
whether or not any notation thereof is made upon this Note or such other Notes.
The Indenture contains provisions for defeasance at any time of the
entire indebtedness on this Note upon compliance by the Issuer with certain
conditions set forth therein, which provisions apply to this Note.
No reference herin to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and any premium and
interest on this Note in the manner, at the respective times, at the rate and
in the coin or currency herein prescribed.
The Notes are issuable in registered form without coupons in
denominations of $1,000 and any multiple of $1,000 at the office or agency of
the Issuer in the Borough of Manhattan, The City of New York, and in the manner
and subject to the limitations provided in the Indenture, but without the
payment of any service charge except for any tax or other governmental charge
imposed in connection therewith, notes may be exchanged for a like aggregate
principal amount of Notes of other authorized denominations.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Issuer in the Borough of Manhattan, The City of New
York, a new Note or Notes of authorized denominations for an equal aggregate
principal amount will be issued to the transferee in exchange therefor, subject
to the limitations provided in the Indenture, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Issuer, the Trustee and any authorized agent of the Issuer or the
Trustee may deem and treat the registered Holder thereof as the absolute owner
of this Note (whether or not this Note shall be overdue and notwithstanding any
notation of ownership or other writing hereon), for the purpose of receiving
payment of, or on account of, the principal hereof and premium, if any, and
subject to the provisions on the face hereof, interest hereon, and for all
other purposes, and neither the Issuer nor the Trustee nor any authorized agent
of the Issuer or the Trustee shall be affected by any notice to the contrary.
No recourse under or upon any obligation, covenant or agreement of the
Issuer in the Indenture or any indenture supplemental thereto or in any Note,
or because of the creation
-5-
<PAGE> 6
of any indebtedness represented thereby, shall be had against any incorporator,
any past, present or future stockholder, officer or director, as such, of the
Issuer or of any successor corporation, either directly or through the Issuer
or any successor corporation, under any rule of law, statute or constitutional
provision or by the enforcement of any assessment or by any legal or equitable
proceeding or otherwise, all such liability being expressly waived and released
by the acceptance hereof and as part of the consideration for the issue hereof.
Terms used herein which are defined in the Indenture shall have the
respective meanings assigned thereto in the Indenture.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM-as tenants in common
TEN ENT-as tenants by the entireties
JT TEN-as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT - Custodian
--------------------------------------------------
(Cust) (Minor)
Under Uniform Gifts to Minors Act
------------------------------------
(State)
Additional abbreviations may also be used though not in the above list.
-6-
<PAGE> 7
ASSIGNMENT FORM
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to:
- --------------------------------------------------------------------------------
(insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(print or type assignee's name, address and zip code)
and irrevocable appoint
-------------------------------------------------------
agent to transfer this Security on the books of the Issuer.
- ----------------
The agent may substitute another to act for him.
Dated: Signature:
---------------------------------- ----------------------------
(Sign exactly as your
name appears on the
other side of this
Security)
-7-
<PAGE> 8
[FACE OF NOTE]
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has and interest herein.
Unless and until it is exchanged in whole or in part for Notes in definitive
registered form, this Note may not be transferred except as a whole by the
Depositary to the nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another Depositary or by the Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary.
CUSIP No. 375766AC6
No._____ $150,000,000.00
The Gillette Company
6.25% Note due August 15, 2003
The Gillette Company, a Delaware corporation (the "Issuer"), for value
received, hereby promises to pay to Cede & Co. or registered assigns, at the
office or agency of the Issuer in the Borough of Manhattan, The City of New
York, the principal sum of One Hundred Fifty Million ($150,000,000.00) Dollars
on August 15, 2003.
Interest Payment Dates: February 15 and August 15, commencing
February 15, 1994.
Record Dates: February 1 and August 1.
Reference is made to the further provisions of this Note set forth on
the reverse hereof. Such further provisions shall for all purposes have the
same effect as though fully set forth at this place.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by the
Trustee under the Indenture referred to on the reverse hereof.
<PAGE> 9
IN WITNESS WHEREOF, The Gillette Company has caused this instrument to
be signed by its duly authorized officers and has caused its corporate seal to
be affixed hereunto or imprinted hereon.
Dated: August 16, 1993
The Gillette Company
By /s/ Lloyd B. Swaim
----------------------------------
By /s/ Anthony S. Lucas
----------------------------------
-2-
<PAGE> 10
[TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities of the series designated herein referred
to in the within-mentioned Indenture.
Morgan Guaranty Trust Company of
New York, as Trustee
By
---------------------------------
Authorized Signatory
[REVERSE OF NOTE]
The Gillette Company
6.25% Note due August 15, 2003
This Note is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Issuer (hereinafter called the
"Securities") of the series hereinafter specified, all issued or to be issued
under and pursuant to an indenture dated as of November 23, 1992 (herein called
the "Indenture"), duly executed and delivered by the Issuer to Morgan Guaranty
Trust Company of New York, as Trustee (herein called the "Trustee"), to which
Indenture and all indentures supplemental thereto reference is hereby made for
a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Issuer and the holders of the
Securities. The Securities may be issued in one or more series, which
different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest (if any) at different rates, may
be subject to different redemption provisions (if any), may be subject to
different sinking, purchase or analogous funds (if any) and may otherwise vary
as in the Indenture provided. This Note is one of a series designated as the
6.25% Notes due August 15, 2003 of the Issuer, limited in aggregate principal
amount to $150,000,000.00.
The Issuer promises to pay interest on the principal amount of this
Note at the rate per annum shown above. Interest will be payable semiannually
on February 15 and August 15 of each year, commencing February 15, 1994, on
said principal sum at the office or agency of the Issuer in the Borough of
Manhattan, The City of New York, and will accrue at the rate per annum shown
above, from the most recent date to which interest has been paid, or if no
interest has been paid on these Notes, from August 16, 1993, until payment of
said principal sum has been made or duly provided for; provided, that payment
of interest may be made at the option of the Issuer by check mailed to the
address of the person entitled thereto as such address shall appear on the
-3-
<PAGE> 11
Security register. Notwithstanding the foregoing, if the date of this Note is
after the 1st day of February or August, as the case may be, and before the
immediately following February 15 or August 15, this Note shall bear interest
from such February 15 or August 15; provided, that if the Issuer shall default
in the payment of interest due on such February 15 or August 15, then this Note
shall bear interest from the immediately preceding February 15 or August 15, to
which interest has been paid or, if no interest has been paid on these Notes,
from August 16, 1993. The interest so payable on any February 15 or August 15
will, subject to certain exceptions provided in the Indenture referred to
herein, be paid to the person in whose name this Note is registered at the
close of business on the February 1 or August 1, as the case may be, next
preceding such February 15 or August 15. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
In case an Event of Default with respect to the 6.25% Notes due August
15, 2003, as defined in the Indenture, shall have occurred and be continuing,
the principal hereof may be declared, and upon such declaration shall become,
due and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The Indenture contains provisions permitting the Issuer and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities at the time Outstanding (as
defined in the Indenture) of all series to be affected (voting as one class),
evidenced as in the Indenture provided, to execute supplemental indentures
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or modifying in
any manner the rights of the Holders of the Securities of each such series;
provided, however, that no such supplemental indenture shall (i) extend the
final maturity of any Security, or reduce the principal amount thereof or any
premium thereon, or reduce the rate or extend the time of payment of any
interest thereon, or impair or affect the rights of any Holder to institute
suit for the payment thereof, without the consent of the Holder of each
Security so affected, or (ii) reduce the aforesaid percentage of Securities the
Holders of which are required to consent to any such supplemental indenture,
without the consent of the Holder of each Security affected. It is also
provided in the Indenture that, with respect to certain defaults or Events of
Default regarding the Securities of any series, prior to any declaration
accelerating the maturity of such Securities, the Holders of a majority in
aggregate principal Amount Outstanding of the Securities of such series may on
behalf of the Holders of all the securities of such series waive any such past
default or Event of Default and its consequences. The preceding sentence shall
not, however, apply to a default in the payment of the principal of or premium,
if any, or interest on
-4-
<PAGE> 12
any of the Securities. Any such consent or waiver by the Holder of this Note
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Note and any
Notes which may be issued in exchange or substitution herefor, irrespective of
whether or not any notation thereof is made upon this Note or such other Notes.
The Indenture contains provisions for defeasance at any time of the
entire indebtedness on this Note upon compliance by the Issuer with certain
conditions set forth therein, which provisions apply to this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and any premium and
interest on this Note in the manner, at the respective times, at the rate and
in the coin or currency herein prescribed.
The Notes are issuable in registered form without coupons in
denominations of $1,000 and any multiple of $1,000 at the office or agency of
the Issuer in the Borough of Manhattan, The City of New York, and in the manner
and subject to the limitations provided in the Indenture, but without the
payment of any service charge except for any tax or other governmental charge
imposed in connection therewith, notes may be exchanged for a like aggregate
principal amount of Notes of other authorized denominations.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Issuer in the Borough of Manhattan, The City of New
York, a new Note or Notes of authorized denominations for an equal aggregate
principal amount will be issued to the transferee in exchange therefor, subject
to the limitations provided in the Indenture, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Issuer, the Trustee and any authorized agent of the Issuer or the
Trustee may deem and treat the registered Holder hereof as the absolute owner
of this Note (whether or not this Note shall be overdue and notwithstanding any
notation of ownership or other writing hereon), for the purpose of receiving
payment of, or on account of, the principal hereof and premium, if any, and
subject to the provisions on the face hereof, interest hereon, and for all
other purposes, and neither the Issuer nor the Trustee nor any authorized agent
of the Issuer or the Trustee shall be affected by any notice to the contrary.
No recourse under or upon any obligation, covenant or agreement of the
Issuer in the Indenture or any indenture supplemental thereto or in any Note,
or because of the creation
-5-
<PAGE> 13
of any indebtedness represented thereby, shall be had against any incorporator,
any past, present or future stockholder, officer or director, as such, of the
Issuer or of any successor corporation, either directly or through the Issuer or
any successor corporation, under any rule of law, statute or constitutional
provision or by the enforcement of any assessment or by any legal or equitable
proceeding or otherwise, all such liability being expressly waived and released
by the acceptance hereof and as part of the consideration for the issue hereof.
Terms used herein which are defined in the Indenture shall have the
respective meanings assigned thereto in the Indenture.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM-as tenants in common
TEN ENT-as tenants by the entireties
JT TEN-as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT - Custodian
--------------------------------------------------
(Cust) (Minor)
Under Uniform Gifts to Minors Act
-------------------------------------
(State)
Additional abbreviations may also be used though not in the above list.
-6-
<PAGE> 14
ASSIGNMENT FORM
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to:
- --------------------------------------------------------------------------------
(insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
agent to transfer this Security on the books of the Issuer. The agent may
substitute another to act for him.
Dated: Signature:
------------------------ ------------------------------------
(Sign exactly as your name
appears on the other side
of this Security)
-7-
<PAGE> 15
[FACE OF NOTE]
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
Unless and until it is exchanged in whole or in part for Notes in definitive
registered form, this Note may not be transferred except as a whole by the
Depositary to the nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another Depositary or by the Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary.
CUSIP No.375766 AD 4
Registered No. 3 $150,000,000.00
The Gillette Company
5.75% Note due October 15, 2005
The Gillette Company, a Delaware corporation (the "Issuer"), for value
received, hereby promises to pay to , or registered assigns, at the
office or agency or the Issuer in the Borough of Manhattan, The City of New
York, the principal sum of One Hundred Fifty Million ($150,000,000.00) Dollars
on October 15, 2005.
Interest Payment Dates: April 15 and October 15,
commencing April 15, 1994.
Record Dates: April 1 and October 1.
Reference is made to the further provisions of this Note set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
This Note shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been signed by the Trustee
under the Indenture referred to on the reverse hereof.
<PAGE> 16
IN WITNESS WHEREOF, The Gillette Company has caused this instrument to be
signed by its duly authorized officers and has caused its corporate seal to be
affixed hereunto or imprinted hereon.
Dated:
The Gillette Company
By /s/ Lloyd B. Swain
----------------------------
[TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities of the series designated herein referred to
in the within-mentioned Indenture.
Morgan Guaranty Trust Company of
New York, as Trustee
By
----------------------------
Authorized Signatory
-2-
<PAGE> 17
[REVERSE OF NOTE]
The Gillette Company
5.75% Note due October 15, 2005
This Note is one of a duly authorized issue of debentures, notes, bonds or
other evidences of indebtedness of the Issuer (hereinafter called the
"Securities") of the series hereinafter specified, all issued or to be issued
under and pursuant to an indenture dated as of November 23, 1992 (herein called
the "Indenture"), duly executed and delivered by the Issuer to Morgan Guaranty
Trust Company of New York, as Trustee (herein called the "Trustee"), to which
Indenture and all indentures supplemental thereto reference is hereby made for
a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Issuer and the holders of the
Securities. The Securities may be issued in one or more series, which
different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest (if any) at different rates, may
be subject to different redemption provisions (if any), may be subject to
different sinking, purchase or analogous funds (if any) and may otherwise vary
as in the Indenture provided. This note is one of a series designated as the
5.75% Notes due October 15, 2005 of the Issuer, limited in aggregate principal
amount to $200,000,000.00.
The Issuer promises to pay interest on the principal amount of this Note
at the rate per annum shown above. Interest will be payable semiannually on
April 15 and October 15 of each year, commencing April 15, 1994, on said
principal sum at the office or agency of the Issuer in the Borough of
Manhattan, The City of New York, and will accrue at the rate per annum shown
above, from the most recent date to which interest has been paid, or if no
interest has been paid on these Notes, from October 25, 1993, until payment of
said principal sum has been made or duly provided for; provided, that payment
of interest may be made at the option of the Issuer by check mailed to the
address of the person entitled thereto as such address shall appear on the
Security register. Notwithstanding the foregoing, if the date of this Note is
after the 1st day of April or October, as the case may be, and before the
immediately following April 15 or October 15, this Note shall bear interest
from such April 15 or October 15; provided, that if the Issuer shall default in
the payment of interest due on such April 15 or October 15, then this Note
shall bear interest from the immediately preceding April 15 or October 15, to
which interest has been paid or, if no interest has been paid on these Notes,
from October 25, 1993. The interest so payable on any April 15 or October 15
will, subject to certain exceptions provided in the Indenture referred to
herein, be paid to the person in whose name this Note is registered at the close
-3-
<PAGE> 18
of business on the April 1 or October 1, as the case may be, next preceding
such April 15 or October 15. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
In case an Event of Default with respect to the 5.75% Notes due October 15,
2005, as defined in the Indenture, shall have occurred and be continuing, the
principal hereof may be declared, and upon such declaration shall become, due
and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The Indenture contains provisions permitting the Issuer and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of the Securities at the time Outstanding (as defined in the
Indenture) of all series to be affected (voting as one class), evidenced as in
the Indenture provided, to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of any supplemental indenture or modifying in any manner the
rights of the Holders of the Securities of each such series; provided, however,
that no such supplemental indenture shall (i) extend the final maturity of any
Security, or reduce the principal amount thereof or any premium thereon, or
reduce the rate or extend the time of payment of any interest thereon, or
impair or affect the rights of any Holder to institute suit for the payment
thereof, without the consent of the Holder of each Security so affected, or
(ii) reduce the aforesaid percentage of Securities the Holders of which are
required to consent to any such supplemental indenture, without the consent of
the Holder of each Security affected. It is also provided in the Indenture
that, with respect to certain defaults or Events of Default regarding the
Securities of any series, prior to any declaration accelerating the maturity of
such Securities, the Holders of a majority in aggregate principal amount
Outstanding of the Securities of such series may on behalf of the Holders of
all the Securities of such series waive any such past default or Event of
Default and its consequences. The preceding sentence shall not, however, apply
to a default in the payment of the principal of or interest on any of the
Securities. Any such consent or waiver by the Holder of this Note (unless
revoked as provided in the Indenture) shall be conclusive and binding upon such
Holder and upon all future Holders and owners of this Note and any Notes which
may be issued in exchange or substitution herefor, irrespective of whether or
not any notation thereof is made upon this Note or such other Notes.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness on this Note upon compliance by the Issuer with certain conditions
set forth therein, which provisions apply to this Note.
-4-
<PAGE> 19
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and any premium and
interest on this Note in the manner, at the respective times, at the rate and
in the coin or currency herein prescribed.
The Notes are issuable in registered form without coupons in denominations
of $1,000 and any multiple of $1,000 at the office or agency of the Issuer in
the Borough of Manhattan, The City of New York, and in the manner and subject to
the limitations provided in the Indenture, but without the payment of any
service charge except for any tax or other governmental charge imposed in
connection therewith, Notes may be exchanged for a like aggregate principal
amount of Notes of other authorized denominations.
Upon due presentment for registration of transfer of this Note at the office
or agency of the Issuer in the Borough of Manhattan, The City of New York, a
new Note or Notes of authorized denominations for an equal aggregate principal
amount will be issued to the transferee in exchange therefor, subject to the
limitations provided in the Indenture, without charge except for any tax or
other governmental charge imposed in connection therewith.
The Issuer, the Trustee and any authorized agent of the Issuer or the
Trustee may deem and treat the registered Holder hereof as the absolute owner
of this Note (whether or not this Note shall be overdue and notwithstanding any
notation of ownership or other writing hereon), for the purpose of receiving
payment of, or on account of, the principal hereof and premium, if any, and
subject to the provisions on the face hereof, interest hereon, and for all
other purposes, and neither the Issuer nor the Trustee nor any authorized agent
of the Issuer or the Trustee shall be affected by any notice to the contrary.
No recourse under or upon any obligation, covenant or agreement of the
Issuer in the Indenture or any indenture supplemental thereto or in any Note, or
because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, any past, present or future stockholder, officer or
director, as such, of the Issuer or of any successor corporation, either
directly or through the Issuer or any successor corporation, under any rule of
law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance hereof and as
part of the consideration for the issue hereof.
Terms used herein which are defined in the Indenture shall have the
respective meanings assigned thereto in the Indenture.
-5-
<PAGE> 20
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM-as tenants in common
TEN ENT-as tenants by the entireties
JT TEN-as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT - Custodian
---------------------------------------
(Cust) (Minor)
Under Uniform Gifts to Minors Act
-------------------------
(State)
Additional abbreviations may also be used though not in the above list.
-6-
<PAGE> 21
ASSIGNMENT FORM
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to:
- --------------------------------------------------------------------------------
(insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________agent to
transfer this Security on the books of the Issuer. The agent may substitute
another to act for him.
Dated: Signature:
------------------------------- -----------------------------
(Sign exactly as your name
appears on the other side
of this Security)
-7-
<PAGE> 22
[FACE OF NOTE]
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
Unless and until it is exchanged in whole or in part for Notes in definitive
registered form, this Note may not be transferred except as a whole by the
Depositary to the nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another Depositary or by the Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary.
CUSIP No.375766 AD 4
Registered No. 8 $50,000,000.00
The Gillette Company
5.75% Note due October 15, 2005
The Gillette Company, a Delaware corporation (the "Issuer"), for value
received, hereby promises to pay to , or registered assigns, at the
office or agency of the Issuer in the Borough of Manhattan, The City of New
York, the principal sum of Fifty Million ($50,000,000.00) dollars on October
15, 2005.
Interest Payment Dates: April 15 and October 15,
Commencing April 15, 1994.
Record Dates: April 1 and October 1.
Reference is made to the further provisions of this Note set forth on
the reverse hereof. Such further provisions shall for all purposes have the
same effect as though fully set forth at this place.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by the
Trustee under the Indenture referred to on the reverse hereof.
<PAGE> 23
IN WITNESS WHEREOF, The Gillette Company has caused this instrument to
be signed by its duly authorized officers and has caused its corporate seal to
be affixed hereunto or imprinted hereon.
Dated:
The Gillette Company
By /s/ Lloyd B. Swain
----------------------------------
[TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities of the series designated herein referred
to in the within-mentioned indenture.
Morgan Guaranty Trust Company of
New York, as Trustee
By
----------------------------------
Authorized Signatory
- 2 -
<PAGE> 24
[REVERSE OF NOTE]
The Gillette Company
5.75% Note due October 15, 2005
This Note is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Issuer (hereinafter called the
"Securities") of the series hereinafter specified, all issued or to be issued
under and pursuant to an indenture dated as of November 23, 1992 (herein called
the "Indenture"), duly executed and delivered by the Issuer to Morgan Guaranty
Trust Company of New York, as Trustee (herein called the "Trustee"), to which
Indenture and all indentures supplemental thereto reference is hereby made for
a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Issuer and the holders of the
Securities. The Securities may be issued in one or more series, which
different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest (if any) at different rates, may
be subject to different redemption provisions (if any), may be subject to
different sinking, purchase or analogous funds (if any) and may otherwise vary
as in the Indenture provided. This Note is one of a series designated as the
5.75% Notes due October 15, 2005 of the Issuer, limited in aggregate principal
amount to $200,000,000.00
The Issuer promises to pay interest on the principal amount of this
Note at the rate per annum shown above. Interest will be payable semiannually
on April 15 and October 15 of each year, commencing April 15, 1994, on said
principal sum at the office or agency of the Issuer in the Borough of
Manhattan, The City of New York, and will accrue at the rate per annum shown
above, from the most recent date to which interest has been paid, or if no
interest has been paid on these Notes, from October 25, 1993, until payment
of said principal sum has been made or duly provided for; provided, that
payment of interest may be made at the option of the Issuer by check mailed to
the address of the person entitled thereto as such address shall appear on the
Security register. Notwithstanding the foregoing, if the date of this Note is
after the 1st day of April or October, as the case may be, and before the
immediately following April 15 or October 15, this Note shall bear interest
from such April 15 or October 15; provided, that if the Issuer shall default
in the payment of interest due on such April 15 or October 15, then this Note
shall bear interest from the immediately preceding April 15 or October 15, to
which interest has been paid or, if no interest has been paid on these Notes,
from October 25, 1993. The interest so payable on any April 15 or October 15
will, subject to certain exceptions provided in the Indenture referred to
herein, be paid
- 3 -
<PAGE> 25
to the person in whose name this Note is registered at the close of business on
the April 1 or October 1, as the case may be, next preceding such April 15 or
October 15. Interest will be computed on the basis of a 360-day year of twelve
30-day months.
In case an Event of Default with respect to the 5.75% Notes due
October 15, 2005, as defined in the Indenture, shall have occurred and be
continuing, the principal hereof may be declared, and upon such declaration
shall become, due and payable, in the manner, with the effect and subject to
the conditions provided in the Indenture.
The Indenture contains provisions permitting the Issuer and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities at the time Outstanding (as
defined in the Indenture) of all series to be affected (voting as one class),
evidenced as in the Indenture provided, to execute supplemental indentures
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or modifying in
any manner the rights of the Holders of the Securities of each such series;
provided, however, that no such supplemental indenture shall (i) extend the
final maturity of any security, or reduce the principal amount thereof or any
premium thereon, or reduce the rate or extend the time of payment of any
interest thereon, or impair or affect the rights of any Holder to institute
suit for the payment thereof, without the consent of the Holder of each
Security so affected, or (ii) reduce the aforesaid percentage of Securities the
Holders of which are required to consent to any such supplemental indenture,
without the consent of the Holder of each Security affected. It is also
provided in the Indenture that, with respect to certain defaults or Events of
Default regarding the Securities of any series, prior to any declaration
accelerating the maturity of such Securities, the Holders of a majority in
aggregate principal amount Outstanding of the Securities of such series may on
behalf of the Holders of all the Securities of such series waive any such past
default or Event of Default and its consequences. The preceding sentence shall
not, however, apply to a default in the payment of the principal of or interest
on any of the Securities. Any such consent or waiver by the Holder of this
Note (unless revoked as provided in the Indenture) shall be conclusive and
binding upon such Holder and upon all future Holders and owners binding upon
such Holder and upon all future Holders and owners of this Note and any Notes
which may be issued in exchange or substitution herefor, irrespective of
whether or not any notation thereof is made upon this Note or such other Notes.
The Indenture contains provisions for defeasance at any time of the
entire indebtedness on this Note upon compliance by the Issuer with certain
conditions set forth therein, which provisions apply to this Note.
- 4 -
<PAGE> 26
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and any premium and
interest on this Note in the manner, at the respective times, at the rate and
in the coin or currency herein prescribed.
The Notes are issuable in registered form without coupons in
denominations of $1,000 and any multiple of $1,000 at the office or agency of
the Issuer in the Borough of Manhattan, The City of New York, and in the manner
and subject to the limitations provided in the Indenture, but without the
payment of any service charge except for any tax or other governmental charge
imposed in connection therewith, Notes may be exchanged for a like aggregate
principal amount of Notes of other authorized denominations.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Issuer in the Borough of Manhattan, The City of New
York, a new Note or Notes of authorized denominations for an equal aggregate
principal amount will be issued to the transferee in exchange therefor, subject
to the limitations provided in the Indenture, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Issuer, the Trustee and any authorized agent of the Issuer or the
Trustee may deem and treat the registered Holder hereof as the absolute owner
of this Note (whether or not this Note shall be overdue and notwithstanding any
notation of ownership or other writing hereon), for the purpose of receiving
payment of, or on account of, the principal hereof and premium, if any, and
subject to the provisions on the face hereof, interest hereon, and for all
other purposes, and neither the Issuer nor the Trustee nor any authorized agent
of the Issuer or the Trustee shall be affected by any notice to the contrary.
No recourse under or upon any obligation, covenant or agreement of the
Issuer in the Indenture or any indenture supplemental thereto or in any Note,
or because of the creation of any indebtedness represented thereby, shall be
had against any incorporator, any past, present or future stockholder, officer
or director, as such, of the Issuer or of any successor corporation, either
directly or through the Issuer or any successor corporation, under any rule of
law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance hereof and as
part of the consideration for the issue hereof.
Terms used herein which are defined in the Indenture shall have the
respective meanings assigned thereto in the Indenture.
- 5 -
<PAGE> 27
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM-as tenants in common
TEN ENT-as tenants by the entireties
JT TEN-as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT - Custodian
-------------------------------------------
(Cust) (Minor)
Under Uniform Gifts to Minors Act------------------------------
(State)
Additional abbreviation may also be used though not in the above list.
- 6 -
<PAGE> 28
ASSIGNMENT FORM
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to:
- ------------------------------------------------------------------------------
(insert assignee's social security or tax I.D. number)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(print or type assignee's name, address and zip code)
and irrevocably appoint _______________________________________
agent to transfer this Security on the books of the Issuer. The agent may
substitute another to act for him.
Dated: Signature:
------------------ ----------------------------
(Sign exactly as your name
appears on the other side of
this Security)
- 7 -
<PAGE> 1
Exhibit 10(a)
SUBJECT TO THE APPROVAL OF THE STOCKHOLDERS
AT THEIR ANNUAL MEETING ON APRIL 21, 1994
THE GILLETTE COMPANY
1971 Stock Option Plan, as amended
1. PURPOSE. The purpose of the 1971 Stock Option Plan (hereinafter
referred to as the "Plan") is to provide a special incentive to selected key
salaried employees of The Gillette Company (hereinafter referred to as the
"Company") and of its subsidiaries and to the non-employee members of the Board
of Directors of the Company to promote the Company's business. The Plan is
designed to accomplish this purpose by offering such employees and non-employee
directors a favorable opportunity to purchase shares of the common stock of the
Company so that they will share in the success of the Company's business. For
purposes of the Plan a subsidiary is any corporation in which the Company owns,
directly or indirectly, stock possessing fifty percent or more of the total
combined voting power of all classes of stock or over which the Company has
effective operating control.
2. ADMINISTRATION. The Plan shall be administered by the Personnel
Committee heretofore established by the Board of Directors of the Company, no
member of which shall be an employee of the Company or of any subsidiary. The
Committee shall have authority, not inconsistently with the Plan, (a) to
determine which of the key salaried employees of the Company and its
subsidiaries shall be granted options; (b) to determine whether the options
granted to any employees shall be incentive stock options within the meaning of
the Internal Revenue Code or non-qualified stock options or both; provided,
however, that with respect to options granted after December 31, 1986, in no
event shall the fair market value of the stock (determined at the time of grant
of the options) subject to incentive stock options within the meaning of the
Internal Revenue Code which first became exercisable by any employee in any
calendar year exceed $100,000 (and, to the extent such fair market value
exceeds $100,000, the later granted options shall be treated as nonqualified
stock options); (c) to determine the time or times when options shall be
granted to employees and the number of shares of common stock to be subject to
each such option provided, however, subject to adjustment as provided in
Section 9 of the Plan, in no event shall any employee be granted options
covering more than 100,000 shares of common stock in any calendar year; (d)
with respect to options granted to employees,to determine the option price of
the shares subject to each option and the method of payment of such price; (e)
with respect to options granted to employees, to determine the time or times
when each option becomes exercisable and the duration of the exercise period;
(f) to prescribe the form or forms of the instruments evidencing any options
granted under the Plan and of any other instruments required under the Plan and
to change such forms from time to time; (g) to make all determinations as to
the terms of any sales of common stock of the Company to employees under
Section 8; (h) to adopt, amend and rescind rules and regulations for the
administration of the Plan and the options and for its own acts and
proceedings; and (i) to decide all questions and settle all controversies and
disputes which may arise in connection with the Plan. All decisions,
determinations and interpretations of the Committee shall be binding on all
parties concerned.
3. PARTICIPANTS. The participants in the Plan shall be such
key salaried employees of the Company or of any of its subsidiaries, whether or
not also officers or directors, as may be selected from time to time by the
Committee in its discretion, subject to the provisions of Section 8. In
addition, effective upon shareholder approval at the 1992 Annual Meeting of
Shareholders of the Company , each non-employee director shall be a participant
in the Plan. In any grant of options after the initial grant, or any sale made
under Section 8 after the initial sale, employees who were previously granted
options or sold shares under the Plan may be included or excluded.
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4. LIMITATIONS. No option shall be granted under the Plan and no sale
shall be made under Section 8 after April 15, 1999, but options theretofore
granted may extend beyond that date. Subject to adjustment as provided in
Section 9 of the Plan, the number of shares of common stock of the Company
which may be delivered under the Plan shall not exceed 28,200,000 in the
aggregate. To the extent that any option granted under the Plan shall expire
or terminate unexercised or for any reason become unexercisable as to any
shares subject thereto, such shares shall thereafter be available for further
grants under the Plan, within the limit specified above.
5. STOCK TO BE DELIVERED. Stock to be delivered under the Plan may
constitute an original issue of authorized stock or may consist of previously
issued stock acquired by the Company, as shall be determined by the Board of
Directors. The Board of Directors and the proper officers of the Company shall
take any appropriate action required for such delivery.
6. TERMS AND CONDITIONS OF OPTIONS GRANTED TO EMPLOYEES. All options
granted to either non-employee directors or employees shall be subject to
Section 6 Paragraph (c) Subparagraphs (4) and (5). All options granted to
employees under the Plan shall be subject to all the following additional terms
and conditions (except as provided in Sections 7 and 8 below) and to such other
terms and conditions as the Committee shall determine to be appropriate to
accomplish the purposes of the Plan:
(a) Option Price. The option price under each option shall be
determined by the Committee and shall be not less than l00 percent of the fair
market value per share at the time the option is granted. If the Committee so
directs, an option may provide that if an employee Participant who was an
employee participant at the time of the grant of the option and who is not an
officer or director of the Company at the time of any exercise of the option,
he shall not be required to make payment in cash or equivalent at that time for
the shares acquired on such exercise, but may at his election pay the purchase
price for such shares by making a payment in cash or equivalent of not less
than five percent of such price and entering into an agreement, in a form
prescribed by the Committee, providing for payment of the balance of such
price, with interest at a specified rate, but not less than four percent, over
a period not to exceed five years and containing such other provisions as the
Committee in its discretion determines. In addition, if the Committee so
directs, an option may provide for a guarantee by the Company or repayment of
amounts borrowed by the Participant in order to exercise the option, provided
he is not an officer or director of the Company at the time of such borrowing,
or may provide that the Company may make a loan, guarantee, or otherwise
provide assistance as the Committee deems appropriate to enable the Participant
to exercise the option, provided that no such loan, guarantee, or other
assistance shall be made without approval of the Board of Directors as required
by law.
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(b) Period of Options. The period of an option shall not exceed ten
years from the date of grant.
(c) Exercise of Option.
(l) Each option held by a participant other than a non-employee
director shall be made exercisable at such time or times, whether or not in
installments, as the Committee shall prescribe at the time the option is
granted. In the case of an option held by a participant other than a
non-employee director which is not immediately exercisable in full, the
Committee may at any time accelerate the time at which all or any part of the
option may be exercised.
(2) Options intended to be incentive stock options, as defined
in the Internal Revenue Code, shall contain and be subject to such provisions
relating to the exercise and other matters as are required of incentive stock
options under the applicable provisions of the Internal Revenue Code and
Treasury Regulations, as from time to time in effect, and the Secretary of the
Committee shall inform optionees of such provisions.
(3) Each incentive stock option within the meaning of the
Internal Revenue Code granted on or before December 31, 1986 shall contain and
be subject to the following provision:
This option shall not be exercisable while there is outstanding
(within the meaning of Section 422A(c)7 of the Internal Revenue Code of l954,
as amended) any incentive stock option (as that term is defined in said Code)
which was granted to the Participant before the granting of this option to
purchase stock in his employer corporation (whether The Gillette Company or a
parent or subsidiary corporation thereof), or in a corporation which at the
time of the granting of this option is a parent or subsidiary corporation of
the employer corporation, or in a predecessor corporation of any such
corporation.
Each incentive stock option within the meaning of the Internal
Revenue Code granted after December 31, 1986 shall not be subject to the above
provision.
(4) Payment for Delivery of Shares. Upon exercise of
any option, payment in full in the form of cash or a certified bank, or
cashier's check or, with the approval of the Secretary of the Committee, in
whole or part Common Stock of the Company at fair market value, which for this
purpose shall be the closing price on the business day preceding the date of
exercise, shall be made at the time of such exercise for all shares then being
purchased thereunder, except in the case of an exercise to which the provisions
of the second sentence of subsection (a) above are applicable.
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The purchase price payable by any person, other than a
non-employee director, who is not a citizen or resident of the United States of
America and who is an employee of a foreign subsidiary at the time payment is
due shall, if the Committee so directs, be paid to such subsidiary in the
currency of the country in which such subsidiary is located, computed at such
exchange rate as the Committee may direct. The amount of each such payment
may, in the discretion of the Committee, be accounted for on the books of such
subsidiary as a contribution to its capital by the Company.
The Company shall not be obligated to deliver any shares
unless and until, in the opinion of the Company's counsel, all applicable
federal and state laws and regulations have been complied with, nor, in the
event the outstanding common stock is at the time listed upon any stock
exchange, unless and until the shares to be delivered have been listed or
authorized to be added to the list upon official notice of issuance upon such
exchange, nor unless or until all other legal matters in connection with the
issuance and delivery of shares have been approved by the Company's counsel.
Without limiting the generality of the foregoing, the Company may require from
the Participant such investment representation or such agreement, if any, as
counsel for the Company may consider necessary in order to comply with the
Securities Act of 1933 and may require that the Participant agree that any sale
of the shares will be made only on the New York Stock Exchange or in such other
manner as is permitted by the Committee and that he will notify the Company
when he makes any disposition of the shares whether by sale, gift, or
otherwise. The Company shall use its best efforts to effect any such
compliance and listing, and the Participant shall take any action reasonably
requested by the Company in such connection. A Participant shall have the
rights of a shareholder only as to shares actually acquired by him under the
Plan.
(5) Notwithstanding any other provision of this Plan, if within
one year of a Change in Control, as hereinafter defined, the employment of an
employee Participant is terminated for any reason other than willful misconduct
or the service as a director of a non-employee director is terminated, all his
outstanding options which are not yet exercisable shall become immediately
exercisable and all the rights and benefits relating to such options including,
but not limited to, periods during which such options may be exercised shall
become fixed and not subject to change or revocation by the Company; provided,
that in the case of any incentive stock option (the "second option") which is
not exercisable by reason of a previously granted incentive stock option which
is still "outstanding" within the meaning of section 422A(c)(7) of the Internal
Revenue Code (as in effect before the amendments made by the Tax Reform Act of
1986), the second option shall not be exercisable until the earlier outstanding
option is exercised in full or expires by reason of the lapse of time. For
purposes of the foregoing, a Change in Control shall mean the happening of any
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 of the Company;
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<PAGE> 5
(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 or directors 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 cease
for any reason to constitute at least a majority thereof. For this purpose,
new directors who were elected, or nominated (or approved for nomination in the
case of nomination by a Committee of the Board) 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.
(d) Nontransferability of Options. No option may be transferred by
the Participant otherwise than by will or by the laws of descent and
distribution, and during the Participant's lifetime the option may be exercised
only by him.
(e) Nontransferability of Shares. If the Committee so
determines, an option granted to an employee may provide that, without prior
consent of the Committee, shares acquired by exercise of the option shall not
be transferred, sold, pledged or otherwise disposed of within a period not to
exceed one year from the date the shares are transferred to the Participant
upon his exercise of the option or prior to the satisfaction of all
indebtedness with respect thereto, if later.
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<PAGE> 6
(f) Termination of Employment. If the employment of a Participant
terminates for any reason other than his death, he may, unless discharged for
cause which in the opinion of the Committee casts such discredit on him as to
justify termination of his option, thereafter exercise his option as provided
below. (i) If such termination of employment is voluntary on the part of the
Participant, he may exercise his option only within seven days after the date
of termination of his employment (unless a longer period not in excess of three
months is allowed by the Committee). (ii) If such termination of employment is
involuntary on the part of the Participant, he may exercise his option only
within three months after the date of termination of his employment. (iii)
Notwithstanding the above, if a Participant retires under The Gillette Company
Retirement Plan or the retirement plan of a subsidiary, or if a Participant
terminates his employment with a subsidiary that does not maintain a retirement
plan and he would have been eligible to retire under the terms of The Gillette
Company Retirement Plan had he been a Participant in that Plan, he may exercise
any option granted prior to January 1, 1994, other than an incentive stock
option within the meaning of the Internal Revenue Code, within a period not to
exceed two years after his retirement date, any option granted after December
31, 1993 other than an incentive stock option within the meaning of the
Internal Revenue Code within a period not to exceed three years after his
retirement date, and any incentive stock option within a period not to exceed
three months after his retirement date. The Committee may, in its sole
discretion, terminate any such option at or at any time after the time when
that option would otherwise have terminated as a result of the termination of a
Participant's employment, if it deems such action to be in the best interests
of the Company. In no event, however, may any Participant exercise any option
which was not exercisable on the date he ceased to be an employee, or after the
expiration of the option period. For purposes of this subsection (g) a
Participant's employment shall not be considered terminated in the case of a
sick leave or other bona fide leave of absence approved by the Company or a
subsidiary in conformance with the applicable provisions of the Internal
Revenue Code or Treasury Regulations, or in the case of a transfer to the
employment of a subsidiary or to the employment of the Company.
(g) Death. If a Participant dies at a time when he is entitled to
exercise an option, then at any time or times within one year after his death
(or with respect to employee participants such further period as the Committee
may allow) such option may be exercised, as to all or any of the
shares which the Participant was entitled to purchase immediately prior to his
death, by his executor or administrator or the person or persons to whom the
option is transferred by will or the applicable laws of descent and
distribution, and except as so exercised such option shall expire at the end of
such period. In no event, however, may any option be exercised after the
expiration of the option period or, in the case of an incentive stock option
within the meaning of the Internal Revenue Code after the expiration of any
period of exercise for such options specified in the Internal Revenue Code or
the regulations thereunder.
7. REPLACEMENT OPTIONS. The Company may grant options under the Plan on
terms differing from those provided for in Section 6 where such options are
granted in substitution for options held by employees of other corporations who
concurrently become employees of the Company or a subsidiary as the result
of a merger or consolidation of the employing corporation with the Company or
subsidiary, or the acquisition by the Company or a subsidiary of property or
stock of the employing corporation. The Committee may direct that the
substitute options be granted on such terms and conditions as the Committee
considers appropriate in the circumstances.
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<PAGE> 7
Notwithstanding anything contained in this Plan, the Committee shall
have authority, with respect to any options granted or to be granted to
employees or outstanding installment Purchase Agreements of participants other
than non-employee directors under this Plan, to extend the time for payment of
any and all installments, to modify the amount of any installment, to amend
outstanding option certificates to provide for installment payments or to take
any other action which it may, in its discretion, deem necessary, provided
that: (1) interest on the unpaid balance under any outstanding Purchase
Agreement at the rate of at least four percent (4%) per annum shall continue to
be due and payable quarterly during the period of any deferral of payment; (2)
all such installment Purchase Agreements and unexercised options, shall at all
times be in accordance with the applicable provisions of Regulation G of the
Board of Governors of the Federal Reserve System, as from time to time amended,
and with all other applicable legal requirements; (3) no such action by the
Committee shall jeopardize the status of stock options as incentive stock
options under the Internal Revenue Code.
8. FOREIGN EMPLOYEES. The Company may grant options under the Plan on
terms differing from those provided for in Section 6 where such options are
granted to employee Participants who are not citizens or residents of the
United States of America if the Committee determines that such different terms
are appropriate in view of the circumstances of such Participants, provided,
however, that such options shall not be inconsistent with the provisions of
Section 6(a) or Section 6(b).
In addition, if the Committee determines that options are
inappropriate for any key salaried employees who are not citizens or residents
of the United States of America, whether because of the tax laws of the foreign
countries in which such employees are residents or for other reasons, the Board
of Directors may authorize special arrangements for the sale of shares of
common stock of the Company to such employees, whether by the Company, or a
subsidiary, or other person. Such arrangements may, if approved by the Board
of Directors, include the establishment of a trust by the foreign subsidiary
which is the employer of the key salaried employees, designated by such
subsidiary, to whom the shares are to be sold. Such arrangements shall provide
for a purchase price of not less than the fair market value of the stock at the
date of sale and a maximum annual grant per participant of options to purchase
100,000 shares of common stock and may provide that the purchase price be paid
over a period of not more than ten years, with or without interest, and that
such employees have the right, with or without payment of a specified premium,
to require the seller of the shares to repurchase such shares at the same
price, subject to specified conditions. Such arrangements may also include
provisions deemed appropriate as to acceleration or prepayment of the balance
of the purchase price, restrictions on the transfer of the shares by the
employee, representations or agreements by the employee about his investment
purposes and other miscellaneous matters.
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<PAGE> 8
9. CHANGES IN STOCK. In the event of a stock dividend, split-up or
combinations of shares, recapitalization or merger in which the Company is the
surviving corporation, or other similar capital change, the number and kind of
shares of stock or securities of the Company to be subject to the Plan and to
options then outstanding or to be granted thereunder, the maximum number of
shares or securities which may be issued or sold under the Plan, the maximum
annual grant for each participant, the automatic annual grant for each
non-employee director, the option price and other relevant provisions shall be
appropriately adjusted by the Board of Directors of the Company, whose
determination shall be binding on all persons. In the event of a consolidation
or a merger in which the Company is not the surviving corporation or which
results in the acquisition of substantially all the Company's outstanding stock
by a single person or entity or by a group of persons and/or entities acting in
concert, or in the event of complete liquidation of the Company, all
outstanding options shall thereupon terminate, provided that (i) at least
twenty days prior to the effective date of any such consolidation or merger,
the Board of Directors shall with respect to employee participants either (a)
make all outstanding options immediately exercisable, or (b) arrange to have
the surviving corporation grant replacement options to the employee
Participants and (ii) in the case of option grants to non-employee directors,
all outstanding options not otherwise exercisable shall become exercisable on
the twentieth day prior to the effective date of the merger.
l0. EMPLOYMENT RIGHTS. The adoption of the Plan does not confer upon any
employee of the Company or a subsidiary any right to continued employment with
the Company or a subsidiary, as the case may be, nor does it interfere in any
way with the right of the Company or a subsidiary to terminate the employment
of any of its employees at any time.
ll. THE COMMITTEE MAY AT ANY TIME DISCONTINUE GRANTING OPTIONS
UNDER THE PLAN. The Board of Directors of the Company or the Personnel
Committee of the Board of Directors if and to the extent authorized, may at any
time or times amend the Plan or amend any outstanding option or options or
arrangements established under Section 8 for the purpose of satisfying the
requirements of any changes in applicable laws or regulations or for any other
purpose which may at the time be permitted by law, provided that (except to the
extent required or permitted under Section 9 and, with respect to clauses (b)
and (f) below, except to the extent required or permitted under Section 7) no
such amendment shall, without the approval of the stockholders of the Company,
(a) increase the maximum number of shares available under the Plan or the
maximum annual grant per participant other than as permitted under Section 9,
(b) reduce the minimum option price of options thereafter to be granted below
the price provided for in Section 6(a), except that the Plan may be amended to
provide that the minimum option price of non-qualified stock options thereafter
to be granted to employees may be not less than 95% of the fair market value at
the date of grant if the Board determines that such amendment is necessary for
tax reasons to carry out the objectives of the Plan, (c) reduce the price at
which shares of common stock of the Company may be sold under Section 8 below
the price provided for in Section 8, (d) reduce the option price of outstanding
options, (e) extend the time within which options may be granted, (f) extend
the period of an outstanding option beyond ten years from the date of grant,
(g) amend the provisions of Section 12 with respect to the terms and conditions
of options to non-employee directors and further provided no such amendment
shall adversely affect the rights of any Participant (without his consent)
under any option theretofore granted or other contractual arrangements
theretofore entered into or after a Change in Control deprive any Participant
of any right or benefit which became operative in the event of a Change in
Control. Notwithstanding the above, in no event may the provisions of Section
12 be amended more than once every six months, other than to comport with
changes in the Internal Revenue Code, the Employee Retirement Income Security
Act, or the rules thereunder.
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<PAGE> 9
12. TERMS AND CONDITIONS OF OPTIONS GRANTED TO NON-EMPLOYEE DIRECTORS.
Effective at the close of business on the second business day after the 1992
Annual Meeting of Shareholders of the Company and on the second business day
after each Annual Meeting thereafter, each non-employee director shall be
automatically granted a non-incentive stock option to purchase 1,000 shares of
the common stock of the Company upon the following terms and conditions:
(a) Option Price. The option price under each option shall be the fair
market value on the date of grant, which for this purpose is defined as the
average between the high and the low price of the common stock on the NYSE
Composite Transaction listing.
(b) Option Period. The period of an option shall be ten years from the
date of grant.
(c) Option Exercise. Each option shall become exercisable on the first
anniversary of the date of grant except as otherwise provided under Section 6
Paragraph c Subparagraph 5 of this Plan. Any option, otherwise exercisable,
may be exercised during the period a non-employee director remains a member of
the Board of Directors and for a period of three months following the date a
non-employee director ceases to be a director except in the case where the
non-employee director is or will be eligible to receive benefits under the
Company's Retirement Plan for Directors when membership on the Board of
Directors ends and where the non-employee director continues to be so eligible
as of the date of exercise, that non-employee director's options shall be
exercisable for a period of two years from the date membership on the Board of
Directors ceases.
If a non-employee director dies at the time when the non-employee
director is entitled to exercise an option, then at any time or times within
one year after that non-employee director's death that non-employee director's
option may be exercised in accordance with the provisions of Section 6
Paragraph (g) of the Plan. In no event shall any option be exercised after the
expiration of the option period.
(d) Payment for Delivery of Shares. Payment for the shares shall be made
in accordance with the provisions of Section 6 Paragraph c Subparagraph 4 of
this Plan.
(e) Nontransferability of Options. No option may be transferred by a
non-employee director otherwise than by will or by the laws of descent and
distribution, and during the non-employee director's lifetime the option may be
exercised only by the non-employee director.
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<PAGE> 1
EXHIBIT 10(b)
SUBJECT TO THE APPROVAL OF THE STOCKHOLDERS
AT THEIR ANNUAL MEETING ON APRIL 21, 1994
THE GILLETTE COMPANY
Stock Equivalent Unit Plan, as amended
1. PURPOSE. The purpose of the Stock Equivalent Unit Plan is
to provide an incentive and reward to key salaried employees of
The Gillette Company and its subsidiaries who can make
substantial contributions to the success of the business. To
that end, the Plan provides an opportunity for such key salaried
employees to participate in that success through awards of stock
equivalent units, subject to the conditions set forth in the
Plan.
2. DEFINITIONS. Unless the context otherwise requires, the
following words have the following meanings for purposes of the
Plan.
2.1 Basic stock unit - A stock equivalent unit awarded to a
participant pursuant to Section 4.2.
2.2 Committee - The Personnel Committee established by the
Board of Directors of the Company.
2.3 Company - The Gillette Company, a Delaware corporation.
2.4 Disability - Mental or physical disability, either
occupational or non-occupational in cause, which, in the opinion
of the Committee, on the basis of medical evidence satisfactory
to it, prevents the employee from engaging in any occupation or
employment for wage or profit and is likely to be permanent.
2.5 Dividend equivalent unit - A stock equivalent unit
which is credited to a participant's account as the result of
conversion of amounts credited to the account in respect of
dividends, as provided in Section 5.2.
2.6 Employee - Any person, whether or not an officer or
director of the Company or any subsidiary, who is regularly
employed by the Company or a subsidiary on a salaried full-time
basis, or who, under conditions approved by the Committee, is
regularly employed by the Company or subsidiary on a salaried
part-time basis.
2.7.1 Maturity date (with respect to awards made on or
before 12/31/83) - When used with respect to an award, March l5
of the tenth calendar year following the calendar year in which
the award was made.
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2.7.2 Maturity date (with respect to awards made after
12/31/83) - When used with respect to an award, March 15 of the
seventh calendar year following the calendar year in which the
award was made.
2.8 Normal retirement date - In the case of any
participant, the date prescribed under the Retirement plan
maintained by his employer as his normal retirement date (or, if
no such plan is maintained by his employer, the normal retirement
date prescribed under The Gillette Company Retirement Plan).
2.9 Plan - The Stock Equivalent Unit Plan set forth herein,
as from time to time amended.
2.10 Share - A share of the Company's common stock as the
same is constituted from time to time.
2.11 Stock equivalent unit - A measure of value equal in
amount to the value of one share at the time of reference.
2.12 Subsidiary - Any corporation in which the Company owns,
directly or indirectly, stock possessing fifty percent or more of
the total combined voting power of all classes of stock or over
which the company has effective operating control.
2.13 (A) Total credits - When used with respect to an
individual account, the sum of (a) the excess, if any, of (i) the
value of that number of shares which is equal to the number of
basic stock units credited to the account in respect of awards in
designated years, after adjustment for any prior payments, over
(ii) the value on the date of the respective awards of that
number of shares which corresponds, after adjustment for stock
splits, stock dividends and similar capital changes, to the
number of basic stock units referred to in (i), except that for
awards made after 12/31/78, the amount of the excess cannot
exceed an amount equal to the value on the date of the respective
awards of that number of shares which corresponds, after
adjustment for stock splits, stock dividends and similar capital
changes, to the number of basic stock units referred to in (i),
plus (b) the value of that number of shares which is equal to the
number of dividend equivalent units then credited to the account
in respect of such awards plus (c) any amounts then credited to
the account based on dividend payments attributable to such
awards which have not been converted into dividend equivalent
units.
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2.14 Value - When used with respect to a share
(a) On the date of an award of basic stock units, the
average of the reported high and low sales prices of the shares
as quoted on a composite basis;
(b) For purposes of converting dividend credits into
dividend equivalent units, the average of the reported closing
prices of the shares as quoted on a composite basis on the last
business day of the months of December, January, and February
immediately preceding the March l5 on which such conversion
occurs;
(c) For purposes of determining the amount payable in
respect of an interest which becomes vested or for purposes of
determining the amount payable, in cases not covered by (d) or
(e) below, in respect of an interest which previously became
vested, the average of the reported closing prices of the shares
as quoted on a composite basis on the last business day of the
twelve calendar months immediately preceding the March l5 on
which such vesting occurs or the month in which such payment
becomes payable;
(d) For purposes of determining the amount payable to a
terminating participant or to the estate of a deceased
participant, the average of the reported closing prices of the
shares as quoted on a composite basis on the last business day of
the twelve calendar months immediately preceding the month in
which the participant's employment terminates or the participant
dies or the twelve consecutive calendar months including and
ending with that month if such termination or death occurs on or
after the last business day of that month;
(e) For purposes of determining the amount payable with
respect to an award on or after the maturity date thereof, the
average of the reported closing prices of the shares as quoted on
a composite basis on the last business day of the twelve calendar
months immediately preceding such maturity date;
2.15 Unapproved Change in Control shall mean the happening
of any one of the following events, which, in each case, was not
recommended to the shareholders by a vote of at least two-thirds
of the non-employee directors of the Company then still in office
who were in office two years prior to such event:
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<PAGE> 4
(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 or directors 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 cease for any reason to constitute at least a
majority thereof. For this purpose, new directors who were
elected, or nominated (or approved for nomination in the case of
nomination by a Committee of the Board) 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.
2.16 Approved Change in Control shall mean the happening of
any one of the following events, which, in each case was
recommended to the shareholders by a vote of at least two-thirds
of the non-employee directors of the Company then still in office
who were in office two years prior to such event:
(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;
4
<PAGE> 5
(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 or directors 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 cease for any reason to constitute at least a
majority thereof. For this purpose, new directors who were
elected, or nominated (or approved for nomination in the case of
nomination by a Committee of the Board) 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.
3. ADMINISTRATION.
3.1 The Plan shall be administered by the Personnel Committee
heretofore established by the Board of Directors of the
Company no member of which shall be an employee of the Company or
of any subsidiary. The Committee shall have authority, not
inconsistently with the Plan, (a) to determine which of the
eligible Employees of the Company and its subsidiaries shall be
awarded basic stock units; (b) to determine the times when basic
stock units shall be awarded and the number of basic stock units
to be awarded to each participant; (c) to determine the time or
times when amounts may become payable with respect to stock
equivalent units within the limits provided in the Plan; (d) to
prescribe the form of the instruments evidencing any basic stock
units awarded under the Plan (which forms need not be identical);
(e) to adopt, amend and rescind rules and regulations for the
administration of the Plan and the stock equivalent units and for
its own acts and proceedings; and (f) to decide all questions and
connection settle all controversies and disputes which may arise in
with the Plan. All decisions, determinations and
interpretations of the Committee shall be binding on all parties
concerned.
3.2 The maximum number of basic stock units which may be
awarded under the Plan is 20,700,000 subject to adjustment as
provided under Section 8.3. No basic stock units may be awarded
under the Plan after April 15, 1999.
5
<PAGE> 6
4. PARTICIPATION.
4.1 The participants in the Plan shall be such key salaried
Employees as may be selected from time to time by the Committee.
Directors who are not employees shall not be eligible. The
Employees to whom basic stock units are awarded at any time may
include Employees to whom basic stock units were previously
granted under the Plan.
4.2 Awards of basic stock units shall be made from time to
time by the Committee in its discretion. In addition, with
respect to any award, the Committee shall have discretion to
provide that all or any portion of that award shall be contingent
on achievement by the participant or by any unit or units of the
Company of any performance goal or goals over any period or
periods of time ending before March 15 of the third year
following the date of the award. Notwithstanding the above, the
Committee may not award more than 50,000 basic stock units to any
participant in any calendar year subject to adjustment as
provided under Section 8.3.
5. INDIVIDUAL ACCOUNTS.
5.1 The Committee shall maintain a separate account for
each award made under the Plan. Each such account shall show the
information necessary to compute the participant's total credits
in respect of each award, including the number of basic stock
units awarded to the participant, the value of an equal number of
shares on the date of the award, the amount credited to the
account in respect of dividends, as provided below, the number of
dividend equivalent units credited to the account and details as
to any payments under the Plan which are deducted from the account.
6
<PAGE> 7
5.2 Whenever the Company pays a dividend (other than a
stock dividend) upon its outstanding common stock, there shall be
credited to the separate account for each award a dollar amount
equal to the value of such dividend per share multiplied by the
number of stock equivalent units credited to the account on the
record date for such dividend. However, no such credits shall be
made with respect to any award after the maturity date
thereof or after the date on which the participant ceases to
be an employee. As of March 15 in each year the aggregate of the
amounts so credited to the account since the prior March 15 shall
be converted into a number of dividend equivalent units by
dividing such aggregate by the value of a share.
5.3 In the event of a dividend payable in shares, or in the
event of a stock split or combination of shares, the Committee
shall make a corresponding change in the number of basic stock
units and dividend equivalent units then credited to the account.
5.4 On the maturity date of an award, the total amount
payable with respect to such award shall become a fixed amount
which will not change thereafter except that the Committee may
provide for the payment of interest beginning at maturity on
amounts whose payment is deferred to a date thereafter. Such
fixed amount shall be the total credits in respect of such award
on such maturity date.
5.5 Whenever a payment is made under the Plan to a
participant with respect to any award, there shall be a
corresponding reduction in the number of stock equivalent units
and other amounts credited to the participant's account in
respect of such award, or in the case of a payment after maturity
date or after the date on which the participant ceases to be an
employee, in the amount then credited to the account. A similar
reduction shall be made if a participant forfeits any portion of
his interest in any awards.
6. PAYMENT.
6.1 Payments to a participant under the Plan may be made
from time to time when segments of his total credits in respect
of an award become vested, or payment may be deferred, all in
accordance with rules established from time to time by the
Committee.
7
<PAGE> 8
6.2.1 With respect to awards made on or before 12/31/83
fifteen percent of the total credits in respect of an award shall
become vested on March 15 of the fourth calendar year following
the calendar year of the award, an additional fifteen percent
thereof (or, in cases of vesting after one or more prior payments
under Section 6.3, the applicable vesting percentage thereof as
provided below) shall become vested on March 15 of the fifth,
sixth, seventh, eighth, and ninth calendar years following the
calendar year of the award, and any unvested balance thereof
shall become vested on the maturity date of such award.
6.2.2 With respect to awards made after 12/31/83 twenty
percent of the total credits in respect of an award shall become
vested on March 15 of the third calendar year following the
calendar year of the award, an additional twenty percent thereof
(or, in cases of vesting after one or more prior payments under
Section 6.3, the applicable vesting percentage thereof as
provided below) shall become vested on March 15 of the fourth,
fifth, and sixth calendar years following the calendar year of
the award, and any unvested balance thereof shall become vested
on the maturity date of such award.
6.2.3 Such vesting as described above shall occur only
if the participant is an employee on the date of vesting and has
been an employee continuously since the date of the award. The
total credits in respect of all awards not at that time subject
to any contingency pursuant to Section 4.2 shall become fully
vested if the participant, while an employee, dies, incurs a
disability, retires prior to his normal retirement date with the
consent of the Company and under conditions approved by the
Committee, or retires on or after his normal retirement date, and
the total amount payable with respect thereto shall become a
fixed amount which will not change thereafter, except that the
Committee may provide for the payment of interest on amounts
whose payment is deferred to a date thereafter. If the
employment of a participant terminates as a result of the merger,
sale or other absorption or termination of operations of a
subsidiary or a division, all credits in respect of any such
participant's award not at that time subject to any contingency
pursuant to Section 4.2 may become vested if the Committee, in
its sole discretion, determines such action to be in the best
interests of the Company, and the total amount payable with
respect thereto shall become a fixed amount which will not change
thereafter, except that the Committee may provide for the payment
of interest on amounts whose payment is deferred to a date
thereafter. In connection with the determination of any
participant's vested rights under this paragraph 6.2.3, the
Committee may retroactively remove any contingency in effect
pursuant to Section 4.2. Notwithstanding the above, in the event
of an Unapproved or Approved Change in Control, if a participant
retires prior to his normal retirement date the consent of the
Company shall not be required and all credits and all
contingencies with respect to the awards of such participant
shall become fully vested and immediately payable.
8
<PAGE> 9
6.2.3.l In the event of an Unapproved Change in Control,
all contingencies then in effect pursuant to Section 4.2 shall be
automatically removed and the total credits in respect of all
awards of a participant shall become fully vested and payable (1)
upon termination of the employment of a participant for any
reason within one year following the Unapproved Change in
control, or (2) upon termination of the employment of a
participant at any time after an Unapproved Change in Control if
such termination (a) is initiated by the Company, except that
termination for willful misconduct shall not be treated as a
termination under this subparagraph (2), or (b) is initiated by
the participant for Good Reason. In the event of an Approved
Change in Control, all contingencies then in effect pursuant to
Section 4.2 shall be automatically removed and the total credits
in respect of all awards of a participant shall become fully
vested and payable upon termination of the employment of a
participant after an Approved Change in Control if such
termination is (i) initiated by the Company, except that
termination for willful misconduct shall not be treated as a
termination under this sentence, or (ii) initiated by the
participant for Good Reason. Good Reason, as used herein, shall
mean any of the following: Assignment of any duties inconsistent
with the position, duties, responsibilities and status of the
employee or reduction or adverse change in the nature or status
of responsibilities of the employee from those which existed on
the date immediately preceding an Approved or Unapproved Change
in Control; any reduction by the Company or any successor entity
in the employees' compensation including benefits, other than
such reduction required by law or required to maintain the
tax-qualified status of any benefit Plan, from those which
existed on the date immediately preceding an Approved or
Unapproved Change in Control; or the Company or any successor
entity requiring the employee to be based at a location in excess
of fifty miles from the location where the employee is based on
the date immediately preceding an Approved or Unapproved Change
in Control.
9
<PAGE> 10
6.2.3.2 Notwithstanding any other provision of this Plan,
(a) upon an employer-initiated termination of employment of a
participant pursuant to the Restructuring Plan approved by the
Board of Directors of the Company at its meeting on December 18,
1986, the Reorganization Plan approved by the Board of Directors
of the Company at its meeting on December 14, 1989 or the 1994
Realignment Plan and Parker Integration Plan, or (b) upon the
sale or other disposition of the unit, division or subsidiary in
which a participant is employed pursuant to the Restructuring
Plan approved by the Board of Directors of the Company at its
meeting on December 18, 1986, or the Reorganization Plan approved
by the Board of Directors of the Company at its meeting on
December 14, 1989, which sale or other disposition results in the
participant no longer being employed by the Company or any of its
subsidiaries, all contingencies then in effect pursuant to
Section 4.2 shall be automatically removed except with respect to
contingencies which expire on February 19, 1987. Further, in
such event, the total credits in respect of all awards of a
participant for which no contingencies remain in effect shall
become fully vested and the amount of such awards shall be fixed
and payable. With respect to awards or segments of awards which
become vested under this subparagraph or any other award or
segment thereof which becomes payable by reason of the
participant's termination of employment, the participant may
elect to receive such awards upon termination of employment or
may, prior to the date participant's employment with the Company
or any subsidiary terminates, elect to defer such award in
accordance with the provisions of Paragraph 6.2.3 and rules
established from time to time by the Committee. Notwithstanding
the above, the removal of contingencies and the granting of
vesting and deferral rights provided for in this Paragraph
6.2.3.2 shall serve as partial consideration for a settlement of
all claims and disputes which the participant may have against
the Company, its subsidiaries, employees and agents and shall be
subject to the execution by the participant of a release and
settlement agreement in a form to be prescribed by the Committee.
6.2.4 In order to make proper adjustment for any previous
payments under Section 6.3, the applicable vesting percentage to
be used in computing vested segments under the foregoing
provisions of this Section 6.2 and in computing the amount of a
payment under Section 6.3 or Section 6.4 shall be determined as
follows
10
<PAGE> 11
(a) In computing such vested segment or the amount or a
payment under section 6.3 for awards made prior to 12/31/83, the
applicable vesting percentage to be applied to the total credits
in respect of a particular award shall be equal in value to a
fraction whose numerator is fifteen (or ten in the case of the
final vested installment) and whose denominator is (i) 100 minus
(ii) fifteen multiplied by the number of vested segments previously
paid to the participant under Section 6.3. Payment of each vested
segment shall be considered a separate payment.
(b) In the case of a payment under section 6.4 for
awards made prior to 12/31/83, the applicable vesting percentage
to be applied to the total credits in respect of a particular
award shall be equal in value to a fraction whose numerator is
(i) fifteen multiplied by the number of segments of the award
which have become vested in accordance with the foregoing
provisions prior to the date on which the participant ceases to
be an employee (but not more than 100) minus (ii) fifteen
multiplied by the number of vested segments previously paid to
the participant under Section 6.3, and whose denominator is 100
minus (ii) above.
(c) In computing such vested segment or the amount of a
payment under section 6.3 for awards made after 12/31/83, the
applicable vesting percentage to be applied to the total credits
in respect of a particular award shall be equal in value to a
fraction whose numerator is twenty and whose denominator is (i)
100 minus (ii) twenty multiplied by the number of vested segments
previously paid to the participant under Section 6.3. Payment of
each vested segment shall be considered a separate payment.
(d) In the case of a payment under section 6.4 for
awards made after 12/31/83, the applicable vesting percentage to
be applied to the total credits in respect of a particular award
shall be equal in value to a fraction whose numerator is (i)
twenty multiplied by the number of segments of the award which
have become vested in accordance with the foregoing provisions
prior to the date on which the participant ceases to be an
employee (but not more than 100) minus (ii) twenty multiplied by
the number of vested segments previously paid to the participant
under Section 6.3, and whose denominator is 100 minus (ii) above.
11
<PAGE> 12
6.3 Prior to any date on which a participant is to acquire
a vested interest or additional vested interest in the total
credits in respect of an award, the participant shall make an
election, at the time and in a manner specified by the Committee,
as to the time when payment is to be made of the segment or
segments of such total credits which may become vested on such
date. The participant may elect (a) to receive payment within a
reasonable time after such date or (b) to defer payment in
accordance with rules established from time to time by the
Committee. In the event of an Approved or Unapproved Change in
Control, the participant may, upon any date, revoke his election
to defer receipt of any or all interests in respect of an award
and the Company shall make payment to the participant of the
value of any vested interest or interests, within a reasonable
time after such revocation and with respect to interests which
have not yet vested as of the date of such revocation, within a
reasonable time after such interests become vested. If no such
election is made, payment shall be made within a reasonable time
after the date on which such vested interest or additional vested
interest is acquired.
The amount of any payment shall be computed by multiplying the
total credits in respect of the award at the time of payment, or
in the case of revocation of an election to defer, at the time of
such revocation, by the applicable vesting percentage. The
Committee may provide for the payment of interest beginning upon
maturity for amounts deferred beyond maturity.
6.4 If a participant ceases to be an employee for any
reason not specified in Section 6.2, his vested interest in
respect of each award shall thereupon become a fixed amount which
will not change thereafter. Such fixed amounts shall be
determined by multiplying the total credits in respect of each
award on the date of termination of employment by the applicable
vesting percentage. The participant shall thereupon forfeit his
interest in any amounts then credited to his account to the
extent his interest has not become vested. Payment of vested
interests shall be made in accordance with rules established from
time to time by the Committee.
12
<PAGE> 13
6.5 If a participant dies prior to termination of his
employment, an amount equal to his total credits in respect of
all awards not subject to any contingency pursuant to Section 4.2
shall be paid to his executor or administrator or as otherwise
provided by law valued as of the date of death.
6.6 All payments will be made in cash and will be subject
to any required tax withholdings.
7. AMENDMENT AND TERMINATION.
7.1 The Board of Directors of the Company or the Personnel
Committee of the Board of Directors if and to the extent
authorized may at any time amend the Plan for the purposes of
satisfying the requirements of any changes in applicable laws or
regulations or for any other purpose which may be permitted by
law, except that neither the Board of Directors or the Personnel
Committee of the Board of Directors may, without the approval of
the stockholders of the Company, increase the maximum number of
basic stock units that may be awarded under the Plan or the
maximum annual grant for each participant (subject to Section
8.3) or increase the time within which basic stock units may be
awarded, as provided in Section 3.2, or extend the maturity date
of an award beyond March 15 of the tenth calendar year following
the calendar year in which the award was made. Notwithstanding
the above, in the event of an Approved or Unapproved Change in
Control, no amendment to the Plan which provides for prospective
Plan benefits and other terms and conditions any less favorable
to Plan participants than those which existed prior to the
amendment shall be effective unless it provides that all
contingencies which are then in existence be removed and all
awards which are unvested prior to such amendment shall become
immediately vested and payable.
7.2 The Board of Directors of the Company may terminate the
Plan at any time except that after an Approved or Unapproved
Change in Control such Plan may not be terminated without
providing that all contingencies then in existence shall be
removed and all unvested awards shall become immediately vested
and payable.
7.3 No such amendment or termination shall adversely affect
the rights of any participant (without his consent) under any
award previously made or after an Approved Change in Control
deprive a participant of a benefit or right which became
operative upon an Approved Change in Control or after an
Unapproved Change in Control deprive a participant of a benefit
or right which became operative upon an Unapproved Change in
Control.
13
<PAGE> 14
8. MISCELLANEOUS.
8.1 The interest under the Plan of any participant, his
heirs or legatees shall not be alienable by the participant, his
heirs or legatees by assignment or any other method and shall not
be subject to being taken by his creditors by any process
whatsoever.
8.2 The Plan shall not be deemed to give any participant or
employee the right to be retained in the employ of the Company or
any subsidiary nor shall the Plan interfere with the right of the
Company or any subsidiary to discharge any employee at any time.
8.3 In the event of a stock dividend, split-up or
combinations of shares, recapitalization or merger in which the
Company is the surviving corporation or other similar capital
change, the number and kind of shares of stock or securities of
the Company to be used as a basis for granting awards under the
Plan, the units then outstanding or to be granted thereunder, the
maximum number of basic stock units which may be granted, the
maximum annual grant for each participant, the unit value and
other relevant provisions shall be appropriately adjusted by the
Board of Directors of the Company, whose determination shall be
binding on all persons. In the event of a consolidation or a
merger in which the Company is not the surviving corporation or
complete liquidation of the Company, all outstanding basic
stock units and dividend equivalent units shall thereafter accrue
no further value, provided that at least twenty days prior to the
effective date of any such consolidation or merger, the Board of
Directors shall either (a) make all outstanding basic units and
dividend equivalent units immediately vested and payable, or (b)
arrange to have the surviving corporation grant replacement units
to the participants.
14
<PAGE> 1
Exhibit 10(c)
THE GILLETTE COMPANY
--------------------
INCENTIVE BONUS PLAN
--------------------
Amended As of March 17, 1994
----------------------------
I. Purpose
-------
The purpose of this Incentive Bonus Plan is to foster continuing long-term
growth in earnings of The Gillette Company by rewarding key management for
outstanding performance in the accomplishment of assigned goals under the
Company's Management by Objectives Program through awards of cash bonuses.
II. Definitions
-----------
PROFIT FROM OPERATIONS - The amount reported as profit from operations in
the annual financial statements of the Company after adjustments to exclude
the results of operations of businesses acquired or disposed of during the
incentive year and any other adjustment, all as determined by the Committee
to be necessary or appropriate to insure comparability between profit from
operations figures from year to year for the purposes of this Plan.
BASE SALARY EARNINGS - The actual base salary, exclusive of any bonus
awards made under this Plan and any other payments, earned by the
participant during the fiscal year of his or her employing unit ending
during the incentive year of the Plan as reported on the Company's records.
BASE SALARY - The eligible employee's annual base salary rate of earnings in
effect as of December 31 of any Incentive Year.
BONUS AWARD - An amount awarded to a participant as determined pursuant to
Paragraph V.
BONUS POOL - An amount earned in any incentive year as determined pursuant
to Paragraph III, from which bonus awards may be paid.
CHAIRMAN - The Chairman of the Board of Directors of the Company.
COMMITTEE - The Personnel Committee established by the Board of Directors of
the Company.
COMPANY - The Gillette Company, a Delaware Corporation.
INCENTIVE YEAR - A fiscal year of the Company in which the Plan is in
effect.
MANAGEMENT REPORTING FORM - The annual written review of individual
performance and assignment of goals conducted under the Company's
Management by Objectives Program.
ELIGIBLE POSITION - For each incentive year, a key management position which
the Chairman and President determine to have a significant impact on the
attainment of the Company's objectives.
Restated to Reflect Plan in Effect: March 17, 1994
-1-
<PAGE> 2
ELIGIBLE EMPLOYEE - For each incentive year, a person whether or not an
officer or director of the Company or any subsidiary, who is regularly
employed by the Company or a subsidiary on a full-time basis, or who, under
conditions approved by the Committee, is regularly employed by the Company
or a subsidiary on a part-time basis, who (a) has been notified of his or
her eligibility, (b) has been assigned goals under the Company's Management
by Objectives Program to be accomplished during the incentive year, (c)
holds an eligible position for all or a substantial part of the incentive
year except in the case of a Partial Plan Year as provided under Section
XIII of the Plan, or is transferred during the incentive year from an
eligible position to an ineligible position for career developmental
purposes as determined by the Company, and (d) is an employee on the date
of the granting of awards (or is an employee whose employment is terminated
by death, retirement or disability or as a direct result of action
initiated by the Company pursuant to the Restructuring Plan approved by the
Board of Directors of the Company at its meeting on December 18, 1986 or
the Reorganization Plan approved by the Board of Directors at its meeting
on December 14, 1989 or after an approved Change in Control or for any
reason after an Unapproved Change in Control).
PARTICIPANT - An eligible employee who has been granted an award under the
Plan.
PLAN - The Incentive Bonus Plan as set forth herein, as from time to time
amended.
PRESIDENT - The President of the Company.
PROJECTED BONUS POOL - Projected bonus pool in any given year shall mean the
amount of the bonus pool which would be earned assuming the Growth Goals for
that year are achieved.
RETIREMENT ELIGIBILITY DATE - The earliest date upon which a participant
becomes eligible to retire under the terms of The Gillette Company
Retirement Plan or, with respect to individuals not participating in that
Plan, the earliest date upon which that individual could have become
eligible to retire under the terms of The Gillette Company Retirement Plan
had he or she been a participant in that Plan.
SAVINGS PLAN EQUIVALENCY - An amount computed by multiplying an employee's
rate of contributions (up to a maximum of 5%) under The Gillette Company
Employees' Savings Plan or one half of the employee's rate of savings under
The Gillette Company Ltd./Ltee Retirement Income Savings Plan, as
applicable, as of the January l immediately preceding the date of an award,
by the amount of that award that is deferred under Paragraph VI (a) and (c)
of this Incentive Bonus Plan.
SUBSIDIARY - Any corporation (1) in which the Company owns, directly or
indirectly, stock possessing 50 percent or more of the total combined voting
power of all classes of stock, (2) over which the Company has effective
operating control, or (3) in which the Company has a material interest.
SALES GROWTH - The amount reported as growth in net sales in the annual
financial statements of the Company after adjustments as determined by the
Committee to be necessary or appropriate to insure comparability between net
sales from year to year for the purposes of the Plan.
Restated to Reflect Plan in Effect: March 17, 1994
-2-
<PAGE> 3
RETURN ON ASSETS - Return on Assets shall be defined as hereinafter
determined by the Committee from time to time in its discretion.
GROWTH GOALS - Growth Goals shall mean the specific percentage of increase
in Profit from Operations, Sales Growth and Return on Assets determined by
the Committee for any given year which if achieved would result in a bonus
pool being earned.
III. Bonus Pool and Reserve
----------------------
If Growth Goals for any fiscal year the Plan is in effect are met, a bonus
pool shall be earned. Such Growth Goals shall be determined by the Committee
as soon as is practicable after the commencement of each incentive year.
With respect to any incentive year after l990, the Committee may, within
its sole discretion, establish a contingency reserve which, in any given
incentive year shall not exceed thirty five percent (35%) of the amount of the
projected bonus pool for that incentive year, from which contingency reserve
bonus awards may be made to recognize outstanding performance in that incentive
year should a bonus pool not otherwise be earned. In addition, with respect to
any plan year after 1990 the Committee may, within its sole discretion, elect
to carry forward up to fifteen percent (15%) of the bonus pool earned in that
year to any one or more of the next ensuing three years with the Committee
having sole discretion as to whether to distribute all or a portion of such
carried forward amounts in any one or more of those three years.
IV. Eligibility
-----------
The Chairman and the President shall make the selection of eligible
positions and eligible employees, except with respect to themselves, for each
incentive year. Selection as an eligible employee in any incentive year shall
not bind the Company to select the individual in any other incentive year.
Selection of any individual in any incentive year shall not bind the Company to
select any other individual holding the same position in the same or any other
incentive year.
V. Amount of Bonus Award
---------------------
As soon as is practicable after the end of the incentive year, the amount,
if any, of the award of each eligible employee shall be determined by the
Chairman and the President, except with respect to themselves, after evaluating
the eligible employee's performance in relation to his or her assigned goals as
contained in his or her Management Reporting Form relating to the incentive
year. Bonus awards shall be determined as a percentage of the eligible
employee's base salary earnings, however, in no event shall the percentage be
less than 5 percent nor more than 70 percent. Proposed awards to officers of
the Company and other senior management employees whose compensation is
regularly reviewed by the Committee shall be subject to review and approval of
the Committee. In addition, in connection with any bonus award the Committee
shall have discretion to make an award or awards under this Corporation's Stock
Equivalent Unit Plan and to provide that all or any portion of any such award
shall be contingent on achievement by the participant or by any unit or units
of the Company of any performance goal or goals over any period or periods of
time ending before March l5 of the third year following the date of the award.
Notwithstanding the above, commencing with the 1994 plan year, the Personnel
Committee, in its sole discretion, in special circumstances may grant an
eligible employee a bonus award which is greater than 70 percent of the
eligible employee's base salary earnings.
Restated to Reflect Plan in Effect: March 17, 1994
-3-
<PAGE> 4
VI. Deferral, Vesting and Payment of Awards
---------------------------------------
Awards are payable in cash.
(a) With respect to awards relating to the l979 Incentive Year, a
percentage of each award equal to twice the percentage the award
bears to the base salary earnings of the participant (up to a
maximum of 40 percent (40%) of the award) and with respect to awards
relating to any Incentive Year after 1979, but before 1984 a
percentage of each award equal to one and one half times the
percentage the award bears to the base salary earnings of the
participant (up to a maximum of 30 percent (30%) of the award) shall
be deferred. Such mandatorily deferred amounts shall vest at the end
of the third calendar year following the close of the incentive year
for which the bonus award was earned or upon the retirement
eligibility date of the participant, whichever occurs first. Such
vested amounts shall become payable when the participant ceases to be
an employee if the participant has reached his or her retirement
eligibility date at cessation of employment, or at age 65 if the
participant has not reached his or her retirement eligibility date at
cessation of employment provided, however, that a participant who has
reached his or her retirement eligibility date at cessation of
employment may elect, prior to cessation of employment, to defer such
amounts beyond retirement in accordance with rules to be prescribed
by the Committee. Notwithstanding the above, in the event an
employee's employment with the Company or any of its subsidiaries is
terminated as a direct result of action initiated by the Company
pursuant to the Restructuring Plan approved by the Board of Directors
of the Company at its meeting on December 18, 1986, or the
Reorganization Plan approved by the Board of Directors of the Company
at its meeting on December 14, 1989, and such employee retires under
a Company-sponsored retirement plan at cessation of employment, the
employee may elect to receive all amounts which would become payable
by reason of such termination of employment in up to ten
approximately equal consecutive annual installments. Such election
must be made prior to the employee's termination of employment in
accordance with rules to be prescribed by the Committee and if no
such election is made, payment of such amounts shall be made within a
reasonable time after the date of termination.
(b) The remainder of the bonus award described in (a) above and all of any
award made with respect to the Incentive Year 1984 and thereafter
shall vest immediately upon the grant of the award and be payable as
soon as is practicable after the financial statements for the
incentive year are available.
(c) As prescribed by the rules pursuant to this Plan, an individual may
elect to defer payment of all or a portion of any award payable under
Subparagraph (b) above to March 1 of any future year or to retirement.
Notwithstanding any prior voluntary deferral, all amounts so deferred
shall become payable when the participant ceases to be an employee
for any reason other than retirement under a Company-sponsored
retirement plan upon cessation of employment. With respect to
participants whose employment ceases and who, upon cessation of
employment, retire under a Company-
Restated to Reflect Plan in Effect: March 17, 1994
-4-
<PAGE> 5
sponsored retirement plan, such participants may, prior to termination
of employment, elect to defer payment of any awards beyond retirement
in accordance with rules to be prescribed by the Committee and if no
such election is made, payment of such amounts shall be made within a
reasonable time after the date of termination of employment.
Notwithstanding the above, in the event an employee's employment with
the Company or any of its subsidiaries is terminated as a direct
result of action initiated by the Company pursuant to the
Restructuring Plan approved by the Board of Directors of the Company
at its meeting on December 18, 1986, or the Reorganization Plan
approved by the Board of Directors at its meeting on December 14,
1989, the employee may elect to receive all amounts which would become
payable by reason of such termination of employment in up to ten
approximately equal consecutive annual installments but in no event
may payments end beyond March 1, of the tenth year following
termination of employment, with respect to employees who have not
retired under a Company-sponsored retirement plan upon cessation of
employment. Such election must be made prior to the employee's
termination of employment in accordance with rules to be prescribed by
the Committee and if no such election is made, payment of such amounts
shall be made within a reasonable time after the date of termination.
Notwithstanding the provisions of this subparagraph, the right to defer
payment beyond termination shall serve as partial consideration for a
settlement of all claims which the participant may have against the
Company, its subsidiaries, employees and agents and shall be subject to
execution by the participant of a release and settlement agreement in a
form to be prescribed by the Committee.
(d) Amounts deferred under subparagraph (a) and (c) above shall be
credited to an individual account in the name of the participant. The
account of an employee who is participating in The Gillette Employees'
Savings Plan or The Gillette Company Ltd/Ltee Retirement Income
Savings Plan shall also be credited with a Savings Plan Equivalency
based on the participant's rate of contributions under The Gillette
Company Employees' Savings Plan or savings under The Gillette Company
Ltd./Ltee Retirement Income Savings Plan, as applicable, on the
January l immediately preceding the date of an award.
Amounts equivalent to interest at the rate applicable to the
Guaranteed Fund of The Gillette Company Employees' Savings Plan
shall be credited to the total amount in the employee's account in so
far as the Company shall deem practicable in the same manner as such
amounts are credited under The Gillette Company Employees' Savings
Plan. Upon payment to the participant of an amount deferred under
subparagraph (a) or (c) above, the related Savings Plan Equivalency
and amounts equivalent to interest credited thereon will be paid. A
participant whose employment ceases prior to his or her retirement
eligibility date will forfeit unvested amounts deferred under
subparagraph (a) above, as well as the related Savings Plan
Equivalency and amounts equivalent to interest credited thereon. In
the event that the Savings Plan Equivalency no longer exists by virtue
of
Restated to Reflect Plan in Effect: March 17, 1994
-5-
<PAGE> 6
termination of the Savings Plan and/or The Guaranteed Fund of the
Savings Plan, the amounts in each employee's account shall be credited
with a rate of return adjusted each January 2 to reflect the interest
rate in effect on January 2 for two year United States Treasury Notes.
(e) If a participant dies or becomes totally and permanently disabled while
an employee of the Company or a subsidiary, an amount equal to all
deferred amounts, vested and unvested, Savings Plan Equivalency
amounts and amounts equivalent to interest accrued thereon shall be
paid to the participant or, in the case of death, to the participant's
executor or administrator or as otherwise provided by law.
(f) All payments shall be subject to any required withholdings.
(g) Prior to the happening of a Change in Control, either Approved or
Unapproved, as those terms are defined in The Gillette Company
Employees' Savings Plan, with respect to amounts deferred pursuant
to subparagraph (c), an individual who has made such deferral may, in
accordance with rules prescribed by the Committee, revoke all deferral
elections in the event of a Change in Control of the Corporation, with
such revocation to take effect, at the option of the participant, if a
Change in Control occurs prior to January 1, 1988, upon the happening
of any Change in Control or January 1, 1998, or if a Change in Control
occurs on or after January 1, 1988, upon the happening of a Change in
Control and the Company shall make payment to the participant of such
deferred amounts for which such deferral has been revoked plus
interest as provided in subparagraph (d) above.
(h) In the event of a Change in Control, either Approved or Unapproved, as
those terms are defined in The Gillette Company Employees' Savings
Plan, amounts deferred pursuant to subparagraph (a) above will become
immediately payable.
VII. Amendment and Termination
-------------------------
The Board of Directors of the Company, or the Personnel Committee of the
Board of Directors, if and to the extent authorized, in absolute discretion of
the body so acting and without notice, may at any time amend or terminate the
Plan, provided that no such amendment or termination shall adversely affect the
rights of any participant under any award previously granted. Further, neither
the Board of Directors nor the Personnel Committee of the Board of Directors
shall have the discretion once a plan year has commenced not to make awards if
a bonus pool is earned for that plan year or after a contingency reserve has
been established in any plan year not to make awards from such contingency
reserve.
VIII. Assignment
----------
Bonus payments under this Plan shall be paid only to participants. No
bonus payment herein provided, nor any part thereof, and no right or claim to
any of the monies payable pursuant to the provisions of this Plan shall be
anticipated, assigned, or otherwise encumbered, nor be subject to attachment,
garnishment, execution or levy of any kind, prior to the actual payment and
delivery of said amount to the Plan participant and any attempted assignment or
other encumbrance or attachment, garnishment, execution or levy shall be of no
force or effect, except as otherwise provided by law. Notwithstanding the
above, if a participant is adjudged incompetent, the Committee may direct that
any amounts payable be paid to the participant's guardian or legal
representative.
Restated to Reflect Plan in Effect: March 17, 1994
-6-
<PAGE> 7
IX. Employment and Plan Rights
--------------------------
The Plan shall not be deemed to give any eligible employee or participant
the right to be retained in the employ of the Company or any subsidiary nor
shall the Plan interfere with the right of the Company or any subsidiary to
discharge any employee at any time nor shall the Plan be deemed to give any
employee any right to any award until such award is actually made.
X. Administration and Authority
----------------------------
The Plan shall be administered by the Committee except as otherwise
provided herein. The Committee shall have the authority, consistent with the
Plan, to (a) determine adjustments to Profit from Operations, Net Sales and
Return on Assets as provided in Paragraph II of this Plan, (b) determine the
percentage increase of annual Profit from Operations, Net Sales, and Return on
Assets, i.e., Growth Goals, necessary to earn a bonus pool, if any, for each
incentive year, (c) establish an earned reserve and approve payments of awards
from the earned reserve in accordance with Paragraph III of the Plan, (d)
review and approve bonus awards made to officers and other senior management
employees whose compensation is regularly reviewed by it, (e) determine the
amount of any bonus awards to be granted to the Chairman and the President, (f)
adopt, amend and rescind rules and regulations for the administration of the
Plan and for its own acts and proceedings and (g) decide all questions and
settle all controversies and disputes which may arise in connection with the
Plan. The Committee may delegate any or all responsibilities assigned to it
pursuant to subparagraph (f).
The Chairman and the President, except with respect to themselves, shall
have authority, consistent with the Plan, (a) to select eligible positions,
eligible employees, and participants under the Plan, (b) to recommend to the
Committee the amount of bonus awards to participants listed under (d) in the
preceding paragraph, (c) to determine the amount of bonus awards to
participants other than those listed in (d) of the preceding paragraph, and (e)
evaluate the performance or review evaluations of the performance of eligible
employees in the accomplishment of assigned objectives. The Chairman and
President may delegate any or all administrative responsibilities delegated to
them by the Committee.
All decisions, determinations and interpretations of the Committee or the
Chairman and the President or their delegees with respect to the exercise of
their respective responsibilities shall be binding on all parties concerned.
XI. Individual Accounts
-------------------
The Committee shall maintain a separate account under the Plan for each
participant. Each account shall show the amount awarded, vested and unvested
portions of awards, amounts deferred, Savings Plan Equivalency amounts, if
applicable, and amounts equivalent to interest credited thereon.
XII. Forfeitures
-----------
Subject to Section III of this Plan, all amounts forfeited by participants
under the terms of this Plan shall revert to the Company.
Restated to Reflect Plan in Effect: March 17, 1994
-7-
<PAGE> 8
XIII. Partial Plan Year in the Event of Change in Control
---------------------------------------------------
Notwithstanding any other provisions of this Plan to the contrary, in the
event of a Change in Control, either Approved or Unapproved, as those terms are
defined in The Gillette Company Employees' Savings Plan or if the Company is
merged, dissolved or otherwise ceases to exist after July 1, of any plan year,
the Board of Directors or the Personnel Committee of the Board of Directors
shall pay participants awards from the Bonus Pool or Contingency Reserve, if
applicable, adjusted as follows:
The achievement of the Growth Goals for that year from the beginning of
the plan year to the happening of its first or any of the aforementioned events
(the "Partial Plan year") shall be compared against the results for the same
period of the preceding year and the bonus pool will be determined on a
prorated basis for the Partial Plan Year.
Restated to Reflect Plan in Effect: March 17, 1994
-8-
<PAGE> 1
Exhibit 10(d)
SUBJECT TO THE APPROVAL OF THE STOCKHOLDERS AT THEIR ANNUAL MEETING
ON APRIL 21, 1994
THE GILLETTE COMPANY
OUTSIDE DIRECTORS' STOCK OWNERSHIP PLAN
1. PURPOSE.
The purpose of The Gillette Company Outside Directors' Stock Ownership
Plan (the "Plan") is to advance the interests of the Company and its
shareholders by helping to attract and retain highly qualified outside
directors and providing compensation which aligns the interests of the
directors with those of the shareholders. The Plan shall be interpreted and
implemented in a manner so that eligible directors will not fail, by reason of
the Plan or its implementation, to be "disinterested persons" within the
meaning of Rule 16(b)3 of the Securities Exchange Act of 1934, as such Rule and
such Act may be amended.
2. DEFINITION.
Unless the context clearly indicates otherwise, the following terms
when used in the Plan shall have the meanings set forth in this section:
a. "Board of Directors" shall mean the Board of Directors of
the Company.
b. "Company" shall mean The Gillette Company, a Delaware corporation,
or its successor.
c. "Director" shall mean any member of the Board of Directors of the
Company who is not also an employee or officer of the Company or
any of its affiliates and who serves as a director on or after
January 1, 1994.
d. "Common Stock" shall mean the shares of common stock of the
Company, $1 par value per share.
e. "Dividend Reinvestment Plan" shall mean the Dividend Reinvestment
and Stock Purchase Plan maintained by the Company's transfer agent
for the Company's Common Stock.
f. "Retainer(s)" shall mean the annual retainer(s) paid quarterly, in
advance, to each Director for services on the Board of Directors.
3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
Common Stock may be shares of the Company's authorized but unissued
Common Stock, treasury shares of Common Stock or shares of Common Stock
purchased on the open market.
<PAGE> 2
4. ELIGIBILITY.
Only Directors of the Company shall participate in the Plan.
5. ACQUISITION OF COMMON STOCK.
With respect to all Director Retainers earned for Board service on and
after January 1, 1994, payment of fifty percent of all Retainers shall be made
in the form of Common Stock in accordance with provisions set out below and
further administrative procedures to be determined by the Personnel Committee
of the Board of Directors of the Company.
In the event that Common Stock is to be purchased on the open market on
behalf of the Director, the Company shall, on the first business day of each
quarter, transfer a sum of money for each Director equal to fifty percent of
his or her quarterly Retainer to an account established in the name of each
Director under the Dividend Reinvestment Plan. Such Retainers shall be used to
purchase Common Stock and the dividends paid thereon also shall be invested in
Common Stock all in accordance with the terms of the Dividend Reinvestment
Plan.
In the event that Common Stock is to be issued by the Company from its
authorized but unissued shares or from its treasury, the value of the shares
shall be based upon the average of the high and low prices for the Common Stock
as reported on the New York Stock Exchange composite index on the date that the
shares would otherwise have been purchased under the Dividend Reinvestment
Plan. Shares issued by the Company are to be deposited in the Director's
account under the Dividend Reinvestment Plan.
Notwithstanding the above, 50% of the Retainer(s) for Board service
payable on January 1 and April 1, 1994 shall be retained by the Company and
shall be used to purchase Common Stock on the open market on April 25, 1994
subject to approval of the Plan by the shareholders. Such shares shall be
deposited in the Dividend Reinvestment Plan account established for each
Director under this plan.
When a Director's service as a Director of the Company ceases the
Director may continue or terminate participation in the Dividend Reinvestment
Plan.
<PAGE> 3
6. GENERAL PROVISIONS.
a. No Director and no beneficiary or other person claiming under or
through such Director shall have any right, title or interest
by reason of this Plan or any share of Common Stock to any
particular assets of the Company. The Company shall not be
required to establish any fund or make any other segregation of
assets to assure the award of Common Stock hereunder.
b. No right under the Plan shall be subject to anticipation, sale,
assignment, pledge, encumbrance or charge except by will or the
law of descent and distribution.
c. Notwithstanding any other provision of the Plan or agreements made
pursuant hereto, the Company shall not be required to issue,
purchase or deliver any certificate for shares of Common Stock
under this Plan prior to fulfillment of all of the following
conditions:
1. Any required listing or approval upon notice of issuance or
purchase of such shares on any securities exchange on which
the Common Stock may then be traded.
2. Any registration or other qualification of such shares under
any state or federal law or regulation or other qualification
which the Board of Directors shall upon the advice of counsel
deem necessary or advisable.
3. The obtaining of any other required consent or approval or
permit from any state or federal government agency.
d. In no event shall the Company be required to issue a fractional
share hereunder.
e. The issuance to or purchase of shares for Directors or their legal
representatives shall be subject to any applicable taxes or other
laws or regulations of the United States of America or any state
having jurisdiction thereover.
<PAGE> 4
7. ADMINISTRATION.
This Plan shall be administered by the Personnel Committee of the Board
of Directors of the Company. The Committee shall have the authority,
consistent with the Plan to adopt, amend and rescind rules and regulations for
the administration of the Plan and for its own acts and proceedings and decide
all questions and settle all controversies and disputes which may arise in
connection with the Plan. The Personnel Committee may delegate any or all
responsibilities assigned to it. All decisions, determinations and
interpretations of the Personnel Committee or its delegates with respect to the
exercise of their respective responsibilities shall be binding on all parties
concerned.
8. EFFECTIVE DATE; TERMINATION AND AMENDMENT.
a. This Plan shall become effective upon its approval by the holders of
an affirmative majority of the votes properly cast at the 1994 Annual
Meeting of the shareholders of the Company. The term of the Plan
shall be indefinite.
b. The Board of Directors may terminate the Plan or make such
modifications or amendments to the Plan as it may deem advisable,
provided, however, that the Board of Directors may not amend the Plan:
(1) more often than once every six months, other than to comply with
changes in the Internal Revenue Code, the Employee Retirement
Income Security Act, or the rules thereunder; and
(2) without the approval of the shareholders of the Company if such
approval is required to maintain the Plan's compliance under
Section 16 of the Securities and Exchange Act or is otherwise
required pursuant to any applicable law or rule.
<PAGE> 1
Exhibit 10(f)
[LOGO] LLOYD'S POLICY
WE, UNDERWRITING MEMBERS of the syndicates whose definitive numbers and
proportions are shown in the Table attached hereto (hereinafter referred to as
'the Underwriters'), hereby agree, in consideration of the payment to Us by or
on behalf of the Assured of the premium specified in the Schedule, to insure
against loss, including but not limited to associated expenses specified
herein, if any, to the extent and in the manner provided in this Policy.
THE UNDERWRITERS hereby bind themselves severally and not jointly, each for his
own part and not one for another, and therefore each of the Underwriters (and
his heirs, Executors and Administrators) shall be liable only for his own share
of his syndicate's proportion of any such loss and of any such expenses. The
identity of each of the Underwriters and the amount of his share may be
ascertained by the Assured or the Assured's representative on application to
Lloyd's Policy Signing Office, quoting the Lloyd's Policy Signing Office number
and date shown in the Table.
If the Assured shall make any claim knowing the same to be false or fraudulent,
as regards amount or otherwise, this Policy shall become void and all claim
hereunder shall be forfeited.
IN WITNESS whereof the General Manager of Lloyd's Policy Signing Office has
signed this Policy on behalf of each of Us.
"WARNING: DO NOT AMEND COVERAGE
WITHOUT CHECKING ALL PRIMARY AND
EXCESS COVERAGES."
/s/ [??] LLOYD'S
--------------------------------- POLICY SIGNING
LLOYD'S POLICY SIGNING OFFICE OFFICE
General Manager EMBOSSMENT
APPEARS HERE
ON ORIGINAL
DOCUMENT
<PAGE> 2
DIRECTORS AND OFFICERS AND
COMPANY REIMBURSEMENT
INDEMNITY POLICY
L88RL
<PAGE> 3
DECLARATIONS
DIRECTORS AND OFFICERS AND COMPANY
REIMBURSEMENT INDEMNITY POLICY
NOTICE: THIS POLICY SUBJECT TO ITS TERMS APPLIES ONLY TO ANY "CLAIM" (AS
DEFINED HEREIN) MADE AGAINST THE DIRECTORS AND OFFICERS DURING THE
POLICY PERIOD. THE LIMIT OF LIABILITY AVAILABLE TO PAY DAMAGES OR
SETTLEMENTS SHALL BE REDUCED AND MAY BE EXHAUSTED BY AMOUNTS INCURRED
AS "COSTS, CHARGES AND EXPENSES" (AS DEFINED HEREIN) AND "COSTS,
CHARGES AND EXPENSES"SHALL BE APPLIED TO THE RETENTIONS. THIS POLICY
DOES NOT PROVIDE FOR ANY DUTY BY UNDERWRITERS TO DEFEND THOSE INSURED
UNDER THE POLICY.
These Declarations along with the completed signed Application, including
attachments, and the Policy with Endorsements shall constitute the contract
between the Company, its Directors and Officers and Underwriters.
POLICY NO. 757/DJ.930040
Item A. Parent Company: THE GILLETTE COMPANY
Principal Address: Prudential Tower Building
Boston, MA 02199, USA
State of Incorporation: Delaware
Item B. Policy Period:
From 1st June 1993 to lst June 1994 both days at 12.01 a.m.
Standard Time At The Principal Address Stated In Item A.
Item C. Limit of Liability: US$ 10,000,000 in the aggregate
each Policy year
Item D. Retentions: US$ Nil each Director or
Officer each Claim
but in no event
exceeding
US$ Nil in the aggregate
each Claim all
Directors and
Officers under
Insuring Clause
I.A. and
<PAGE> 4
US$ 1,000,000 each Claim under
Insuring Clause I.B.
Item E. Insured Percentage: 100% of Loss in excess of retention
under Insuring Clause I.A.
100% of Loss in excess of retention under
Insuring Clause I.B.
Item F. Premium: US$ 283,570.95 part of US$ 495,000.00
It is understood and agreed that a premium allocation of US$
12.00 is payable by each Director or Officer of each of the
Australian Subsidiaries of the Parent Company in Item A. of the
Declarations. Such Premium allocation is part of and not in
addition to the premium amount shown above.
Item G. Premium for Optional Extension Period: 100% of the total premium
as provided in Clause VIII., to be paid only if the eligibility
requirements are met and the option is exercised.
Item H. Notification to Underwriters pursuant to Clause VI. shall be
given to Peterson and Ross, attention Theodore A. Boundas, 200
E Randolph Drive, Suite 7300, Chicago, Illinois 60601-6969.
Item I. Consolidated assets of Parent Company: US$ 4,189,900,000
Item J. Form numbers of endorsements attached at issuance:
NMA 1256 Nuclear Incident Exclusion Clause
NMA 1477 Radioactive Contamination Exclusion Clause
NMA 1168 Small Additional or Return Premiums Clause
01.01 Company Definition Amendment
02.01 Directors and Officers Definition Amendment
57.01 Exclusion Deletion Endorsement
270.01 Amended Notification Clause
270.02 Special Exclusion
270.03 Exclusion E Amended
270.04 Amended Cancellation Clause
270.05 Subsidiary Definition Amendment
270.06 Wrongful Act Definition Amendment
270.07 Special Endorsement
<PAGE> 5
270.08 Amendment to Exclusion G
270.09 Amendment to Exclusion F
270.10 Special Endorsement
500.01 Amendment to Exclusion G
51.01 Outside Service Extension
DATED IN LONDON: 25th October 1993
<PAGE> 6
DIRECTORS AND OFFICERS AND COMPANY
REIMBURSEMENT INDEMNITY POLICY
In consideration of the payment of the premium, in reliance upon
the statements in the Application attached hereto and made a part hereof,
subject to the Declarations made a part hereof and subject to all of the terms
of this Policy, Underwriters agree as follows:-
I INSURING CLAUSE
A. To reimburse the Directors and Officers for Loss not exceeding
the Limit of Liability in excess of the applicable Retention
set forth in Item D. of the Declarations sustained by such
Directors and Officers resulting from any Claim first made
during the Policy Period or the Optional Extension Period, if
applicable, against any of them for a Wrongful Act, except for
such Loss which the Company actually pays to the Directors and
Officers as indemnification, and except for such Loss which
the Company is required or permitted by law to indemnify the
Directors and Officers unless and to the extent that the
Company is unable to make actual indemnification solely by
reason of its financial insolvency.
B. To reimburse the Company for Loss not exceeding the Limit of
Liability in excess of the applicable Retention set forth in
Item D. of the Declarations for which the Company shall have
lawfully indemnified or is required or permitted by law to
indemnify the Directors and Officers resulting from any Claim
first made during the Policy Period or the Optional Extension
Period, if applicable, against any of them for a Wrongful Act.
II DEFINITIONS
The following terms whenever used in this Policy shall have the
meanings indicated.
A. "Claim" shall mean any judicial or administrative proceeding
initiated against a Director or Officer in which such Director
or Officer may be subjected to a binding adjudication of
liability for damages or other relief, including any appeal
therefrom.
B. "Company" shall mean:-
(1) the Parent Company, and
(2) any Subsidiary.
C. "Corporate Takeover" shall mean:-
(1) the acquisition of more than 50% of the outstanding
securities of
<PAGE> 7
the Parent Company representing the Present right to
vote for the election of directors by any person or
entity, or
(2) the merger of the Parent Company into another entity
such that the Parent Company is not the surviving
entity, or
(3) the consolidation of the Parent Company with another
entity, or
(4) acquisition of substantially all of the assets of the
Parent Company by another entity, or
(5) The Parent Company ceasing to be publicly held.
D. "Costs, Charges and Expenses" shall mean reasonable and
necessary legal fees and expenses incurred by the Directors
and Officers in defense of any Claim and appeals therefrom,
and cost of attachment or similar bonds; provided, however,
Costs, Charges and Expenses shall not include:-
(1) salaries, wages, overhead or benefit expenses
associated with officers or employees of the Company
or
(2) any amounts incurred in defense of any Claim for
which any other insurer has a duty to defend,
regardless of whether or not such other insurer
undertakes such duty.
E. "Directors and Officers" shall mean any persons who were, now
are, or shall be directors or officers of the Company
including their estates, heirs, legal representatives or
assigns in the event of their death, incapacity or bankruptcy.
F. "Interrelated Wrongful Acts" shall mean Wrongful Acts which
have as a common nexus any fact, circumstance, situation,
event, transaction or series of facts, circumstances,
situations, events or transactions.
G. "Loss" shall mean damages, settlements and Costs, Charges and
Expenses, provided, however that Loss shall not include:-
(1) punitive or exemplary damages or that portion of any
multiplied damages award which exceeds the amount
multiplied,
(2) criminal or civil fines or penalties imposed by law,
(3) taxes; or
(4) matters deemed uninsurable under the law pursuant to
which this Policy shall be construed.
<PAGE> 8
H. "Parent Company" shall mean the entity named in Item A. of the
Declarations.
I. "Policy Period" shall mean the period from the effective date
and hour of this Policy as set forth in Item B. of the
Declarations, to the Policy expiration date set forth in Item
B. of the Declarations, or its earlier cancellation date, if
any.
J. "Policy Year" shall mean the period of twelve months following
the effective date and hour of this Policy or the period of
twelve months falling within the Policy Period following any
anniversary date of such effective date, or, if the period
between the effective date or any anniversary date and the
cancellation date of the Policy is less than twelve months,
such lesser period. If the Optional Extension Period option
is exercised in accordance with Clause VIII. then such period
shall be part of and not in addition to the last Policy Year.
K. "Subsidiary" shall mean:-
(1) any entity more than 50% of whose outstanding
securities representing the present right to vote for
the election of directors are owned by the Parent
Company and/or one or more of its Subsidiaries at the
inception date of this Policy and which Subsidiary is
named in the application for this Policy, or
(2) any entity more than 50% of whose outstanding
securities representing the present right to vote for
the election of directors were owned by the Parent
Company and/or one or more of its Subsidiaries prior
to the inception date of this Policy and which
Subsidiary was insured under any policy issued by
Underwriters of which this Policy is a renewal
thereof, or
(3) any entity acquired or created subsequent to the
effective date of this Policy in which more than 50%
of whose outstanding securities representing the
present right to vote for the election of directors
are owned by the Parent Company and/or one or more of
its Subsidiaries, and whose assets do not exceed 10%
of the consolidated assets of the Company as set
forth in Item I. of the Declarations, or
(4) any entity which is acquired or created subsequent to
the effective date of this Policy in which more than
50% of whose outstanding securities representing the
present eight to vote for the election of directors
are owned by the Parent Company and/or one or more of
its Subsidiaries, and whose assets exceed 10% of the
consolidated assets of the Company as set forth in
Item of the Declarations, subject, however, to the
provisions of Clause VII.B.
<PAGE> 9
L. "Wrongful Act" shall mean any actual or alleged negligent act,
error, omission, misstatement, misleading statement, neglect
or breach of duty by the Directors or Officers, individually
or collectively, in the discharge of their duties solely in
their capacity as Directors or Officers of the Company.
III EXCLUSIONS
Underwriters shall not be liable to make any payment for Loss
in connection with any Claim made against the Directors or
Officers:-
A. for any actual or alleged libel, slander, other defamation or
any actual or alleged bodily injury, sickness, disease or
death of any person, or any actual or alleged damage to or
destruction of any tangible property including loss of use
thereof, or any actual or alleged invasion of privacy,
wrongful entry, eviction, false arrest, false imprisonment,
malicious prosecution, assault, battery, mental anguish,
emotional distress, or loss of consortium;
B. Based upon, arising out of, directly or indirectly resulting
from or in consequence of or in any way involving:-
(1) any Wrongful Act or any fact, circumstance or
situation which has been the subject of any notice
given prior to the effective date of this Policy
under any prior policy, or
(2) any other Wrongful Act whenever occurring, which,
together with a Wrongful Act which has been the
subject of such notice, would constitute Interrelated
Wrongful Acts;
C. to the extent it is insured under any other existing valid
policy or policies, whether such other insurance is stated to
be primary, contributory, excess, contingent or otherwise, and
regardless of whether or not any Loss in connection with such
Claim is collectible or recoverable under such other policy or
policies; provided, however, this exclusion shall not apply to
the amount of Loss which is in excess of the amount of any
deductible and the limit of liability of such other policy or
policies where such Claim is not otherwise excluded by the
terms of this Policy;
D. based upon, arising out of, directly or indirectly resulting
from or in consequence of, or in any way involving, actual or
alleged seepage, pollution or contamination of any kind;
E. for violation of the Employee Retirement Income Security Act
of 1974 (or any regulations promulgated thereunder) or similar
provisions of any federal, state or local statutory law or
common law;
F. by or at the behest of the Company, or any affiliate of the
Company, or by any security holder of the Company whether
directly or derivatively
<PAGE> 10
except where such security holder bringing such Claim is
acting totally independently of, and totally without the
solicitation of, or assistance of, or participation of, or
intervention of, any Director or Officer, or the Company or
any affiliate of the Company;
G. by or on behalf of any other Director of Officer except and to
the extent that such Claim is in the form of a crossclaim,
third party claim or otherwise for contribution or indemnity
which is part of and results directly from a Claim which is
not otherwise excluded by the terms of this Policy;
H. brought about or contributed to in fact by any dishonest or
fraudulent act or omission or any criminal act or omission;
I. based upon or attributable to the Directors and Officers
gaining in fact any personal profit or advantage to which they
were not legally entitled;
J. for the return by the Directors or Officers of any
remuneration paid to them without the previous approval of the
stockholders of the Company, which payment without such
previous approval shall be held by the court to be in
violation of the law;
K. of any Subsidiary based upon, arising out of, directly or
indirectly resulting from or in consequence of, or in any way
involving:
(1) any Wrongful Act occurring prior to the date such
entity became a Subsidiary, or
(2) any Wrongful Act occurring subsequent to the date
such entity became a Subsidiary which, together with
a Wrongful Act occurring prior to the date such
entity became a Subsidiary, would constitute
Interrelated Wrongful Acts;
L. based upon, arising out of, directly or indirectly resulting
from or in consequence of, or in any way involving, the
failure to effect or maintain insurance;
M. based upon, arising out of, directly or indirectly, resulting
from or in consequence of, or in any way involving, any
Wrongful Act actually or allegedly committed subsequent to a
Corporate Takeover;
N. based upon, arising out of, directly or indirectly, resulting
from or in consequence of, or in any way involving, any offer
to purchase, or purchase of, securities of the Company at a
premium over their then-current market value, made by the
Company or by the Directors or Officers, except:-
(1) where such offer or purchase extends to all security
holders of the Company, or
<PAGE> 11
(2) where an independent legal counsel provided its prior
written opinion that such contemplated offer to
purchase or purchase would constitute a proper
exercise of the Company's business judgement, and an
independent investment banking firm provided its
prior written opinion that such contemplated offer to
purchase or purchase would involve fair and adequate
consideration;
0. based upon, arising out of, directly or indirectly, resulting
from or in consequence of, or in any way involving, their
service as directors, officers, or employees of any entity
other than the Company, even if directed or requested to serve
by the Company as directors, officers, or employees of such
other entity.
Any Wrongful Act pertaining to any Director or Officer shall
not be imputed to any other person for the purposes of
determining the applicability of Exclusions H., I. and J.
IV. LIMITS OF LIABILITY
A. Subject to Clause IV.B., Underwriters shall be liable to pay
the percentage set forth in Item E. of the Declarations of Loss
which is in excess of the amount of the applicable Retention
as determined under Clause IV.D. up to the Limit of Liability
as shown under Item C. of the Declarations resulting from each
Claim made against the Directors and Officers, it being
warranted that the remaining percentage of such Loss shall be
uninsured.
B. The amount shown in Item C. of the Declarations shall be the
maximum aggregate Limit of Liability of Underwriters in each
Policy Year for all Loss resulting from all Claims made
against the Directors and Officers during each such Policy
Year, together with all Claims made against the Directors and
Officers which, in accordance with Clause IV.C. or Clause
VI.B., shall be deemed to have been made during each such
Policy Year.
C. More than one Claim involving the same Wrongful Act or
Interrelated Wrongful Acts of one or more Directors and
Officers shall be deemed to constitute a single Claim and such
single Claim shall be deemed to have been made solely within
the earliest of the following Policy Years:-
(1) the Policy Year in which the earliest Claim involving
the same Wrongful Act or Interrelated Wrongful Acts
is first made, or
(2) the Policy Year in which the Claim involving the same
Wrongful Act or Interrelated Wrongful Acts shall be
deemed to have been made pursuant to Clause VI.B., if
applicable.
D. In the event a Claim is covered in part under both Insuring
Clauses I.A. and I.B. the Retentions set forth in Item D. of
the Declarations shall be
<PAGE> 12
applied separately to that part of the Loss resulting from
such Claim covered by each Insuring Clause and the sum of the
Retentions so applied shall constitute the Retention
applicable to such Claim provided, however, the total
Retention as finally determined shall in no event exceed the
Retention applicable to Insuring Clause I.B.
E. The Retention applicable to Insuring Clause I.B. shall apply
to Loss resulting from any Claim if indemnification by the
Company is required by law or is legally permissible to the
fullest extent permitted by law, regardless of whether or not
actual indemnification is made, unless the Company is unable
to make such actual indemnification solely by reason of its
insolvency.
F. Cost, Charges and Expenses shall be part of and not in
addition to the Limit of Liability as shown under Item C. of
the Declarations, and such Costs, Charges and Expenses shall
reduce the Limit of Liability as shown under Item C. of the
Declarations.
G. Except as provided hereinbelow, Underwriters shall reimburse
Loss only upon the final disposition of any Claim made against
the Directors and Officers.
However, if:
(1) the Directors and Officers incur Costs, Charges and
Expenses, and
(2) the Company cannot advance or indemnify such Costs,
Charges and Expenses solely because of the provisions
of its charter, bylaws or applicable statutes and not
because of the failure or refusal of its Board of
Directors or other governing body or person to
authorize such advancement or indemnification,
then, Underwriters shall advance to the Directors and Officers
no more than once every ninety (90) days all such Costs,
Charges and Expenses, subject to the applicable Retention,
Limit of Liability and Exclusions and all of the other terms
and conditions of this Policy.
V SETTLEMENTS AND DEFENSE
A. No settlement shall be made without Underwriters' consent,
such consent not to be unreasonably withheld.
B. It shall be the duty of the Directors and Officers and not the
duty of Underwriters to defend Claims made against the
Directors and Officers, provided that no Costs, Charges or
Expenses shall be incurred without Underwriters' consent, such
consent not to be unreasonably withheld. In the event of such
consent being given, subject to all other terms and provisions
of this Policy and except as provided in Clause IV.G. of this
<PAGE> 13
Policy, Underwriters shall reimburse Costs, Charges and
Expenses only upon the final disposition of any Claim.
VI NOTIFICATION
A. If during the Policy Period or Optional Extension Period, if
applicable, any Claim is made against any Director or Officer,
the Company and the Directors and Officers shall, as a
condition precedent to their right to be reimbursed under this
Policy, give to Underwriters notice in writing as soon as
practicable of any such Claim, but in no event later than
sixty (60) days after such Claim is first made.
B. If during the Policy Period or the Optional Extension Period,
if applicable, the Directors and Officers or the Company first
become aware of a specific Wrongful Act, and if the Directors
and Officers or the Company shall, during such period, give
written notice to Underwriters as soon as practicable of:
(1) the specific Wrongful Act, and
(2) the consequences which have or may result therefrom,
and
(3) the circumstances by which the Directors and Officers
or the Company first became aware thereof,
then any Claim not otherwise excluded by the terms of this
Policy subsequently made against the Directors and Officers
arising out of such Wrongful Act or any other Wrongful Act
which, together with such Wrongful Act, would constitute
Interrelated Wrongful Acts, shall be deemed for the purposes
of this Policy to have made during the Policy Year in which
such notice was first given.
C. Notice to Underwriters provided for in Clause VI. shall be
given to the firm shown under Item H. of the Declarations.
VII GENERAL CONDITIONS
A. WARRANTY CLAUSE
It is warranted that the particulars and statements contained
in the application for this Policy or contained in the
application for any policy issued by Underwriters of which
this Policy is a renewal thereof (any such applications herein
collectively referred to as the "Application") a copy of which
is attached hereto, and any material submitted therewith
(which shall be retained on file by Underwriters and be deemed
attached hereto, as if physically attached hereto), are the
basis of this Policy and are to be considered as incorporated
into and constituting a part of this Policy.
<PAGE> 14
By acceptance of this Policy the Directors and Officers and
the Company agree:-
(1) that the statements in the Application or in any
materials submitted therewith are their
representations, that they shall be deemed material
to the acceptance of the risk or the hazard assumed
by Underwriters under this Policy and that this
Policy is issued in reliance upon the truth of such
representations;
(2) that in the event that the Application, including
materials submitted therewith, contains
misrepresentations made with the actual intent to
deceive, or contains misrepresentations which
materially affect either the acceptance of the risk
or the hazard assumed by Underwriters under this
Policy, this Policy in its entirety shall be void and
of no effect whatsoever, and
(3) that this Policy shall be deemed to be a single
unitary contract and not a severable contract of
insurance or a series of individual contracts of
insurance with each of the Directors or Officers.
B. ADJUSTMENT CLAUSE
(1) This Policy is issued and the premium computed on the
basis of the information submitted to Underwriters as
part of the Application. In the event the Company
acquires any other entity or acquires substantially
all of the assets of another entity, or merges with
another entity such that said Company is the
surviving entity, or creates or acquires a Subsidiary
as defined in Clause II.K(4), after the inception of
this Policy, no coverage shall be afforded under this
Policy for any Loss in any way involving the assets
acquired or the assets, liabilities, directors,
officers or employees of the entity acquired or
merged with, or such Subsidiary unless:
(a) written notice of such transaction or event
is given to Underwriters by the Parent
Company within thirty (30) days of the
effective date of such transaction or event,
and
(b) the Parent Company provides Underwriters with
such information in connection therewith as
Underwriters may deem necessary, and
(c) the company accepts any special terms,
conditions, exclusions or additional premium
charge as may be required by Underwriters,
and
(d) Underwriters, at their sole discretion, agree
to provide such coverage
<PAGE> 15
(2) In the event any entity ceased to be a Subsidiary as
defined herein after the inception date of this
Policy, or of any policy issued by Underwriters of
which this Policy is a renewal or replacement
thereof, this Policy, subject to its terms, shall
continue to apply to all persons who were Directors
or Officers of such Subsidiary with respect to Claims
first made during the Policy Period or the Optional
Extension Period if applicable against such Directors
of Officers for Wrongful Acts committed or allegedly
committed prior to the time such entity ceased to be
a Subsidiary. There shall be no coverage for Claims
made against the Directors and Officers of such
Subsidiary based on Wrongful Acts committed or
allegedly committed after such entity ceased to be a
Subsidiary.
C. CANCELLATION CLAUSE
(1) By acceptance of this Policy, the Company and the
Directors and Officers hereby confer the exclusive
power and authority to cancel this Policy on their
behalf to the Parent Company. Such entity may cancel
this Policy on their behalf to the Parent Company.
Such entity may cancel this Policy by surrender
thereof to Underwriters, or by mailing to
Underwriters written notice stating when thereafter
such cancellation shall be effective. The mailing of
such notice shall be sufficient notice and the
effective date of cancellation stated in the notice
shall become the end of the Policy Period. Delivery
of such written notice shall be equivalent to
mailing.
(2) This Policy may be cancelled by Underwriters by
mailing to the Parent Company written notice stating
when, not less than thirty (30) days thereafter, such
cancellation shall be effective. The mailing of such
notice shall be sufficient notice and the effective
date of cancellation stated in the notice shall
become the end of the Policy Period. Delivery of
such written notice by Underwriters shall be
equivalent to mailing. If the foregoing notice
period is in conflict with any governing law or
regulation, then such period shall be amended to
afford the minimum notice period permitted
thereunder.
(3) If this Policy is cancelled pursuant to (1)
hereinabove, Underwriters shall retain the customary
short rate proportion of the premium hereon. If this
Policy is cancelled pursuant to (2) hereinabove,
Underwriters shall retain the pro rata proportion of
the premium hereon. Payment or tender of any
unearned premium by Underwriters shall not be a
condition precedent to the effectiveness of
cancellation, but payment shall be made as soon as
practicable.
<PAGE> 16
D. COMPANY AUTHORIZATION CLAUSE
By acceptance of this Policy the Directors and Officers and
the Company agree that the Parent Company will act on behalf
of the Directors and Officers and the Company with respect to
giving of all notices to Underwriters as provided herein, the
receiving of notices from Underwriters, the payment of the
premiums and the receiving of any return premiums that may
become due under this Policy.
VIII OPTIONAL EXTENSION PERIOD
A. If this Policy is cancelled pursuant to Clause VII.C. (2) or
if Underwriters refuse to renew this Policy, for reasons other
than the Company's nonpayment of premium or non-compliance
with the terms and conditions of this Policy, then, the Parent
Company shall have the right, upon payment of an additional
premium calculated at that percentage shown in Item G. of the
Declarations of the total premium for this Policy to an
extension of the coverage granted by this Policy with respect
to any claim first made against the Directors and Officers
during the period of ninety (90) days after the effective date
of such cancellation or, in the event of such refusal to
renew, after the date upon which the Policy Period ends, but
only with respect to any Wrongful Act committed before such
date and otherwise covered by this Policy. This ninety (90)
days period shall be referred to in this Policy as the "Option
al Extension Period."
B. The quotation of a different premium and/or retention and/or
limit of liability for renewal does not constitute a
cancellation or refusal to renew for the purposes of this
provision.
C. As a condition precedent to the right to purchase the Optional
Extension Period, the total premium of this Policy must have
been paid. The right to purchase the Optional Extension
Period shall terminate unless written notice is given to
Underwriters within ten (10) days after the effective date of
cancellation, or, in the event of a refusal to renew, within
ten (10) days after the Policy Period ends, together with
payment of the premium for the Optional Extension Period. If
such notice and premium payment is not so given to
Underwriters, the Parent Company shall not at a later date be
able to exercise the right to purchase the Optional Extension
Period.
D. In the event of the purchase of the Optional Extension Period,
the entire premium therefor shall be deemed earned at its
commencement and in the event the Company terminates the
Optional Extension Period before its term for any reason other
than that set forth in the Clause E. hereinbelow, Underwriters
shall not be liable to return any portion of the premium paid
for the Optional Extension Period.
E. In the event the Optional Extension Period is purchased, it
shall
<PAGE> 17
terminate forthwith on the effective date of any contract of
insurance or indemnity which replaces the coverage afforded
by this Policy through the Optional Extension Period either
in whole or in part, and in the event the Optional Extension
Period is so terminated by reason of the issuance of a
replacement contract of insurance or indemnity Underwriters
shall refund pro rata any unearned premium for the unexpired
period of such extension.
F. The fact that this Policy may be extended by virtue of the
exercise of the Optional Extension Period shall not in any
way increase the applicable Limit of Liability set forth in
the Declarations.
IX SUBROGATION
In the event of any payments under this Policy, Underwriters shall be
subrogated to the extent of such payment to all of the Directors' and
Officers' and the Company's rights of recovery therefor against any
person or entity, and the Directors and Officers and the Company shall
execute all papers required and shall do everything that may be
necessary to secure and preserve such rights including the execution
of such documents as are necessary to enable Underwriters effectively
to bring suit in their name, and shall provide all other assistance
and cooperation which Underwriters may reasonably require.
X ACTION AGAINST UNDERWRITERS
No action shall lie against Underwriters unless, as a
condition precedent thereto, the Directors and Officers and the
Company shall have fully complied with all of the terms of this
Policy, nor until the amount of the Directors' and Officers' and the
Company's obligation to pay shall have been fully and finally
determined either by judgement against them or by written
agreement between them, the claimant and Underwriters.
Any person or organization or the legal representative thereof who
has secured such judgement or written agreement shall thereafter
be entitled to recover under this Policy to the extent of the
insurance afforded by this Policy.
Nothing contained herein shall give any person or organization any
right to join Underwriters as a party to any Claim against the
Directors and Officers and the Company to determine their
liability, nor shall Underwriters be impleaded by the Company or the
Directors and Officers or their legal representative in any
Claim.
XI CHANGES
Notice to any agent or knowledge possessed by any agent or
other person acting on behalf of Underwriters shall not effect a
waiver or change in any part of this Policy or estop Underwriters
from asserting any right under the terms of this Policy, nor shall
the terms be waived or changed except by written endorsement
or rider issued to form a part of this Policy.
<PAGE> 18
XII ASSIGNMENT OF INTEREST
Assignment of interest under this Policy shall not bind Underwriters
unless their consent is endorsed hereon.
XIII ENTIRE AGREEMENT
By acceptance of this Policy, the Directors and Officers and the
Company agree that this Policy embodies all agreements existing
between them and Underwriters or any of their agents relating to this
insurance.
XIV ASSISTANCE AND COOPERATION IN THE EVENT OF LOSS
The Directors and Officers and the Company agree to provide
Underwriters with such information, assistance and cooperation as
Underwriters and/or their counsel may reasonably request, and they
further agree that they shall not take any action which in any way
increases Underwriters' exposure for Loss under this Policy resulting
from any Claim.
XV SERVICE OF SUIT
It is agreed that in the event of the failure of the Underwriters
hereon to pay any amount claimed to be due hereunder, the Underwriters
hereon, at the request of the Insured (or Reinsured), will submit to
the jurisdiction of a Court of competent jurisdiction within the
United States. Nothing in this Clause constitutes or should be
understood to constitute a, waiver of Underwriters' rights to commence
an action in any Court of competent jurisdiction in the United States,
to remove an action to a United States District Court, or to seek a
transfer of a case to another Court as permitted by the laws of the
United States or of any State in the United States. It is further
agreed that service of process in such suit may be made upon Mendes
and Mount, 750 Seventh Avenue, New York, N.Y. 10019-6829, U.S.A., and
that in such suit instituted against any one of them upon this
Contract, Underwriters will abide by the final decision of such Court
or of any Appellate Court in the event of an appeal.
The above named are authorised and directed to accept service of
process on behalf of Underwriters in any such suit and/or upon the
request of the Insured (or Reinsured) to give a written undertaking to
the Insured (or Reinsured) that they will enter a general appearance
upon Underwriters' behalf in the event such a suit shall be
instituted.
Further, pursuant to the statute of any state, territory or district
of the United States which makes provision therefor, Underwriters
hereon hereby designate the Superintendent, Commissioner or Director
of Insurance or other officer specified for that purpose in the
statute, or his successor or successors in office, as their true and
lawful attorney, upon whom may be served any lawful process in any
action, suit or proceeding instituted by or on behalf of the Insured
(or Reinsured) or any beneficiary hereunder arising out of this
contract
<PAGE> 19
of insurance (or reinsurance) and hereby designate the above-named as
the person to whom the said officer is authorized to mail such process
or a true copy thereof
U.S.A.
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - DIRECT (BROAD)
(Approved by Lloyd's Underwriters' Non-Marine Association)
For attachment to insurances of the following classifications in the U.S.A.,
its Territories and Possessions, Puerto Rico and the Canal Zone:-
Owners, Landlords and Tenants Liability, Contractual Liability,
Elevator Liability, Owners or Contractors (including railroad)
Protective Liability, Manufacturers and Contractors Liability, Product
Liability, Professional and Malpractice Liability, storekeepers
Liability, Garage Liability, Automobile Liability (including
Massachusetts Motor Vehicle or Garage Liability),
not being insurances of the classifications to which the Nuclear Incident
Exclusion Clause - Liability - Direct (Limited) applies.
This Policy*
does not apply:-
1. Under any Liability Coverage, to injury, sickness, disease, death or
destruction
(a) with respect to which an insured under the policy is also an
insured under a nuclear energy liability policy issued by
Nuclear Energy Liability Insurance Association, Mutual Atomic
Energy Liability Underwriters or Nuclear Insurance Association
of Canada, or would be an insured under any such policy but
for its termination upon exhaustion of its limit of liability,
or
(b) resulting from the hazardous properties of nuclear material
and with respect to which (1) any person or organization is
required to maintain financial protection pursuant to the
Atomic Energy Act of 1954, or any law amendatory thereof, or
(2) the insured is, or had this policy not been issued would
be, entitled to indemnity from the United States of America,
or any agency thereof, under any agreement entered into by the
United States of America, or any agency thereof, with any
person or organization.
2. Under any medical Payments Coverage, or under any Supplementary
Provision relating to immediate medical or surgical relief, to
expenses incurred with respect to bodily injury, sickness, disease or
death resulting from the hazardous properties of nuclear material and
arising out of the operation of a nuclear
<PAGE> 20
facility by any person or organization.
3. Under any Liability Coverage, to injury, sickness, disease, death or
destruction resulting from the hazardous properties of nuclear
material, if
(a) the nuclear material (1) is at any nuclear facility owned by,
or operated by or on behalf of, an insured or (2) has been
discharged or dispersed therefrom;
(b) the nuclear material is contained in spent fuel or waste at
any time possessed, handled, used, processed, stored,
transported or disposed of by or on behalf of an insured, or
(c) the injury, sickness, disease, death or destruction arises
out of the furnishing by an insured of services, materials,
parts or equipment in connection with the planning,
construction, maintenance, operation or use of any nuclear
facility, but if such facility is located within the United
States of America, its territories or possessions or Canada,
this exclusion (c) applies only to injury to or destruction
of property at such nuclear facility.
4. As used in this endorsement:
"HAZARDOUS PROPERTIES" include radioactive, toxic or explosive
properties; "NUCLEAR MATERIAL" means source material, special nuclear
material or byproduct material; "SOURCE MATERIAL", "SPECIAL NUCLEAR
MATERIAL", and "BYPRODUCT MATERIAL" have the meanings given them in the
Atomic Energy Act 1954 or in any law amendatory thereof; "SPENT FUEL"
means any fuel element of fuel component, solid or liquid, which has
been used or exposed to radiation in a nuclear reactor; "WASTE" means
any waste material (1) containing byproduct material and (2) resulting
from the operation by any person or organization of any nuclear
facility included within the definition of nuclear facility under
paragraph (a) or (b) thereof, "NUCLEAR FACILITY" means
(a) any nuclear reactor,
(b) any equipment or device designed or used for (1) separating
the isotopes of uranium or plutonium, (2) processing or
utilizing spent fuel, or (3) handling, processing or packaging
waste,
(c) any equipment or device used for the processing, fabricating
or alloying of special nuclear material if at any time the
total amount of such material in the custody of the insured
at the premises where such equipment or device is located
consists of or contains more than 25 grams of plutonium or
uranium 233 or any combination thereof, or more than 250 grams
of uranium 235,
(d) any structure, basin, excavation, premises or place prepared
or used for the storage or disposal of waste, and includes the
site on which any of the foregoing is located, all operations conducted
on such site and all premises used for such operations; "NUCLEAR
REACTOR" means any apparatus designed or used to sustain nuclear
fission in a self-supporting chain reaction or to contain a critical
mass of fissionable material.
With respect to injury to or destruction of property, the word "INJURY"
or
<PAGE> 21
"DESTRUCTION" includes all forms of radioactive contamination of
property.
It is understood and agreed that, except as specifically provided in
the foregoing to the contrary, this clause is subject to the terms,
exclusions, conditions and limitations of the Policy to which it is
attached.
*NOTE:- As respects policies which afford liability coverages and other forms
of coverage in addition, the words underlined should be amended to designate
the liability coverage to which this clause is to apply.
17/3/60
N.M.A. 1256
U.S.A.
RADIOACTIVE CONTAMINATION EXCLUSION CLAUSE - LIABILITY - DIRECT
(Approved by Lloyd's Underwriters' Non-Marine Association)
For attachment (in addition to the appropriate Nuclear Incident Exclusion
Clause - Liability - Direct) to liability insurances affording worldwide
coverage.
In relation to liability arising outside the U.S.A. its Territories, or
Possessions, Puerto Rico or the Central Zone, this Policy does not cover any
liability of whatsoever nature directly or indirectly caused by or contributed
to by or arising from ionising radiations or contamination by radioactivity
from any nuclear fuel or from any nuclear waste from the combustion of nuclear
fuel.
13/2/64
N.M.A. 1477
U.S.A.
SMALL ADDITIONAL OR RETURN PREMIUMS CLAUSE
NOTWITHSTANDING anything to the contrary contained herein and in consideration
of the premium for which this Insurance is written, it is understood and agreed
that whenever an additional or return premium of US$2 or less becomes due from
or to the Assured on account of the adjustment of a deposit premium, or of an
alteration in coverage or rate during the term or for any other reason, the
collection of such premium from the Assured will be waived or the return of
such premium to the Assured will not be made, as the case may be.
N.M.A. 1168
<PAGE> 22
Attaching to and forming part of Policy No. 757/DJ930040
THE GILLETTE COMPANY
COMPANY DEFINITION AMENDMENT
(01.01)
In consideration of the premium charged for this Policy, it is hereby
understood and agreed that Clause II. DEFINITIONS B is deleted and the
following is substituted therefor:
"B. "Company" shall mean:
(1) the Parent Company
(2) any Subsidiary,
(3) any unincorporated division,
(4) Gillette Charitable Foundation but only in respect of
Wrongful Acts actually or allegedly committed subsequent
to June 1st 1991.
<PAGE> 23
Attaching to and forming part of Policy No. 757/DJ930040
THE GILLETTE COMPANY
DIRECTORS AND OFFICERS DEFINITION AMENDMENT
(02.01)
In consideration of the premium charged for this Policy, it is hereby
understood and agreed that Clause II. DEFINITIONS E is deleted and the
following is substituted therefor:
"E. "Directors and Officers" shall mean any persons who were, now are, or
shall be:
(1) directors or officers of the Company,
(2) general managers, area general managers and group general
managers of the Company,
or their equivalent in countries where not so titled including their
estates, heirs, legal representatives or assigns in the event of their
death or incapacity or bankruptcy.
<PAGE> 24
Attaching to and forming part of Policy No. 757/DJ930040
THE GILLETTE COMPANY
EXCLUSION DELETION ENDORSEMENT
(57.01)
In consideration of the premium charged for this Policy, it is hereby
understood and agreed that Clause III. EXCLUSIONS L. is deleted.
<PAGE> 25
Attaching to and forming part of Policy No. 757/DJ930040
THE GILLETTE COMPANY
AMENDED NOTIFICATION CLAUSE
(270.01)
In consideration of the premium charged for this Policy, it is hereby
understood and agreed that Clause VI. NOTIFICATION A. is deleted and the
following is substituted therefor:
A) If during the Policy Period or Optional Extension Period, if
applicable, any Claim is made against any Director or Officer, the
Company and the Directors and Officers shall, as a condition precedent
to their right to be reimbursed under this policy, give to Underwriters
notice in writing as soon as practicable of any such Claim, but in no
event later than sixty (60) days after the date the Corporate Risk
Management Department is aware of such Claim.
<PAGE> 26
Attaching to and forming part of Policy No. 757/DJ930040
THE GILLETTE COMPANY
SPECIAL EXCLUSION
(270.02)
In consideration of the premium charged for this Policy, it is hereby
understood and agreed that Clause III. EXCLUSIONS is amended by the addition
of the following:
P. In connection with any Claim or Claims made against the Insured arising
out of facts underlying or alleged in a complaint filed in the United
States District Court of Boston charging the Gillette Company that the
acquisition of Braun is a violation of The Clayton Act.
<PAGE> 27
Attaching to and forming part of Policy No. 757/DJ930040
THE GILLETTE COMPANY
EXCLUSION E AMENDED
(270.03)
In consideration of the premium charged for this Policy, it is hereby
understood and agreed that Clause III. EXCLUSIONS E is deleted and the
following is substituted therefor:
E. for violation of the Employee Retirement Income Security Act of 1974
(or any regulations promulgated thereunder) or similar provisions of
any federal, state, or local statutory law or common law in connection
with any employee benefit or welfare plan(s) subject to ERISA and
sponsored by the Company.
<PAGE> 28
Attaching to and forming part of Policy No. 757/DJ930040
THE GILLETTE COMPANY
AMENDED CANCELLATION CLAUSE
(270.04)
In consideration of the premium charged for this Policy, it is hereby
understood and agreed that Clause VII. GENERAL CONDITIONS C.(2) is deleted and
the following is substituted therefor:
2) This Policy may be cancelled by Underwriters by mailing to the Parent
Company notice stating when, not less than sixty (60) days thereafter,
such cancellation shall be effective. The mailing of such notice
shall be sufficient notice and the effective date of cancellation
stated in the notice shall become the end of the Policy Period.
Delivery of such written notice by Underwriters shall be equivalent
to mailing. If the foregoing notice period is in conflict with any
governing law or regulation, then such period shall be amended to
afford the minimum notice period required thereunder.
<PAGE> 29
Attaching to and forming part of Policy No. 757/DJ930040
THE GILLETTE COMPANY
SUBSIDIARY DEFINITION AMENDED
(270.05)
In consideration of the premium charged for this Policy, it is hereby and
agreed that.
1. DEFINITIONS K. (4) is amended by the addition of "or" at the end
thereof.
2. Clause II. DEFINITIONS K. is amended by the addition of the following
at the end thereof:
(5) the entities as scheduled in question 5(c) of the Application
dated 50% or less of whose outstanding securities
representing the present right to vote for the election of
directors are owned by the Parent Company and/or one or more
of its Subsidiaries at the inception of this Policy.
<PAGE> 30
Attaching to and forming part of Policy No. 757/DJ930040
THE GILLETTE COMPANY
WRONGFUL ACT DEFINITION AMENDED
(270.06)
In consideration of the premium charged for this Policy it is hereby understood
and agreed that:
1. Clause II DEFINITIONS L is deleted and the following is substituted
therefor:
"L Wrongful Act" shall mean any actual or alleged act, error,
omission, misstatement, misleading statement, neglect or breach
of duty by the Directors or Officers, individually or
collectively, in the discharge of their duties solely in their
capacity as Directors or Officers of the Company."
2. Clause III EXCLUSIONS H is deleted and the following is substituted
therefor:
"H brought about or contributed to in fact by any dishonest,
fraudulent or criminal Wrongful Act or by any Wrongful Act
committed with actual knowledge of its wrongful nature or with
actual intent to cause damage."
<PAGE> 31
Attaching to and forming part of Policy No. 757/DJ930040
THE GILLETTE COMPANY
SPECIAL ENDORSEMENT
(270.07)
It is hereby understood and agreed that notwithstanding the provisions of
Exclusion C. Underwriters note coverage hereon is on a primary basis and
Underwriters acknowledge the existence of excess and D.I.C. Policy No. GS-212-C
arranged with C.O.D.A. Ltd., and other excess policies.
<PAGE> 32
Attaching to and forming part of Policy No. 757/DJ930040
THE GILLETTE COMPANY
AMENDMENT TO EXCLUSION G
(270.08)
In consideration of the premium charged for this Policy it is hereby understood
and agreed that Clause III EXCLUSIONS G is amended by the addition of the
following at the end thereof:
"provided however that this Exclusion shall not apply to employment
related Claims brought by person sholding positions of assistant
vice president and below."
<PAGE> 33
Attaching to and forming part of Policy No. 757/DJ930040
THE GILLETTE COMPANY
AMENDMENT TO EXCLUSION F
(270.09)
In consideration of the premium charged for this Policy, it is hereby
understood and agreed that Clause III EXCLUSIONS F is deleted and the following
is substituted therefor:
"F. by or at the behest of the Company, or by any security holder
of the Company whether directly or derivatively except where
such security holder bringing such Claim is acting totally
independently of, and totally without the solicitation of, or
assistance of, or participation of, or intervention of, any
Director or Officer or the Company."
<PAGE> 34
Attaching to and forming part of Policy No. 757/DJ930040
THE GILLETTE COMPANY
SPECIAL ENDORSEMENT
(270.10)
In consideration of the premium charged for this Policy it is hereby understood
and agreed that Clause II DEFINITIONS K (2) is deleted and the following is
substituted therefor:
"K. (2) an entity more than 50% of whole outstanding securities
representing the present right to vote for the election
of directors were owned by the Parent Company and/or
one or more of its Subsidiaries prior to the inception
date of this Policy and which Subsidiary was insured or
reinsured under any Policy issued by Underwriters of
which this Policy is a renewal thereof, or."
<PAGE> 35
Attaching to and forming part of Policy No. 757/DJ930040
THE GILLETTE COMPANY
AMENDMENT TO OPTIONAL EXTENSION PERIOD
(500.01)
In consideration of the premium charged for this Policy it is hereby understood
and agreed that Clause VIII OPTIONAL EXTENSION PERIOD A. is deleted and the
following is substituted therefor:
VIII. OPTIONAL EXTENSION PERIOD
A. If this Policy is cancelled pursuant to Clause VII.C(2) or
VII. V.(3) of this Policy or if Underwriters refuse to renew this
Policy, for reasons other than the Company's non-payment of premium
or non-compliance with the terms and conditions of this Policy,
then, the Parent Company shall have the right, upon payment of an
additional premium calculated at that percentage shown in Item G.
of the Declarations of the total premium for this Policy to an
extension of the coverage granted by this Policy with respect to
any Claim first made against the Directors and Officers during the
period of three hundred and sixty five (365) days after the
effective date of such cancellation or, in the event of such
refusal to renew, after the date upon which the Policy Period ends,
but only with respect to any Wrongful Act committed before such
date and otherwise covered by this Policy. This three hundred and
sixty five day period shall be referred to in this Policy as the
"Optional Extension Period."
<PAGE> 36
Attaching to and forming part of Policy No. 757/DJ930040
THE GILLETTE COMPANY
OUTSIDE SERVICE EXTENSION
(51.01)
In consideration of the premium charged for this Policy, it is hereby
understood and agreed as follows:
1. Clause II DEFINITIONS L is amended by the addition of the following:
"L. (1) a director, officer or trustee of
(A) Polaroid Corporation
(B) University Hospital
(C) Massachusetts Mutual Life Insurance Company
but only in the case of Mr. Alfred M. Zeien.
(2) a director, officer or trustee of Square D Company
but only in the case of Mr. Alfred M. Zeien and only
in respect of Wrongful Acts actually or allegedly
committed subsequent to June 1st 1991.
Solely for the purposes of the coverage provided
through Clause 1.A.
(3) a director, officer or trustee of Repligen Corporation
but only in the case of Mr. Alfred M. Zeien and only
in respect of Wrongful Acts actually or allegedly
committed subsequent to June 1st 1992.
(4) a director, officer or trustee of
(A) New England Legal Foundation
(B) Park Street Corporation
(C) Greater Boston Legal Svcs Corporation
(D) World Affairs Council, Boston
(E) Greater Boston Chamber of Commerce
(F) Boston Municipal Research Bureau
but only in the case of Mr. Joseph E. Mullaney".
(5) a director, officer of trustee of Mass. Taxpayers
Foundation but only in the case of Mr. Joseph E.
Mullaney and only in respect of Wrongful Acts actually
or allegedly committed subsequent to December 18th
1992.
(6) a director, officer or trustee of
(A) Boston College
<PAGE> 37
(B) St. Elizabeth's Hospital
(C) The Boston Symphony Orchestra
but only in the case of Mr. Robert J. Murray and only in
respect of Wrongful Acts actually or allegedly committed
subsequent to June 1st 1993.
(7) a director, officer or trustee of
(A) Arts Boston
(B) Black Achievers Commission
(C) Old North Foundation
(D) St Margarets Hospital
but only in the case of Mr. William J. McMorrow and only in
respect of Wrongful Acts actually or allegedly committed
subsequent to June 1st 1993.
(8) a director, officer or trustee of the National
Association of Manufacturers but only in the case of
Lorne R. Waxlax and only in respect of Wrongful Acts
actually or allegedly committed subsequent to June 1st
1993.
(9) a director, officer or trustee of
(A) Marine Biological Laboratory
(B) Massachusetts Business Roundtable
but only in the case of Mr. Alfred M. Zeien and only in
respect of Wrongful Acts actually or allegedly committed
subsequent to June 1st 1993.
2. Clause III EXCLUSIONS O is amended by inserting the following at the
end thereof:
"provided, however, this Exclusion shall not apply to Loss resulting
from any Claim to the extent that:
(1) such Claim is based on the service of
(i) Mr. Alfred M. Zeien as a director, officer or trustee of
(A) Polaroid Corporation
(B) University Hospital
(C) Massachusetts Mutual Life Insurance Company
(ii) Mr. Alfred M. Zeien as a director, officer or trustee of
Square D Company in respect of Wrongful Acts actually or
allegedly committed subsequent to June 1st 1991 or
(iii) Mr. Alfred M. Zeien as a director, officer or trustee of
Repligen
<PAGE> 38
Corporation in respect of Wrongful Acts actually or
allegedly committed subsequent to June 1st 1992 or
(iv) Mr. Joseph E. Mullaney as a director, officer or
trustee of
(A) New England Legal Foundation
(B) Park Street Corporation
(C) Greater Boston Legal Svcs Corporation
(D) World Affairs Council, Boston
(E) Greater Boston Chamber of Commerce
(F) Boston Municipal Research Bureau
(v) Mr. Joseph E Mullaney as a director, officer or
trustee of Mass. Taxpayers Foundation in respect of
Wrongful Acts actually or allegedly committed
subsequent to December 18th 1992.
(vi) Mr. Robert J. Murray as a director, officer or trustee
of Boston College, St Elizabeths Hospital or The
Boston Symphony Orchestra in respect of Wrongful Acts
actually or allegedly committed subsequent to June 1st
1993.
(vii) Mr. William J. McMorrow as a director, officer or
trustee of Arts Boston, Black Achievers Commission,
Old North Foundation or St Margarets Hospital in
respect of Wrongful Acts actually or allegedly
committed subsequent to June 1st 1993.
(viii) Lorne R. Waxlax as a director, officer or trustee of
The National Association of Manufacturers in respect
of Wrongful Acts actually or allegedly committed
subsequent to June 1st 1993.
(ix) Mr. Alfred M. Zeien as a director, officer or trustee
of Marine Biological Laboratory or Massachusetts
Business Roundtable in respect of Wrongful Acts
actually or allegedly committed subsequent to June 1st
1993.
(2) such loss is not indemnified by the above entities or any of
their insurers".
3. Item C of the Declarations is deleted and the following is substituted
therefor:
"Item C Limit of Liability
$10,000,000 in the aggregate each Policy year, provided,
however, that the Limit of Liability shall be $1,000,000 in
the aggregate each Policy year for all claims brought against
Mr. Alfred M. Zeien in his capacity as a director, officer or
trustee of Repligen Corporation provided, however, that such
$1,000,000 shall be part of and not in addition to the
aforementioned $10,000,000 overall Limit of Liability of this
Policy."
<PAGE> 39
LINES CLAUSE
This Insurance, being signed for 60.983%, of 100% insures only that proportion
of any loss, whether total or partial, including but not limited to that
proportion of associated expenses, if any, to the extent and in the manner
provided in this Insurance.
The percentages signed in the Table are percentages of 100% of the amount(s) of
Insurance stated herein.
N.M.A. 2419
<PAGE> 40
(THIS IS AN APPLICATION FOR A CLAIMS MADE POLICY)
RENEWAL APPLICATION
FOR
DIRECTORS' AND OFFICERS' AND COMPANY REIMBURSEMENT INDEMNITY POLICY
NOTICE: THE POLICY FOR WHICH APPLICATION IS MADE (THE "POLICY"), SUBJECT TO ITS
TERMS, APPLIES ONLY TO ANY "CLAIM" (AS DEFINED IN THE POLICY) MADE AGAINST THE
DIRECTORS AND OFFICERS DURING THE POLICY PERIOD. THE LIMIT OF LIABILITY
AVAILABLE TO PAY DAMAGES OR SETTLEMENTS SHALL BE REDUCED AND MAY BE EXHAUSTED
BY AMOUNTS INCURRED AS "COSTS, CHARGES, AND EXPENSES" ("AS DEFINED IN THE
POLICY") AND "COSTS, CHARGES, AND EXPENSES" SHALL BE APPLIED TO THE RETENTIONS.
THE POLICY DOES NOT PROVIDE FOR ANY DUTY BY UNDERWRITERS TO DEFEND THOSE
INSURED UNDER THE POLICY.
GENERAL INSTRUCTIONS FOR COMPLETING THIS APPLICATION:
1. Please type or print in ink.
2. Please read carefully and answer all questions. If a question is not
applicable, so state. If space is insufficient to answer any question
fully, attach a separate sheet.
3. The original Renewal Application must be submitted.
4. The Chairman of the Board or the President must sign and date this
Renewal Application.
-1-
<PAGE> 41
5. This Renewal Application and all exhibits shall be held in confidence.
6. Please read the Policy for which application is made (the "Policy")
prior to completing this Renewal Application.
7. The terms as used herein shall have the meaning stated in Paragraph II,
Definitions, of the Policy.
- -----------------------------------------------------------------------
1. Name of Parent Company The Gillette Company
Address Prudential Tower Building
(Number) (Street)
Boston MA 02199-3799
(City) (State) (Zip Code)
2. The Parent Company has continuously been in business since
/ 1901
(Month) (Year)
3. The Parent Company has continually paid cash dividends on its:
(a) Common Stock since 1905 (b) Preferred Stock since 12/31/90
(Series C).
-2-
<PAGE> 42
4. Complete the following in respect of all classes of shares issued by
the Parent Company: as of 03/01/93.
<TABLE>
<CAPTION>
1 2 3 4
----- ----- ----- -----
<S> <C> <C> <C> <C>
Series C
Class of shares Common Preferred
------ ------
Number of shares outstanding 220,218,660 164,604
------ ------
Number of shares owned by Directors
(directly and/or beneficially) 24,459,346 14
------ ------
Number of shares owned by Executive
Officers who are not directors
(directly and/or beneficially) 209,084 42
------ ------
</TABLE>
5. (a) Total number of wholly owned Subsidiaries as of March, 1993:
Domestic 57 Foreign 163
List all such Subsidiaries for which coverage is requested and the
date created or acquired:
----------------------------------------
1) Coverage requested for all subsidiaries - see March 15, 1993
listing attached;
2) Coverage requested for Parker Pen Holdings Limited and its
subsidiaries which were required on May 7, 1993;
3) Coverage requested for all unincorporated divisions of the
listed subsidiaries.
(b) Total number of controlled Subsidiaries (more than 50% but less
than 100% owned) as of March, 1993:
Domestic 0 Foreign 10
-3-
<PAGE> 43
5. (c) List all such Subsidiaries for which coverage is requested and
the date created or acquired:
Coverage requested for all - details on attached listing dated
March 15, 1993, including the following subsidiaries in which
The Gillette Company has an interest of 50% or less:
Gillette Continental Trading 50%
Intermaghreb (80% of 51% through Gillette Interlame S.A.)
Shenmei Daily Use Co. 50%
6. (a) Does any person or entity (other than the Company) own 10% or
more of any entity described in 5.(b) above?
Yes X No _______
If yes, give details: (as of March 15, 1993)
<TABLE>
<S> <C> <C>
Industry - Beteiligungs -
Gesellschaft mbH 50% Gillette Continental Trading Co.
Societe Matron 12% Gillette Interlame
Shanghai Razor Blade
Factory 30% Gillette (Shanghai) Limited
House of Poddar 19.9% Indian Shaving Products
Societe Matron 29% lntermaghreb
Professeur M. Benomar 20% Intermaghreb
National Investment Trust 23.5% Interpak Shaving Products
E. Trismitro 25% P. T. Gillette Indonesia
Leninets 35% Petersburg Products International
Shenyang Daily Use
Metal Industry Co. 50% Shenmei Daily Use Co.
State Treasury of Poland 20% Wizamet S.A.
</TABLE>
(b) Does any person or entity own 10% or more of any class of
shares issued by the Parent Company?
Yes x No ________
If yes, give details:
Berkshire Hathaway, Inc., 1440 Kiewit Plaza, Omaha, Nebraska,
beneficially owns 24,000,000 shares of the company's common
stock (10.9% of the outstanding common stock of the Company).
-4-
<PAGE> 44
7. (a) Complete the following for each of the Parent Company's last
four fiscal years (use consolidated figures):
<TABLE>
<CAPTION>
($ Millions)
Year 1992 1991 1990 1989
<S> <C> <C> <C> <C>
Total Consolidated Assets 4,189.9 $3,886.7 3,671.3 3,114.0
------- ------- ------- -------
Current Assets 2,336.2 2,177.8 2,093.5 1,854.5
------- ------- ------- -------
Current Liabilities 1,560.8 1,484.6 1,307.9 1,061.3
------- ------- ------- -------
Shareholders Equity 1,496.4 1,157.1 265.4 70.0
------- ------- ------- ------
Net Income 513.4 427.4 367.9 284.7
------ ------ ------ -------
Net Income Per Share 2.32 1.94 1.60 1.35
------ ------ ------ ------
Dividends Per Share .72 .62 .54 .48
----- ------ ----- -----
Sales/Revenues 5,162.8 4,683.9 4,344.6 3,818.5
------- ------- ------- -------
Long Term Debt 554.2 742.2 1,045.7 1,041.0
------ ------ ------- -------
Short Term Debt 475.8 460.0 370.3 340.7
------ ------ ------- ------
</TABLE>
(b) Has the Company at any time over the last five years been in
breach of any of its debts covenants or loan agreements?
Yes ___________ No X
8. Has the Company at any time over the last five years been involved in
any policy dispute with any of its ins.urers (on any class of
business)?
Yes X No __________
If yes, give details: The Company was a plaintiff in a
lawsuit against Seaboard Surety concerning coverage for an
advertising liability claim. The lawsuit was settled in 1990.
-5-
<PAGE> 45
9. Give details of the Company's current directors' and officers'
insurance:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
<S> <C> <C> <C>
Insurer: Lloyds London Cos. Aetna C&S CODA ACE
----------------------------------------------------------------------------------------
Limit: $10,000,000 $10,000,000 $20,000,000 $20,000,000 $10,000,000
------------------------------------------------------------------------------------------
Period: 6/1/92-3 6/1/92-3 6/1/92-3 11/21/92-6/01/95 6/01/92-3
--------------------------------------------------------------------------------------------
Retention: $1,000,000 Corporate Reimbursement
----------------------------------------------------------------------------------------
Annual
Premium: $476,776 $180,013 $300,000 $143,000 $155,000
----------------------------------------------------------------------------
</TABLE>
10. (a) Has the Company under consideration at the present time or does it
contemplate any acquisitions, tender offers or mergers?
Yes ________ No X
If yes, give details: Gillette purchased 100% of the stock of Parker
Pen Holdings Limited on May 7, 1993. Refer to enclosed 8-K dated May
7, 1993 for details. None other publicly announced.
(b) Complete the following for all acquisitions made over the last five
years which have increased the total assets of the Company by 5% or more:
<TABLE>
<CAPTION>
Asset
Entity Date Value at Purchase Method of
Acquired Acquired Date Acquired Price Payment
<S> <C> <C> <C> <C>
Parker Pen May 7,1993 (Book Value Borrowing
---------- ---------- ----------- ---------- ---------
Holdings (Approx.) (Refer to
-------- ---------- ----------- ---------- ----------
Limited $220,000,000 $450,000,000 5/7/93 8-K
------- ---------- ------------ ------------ ----------
For Details)
------- ---------- ------------ ------------ ------------
</TABLE>
-6-
<PAGE> 46
11. Has the Company ever repurchased its own shares at a price in excess of the
market value at the time?
Yes ________ No __________
If yes, give details: Please refer to previous Applications.
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
12. Has the Company at any time over the last five years changed its
accountants or external general counsel?
Yes ________ No X
If yes, give details including reasons for changes:
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
13. Has the Company:
(a) filed within the past 18 months or contemplated filing within
the next 12 months any registration statement with the
Securities and Exchange Commission for a public offering of
securities?
Yes X No X
If yes, furnish copy of prospectus.
See attached copies of (a) Press Release regarding a shelf
registration dated November 24, 1992, which has not yet become
effective and (b) Form S-8 filed December 23, 1992.
-7-
<PAGE> 47
(b) issued within the past 18 months or contemplated issuing
within the next 12 months any share (common or otherwise)?
Yes X No __________
If yes, give details: See 1992 Annual Report financial
note regarding Common Stock and Additional Paid-in Capital (p. 33).
14. The following officer of the Parent Company is designated to receive
any and all notices from Underwriters of their authorized
representative(s) concerning this insurance:
Lloyd B. Swaim, Vice President and Treasurer
15. List the date at the end of each of the last eight calendar quarters and
the corresponding closing price for shares of the Parent Company's common
stock:
<TABLE>
<CAPTION>
DATE PRICE
<S> <C>
06/30/91 34 1/4
-------- ------
09/30/91 40 7/8
-------- ------
12/31/91 56 1/8
-------- ------
03/31/92 47 1/4
-------- ------
06/30/92 47 5/8
-------- ------
09/30/92 57 3/8
-------- ------
12/31/92 56 7/8
-------- ------
03/31/93 60 1/2
-------- ------
</TABLE>
-8-
<PAGE> 48
16. Have any filings been made concerning the Company pursuant to Section
13.(d) of the Securities Exchange Act of 1934 during the last two
years?
Yes __________ No X
17. Has the Company made any filing pursuant to Section 13.(d) of the
Securities Exchange Act of 1934 during the last two years?
Yes __________ No X
If yes, attach a copy of each such filing.
18. What percentage of the Parent Company's common stock was sold and
purchased during the last 12 months? 53.15% (March 3, 1992 - 93)
19. The Company has not been involved in or had any knowledge of any
pending anti-trust, price-fixing, tax, copyright, patent litigation or
governmental regulatory or administrative proceedings except as
follows (if answer is none, so state):
1) Wilkinson Sword counter claim was dismissed as part
of the resolution of antitrust proceedings related to
the Wilkinson business in Europe.
2) Summary of Wafer Shave Claim was attached to '91
Application.
3) The U.S. Tax Court ruled favorably on The Oral-B Tax
matter mentioned in the 1992 Application. See p. 9
of the September 30, 1992 10-Q for details.
4) Certain environmental proceedings in the U.S. arising
out of operations. Management considers the potential
liability to be immaterial.
5) See attached 8-K re purchase of Parker Pen Holdings
Limited.
-9-
<PAGE> 49
20. It is agreed that this Renewal Application is supplemental to
Application(s) for all policies of which the Policy would be a
renewal, and that such Application(s), together with the Renewal
Application and any materials submitted herewith (which shall be
retained on file by Underwriters and shall be deemed attached hereto,
as if physically attached hereto) constitute the complete Application
which shall be the basis of the Policy and will be attached to and
become part of the Policy.
21. It is agreed that in the event there is any material change in the
answers to the questions contained herein prior to the effective date
of the Policy, the applicant will notify Underwriters and, at the sole
discretion of Underwriters, any outstanding quotations may be modified
or withdrawn.
22. Attached and made a part of this Renewal Application by reference are
the following materials regarding the Parent Company: (a) two copies
of the Last Annual Report to Stockholders (b) two certified copies of
the provisions of the Charter or By-Laws covering Indemnification of
Directors and Officers, and (c) two copies of the Notice to
Stockholders and the Proxy Statement for either the last or the next
annual meeting. Underwriters are hereby authorized to make any
investigation and inquiry in connection with this Renewal Application
as they may deem necessary.
23. The undersigned declares that to the best of his/her knowledge the
statements herein are true. Signing of this Renewal Application does
not bind the undersigned to complete the insurance, but it is agreed
that this Renewal Application, shall be the basis of the contract
should a Policy be issued, and this Renewal Application will be
attached to and become a part of such Policy, if issued. Underwriters
are hereby authorized to make any investigation and inquiry in
connection with this Renewal Application as they may deem necessary.
-10-
<PAGE> 50
Signed /s/ [??]
----------------------------------------------
Must be Signed By
Chairman of the Board or President
of Parent Company
Capacity Chairman of the Board and
--------------------------------------------
Chief Executive Officer
-------------------------------------------
Company The Gillette Company
--------------------------------------------
Date May 28, 1993
------------------------------------------------
Submitted by
----------------------------------------
(Agent)
Date
------------------------------------------------
-11-
<PAGE> 51
[LOGO] The Table of Syndicates referred to on the face of this Policy follows:
<TABLE>
<CAPTION>
FOR LPSO USE ONLY Broker LPSO No. & DATE FOR LPSO USE ONLY Broker LPSO No. & DATE
UX01 2910 0757 61163 03/09/93 0757 61163 03/09/93
41 42
-------------------------------------------------------------------------------------------------------------------
AMOUNT, PERCENTAGE SYNDICATE UNDERWRITER'S PAGE AMOUNT, PERCENTAGE SYNDICATE UNDERWRITER'S PAGE
OR PROPORTION REFERENCE OR PROPORTION REFERENCE
1 2
PERCENT PERCENT
<S> <C> <C> <C>
15.000 1068 9300792D0GBH 0.274 212 078631310201
10.000 1145 681X35405X93 0.320 991 0093293AA000
5.000 484 XSP292B0009N 0.457 56 Q4007J93AXXT
9.150 1173 ALDPAA40703E 0.366 179 411LL870011
2.745 79 322FB002564A 0.046 573 81230531TND
2.745 1007 FD867K93A403 0.457 510 EDF093ADCS
1.830 204 078631310201 0.137 1105 EDF093ADCS
1.144 322 93X54293 0.320 1003 LTXSM0200030
1.372 205 481N00242FNA 5.000 435 08066300
0.915 588 11E23288F03
0.915 406 U82XWD05000H THE LIST OF UNDERWRTING MEMBERS
0.915 1047 Y0031K93A OF LLOYDS IS NUMBERED 1993/ 9
0.457 375 7231N09326NN
0.686 122 CJ888N93A200
0.732 546 TB60OD93B418
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
TOTAL LINE No. of SYND FOR LPSO USE ONLY TOTAL LINE No. of SYND FOR LPSO USE ONLY
60.983 24 USE 1 13835
</TABLE>
<PAGE> 52
J(A) FORM
THE INSTITUTE OF LONDON UNDERWRITERS
[LOGO]
COMPANIES POLICY
WE, THE COMPANIES, hereby agree, in consideration of the payment to us by or on
behalf of the Assured of the premium specified in the Schedule, to insure
against loss damage liability or expense in the proportions and manner,
hereinafter provided. Each Company shall be liable only for its own respective
proportion.
If the Assured shall make any claim knowing the same to be false or fraudulent,
as regards amount or otherwise, this Policy shall become void and all claim
hereunder shall be forfeited.
IN WITNESS whereof the General Manager and Secretary of The Institute of London
Underwriters has subscribed his name on behalf of each Company.
/S/ [??]
---------------------------------- [STAMP]
CHIEF EXECUTIVE
General Manager and Secretary
The Institute of London Underwriters
<PAGE> 53
SCHEDULE
POLICY NUMBER 757/DJ930040
NAME AND ADDRESS THE GILLETTE COMPANY
OF THE ASSURED Prudential Tower Building,
Boston,
MA 02199
USA
THE PERIOD OF
INSURANCE From 1st June 1993 1st June 1994 at 12.01 a.m. Standard
Time at the address stated above.
THE RISK AND SUM
INSURED HEREUNDER Directors and Officers Liability and Reimbursement for
Directors and Officers Liability.
As more fully set forth in the co-insuring Lloyd's policy.
0. 915% of
US$10,000,000 in the aggregate each policy year.
Excess of:-
US$ Nil/US$ Nil Directors and Officers Liability.
US$1,000,000 Reimbursement Liability.
Warranted that this Policy shall run concurrently with, and shall be subject to
the same terms, conditions, limitations and endorsements as are more fully set
forth in or as may be added to Policy No.757/DJ930040 subscribed by Lloyd's
Underwriters covering the identical subject matter and risk.
PREMIUM US$4,254.75 part of US$465,000.00
<PAGE> 54
ILU REFERENCE
PROPORTION CODE COMPANY AND REFERENCE
TOTAL (T) or FORWARD (F)
<PAGE> 55
LIRMA POLICY
IN CONSIDERATION of the Insured named in the Schedule hereto having paid
or promised to pay the premium stated in the said Schedule to the Insurers named
herein who have hereunto subscribed their names ("the Insurers").
THE INSURERS HEREBY SEVERALLY AGREE each for the proportion set against
its own name to indemnify the Insured or the Insured's Executors and
Administrators against loss, damage or liability to the extent and in the
manner set forth herein. Provided that the aggregate liability of the Insurers
shall not exceed the Sum Insured or other limits as are set forth in the
Schedule.
If the Insured shall make any claim knowing the same to be false or
fraudulent, as regards amount or otherwise, this Policy shall become void and
all claim hereunder shall be forfeited.
IN WITNESS WHEREOF the Director of Policy Signing Service of LONDON
INSURANCE AND REINSURANCE MARKET ASSOCIATION ("LIRMA") has subscribed his name
on behalf of each of the LIRMA Companies and (where the Companies Collective
Signing Agreement ("CCSA") is being implemented) on behalf of the Leading CCSA
Company which is a LIRMA member and authorised to sign this Policy (either
itself or by delegation to LIRMA) on behalf of all the other CCSA Companies.
Signed: /s/ Sanders
-----------------------------------
Director of Policy Signing Services
Date as in the Schedule.
<PAGE> 56
Date: 21st July 1993
Policy No: 757/DJ930040
THE SCHEDULE
<TABLE>
<S> <C>
The insured: THE GILLETTE COMPANY
Premium: US$114,324.90 Part of US$465,000.00
Limits of Liability: 24.586% of
US$10,000,000 in the aggregate each Policy
year.
Excess of: -
US$NIL/US$NIL Directors and Officers Liability.
US$1,000,000 Reimbursement Liability.
The Interest Insured: DIRECTORS AND OFFICERS LIABILITY AND REIMBURSEMENT FOR DIRECTORS AND OFFICERS
LIABILITY.
As more fully set forth in the co-insuring Lloyd's policy.
Period of Insurance
</TABLE>
From: 1st June 1993 To: 1st June 1994 both days at 12.01 a.m. local
time and for such further period or periods as may be mutually agreed.
- --------------------------------------------------------------------------------
COINSURANCE CLAUSE
It is warranted that this Policy shall run concurrently with and be subject to
the same terms, provisions, and limitations as are contained In Policy No.
757/DJ930040 issued by certain underwriting members at Lloyd's of London
covering the identical subject matter and risk.
- --------------------------------------------------------------------------------
<PAGE> 57
<TABLE>
<CAPTION>
LIRMA
COMPANY
THE INSURERS NUMBER PROPORTION REFERENCE
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
CNA INTERNATIONAL
REINSURANCE LTD C4009 9.150% 354564931
AEGON INSURANCE CO
(UK) LTD E2001 1.372% K01SC301530093F
LIBERTY MUTUAL
INS. CO. (UK)
LTD L2706 5.490% 339218
ZURICH RE (UK)
LTD Z4508 4.000% Z67300391493
NEW HAMPSHIRE
INSURANCE COMPANY N4395 4.574% 3370002993
-------
24.586%
-------
</TABLE>
<PAGE> 58
[LOGO] LLOYD'S POLICY
WE, UNDERWRITING MEMBERS of the syndicates whose
definitive numbers and proportions are shown in the
Table attached hereto (hereinafter referred to as
'the Underwriters'), hereby agree, in consideration
of the payment to Us by or on behalf of the Assured
of the premium specified in the Schedule, to insure
against loss, including but not limited to associated
expenses specified herein, if any, to the extent and
in the manner provided in this Policy.
THE UNDERWRITERS hereby bind themselves severally and
not jointly, each for his own part and not one for
another, and therefore each of the Underwriters (and
his heirs, Executors and Administrators) shall be
liable only for his own share of his syndicate's
proportion of any such loss and of any such expenses.
The identity of each of the Underwriters and the
amount of his share may be ascertained by the Assured
or the Assured's representative on application to
Lloyd's Policy Signing Office, quoting the Lloyd's
Policy Signing Office number and date shown in the
Table.
If the Assured shall make any claim knowing the same
to be false or fraudulent, as regards amount or
otherwise, this Policy shall become void and all
claim hereunder shall be forfeited.
IN WITNESS whereof the General Manager of Lloyd's
Policy Signing Office has signed this Policy on
behalf of each of Us.
"WARNING: DO NOT AMEND COVERAGE
WITHOUT CHECKING ALL PRIMARY AND
EXCESS COVERAGES."
/s/ [??]
LLOYD'S POLICY SIGNING OFFICE
General Manager
LLOYD'S
POLICY SIGNING
OFFICE
EMBOSSMENT
APPEARS HERE
ON ORIGINAL
DOCUMENT
<PAGE> 59
EXCESS
DIRECTORS AND OFFICERS AND
COMPANY REIMBURSEMENT
POLICY
JOHNSON & HIGGINS
This document has been checked
By:
Name: /s/ J. [??]
Date: 1/19/94
<PAGE> 60
DECLARATIONS
EXCESS DIRECTORS AND OFFICERS AND
COMPANY REIMBURSEMENT INDEMNITY POLICY
NOTICE: THIS POLICY SUBJECT TO ITS TERMS APPLIES TO ANY CLAIM MADE AGAINST THE
DIRECTORS AND OFFICERS DURING THE POLICY PERIOD. THE LIMIT OF LIABILITY
AVAILABLE TO PAY DAMAGES OR SETTLEMENTS SHALL BE REDUCED AND MAY BE EXHAUSTED
BY AMOUNTS INCURRED AS REASONABLE AND NECESSARY LEGAL FEES AND EXPENSES IN
DEFENDING THE DIRECTORS AND OFFICERS. THIS POLICY DOES NOT PROVIDE FOR ANY
DUTY BY UNDERWRITERS TO DEFEND THOSE INSURED HEREUNDER.
These Declarations along with the completed signed Application, including
attachments, and the Policy with Endorsements shall constitute the contract
between those insured hereunder and Underwriters.
POLICY NO. 757/DJ930041
Item A. Named Insured: THE GILLETTE COMPANY
Principal Address: Prudential Tower Building
Boston, MA 02199, USA
Item B. Policy Period: From lst June 1993 to
1st June 1994 at 12.01 a.m.
Standard Time At The
Principal Address Stated in
Item A.
Item C. Limit of Liability: US$ 10,000,000 in the
aggregate each Policy year.
Item D. Premium: US$ 113,662.50 part of US$ 175,000.00
It is understood and agreed that a premium allocation of
US$12.00 is payable by each Director or Officer of each of
the Australian Subsidiaries of the Parent Company in Item A
of this Declaration. Such premium allocation is a part of
and not in addition to the premium amount shown above.
Item E. Notification to Underwriters pursuant to Clause V. shall be
given to Peterson, Ross, Schloerb & Seidel, attention
Theodore A. Boundas, 200 E. Randolph Drive, Suite 7300,
Chicago, Illinois 60601-6969.
<PAGE> 61
Item F. Form numbers of endorsements attached at issuance:
NMA 1256 Nuclear Incident Exclusion Clause
NMA 1477 Radioactive Contamination Exclusion Clause
270.01 Amended Notification Clause
Item G. Primary Policy:
Primary Insurer: Certain Underwriting
Members of Lloyd's and Various
Insurance Companies
Policy No: 757/DJ930040
Limits of Liability: US$ 10,000,000
Retentions/Deductibles: Nil/Nil/US$ 1,000,000
Participation/ Co-Insurance: Nil
Policy Period: From 1st June 1993 to 1st June
1994
- --------------------------------------------------------------------------------
DATED IN LONDON: 29th July 1993
- --------------------------------------------------------------------------------
<PAGE> 62
EXCESS DIRECTORS AND OFFICERS AND
COMPANY REIMBURSEMENT INDEMNITY POLICY
In consideration of the payment of the premium, in reliance upon the statements
in the Application attached hereto and made a part hereof, subject to the
Declarations made a part hereof and subject to all of the terms of this Policy,
Underwriters agree as follows:-
I. CONFORMANCE WITH PRIMARY POLICY
Except as regards:
(1) the premium, and
(2) the amounts and limits of liability, and
(3) the subject matter of Clauses II, III, IV, V, VI, and VII, and
(4) as otherwise may be provided herein,
this Policy is subject to the same insuring clauses, definitions, terms,
conditions, exclusions and other provisions as those set forth in the Primary
Policy as described in the materials submitted to Underwriters in connection
with the application for this Policy. No changes to the Primary Policy as so
described shall be binding upon Underwriters under this Policy unless
specifically endorsed hereon.
II. DEFINITIONS
The following terms whenever used in this Policy shall have the
meanings indicated.
A. "Primary Policy" shall mean the policy identified in Item G.
of the Declarations.
B. "Underlying Policies" shall mean the policies identified in
Items G. and H. of the Declarations.
C. "Underlying Limit of Liability" shall mean the combined limits
of liability of the Underlying Policies as set forth in Item
G. and H. of the Declarations, less any reduction or
exhaustion of said limits of liability due to payment of loss
under said policies.
III. MAINTENANCE OF UNDERLYING POLICIES
This Policy provides excess coverage only. It is a condition
precedent to the coverage afforded under this Policy that those
insured hereunder maintain the Underlying Policies with
retentions/deductibles, participation/co-insurance and limits of
liability (subject to reduction or exhaustion as a result of loss
payments), as set forth in items G. and H. of the Declarations. This
Policy does not provide coverage for any loss not covered by the
Underlying Policies except and to the extent that
<PAGE> 63
such loss is not paid under the Underlying Policies solely by reason of the
reduction or exhaustion of the Underlying Limits of Liability through payments
of loss thereunder. In the event the insurer under one or more of the
Underlying Policies fails to pay loss in connection with any claim as a result
of the insolvency, bankruptcy or liquidation of said insurer, then those
insured hereunder shall be deemed self-insured for the amount of the limit of
liability of said insurer which is not paid as a result of such insolvency,
bankruptcy or liquidation.
IV. LIMIT OF LIABILITY
A. Subject to Clause IV.B., Underwriters shall be liable to pay
loss which is in excess of
(1) The Underlying Limit of Liability plus
(2) the applicable retention or deductible under the Primary
Policy
up to the Limit of Liability as shown under Item C. of the
Declarations resulting from each claim made against the
directors and officers.
B. The amount shown in Item C. of the Declarations shall be the
maximum aggregate Limit of Liability of Underwriters for all
loss resulting from all claims made against the directors and
officers during the Policy Period, together with all claims
made against the directors and officers which, in accordance
with Clause IV.E or Clause V.B., shall be deemed to have been
made during the Policy Period.
C. Underwriters shall be liable hereunder only after the insurers
under each of the Underlying Policies have paid or have been
held liable to pay the full amount of the Underlying Limit of
Liability.
D. Subject to Clause IV.B., in the event of the reduction or
exhaustion of the Underlying Limit of Liability by reason of
payment of loss, this Policy shall:
(1) in the event of reduction, pay excess of the reduced
limits and
(2) in the event of exhaustion, continue in force as
primary insurance; provided, however that in the case
of exhaustion this Policy shall only pay excess of
the retention or deductible applicable to the Primary
Policy as set forth in Item G. of the Declarations,
which shall be applied to any subsequent loss in the
same manner as specified in this Primary Policy.
E. More than one claim involving the same wrongful act or related
wrongful acts of one or more directors and officers shall be
deemed to constitute a single claim and such single claim
shall be deemed to have been made at the earliest of the
following times:
<PAGE> 64
(1) the time the earliest claim involving the same
wrongful act or related wrongful acts is first made,
or
(2) the time the claim involving the same wrongful act or
related wrongful acts shall be deemed to have been
made pursuant to Clause V.B., if applicable.
V. NOTIFICATION
A. If during the Policy period or any optional extension period,
if applicable, any claim is made against any director or
officer, those insured hereunder shall, as a condition
precedent to their right to be reimbursed under this Policy,
give to Underwriters notice in writing as soon as practicable
of any such claim, but in no event later than sixty (60) days
after such claim is first made.
B. If during the Policy Period or any optional extension period,
if applicable, those insured hereunder first become aware of a
specific wrongful acts, and if those insured hereunder shall,
during such period, give written notice to Underwriters as
soon as practicable of:
(1) the specific wrongful act, and
(2) the consequences which have or may result therefrom,
and
(3) the circumstances by which those insured hereunder
first became aware thereof, then any claim not
otherwise excluded by the terms of this Policy
subsequently made against the directors and officers
arising out of such wrongful act or any related
wrongful act shall be deemed for the purposes of this
Policy to have been made at the time such notice was
first given.
C. Notice to Underwriters provided for in this Clause V. shall be
given to the firm shown under Item E. of the Declarations.
VI. WARRANTY CLAUSE
It is warranted that the particulars and statements contained in the
application for this Policy or contained in any application for any
policy issued by Underwriters of which this Policy is a renewal
thereof, a copy of which is attached hereto, and any material
submitted therewith (which shall be retained on file by Underwriters
and be deemed attached hereto, as if physically attached hereto), are
the basis of this Policy and are to be considered as incorporated in
to and constituting a part of this Policy. This Policy shall be
deemed to be a single unitary contract and not a severable contract of
insurance or a series of individual contracts of insurance with each
of the persons or entities insured hereunder.
<PAGE> 65
VII. SERVICE OF SUIT
It is agreed that in the event of the failure of the Underwriters
hereon to pay any amount claimed to be due hereunder, the Underwriters
hereon at the request of the Insured (or Reinsured), will submit to
the jurisdiction of a Court or competent jurisdiction within the
United States. Nothing in this Clause constitutes or should be
understood to constitute a waiver of Underwriters' rights to commence
an action in any court of competent jurisdiction in the United States,
to remove an action to a United States District Court, or to seek a
transfer of a case to another court as permitted by the laws of the
United States or of any State in the United States. It is further
agreed that service of process in such suit may be made upon Mendes
and Mount, 750 Seventh Avenue, New York, N.Y. 10019-6829, U.S.A., and
that in such suit instituted against any one of them upon this
contract, Underwriters will abide by the final decision of such court
or of any Appellate Court in the event of an appeal.
The above-named are authorized and directed to accept service of
process on behalf of Underwriters in any such suit and/or upon the
request of the Insured (or Reinsured) to give a written undertaking to
the Insured (or Reinsured) that they will enter a general appearance
upon Underwriters' behalf in the event such a suit shall be
instituted.
Further, pursuant to the statute of any state, territory or district
of the United States which makes provision therefore, Underwriters
hereon hereby designate the Superintendent, Commissioner or Director
of Insurance or other officer specified for that purpose in the
statute, or his successor or successors in office, as their true and
lawful attorney upon whom may be served any lawful process in any
action, suit or proceeding instituted by or on behalf of the Insured
(or Reinsured) or any beneficiary hereunder arising out of this
contract of insurance (or reinsurance), and hereby designate the
above-named as the person to whom the said officer is authorized to
mail such process or a true copy thereof.
<PAGE> 66
U.S.A.
NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - DIRECT (BROAD)
(Approved by Lloyd's Underwriters' Non-Marine' Association)
For attachment to insurances of the following classifications in the U.S.A.,
its Territories and Possessions, Puerto Rico and the Canal Zone:-
Owners, Landlords and Tenants Liability, Contractual Liability,
Elevator Liability, Owners or Contractors (including railroad)
Protective Liability, Manufacturers and Contractors Liability, Product
Liability, Professional and Malpractice Liability, storekeepers
Liability, Garage Liability, Automobile Liability (including
Massachusetts Motor Vehicle or Garage Liability),
not being insurances of the classifications to which the Nuclear Incident
Exclusion Clause - Liability - Direct (Limited) applies.
This Policy*
does not apply:-
1 . Under any Liability Coverage, to injury, sickness, disease, death or
destruction
(a) with respect to which an insured under the policy is also an
insured under a nuclear energy liability policy issued by Nuclear
Energy Liability Insurance Association, Mutual Atomic Energy
Liability Underwriters or Nuclear Insurance Association of
Canada, or would be an insured under any such policy but for its
termination upon exhaustion of its limit of liability; or
(b) resulting from the hazardous properties of nuclear material and
with respect to which (1) any person or organization is required
to maintain financial protection pursuant to the Atomic Energy
Act of 1954, or any law amendatory thereof, or (2) the insured
is, or had this policy not been issued would be, entitled to
indemnity from the United States of America, or any agency
thereof, under any agreement entered into by the United States of
America, or any agency thereof, with any person or organization.
2. Under any medical Payments Coverage, or under any Supplementary
Provision relating to immediate medical or surgical relief, to
expenses incurred with respect to bodily injury, sickness, disease or
death resulting from the hazardous properties of nuclear material and
arising out of the operation of a nuclear facility by any person or
organization.
3. Under any Liability Coverage, to injury, sickness, disease, death or
destruction resulting from the hazardous properties of nuclear
material, if
(a) the nuclear material (1) is at any nuclear facility owned by, or
operated by or on behalf of, an insured or (2) has been
discharged or dispersed therefrom;
(b) the nuclear material is contained in spent fuel or waste at any
time possessed, handled, used, processed, stored, transported or
disposed of by or on behalf of an insured, or
<PAGE> 67
(c) the injury, sickness, disease, death or destruction arises out of
the furnishing by an insured of services, materials, parts or
equipment in connection with the planning, construction,
maintenance, operation or use of any nuclear facility, but if
such facility is located within the United States of America, its
territories or possessions or Canada, this exclusion (c) applies
only to injury to or destruction of property at such nuclear
facility.
4. As used in this endorsement:
"HAZARDOUS PROPERTIES" include radioactive, toxic or explosive
properties; "NUCLEAR MATERIAL" means source material, special nuclear
material or byproduct material; "SOURCE MATERIAL", "SPECIAL NUCLEAR
MATERIAL", and "BYPRODUCT MATERIAL" have the meanings given them in
the Atomic Energy Act 1954 or in any law amendatory thereof; "SPENT
FUEL" means any fuel element of fuel component, solid or liquid, which
has been used or exposed to radiation in a nuclear reactor; "WASTE"
means any waste material (1) containing byproduct material and (2)
resulting from the operation by any person or organization of any
nuclear facility included within the definition of nuclear facility
under paragraph (a) or (b) thereof; "NUCLEAR FACILITY" means
(a) any nuclear reactor,
(b) any equipment or device designed or used for (1) separating the
isotopes of uranium or plutonium, (2) processing or utilizing
spent fuel, or (3) handling, processing or packaging waste,
(c) any equipment or device used for the processing, fabricating or
alloying of special nuclear material if at any time the total
amount of such material in the custody of the insured at the
premises where such equipment or device is located consists of or
contains more than 25 grams of plutonium or uranium 233 or any
combination thereof, or more than 250 grams of uranium 235,
(d) any structure, basin, excavation, premises or place prepared or
used for the storage or disposal of waste,
and includes the site on which any of the foregoing is located,
all operations conducted on such site and all premises used for
such operations; "NUCLEAR REACTOR" means any apparatus designed or
used to sustain nuclear fission in a self-supporting chain reaction
or to contain a critical mass of fissionable material. With respect
to injury to or destruction of property, the word "INJURY" or
"DESTRUCTION" includes all forms of radioactive contamination of
property.
It is understood and agreed that, except as specifically provided in the
foregoing to the contrary, this clause is subject to the terms, exclusions,
conditions and limitations of the Policy to which it is attached.
*NOTE:- As respects policies which afford liability coverages and other forms
of coverage in addition, the words underlined should be amended to designate
the liability coverage to which this clause is to apply.
17/3/60
N.M.A. 1256
<PAGE> 68
U.S.A.
RADIOACTIVE CONTAMINATION EXCLUSION CLAUSE - LIABILITY - DIRECT
(Approved by Lloyd's Underwriters' Non-Marine Association)
For attachment (in addition to the appropriate Nuclear Incident Exclusion
Clause - Liability - Direct) to liability insurances affording worldwide
coverage.
In relation to liability arising outside the U.S.A. its Territories or
Possessions, Puerto Rico or the Central Zone, this Policy does not cover any
liability of whatsoever nature directly or indirectly caused by or contributed
to by or arising from ionising radiations or contamination by radioactivity
from any nuclear fuel or from any nuclear waste from the combustion of nuclear
fuel.
13/2/64
N.M.A. 1477
<PAGE> 69
Attaching to and forming part of Policy No. 757/DJ930041
THE GILLETTE COMPANY
AMENDED NOTIFICATION CLAUSE
(270.01)
In consideration of the premium charged for this Policy, it is hereby
understood and agreed that Clause V. NOTIFICATION A. is deleted and the
following is substituted therefor:
A. If during the Policy Period or Optional Extension Period, if
applicable, any Claim is made against any Director or Officer,
the Company and the Directors and Officers shall, as a
condition precedent to their right to be reimbursed under this
policy, give to Underwriters notice in writing as soon as
practicable of any such Claim, but in no event later than
sixty (60) days after the date the Corporate Risk Management
department is aware of such Claim.
All other terms and conditions remain unchanged
<PAGE> 70
LINES CLAUSE
This Insurance, being signed for 64.950%, of 100% insures only that proportion
of any loss, whether total or partial, including but not limited to that
proportion of associated expenses, if any, to the extent and in the manner
provided in this Insurance.
The percentages signed in the Table are percentages of 100% of the amount(s) of
Insurance stated herein.
N.M.A. 2419
<PAGE> 71
(THIS IS AN APPLICATION FOR A CLAIMS MADE POLICY)
RENEWAL APPLICATION
FOR
DIRECTORS' AND OFFICERS' AND COMPANY REIMBURSEMENT INDEMNITY POLICY
NOTICE: THE POLICY FOR WHICH APPLICATION IS MADE (THE "POLICY"), SUBJECT TO ITS
TERMS, APPLIES ONLY TO ANY "CLAIM" (AS DEFINED IN THE POLICY) MADE AGAINST THE
DIRECTORS AND OFFICERS DURING THE POLICY PERIOD. THE LIMIT OF LIABILITY
AVAILABLE TO PAY DAMAGES OR SETTLEMENTS SHALL BE REDUCED AND MAY BE EXHAUSTED
BY AMOUNTS INCURRED AS "COSTS, CHARGES, AND EXPENSES" ("AS DEFINED IN THE
POLICY") AND "COSTS, CHARGES, AND EXPENSES" SHALL BE APPLIED TO THE RETENTIONS.
THE POLICY DOES NOT PROVIDE FOR ANY DUTY BY UNDERWRITERS TO DEFEND THOSE
INSURED UNDER THE POLICY.
GENERAL INSTRUCTIONS FOR COMPLETING THIS APPLICATION:
1 . Please type or print in ink.
2. Please read carefully and answer all questions. If a question is not
applicable, so state. If space is insufficient to answer any question
fully, attach a separate sheet.
3. The original Renewal Application must be submitted.
4. The Chairman of the Board or the President must sign and date this
Renewal Application.
<PAGE> 72
5. This Renewal Application and all exhibits shall be held in confidence.
6. Please read the Policy for which application is made (the "Policy")
prior to completing this Renewal Application.
7. The terms as used herein shall have the meaning stated in Paragraph
II, Definitions, of the Policy.
1. Name of Parent Company The Gillette Company
Address -Prudential Tower Building
(Number) (Street)
Boston MA 02199-3799
(City) (State) (Zip Code)
2. The Parent Company has continuously been in business since
/ 1901
(Month) (Year)
3. The Parent Company has continually paid cash dividends on its:
(a) Common Stock since 1905 (b) Preferred Stock since 12/31/90
(Series C).
-2-
<PAGE> 73
5. This Renewal Application and all exhibits shall be held in confidence.
6. Please read the Policy for which application is made (the "Policy")
prior to completing this Renewal Application.
7. The terms as used herein shall have the meaning stated in Paragraph
II, Definitions, of the Policy.
1. Name of Parent Company The Gillette Company
Address -Prudential Tower Building
(Number) (Street)
Boston MA 02199-3799
(City) (State) (Zip Code)
2. The Parent Company has continuously been in business since
/ 1901
(Month) (Year)
3. The Parent Company has continually paid cash dividends on its:
(a) Common Stock since 1905 (b) Preferred Stock since 12/31/90
(Series C).
-2-
<PAGE> 74
5. (c) List all such Subsidiaries for which coverage is requested and
the date created or acquired:
--------------------------------
Coverage requested for all - details on attached listing dated
March 15, 1993, including the following subsidiaries in which
The Gillette Company has an interest of 50% or less:
Gillette Continental Trading 50%
Intermaghreb (80% of 51% through Gillette Interlame S.A.)
Shenmei Daily Use Co. 50%
6. (a) Does any person or entity (other than the Company) own 10% or
more of any entity described in 5.(b) above?
Yes X No _______
If yes, give details: (as of March 15, 1993)
<TABLE>
<S> <C> <C>
Industry - Beteiligungs -
Gesellschaft mbH 50% Gillette Continental Trading Co.
Societe Matron 12% Gillette Interlame
Shanghai Razor Blade
Factory 30% Gillette (Shanghai) Limited
House of Poddar 19.9% Indian Shaving Products
Societe Matron 29% Intermaghreb
Professeur M. Benomar 20% Intermaghreb
National Investment Trust 23.5% Interpak Shaving Products
E. Trismitro 25% P. T. Gillette Indonesia
Leninets 35% Petersburg Products International
Shenyang Daily Use
Metal Industry Co. 50% Shenmei Daily Use Co.
State Treasury of Poland 20% Wizamet S.A.
</TABLE>
(b) Does any person or entity own 10% or more of any class of
shares issued by the Parent Company?
Yes X No _______
If yes, give details:
---------------------------------------
Berkshire Hathaway, Inc., 1440 Kiewit Plaza, Omaha, Nebraska,
beneficially owns 24,000,000 shares of the company's common
stock (10.9% of the outstanding common stock of the Company).
-4-
<PAGE> 75
7. (a) Complete the following for each of the Parent Company's last
four fiscal years (use consolidated figures):
<TABLE>
<CAPTION>
($ Millions)
Year 1992 1991 1990 1989
<S> <C> <C> <C> <C>
Total Consolidated Assets 4,189.9 $3,886.7 3,671.3 3,114.0
------- ------- ------- -------
Current Assets 2,336.2 2,177.8 2,093.5 1,854.5
------- ------- ------- -------
Current Liabilities 1,560.8 1,484.6 1,307.9 1,061.3
------- ------- ------- -------
Shareholders Equity 1,496.4 1,157.1 265.4 70.0
------- ------- ------ -----
Net Income 513.4 427.4 367.9 284.7
------ ------ ------ ------
Net Income Per Share 2.32 1.94 1.60 1.35
------ ------ ------ ------
Dividends Per Share .72 .62 .54 .48
----- ----- ----- -----
Sales/Revenues 5,162.8 4,683.9 4,344.6 3,818.5
------- ------- ------- -------
Long Term Debt 554.2 742.2 1,045.7 1,041.0
------ ------ ------- -------
Short Term Debt 475.8 460.0 370.3 340.7
------ ------ ------ ------
</TABLE>
(b) Has the Company at any time over the last five years been in
breach of any of its debts covenants or loan agreements?
Yes ________ No X
8. Has the Company at any time over the last five years been involved in
any policy dispute with any of its insurers (on any class of
business)?
Yes X No _______
If yes, give details: The Company was a plaintiff in a lawsuit
against Seaboard Surety concerning coverage for an advertising
liability claim. The lawsuit was settled in 1990.
-5-
<PAGE> 76
9. Give details of the Company's current directors' and officers'
insurance:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
<S> <C> <C> <C> <C>
Insurer: Lloyds London Cos. Aetna C&S CODA ACE
---------------------------------------------------------------------------------
Limit: $10,000,000 $10,000,000 $20,000,000 $20,000,000 $10,000,000
---------------------------------------------------------------------------------
Period: 6/l/92-3 6/l/92-3 6/lZ92-3 11/21/92-6/01/95 6/01/92-3
---------------------------------------------------------------------------------
Retention: $1,000,000 Corporate Reimbursement
---------------------------------------------------------------------------------
Annual
Premium: $476,776 $180,013 $300,000 $143,000 $155,000
---------------------------------------------------------------------------------
</TABLE>
10. (a) Has the Company under consideration at the present time or
does it contemplate any acquisitions, tender offers or
mergers?
Yes _______ No X
If yes, give details: Gillette purchased 100% of the stock of
Parker Pen Holdings Limited on May 7, 1993. Refer to enclosed
8-K dated May 7, 1993 for details. None other publicly
announced.
(b) Complete the following for all acquisitions made over the last
five years which have increased the total assets of the
Company by 5% or more:
<TABLE>
<CAPTION>
Asset
Entity Date Value at Purchase Method of
Acquired Acquired Date Acquired Price Payment
<S> <C> <C> <C> <C>
Parker Pen May 7,1993 (Book Value Borrowing
---------- ---------- ------------ ------------ ------------
Holdings (Approx.) (Refer to
---------- ---------- ------------ ------------ ------------
Limited $220,000,000 $450,000,000 5/7/93 8-K
---------- ---------- ------------ ------------ ------------
For Details)
---------- ---------- ------------ ------------ ------------
</TABLE>
-6-
<PAGE> 77
11. Has the Company ever repurchased its own shares at a price in excess
of the market value at the time?
Yes _______ No _______
If yes, give details: Please refer to previous Applications.
12. Has the Company at any time over the last five years changed its
accountants or external general counsel?
Yes _______ No X
If yes, give details including reasons for changes:
13. Has the Company:
(a) filed within the past 18 months or contemplated filing within
the next 12 months any registration statement with the
Securities and Exchange Commission for a public offering of
securities?
Yes X No _______
If yes, furnish copy of prospectus.
See attached copies of (a) Press Release regarding a shelf
registration dated November 24, 1992, which has not yet become
effective and (b) Form S-8 filed December 23, 1992.
-7-
<PAGE> 78
(b) issued within the past 18 months or contemplated issuing
within the next 12 months any share (common or otherwise)?
Yes X No _______
If yes, give details: See 1992 Annual Report financial
note regarding Common Stock and Additional Paid-In Capital (p.
33).
14. The following officer of the Parent Company is designated to
receive any and all notices from Underwriters of their
authorized representative(s) concerning this insurance:
Lloyd B. Swaim, Vice President and Treasurer
15. List the date at the end of each of the last eight calendar quarters
and the corresponding closing price for shares of the Parent Company's
common stock:
<TABLE>
<CAPTION>
DATE PRICE
<S> <C>
06/30/91 34 1/4
----------- ---------
09/30/91 40 7/8
----------- ---------
12/31/91 56 1/8
----------- ---------
03/31/92 47 1/4
----------- ---------
06/30/92 47 5/8
----------- ---------
09/30/92 57 3/8
----------- ---------
12/31/92 56 7/8
----------- ---------
03/31/93 60 1/2
----------- ---------
</TABLE>
-8-
<PAGE> 79
16. Have any filings been made concerning the Company pursuant to Section
13.(d) of the Securities Exchange Act of 1934 during the last two
years?
Yes _____ No x
17. Has the Company made any filing pursuant to Section 13.(d) of the
Securities Exchange Act of 1934 during the last two years?
Yes _____ No x
If yes, attach a copy of each such filing.
18. What percentage of the Parent Company's common stock was sold and
purchased during the last 12 months? 53.15% (March 3, 1992 - 93)
19. The Company has not been involved in or had any knowledge of any
pending anti-trust, price-fixing, tax, copyright, patent litigation or
governmental regulatory or administrative proceedings except as
follows (if answer is none, so state):
1) Wilkinson Sword counter claim was dismissed as part of the
resolution of antitrust proceedings related to the Wilkinson
business in Europe.
2) Summary of Wafer Shave Claim was attached to '91 Application.
3) The U.S. Tax Court ruled favorably on The Oral-B Tax matter
mentioned in the 1992 Application. See P. 9 of the September
30, 1992 10-Q for details.
4) Certain environmental proceedings in the U.S. arising out of
operations. Management considers the potential liability to be
immaterial.
5) See attached 8-K re purchase of Parker Pen Holdings Limited.
<PAGE> 80
20. It is agreed that this Renewal Application is supplemental to
Application(s) for all policies of which the Policy would be a
renewal, and that such Application(s), together with the Renewal
Application and any materials submitted herewith (which shall be
retained on file by Underwriters and shall be deemed attached hereto,
as if physically attached hereto) constitute the complete Application
which shall be the basis of the Policy and will be attached to and
become part of the Policy.
21. It is agreed that in the event there is any material change in the
answers to the questions contained herein prior to the effective date
of the Policy, the applicant will notify Underwriters and, at the sole
discretion of Underwriters, any outstanding quotations may be modified
or withdrawn.
22. Attached and made a part of this Renewal Application by reference are
the following materials regarding the Parent Company: (a) two copies
of the Last Annual Report to Stockholders (b) two certified copies of
the provisions of the Charter or By-Laws covering Indemnification of
Directors and Officers, and (c) two copies of the Notice to
Stockholders and the Proxy Statement for either the last or the next
annual meeting. Underwriters are hereby authorized to make any
investigation and inquiry in connection with this Renewal Application
as they may deem necessary.
23. The undersigned declares that to the best of his/her knowledge the
statements herein are true. Signing of this Renewal Application does
not bind the undersigned to complete the insurance, but it is agreed
that this Renewal Application, shall be the basis of the contract
should a Policy be issued, and this Renewal Application will be
attached to and become a part of such Policy, if issued. Underwriters
are hereby authorized to make any investigation and inquiry in
connection with this Renewal Application as they may deem necessary.
-10-
<PAGE> 81
Signed /s/
-----------------------------
Must be Signed By
Chairman of the Board or President
of Parent Company
Capacity Chairman of the Board and
Chief Executive Officer
-----------------------
Company The Gillette Company
-----------------------
Date May 28, 1993
-----------------------
Submitted by
(Agent) -------------------
Date
---------------------------
-11-
<PAGE> 82
[SEAL]
The Table of Syndicates referred to on the face of this Policy follows:
<TABLE>
<CAPTION>
FOR LPSO USE ONLY BROKER LPSO No. & DATE FOR LPSO USE ONLY BROKER LPSO No. & DATE
0757 61104 051 08193 UX01 0908 0757 61104 051 08193
343 344
___________________________________________________________________________________________________________________________________
AMOUNT, PERCENTAGE SYNDICATE UNDERWRITER'S PAGE AMOUNT, PERCENTAGE SYNDICATE UNDERWRITER'S PAGE
OR PROPORTION REFERENCE 1 OR PROPORTION REFERENCE 2
PERCENT PERCENT
<S> <C> <C> <C>
12.50 1068 9300793DOGBH 1.00 923 QD567K93B64F
1.00 1145 681X35406X93 0.75 724 NA4395326M21
6.00 1038 9300770DOGA1 0.35 1003 LTXSM0203010
2.00 219 954P3137 0.05 573 81230531WNY
6.00 219 254P3137 1.50 435 13500400
4.00 79 322FB402564B 10.00 1067 9360458DOGA1
5.00 406 C14XWD05003B 0.50 1066 9300154DOGA1
7.50 1173 ALDTAA40903E
1.50 205 481NO2228BNA THE LIST OF UPDERWRITING MEMBERS
1.00 1047 Y0147Z93A OF LLOYDS IS NUMBERED 1993/ 8
1.00 588 11E23291PO3
1.00 375 7233NO9326NN
1.00 204 079504220001
0.30 212 079504220001
1.00 947 QD567K93A64X
___________________________________________________________________________________________________________________________________
TOTAL LINE NO. OF SYND. FOR LPSO USE ONLY TOTAL LINE NO. OF SYND. FOR LPSO USE ONLY
64.95 22 NUX5 14716
</TABLE>
<PAGE> 83
COMPANIES INSURANCE POLICY
WHEREAS the Assured named in the Schedule having paid the Premium specified in
the Schedule to Us, the Insurance Companies subscribing to this Policy
(hereinafter collectively referred to as the "Insurers"), to insure against
loss as stated herein during the period of insurance stated in the Schedule.
NOW KNOW YE that We the Insurers do hereby bind ourselves each COMPANY for
itself and not one for another, to pay or make good to the Assured or the
Assured's Executors, Administrators and Assigns, all such loss not exceeding
the sum insured or other limits as stated in the Schedule that the Assured may
sustain during the said period after such loss is proved and that the liability
of each of Us, the Insurers, shall be limited to the individual proportion set
against our name.
Warranted that this policy shall run concurrently with and shall be subject to
the same gross rate, terms, conditions, definitions and Endorsements, if any,
approved by the Insurers, appearing in the Policy numbered and subscribed by
the Warranty Underwriters/Company stated in the Schedule and covering the
identical subject matter and risk.
If the Assured shall make any claim knowing the same to be false or fraudulent
as regards amount or otherwise this Policy shall become void and all claim
hereunder shall be forfeited.
IN WITNESS whereof I, being a representative of the Leading Company and
authorized by the said Company and by all other Companies appearing hereon to
sign this Policy on their behalf, have hereunto subscribed my name this 16th day
of August, 1993.
[SEAL]
<PAGE> 84
POLICY NO: 757/DJ930041
THE SCHEDULE
THE NAME OF THE ASSURED: THE GILLETTE COMPANY
OF: Prudential Tower Building,
Boston, MA 02199, USA
PREMIUM: US$7,875.00 Part of US$175,000.00
LIMIT OF LIABILITY: US$10,000,000 in the aggregate
each Policy year
which is excess of
US$10,000,000 in the aggregate
each Policy year.
Which is excess of: -
US$NIL/US$NIL Directors and
Officers Liability
US$1,000,000 Reimbursement
Liability.
THE PERILS AND
INTEREST INSURED: Excess Directors and Officers
Liability and Excess Reimbursement
for Directors and Officers
Liability.
As more fully set forth in the
co-insuring Lloyd's Policy.
PERIOD OF INSURANCE: FROM: 1st June 1993 TO: 1st June
1994
Both days at 12.01 a.m.
standard time.
DETAILS OF WARRANTY POLICY: NUMBER: 757/DJ930041
WARRANTY UNDERWRITERS: Certain
Underwriting members at Lloyd's of
London.
This Policy, being for 4.5000% of 100% insures its pro-rata proportion of the
Limit of Liability as set forth above and the individual proportions signed
hereon are percentages of the Limit of Liability as set forth above.
<PAGE> 85
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
The Insurers Proportion Reference
- ------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL UNION
ASSURANCE COMPANY PLC 1.5000% A9235596
(THE LEADING COMPANY)
UNITED NATIONAL
INSURANCE COMPANY
(PER HARRIS & DIXON
LTD) 3.0000% NR933316
</TABLE>
<PAGE> 86
COMPANIES INSURANCE POLICY
WHEREAS the Assured named in the Schedule having paid the Premium specified in
the Schedule to Us, the Insurance Companies subscribing to this Policy
(hereinafter collectively referred to as the "Insurers"), to insure against
loss as stated herein during the period of insurance stated in the Schedule.
NOW KNOW YE that We the Insurers do hereby bind ourselves each COMPANY for
itself and not one for another, to pay or make good to the Assured or the
Assured's Executors, Administrators and Assigns, all such loss not exceeding
the sum insured or other limits as stated in the Schedule that the Assured may
sustain during the said period after such loss is proved and that the liability
of each of Us, the Insurers, shall be limited to the individual proportion set
against our name.
Warranted that this policy shall run concurrently with and shall be subject to
the same gross rate, terms, conditions, definitions and Endorsements, if any,
approved by the Insurers, appearing in the Policy numbered and subscribed by
the Warranty Underwriters/Company stated in the Schedule and covering the
identical subject matter and risk.
If the Assured shall make any claim knowing the same to be false or fraudulent
as regards amount or otherwise this Policy shall become void and all claim
hereunder shall be forfeited.
IN WITNESS whereof I, being a representative of the Leading Company and
authorized by the said Company and by all other Companies appearing hereon to
sign this Policy on their behalf, have hereunto subscribed my name this 20th
day of August, 1993
THREADNEEDLE INSURANCE COMPANY LIMITED
/s/
<PAGE> 87
POLICY NO: 757/DJ930041
THE SCHEDULE
THE NAME OF THE ASSURED: THE GILLETTE COMPANY
OF: Prudential Tower Building,
Boston, MA 02199, USA
PREMIUM: US$437.50 Part of US$175,000.00
LIMIT OF LIABILITY: US$10,000,000 in the aggregate each
Policy year
which is excess of US$10,000,000
in the aggregate each Policy year.
Which is excess of:-
US$NIL/US$NIL Directors and Officers
Liability.
US$1,000,000 Reimbursement
Liability.
THE PERILS AND
INTEREST INSURED: Excess Directors and Officers
Liability and Excess Reimbursement
for Directors and Officers
Liability.
As more fully set forth in the
co-insuring Lloyd's Policy.
PERIOD OF INSURANCE: FROM: 1st June 1993 TO: 1st June
1994
Both days at 12.01 a.m.
standard time.
DETAILS OF WARRANTY POLICY: NUMBER: 757/DJ930041
WARRANTY UNDERWRITERS: Certain
Underwriting members at Lloyd's of
London.
This Policy, being for 0.2500% of 100% insures its pro-rata proportion of the
Limit of Liability as set forth above and the individual proportions signed
hereon are percentages of the Limit of Liability as set forth above.
<PAGE> 88
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
THE INSURERS PROPORTION REFERENCE
- -------------------------------------------------------------------------------
<S> <C> <C>
THREADNEEDLE INSURANCE
COMPANY LTD 0.2500% 25936043600
</TABLE>
<PAGE> 89
COMPANIES INSURANCE POLICY
WHEREAS the Assured named in the Schedule having paid the Premium specified in
the Schedule to Us, the Insurance Companies subscribing to this Policy
(hereinafter collectively referred to as the "Insurers"), to insure against
loss as stated herein during the period of insurance stated in the Schedule.
NOW KNOW YE that We the Insurers do hereby bind ourselves each COMPANY for
itself and not one for another, to pay or make good to the Assured or the
Assured's Executors, Administrators and Assigns, all such loss not exceeding
the sum insured or other limits as stated in the Schedule that the Assured may
sustain during the said period after such loss is proved and that the liability
of each of Us, the Insurers, shall be limited to the individual proportion set
against our name.
Warranted that this policy shall run concurrently with and shall be subject to
the same gross rate, terms, conditions, definitions and Endorsements, if any,
approved by the Insurers, appearing in the Policy numbered and subscribed by
the Warranty Underwriters/Company stated in the Schedule and covering the
identical subject matter and risk.
If the Assured shall make any claim knowing the same to be false or fraudulent
as regards amount or otherwise this Policy shall become void and all claim
hereunder shall be forfeited.
IN WITNESS whereof I, being a representative of the Leading Company and
authorized by the said Company and by all other Companies appearing hereon to
sign this Policy on their behalf, have hereunto subscribed my name
this 26th day of August, 1993
/s/
[SEAL]
<PAGE> 90
POLICY NO: 757/DJ930041
THE SCHEDULE
THE NAME OF THE ASSURED: THE GILLETTE COMPANY
OF: Prudential Tower Building,
Boston, MA 02199, USA
PREMIUM: US$11,375.00 Part of US$175,000.00
LIMIT OF LIABILITY: US$10,000,000 in the aggregate
each Policy year.
Which is excess of US$10,000,000 in
the aggregate each Policy year.
Which is excess of:-
US$NIL/US$NIL Directors and
Officers Liability
US$1,000,000 Reimbursement
Liability.
THE PERILS AND
INTEREST INSURED: Excess Directors and Officers
Liability and Excess Reimbursement
for Directors and Officers
Liability.
As more fully set forth in the
co-insuring Lloyd's Policy.
PERIOD OF INSURANCE: FROM: 1st June 1993 TO: 1st June
1994
Both days at 12.01 a.m.
standard time.
DETAILS OF WARRANTY POLICY: NUMBER: 757/DJ930041
WARRANTY UNDERWRITERS: Certain
Underwriting members at Lloyd's of
London.
This Policy, being for 6.500% of 100% insures its pro-rata proportion of the
Limit of Liability as set forth above and the individual proportions signed
hereon are percentages of the Limit of Liability as set forth above.
/s/
26 Aug. 93
<PAGE> 91
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
THE INSURERS PROPORTION REFERENCE
- --------------------------------------------------------------------------------
<S> <C> <C>
CHUBB INSURANCE COMPANY
OF EUROPE 6.500% 81424330
</TABLE>
[SEAL]
/s/
26 Aug. 93
<PAGE> 92
J (A) FORM
THE INSTITUTE OF LONDON UNDERWRITERS
[LOGO]
COMPANIES POLICY
WE, THE COMPANIES, hereby agree, in consideration of the payment to us by or on
behalf of the Assured of the premium specified in the Schedule, to insure
against loss damage liability or expense in the proportions and manner
hereinafter provided. Each Company shall be liable only for its own respective
proportion.
If the Assured shall make any claim knowing the same to be false or fraudulent,
as regards amount or otherwise, this Policy shall become void and all claim
hereunder shall be forfeited.
IN WITNESS whereof the General Manager and Secretary of The Institute of London
Underwriters has subscribed his name on behalf of each Company.
/s/
........................................
CHIEF EXECUTIVE
General Manager and Secretary
The Institute of London Underwriters
<PAGE> 93
SCHEDULE
POLICY NUMBER 757/DJ930041
NAME AND ADDRESS
OF THE ASSURED THE GILLETTE COMPANY
Prudential Tower Building
Boston
MA 02199
USA
THE PERIOD OF
INSURANCE From 1st June 1993 to 1st June 1994 at 12.01 a.m.
Standard Time at the address stated above.
THE RISK AND SUM
INSURED HEREUNDER Excess Directors and Officers Liability and
Excess Reimbursement for Directors and Officers
Liability.
As more fully set forth in the co-insuring Lloyd's
policy.
0.500% of
US$10,000,000 in the aggregate each Policy year.
Excess of: -
US$10,000,000 in the aggregate each Policy year.
Excess of: -
US$Nil/US$Nil Directors and Officers Liability.
US$1,000,000 Reimbursement Liability.
Warranted that this Policy shall run concurrently with, and shall be subject to
the same terms, conditions, limitations and endorsements as are more fully set
forth in or as may be added to Policy No.757/DJ930041 subscribed by Lloyd's
Underwriters covering the identical subject matter and risk.
PREMIUM US$875.00 part of US$175,000.00
<PAGE> 94
[STAMP] THE INSTITUTE OF LONDON UNDERWRITERS
ILU REFERENCE PMC 93 223157 24 8 93
PROPORTION CODE COMPANY AND REFERENCE
0.5000000 3030/01/8 SPHERE DRAKE INSURANCE PLC NO 1. A/D
93LJBTD07814
TOTAL (T) or FORWARD (F)
0,5000000% T
<PAGE> 95
LIRMA POLICY
IN CONSIDERATION of the Insured named in the Schedule hereto having
paid or promised to pay the premium stated in the said Schedule to the Insurers
named herein who have hereunto subscribed their names ("the Insurers").
THE INSURERS HEREBY SEVERALLY AGREE each for the proportion set
against its own name to indemnify the Insured or the Insured's Executors and
Administrators against loss, damage or liability to the extent and in the
manner set forth herein. Provided that the aggregate liability of the Insurers
shall not exceed the Sum Insured or other limits as are set forth in the
Schedule.
If the Insured shall make any claim knowing the same to be false or
fraudulent, as regards amount or otherwise, this Policy shall become void and
all claim hereunder shall be forfeited.
IN WITNESS WHEREOF the Director of Policy Signing Services of LONDON
INSURANCE AND REINSURANCE MARKET ASSOCIATION ("LIRMA") has subscribed his name
on behalf of each of the LIRMA Companies and (where the Companies Collective
Signing Agreement ("CCSA") is being implemented) on behalf of the Leading CCSA
Company which is a LIRMA member and authorised to sign this Policy (either
itself or by delegation to LIRMA) on behalf of all the other CCSA Companies.
Signed /s/
...............................................
Director of Policy Signing Services
Date as in the Schedule.
<PAGE> 96
DATE: 20th July 1993
POLICY NO: 757/DJ930041
THE SCHEDULE
THE INSURED: THE GILLETTE COMPANY
PREMIUM: US$40,775.00 Part of US$175,000.00
LIMITS OF LIABILITY: 23.300% of
US$10,000,000 in the aggregate each
Policy year.
Excess of: -
US$10,000,000 in the aggregate each
Policy year.
Excess of: -
US$NIL/US$NIL Directors and Officers
Liability
US$1,000,000 Reimbursement Liability.
THE INTEREST INSURED: Excess Directors and Officers Liability
and Excess Reimbursement for Directors
and Officers Liability.
As more fully set forth in the
co-insuring Lloyd's policy.
PERIOD OF INSURANCE
FROM: 1st June 1993 TO: 1st June 1994 BOTH DAYS AT 12.01 A.M. LOCAL STANDARD
TIME AND FOR SUCH FURTHER PERIOD OR PERIODS AS MAY BE MUTUALLY AGREED.
COINSURANCE CLAUSE
It is warranted that this Policy shall run concurrently with and be
subject to the same terms, provisions, and limitations as are contained in
Policy No. 757/DJ930041 issued by certain underwriting members at Lloyd's of
London covering the identical subject matter and risk.
<PAGE> 97
<TABLE>
<CAPTION>
LIRMA
COMPANY
THE INSURERS NUMBER PROPORTION REFERENCE
- --------------------------------------------------------------------------
<S> <C> <C> <C>
CNA REINSURANCE
OF LONDON LTD C4009 5.0000% 3546391
AEGON INS CO.
(UK) LTD E2001 1.0000% K01SC301540093G
ZURICH REINSURANCE
(UK) LTD Z4508 8.3300% Z67115993193
NEW HAMPSHIRE
INS CO. N4395 8.9700% 3370002393
--------
23.300%
--------
</TABLE>
<PAGE> 98
[LOGO] THIS IS AN EXCESS CLAIMS MADE POLICY WITH EXPENSES INCLUDED IN
THE LIMIT OF LIABILITY.
PLEASE READ THE ENTIRE POLICY CAREFULLY.
THE AETNA CASUALTY AND SURETY COMPANY
DIRECTORS AND OFFICERS LIABILITY AND REIMBURSEMENT LIABILITY EXCESS POLICY
DECLARATIONS
POLICY NUMBER
095 LB 100 654 391 BCA
NOTICE: THIS POLICY, SUBJECT TO ALL TERMS, CONDITIONS AND LIMITATIONS, APPLIES
ONLY TO ANY CLAIM FIRST MADE OR DEEMED MADE PURSUANT TO THE TERMS HEREOF
AGAINST THE INSUREDS DURING THE POLICY PERIOD. THE LIMIT OF LIABILITY
AVAILABLE TO PAY DAMAGES OR SETTLEMENTS SHALL BE REDUCED BY AMOUNTS INCURRED AS
DEFENSE EXPENSES. THIS POLICY DOES NOT PROVIDE FOR ANY DUTY BY THE UNDERWRITER
TO DEFEND ANY OF THE INSUREDS.
<TABLE>
<S> <C>
ITEM 1. PARENT ORGANIZATION NAME AND PRINCIPAL ADDRESS: ITEM 2. POLICY PERIOD:
The Gillette Company (a) From 6/1/1993
Prudential Tower Building (b) To 6/1/1994
Boston, MA 02199 at 12:01 a.m. Standard Time both dates
at the Principal Address in Item 1.
ITEM 3. LIMIT OF LIABILITY (Inclusive of DEFENSE EXPENSES):
$20,000,000.00 maximum aggregate Limit of Liability for the POLICY PERIOD.
ITEM 4. SCHEDULE OF UNDERLYING POLICIES
a. Primary Policy
UNDERWRITER POLICY NUMBER LIMIT RETENTION
Lloyd's of London 727/DJ930040 $10,000,000.00 $0.00/$0.00/$1,000,000.00
Other Policy(ies), if any:
UNDERWRITER(S) POLICY NUMBER(S) LIMIT(S) RETENTION(S)
Lloyd's of London 727/DJ930041 $10,000,000.00
</TABLE>
ITEM 5. PREMIUM:
$300,000.00 one year prepaid premium.
ITEM 6. NOTICE REQUIRED TO BE GIVEN TO THE UNDERWRITER SHALL BE ADDRESSED TO
Vice President of Claims
Executive Risk Management Associates
P. 0. Box 2002
Simsbury, CT. 06070
ITEM 7. ENDORSEMENTS ATTACHED AT ISSUANCE
X-301.0
X-401.0
THESE DECLARATIONS, THE COMPLETED SIGNED APPLICATION AND THE POLICY WITH
ENDORSEMENTS SHALL CONSTITUTE THE CONTRACT BETWEEN THE INSUREDS AND THE
UNDERWRITER.
THE AETNA CASUALTY AND SURETY COMPANY By (Attoney-in-Fact)
02/03/1994
/s/
INSURED'S COPY
F-1727-A (12-90)
<PAGE> 99
ENDORSEMENT
To be attached to and form part of Policy No.
095 LB 100 654 391 BCA, issued to THE GILLETTE COMPANY.
In consideration of the premium charged, the Underwriter shall not be
liable to make any payment for loss in connection with any claim made against
any of the Insureds based on, arising out of, directly or indirectly resulting
from, in consequence of, or in any way involving:
(a) any prior and/or pending litigation as of 11-21-87; or
(b) any fact, circumstance or situation underlying or alleged in
any prior and/or pending litigation as of 11-21-87.
All other terms, conditions and limitations of this Policy shall
remain unchanged, including, but not limited to, the maximum aggregate Limit of
Liability set forth in Item 3 of the Declarations.
Complete Only When This Endorsement Is Not Prepared With The Policy Or
Is Not To Be Effective With The Policy.
Effective Date Of This Endorsement:
THE AETNA CASUALTY AND SURETY COMPANY
By:
-------------------------------------
Attorney-In-Fact
X-301.0 Endorsement No. 1
(11-89)
<PAGE> 100
ENDORSEMENT
To be attached to and form part of Policy No.
095 LB 100 654 391 BCA, issued to THE GILLETTE COMPANY.
In consideration of the premium charged, the phrase "thirty (30) days"
in the fourth line of the first paragraph of Section XI is amended to read
"sixty (60) days."
All other terms, conditions and limitations of this Policy shall
remain unchanged, including, but not limited to, the maximum aggregate Limit of
Liability set forth in Item 3 of the Declarations.
Complete Only When This Endorsement Is Not Prepared With The Policy Or
Is Not To Be Effective With The Policy.
Effective Date Of This Endorsement:
THE AETNA CASUALTY AND SURETY COMPANY
By:
------------------------------------------
Attorney-In-Fact
X-401.0
(11-89) Endorsement No. 2
<PAGE> 101
AETNA
The Aetna Casualty and Surety Company
Hartford, Connecticut 06156
(Herein referred to as Underwriter)
RENEWAL APPLICATION
DESIGNATED INSURED PERSONS AND COMPANY
REIMBURSEMENT INSURANCE
USE THIS FORM FOR ALL RENEWALS EXCEPT DEPOSITORY INSTITUTIONS
NOTICE: THE POLICY FOR WHICH RENEWAL APPLICATION IS MADE, SUBJECT TO ITS TERMS,
APPLIES ONLY TO ANY "CLAIM" (AS DEFINED IN THE POLICY) FIRST MADE OR DEEMED
MADE AGAINST THE "INSURED PERSONS" (AS DEFINED IN THE POLICY) DURING THE POLICY
PERIOD. THE LIMIT OF LIABILITY AVAILABLE TO PAY DAMAGES OR SETTLEMENTS SHALL
BE REDUCED BY THE AMOUNTS INCURRED AS "DEFENSE EXPENSES" (AS DEFINED IN THE
POLICY), AND SUCH DEFENSE EXPENSES SHALL BE SUBJECT TO THE DEDUCTIBLE AMOUNT.
THE POLICY DOES NOT PROVIDE FOR ANY DUTY BY THE UNDERWRITER TO DEFEND THE
INSURED PERSONS.
COMPLETE AND CORRECT INFORMATION MUST BE SUPPLIED BY THE APPLICANT WHETHER OR
NOT SUCH INFORMATION IS DEEMED CONFIDENTIAL BY THE APPLICANT. THIS APPLICATION
IS DIVIDED INTO THREE SECTIONS (A, B, AND C). PART B IS DETACHABLE AND MAY BE
SENT UNDER SEPARATE COVER.
A 1. a) Name of Applicant: The Gillette Company
(whenever used, Applicant shall mean the Parent Corporation)
b) Principal address: Prudential Tower Building
Boston, MA 02199
c) State of incorporation or charter: Delaware
d) Name and title of the officer of the Applicant designated as
the representative to receive notices from the Underwriter on
behalf of all persons and entities proposed for this
insurance:
Lloyd B. Swaim, Vice President and Treasurer
e) Total consolidated assets and liabilities of Applicant and all
Subsidiaries as of the close of the most recent quarter:
Assets $ 4,189,900,000 - Liabilities $ 2,693,500,000 Date:
12/31/92
A 2. a) Has the Applicant increased or decreased the amount of, or
suspended the payment of, dividends on its preferred or common
stock since the date of the last application for directors and
officers liability insurance? X Yes __ No
If yes, explain in an attachment to this application. (See
April 15, 1993 Press Release and 1992 Annual Report.)
b) Provide the price per share and closing P/E ratio for the
Applicant's common stock for each quarter of the last four
quarters:
<TABLE>
<CAPTION>
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------- ----------- ----------- -----------
Year High Low P/E High Low P/E High Low P/E High Low P/E
---- ---- --- --- ---- --- --- ---- --- --- ---- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1992 54 7/8 46 3/8 23.8 52 1/2 43 7/8 22.5 58 3/4 47 1/2 25.7 61 1/4 54 1/2 24.5
---- ------ ------ ---- ------ ------ ---- ------ ------ ---- ------ ------ ----
</TABLE>
<PAGE> 102
A 3. a) If not provided in the annual report to shareholders or the
proxy statement, provide a list of the names and affiliations
of all directors of the Applicant and the names and official
titles of all officers of the Applicant in an attachment to
this application.
b) Describe any changes in the board of directors or senior
management of the Applicant since the date of the last annual
report.
Mr. Michael B. Gifford elected to Board of Directors
A 4. Has the Applicant changed its outside legal counsel within the last 12
months? If so, give details:
No
A 5. Has the Applicant changed its outside auditors within the last 12
months? It so give details:
No
A 6. If permitted under state law or statute, has the Applicant adopted a
provision limiting the personal liability of its directors?
X Yes __ No ___ Not Permitted
A 7. Has the board of directors established formal, written policies and
procedures for reporting claims against directors or officers of the
Applicant or claims against the Applicant that are periodically
reviewed? ___Yes X No
If yes, provide complete claims details in an attachment to this
application.
A 8. a) Does the Applicant have an internal audit procedure?
X Yes ___ No
If yes, and if not previously described in the application for
the policy as to which the coverage applied for now would be a
renewal, describe the audit procedure in detail, in a separate
attachment to this application. 1993 Audit Plan attached.
b) Are there any significant areas in the audit procedures of the
Applicant that the outside auditors have criticized, or
recommended changing that have not been changed?
__ Yes X No
If yes, provide details in an attachment to this application.
c) Are any members of the audit committee of the board of
directors also officers of the Applicant?
___ Yes X No
If yes, specify names, titles and operational responsibilities:
d) How often has the audit committee met in the last 12 months?
4 times (1992)
e) Have there been any changes in the procedures of the audit
committee since the date of the last application for directors
and officers liability insurance with respect to the
following:
(i) The head of the audit committee or of the audit
department; No
(ii) The composition of the audit committee or the audit
department; or Yes
(iii) The scope of the audit procedures. No
If yes, provide details in a separate attachment to this
application.
(ii) Current committee consists of Mr. Steta, Mr. Buffet,
Mrs. Goldberg, Mr. Gantz, Mr. Gifford, and Mr. Turley.
Mr. Trowbridge is no longer a member of the
committee.
<PAGE> 103
B 1 As an attachment to this application, provide the names and number of
shares for all persons or entities that presently own or control or
have stated the intention to acquire, of record or beneficially, more
than 5% of the Applicant's outstanding stock. If not applicable or if
there has been no change since the last available notice of
shareholders meeting and proxy statement, indicate here.
Berkshire Hathaway Inc. - 24,000,000 shares - (10.9%)
B 2. If the Applicant is a cooperative or mutual association, has a
conversion of cooperative or mutual ownership to stock ownership been
considered or concluded in the past or is such a conversion being
considered for implementation to occur within the next 12 months?
__Yes __No X Not Applicable
If yes, attach a copy or a draft of the official circular.
B 3. State whether the Applicant or any Subsidiary has in the past 12
months contemplated or agreed to, or contemplates within the next 12
months, any of the following, whether or not such transactions were or
will be completed in such period (if yes, describe the terms or each
such transaction in an attachment to this application):
a) Merger or consolidation with another entity whose assets prior
to such merger or consolidation exceed 10% of the Applicant's
consolidated assets. ___ Yes ___ No None Publicly Announced
b) Acquisition or disposition of any assets or stock of any other
corporation or interests in any partnership or joint venture
where such acquisition or disposition increased or decreased
or would increase or decrease the Applicant's consolidated
assets by more than 10%. ___ Yes ___ No None Other Publicly
See 8-K re acquisition of stock of Announced
Parker Pen Holdings Limited.
c) Sale, distribution or divestiture of any assets other than in
the ordinary course of business involving more than 10% of
Applicant's consolidated assets. __Yes __ No None Publicly
Announced
d) Reorganization or arrangement with creditors under federal or
state law. ___ Yes X No
e) Borrowing of funds or incurring indebtedness where the
transaction increased, or would increase,the Applicant's
consolidated liabilities by 10% or more. X Yes ___ No
See Press Release dated November 24, 1992, re shelf
registration for issuance of debt securities.
(f) (i) Placing anti-takeover provisions in the Applicant's
certificate of incorporation or by-laws.
___ Yes X No
(ii) if yes, describe each such provision.
(iii) If yes, have such provisions been approved by the
shareholders? ___ Yes ___ No
B 4. Has the Applicant or any Subsidiary filed or contemplated filing any
registration statement for an offering of securities with any
governmental authority within the past 18 months or within the next 12
months? X Yes ___ No See B3(e) above and attached form S-8 filed
December 23, 1992.
Also, registration statements may be filed in the future with
reference to shares issued to fulfill the requirements of
stockholder approved employee benefit plans.
B 5. Does the Applicant or any Subsidiary have any contingent liabilities
that exceed 10% of the Applicant's consolidated stockholders' equity
other than those disclosed in the financial statements submitted with
this application? ___ Yes X No
If yes, provide complete details in an attachment to this application.
B 6. Has the Applicant or any Subsidiary within the last 12 months acquired
or considered the acquisition of any of its own securities?
___ Yes X No
<PAGE> 104
C 1. Have there been any fidelity bond claims greater than $100,000 in the
past 12 months? __ Yes X No
If yes, provide details in an attachment to this application.
C 2. As part of this application, submit the following documents with
respect to the Applicant:
a) Last annual report including audited financial statements with
all notes and schedules.
b) Quarterly reports to shareholders subsequent to the last
annual report to shareholders.
c) Latest 1O-K report, 10-Q reports flied subsequent to the
last annual report, and any 8-K reports filed with the SEC
within the last 12 months.
d) The text of any presentation, together with all supporting
documents, by management to securities analysts in the last 12
months.
Text of the Chairman of the Board's April 15, 1993 Annual
Meeting presentation submitted in lieu of the requested
information.
e) Any reports prepared by outside financial analysts or
consultants within the past 12 months. Examples of recent
reports attached.
f) Latest CPA letter to management on internal controls and any
written response thereto. Summary of 1991 KPMG letters
attached. Summary of 1992 letters will be available after
June 1, 1993.
g) Most recent prospectus.
h) Last notice of regular shareholders meeting and all notices of
any special shareholders meetings, with accompanying proxy
statements.
i) Indemnification provision in the certificate of incorporation
or corporate by-laws.
C 3. As part of this application, submit a schedule of all material
litigation with a brief description of each case filed within the last
12 months or since the date of the last application for directors and
officers liability insurance, as well as any adverse judgments that
have been rendered against the Applicant or any of its Subsidiaries in
the past 12 months.
See 1992 Form 10-K - Item 3
C 4. Has any director or officer of the Applicant or any Subsidiary been
charged with or convicted of any criminal act within the last 12
months, or is any director or officer the subject of any pending
criminal or administrative investigation? __ Yes X No Based on
annual survey of Corporate Directors and certain key Corporate
Officers.
If yes, provide details as an attachment to this application.
THE UNDERSIGNED AUTHORIZED AGENT OF THE PERSONS AND ENTITY(IES) PROPOSED FOR
THIS INSURANCE FOR THE PURPOSE OF THIS APPLICATION DECLARES THAT TO THE BEST OF
HIS/HER KNOWLEDGE THE STATEMENTS HEREIN ARE TRUE. SIGNING THIS APPLICATION
DOES NOT BIND THE UNDERSIGNED TO COMPLETE THE INSURANCE BUT IT IS AGREED THAT
THIS APPLICATION SHALL BE THE BASIS OF THE CONTRACT SHOULD A POLICY BE ISSUED,
AND THIS APPLICATION WILL BECOME A PART OF SUCH POLICY, IF ISSUED, AND WILL BE
ATTACHED THERETO. THE UNDERWRITER IS HEREBY AUTHORIZED TO MAKE ANY
INVESTIGATION AND INQUIRY IN CONNECTION WITH THIS APPLICATION AS IT MAY DEEM
NECESSARY.
SUBMISSION OF THIS APPLICATION DOES NOT BIND THE UNDERWRITER TO ISSUE ANY
COVERAGE; HOWEVER, IT IS AGREED THAT THIS APPLICATION AND ANY MATERIALS
SUBMITTED HEREWITH, TOGETHER WITH THE APPLICATION DATED November 18, 1987 , ARE
THE BASIS FOR ISSUANCE OF ANY POLICY WHICH MAY BE ISSUED TO THE APPLICANT BY
THE UNDERWRITER PURSUANT TO THIS APPLICATION.
IT IS AGREED THAT IN THE EVENT THERE IS ANY MATERIAL CHANGE IN THE ANSWERS TO
THE QUESTIONS CONTAINED HEREIN PRIOR TO THE EFFECTIVE DATE OF THE POLICY, THE
APPLICANT WILL NOTIFY THE UNDERWRITER AND, AT THE SOLE DISCRETION OF THE
UNDERWRITER, ANY OUTSTANDING QUOTATIONS MAY BE MODIFIED OR WITHDRAWN.
<PAGE> 105
AETNA
The Aetna Casualty and Surety Company
Hartford, Connecticut 06156
(Herein referred to as Underwriter)
RENEWAL APPLICATION
DESIGNATED INSURED PERSONS AND COMPANY
REIMBURSEMENT INSURANCE
USE THIS FORM FOR ALL RENEWALS EXCEPT DEPOSITORY INSTITUTIONS
NOTICE: THE POLICY FOR WHICH RENEWAL APPLICATION IS MADE, SUBJECT TO ITS TERMS,
APPLIES ONLY TO ANY "CLAIM" (AS DEFINED IN THE POLICY) FIRST MADE OR DEEMED
MADE AGAINST THE "INSURED PERSONS" (AS DEFINED IN THE POLICY) DURING THE POLICY
PERIOD. THE LIMIT OF LIABILITY AVAILABLE TO PAY DAMAGES OR SETTLEMENTS SHALL
BE REDUCED BY THE AMOUNTS INCURRED AS "DEFENSE EXPENSES" (AS DEFINED IN THE
POLICY), AND SUCH DEFENSE EXPENSES SHALL BE SUBJECT TO THE DEDUCTIBLE AMOUNT.
THE POLICY DOES NOT PROVIDE FOR ANY DUTY BY THE UNDERWRITER TO DEFEND THE
INSURED PERSONS.
COMPLETE AND CORRECT INFORMATION MUST BE SUPPLIED BY THE APPLICANT WHETHER OR
NOT SUCH INFORMATION IS DEEMED CONFIDENTIAL BY THE APPLICANT. THIS APPLICATION
IS DIVIDED INTO THREE SECTIONS (A, B, AND C). PART B IS DETACHABLE AND MAY BE
SENT UNDER SEPARATE COVER.
A 1. a) Name of Applicant: The Gillette Company
(whenever used, Applicant shall mean the Parent Corporation)
b) Principal address: Prudential Tower Building
Boston, MA 02199
c) State of incorporation or charter: Delaware
d) Name and title of the officer of the Applicant designated as
the representative to receive notices from the Underwriter on
behalf of all persons and entities proposed for this
insurance:
Lloyd B. Swaim, Vice President and Treasurer
e) Total consolidated assets and liabilities of Applicant and all
Subsidiaries as of the close of the most recent quarter:
Assets $ 3,887,000,000 Liabilities $ 2,730,000,000 Date:
12/31/91
A 2. a) Has the Applicant increased or decreased the amount of, or
suspended the payment of, dividends on its preferred or common
stock since the date of the last application for directors and
officers liability Insurance? X Yes __ No
If yes, explain in an attachment to this application. (See
Attachments re increase.)
b) Provide the price per share and closing P/E ratio for the
Applicant's common stock for each quarter of the last four
quarters:
<TABLE>
<CAPTION>
1st Quarter 1991* 2nd Quarter 1991* 3rd Quarter 1991 4th Quarter 1991
----------- ---------------- ----------- ----------------
Year High Low P/E High Low P/E High Low P/E High Low P/E
---- ---- --- --- ---- --- --- ---- --- --- ---- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1991 39 3/8 28 1/8 22.2 40 3/8 33 1/2 19.2 44 1/4 33 7/8 22.5 56 1/8 37 3/4 28.9
---- ------ ------ ---- ------ ------ ---- ------ ------ ---- ------ ------ ----
* After 2 for 1 stock split effective 05/01/91.
</TABLE>
<PAGE> 106
A 3. a) If not provided in the annual report to shareholders or the
proxy statement, provide a list of the names and affiliations
of all directors of the Applicant and the names and official
titles of all officers of the Applicant in an attachment to
this application.
b) Describe any changes in the board of directors or senior
management of the Applicant since the date of the last annual
report.
Mr. Wilbur H. Gantz elected to Board of Directors
A 4. Has the Applicant changed its outside legal counsel within the last 12
months? If so, give details:
No
A 5. Has the Applicant changed its outside auditors within the last 12
months? If so give details:
No
A 6. If permitted under state law or statute, has the Applicant adopted a
provision limiting the personal liability of Its directors? X Yes
__ No __ Not Permitted
A 7. Has the board of directors established formal, written policies and
procedures for reporting claims against directors or officers of the
Applicant or claims against the Applicant that are periodically
reviewed? __ Yes X No
If yes, provide complete claims details In an attachment to this
application.
A 8. a) Does the Applicant have an internal audit procedure? X Yes
__ No
If yes, and if not previously described in the application for
the policy as to which the coverage applied for now would be a
renewal, describe the audit procedure in detail, in a separate
attachment to this application. 1992 Audit Plan attached.
b) Are there any areas in the audit procedures of the Applicant
that the outside auditors have criticized, or recommended
changing that have not been changed? __ Yes X No
If yes, provide details in an attachment to this application.
c) Are any members of the audit committee of the board of
directors also officers of the Applicant? __ Yes X No
If yes, specify names, titles and operational responsibilities:
d) How often has the audit committee met in the last 12 months?
3 times
e) Have there been any changes in the procedures of the audit
committee since the date of the last application for directors
and officers liability insurance with respect to the
following:
(i) The head of the audit committee or of the audit
department; No
(ii) The composition of the audit committee or the audit
department; or Yes
(iii) The scope of the audit procedures. No
If yes, provide details in a separate attachment to this
application.
(ii) Current committee consists of Mr. Steta (Chair), Mr.
Buffet, Mrs. Goldberg, Mr. Trowbridge, and Mr. Gantz.
Mr. Jacobi is no longer a member of the committee.
<PAGE> 107
B 1. As an attachment to this application, provide the names and number of
shares for all persons or entities that presently own or control or
have stated the intention to acquire, of record or beneficially, more
than 5% of the Applicant's outstanding stock. If not applicable or if
there has been no change since the last available notice of
shareholders meeting and proxy statement, indicate here.
Berkshire Hathaway Inc. - 24,000,000 shares - (10.9%)
B 2. If the Applicant is a cooperative or mutual association, has a
conversion of cooperative or mutual ownership to stock ownership been
considered or concluded in the past or is such a conversion being
considered for implementation to occur within the next 12 months?
__ Yes __ No X Not Applicable
If yes, attach a copy or a draft of the official circular.
B 3. State whether the Applicant or any Subsidiary has in the past 12
months contemplated or agreed to, or contemplates within the next 12
months, any of the following, whether or not such transactions were or
will be completed in such period (if yes, describe the terms or each
such transaction in an attachment to this application):
a) Merger or consolidation with another entity whose assets prior
to such merger or consolidation exceed 10% of the Applicant's
consolidated assets. ___ Yes ___ No None Publicly Announced
b) Acquisition or disposition of any assets or stock of any other
corporation or interests in any partnership or joint venture
where such acquisition or disposition increased or decreased
or would increase or decrease the Applicant's consolidated
assets by more than 10%. __ Yes __ No None Publicly Announced
c) Sale, distribution or divestiture of any assets other than in
the ordinary course of business involving more than 10% of
Applicant's consolidated assets. ___ Yes ___ No None
Publicly Announced
d) Reorganization or arrangement with creditors under federal or
state law. __ Yes X No
e) Borrowing of funds or incurring indebtedness where the
transaction increased, or would increase, the Applicant's
consolidated liabilities by 10% or more. ___ Yes X No
(f) (i) Placing anti-takeover provisions in the Applicant's
certificate of incorporation or by-laws.
___ Yes X No
(ii) If yes, describe each such provision.
(iii) If yes, have such provisions been approved by the
shareholders? ___ Yes ___ No
B 4. Has the Applicant or any Subsidiary filed or contemplated filing any
registration statement for an offering of securities with any
governmental authority within the past 18 months or within the next 12
months? __ Yes __ No
Registration statements may be filed in the future with
reference to shares issued to fulfill the requirements of
stockholder approved employee benefit plans.
B 5. Does the Applicant or any Subsidiary have any contingent liabilities
that exceed 10% of the Applicant's consolidated stockholders' equity
other than those disclosed In the financial statements submitted with
this application? __ Yes X No
If yes, provide complete details in an attachment to this application.
B 6. Has the Applicant or any Subsidiary within the last 12 months acquired
or considered the acquisition of any of its own securities?
___ Yes X No
<PAGE> 108
C 1. Have there been any fidelity bond claims greater than $100,000 In the
past 12 months? ___ Yes X No
If yes, provide details in an attachment to this application.
C 2. As part of this application, submit the following documents with
respect to the Applicant:
a) Last annual report including audited financial statements with
all notes and schedules.
b) Quarterly reports to shareholders subsequent to the last
annual report to shareholders.
c) Latest 10-K report, 10-Q reports filed subsequent to the last
annual report, and any 8-K reports filed with the SEC within
the last 12 months.
d) The text of any presentation, together with all supporting
documents, by management to securities analysts in the last 12
months.
e) Any reports prepared by outside financial analysts or
consultants within the past 12 months.
f) Latest CPA letter to management on internal controls and any
written response thereto.
g) Most recent prospectus.
h) Last notice of regular shareholders meeting and all notices of
any special shareholders meetings, with accompanying proxy
statements.
i) Indemnification provision in the certificate of incorporation
or corporate by-laws.
C 3. As part of this application, submit a schedule of all material
litigation with a brief description of each case filed within the last
12 months or since the date of the last application for directors and
officers liability insurance, as well as any adverse judgments that
have been rendered against the Applicant or any of its Subsidiaries In
the past 12 months.
See 1991 Form 10-K - Item 3
C 4. Has any director or officer of the Applicant or any Subsidiary been
charged with or convicted of any criminal act within the last 12
months, or is any director or officer the subject of any pending
criminal or administrative Investigation? ___ Yes X No Based on
annual survey of Corporate Directors and certain key Corporate
Officers.
If yes, provide details as an attachment to this application.
THE UNDERSIGNED AUTHORIZED AGENT OF THE PERSONS AND ENTITY(IES) PROPOSED FOR
THIS INSURANCE FOR THE PURPOSE OF THIS APPLICATION DECLARES THAT TO THE BEST OF
HIS/HER KNOWLEDGE THE STATEMENTS HEREIN ARE TRUE. SIGNING THIS APPLICATION
DOES NOT BIND THE UNDERSIGNED TO COMPLETE THE INSURANCE BUT IT IS AGREED THAT
THIS APPLICATION SHALL BE THE BASIS OF THE CONTRACT SHOULD A POLICY BE ISSUED,
AND THIS APPLICATION WILL BECOME A PART OF SUCH POLICY, IF ISSUED, AND WILL BE
ATTACHED THERETO. THE UNDERWRITER IS HEREBY AUTHORIZED TO MAKE ANY
INVESTIGATION AND INQUIRY IN CONNECTION WITH THIS APPLICATION AS IT MAY DEEM
NECESSARY.
SUBMISSION OF THIS APPLICATION DOES NOT BIND THE UNDERWRITER TO ISSUE ANY
COVERAGE; HOWEVER, IT IS AGREED THAT THIS APPLICATION AND ANY MATERIALS
SUBMITTED HEREWITH, TOGETHER WITH THE APPLICATION DATED November 18, 1987 , ARE
THE BASIS FOR ISSUANCE OF ANY POLICY WHICH MAY BE ISSUED TO THE APPLICANT BY
THE UNDERWRITER PURSUANT TO THIS APPLICATION.
IT IS AGREED THAT IN THE EVENT THERE IS ANY MATERIAL CHANGE IN THE ANSWERS
TO THE QUESTIONS CONTAINED HEREIN PRIOR TO THE EFFECTIVE DATE OF THE
POLICY, THE APPLICANT WILL NOTIFY THE UNDERWRITER AND, AT THE SOLE DISCRETION
OF THE UNDERWRITER, ANY OUTSTANDING QUOTATIONS MAY BE MODIFIED OR
WITHDRAWN.
<PAGE> 109
THE UNDERSIGNED AUTHORIZED AGENT OF THE PERSONS AND ENTITY(IES) PROPOSED
FOR THIS INSURANCE FOR THE PURPOSE OF THIS APPLICATION DECLARES THAT
THE APPLICANT HAS RECEIVED AND READ A SPECIMEN FORM OF THE INSURANCE CONTRACT
FOR WHICH APPLICATION IS MADE.
The Gillette Company
APPLICANT
Chairman of the Board and
/s/ Chief Executive Officer May 8, 1992
BY (Chairman and/or President Signature TITLE DATE
NOTE: This application must be signed by the chairman and/or president of
the Applicant acting as the authorized agent of the persons and
entity(ies) proposed for this Insurance.
/s/
SUBMITTED BY (Insurance Agency) INSURANCE AGENCY TAXPAYER ID. OR
SOCIAL SECURITY NO.
3 Center Plaza
Boston, MA 02108
ADDRESS (No. Street, City, State, and Zip Code)
<PAGE> 110
[LOGO] The Aetna Casualty and Surety Company
Hartford, Connecticut 06156
(Herein referred to as Underwriter)
RENEWAL APPLICATION
DESIGNATED INSURED PERSONS AND COMPANY
REIMBURSEMENT INSURANCE
USE THIS FORM FOR ALL RENEWALS EXCEPT DEPOSITORY INSTITUTIONS
NOTICE: THE POLICY FOR WHICH RENEWAL APPLICATION IS MADE, SUBJECT TO ITS TERMS,
APPLIES ONLY TO ANY "CLAIM" (AS DEFINED IN THE POLICY) FIRST MADE OR DEEMED
MADE AGAINST THE "INSURED PERSONS" (AS DEFINED IN THE POLICY) DURING THE
POLICY PERIOD. THE LIMIT OF LIABILITY AVAILABLE TO PAY DAMAGES OR SETTLEMENTS
SHALL BE REDUCED BY THE AMOUNTS INCURRED AS "DEFENSE EXPENSES" (AS DEFINED IN
THE POLICY), AND SUCH DEFENSE EXPENSES SHALL BE SUBJECT TO THE DEDUCTIBLE
AMOUNT. THE POLICY DOES NOT PROVIDE FOR ANY DUTY BY THE UNDERWRITER TO DEFEND
THE INSURED PERSONS.
COMPLETE AND CORRECT INFORMATION MUST BE SUPPLIED BY THE APPLICANT WHETHER OR
NOT SUCH INFORMATION IS DEEMED CONFIDENTIAL BY THE APPLICANT. THIS APPLICATION
IS DIVIDED INTO THREE SECTIONS (A, B AND C). PART B IS DETACHABLE AND MAY BE
SENT UNDER SEPARATE COVER.
A 1. a) Name of Applicant: The Gillette Company
(whenever used, Applicant shall mean the Parent Corporation)
b) Principal address: Prudential Tower Building
Boston, MA 02199
c) State of incorporation or charter: Delaware
d) Name and title of the officer of the Applicant designated as
the representative to receive notices from the Underwriter on
behalf of all persons and entities proposed for this
insurance:
Lloyd B. Swaim, Vice President and Treasurer
e) Total consolidated assets and liabilities of Applicant and all
Subsidiaries as of the close of the most recent quarter:
Assets $3,705.5 Billion Liabilities $2,750.6 Billion
Date: 3/31/91
A 2. a) Has the Applicant increased or decreased the amount of, or
suspended the payment of, dividends on its preferred or
common stock since the date of the last application for
directors and officers liability insurance? X Yes __ No
If yes, explain in an attachment to this application. (See
Attachment Re Increase)
b) Provide the price range per share and closing P/E ratio for
the Applicant's common stock for each quarter of the last four
quarters:
<TABLE>
<CAPTION>
1st Quarter - 1991 2nd Quarter - 1990 3rd Quarter - 1990 4th Quarter - 1990
----------- ----------- ----------- -----------
Year High Low P/E High Low P/E High Low P/E High Low P/E
---- ---- --- --- ---- --- --- ---- --- --- ---- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
78 3/4 56 3/8 22.2 60 5/8 50 5/8 22.0 65# 47 3/8 17.5 63 1/8 50# 19.6
---- ------ ------ ---- ------ ------ ---- --- ------ ---- ------ --- ----
</TABLE>
<PAGE> 111
B 1. As an attachment to this application, provide the names and number of
shares for all persons or entities that presently own or control or
have stated the intention to acquire, of record or beneficially, More
than 5% of the Applicant's outstanding stock. If not applicable or
if there has been no change since the last available notice of
shareholders meeting and proxy statement, indicate here.
Berkshire Hathaway, Inc.
2. If the Applicant is a cooperative or mutual association, has a
conversion of cooperative or mutual ownership to stock ownership been
considered or concluded in the past or is such a conversion being
considered for implementation to occur within the next 12 months?
___ Yes ___ No X Not Applicable
If yes, attach a copy or a draft of the official circular.
B 3. State whether the Applicant or any Subsidiary has in the past 12
months contemplated or agreed to, or contemplates within the next 12
months, any of the following, whether or not such transactions were or
will be completed in such period (if yes, describe the terms of each
such transaction in an attachment to this application):
a) Merger or consolidation with another entity whose assets prior
to such merger or consolidation exceed 10% of the Applicant's
consolidated assets. ___ Yes ___ No None Publicly
Announced
b) Acquisition or disposition of any assets or stock of any other
corporation or interests in any partnership or joint venture
where such acquisition or disposition increased or decreased
or would increase or decrease the Applicant's consolidated
assets by more than 10%. ___ Yes ___ No None Publicly
Announced
c) Sale, distribution or divestiture of any assets other than in
the ordinary course of business involving more than 10% of
Applicant's consolidated assets. ___ Yes ___ No None
Publicly Announced
d) Reorganization or arrangement with creditors under federal or
state law. ___ Yes X No
e) Borrowing of funds or incurring indebtedness where the
transaction increased, or would increase, the Applicant's
consolidated liabilities by 10% or more. ___ Yes X No
(i) Placing anti-takeover provisions in the Applicant's
certificate of incorporation or by-laws. ___ Yes
X No
(ii) If yes, describe each such provision.
(iii) If yes, have such provisions been approved by the
shareholders? ___ Yes ___ No
B 4. Has the Applicant or any Subsidiary filed or contemplated filing any
registration statement for an offering of securities with any
governmental authority within the past 18 months or within the next 12
months? __ Yes X No
If yes, attach a copy of the registration statement.
B 5. Does the Applicant or any Subsidiary have any contingent liabilities
that exceed 10% of the Applicant's consolidated stockholders' equity
other than those disclosed in the financial statements submitted with
this application? ___ Yes X No
If yes, provide complete details in an attachment to this application.
B 6. Has the Applicant or any Subsidiary within the last 12 months acquired
or considered the acquisition of any of its own securities? X Yes
___ No
If yes, provide complete details in an attachment to this application.
Refer to enclosed Press Release concerning redemption of
Series B Preferred Stock held by Berkshire Hathaway. Also,
see 1990 Annual Report note on "Employee Stock Ownership
Plan", page 22.
<PAGE> 112
C 1. Have there been any fidelity bond claims greater than $100,00 in the
past 12 months? ___ Yes X No
If yes, provide details in an attachment to this application.
C 2. As part of this application, submit the following documents with
respect to the Applicant:
a) Last annual report including audited financial statements with
all notes and schedules.
b) Quarterly reports to shareholders subsequent to the last
annual report to shareholders.
c) Latest 10-K report, 10-Q reports filed subsequent to the last
annual report, and any 8-K reports filed SEC within the last
12 months.
d) The text of any presentation, together with all supporting
documents, by management to securities analysts in the last
12 months. Mr. Zeien's April 18, 1991 presentation attached.
e) Any reports prepared by outside financial analysts or
consultants within the past 12 months. Representative reports
attached.
f) Latest CPA letter to management on internal controls and any
written response thereto. Summary to be submitted +/- 7/1
g) Most recent prospectus.
h) Last notice of regular shareholders meeting and all notices of
any special shareholders meetings, with accompanying proxy
statements.
i) Indemnification provision in the certificate of incorporation
or corporate by-laws.
C 3. As part of this application, submit a schedule of all material
litigation with a brief description of each case filed within the last
12 months or since the date of the last application for directors and
officers liability insurance, as well as any adverse judgments that
have been rendered against the Applicant or any of its Subsidiaries in
the past 12 months.
See 1990 Form 10-K (Item 3)
C 4. Has any director or officer of the Applicant or any Subsidiary been
charged with or convicted of any criminal act within the last 12
months, or is any director or officer the subject of any pending
criminal or administrative investigation?
___ Yes X No Based on annual survey of Corporate Directors
and certain key Corporate Officers.
If yes, provide details as an attachment to this application.
THE UNDERSIGNED AUTHORIZED AGENT OF THE PERSONS AND ENTITY(IES) PROPOSED FOR
THIS INSURANCE FOR THE PURPOSE OF THIS APPLICATION DECLARES THAT TO THE BEST OF
HIS/HER KNOWLEDGE THE STATEMENTS HEREIN ARE TRUE. SIGNING THIS APPLICATION
DOES NOT BIND THE UNDERSIGNED TO COMPLETE THE INSURANCE BUT IT IS AGREED THAT
THIS APPLICATION SHALL BE THE BASIS OF THE CONTRACT SHOULD A POLICY BE ISSUED,
AND THIS APPLICATION WILL BECOME A PART OF SUCH POLICY, IF ISSUED, AND WILL BE
ATTACHED THERETO. THE UNDERWRITER IS HEREBY AUTHORIZED TO MAKE ANY
INVESTIGATION AND INQUIRY IN CONNECTION WITH THIS APPLICATION AS IT MAY DEEM
NECESSARY.
SUBMISSION OF THIS APPLICATION DOES NOT BIND THE UNDERWRITER TO ISSUE ANY
COVERAGE; HOWEVER, IT IS AGREED THAT THIS APPLICATION AND ANY MATERIALS
SUBMITTED HEREWITH, TOGETHER WITH THE APPLICATION DATED 11/18/87, ARE THE
BASIS FOR ISSUANCE OF ANY POLICY WHICH MAY BE ISSUED TO THE APPLICANT BY THE
UNDERWRITER PURSUANT TO THIS APPLICATION.
IT IS AGREED THAT IN THE EVENT THERE IS ANY MATERIAL CHANGE IN THE ANSWERS TO
THE QUESTIONS CONTAINED HEREIN PRIOR TO THE EFFECTIVE DATE OF THE POLICY, THE
APPLICANT WILL NOTIFY THE UNDERWRITER AND, AT THE SOLE DISCRETION OF THE
UNDERWRITER, ANY OUTSTANDING QUOTATIONS MAY BE MODIFIED OR WITHDRAWN.
<PAGE> 113
AETNA
The Aetna Casualty and Surety Company
Hartford Connecticut 06156
(Herein referred to as Underwriter)
RENEWAL APPLICATION
DESIGNATED INSURED PERSONS AND COMPANY
REIMBURSEMENT INSURANCE
USE THIS FORM FOR ALL RENEWALS EXCEPT DEPOSITORY INSTITUTIONS
NOTICE: THE POLICY FOR WHICH RENEWAL APPLICATION IS MADE, SUBJECT TO ITS TERMS,
APPLIES ONLY TO ANY "CLAIM" (AS DEFINED IN THE POLICY) FIRST MADE OR DEEMED
MADE AGAINST THE "INSURED PERSONS" (AS DEFINED IN THE POLICY) DURING THE POLICY
PERIOD. THE LIMIT OF LIABILITY AVAILABLE TO PAY DAMAGES OR SETTLEMENTS SHALL
BE REDUCED BY THE AMOUNTS INCURRED AS "DEFENSE EXPENSES" (AS DEFINED IN THE
POLICY), AND SUCH DEFENSE EXPENSES SHALL BE SUBJECT TO THE DEDUCTIBLE AMOUNT.
THE POLICY DOES NOT PROVIDE FOR ANY DUTY BY THE UNDERWRITER TO DEFEND THE
INSURED PERSONS.
COMPLETE AND CORRECT INFORMATION MUST BE SUPPLIED BY THE APPLICATN WHETHER OR
NOT SUCH INFORMATION IS DEEMED CONFIDENTIAL BY THE APPLICANT. THIS APPLICATION
IS DIVIDED INTO THREE SECTIONS (A, B, AND C). PART B IS DETACHABLE AND MAY BE
SENT UNDER SEPARATE COVER.
A 1. a) Name of Applicant: The Gillette Company
(whenever used, Applicant shall mean the Parent Corporation)
b) Principal address: Prudential Tower Building
Boston, MA 02199
c) State of incorporation or charter: Delaware
d) Name and title of the officer of the Applicant designated as
the representative to receive notices from the Underwriter on
behalf of all persons and entities proposed for this
insurance:
Lloyd B. Swaim, Vice President and Treasurer
e) Total consolidated assets and liabilities of Applicant and all
Subsidiaries as of the close of the most recent quarter:
Assets $4,189,900,000 Liabilities $2,693,500,000 Date:
12/31/92
A 2. a) Has the Applicant increased or decreased the amount of, or
suspended the payment of, dividends on its preferred or common
stock since the date of the last application for directors and
officers liability insurance? X Yes ___ No
If yes, explain In an attachment to this application. (See
April 15, 1993 Press Release and 1992 Annual Report.)
b) Provide the price per share and closing P/E ratio for the
Applicant's common stock for each quarter of the last four
quarters:
<TABLE>
<CAPTION>
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------- ----------- ----------- -----------
Year High Low P/E High Low P/E High Low P/E High Low P/E
---- ---- --- --- ---- --- --- ---- --- --- ---- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1992 54 7/8 46 3/8 23.8 52 1/2 43 7/8 22.5 58 3/4 47 1/2 25.7 61 1/4 54 1/2 24.5
---- ------ ------ ---- ------ ------ ---- ------ ------ ---- ------ ------ ----
</TABLE>
<PAGE> 114
B 1. As an attachment to this application, provide the names and number of
shares for all persons or entities that presently own or control or have
stated the intention to acquire, of record or beneficially, more than 5%
of the Applicant's outstanding stock. If not applicable or if there has
been no change since the last available notice of shareholders meeting and
proxy statement, indicate here.
Berkshire Hathaway Inc. - 24,000,000 shares - (10.9%)
-------------------------------------------------------------------------
B 2. If the Applicant is a cooperative or mutual association, has a conversion
of cooperative or mutual ownership to stock ownership been considered or
concluded in the past or is such a conversion being considered for
implementation to occur within the next 12 months? ___ Yes ___ No X Not
Applicable
If yes, attach a copy or a draft of the official circular.
B 3. State whether the Applicant or any Subsidiary has in the past 12 months
contemplated or agreed to, or contemplates within the next 12 months, any
of the following, whether or not such transactions were or will be
completed in such period (if yes, describe the terms or each such
transaction in an attachment to this application):
a) Merger or consolidation with another entity whose assets prior to
such merger or consolidation exceed 10% of the Applicant's
consolidated assets. ___ Yes ___ No None Publicly Announced
b) Acquisition or disposition of any assets or stock of any other
corporation or interests in any partnership or joint venture where
such acquisition or disposition increased or decreased or would
increase or decrease the Applicant's consolidated assets by more
than 10% ___ Yes ___ No None Other Publicly Announced
See 8-K re acquisition of stock of Parker Pen Holdings Limited.
c) Sale, distribution or divestiture of any assets other than in the
ordinary course of business involving more than 10% of Applicant's
consolidated assets. ___ Yes ___ No None Publicly Announced
d) Reorganization or arrangement with creditors under federal or state
law. ___ Yes X No
e) Borrowing of funds or incurring indebtedness where the transaction
increased, or would increase, the Applicant's consolidated
liabilities by 10% or more. X Yes ___ No
See Press Release dated November 24, 1992, re shelf registration
issuance of debt securities.
f) (i) Placing anti-takeover provisions in the Applicant's
certificate of incorporation or by-laws.
___ Yes X No
(ii) If yes, describe each such provision.
(iii) If yes, have such provisions been approved by the
shareholders? ___ Yes ___ No
B 4. Has the Applicant or any Subsidiary filed or contemplated filing any
registration statement for an offering of securities with any
governmental authority within the past 18 months or within the next 12
months? X Yes ___ No See B3(e) above and attached form S-8 filed
December 23,1992.
Also, registration statements may be filed in the future with
reference to shares issued to fulfill the requirements of
stockholder approved employee benefit plans.
B 5. Does the Applicant or any Subsidiary have any contingent liabilities that
exceed 10% of the Applicant's consolidated stockholders' equity other
than those disclosed in the financial statements submitted with this
application? ___ Yes X No
If yes, provide complete details in an attachment to this application.
B 6. Has the Applicant or any Subsidiary within the last 12 months acquired or
considered the acquisition of any of its own securities? ___ Yes X No
<PAGE> 115
C 1. Have there been any fidelity bond claims greater than $100,000 in the
last 12 months? ___ Yes X No
If yes, provide details in an attachment to this application.
C 2. As part of this application, submit the following documents with respect
to the Applicant:
a) Last annual report including audited financial statements with all
notes and schedules.
b) Quarterly reports to shareholders subsequent to the last annual
report to shareholders.
c) Latest 10-K report, 10-Q reports filed subsequent to the last annual
report, and any S-K reports filed with the SEC within the last 12
months.
d) The text of any presentation, together with all supporting documents,
by management to securities analysts in the last 12 months.
Text of the Chairman of the Board's April 15, 1993 Annual Meeting
presentation submitted in lieu of the requested information.
e) Any reports prepared by outside financial analysts or consultants
within the past 12 months.
Examples of recent reports attached.
f) Latest CPA letter to management on internal controls and any written
response thereto. Summary of 1991 KPMG letters attached. Summary
of 1992 letters will be available after June 1, 1993.
g) Most recent prospectus.
h) Last notice of regular shareholders meeting and all notices of any
special shareholders meetings, with accompanying proxy statements.
i) Indemnification provision in the certificate of incorporation or
corporate by-laws.
C 3. As part of this application, submit a schedule of all material litigation
with a brief description of each case filed within the last 12 months or
since the date of the last application for directors and officers
liability insurance, as well as any adverse judgments that have been
rendered against the Applicant or any of its Subsidiaries in the past 12
months
See 1992 Form 10-K - Item 3
C 4. Has any director or officer of the Applicant or any Subsidiary been
charged with or convicted of any criminal act within the last 12 months,
or is any director or officer the subject of any pending criminal or
administrative investigation? ___ Yes X No Based on annual survey of
Corporate Directors and certain key Corporate Officers.
If yes, provide details as an attachment to this application.
THE UNDERSIGNED AUTHORIZED AGENT OF THE PERSONS AND ENTITY(IES) PROPOSED FOR
THIS INSURANCE FOR THE PURPOSE OF THIS APPLICATION DECLARES THAT TO THE BEST OF
HIS/HER KNOWLEDGE THE STATEMENTS HEREIN ARE TRUE. SIGNING THIS APPLICATION
DOES NOT BIND THE UNDERSIGNED TO COMPLETE THE INSURANCE BUT IT IS AGREED THAT
THIS APPLICATION SHALL BE THE BASIS OF THE CONTRACT SHOULD A POLICY BE ISSUED,
AND THIS APPLICATION WILL BECOME A PART OF SUCH POLICY, IF ISSUED, AND WILL BE
ATTACHED THERETO. THE UNDERWRITER IS HEREBY AUTHORIZED TO MAKE ANY
INVESTIGATION AND INQUIRY IN CONNECTION WITH THIS APPLICATION AS IT MAY DEEM
NECESSARY.
SUBMISSION OF THIS APPLICATION DOES NOT BIND THE UNDERWRITER TO ISSUE ANY
COVERAGE; HOWEVER, IT IS AGREED THAT THIS APPLICATION AND ANY MATERIALS
SUBMITTED HEREWITH, TOGETHER WITH THE APPLICATION DATED NOVEMBER 18, 1987, ARE
THE BASIS FOR ISSUANCE OF ANY POLICY WHICH MAY BE ISSUED TO THE APPLICANT BY
THE UNDERWRITER PURSUANT TO THIS APPLICATION.
IT IS AGREED THAT IN THE EVENT THERE IS ANY MATERIAL CHANGE IN THE ANSWERS TO
THE QUESTIONS CONTAINED HEREIN PRIOR TO THE EFFECTIVE DATE OF THE POLICY, THE
APPLICANT WILL NOTIFY THE UNDERWRITER AND, AT THE SOLE DISCRETION OF THE
UNDERWRITER, ANY OUTSTANDING QUOTATIONS MAY BE MODIFIED OR WITHDRAWN.
<PAGE> 116
ACTIVITY REPORT
TRANSMISSION OK
<TABLE>
<S> <C>
TN # 7307
CONNECTION TEL 16172273107
CONNECTION ID JOHNSON & HIGGIN
START TIME 05/25 13:24
USAGE TIME 00' 57
PAGES 2
</TABLE>
<PAGE> 117
EXECUTIVE RISK MANAGEMENT
82 HOPMEADOW STREET
P.O. BOX 2002
SIMSBURY, CT 06070
FAX COVER SHEET
(IF THERE IS A PROBLEM WITH THIS FAX PLEASE CALL (203)244-8900)
TO: Joan Goldberg
FROM: S. Acorn
FAX#: 617-227-3107
NUMBER OF PAGES INCLUDING THIS PAGE
-------
MESSAGE:
As requested
<PAGE> 118
[JOHNSON & HIGGINS LETTERHEAD]
May 25, 1993 TELEFAX
Ms. Stephanie Acorn
Executive Risk Management Associates
82 Hopmeadow Street
P.O. Box 2002
Simsbury, CT 06070
Re: The Gillette Company
Excess D&O
6/1/93 renewal date
Dear Stephanie:
Thanks for your May 21, 1993 fax outlining the renewal terms. It conforms with
our discussion, except with respect to the requirement that the completed and
signed application be in your hands prior to binding. You agreed that we could
get it to you sometime during the week of June 5th. Would you mind sending out
a revised indication or alternatively a fax confirming that it is coverage
will be bound subject to your receipt, review and acceptance of the signed
application sometime during the week of the 5th.
We are still trying to tie up one or two loose ends with London underwriters
and will be In touch once we finalize the underlying program.
Thanks for getting back to me at your earliest convenience.
Sincerely,
/S/ Joan Goldberg
- -----------------
Joan Goldberg
Vice President
[5/25/93
agreed
/S/ S. T. Acorn
-------------------------------
[UNISON LOGO]
<PAGE> 119
[AETNA LETTERHEAD]
RENEWAL APPLICATION
DESIGNATED INSURED PERSONS AND COMPANY
REIMBURSEMENT INSURANCE
USE THIS FORM FOR ALL RENEWALS EXCEPT DEPOSITORY INSTITUTIONS
NOTICE: THE POLICY FOR WHICH RENEWAL APPLICATION IS MADE, SUBJECT TO ITS TERMS,
APPLIES ONLY TO ANY "CLAIM" (AS DEFINED IN THE POLICY) FIRST MADE OR DEEMED
MADE AGAINST THE "INSURED PERSONS" (AS DEFINED IN THE POLICY) DURING THE POLICY
PERIOD. THE LIMIT OF LIABILITY AVAILABLE TO PAY DAMAGES OR SETTLEMENTS SMALL
BE REDUCED BY THE AMOUNTS INCURRED AS "DEFENSE EXPENSES" (AS DEFINED IN THE
POLICY), AND SUCH DEFENSE EXPENSES SHALL BE SUBJECT TO THE DEDUCTIBLE AMOUNT.
THE POLICY DOES NOT PROVIDE FOR ANY DUTY BY THE UNDERWRITER TO DEFEND THE
INSURED PERSONS.
COMPLETE AND CORRECT INFORMATION MUST BE SUPPLIED BY THE APPLICANT WHETHER OR
NOT SUCH INFORMATION IS DEEMED CONFIDENTIAL BY THE APPLICANT. THIS APPLICATION
IS DIVIDED INTO THREE SECTIONS (A, B AND C). PART B IS DETACHABLE AND MAY BE
SENT UNDER SEPARATE COVER.
A 1. a) Name of Applicant: The Gillette Company
(whenever used, Applicant shall mean the Parent Corporation)
b) Principal address: Prudential Tower Building
Boston, MA 02199
c) State of incorporation or charter: Delaware
d) Name and title of the officer of the Applicant designated as the
representative to receive notices from the Underwriter on behalf of
all persons and entities proposed for this insurance:
Lloyd B. Swaim, Vice President and Treasurer
e) Total consolidated assets and liabilities of Applicant and all
Subsidiaries as of the close of the most recent quarter:
Assets $ 3,705.5 Billion Liabilities $2,750.6 Billion
Date: 3/31/91
A 2. a) Has the Applicant increased or decreased the amount of, or suspended
the payment of, dividends on its preferred or common stock since the
date of the last application for directors and officers liability
insurance? [X] Yes [ ] No
If yes, explain in an attachment to this application. (SEE
ATTACHMENT RE INCREASE)
b) Provide the price range per share and closing P/E ratio for the
Applicant's common stock for each quarter of the last four quarters:
<TABLE>
<CAPTION>
1st Quarter - 1991 2nd Quarter - 1990 3rd Quarter - 1990 4th Quarter - 1990
----------- ----------- ----------- -----------
Year High Low P/E High Low P/E High Low P/E High Low P/E
---- ---- --- --- ---- --- --- ---- --- --- ---- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
78 3/4 56 3/8 22.2 60 5/8 50 5/8 22.0 65 1/4 47 3/8 17.5 63 1/8 50 1/2 19.6
</TABLE>
<PAGE> 120
B 1. As an attachment to this applications provide the names and number of
shares for all persons or entities that presently own or control or have
stated the intention to acquire, of record or beneficially, more than 5%
of the Applicant's outstanding stock. If not applicable or if there has
been no change since the last available notice of shareholders meeting
and proxy statement, indicate here.
Berkshire Hathaway, Inc.
B 2. If the Applicant is a cooperative or mutual association, has a conversion
of cooperative or mutual ownership to stock ownership been considered or
concluded in the past or is such a conversion being considered for
implementation to occur within the next 12 months? [ ] Yes [ ] No
[X] Not Applicable
If yes, attach a copy or a draft of the official circular.
B 3. State whether the Applicant or any Subsidiary has in the past 12 months
contemplated or agreed to, or contemplates within the next 12 months, any
of the following, whether or not such transactions were or will be
completed in such period (if yes, describe the terms of each such
transaction in an attachment to this application):
a) Merger or consolidation with another entity whose assets prior to
such merger or consolidation exceed 10% of the Applicant's
consolidated assets. [ ] Yes [ ] No None Publicly Announced
b) Acquisition or disposition of any assets or stock of any other
corporation or interests in any partnership or joint venture where
such acquisition or disposition increased or decreased or would
increase or decrease the Applicant's consolidated assets by more
than 10%. [ ] Yes [ ] No None Publicly Announced
c) Sale, distribution or divestiture of any assets other than in the
ordinary course of business involving more than 10% of Applicant's
consolidated assets. [ ] Yes [ ] No None Publicly Announced
d) Reorganization or arrangement with creditors under federal or state
law. [ ] Yes X No
e) Borrowing of funds or incurring indebtedness where the transaction
increased, or would increase, the Applicant's consolidated
liabilities by 10% or more. [ ] Yes X No
f) (i) Placing anti-takeover provisions in the Applicant's
certificate of incorporation or by-laws. [ ] Yes X No
(ii) If yes, describe each such provision.
(iii) If yes, have such provisions been approved by the
shareholders? [ ] Yes [ ] No
B 4. Has the Applicant or any Subsidiary filed or contemplated filing any
registration statement for an offering of securities with any
governmental authority within the past 18 months or within the next 12
months? [ ] Yes [X] No
If yes, attach a copy of the registration statement.
B 5. Does the Applicant or any Subsidiary have any contingent liabilities that
exceed 10% of the Applicant's consolidated stockholders' equity other
than those disclosed in the financial statements submitted with this
application? [ ] Yes [X] No
If yes, provide complete details in an attachment to this application.
B 6. Has the Applicant or any Subsidiary within the last 12 months acquired or
considered the acquisition of any of its own securities [X] Yes [ ] No
If yes, provide complete details in an attachment to this application.
Refer to enclosed Press Release concerning redemption of Series B
Preferred Stock held by Berkshire Hathaway. Also, see 1990 Annual
Report note on 'Employee Stock Ownership Plan", page 22.
3
<PAGE> 121
C 1. Have there been any fidelity bond claims greater than $100,000 in the
past 12 months? [ ] Yes [X] No
If yes, provide details in an attachment to this application.
C 2. As part of this application, submit the following documents with respect
to the Applicant:
a) Last annual report including audited financial statements with all
notes and schedules.
b) Quarterly reports to shareholders subsequent to the last annual
report to shareholders.
c) Latest 10-K report, 10-Q reports filed subsequent to the last annual
report, and any 8-K reports filed with the SEC within the last 12
months.
d) The text of any presentation, together with all supporting
documents, by management to securities analysts in the last 12
months. Mr. Zeien's April 18, 1991 presentation attached.
e) Any reports prepared by outside financial analysts or consultants
within the past 12 months. Representative reports attached
f) Latest CPA letter to management on internal controls and any written
response thereto. Summary to be submitted +/-7/1
g) Most recent prospectus.
h) Last notice of regular shareholders meeting and all notices of any
special shareholders meetings, with accompanying proxy statements.
i) Indemnification provision in the certificate of incorporation or
corporate by-laws.
C 3. As part of this application, submit a schedule of all material litigation
with a brief description of each case filed within the last 12 months or
since the date of the last application for directors and officers
liability insurance, as well as any adverse judgments that have been
rendered against the Applicant or any of its Subsidiaries in the past 12
months.
See 1990 Form 10-K (Item 3)
C 4. Has any director or officer of the Applicant or any Subsidiary been
charged with or convicted of any criminal act within the last 12 months,
or is any director or officer the subject of any pending criminal or
administrative investigation [ ] Yes [X] No Based on annual survey of
Corporate Directors and certain key Corporate Officers.
If yes, provide details as an attachment to this application.
THE UNDERSIGNED AUTHORIZED AGENT OF THE PERSONS AND ENTITY(IES) PROPOSED FOR
THIS INSURANCE FOR THE PURPOSE OF THIS APPLICATION DECLARES THAT TO THE BEST OF
HIS/HER KNOWLEDGE THE STATEMENT HEREIN ARE TRUE. SIGNING THIS APPLICATION DOES
NOT BIND THE UNDERSIGNED TO COMPLETE THE INSURANCE BUT IT IS AGREED THAT THIS
APPLICATION SHALL BE THE BASIS OF THE CONTRACT SHOULD A POLICY BE ISSUED AND
THIS APPLICATION WILL BECOME A PART OF SUCH POLICY, IF ISSUED, AND WILL BE
ATTACHED THERETO. THE UNDERWRITER IS HEREBY AUTHORIZED TO MAKE ANY
INVESTIGATION AND INQUIRY IN CONNECTION WITH THIS APPLICATION AS IT MAY DEEM
NECESSARY.
SUBMISSION OF THIS APPLICATION DOES NOT BIND THE UNDERWRITER TO ISSUE ANY
COVERAGE; HOWEVER, IT IS AGREED THAT THIS APPLICATION AND ANY MATERIALS
SUBMITTED HEREWITH, TOGETHER WITH THE APPLICATION DATED 11/18/87, ARE THE
BASIS FOR ISSUANCE OF ANY POLICY WHICH MAY BE ISSUED TO THE APPLICANT BY THE
UNDERWRITER PURSUANT TO THIS APPLICATION.
IT IS AGREED THAT IN THE EVENT THERE IS ANY MATERIAL CHANGE IN THE ANSWERS TO
THE QUESTIONS CONTAINED HEREIN PRIOR TO THE EFFECTIVE DATE OF THE POLICY, THE
APPLICANT WILL NOTIFY THE UNDERWRITER AND, AT THE SOLE DISCRETION OF THE
UNDERWRITER, ANY OUTSTANDING QUOTATIONS MAY BE MODIFIED OR WITHDRAWN.
4
<PAGE> 122
[AETNA LOGO]
THIS IS A CLAIMS MADE INDEMNITY POLICY
WITH EXPENSES INCLUDED IN THE LIMIT OF LIABILITY.
PLEASE READ THE ENTIRE POLICY CAREFULLY.
THE AETNA CASUALTY AND SURETY COMPANY
DIRECTORS AND OFFICERS LIABILITY
AND
REIMBURSEMENT LIABILITY
EXCESS POLICY
IN CONSIDERATION OF THE PAYMENT OF THE PREMIUM AND IN RELIANCE ON ALL
STATEMENTS MADE AND INFORMATION FURNISHED TO THE AETNA CASUALTY AND
SURETY COMPANY (HEREINAFTER CALLED THE "UNDERWRITER"), AND TO THE
UNDERLYING INSURERS OF THE UNDERLYING INSURANCE, INCLUDING THE
STATEMENTS MADE IN THE APPLICATION MADE A PART HEREOF AND SUBJECT TO ALL
OF THE TERMS, CONDITIONS AND LIMITATIONS OF THIS POLICY, THE UNDERWRITER
AND THE INSUREDS AGREE AS FOLLOWS:
I. INSURING AGREEMENT
The Underwriter shall provide the Insureds with insurance coverage during
the Policy Period set forth in Item 2 of the Declarations excess of the
Underlying Insurance in Item 4 of the Declarations. Coverage hereunder
shall attach only after all such Underlying Insurance has been exhausted
and shall then apply in conformance with the terms, conditions and
limitations of the Policy immediately underlying this Policy except as
specifically set forth in the terms, conditions and limitations of this
Policy.
II. POLICY DEFINITIONS
Application means the written application attached hereto and forming
part of this Policy, including any materials submitted therewith, and
deemed a part of and attached to this Policy as if physically attached to
this Policy.
Insureds means those persons or organizations insured under the Policy
immediately underlying this Policy.
Parent Corporation means the entity named in Item 1 of the Declarations.
Primary Policy means the Policy scheduled in Item 4 (a) of the
Declarations.
Underlying Insurance means all those Policies scheduled in Item 4 of the
Declarations and any Policies replacing them.
III. MAINTENANCE OF UNDERLYING INSURANCE
All of the Underlying Insurance scheduled in Item 4 of the Declarations
shall be maintained during the Policy Period in full effect and affording
coverage at least as broad as the Primary Policy, except for any
reduction of the aggregate limit(s) of liability available under the
Underlying Insurance solely by reason of payment of losses thereunder.
Failure to comply with the foregoing shall not invalidate this Policy but
the Underwriter shall not be liable to a greater extent than if this
condition had been complied with, provided that nothing in this provision
shall be deemed to negate Paragraph XII of this Policy.
In the event of any actual or alleged (a) failure by the Insureds to give
notice or to exercise any extensions under any Underlying Insurance or
(b) misrepresentation or breach of warranties by any of the Insureds with
respect to any Underlying Insurance, the Underwriter shall not be liable
hereunder to a greater extent than it would have been in the absence of
such actual or alleged failure, misrepresentation or breach.
IV. DEPLETION OF UNDERLYING LIMIT(S)
In the event of the depletion of the limit(s) of liability of the
Underlying Insurance solely as the result of actual payment of losses
thereunder by the applicable insurers, this Policy shall, subject to the
limit of liability of the Underwriter and to the other terms of this
Policy, continue to apply to losses as excess insurance over the amount
of insurance remaining under such Underlying Insurance. In the event of
the exhaustion of all of the limit(s) of liability of such Underlying
Insurance solely as a result of payment of losses thereunder, the
remaining limits available under this Policy shall, subject to the limit
of liability of the Underwriter and to the other terms, conditions and
limitations of this Policy, continue for subsequent losses as primary
insurance and any retention specified in the Primary Policy shall be
imposed under this Policy as to each claim made; otherwise no retention
shall be imposed under this Policy.
5
<PAGE> 123
COPY
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
Endorsement No. 18 Effective Date of Endorsement June 1, 1991
----------- -------------------
Attached to and forming part of POLICY No. GS-212C
---------------------------------
COMPANY THE GILLETTE COMPANY
-------------------------------------------------------------------
It is understood and agreed that this POLICY is hereby amended as
indicated below. All other terms of this POLICY remain unchanged.
INSURED DEFINITION ENDORSEMENT
Subpart (d) of Clause 2 (Definitions) of this POLICY is hereby deleted in
its entirety and replaced with the following:
(d) "INSUREDS" shall mean:
(1) all persons who were, now are, or shall be duly elected or
appointed directors, officers, operating division
presidents, functional vice presidents, general managers,
area general managers and general managers of the COMPANY
or any unincorporated divisions of the COMPANY: or
(2) the estates, heirs, legal representatives or assigns of
deceased INSUREDS who were directors, officers, operating
division presidents, functional vice presidents, general
managers, area general managers and group general managers
of the COMPANY or any unincorporated divisions of the
COMPANY at the time of the WRONGFUL ACT upon which such
CLAIMS are based were ccmmitted, and the legal
representatives or assigns of INSUREDS in the event of
their incompetency, insolvency or bankruptcy.
All other terms and conditions remain unchanged.
By /s/ Terry F. Smith
--------------------------------------
Authorized Representative
<PAGE> 124
[COPY]
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
ENDORSEMENT NO. 17 EFFECTIVE DATE OF ENDORSEMENT JUNE 1, 1991
------------- --------------------
ATTACHED TO AND FORMING PART OF POLICY NO. GS-212C
------------------------------------
COMPANY THE GILLETTE COMPANY
----------------------------------------------------------------------
IT IS UNDERSTOOD AND AGREED THAT THIS POLICY IS HEREBY AMENDED AS INDICATED
BELOW.
ALL OTHER TERMS OF THIS POLICY REMAIN UNCHANGED.
OUTSIDE POSITIONS ENDORSEMENT:
SUBLIMIT, SPECIFIC INDIVIDUALS
(A) Subject to the sublimit of liability set forth in (C) below, the
definition of "INSUREDS" is hereby extended to include:
(1) the following persons who were. are. or shall be serving as
directors, officers, trustees, governors, partners or the
equivalent thereof for any corporation, partnership, joint venture,
eleemosynary institution, non-profit organization, industry
association, or foundation. (any such enterprises referred to below
as "Entity"):
MR. ALFRED M. ZEIEN
MR. JOSEPH M. MULLANEY
provided. however, that:
(a) such activity is part of their duties regularly assigned by
the COMPANY, or
(b) they are so directed to serve by the COMPANY.
(2) the estates, heirs, legal representatives or assigns of deceased
persons who were INSUREDS, as defined in subpart (A)(1) above, and
the legal representatives or assigns of INSUREDS in the event of
their incompetency, insolvency or bankruptcy.
(B) It is further understood and agreed that this extension of coverage:
(1) is to be excess of any other insurance and excess of any director
or officer liability insurance and/or company reimbursement
insurance any conditions in such other insurance notwithstanding;
(2) shall not apply to any LOSS for which such Entity or the COMPANY
actually pays or indemnities or is required or permitted to pay on
behalf of or to indemnify the INSUREDS pursuant to the charter or
other similar formative document or by-laws or written agreements
of such Entity or the COMPANY duly effective under applicable law,
that determines and defines such rights of indemnity; provided,
however, this subpart (2) shall not apply if:
(a) such Entity and the COMPANY refuse to indemnify or advance
defense or other costs as required or permitted. or if such
Entity and the COMPANY are financially unable to indemnify;
and
<PAGE> 125
(b) the INSUREDS comply with Clause 20 (Subrogation) of the
POLICY;
(3) shall not apply to any LOSS in connection with any CLAIM made
against the INSUREDS in their capacity as directors or officers of
Corporate Officers & Directors Assurance Ltd. or Corporate Officers
& Directors Assurance Holding, Ltd.; and
(4) is not to be construed to extend to the Entity nor to any other
director, officer, trustee, governor, partner or employee of such
Entity.
(C) In lieu of the LIMIT OF LIABILITY stated in Item III of the Declarations,
the limit of liability of the INSURER for the extension of coverage
afforded by this Endorsement shall be $15,000,000 in the aggregate for
all LOSS which is covered by reason of this Endorsement and which is paid
on behalf of all INSUREDS arising from all CLAIMS first made during each
POLICY YEAR. It is understood that the amount stated in Item III of the
Declarations is the maximum amount payable by the INSURER under this
POLICY for all CLAIMS first made during each POLICY YEAR, and that this
Endorsement extends coverage with a sublimit which further limits the
INSURER'S liability and does not increase the INSURER'S maximum liability
beyond the LIMIT OF LIABILITY stated in Item III the Declarations. It is
further understood that such sublimit is separate from, and payment of
LOSS pursuant to this Endorsement does not reduce. the sublimit or limit
contained in any other Outside Positions Endorsement to this POLICY.
(D) Solely for purposes of this extension of coverage. the definition of
"WRONGFUL ACT" is hereby modified to replace the word "COMPANY" with the
word "Entity" wherever the word "COMPANY" appears.
(E) Solely for purposes of applying subparts (i) and (j) of Clause 3
(Exclusions) of the POLICY to this extension of coverage, the definition
of "COMPANY" is hereby modified to include such Entity.
/s/ Terry F. Smith
----------------------------------------------
Signature of Authorized Representative
<PAGE> 126
COPY
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
Endorsement No. 16 Effective Date of Endorsement August 1, 1990
-------------- --------------------
Attached to and forming part of POLICY No. GS-212C
-------------------------------------
COMPANY THE GILLETTE COMPANY
-----------------------------------------------------------------------
It is hereby understood and agreed that section (H) of the EXCESS AND
DIFFERENCE IN CONDITIONS ENDORSEMENT (Endorsement # 2) is deleted in its
entirety and replaced with the following:
(H) Schedule of Underlying Directors and officers insurance:
<TABLE>
<CAPTION>
Policy Policy
Layer Carrier Number Year Limits Retention
----- ------- ------ ---- ------ ---------
<S> <C> <C> <C> <C> <C>
Primary London 576/P39008500 8/1/90-6/1/91 $20M NIL/NIL/$1,000,000
576/P39008600
1st Excess Aetna 095LB100654391BCA 8/1/90-6/1/91 $20M Underlying
</TABLE>
All other terms and conditions remain unchanged.
By /s/ Terry F. Smith
--------------------------------------
Authorized Representative
<PAGE> 127
COPY
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
ENDORSEMENT NO. 15 EFFECTIVE DATE OF ENDORSEMENT JUNE 1, 1992
----------------- -----------------
ATTACHED TO AND FORMING PART OF POLICY NO. GS-212C
-------------------------------------
COMPANY THE GILLETTE COMPANY
-----------------------------------------------------------------------
It is hereby understood and agreed that section (H) of the EXCESS AND
DIFFERENCE IN CONDITIONS ENDORSEMENT (Endorsement # 2) is deleted in its
entirety and replaced with the following:
(H) Schedule of Underlying Directors and Officers Insurance:
<TABLE>
<CAPTION>
Policy Policy
Layer Carrier Number Year Limits Retention
----- ------- ------ ---- ------ ---------
<S> <C> <C> <C> <C> <C>
Primary London 757/W920040 6/1/92-93 $10M NIL/NIL/$1,000,000
1st Excess London 757/W920041 6/1/92-93 $10M Underlying
2nd Excess Aetna 095LB100654391BCA 6/1/92-93 $20M "
</TABLE>
All other terms and conditions remain unchanged.
By /s/ Terry F. Smith
-------------------------------------
Authorized Representative
<PAGE> 128
COPY
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
ENDORSEMENT NO. 14 EFFECTIVE DATE OF ENDORSEMENT JUNE 1, 1992
------------ ---------------------
ATTACHED TO AND FORMING PART OF POLICY NO. GS-212C
-----------------------------------
COMPANY THE GILLETTE COMPANY
----------------------------------------------------------------------
It is understood and agreed that this POLICY is hereby amended as
indicated below. All other terms of this POLICY remain unchanged.
AUTOMATIC EXTENSION ENDORSEMENT
(Extension Premium: $155,000)
In consideration of payment of the above-referenced premium, it is
understood and agreed that this POLICY shall be continued and the POLICY
PERIOD shall be extended to June 1, 1995 12:01 A.M. Standard Time at the
address of the Company as stated in Item I of the Declarations
It is further understood and agreed that the above-referenced premium
has been allocated and paid as follows:
<TABLE>
<CAPTION>
Policy Year
Following Effective
Date of this Endorsement Premium
------------------------ -------
<S> <C>
Year 92-93 125,000
Year 93-94 150,000
Year 94-95 155,000
--------
$ 430,000
Less Prepaid Premium on hand $ 285,000
--------
Additional Premium $ 145,000
========
</TABLE>
By /s/ Terry F. Smith
-------------------------------------
Authorized Representative
<PAGE> 129
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
ENDORSEMENT NO. 13 EFFECTIVE DATE OF ENDORSEMENT JUNE 1, 1991
ATTACHED TO AND FORMING PART OF POLICY NO. GS-212C
COMPANY E GILLETTE COMPANY
It is hereby understood and agreed that section (H) of the EXCESS
AND DIFFERENCE IN CONDITIONS ENDORSEMENT (Endorsement #2) is
deleted in its entirety and replaced with the following:
(H) Schedule of Underlying Directors and Officers Insurance:
<TABLE>
<CAPTION>
Policy Policy
Layer Carrier Number Year Limits Retention
----- ------- ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C>
Primary London 757/DJ910040 6/1/91-92 $20M NIL/NIL/$1,000,000
757/DJ910041
1st Excess Aetna 095LB100654391BCA 6/l/91-92 $20M Underlying
</TABLE>
All other terms and conditions remain unchanged.
By /s/
-------------------------
Authorized Representative
<PAGE> 130
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
ENDORSEMENT NO. 12. EFFECTIVE DATE OF ENDORSEMENT JUNE 1, 1991
ATTACHED TO AND FORMING PART OF POLICY NO. GS-212C
COMPANY THE GILLETTE COMPANY
It is understood and agreed that this POLICY is hereby amended as indicated
below. All other terms of this POLICY remain unchanged.
AUTOMATIC EXTENSION ENDORSEMENT
(Extension Premium: $150,000)
In consideration of payment of the above-referenced premium, it is
understood and agreed that this POLICY shall be continued and the
POLICY PERIOD shall be extended to June 1, 1994 12:01 A.M. Standard Time
at the address of the Company as stated in Item I of the Declarations.
It is further understood and agreed that the above-referenced premium
has been allocated and paid as follows:
<TABLE>
<CAPTION>
Policy Year
Following Effective
Date of this Endorsement Premium
------------------------ -------
<S> <C>
Year 91-92 125,000
Year 92-93 135,000
Year 93-94 150,000
--------
$410,000
Less Prepaid Premium on hand $270,000
--------
Additional Premium $140,000
========
</TABLE>
By /s/
-------------------------
Authorized Representative
<PAGE> 131
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
ENDORSEMENT NO. 11 EFFECTIVE DATE OF ENDORSEMENT AUGUST 20, 1990
ATTACHED TO AND FORMING PART OF POLICY NO. GS-212C
COMPANY THE GILLETTE COMPANY
IT IS UNDERSTOOD AND AGREED THAT THIS POLICY IS HEREBY AMENDED AS INDICATED
BELOW. ALL OTHER TERMS OF THIS POLICY REMAIN UNCHANGED.
OUTSIDE POSITIONS ENDORSEMENT
(A) Subject to the sublimit of liability set forth in (C) below, the
definition of "INSUREDS" is hereby extended to include:
(1) all directors, officers, or employees of the COMPANY who
were, are, or shall be serving as directors, officers,
trustees, or governors for any eleemosynary institution,
non-profit organization, industry association,
foundation, or business corporation, if:
(a) such activity is part of their regularly
assigned duties or is consistent with COMPANY
policy, and
(b) they are a member of a class of persons so
directed to serve by the COMPANY.
(2) the estates, heirs, legal representatives or assigns of
deceased persons who were INSUREDS, as defined in
subpart (A)(1) above, at the time the WRONGFUL ACT
upon which such CLAIMS are based was committed, and
the legal representatives or assigns of INSUREDS in the
event of their incompetency, insolvency or bankruptcy.
(B) It is further understood and agreed that this extension of
coverage:
(1) is to be excess of any other insurance and excess of any
director or officer liability insurance and/or company
reimbursement insurance and/or any indemnification
provided for, to or by the eleemosynary institution,
association, foundation, or business corporation, any
conditions in such other insurance notwithstanding; and
(2) is not to be construed to extend to the outside
organization in which the INSURED is serving or has
served, nor to any other director, officer, or employee
of such outside organization.
(C) In lieu of the LIMIT OF LIABILITY stated in Item III of the
Declarations, the limit of liability of the INSURER for this
extension of coverage shall be $ 5,000,000 in the aggregate for
all LOSS paid on behalf of all INSUREDS arising from all CLAIMS
first made during each POLICY YEAR. It is understood that the
amount stated in Item III of the Declarations is the maximum
amount payable for each POLICY YEAR, and that this Endorsement
extends coverage with a sublimit which further limits the
INSURER'S liability and
<PAGE> 132
does not increase the INSURER'S maximum liability beyond the
LIMIT OF LIABILITY stated in Item III the Declarations.
(D) For purposes of subpart (A)(2) above, the definitions of
"WRONGFUL ACT" is hereby modified to replace the word "COMPANY"
with the words "the eleemosynary or non-profit institution,
industry association, foundation, or business corporation"
wherever the word "COMPANY" appears.
/s/
--------------------------------------
Signature of Authorized Representative
<PAGE> 133
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
ENDORSEMENT NO. 10 EFFECTIVE DATE OF ENDORSEMENT AUGUST 20, 1990
ATTACHED TO AND FORMING PART OF POLICY NO. GS-212C
COMPANY THE GILLETTE COMPANY
In consideration of the additional premium of $76,300 it is understood and
agreed that the policy period on endorsement no. 8 is amended to read as
follows:-
....Policy Period shall be extended to June 1, 1993, 12:01 a.m.
standard time....
All other terms and conditions remain unchanged.
By /s/
-------------------------
Authorized Representative
<PAGE> 134
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
ENDORSEMENT NO. 9 EFFECTIVE DATE OF ENDORSEMENT NOVEMBER 21, 1989
ATTACHED TO AND FORMING PART OF POLICY NO. GS-212C
COMPANY The Gillette Company
It is hereby understood and agreed that section (H) of the EXCESS AND
DIFFERENCE IN CONDITIONS ENDORSEMENT (Endorsement #6) is deleted in its
entirety and replaced with the following:
(H) Schedule of Underlying Directors and Officers Insurance:
<TABLE>
<CAPTION>
Policy Policy
Layer Carrier Number Year Limits Retention
- ----- ------- ------ ---- ------ ---------
<S> <C> <C> <C> <C> <C>
Primary London 576/P29008500) 11/21/89-90 $20M $2500/$25,000/$1,000,000
576/P29008600)
1st Excess Aetna 095LB100435854BCA 11/21/89-90 $20M Underlying
</TABLE>
All other terms and conditions remain unchanged.
By /s/
-------------------------
Authorized Representative
<PAGE> 135
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
ENDORSEMENT NO. 8 EFFECTIVE DATE OF ENDORSEMENT NOVEMBER 21, 1989
ATTACHED TO AND FORMING PART OF POLICY NO. GS-212C
COMPANY The Gillette Company
It is understood and agreed that this POLICY is hereby amended as indicated
below. All other terms of this POLICY remain unchanged.
AUTOMATIC EXTENSION ENDORSEMENT
( Extension Premium: $ 135,000 )
In consideration of payment of the above-referenced premium, it is understood
and agreed that this POLICY shall be continued and the POLICY PERIOD shall be
extended to November 21, 1992, 12:01 A.M. Standard Time at the address of the
Company as stated in Item I of the Declarations.
It is further understood and agreed that the above-referenced premium has been
allocated and paid as follows:
<TABLE>
<CAPTION>
Policy Year
Following Effective
Date of This Endorsement Premium
------------------------ -------
<S> <C>
Year 89 - 90 130,000
Year 90 - 91 135,000
Year 91 - 92 135,000
--------
$400,000
Less Prepaid Premium
On Hand $275,000
--------
Additional Premium $125,000
========
</TABLE>
By /S/
-------------------------
Authorized Representative
<PAGE> 136
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
ENDORSEMENT NO. 7 EFFECTIVE DATE OF ENDORSEMENT SEPTEMBER 27, 1989
ATTACHED TO AND FORMING PART OF POLICY NO. GS-212C
COMPANY THE GILLETTE COMPANY
IT IS HEREBY UNDERSTOOD AND AGREED THAT ENDORSEMENT NO. 4 (OUTSIDE POSITIONS
ENDORSEMENT) IS DELETED IN ITS ENTIRETY.
All other terms and conditions remain unchanged.
By /s/
-------------------------
Authorized Representative
<PAGE> 137
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
ENDORSEMENT NO. 6 EFFECTIVE DATE OF ENDORSEMENT November 21, 1988
ATTACHED TO AND FORMING PART OF POLICY NO. GS-212C
COMPANY THE GILLETTE COMPANY
It is hereby understood and agreed that section (H) of the EXCESS AND
DIFFERENCE IN CONDITIONS ENDORSEMENT (Endorsement # 2) is deleted in its
entirety and replaced with the following:
(H) Schedule of Underlying Directors and Officers Insurance:
<TABLE>
<CAPTION>
Policy Policy
Layer Carrier Number Year Limits Retention
- ----- ------- ------ ---- ------ ---------
<S> <C> <C> <C> <C> <C>
Primary Lloyds & Cos. P190085 11/21/88-89 $10,000,000 5,000/30,000/lM
lst Excess Lloyds & Cos. P190086 11/21/88-89 $10,000,000 Underlying
2nd Excess Aetna Casualty 095LB100435854BCA 11/21/88-89 $20,000,000 Underlying
</TABLE>
All other terms and conditions remain unchanged.
By
-------------------------
Authorized Representative
<PAGE> 138
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
ENDORSEMENT NO. 5 EFFECTIVE DATE OF ENDORSEMENT November 17, 1988
ATTACHED TO AND FORMING PART OF POLICY NO. GS-212C
COMPANY THE GILLETTE COMPANY
It is hereby understood and agreed that Clause 2. (d) (Definition of Insureds),
is extended to include those individuals serving in the following positions:
- Group General Manager,
Gillette International, Asia-Pacific Group
- President, Blade and Razor Group,
North America Division
- President, Oral-B Laboratories
- President, Jafra Cosmetics
- President Directeur General, Financiere
Gillette Societe Participation
- President, Blade and Razor Group,
European Division
- President, Personal Care Group,
European Division
- President, Stationery Products Group,
European Division
- President, Stationery Products Group,
North America Division
- President, Personal Care Group,
North America Division
- Group General Manager,
Gillette International, Latin American Group
- Group General Manager,
Gillette International, Africa, Middle East and Eastern Europe
All other terms and conditions remain unchanged.
By /s/
-------------------------
Authorized Representative
<PAGE> 139
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
ENDORSEMENT NO. 4 EFFECTIVE DATE OF ENDORSEMENT November 21, 1988
ATTACHED TO AND FORMING PART OF POLICY NO. GS-212C
COMPANY THE GILLETTE COMPANY
IT IS UNDERSTOOD AND AGREED THAT THIS POLICY IS HEREBY AMENDED AS INDICATED
BELOW. ALL OTHER TERMS OF THIS POLICY REMAIN UNCHANGED.
OUTSIDE POSITIONS ENDORSEMENT
(A) Subject to the sublimit of liability set forth in (C) below, the
definition of "INSUREDS" is hereby extended to include:
(1) all directors, officers, or employees of the COMPANY who were, are,
or shall be serving as directors, officers, trustees, or governors
for any eleemosynary institution, non-profit organization, industry
association, foundation, or business corporation, if:
(a) such activity is part of their regularly assigned duties or is
consistent with COMPANY policy, and
(b) they are a member of a class of persons so directed to serve
by the COMPANY.
(2) the estates, heirs, legal representatives or assigns of deceased
persons who were INSUREDS, as defined in subpart (A)(1) above, at
the time the WRONGFUL ACT upon which such CLAIMS are based was
committed, and the legal representatives or assigns of INSUREDS
in the event of their incompetency, insolvency or bankruptcy.
(B) It is further understood and agreed that this extension of coverage:
(1) is to be excess of any other insurance and excess of any director
or officer liability insurance and/or company reimbursement
insurance and/or any indemnification provided for, to or by the
eleemosynary institution, association, foundation, or business
corporation, any conditions in such other insurance notwithstanding;
and
(2) is not to be construed to extend to the outside organization in
which the INSURED is serving or has served, nor to any other
director, officer, or employee of such outside organization.
(C) In lieu of the LIMIT OF LIABILITY stated in Item III of the Declarations,
the limit of liability of the INSURER for this extension of coverage
shall be $ 5,000,000 in the aggregate for all LOSS paid on behalf of all
INSUREDS arising from all CLAIMS first made during eachPOLICY YEAR. It is
understood that the amount stated in Item III of the Declarations is the
maximum amount payable for each POLICY YEAR. and that this Endorsement
extends coverage with a sublimit which further limits the INSURER'S
liability and
<PAGE> 140
does not increase the INSURER'S maximum liability beyond the LIMIT OF
LIABILITY stated in Item III the Declarations.
(D) For purposes of subpart (A)(2) above, the definitions of "WRONGFUL ACT"
is hereby modified to replace the word "COMPANY" with the words "the
eleemosynary or non-profit institution, industry association, foundation,
or business corporation" wherever the word "COMPANY" appears.
/s/
--------------------------------------
Signature of Authorized Representative
<PAGE> 141
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
ENDORSEMENT NO. 3 EFFECTIVE DATE OF ENDORSEMENT November 21, 1988
ATTACHED TO AND FORMING PART OF POLICY NO. GS-212C
COMPANY THE GILLETTE COMPANY
In accordance with Clause 7 (Automatic Extension) of this POLICY and in payment
of the additional premium as shown below, the POLICY PERIOD is amended to read
from November 21, 1988 to November 21, 1991, 12:01 a.m. Standard Time at the
address of the COMPANY referred to herein.
The premium for the POLICY PERIOD above stated is as follows:
<TABLE>
<S> <C>
Year 2 - $ 130,000
Year 3 - $ 140,000
Year 4 - $ 135,000
----------
$ 405,000
Premium prepaid for Years 2-3 - $ 280,000
----------
Additional premium $ 125,000
==========
</TABLE>
All other term and conditions remain unchanged.
By /s/ [?]
------------------------------------
Authorized Representative
<PAGE> 142
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
ENDORSEMENT No. 2 EFFECTIVE DATE OF ENDORSEMENT July 21, 1988
ATTACHED TO AND FORMING PART OF POLICY No. GS-212C
COMPANY THE GILLETTE COMPANY
It is understood and agreed that this POLICY is hereby amended as indicated
below. All other terms of this POLICY remain unchanged.
EXCESS AND DIFFERENCE IN CONDITIONS ENDORSEMENT
(A) Clause 1 (Insuring Clause) of this POLICY is hereby deleted in
its entirety and replaced with the following:
1. Insuring Clause
(a) The INSURER shall pay on behalf of the INSUREDS or
any of them, any and all LOSS, that the INSUREDS
shall become legally obligated to pay by reason of
CLAIMS first made against the INSUREDS or any of them
during the POLICY PERIOD, for any WRONGFUL ACTS that
are actually or allegedly caused, committed, or
attempted prior to the end of the POLICY PERIOD by
the INSUREDS while acting in their individual or
collective capacities as directors or officers, in
excess of the amounts payable under, or for which no
amounts are payable with respect to such LOSS under,
or for which the insurer(s) wrongfully refuses or is
financially unable to pay under, the Underlying
Insurance scheduled below, and not exceeding the
LIMIT OF LIABILITY.
(b) Regardless of the time of payment of LOSS by the
INSURER, the LIMIT OF LIABILITY shall be the maximum
liability of the INSURER for all LOSS arising from
all CLAIMS first made during each POLICY YEAR.
(c) The INSURER shall not be liable for any LOSS unless:
(1) the insurer(s) of the Underlying Insurance:
a. wrongfully refuses to indemnify the
INSUREDS as required under the terms
of the Underlying Insurance: or
b. is financially unable to indemnify
the INSUREDS; or
(2) according to the terms and conditions of the
Underlying Insurance, the insurer(s) of the
Underlying Insurance are not liable for any
part of the LOSS; or
(3) the limit(s) of liability of the Underlying
Insurance has been exhausted or reduced by
reason of LOSSES paid thereunder.
(d) In the event that:
(1) part or all of a LOSS would be payable under
the Underlying Insurance, but the limits of
liability of the Underlying Insurance have
been exhausted by reason of payments made the
reunder: or
<PAGE> 143
(2) part of a LOSS is paid by the Underlying Insurance,
then the liability of the INSURER for the LOSS shall exclude
any required retention and coininsurance amounts under such
Underlying Insurance.
(e) In the event that the INSUREDS suffer a LOSS:
(1) that is covered by the Underlying insurance, or
(2) that would be covered by the Underlying Insurance
except that such insurance has been exhausted or
reduced by reason of payments thereunder
and the excess of which LOSS would be payable under this
POLICY except for terms and conditions of this POLICY that are
not consistent with the Underlying Insurance, then,
notwithstanding anything in this POLICY to the contrary except:
the LIMIT OF LIABILITY, Clause 11 (Currency), Clause 1
4 (LOSS Provisions), and Clause 17 (Representation),
and the Clauses in this endorsement,
this POLICY is amended to follow and be subject to the terms
and conditions of such Underlying Insurance in respect of such
LOSS.
Notwithstanding any provision of this endorsement to the
contrary, the INSURER shall not cover the COMPANY for any
amounts the COMPANY pays to indemnify, or pays on behalf of,
the INSUREDS for any LOSS or expense.
(B) Clause 4 (Appeals) of this POLICY is hereby deleted in its entirety and
replaced with the following:
4. APPEALS
In the event of the INSUREDS or the insurer(s) of the
Underlying Insurance elect not to appeal a judgment, the
INSURER may elect to make such appeal at its own expense, and
shall be liable for any increased award, taxable costs and
disbursements and any additional interest incidental to such
appeal, to the extent such payments are not covered by other
valid and collectible insurance.
(C) Clause 6 (Assistance and Cooperation) of this POLICY is hereby deleted
in its entirety and replaced with the following:
6. ASSISTANCE AND COOPERATION
The INSURER has no duty to defend any CLAIM and shall not be
called upon to assume charge of the investigation, settlement
or defense of any demand, suit or proceeding, but the INSURER
shall have the right and shall be given the opportunity to
associate with the INSUREDS, the COMPANY, and the insurer(s)
of the Underlying Insurance in the investigation, settlement,
defense and control of any demand, suit or proceeding relative
to any WRONGFUL ACT where the demand, suit or proceeding
involves or may involve the INSURER. At all times, the
INSUREDS and the COMPANY and the INSURER shall cooperate in
the investigation, settlement, and defense of such demand,
suit or proceeding. The failure of the COMPANY to assist and
cooperate with the INSURER shall not impair the rights of the
INSUREDS under this POLICY.
(D) Clause 10 (Payment of LOSS) is hereby deleted in its entirety and
replaced with the following:
10. PAYMENT OF LOSS
Except in those instances when the INSURER has denied
liability for the CLAIM because of the application of one or
more exclusions, or other coverage issues, if the COMPANY and
the insurer(s)
<PAGE> 144
of the Underlying Insurance refuse to advance defense or other
LOSS, or if such costs are not payable under the Underlying
Insurance, the INSURER shall, upon request and if proper
documentation accompanies the request, advance on behalf of
the INSUREDS, or any of them, LOSS that they have incurred in
connection with a CLAIM, prior to disposition of such CLAIM,
provided always that in the event it is finally established
that the INSURER has no liability hereunder, such INSURED
agree to repay to the INSURER, upon demand, all monies
advanced.
(E) Clause 13 (INSURED'S Reporting Duties) of this POLICY is hereby
modified by the addition of the following:
The INSUREDS and/or the COMPANY shall give written notice to the
INSURER of any:
(a) material change in the terms or conditions of the Underlying
Insurance; or
(b) nonrenewal or cancellation of the Underlying Insurance,
within 30 days after the INSUREDS and/or the COMPANY receive or notice of such
change, nonrenewal or cancellation.
(F) Clause 15 (Other Insurance) of this POLICY is hereby deleted in its
entirety and replaced with the following:
15. OTHER INSURANCE
Subject to subparts (f) and (g) of Clause 3 (Exclusions), if
other valid and collectible insurance with any other insurer,
whether such insurance is issued before, concurrent with, or
after inception of this POLICY, is available to the INSUREDS
covering a CLAIM also covered by this POLICY, other than the
Underlying Insurance and insurance that is issued specifically
as insurance in excess of the insurance afforded by this
POLICY, this POLICY shall be in excess of and shall not
contribute with such other insurance. Except as allowed by
subpart (e) of Clause 1 (Insuring Clause), nothing herein shall
be construed to make this POLICY subject to the terms of other
insurance.
(G) Clause 2O (Subrogation) of this POLICY is hereby deleted in its
entirety and replaced with the following:
20. SUBROGATION
(a) Inasmuch as this POLICY is excess insurance, the
INSUREDS' right of recovery against any person or
organization cannot be exclusively subrogated to the
INSURER. It is, therefore, understood and agreed that
in case of any payment hereunder, the INSURER will act
in concert with all other interests concerned
(including the INSURED), in the exercise of such rights
of recovery. The apportioning of any amounts that may
be so recovered shall follow the principle that any
interest (including the INSUREDS') that has paid an
amount over and above any payment hereunder, shall
first be reimbursed up to the amount paid by it;
(a) the INSURER is then to be reimbursed out any balance
then remaining up to the amount paid hereunder;
lastly, the interests (including the INSUREDS') of
which this coverage is in excess are entitled to claim
the residue, if any. Expenses necessary to the
recovery of any such amounts shall be apportioned
between the interests concerned (including the
INSUREDS'), in the proportion of their respective
recoveries as finally settled. If there should be no
recovery in proceedings instituted solely on the
initiative of the INSURER, the expenses thereof shall
be borne by the INSURER.
(b) The INSUREDS shall execute all papers reasonably
required and shall take all reasonable actions that
may be necessary to secure the rights of the INSURER,
including the execution of such documents necessary to
enable the INSURER effectively to bring suit in the
name of the INSUREDS, including but not limited to an
action against the COMPANY or the insurer(s) of the
<PAGE> 145
Underlying Insurance for nonpayment of
indemnity due and owing to the INSUREDS
by the COMPANY or the insurer(s),
respectively.
(H) Schedule of Underlying Directors and Officers Insurance:
<TABLE>
<CAPTION>
Policy Policy
Layer Carrier Number Year Limits Retention
<S> <C> <C> <C> <C> <C>
PRIMARY LONDON TBD 11/21/87-88 $20M $5,000/30,000/1,000,000
1ST EXCESS AETNA TBD 11/21/87-88 $20M UNDERLYING
</TABLE>
/s/ [?]
-----------------------------------------------------
Signature of Authorized Representative of INSURER
<PAGE> 146
CORPORATE OFFICERS AND DIRECTORS ASSURANCE LTD.
ENDORSEMENT NO. 1 EFFECTIVE DATE OF ENDORSEMENT July 21, 1988
ATTACHED TO AND FORMING PART OF POLICY NO. GS-212C
COMPANY THE GILLETTE COMPANY
IT IS UNDERSTOOD AND AGREED THAT THIS POLICY IS HEREBY AMENDED AS INDICATED
BELOW. ALL OTHER TERMS OF THIS POLICY REMAIN UNCHANGED.
NUCLEAR ENERGY LIABILITY EXCLUSION ENDORSEMENT
(BROAD FORM)
It is agreed that:
I. This POLICY does not apply:
A. Under any Liability Coverage, to bodily injury or property damage
(1) with respect to which the INSUREDS or COMPANY under this
POLICY is also an insured under a nuclear energy
liability policy issued by the Nuclear Energy Liability
Insurance Association, Mutual Atomic Energy Liability
Underwriters or Nuclear Insurance Association of Canada,
or any of their successors, or would be an insured under
any such policy but for its termination upon exhaustion
of its limit of liability; or
(2) resulting from the hazardous properties of nuclear
material and with respect to which (a) any person or
organization is required to maintain financial
protection pursuant to the Atomic Energy Act of 1954 or
any law amendatory thereof, or (b) the INSUREDS or
COMPANY is. or had this POLICY not been issued would be,
entitled to indemnity from the United States of America,
or any agency thereof, under any agreement entered
into by the United States of America, or any Agency
thereof, with any person or organization.
B. Under any Medical Payments Coverage, or under any Supplementary
Payments provision relating to first aid, to expenses incurred
with respect to bodily injury resulting from the hazardous
properties of nuclear material and arising out of the operation
of a nuclear facility by any person or organization.
C. Under any Liability Coverage, to bodily injury or property
damage resulting from the hazardous properties of nuclear
material, if
(1) the nuclear material (a) is at any nuclear facility
owned by, or operated by or on behalf of, the COMPANY or
(b) has been discharged or dispersed therefrom;
(2) the nuclear material is contained in spent fuel or waste
at any time possessed, handled, used, processed, stored,
transported or disposed of by or on behalf of the
COMPANY; or
(3) the bodily injury or property damage arises out of the
furnishing by the COMPANY of services, materials, parts
or equipment in connection with the planning,
construction, maintenance, operation or use of any
nuclear facility, but if such facility is located within
the United States of
<PAGE> 147
America, its territories or possessions or
Canada, this exclusion (3) applies only to
property damage to such nuclear facility and any
property thereat.
II. As used in this endorsement:
"hazardous properties" include radioactive, toxic or explosive
properties;
"nuclear material" means source material, special nuclear material or
by-product material;
"source material", "special nuclear material", and "by-product
material" have the meanings given them in the Atomic Energy Act of
1954 or in any law amendatory thereof;
"spent fuel" means any fuel element or fuel component, solid or
liquid, which has been used or exposed to radiation in a nuclear
reactor;
"waste" means any waste material (a) containing by-product material
other than the tailings of wastes produced by the extraction or
concentration of uranium or thorium from any ore processed primarily
for its source material content, and (b) resulting from the operation
by any person or organization of any nuclear facility included under
the first two paragraphs of the definition of nuclear facility.
"nuclear facility" means:
(a) any nuclear reactor,
(b) any equipment or device designed or used for (1) separating
the isotopes or uranium or plutonium, (2) processing or
utilizing spent fuel, or (3) handling, processing or packaging
waste,
(c) any equipment of device used in the processing, fabricating
or alloying of special nuclear material if at any time the
total amount of such material in the custody of the COMPANY at
the premises where such equipment or device is located
consists of or contains more than 25 grams of plutonium or
uranium 233 or any combination thereof, or more than 250 grams
of uranium 235, or
(d) any structure, basin, excavation, premises or place prepared
or used for the storage or disposal of waste,
and includes the site on which any of the foregoing is located, all
operations conducted on such site and all premises used for such
operations;
"nuclear reactor" means any apparatus designed or used to sustain
nuclear fission in a self-supporting chain reaction or to contain a
critical mass of fissionable material;
"property damage" includes all forms of radioactive contamination or
property.
/s/
-----------------------------------
Signature of Authorized Representative
<PAGE> 148
DIRECTORS AND OFFICERS LIABILITY INSURANCE POLICY
ISSUED BY
CORPORATE OFFICERS & DIRECTORS ASSURANCE LTD.
IN HAMILTON, BERMUDA
THIS IS A CLAIMS FIRST MADE POLICY. DEFENSE AND OTHER COSTS
ARE INCLUDED IN THE LIMIT OF LIABILITY.
THIS IS A THREE-YEAR POLICY WITH AN AUTOMATIC
EXTENSION PROVISION.
PLEASE READ THIS POLICY CAREFULLY.
WORDS AND PHRASES THAT APPEAR BELOW IN ALL CAPITAL LETTERS HAVE
THE SPECIAL MEANINGS SET FORTH IN CLAUSE 2 (DEFINITIONS).
DECLARATIONS
POLICY NO: GS-212C
ITEM I COMPANY: THE GILLETTE COMPANY
Principal Address: Prudential Tower Building
Boston, MA 02199
ITEM II POLICY PERIOD: From July 21, 1988 to Nov. 21, 1990 (3 Years)
12:01 a.m. Standard Time at the address of the
Company stated above.
ITEM III LIMIT OF LIABILITY:
$ 20,000,000 Aggregate LIMIT OF LIABILITY for all LOSS paid on
behalf of all INSUREDS
CLAIMS first made during each POLICY YEAR.
ITEM IV PREMIUM:
At inception of first POLICY YEAR: $ 320,000
(prepaid total for three years) Year 1- $40,000
Year 2- $140,000
Year 3- $140,000
<PAGE> 149
At each anniversary
thereafter: Subject to adjustment on each anniversary
date in accordance with Clause 16 (Premium)
of this POLICY.
ITEM V Any notice to the COMPANY or, except in accordance with Clause 17
(Representation), to the INSUREDS, shall be given or made to the
individual listed below, if any, or otherwise to the individual
designated in the APPLICATION, if any, or otherwise to the signer of
the APPLICATION, and shall be sent by airmail, express courier,
telecopy or telex.
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
ITEM VI Any notice to be given or payment to be made to the INSURER under
this POLICY shall be given or made to Corporate Officers &
Directors Assurance Ltd., P.O. Box HM 1015, Craig Appin House,
Wesley St., Hamilton, Bermuda HM OX, and shall be sent by airmail,
express, courier, telecopy or telex.
This POLICY shall constitute the entire contract between the INSUREDS, the
COMPANY, and the INSURER.
Endorsements 1 to 4 are made part of this POLICY at POLICY
issuance.
Countersigned at Hamilton, Bermuda
on November 29, 1988
-------------------------------------
by /s/
-------------------------------------
Signature of Authorized Representative
<PAGE> 150
TABLE OF CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C> <C>
1. Insuring Clause................................................... 1
2. Definitions....................................................... 1
3. Exclusions........................................................ 2
4. Appeals........................................................... 3
5. Arbitration....................................................... 3
6. Assistance and Cooperation........................................ 4
7. Automatic Extension............................................... 4
8. Cancellation...................................................... 5
9. Changes and Assignments........................................... 5
10. Payment of LOSS................................................... 5
11. Currency.......................................................... 5
12. Headings.......................................................... 6
13. INSUREDS' Reporting Duties........................................ 6
14. LOSS Provisions................................................... 6
15. Other Insurance................................................... 6
16. Premium........................................................... 6
17. Representation.................................................... 6
18. Severability...................................................... 7
19. Special POLICY Revisions.......................................... 7
20. Subrogaton........................................................ 7
21. Acquisition or Disposition of a SUBSIDIARY........................ 7
</TABLE>
<PAGE> 151
DIRECTORS AND OFFICERS LIABILITY INSURANCE
In consideration of the payment of the premium and in reliance on all
statements made and information furnished by the COMPANY to the INSURER in the
APPLICATION, which is attached to and hereby made a part hereof, and subject to
the foregoing Declarations and to all other terms of this POLICY, the COMPANY,
the INSUREDS, and the INSURER agree as follows:
1. INSURING CLAUSE
The INSURER shall pay on behalf of the INSUREDS or any of them, any and
all LOSS that the INSUREDS shall become legally obligated to pay by
reason of CLAIMS first made against the INSUREDS or any of them during
the POLICY PERIOD, for any WRONGFUL ACTS that are caused, committed, or
attempted prior to the end of the POLICY PERIOD by the INSUREDS, not
exceeding the LIMIT OF LIABILITY.
2. DEFINITIONS
(a) "APPLICATION" shall mean the signed, written application for
this POLICY, the schedule thereto and all supplementary
information submitted in connection therewith, and all
underwriting data submitted in connection with the automatic
extension of the POLICY, all of which materials shall be deemed
attached hereto, as if physically attached hereto.
(b) "CLAIM" shall mean:
(1) any proceeding, demand or suit against any INSURED by
reason of any WRONGFAULT; or
(2) written notice to the INSURER by the INSUREDS and/or the
COMPANY, during the POLICY PERIOD describing
circumstances that are likely to give rise to a CLAIM
being made against the INSUREDS.
Multiple proceedings, demands or suits arising out of the same
WRONGFUL ACT shall be deemed to be a single CLAIM.
(c) "COMPANY" shall mean the company shown in Item I of the
Declarations, any company that was a predecessor company to the
company shown in Item I of the Declarations, any SUBSIDIARY of
either such company and, if covered in accordance with subpart
(a) of Clause 21 (Acquisition or Disposition of a Subsidiary)
below, any other subsidiary.
(d) "INSUREDS" shall mean:
(1) all persons who were, now are, or shall be duly elected or
appointed directors or officers of the COMPANY; or
(2) the estates, heirs, legal representatives or assigns of
deceased INSUREDS who were directors or officers of the COMPANY
at the time the WRONGFUL ACT upon which such CLAIMS are based
were committed, and the legal representatives or assigns of
INSUREDS in the event of their incompetency, insolvency or
bankruptcy.
(e) "INSURER" shall mean Corporate Officers & Directors Ltd.,
Hamilton, Bermuda.
(f) "LIMIT OF LIABILITY" shall mean the amount described in Item III
of the Declarations. Regardless of the time of payment of LOSS
by the INSURER, the LIMIT OF LIABILITY as stated in Item III of
the Declarations shall be the maximum liability of the INSURER
for all LOSS arising from all CLAIMS first made during each
POLICY YEAR.
(g) "LOSS" shall mean any and all amounts that the INSUREDS are
legally obligated to pay for a CLAIM made against the INSUREDS
for any WRONGFUL ACT, and shall include but not be limited to
damages, judgments, settlements, and reasonable and necessary
costs of investigation and defense of CLAIMS, and appeals
therefrom (excluding all salaries and office expenses of the
COMPANY, amounts paid to counsel as general retainer fees, and
all other expenses that cannot be directly allocated to a
specific CLAIM), and cost of attachment or similar bonds,
providing always,
1
<PAGE> 152
however, LOSS shall not include taxes, fines or penalties or
matters which may be deemed uninsurable under the law
pursuant to which this POLICY shall be construed. ("Fines or
penalties" do not include punitive, exemplary, or multiple
damages).
(h) "POLICY" shall mean this insurance policy, including the
APPLICATION, the Declarations, and any endorsements hereto
issued by the INSURER.
(i) "POLICY PERIOD" shall mean the period of time stated in Item
II of the Declarations, as may be automatically extended in
accordance with Clause 7 (Automatic Extension) below.
(j) "POLICY YEAR" shall mean a period of one year, within the
POLICY PERIOD, commencing each year on the day and hour first
named in Item II of the Declarations, or if the time between
the inception date, or any anniversary date and the
termination date of this POLICY is less than one year, then
such lesser period.
(k) "SUBSIDIARY" shall mean any corporation in which more than
50% of the outstanding voting stock is owned, directly or
indirectly, in any combination, by the COMPANY or by one or
more of its SUBSIDIARIES, at the starting date of the POLICY
PERIOD.
(l) "WRONGFUL ACT" shall mean any actual or alleged error,
misstatement, misleading statement or act, omission, neglect,
or breach of duty by the INSUREDS while acting in their
individual or collective capacities as directors or officers
of the COMPANY, or any other matter claimed against them by
reason of their being directors or officers of the COMPANY.
All such interrelated errors, misstatements, misleading
statements or acts, omissions, neglects, or breaches of duty
actually or allegedly caused, committed, or attempted by or
claimed against one or more of the INSUREDS shall be deemed
to be a single WRONGFUL ACT.
3. EXCLUSIONS
The INSURER shall not be liable to make any payment for LOSS in
connection with any CLAIM made against the INSUREDS:
(a) for which the COMPANY actually pays or indemnifies or is
required or permitted to pay on behalf of or to indemnity the
INSUREDS pursuant to the charter or other similar formative
document or by-laws or written agreements of the COMPANY duty
effective under applicable law, that determines and defines
such rights of indemnity; provided, however, this exclusion
shall not apply if:
(1) the COMPANY refuses to indemnify or advance defense
or other costs as required or permitted, or if the
COMPANY is financially unable to indemnify; and
(2) the INSUREDS comply with Clause 2O (Subrogation)
below;
(b) that result in a judgment or other final adjudication adverse
to the INSUREDS that establishes that the INSUREDS have gained
any personal profit to which they were not legally entitled;
(c) for the return by the INSUREDS of any remuneration paid to the
INSUREDS without the previous approval of the stockholders of
the COMPANY which payment without such previous approval shall
be held by the courts to have been illegal;
(d) for an accounting of profits in fact made from the purchase or
sale by the INSUREDS of securities of the COMPANY within the
meaning of Section 16 (b) of the Securities Exchange Act of
1934 and amendments thereto or similar provisions of any state
statutory law or common law;
(e) brought about or contributed to by the dishonesty of the
INSUREDS; however, notwithstanding the foregoing, the INSUREDS
shall be protected under the terms of this POLICY as to any
CLAIM by reason of any alleged dishonesty on the part of the
INSUREDS, unless a judgment or other final adjudication
thereof adverse to the INSUREDS shall establish that acts of
active and deliberate dishonesty committed by the INSUREDS with
actual dishonest purpose and intent were material to the cause
of action so adjudicated;
2
<PAGE> 153
(f) that is insured by any other existing valid policy or policies
under which payment of the LOSS is actually made except in respect
of any excess beyond the amount or amounts of payments under such
other policy or policies;
(g) for which the INSUREDS are indemnified by reason of having given
notice of a CLAIM or of any circumstance which might give rise to a
CLAIM under any policy or policies of which this POLICY is a
renewal or replacement or which it may succeed in time;
(h) for personal injury, advertising injury, bodily injury, sickness,
disease, or death of any person, or for damage to or destruction of
any tangible property, including the loss of use thereof; however,
this exclusion shall not apply to any derivative action brought
against any INSURED;
(i) by, on behalf of, at the behest of, or in the right of the COMPANY,
if initiated by the management of the COMPANY; however, this
exclusion shall not apply if, between the starting date of the
POLICY PERIOD and the date of the CLAIM, the COMPANY shall have
undergone one of the three events listed in subpart (a) of Clause 8
(Cancellation) or the event listed in subpart (b) of Clause 8
(Cancellation), and the CLAIM is initiated by the management of the
COMPANY after the date of such event; or
(j) that is excluded under the Nuclear Energy Liability Exclusion
(endorsed hereon).
It is agreed that any fact pertaining to any INSURED shall not be imputed to
any other INSURED for the purpose of determining the application of the
Exclusions.
4. APPEALS
In the event the INSUREDS elect not to appeal a judgment, the INSURER
may elect to make such appeal at its own expense, and shall be liable for
any increased award, taxable costs and disbursements and any additional
interest incidental to such appeal, to the extent such payments are not
covered by other valid and collectible insurance.
5. ARBITRATION
(a) Any dispute arising under this POLICY shall be fully determined in
Hamilton, Bermuda under the provisions of the Bermuda Arbitration
Act of 1986, as amended and supplemented, by a Board composed of
three arbitrators who shall all be disinterested, active or retired
business executives having knowledge relevant to the matters in
dispute, and who shall be selected for each controversy as follows:
Either party to the dispute may, once a CLAIM or demand on his part
has been denied or remains unsatisfied for a period of twenty (20)
calendar days by the other party, notify the other of its desire to
arbitrate the matter in dispute and at the time of such notification
the party desiring arbitrator shall notify the other party of the
name of the arbitrator selected by it. The other party who has been
so notified shall within ten (10) calendar days thereafter select
an arbitrator and notify the party desiring arbitration of the name
of such second arbitrator. If the party notified of a desire for
arbitration shall fail or refuse to nominate the second arbitrator
within ten (10) calendar days following the receipt of such
notification, the party who first served notice of a desire to
arbitrate will, within an additional period of ten (10) calendar
days, apply to the Supreme Court of Bermuda for the appointment of a
second arbitrator and in such a case the arbitrator appointed by
such a judge shall be deemed to have been nominated by the party
who failed to select the second arbitrator. The two arbitrators,
chosen as above provided, shall within ten (10) calendar days after
the appointment of the second arbitrator choose a third arbitrator.
In the event of the failure of the first two arbitrators to agree on
a third arbitrator within the said ten (10) calendar day period,
either of the parties may within a period of ten (10) calendar days
thereafter, after notice to the other party, apply to the Supreme
Court of Bermuda for the appointment of a third arbitrator and in
such case the person so appointed shall be deemed and shall act as
the third arbitrator. Upon acceptance of the appointment by said
third arbitrator, the Board or Arbitration for the controversy in
question shall be deemed fixed. All CLAIMS, denials of CLAIMS, and
notices pursuant to this Clause 5 of this POLICY shall be deemed
made if in writing and mailed to the last known address of the
other party.
3
<PAGE> 154
1. (b) The Board of Arbitration shall fix, by a notice in writing to the
involved, a reasonable time and place for the hearing and may in
said written notice or at the time of the commencement of said
hearing, at the option of said Board, prescribe reasonable rules
and regulations governing the course and conduct of said hearing.
(c) This POLICY shall be governed by and construed in accordance with
the internal laws of Bermuda, except insofar as such laws may
prohibit payment in respect of punitive damages hereunder; provided.
however, that the provisions, stipulations, exclusions and conditions
of this POLICY are to be construed in an evenhanded fashion
as between the parties; without limitation, where the language of
this POLICY is deemed to be ambiguous or otherwise unclear, the
issue shall be resolved in the manner most consistent with the
relevant provisions, stipulations, exclusions and conditions
(without regard to authorship of the language, without any
presumption or arbitrary interpretation or construction in favor of
either the INSUREDS or the INSURER) and in accordance with the
intent of the parties.
(d) The Board shall, within ninety (90) calendar days following the
conclusion of the hearing, render its decision on the matter or
matters in controversy in writing and shall cause a copy thereof to
be served on all the parties thereto. In case the Board fails to
reach a unanimous decision, the decision of the majority of the
members of the Board shall be deemed to be the decision of the Board.
(e) Each party shall bear the expense of its own arbitrator. The
remaining costs of the arbitration shall be borne equally by the
parties to such arbitration.
(f) The INSURER and the INSUREDS agree that in the event that claims
for indemnity or contribution are asserted in any action or
proceeding against the INSURER by any of the INSUREDS' other
insurers in any jurisdiction or forum other than that set forth in
this Clause 5, the INSUREDS will in good faith take all reasonable
steps requested by the INSURER to assist the INSURER in obtaining a
dismissal of these claims (other than on the merits) and will,
without limitation, undertake to the court or other tribunal to
reduce any judgment or award against such other insurers to the
extent that the court or tribunal determines that the INSURER would
have been liable to such insurers for indemnity or contribution
pursuant to this POLICY. The INSUREDS shall be entitled to assert
claims against the INSURER for coverage under this POLICY, including,
without limitation, for amounts by which the INSUREDS reduced its
judgment against such other insurers in respect of such claims for
indemnity or contribution, in an arbitration between the INSURER and
the INSUREDS pursuant to this Clause 5; provided, however, that the
INSURER in such arbitration in respect of such reduction of any
judgment shall be entitled to raise any defenses under this POLICY
and any other defenses (other than jurisdictional defenses) as it
would have been entitled to raise in the action or proceeding
with such insurers.
6. ASSISTANCE AND COOPERATION
The INSURER has no duty to defend any CLAIM and shall not be called upon
to assume charge of the investigation, settlement or defense of any CLAIM,
but the INSURER shall have the right and shall be given the opportunity to
associate with the INSUREDS and the COMPANY in the investigation,
settlement, defense and control of any CLAIM relative to any WRONGFUL ACT
where the CLAIM involves or may involve the INSURER. At all times, the
INSUREDS and the COMPANY and the INSURER shall cooperate in the
investigation, settlement and defense of such CLAIM. The failure of the
COMPANY to assist and cooperate with the INSURER shall not impair the
rights of the INSUREDS under this POLICY.
7. AUTOMATIC EXTENSION
On each anniversary of this POLICY, upon payment of premium, this POLICY
shall automatically be continued to a date one year beyond its previously
stated expiration date, unless written notice is given by the INSURER to
the COMPANY, or by the COMPANY to the INSURER, that such POLICY extension
is not desired. Such written notice may be given at any time during the
period commencing ninety (90) days prior to the anniversary of the POLICY,
and ending ten (10) days prior to such anniversary, in which case the
POLICY shall automatically expire two years from such anniversary date.
Such written notice shall be given by the INSURER to the COMPANY only if
it is determined to be appropriate by an affirmative vote of a majority of
the INSURER'S entire Board at a meeting of said Board prior to mailing of
such notice.
4
<PAGE> 155
8. CANCELLATION
This POLICY shall not be subject to cancellation except as follows:
(a) This POLICY shall be deemed cancelled immediately upon the of any of
the following events:
(1) acquisition of the company named in Item I of the Declarations
by another entity,
(2) merger into another organization in which the company name in
Item I of the Declarations is not the surviving entity, or
(3) consolidation of the company named in Item I of the
Declarations with another entity.
In any such instance described in (a) (1) through (3) of this
Clause 8, this POLICY shall not apply to any WRONGFUL ACTS taking
place after the date of said acquisition, merger, or consolidation:
however, this POLICY shall remain in force for the remainder of the
POLICY PERIOD as to CLAIMS based upon WRONGFUL ACTS alleged to have
been committed prior to such date.
(b) In the event of the COMPANY being taken over by a receiver or any
State or Federal regulatory agency or official, this POLICY shall
not apply to any WRONGFUL ACTS taking place after the date of filing
of bankruptcy, insolvency, or assumption of operation. This POLICY
shall remain in force for the remainder of the POLICY PERIOD from
said date as to CLAIMS based upon WRONGFUL ACTS alleged to have been
committed prior to the date of said bankruptcy, insolvency, or
assumption of operation by the State or Federal agency. All premiums
paid or due at the time of such taking over shall be fully earned,
and in no respect refundable. The LIMIT OF LIABILITY of this POLICY
for the remainder of the POLICY PERIOD shall be a continuation of
the same limit, and not a separate limit, as was in effect during
the most recent POLICY YEAR. CLAIMS first made during the remainder
of the POLICY PERIOD shall be deemed to have been first made during
the final POLICY YEAR for purposes of the LIMIT OF LIABILITY.
(c) This POLICY may be cancelled by mutual agreement and consent of the
INSURER, the COMPANY, and the INSUREDS, upon such terms and
conditions as respects return premium and/or future premium
adjustments and/or loss adjustments as the parties may agree upon
at the time of said cancellation.
(d) This POLICY may be cancelled by the INSURER upon granting of 365 days
written notice, providing such cancellation is determined to be
appropriate by an affirmative vote of 3/4 of the INSURER'S entire
Board at a meeting of said Board prior to mailing of said notice.
Payment or tender of any unearned premium by the INSURER shall not
be a condition precedent to the effectiveness of cancellation,
but return of the pro rata unearned premium shall be made as soon as
practicable.
9. CHANGES AND ASSIGNMENTS
The terms and conditions of this POLICY shall not be waived or changed,
nor shall an assignment of interest under this POLICY be binding, except
by an endorsement to this POLICY issued by the INSURER.
10. PAYMENT OF LOSS
Except in those instances when the INSURER has denied liability for the
CLAIM because of the application of one or more exclusions, or other
coverage issues, the INSURER shall, upon request and if proper
documentation accompanies the request, advance on behalf of the INSUREDS,
or any of them, LOSS costs that they have incurred in connection with a
CLAIM, prior to disposition of such CLAIM, provided always that in the
event it is finally established that the INSURER has no liability
hereunder, such INSUREDS agree to repay to the INSURER, upon demand, all
monies advanced.
11. CURRENCY
All premium, limits, retentions, and LOSS under this POLICY are in United
States currency.
5
<PAGE> 156
12. HEADINGS
The descriptions in the headings and sub-headings of this POLICY are
interested solely for convenience and do not constitute any part of
the terms or conditions hereof.
13. INSUREDS' REPORTING DUTIES
The INSUREDS and/or the COMPANY shall give written notice to the
INSURER as soon as practicable of any:
(a) CLAIM, which notice shall include the nature of the WRONGFUL
ACT, the alleged injury, the names of the claimants, and the
manner in which the INSUREDS or COMPANY first became aware of
the CLAIM; or
(b) change in the COMPANY as is described in Clause 8(a) and 8(b)
(Cancellation) of this POLICY,
and shall cooperate with the INSURER and give such additional
information as the INSURER may reasonably require.
14. LOSS PROVISIONS
(a) The time when a CLAIM shall be made for purposes of
determining the application of Clause 1 (Insuring Clause)
above shall be the date on which the CLAIM is first made
against the INSURED.
(b) If during the POLICY PERIOD, the INSUREDS shall become aware
of any circumstances that are likely to give rise to a CLAIM
being made against them and shall give written notice to the
INSURER of the circumstances and the reasons for anticipating
a CLAIM, with particulars as to dates and persons involved,
then any CLAIM that is subsequently made against the INSUREDS
arising out of such circumstances shall be treated as a CLAIM
made during the POLICY YEAR in which the INSUREDS gave such
notice.
(c) The COMPANY and the INSUREDS shall give the INSURER such
information and cooperation as, it may reasonably require and
as shall be in the COMPANY'S and the INSUREDS' power.
15. OTHER INSURANCE
Subject to subparts (f) and (g) of Clause 3 (Exclusions) above, if
other valid and collectible insurance with any other insurer, whether
such insurance is issued before, concurrent with, or after inception
of this POLICY, is available to the INSUREDS covering a CLAIM also
covered by this POLICY, other than insurance that is issued
specifically as insurance in excess of the insurance afforded by this
POLICY, this POLICY shall be in excess of and shall not contribute
with such other insurance. Nothing herein shall be construed to make
this POLICY subject to the terms of other insurance.
16. PREMIUM
It is understood that on each anniversary of this POLICY, a premium
shall be charged for the Automatic Extension in accordance with Clause
7 (Automatic Extension). Such premium shall be determined by the rate
schedules, experience modification, rating plan, and by-laws of the
INSURER in force at said anniversary date.
17. REPRESENTATION
By acceptance of this POLICY, the company named in Item I of the
Declaration agrees to represent the INSUREDS with respect to all
matters under this POLICY, including, but not limited to, the giving
and receiving of notice of CLAIM or cancellation or desire not to
extend the POLICY, the payment of premiums, the receiving of LOSS
payments and any return premiums that may become due under this
POLICY, the requesting, receiving, and acceptance of any endorsement
to this POLICY, and the submission of a dispute to arbitration. The
INSUREDS agree that said company shall represent them but, for
purposes of the investigation, defense, settlement, or appeal of any
CLAIM, the INSUREDS who are named as defendants
6
<PAGE> 157
in the CLAIM may, [??] their unanimous agreement and upon [??] to the
INSURER, replace the company with another agent to represent them with
respect to the CLAIM, including giving and receiving of notice of
CLAIM and other correspondence, the receiving of LOSS payments, and
the submission of a dispute to arbitration.
18. SEVERABILITY
The APPLICATION for coverage shall be constituted as a separate
APPLICATION for coverage by each INSURED. With respect to the
declarations and statements contained in such APPLICATION for coverage
no statement in the APPLICATION or knowledge possessed by any one
INSURED shall be imputed to any other INSURED for the purpose of
determining the availability of coverage with respect to CLAIMS made
against any other INSURED.
The acts, omissions, knowledge, or warranties of any INSURED shall not
be imputed to any other INSURED with respect to the coverages
applicable under this POLICY.
19. SPECIAL POLICY REVISIONS
The INSURER may change this POLICY at any time by an affirmative vote
of a majority of the shareholders of the INSURER, in accordance with
the by-laws of the INSURER.
20. SUBROGATION
In the event of any payment under this POLICY, the INSURER shall be
subrogated to the event of such payment to all the INSUREDS' rights of
recovery, and the INSUREDS shall execute all papers reasonably
required and shall take all reasonable actions that may be necessary
to secure such rights including the execution of such documents
necessary to enable the INSURER effectively to bring suit in the name
of the INSUREDS, including but not limited to, an action against the
COMPANY for nonpayment of indemnity due and owing to the INSUREDS by
the COMPANY.
21. ACQUISITION OR DISPOSITION OF A SUBSIDIARY
(a) Coverage shall apply to the directors and officers of any
subsidiary corporation in which more than 50% of the
outstanding voting stock is owned, directly or indirectly, in
any combination, by the COMPANY or one or more of its
SUBSIDIARIES, and which is acquired or created after the
inception of this POLICY, subject to written notice being
given to the INSURER within 30 days after the acquisition or
creation, and payment of any additional premium required. The
INSURER waives the obligation to provide notice and to pay any
additional premium if the assets of such newly created or
acquired company are not more than 10% of the total assets of
the COMPANY or $250,000,000, whichever is less. The coverage
provided for such new subsidiary shall be limited to WRONGFUL
ACTS subsequent to the date of acquisition or creation of the
subsidiary and prior to the end of the POLICY PERIOD.
(b) Coverage shall not apply to directors and officers of any
subsidiary, including a SUBSIDIARY as defined in Clause 2
(Definitions) above, for CLAIMS arising out of WRONGFUL ACTS
subsequent to the date that the COMPANY or one or more of its
SUBSIDIARIES, directly or indirectly, in any combination,
ceases to own more than 50% of the outstanding voting stock
in such subsidiary.
IN WITNESS WHEREOF, the INSURER has caused this POLICY to be signed by its
President and Secretary, and countersigned on the Declaration Page by a duly
authorized agent of the INSURER.
/s/ [??] /s/ Joseph G. [??]
- --------------------- -----------------------
Secretary President
7
<PAGE> 158
[LETTERHEAD]
[LOGO]
JOHNSON & HIGGINS
FAX TRANSMISSION
FAX # 617-421-7123 NO. OF PAGES TRANSMITTED: 2
ATTN: William Mather DATE: June 1, 1993
Gillette
FROM: Sally A. Weston
SUBJ: Gillette - ACE D&O COPIES: Joan Goldberg, J&H, Boston
(Fax # 617-227-3107)
We have received the following renewal binder from ACE for Gillette:
"ACE (CAY) is pleased to acknowledge receipt of Dlrs 155,000 and confirm
bidding the following:
Policy Period: June 1, 1993 - 1994
Limit of Liability: 10M xs 60M D&O and 10M xs 40M C.R.
Structure: Name Limits
---- ------
D&O C.R.
London 10m 10M
London 10m xs 10M 10M xs 10M
Aetna 20M xs 20M 20M xs 20M
CODA 20M xs 40M -
ACE 10M xs 60M - 10M xs 40M
(GS-2678D) (GS-2679D)
[UNISON LOGO]
<PAGE> 159
-2-
Followed Policies are London C.R. and CODA D&O.
Coverage is D&O and C.R.
Endorsements to be included:
Discovery Period Endorsement
Cancellation Endorsement
Excess DIC Endorsement
Endorsement amending Clause III B (i) and (ii)
Endorsement amending Section II - A&C
We look forward to receipt of the u/l policies."
This policy is issued as an offshore placement. The insurance is placed with
an insurer not admitted to write insurance by any state. The insurer is not
under the jurisdiction of, or subject to supervision, regulation, or
examination by the states. In case of insolvency, payment of claims is not
guaranteed and you will not be protected by any state guarantee funds. Any
applicable taxes including but not limited to Federal Excise Tax are the
responsibility of the insured to settle and are in addition to the premium.
Regards
Sally Weston
Broker
SAW:pmw/002260
<PAGE> 1
EXHIBIT 10(h)
THE GILLETTE COMPANY
--------------------
DIRECTOR'S COMPENSATION DEFERRAL PROVISIONS
-------------------------------------------
- - The directors may elect to defer payment of all or part of their cash
compensation, whether retainers or attendance fees, beyond retirement or
resignation from the Board to receive payment (i) in a lump sum in January
of the year following retirement or resignation or (ii) in ten or less equal
annual installments beginning in January of the year following retirement or
resignation, or, in either case, upon an earlier Change in Control, as that
term is defined in The Gillette Company Retirement Plan, as described below.
- - The election to defer must be communicated in writing to the Treasurer
before December 15 for amounts to be earned starting in the following year
and must include payment instructions and whether upon a Change in Control
of the Corporation the deferral election should continue in effect or the
amounts so deferred plus interest equivalents accrued to date should be paid
immediately in the form of a lump sum payment.
- - An election to defer remains in effect from year to year unless revoked or
amended by notice in writing to the Treasurer before December 15.
- - With respect to the calendar year in which a director is first elected to
the Board, the director may elect to defer amounts to be earned during that
calendar year by delivering a deferral election to the Treasurer at any time
prior to the date the director is elected to serve on the Board.
- - Directors' deferred compensation earns an amount equivalent to interest at a
rate fixed on the first trading day in October at the average yield on U.S.
Treasury notes or bonds maturing in one year. That rate on October 1, 1993,
was 3.4%.
- - Interest equivalents are credited semiannually, on June 30 and December 31.
Payment is deferred on the same basis as payment of retainers and fees. The
unpaid balance remaining in a director's account after retirement or
resignation continues to earn interest equivalents until the payment of all
installments has been completed.
- - In the event of death, payment will be made to the estate of the director in
a lump sum representing the entire unpaid balance.
- - Deferred retainers or attendance fees, plus accrued interest equivalents,
paid to a director after retirement or resignation from the Board or upon a
Change in Control are taxable as ordinary income in the year payment is
received.
- - Effective January 1, 1991 retainers and attendance fees are subject to
taxation for Social Security in the year received. Between January 1, 1988
and December 31, 1990 retainers and attendance fees were subject to taxation
for Social Security in the year earned. Since January 1, 1988 retainers and
attendance fees have been included in the Social Security earnings test for
benefits eligibility in the year earned.
<PAGE> 1
Exhibit 10 (l)
DESCRIPTION OF AGREEMENT BETWEEN THE GILLETTE COMPANY
AND GASTON R. LEVY DATED DECEMBER 27, 1993
Mr. Levy ceased to be an executive officer of the Company on November 30, 1993
and retired from the Company on January 1, 1994. Pursuant to a consulting and
noncompetition agreement, he will receive consulting fees of $125,000 per year
for the years 1994 and 1995.
<PAGE> 1
Exhibit 10 (m)
DESCRIPTION OF AGREEMENT BETWEEN THE GILLETTE COMPANY
AND LORNE R. WAXLAX DATED SEPTEMBER 30, 1993
Mr. Waxlax served as Executive Vice President through September 30, 1993.
Pursuant to a three-year noncompetition agreement ending December 31, 1996, he
will continue to be employed by the Company for two years ended December 31,
1995, during which period he will receive annual compensation of $725,000 per
year and participate in certain Company benefits. In the event of a change in
control of the Company, the compensation payable under the agreement would
become immediately payable in a lump sum.
<PAGE> 1
EXHIBIT 10(n)
THE GILLETTE
COMPANY
ESTATE PRESERVATION PLAN
1. PURPOSE. Effective January 1, 1993, The Gillette Company has adopted
The Gillette Company Estate Preservation Plan for the purpose of providing
eligible executive employees of the Company and its subsidiaries and affiliates
the opportunity to purchase life insurance covering the lives of the employee
and his or her spouse and providing a death benefit upon the second to die of
the employee and such spouse.
2. DEFINITIONS. When used herein, the following terms shall have the
respective meaning ascribed to them below. Terms expressed in the singular
shall be construed to include the plural, and terms expressed in the masculine
shall be construed to include the feminine unless the context plainly indicates
otherwise.
(a) "Beneficiary" means the person(s) or entity(ies) designated by the Owner
of the Policy, to whom the death benefit provided for under such Policy shall
be paid in accordance with Section 10.
(b) "Collateral-Assignment" means the Collateral-Assignment executed by the
Owner in favor of the Company with respect to the Company's interest in the
Policy. A specimen form of Collateral-Assignment is annexed hereto and made a
part hereof.
(c) "Committee" means the Personnel Committee of the Board of Directors of the
Company.
(d) "Company" means The Gillette Company, a Delaware corporation.
(e) "Effective Date" means January 1, 1993.
(f) "Eligible Executive" means an executive employee of the Company or one of
its subsidiaries or affiliates who is designated as being eligible to
participate in the Plan in accordance with Section 3.
(g) "Initial Enrollment Date" shall mean the first day of the month
following an individual's designation as an Eligible Executive, but no earlier
than the Effective Date.
(h) "Insureds" means the Participant and his or her lawful spouse on the
Policy Date.
(i) "Insurer" means the insurance company that issues the Policy under the
Plan.
(j) "Owner" means the Participant, the Insureds or such other person(s) or
entity(ies) designated by the Participant to be the owner of the Policy.
(k) "Participant" means an Eligible Executive who elects to participate in the
Plan and who satisfies the conditions for enrollment as set forth in Section 4.
<PAGE> 2
(l) "Plan" means The Gillette Company Estate Preservation Plan as set forth
herein, as it may be modified from time to time hereafter.
(m) "Plan Administrator" means the Senior Vice President-Administration of the
Company or such other officer of the Company designated by the Committee to
administer the Plan.
(n) "Plan Year" means the calendar year.
(o) "Policy" means the insurance policy issued by the Insurer to the Owner
pursuant to the terms of the Plan.
(p) "Policy Date" means the effective date of a Policy. The Policy Date
with respect to Policies issued during the initial enrollment period shall be
January 1, 1993.
(q) "Policy Year" means the 12-consecutive month period designated as such in
a Policy. Policy Years shall commence on a Policy Date.
(r) "Split Dollar Agreement" means the Split Dollar Agreement executed by the
Owner, the Eligible Executive and the Company with respect to the Company's
interest in the Policy. A specimen form of Split Dollar Agreement is annexed
hereto and made a part hereof.
3. ELIGIBILITY. The Eligible Executives shall be those executive employees of
the Company and its subsidiaries and affiliates who are designated as eligible
under this Plan based upon their place of employment, job grade, officer status
and/or other factors determined by the Plan Administrator, as set forth in
Exhibit A hereto.
The Plan does not constitute a contract of employment or a promise of
continuing employment, and nothing in the Plan shall interfere with the right
of the Company and its subsidiaries and affiliates to terminate the employment
of any employee at any time.
4. ENROLLMENT IN PLAN. An Eligible Executive shall enroll in the Plan, and
thereby become a Participant hereunder, by (i) completing an application to
participate in the Plan, (ii) designating the Owner of the Policy to be
purchased, (iii) completing the documents and instruments furnished by the
Insurer for underwriting purposes, (iv) causing his or her spouse to complete
the documents and instruments furnished by the Insurer, and to submit to a
medical examination, for underwriting purposes, (v) executing, and if necessary
causing his or her spouse to execute, the Split-Dollar Agreement and such other
documents and instruments deemed necessary or desirable by the Company, and
(vi) causing the Owner of the Policy to designate a Beneficiary and to execute
the Split-Dollar Agreement, Collateral-Assignment and such other documents and
instruments deemed necessary or desirable by the Insurer or the Company.
If an Eligible Executive expresses an intention to participate and satisfies
the requirements of (i) and (ii) above prior to his or her Initial Enrollment
Date, the Policy issued with respect to such Participant shall have a Policy
Date that is such Initial Enrollment Date. Otherwise, the Policy issued with
respect to such Participant shall have a Policy Date that is the January 1 or
<PAGE> 3
July 1 as of which the Eligible Executive enrolls in the Plan.
5. AMOUNT OF COVERAGE. The death benefit coverage that may be purchased under
a Policy shall be the amount specified in Exhibit A hereto ("Coverage").
6. COST OF COVERAGE. The cost of the Coverage under a Policy for each Policy
Year shall be determined by the Insurer based upon the assumptions and
guidelines agreed to by the Insurer and the Company. It is the Company's
intent that differences in the cost of the Coverage for each of the Insureds
covered by Policies having the same Policy Date shall be attributable solely to
the respective attained ages of each Insured on such Policy Date.
The portions of the cost of the Coverage under each Policy to be paid by
each of the Owner thereof and the Company shall be determined in accordance
with the terms of the related Split-Dollar Agreement and Collateral-Assignment,
based upon the assumptions and guidelines set forth in Exhibit A hereto.
7. PURCHASE OF POLICIES. The Policies shall be purchased by each Owner
from the Insurer designated by the Company. The Company shall take all
reasonable steps necessary to enable the Insurer to issue the Policies in
conformance with the terms of this Plan. Each Owner shall be the sole and
absolute owner of the Policy purchased by such Owner and may exercise all
ownership rights granted by the terms of the Policy, subject to the terms of
the related Split-Dollar Agreement and Collateral-Assignment.
The benefit provided under the Plan is the opportunity for a Participant
or designated Owner to purchase and own the Policy under the terms and
conditions set forth therein. The actual benefits to be derived from ownership
of the Policy are not guaranteed by the Company, the Plan Administrator or the
Insurer (other than payment by the Insurer of the specified death benefit
proceeds upon the death of the survivor of the Insureds in accordance with the
terms of the Policy and any cash value increases as and when credited by the
Insurer under the Policy). Neither the Company nor the Plan Administrator
guarantees any specific level or rate of cash value accumulation under any
Policy purchased under the Plan.
8. PAYMENT OF PREMIUMS. While the related Split-Dollar Agreement remains in
effect, the Company shall remit to the Insurer the total premium due under the
Policy for each Policy Year, which shall include the amount of the Company's
contribution toward premium as set forth in the Split-Dollar Agreement. The
Owner (or the Participant on behalf of the Owner) shall remit to the Company
the balance of the premium due under the Policy for such Policy Year, in such
manner and at such time or times as the Company and the Owner shall agree. In
the event that the Owner (or the Participant on behalf of the Owner) fails to
remit any amount due the Company for any Policy Year, the Company shall be
deemed to have paid such amount for its own account in determining the
Company's interest in the Policy pursuant to the related Split-Dollar Agreement
and Collateral-Assignment.
Following the termination of the Split-Dollar Agreement while either of the
Insureds is alive, the Owner shall be responsible for payment to the Insurer of
the total premium due (if any) under the Policy for each Policy Year
thereafter.
9. COMPANY INTEREST IN POLICY. As a condition to a Participant's enrollment
<PAGE> 4
in the Plan, the Participant and his or her designated Owner with respect to
the Policy shall execute a Split-Dollar Agreement and the Owner shall execute a
Collateral-Assignment, which documents shall establish the rights of the
Company with respect to the death benefit proceeds and cash value under the
Policy. The terms of the particular Split-Dollar Agreement and
Collateral-Assignment executed by a Participant and related Owner shall apply
solely to such Participant and Owner.
At any time while the Split-Dollar Agreement is in effect, the Company's
interest in each Policy shall be equal to the Company's cumulative
contributions toward the premium under the Policy, including amounts deemed to
have been paid for the Company's account in accordance with the terms of the
Split-Dollar Agreement. Following the termination of the Split-Dollar
Agreement, the Company shall receive from the Insurer the amount of the
Company's cumulative contributions toward the premium under the Policy and,
upon receipt of such amount, the Company shall have no further interest in or
responsibility for the Policy. In the event that, upon the termination of the
Split-Dollar Agreement, there is insufficient cash value under the Policy to
satisfy the Company's interest therein, the Company shall have the right to
receive the cash value or death benefit proceeds available at such time and any
additional amounts available under the Policy thereafter (up to the dollar
amount of the Company's remaining interest), and neither the Insureds nor the
Owner shall have any liability to the Company for the unpaid balance (other
than to the extent of amounts mistakenly received under the Policy prior to
full satisfaction of the Company's interest).
The Split-Dollar Agreement and Collateral-Assignment shall contain provisions
implementing the foregoing paragraphs of this Section and such other
provisions, including limitations on the Owner's rights and benefits under the
Policy, as the Company determines to be necessary or desirable in order to
secure and protect its interest in the Policy. Anything contained herein to
the contrary notwithstanding, the Owner shall at all times have the right to
cancel or surrender the Policy and thereby terminate the related Split-Dollar
Agreement and Collateral-Assignment.
10. PAYMENT OF DEATH BENEFIT. Subject to the terms of the related Split-Dollar
Agreement and Collateral-Assignment, the death benefit payable under a Policy
upon the death of the survivor of the Insureds shall be paid to the Beneficiary
in such form and at such time or times as the Beneficiary may elect in
accordance with the terms of the Policy.
11. SOURCE OF BENEFITS. Any benefit payable to or on account of a Participant
under this Plan shall be paid by the Insurer in accordance with the Policy and,
if applicable, the related Split-Dollar Agreement and Collateral Assignment.
12. NON-ALIENATION OF BENEFITS. Except to the extent provided in the Policy
and the related Split-Dollar Agreement and Collateral-Assignment, the benefits
provided under this Plan may not be assigned or alienated and shall not be
subject to attachment, garnishment or other legal or equitable process.
13. ADMINISTRATION. The Plan Administrator shall be the named fiduciary under
the Plan, and shall have the discretionary authority to control and manage the
operation and administration of the Plan, including but not limited to the
power to construe and interpret the provisions of the Plan, to determine the
<PAGE> 5
eligibility of employees to participate in the Plan and the benefit
entitlements of Participants, and to establish rules and procedures (and to
amend, modify or rescind the same) for the administration of the Plan. The Plan
Administrator may delegate ministerial duties to other employees of the Company
and to third parties. The Plan Administrator shall be eligible to participate
in the Plan but shall not act upon any matter that relates solely to his
interest in the Plan as a Participant.
The Plan Administrator shall make all determinations concerning a Participant's
entitlement to benefits under the Plan. If a Partipant believes that he has
been denied a benefit under the Plan to which he is entitled, the Participant
may file a written request for such benefit with the Plan Administrator,
setting forth his claim. Any decision by the Plan Administrator denying a
claim for benefits by a Participant shall be set forth in writing specifying
the reasons for the denial in a manner calculated to be understood by the
Participant and advising the Participant of his or her right to obtain a review
of such decision. Participants may request a review of any decision denying a
benefit claim by filing a request for such in writing to the Plan Administrator
within 60 days of the Participant's receipt of the denial of his claim,
otherwise he shall be barred and estopped from challenging such claim denial.
The Plan Administrator shall conduct a full and fair review of the request for
review and the underlying claim and shall render a decision thereon in writing,
generally within 60 days of receiving the Participant's request for review (but
may extend the period for rendering a decision to 120 days if special
circumstances warrant the extension). The interpretation and construction of
the Plan by the Plan Administrator, and any action taken thereunder, shall be
binding and conclusive upon all persons and entities claiming to have an
interest under the Plan.
The Plan Administrator shall not be liable to any person for any action taken
or omitted to be taken in connection with the interpretation, construction or
administration of the Plan provided that such action or omission is made in
good faith.
14. NOTICES. Any notice or document required to be given to or filed with
the Company or the Plan Administrator shall be deemed given or filed if
delivered by certified or registered mail, return receipt requested, to such
party's attention at the Company's offices, Prudential Tower Building, Boston,
Massachusetts 02199.
15. AMENDMENT AND TERMINATION. The Plan may be amended or terminated at
any time and from time to time, in whole or in part, by the Plan Administrator;
provided, however, that any amendment that would materially increase the cost
of the Plan to the Company or would result in a material change in the nature
of the benefits provided under the Plan, or any termination of the Plan, shall
not be effective without the approval of the Committee. No such amendment or
termination shall adversely affect the rights of any Participant (without his
or her consent) under any Policy theretofore issued pursuant to the Plan or any
related Split-Dollar Agreement and Collateral-Assignment theretofore entered
into.
16. VALIDITY. In the event any provision of the Plan is held invalid, void or
unenforceable, the same shall not affect in any respect the validity of the
remaining provisions of the Plan.
<PAGE> 6
17. GOVERNING DOCUMENTS. In the event of any inconsistency between the terms
of the Plan set forth herein and the terms of any Policy purchased with respect
to a Participant or the related Split-Dollar Agreement or Collateral-Assignment
the terms of such Policy or agreement shall be controlling as to that
Participant, his or her spouse, the designated Owner and Beneficiary, and any
assignee or successor-in-interest of any of the foregoing persons.
18. APPLICABLE LAW. The provisions of the Plan shall be construed and
administered in accordance with the laws of the Commonwealth of Massachusetts,
except to the extent superseded by applicable Federal law.
THE GILLETTE COMPANY
By:
William J. McMorrow
Senior Vice President - Administration
Date:
<PAGE> 7
THE GILLETTE COMPANY ESTATE
PRESERVATION PLAN
EXHIBIT A
Eligibility Requirements for Participation
Grade level/Officer status: Grade 25 or above, or full by-law officer Other
requirements: Employed in United States, or a U.S. citizen or resident on
temporary foreign assignment
Amount of Coverage
$1,000,000 face amount per Participant and spouse
$500,000 face amount per unmarried Participant
Company/Owner Portions of Policy Premium
The respective portions of the annual premium due under a Policy to be paid by
each of the Company and the Owner initially shall be determined at the
inception of the Policy on the basis that (1) the Company shall make five equal
annual payments commencing on the Policy Date and each anniversary thereof, (2)
the Owner shall make fifteen equal annual payments commencing on the Policy Date
and each anniversary thereof, and (3) the present value (determined as of the
Policy Date using a 7.5% pre-tax/4.5% post-tax per annum discount rate) of the
cumulative payments to be made by each of the Company and the Owner shall be the
same.
The amount of the Company's contribution toward the annual premium under
a Policy shall not change unless agreed to by the Company in writing. The
amount of the Owner's portion of the annual premium due under a Policy may
change from year to year in accordance with the terms of the Policy and the
related Split-Dollar Agreement.
Manner of Payment of Owner Portion of Premium
The Owner's portion of the premium due under the Policy shall be paid to the
Company either (1) in a single lump sum at the beginning of each Policy Year
upon advance notification by the Company or (2) by payroll deduction from the
Participant's regular salary, as shall be elected by the Participant.
ATTACHMENTS
Specimen form of Split-Dollar Agreement
Specimen form of Collateral-Assignment
Specimen form of Certification of Trustee(s) and
Proposed Insureds
- - PAGE 7-
vction or administration of the Plan provided that such action or omission is
made in good faith.
<PAGE> 1
Exhibit 10(o)
-------------
Description of The Gillette Company Estate Planning Program
-----------------------------------------------------------
Certain key employees, including the executive officers, are eligible to
receive a one-time reimbursement for estate tax planning services not to exceed
$3,000.
<PAGE> 1
<TABLE>
EXHIBIT 11
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS, SHARES IN MILLIONS)
<CAPTION>
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
NET INCOME PER COMMON SHARE -- ASSUMING NO DILUTION
Net income as reported..................................... $288.3 $513.4 $427.4
Less: Preferred Stock Dividends, net of tax benefit....... (4.7) (4.8) (18.0)
------ ------ ------
Net income available to Common Shareholders................ $283.6 $508.6 $409.4
====== ====== ======
Average common shares outstanding.......................... 220.4 219.5 211.3
Reported net income per common share....................... $ 1.29 $ 2.32 $ 1.94
NET INCOME PER COMMON SHARE -- ASSUMING FULL DILUTION
Net income available to Common Shareholders (as above)..... $283.6 $508.6 $409.4
Add: Series C ESOP Preferred Stock dividend, net of tax
benefit............................................... 4.7 4.8 4.9
Deduct: Additional ESOP costs, net of tax benefit.......... (2.7) (2.5) (2.9)
------ ------ ------
Adjusted net income available to common shareholders....... $285.6 $510.9 $411.4
====== ====== ======
Average common shares outstanding.......................... 220.4 219.5 211.3
Add: Conversion of Series C ESOP Preferred Stock........... 3.3 3.3 3.3
Net additional common shares upon exercise of stock
options............................................... 1.8 2.0 1.8
------ ------ ------
Adjusted average common shares outstanding................. 225.5 224.8 216.4
====== ====== ======
Net income per common share -- assuming full dilution...... $ 1.27 $ 2.27 $ 1.90
</TABLE>
17
<PAGE> 1
Exhibit 13
THE GILLETTE COMPANY
Founded in 1901, The Gillette
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 is the leader in
several international markets.
Manufacturing operations
are conducted at 62 facilities in 28
countries, and products are
distributed through wholesalers,
retailers and agents in over 200
countries and territories.
<PAGE> 2
LETTER TO STOCKHOLDERS
The Gillette Company registered another outstanding sales and
earnings performance in 1993. Beyond the strong financial
results, the year was highlighted by an accelerating pace of new
product introductions, continued geographic expansion and a major
acquisition.
* * *
Total sales increased 5% to a record level of $5.41 billion.
Profit from operations advanced 12% to $1.09 billion, with net
income and earnings per common share growing at a faster rate of
15% to record highs of $591 million and $2.66, all before special
charges.
For the 88th consecutive year, the Company paid cash dividends on
its common stock. Dividends declared increased 17% to 84 cents
per share, up from 72 cents in 1992.
Reported financial results for the year were significantly
affected by two sets of special one-time charges. In the first
quarter, adoption of mandated accounting changes resulted in a
noncash aftertax charge of $139 million, primarily for
postretirement benefits. Secondly, the Company's adoption of a
comprehensive realignment plan resulted in an aftertax charge of
$164 million in the fourth quarter. In combination, these charges
were equivalent to $1.37 per common share. After these charges,
reported net income amounted to $288 million and earnings per
share, $1.29.
The realignment plan has been adopted to take advantage of
opportunities created by the continuing trend to more open world
trade and the growth of the Company's global operations. Under
the plan, which involves various facilities and business units,
there will be both job additions and reductions over the next two
years. Some 2,000 positions, or about 6% of the Company's
worldwide total, will be affected -- largely outside the United
States. The realignment plan should result in substantial ongoing
operating efficiencies, the effect of which will be felt
beginning primarily in 1995.
The past year's sales growth of 5% in dollar terms was dampened
significantly by the decline of exchange rates and the deep
economic recession in Europe, a region that accounted for 36% of
our business in 1993. The Company's dollar sales in Europe were
7% below those of the previous year; however, if European
exchange rates had held constant at their average 1992 values,
European sales would have matched the 1992 level. The reported
sales decline in Europe was in sharp contrast to increases of 11%
in the United States and 16% in the rest of the world.
While Gillette sales rose more moderately in 1993 than in recent
years, income growth was in line with the Company's longer-term
progress. During the five years from 1988 to 1993, sales grew at
a 9% annual rate, and income and earnings per common share at
17% (before special charges).
The Company's sustained profitable growth has been reflected in
the excellent performance of Gillette common stock over time.
During the last five years, there has been a strong upward
pattern underlying the short-term peaks and valleys of Gillette
stock price movement. Year-end 1993 versus 1992 -- in a stock
market that overreacted to pricing problems in the tobacco
industry and tended to "rotate" from consumer stocks toward
cyclicals -- Gillette's 5% price rise significantly outpaced
consumer goods company averages. It is more notable that the
compounded annual return to shareholders on Gillette stock over
the last five years has been 31%, compared with returns of 15%
for the Dow Jones Industrial Average and 14% for the Standard &
Poor's 500.
The quality of Gillette stock as a long-term investment is
further demonstrated by noting the growth in value of a $1,000
investment in Gillette stock at the end of 1983. By the end of
1993, the value had increased to $12,892 -- three times the value
of a comparable investment in either the Dow Jones Industrial
Average or the S&P 500. The compounded annual rate of return on
Gillette stock over the last 10 years has been 29%, nearly double
that of the market averages.
<TABLE>
<CAPTION>
Investment Value Compounded
12/31/83 12/31/93 Rate of Return
<S> <C> <C> <C>
Gillette $1,000 $12,892 29%
DJIA $1,000 $4,319 16%
S&P 500 $1,000 $3,998 15%
</TABLE>
The strength of Gillette's long-term business results and stock
market performance is largely due to our continuing focus on
carrying out the Company's mission--to achieve or enhance clear
leadership world-wide in the existing or new core consumer
product categories in which we choose to compete. To achieve
this, we emphasize geographic expansion and three primary "growth
drivers" -- research and development, capital spending and
<PAGE> 3
advertising. In combination, these growth drivers should rise at
least as fast as sales over the long term to assure future
growth. (In the last five years, they rose at a 9% annual rate,
matching the Company's sales growth rate.) We also look to
increase the level of incremental spending on these growth
drivers over time by at least as much as we add to profit from
operations. As an indicator of the effectiveness of this
approach, 37% of our 1993 sales came from products introduced in
the last five years -- higher than the 35% ratios achieved in 1991
and 1992.
The pace of new product activity is at an all-time record.
Seventeen new products were introduced in the second half of
1993, and a high level of activity also is planned for 1994,
along with the geographic rollout of major products such as the
Sensor for Women razor, the Gillette Series male grooming line
and the Braun FlavorSelect coffeemaker.
In addition to innovative new products, the Company also has been
pursuing its mission through other approaches. In mid-1993,
Parker Pen Holdings Limited was acquired, adding to our
stationery products business a well-known writing instruments
franchise. The Company also has established joint ventures with
razor blade companies in Russia, Poland and China and a joint
venture for manufacturing toothbrushes in China. These actions
should produce significant long-term growth.
The review of operations section of this Annual Report describes
the performance of all our product lines, but I'd like to
highlight a few areas of outstanding progress:
o The Sensor shaving system franchise has continued to build
substantially, and now accounts for one-third of total Gillette
blade and razor sales dollars. This progress has been accelerated
by the success of the Sensor for Women and SensorExcel shaving
systems. The Sensor for Women system, introduced in the United
States in mid-1992, has surpassed all our expectations, and
production capacity is being expanded to extend distribution. The
SensorExcel system, which raises the standard of quality in
shaving once again, was launched in Continental Europe and Canada
during the second half of 1993, and will be introduced in the
U.S. and selected other markets in 1994.
o The Gillette Series, a line of technologically advanced
men's toiletries, was introduced in the United States, Canada and
the United Kingdom under the same marketing theme that has proven
so successful for the Sensor system -- "Gillette, The Best a Man
Can Get." In all three countries, the Series line has improved
Gillette market shares in the shaving preparation and deodorant/
antiperspirant categories and established the Company in after-
shave conditioners.
o Now in its third year, the Braun Oral-B plaque remover has
become the worldwide leader in oral care appliance sales. The
cooperative efforts of Braun and Oral-B in developing products,
gaining dental profession endorsements and maximizing retail
distribution have played an important role in achieving this
outstanding success.
Each of these product innovations embodies meaningful
technological advances. For a fuller understanding of the
importance of technical mastery in generating Gillette business
growth, I urge you to read the special section on Technological
Innovation that follows on pages 16-21.
* * *
My comments in this letter would be incomplete without noting the
retirement and accomplishments of three longtime colleagues and
thanking them for their many years of dedicated service.
Lawrence E. Fouraker will not be standing for reelection to the
Board this year, having reached the mandatory retirement age for
directors. Larry has served with distinction for 21 years. His
keen business insights and wise counsel have contributed
importantly to the long-term progress of the Company. We will
miss him.
Gaston R. Levy, Executive Vice President -- International Group,
and Lorne R. Waxlax, Executive Vice President -- Diversified
Group, each retired at the end of 1993 after a distinguished
career of 35 years with the Company. Their dedication and
leadership skills in a wide variety of management positions have
made major contributions to the Company's worldwide performance.
* * *
Gillette has a strong combination of technical, marketing and
financial resources, and above all, talented and dedicated
people, deployed across a broad geographic base. These
fundamental strengths make us a world-class company that
confidently looks forward to building an increasingly successful
global enterprise.
Alfred M. Zeien
Chairman of the Board
March 1, 1994
<PAGE> 4
THE GILLETTE COMPANY
BLADES & RAZORS
Further strengthening its worldwide leadership position, Gillette
again achieved record results in its blade and razor business in
1993. Sales rose well above those of a year ago. Profits climbed
even more rapidly, prior to special charges related to
realignment.
* * *
The Company's progress in its major line of business reflects the
extraordinary market performance of its technologically superior
products. Chief among these is the Sensor family of shaving
systems, which has achieved unprecedented success.
The Gillette Sensor shaving system, introduced in early 1990,
continued its strong upward trend in 1993. Worldwide sales were
sharply higher, and share positions were enlarged in every key
market. Another major contributor to sales growth was the Sensor
for Women shaving system, launched in mid-1992. This innovative
product has generated exceptional increases in sales and market
share in the United States, and has been very favorably received
where introduced in international markets. Broadened distribution
is planned for 1994.
The latest addition to the Sensor franchise, the SensorExcel
shaving system, features a revolutionary skin guard composed of
five soft, flexible microfins that deliver unrivaled shaving
closeness and comfort. The new system has received excellent
trade and consumer acceptance in its introductory markets of
Continental Europe and Canada. Distribution in other geographic
areas, including the United States, will begin in 1994.
With the growing success of the Sensor franchise, the Atra and
Trac II twin blade shaving systems, top sellers since the 1970's,
are gradually yielding their leading market positions. Both
brands, however, continue to hold substantial shares in the
United States and abroad.
In the disposable razor category, the Company's worldwide sales
were slightly above those of 1992. The Good News brand remained
the number one disposable razor in the United States for the 18th
consecutive year, and Gillette disposables were again the best
sellers in Canada, Europe and Latin America.
New in 1994 -- Gillette CustomPlus disposable razors for men and
women.
Complementing advances by twin blade systems and disposables, the
Gillette double edge blade business also showed vitality.
Reflecting the Company's increased presence in developing
markets, worldwide sales of Gillette double edge blades rose
moderately, and the Company maintained its traditional leadership
in this category.
In 1993, Gillette continued to pursue two growth strategies to
strengthen its global leadership position in blades and razors.
The first is to increase blade market value worldwide by building
the Sensor franchise and by upgrading consumers in less developed
areas from double edge blades to twin blade products. The second
strategy is geographic expansion, and great progress was made
during the year in China and Eastern Europe.
<PAGE> 5
THE GILLETTE COMPANY
TOILETRIES & COSMETICS
Paced by the strong performance of Gillette Series male grooming
products, sales of the toiletries and cosmetics line moved well
ahead of the prior year's level. Spending in support of new
product introductions, however, significantly reduced profits,
before special charges related to realignment.
* * *
Deodorants/antiperspirants are the Company's principal toiletries
products. Worldwide sales climbed markedly, due chiefly to the
successful introduction of the Gillette Series in North America
and the United Kingdom. Higher sales of Right Guard, Dry Idea and
Soft & Dri deodorants/antiperspirants in the United States also
contributed to the substantial sales increase. Reflecting these
gains, Gillette achieved a notable rise in its share of the
domestic market.
Led by strong acceptance of the Gillette Series in the United
States, Canada and the United Kingdom, shave preparations showed
good sales progress in 1993, and Gillette increased its share of
market in all three countries. Gillette Series after-shave skin
conditioners also were very favorably received in introductory
markets.
At year-end, the Company launched the Gillette Series Wild Rain
collection of nine male grooming products, providing a second
fragrance to complement that offered by the original Series Cool
Wave products. The Wild Rain introduction is expected to
accelerate sales momentum of the Series line.
Among hair care products, the Company continued to emphasize the
White Rain brand, which generated a notable advance in sales. A
major factor was the excellent showing of White Rain Essentials
shampoos and conditioners, launched in late 1992.
Jafra skin care and cosmetic products, sold by consultants at
classes in the home or office, are an important component of the
toiletries and cosmetics line. Sales in 1993 matched those of the
year before. The top-performing market again was Mexico, where a
considerable sales gain enabled Jafra Mexico to remain the leader
in skin care and color cosmetics. During the year, Jafra began
the introduction of its newly designed color cosmetics line,
embarking on the final stage of a redesign of Jafra products that
already has been completed for skin care and body care products.
Enhancing prospects for the future, Jafra increased its
consultant force by 10,000, to a worldwide total of nearly
200,000 consultants. Jafra also expanded geographically in 1993,
starting operations in Canada and Hungary.
<PAGE> 6
THE GILLETTE COMPANY
STATIONERY PRODUCTS
With the acquisition of Parker Pen at midyear, Gillette achieved
the clear leadership position worldwide in the highly competitive
writing instruments business. Reflecting this addition, sales of
stationery products registered a sizable advance. Profits also
climbed sharply, prior to special charges related to realignment.
* * *
The key event in the Company's stationery products business in
1993 was the acquisition of Parker Pen, whose heritage of
technical excellence, well-recognized brand name and strong
worldwide distribution makes it an excellent fit with Gillette.
With the Paper Mate, Parker and Waterman franchises, the Company
holds a strong position within all writing systems, price levels,
distribution channels and geographic areas. Parker Pen's position
in the mid- to high-priced range complements the lower-priced
Paper Mate and premium-priced Waterman brands. Geographically,
the vitality of Parker Pen in European markets outside of France,
as well as in the Middle East and Far East, complements Paper
Mate's strength in North America and Latin America, and
Waterman's in France and other markets.
During 1994, the integration and development of Parker Pen within
the stationery products business will continue, generating a
variety of operational efficiencies.
Among the Company's traditional stationery products categories,
low-priced pens posted worldwide sales somewhat lower than the
prior year's level. During the year, the Rubberstik ball pen,
which features a rubberized barrel for improved writing comfort,
was introduced successfully in North America.
Sales in the mid-priced range were well below those of 1992,
despite the substantial sales growth achieved by the Paper Mate
Flexgrip retractable and Paper Mate Dynagrip refillable pens. At
year-end, a new, disposable version of the Dynagrip pen was well-
received in the United States and Europe.
The Waterman line of premium writing instruments recorded a sales
decline in 1993, as significant shortfalls in Europe, related to
economic recession and unfavorable exchange rates, overshadowed
continued strong performances in the United States and the Asia-
Pacific region, principally Japan.
Sales of Liquid Paper correction products were much lower than
in the previous year. This was chiefly attributable to a
substantial decrease in domestic sales of Liquid Paper correction
fluids, which remained the market leader. Volume comparisons were
adversely affected by the timing of a major trade promotion.
Liquid Paper correction pens achieved a sizable sales gain,
especially in Latin America and Europe.
<PAGE> 7
THE GILLETTE COMPANY
BRAUN
Supported by strong business fundamentals, Braun in 1993 achieved
double-digit growth in key markets such as the United States and
Japan, offsetting much of the negative impact of European
recession and currency devaluation. Overall, Braun sales reported
in U.S. dollars were lower, but profits grew slightly, before
special charges related to realignment.
* * *
Electric shaver volume declined in 1993 in all major markets
except the United States, as unfavorable economic conditions
caused consumers to postpone purchases and the trade to reduce
inventories. While total sales of Braun shavers were below those
of the prior year, the Flex Control family of shavers featuring
the unique twin foil pivoting head system again turned in a good
performance, with sales well above those of 1992. Progress was
especially strong in the United States. At midyear, Braun
introduced successfully a range of lower-priced Flex Control
shavers in Japan, and worldwide distribution is scheduled to be
completed during 1994. Overall, Braun retained its traditional
leading share of the electric shaver market in Germany and its
sizable share positions throughout the rest of the world.
New in 1993 - a lower-
priced Flex Control
rechargeable shaver.
Among women's hair removal appliances, the Braun Silk-epil
electric hair epilator was again the best seller, expanding its
clear worldwide leadership.
Household appliance sales posted a significant decline. However,
Braun hand blenders showed good sales progress, and Braun
strengthened its clear worldwide leadership position. Two major
new household products, launched in late 1993, have been well-
received in introductory markets. The Braun FlavorSelect coffee-
maker incorporates the latest technology to brew coffee to an
individual's particular taste, and the Braun 5-in-1 MultiSystem
food preparation center combines five distinct kitchen appliances
in one versatile unit. Worldwide distribution of both products is
planned for 1994.
The personal care appliance line includes oral care and hair care
appliances. Sales recorded a very good advance, thanks to the
continued outstanding success of the Braun Oral-B plaque remover.
Paced by strong gains in the United States, where market share
more than doubled, Braun achieved clear worldwide leadership in
oral care appliances. Braun maintained its clear European market
leadership in hair care appliances, although sales were
substantially lower.
The Braun
Free Spirit
styling iron.
In addition to the superior technical performance of its
products, a major contributor to future Braun growth is its
increasingly strong global presence, in terms of both geographic
reach and brand name recognition. These strengths, together with
continued leadership in product innovation, design and quality,
should help Braun achieve further success in the years to come.
The Braun Oral-B
plaque remover now
features Indicator
bristles that help
monitor brushing
performance.
<PAGE> 8
THE GILLETTE COMPANY
ORAL-B
After several years of double-digit growth in sales and profits,
Oral-B in 1993 essentially matched its record-setting 1992
performance. Sales were virtually unchanged, and profits dipped
marginally, prior to special charges related to realignment.
Oral-B closed the year strongly, introducing a significant array
of new products in the fourth quarter.
* * *
In a well-established partnership with the dental profession,
Oral-B develops, markets and distributes worldwide a broad range
of superior oral care products, including toothbrushes,
interdental products, specialty toothpastes, oral rinses and
professional dental supplies.
The Oral-B toothbrush is the brand used by more dentists than any
other in the United States and many countries abroad. Sales were
somewhat below those of a year ago, due to unfavorable exchange
rates and intense competitive activity. At year-end, Oral-B
enhanced its toothbrush line with the launch of the Advantage
toothbrush, the best ever from Oral-B. The new product features
unique Power Tip and Action Cup bristle configurations that
remove plaque better and help protect against gum disease. The
brush head contains blue Indicator bristles that signal the need
for replacement, and the innovative handle provides maximum
comfort and control while brushing.
Overall, Oral-B toothbrushes retained a leading share position in
the United States, and were again the best sellers in other large
markets, including Australia, Canada, Mexico and the United
Kingdom.
During 1993, Oral-B continued to expand its presence in other
fast-growing oral care categories. Worldwide sales of Oral-B
interdental products climbed sharply for the sixth consecutive
year, reflecting the excellent acceptance of new Oral-B dental
flosses and dental tape -- the first floss products with fluoride
in the United States.
In the increasingly important specialty toothpaste and oral rinse
categories, five new Oral-B products offering therapeutic
benefits contributed to a sizable sales advance. Oral-B Tooth &
Gum Care toothpaste and Sensitive with Fluoride toothpaste were
very well-received, as was a line of anti-plaque and anti-cavity
rinses for adults and children in low-alcohol or alcohol-free
formulations. Broadened distribution of these new products is
planned for 1994.
To strengthen its position as a leading oral care business
worldwide, Oral-B continues to rapidly increase investment in
research and technology, assuring a sustained flow of innovative
oral care products. Geographic growth also is accelerating
through the utilization of Gillette's strong international
distribution network and the opening of new markets. In 1993,
Oral-B entered six markets, including China, where a joint
venture manufacturing operation was established. Supporting these
moves, Oral-B will continue to build upon its heritage of
partnership with dental professionals as the cornerstone of its
long-term global strategy.
In 1993,
Oral-B began
manufacturing
and marketing
toothbrushes
in China.
<PAGE> 9
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION
RESULTS OF OPERATIONS
In 1993, the Company posted record net sales of $5.41 billion,
compared with $5.16 billion in 1992. Profit from operations was higher
than in 1992, before a special charge for the realignment program.
This charge, along with the cumulative effect of accounting changes,
adversely affected net income and net income per common share. Before
the effect of the realignment program and the accounting changes, the
Company achieved record levels in profit from operations, net income
and net income per common share.
SALES
Net sales were $5.41 billion in 1993, compared with $5.16 billion in
1992. This gain of 5% reflected a 7% increase from volume and new
products, partially offset by a 2% decrease from the combined effects
of fluctuations in exchange rates and selling prices. In 1992, these
factors contributed to sales growth by 4% and 6%, respectively. The
continued economic weakness in Europe and the unfavorable impact of
weaker European currencies adversely affected sales growth in both
years.
Sales of domestic operations rose 11% in 1993, compared with a 6%
increase in 1992. Foreign sales advanced 2% in 1993 following a 12%
increase in 1992. Sales of operations outside the United States
accounted for 67% of sales in 1993 and 69% in 1992.
An analysis of sales by business segment follows.
<TABLE>
<CAPTION>
% Increase/
(Millions of dollars) (Decrease)
93 92 91 93/92 92/91
<S> <C> <C> <C> <C> <C>
Blades & Razors $2,118 $1,978 $1,750 7 13
Toiletries & 1,047
Cosmetics 971 947 8 3
Stationery Products 633 520 460 22 13
Braun Products 1,249 1,326 1,216 (6) 9
Oral-B Products 363 366 308 (1) 19
Other 1 2 3 (34) (33)
$5,411 $5,163 $4,684 5 10
</TABLE>
Further information by business segment is set forth on pages 6 through 15.
In 1993, sales growth of blades and razors was due to continued volume
increases of the Gillette Sensor system, the growth of the Sensor for Women
system, the introduction of SensorExcel razors and cartridges and further
geographic expansion. Sales growth was hampered by the negative exchange
effects in Europe. The Gillette Sensor system was the major contributor to
sales growth in 1993, as well as in 1992.
Sales of toiletries and cosmetics were well above those of the prior year.
Domestic sales increased sharply, due to the Gillette Series male toiletries
line and other deodorant/antiperspirant brands, offsetting a considerable
decline of Jafra skin care products. Foreign sales of toiletries and
cosmetics grew slightly in 1993. In 1992, sales increased modestly,
reflecting lower domestic sales of deodorants/antiperspirants, but higher
foreign sales of Jafra skin care products and shave preparations in Europe.
In 1993, sales of stationery products were significantly higher, reflecting
the inclusion of Parker Pen results. Without Parker Pen, domestic sales
declined and foreign sales were considerably lower, due to the economic
weakness in Europe. In 1992, sales climbed sharply, with advances in all
categories and the addition of Helit desk accessories.
Sales of Braun products declined from those of the prior year. Sales in the
United States increased substantially, but were offset by significantly lower
European sales that reflected the continuing economic recession and weaker
currencies in Europe. In 1992, sales were sharply higher in the United
States, while a lower growth rate in foreign sales was due to the economic
slowdown in Europe and Japan.
In 1993, sales of Oral-B products were virtually unchanged. Domestic sales
were somewhat lower than those of the prior year, due to strong competition
in the premium toothbrush category. Foreign sales maintained last year's
level. The substantial Oral-B sales advance in 1992 reflected the success of
new products in the United States and expansion into new foreign markets.
GROSS PROFIT
Gross profit increased $230 million between 1993 and 1992, and $352 million
between 1992 and 1991. As a percent of sales, gross profit continued to show
a positive trend, increasing to 62.2% in 1993, as compared with 60.8% and
59.5% in 1992 and 1991, respectively. Sales increases in products with higher
profit margins, such as the Sensor system, Braun Flex Control shaver and
Oral-B Indicator toothbrush, had a positive impact on gross profit. The
improving trend also reflected increased production efficiencies for these
and other products.
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses amounted to 42.1% of net sales,
compared with 42.0% in 1992 and 41.1% in 1991. In absolute terms, these
expenses increased 5% in 1993 and 13% and 10% in 1992 and 1991, respectively.
The increases reflect the higher level of marketing support given to major
brands, particularly the Gillette Series. In 1993, $428 million was spent on
advertising, including sampling, and $450 million on sales promotion, for a
total of $878 million, an increase of 3% over 1992. This compares with 1992
<PAGE> 10
amounts of $447 million, $409 million and $856 million, respectively. In
1991, these amounted to $402 million, $352 million and $754 million,
respectively. The spending in 1993 represented 16.2% of sales, compared with
16.6% in 1992 and 16.1% in 1991. Spending on research and development grew 8%
in 1993, and 14% in both 1992 and 1991. Other marketing and administrative
expenses rose 6% in 1993, 9% in 1992 and 10% in 1991.
PROFIT FROM OPERATIONS
The Board of Directors approved a realignment plan to take advantage of
opportunities created by the continuing trend to more open world trade and
the growth of the Company's global operations. Under the plan, which involves
various facilities and business units, there will be both job additions and
job reductions. Over the next two years, some 2,000 positions, or about 6% of
the Company's worldwide total, will be affected, primarily outside the United
States. These actions resulted in a fourth quarter charge to profit from
operations of $262.6 million ($164.1 million after taxes or $.74 per share).
This charge includes estimated costs for employee severance of $140 million,
$84 million for asset write-downs and $39 million for factory closings and
the integration of operations. Management estimates the realignment program
will require net cash expenditures of $27 million and $58 million in 1994 and
1995, respectively. Cash flow benefits will be primarily reinvested into
research and development, capital spending and advertising to support product
line development and expansion.
Before the realignment charge, profit from operations in 1993 was $1,087
million, compared with $967 million in 1992 and $862 million in 1991. This
represented 20.1% of net sales, compared with 18.7% and 18.4% in 1992 and
1991, respectively.
Within the United States, profit from operations, before the realignment
charge, increased 10%, compared with a 9% increase in 1992 and 6% in 1991.
Outside the United States, it increased 13%, compared with 14% increases in
1992 and 1991.
<TABLE>
An analysis of profit from operations by business segment follows.
<CAPTION>
% Increase/
(Millions of dollars) (Decrease)
93((a)) 93((b)) 92 91 93/92((b)) 92/91
<S> <C> <C> <C> <C> <C> <C>
Blades&Razors $692 $797 $665 $556 20 20
Toiletries &
Cosmetics (6) 58 89 114 (35) (22)
Stationery
Products 27 64 49 49 32 --
Braun Products 146 167 163 145 3 12
Oral-B Products 17 45 47 39 (3) 21
876 1,131 1,013 903 12 12
Corporate (51) (44) (46) (41)
$825 $1,087 $967 $862
<FN>
(a) after charge for realignment (b) before charge for realignment See Notes to
Consolidated Financial Statements for geographic area and segment data.
</TABLE>
In 1993, before the charge for realignment, the blade and razor and Braun
segments, as in 1992, showed increases resulting from sales growth in the
United States, improved product mix and lower product costs. In 1993, both
segments were unfavorably affected by weaker European currencies. The gain in
the stationery segment is attributable to the Parker Pen acquisition. Without
Parker Pen, the segment reported a sharp decline reflecting lower sales, due
primarily to economic weakness in Europe. In 1992, profits of stationery
products were level, due to increased advertising expenditures. In 1993, as
in 1992, toiletries and cosmetics reported lower profits, due primarily to
marketing support given the Gillette Series line and established brands. The
marginal 1993 decline in Oral-B profits was attributable to higher marketing
spending. The gain in 1992 reflected sales growth and favorable product mix.
NONOPERATING CHARGES/INCOME
In 1993, net interest expense (interest expense less interest income)
amounted to $33 million, a significant decrease from the 1992 and 1991 totals
of $56 million and $94 million, respectively. The decrease, which occurred
despite a slight increase in average borrowings related to the Parker Pen
acquisition, reflects generally lower interest rates and the Company's
strategy of converting its long-term borrowings into U.S. dollar floating
rate debt through swaps. This strategy was selected considering the Company's
relatively low leverage and its expectation of interest rate development.
Net exchange losses amounted to $105 million, compared with $69 million in
1992 and $53 million in 1991. This was attributable to subsidiaries in highly
inflationary countries, primarily Brazil. Translation adjustments resulting
from currency fluctuations in non-highly inflationary countries are
accumulated in a separate section of stockholders' equity, as noted on page
27. These negative adjustments amounted to $150 million in 1993, $48 million
in 1992 and $7 million in 1991. The loss in 1993 was attributable to the
strengthening of the U.S. dollar against European currencies.
TAXES AND NET INCOME
The effective tax rate of 37.5% in 1993 compared with rates of 38.1% in 1992
and 38.4% in 1991.
Effective January 1, 1993, the Company adopted three Statements of Financial
Accounting Standards (SFAS). The cumulative impact of these changes resulted
in a noncash charge of $206 million, or $139 million after taxes, or $.63 per
common share.
SFAS 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," requires the Company to accrue the expected cost of providing
these postretirement benefits during employees' working years, rather than
the cash method of accounting. The cumulative effect of this change was a
charge of $179 million, or $109 million after taxes, or $.50 per common
share.
<PAGE> 11
SFAS 109, "Accounting for Income Taxes," requires the use of the asset and
liability method rather than the deferred method. The cumulative effect of
this change was a charge of $13 million, or $.06 per common share.
SFAS 112, "Employers' Accounting for Postemployment Benefits," requires the
Company to accrue all types of benefits provided to former or inactive
employees and their dependents. The cumulative effect of this change was a
charge of $27 million, or $17 million after taxes, or $.07 per common share.
Net income for 1993 was $288 million, compared with $513 million in 1992 and
$427 million in 1991. Net income per common share for 1993 was $1.29,
compared with $2.32 and $1.94 in 1992 and 1991, respectively. Excluding the
charge for realignment and the cumulative effect of changes in accounting
principles, net income increased 15% to $591 million, and net income per
common share also increased 15% to $2.66.
Management is unaware of any trends or conditions that could adversely affect
the Company's consolidated financial position or future results of
operations.
FINANCIAL CONDITION
Continuing the trend of recent years, the Company's financial condition
remained strong in 1993. While net debt increased, related to the acquisition
of Parker Pen, the Company's strong operating cash flow and long-term debt
credit ratings improved.
Net debt (total debt, net of associated swaps, less cash and short-term
investments) at December 31, 1993, amounted to $1,257 million, compared with
$994 million in 1992 and $1,099 million in 1991.
Reflecting the 1993 charge for realignment and the cumulative effect of
accounting changes noted above, the Company's book equity position amounted
to $1,479 million at the end of 1993, compared with $1,496 million at the end
of 1992 and $1,157 million at the end of 1991. The market value of Gillette
equity stood at over $13 billion at year-end 1993.
Net cash provided by operating activities in 1993 was $732 million, compared
with $620 million in 1992 and $579 million in 1991. Requirements for net
working capital increased in all three years, reflecting the growth of the
business. The Company's current ratio for 1993, affected by the provision for
realignment, was 1.44, compared with ratios of 1.50 and 1.47 for 1992 and
1991, respectively.
Capital spending in 1993 amounted to $352 million, compared with $321 million
and $286 million in 1992 and 1991, respectively. Spending in all three years
was principally for the Sensor system franchise, other twin blade shaving
products and Braun products.
For 1994, it is expected that spending for property, plant and equipment will
increase over the 1993 level, reflecting additional production capacity for
twin blade shaving, Braun and Oral-B products.
Spending will be financed primarily by funds from operations.
At year-end 1993, there was $154 million outstanding under the U.S.
commercial paper program and no borrowings under the Company's $350 million
long-term revolving credit agreement. At year-end 1992 and 1991, there was
$42 million and $13 million, respectively, in debt outstanding under the
commercial paper program. At year-end 1992 and 1991, there was no debt
outstanding under the revolving credit agreement.
Both Moody's and Standard & Poor's upgraded the Company's long-term credit
ratings in 1993. Moody's raised the Company's long-term debt rating from A2
to A1, while Standard & Poor's increased the rating from A to A+. Commercial
paper ratings were increased to A1 by Standard & Poor's and to P1 by Moody's
in 1991.
In 1993, the Company spent $481 million for acquisitions in certain existing
core businesses, primarily Parker Pen. In 1992, the Company invested $66
million in acquisitions, with $90 million invested in 1991.
Under the $600 million of debt securities issuable pursuant to the shelf
registrations filed with the Securities and Exchange Commission, which became
effective during 1993, the Company issued $500 million in notes consisting of
$150 million of 4.75% three-year notes due 1996, $150 million of 6.25%
10-year notes due 2003, and $200 million of 5.75% 12-year notes due 2005. The
Company used the net proceeds to refinance existing indebtedness related to
maturing long-term debt and short-term debt incurred for the Parker Pen
acquisition and other general corporate purposes. At December 31, 1993, there
remained $100 million of debt securities available under the shelf
registration expiring October 5, 1995.
Gillette continues to have access to substantial sources of capital in world
financial markets. The Company's ability to generate funds internally, its
substantial unused lines of credit and its access to worldwide credit markets
are ample to cover all anticipated needs.
<PAGE> 12
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME AND EARNINGS REINVESTED IN THE BUSINESS
<TABLE>
<CAPTION>
(Millions of dollars, except per share amounts)
Years Ended December 31, 1993, 1992 and 1991 1993 1992 1991
<S> <C> <C> <C>
Net Sales $5,410.8 $5,162.8 $4,683.9
Cost of Sales 2,044.3 2,025.8 1,898.7
Gross Profit 3,366.5 3,137.0 2,785.2
Selling, General and Administrative Expenses 2,279.2 2,169.9 1,923.6
Realignment Expense 262.6 -- --
Profit from Operations 824.7 967.1 861.6
Nonoperating Charges (Income)
Interest income (27.3) (27.3) (21.7)
Interest expense 59.8 83.3 115.3
Other charges - net 109.5 81.4 73.9
142.0 137.4 167.5
Income before Income Taxes and Cumulative
Effect of Accounting Changes 682.7 829.7 694.1
Income Taxes 255.8 316.3 266.7
Income before Cumulative Effect of
Accounting Changes 426.9 513.4 427.4
Cumulative Effect of Accounting Changes (138.6) -- --
Net Income 288.3 513.4 427.4
Preferred Stock dividends, net of tax benefit 4.7 4.8 18.0
Net Income Available to Common Stockholders 283.6 508.6 409.4
Earnings Reinvested in the Business at beginning of
year 2,259.6 1,909.3 1,635.6
2,543.2 2,417.9 2,045.0
Common Stock dividends declared 185.3 158.3 135.7
Earnings Reinvested in the Business at end of year $2,357.9 $2,259.6 $1,909.3
Income per Common Share before Cumulative
Effect of Accounting Changes $ 1.92 $ 2.32 $ 1.94
Cumulative Effect of Accounting Changes (.63) -- --
Net Income per Common Share $ 1.29 $ 2.32 $ 1.94
Dividends declared per common share $ .84 $ .72 $ .62
Average number of common shares outstanding (millions) 220.4 219.5 211.3
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE> 13
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
(Millions of dollars)
December 31, 1993 and 1992 1993 1992
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 37.1 $ 35.3
Short-term investments, at cost, which approximates market value 1.5 4.5
Receivables, less allowances: 1993, $45.9; 1992, $41.8 1,226.9 1,186.1
Inventories 874.6 852.4
Prepaid expenses, principally taxes 387.9 257.9
Total Current Assets 2,528.0 2,336.2
Property, Plant and Equipment, at cost less accumulated depreciation 1,214.5 1,075.4
Intangible Assets, less accumulated amortization 916.9 432.1
Other Assets 442.9 346.2
$5,102.3 $4,189.9
Liabilities and Stockholders' Equity
Current Liabilities
Loans payable $ 395.0 $ 307.2
Current portion of long-term debt 46.2 168.6
Accounts payable and accrued liabilities 1,122.4 928.9
Income taxes 196.7 156.1
Total Current Liabilities 1,760.3 1,560.8
Long-Term Debt 840.1 554.2
Deferred Income Taxes 166.1 103.0
Other Long-Term Liabilities 835.5 459.7
Minority Interest 21.3 15.8
Stockholders' Equity
8.0% Cumulative Series C ESOP Convertible Preferred, without par
value,
Issued: 1993 - 164,243 shares; 1992 - 164,608 shares 99.0 99.2
Unearned ESOP compensation (53.8) (64.8)
Common stock, par value $1 per share
Authorized 580,000,000 shares
Issued: 1993 - 278,587,610 shares; 1992 - 277,874,114 shares 278.6 277.9
Additional paid-in capital 259.4 236.9
Earnings reinvested in the business 2,357.9 2,259.6
Cumulative foreign currency translation adjustments (415.0) (265.2)
Treasury stock, at cost:
1993 - 57,697,990 shares; 1992 - 57,705,301 shares (1,047.1) (1,047.2)
Total Stockholders' Equity 1,479.0 1,496.4
$5,102.3 $4,189.9
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE> 14
<TABLE>
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions of dollars)
Years Ended December 31, 1993, 1992 and 1991 1993 1992 1991
<S> <C> <C> <C>
Operating Activities
Net income $288.3 $513.4 $427.4
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of accounting changes 138.6 -- --
Provision for realignment expense 164.1 -- --
Depreciation and amortization 218.5 210.9 192.7
Other 51.8 10.7 31.2
Changes in assets and liabilities, net of effects
from acquisition of businesses:
Accounts receivable (101.8) (146.8) (99.0)
Inventories (56.0) (77.5) (64.9)
Accounts payable and accrued liabilities 10.8 58.0 6.3
Other working capital items (30.7) 2.9 45.4
Other noncurrent assets and liabilities 48.1 48.8 39.9
Net cash provided by operating activities 731.7 620.4 579.0
Investing Activities
Additions to property, plant and equipment (352.0) (321.4) (286.0)
Disposals of property, plant and equipment 10.2 15.6 17.5
Acquisition of businesses, less cash acquired (452.9) (64.5) (84.6)
Other (35.6) (10.7) (3.9)
Net cash used in investing activities (830.3) (381.0) (357.0)
Financing Activities
Proceeds from exercise of stock option and
purchase plans 24.5 22.2 12.6
Proceeds from long-term debt 500.0 -- 1.0
Reduction of long-term debt (414.8) (239.2) (84.6)
Increase (decrease) in loans payable 177.5 117.1 (27.7)
Dividends paid (183.3) (157.4) (146.0)
Net cash provided by (used in) financing
activities 103.9 (257.3) (244.7)
Effect of Exchange Rate Changes on Cash (3.5) .4 (5.0)
Increase (Decrease) in Cash and Cash Equivalents 1.8 (17.5) (27.7)
Cash and Cash Equivalents at Beginning of Year 35.3 52.8 80.5
Cash and Cash Equivalents at End of Year $ 37.1 $ 35.3 $ 52.8
Supplemental disclosure of cash paid for:
Interest $ 72.5 $ 87.9 $111.5
Income taxes $180.9 $198.2 $156.9
Noncash investing and financing activities:
Acquisition of businesses
Fair value of assets acquired $705.8 $ 62.3 $163.1
Cash paid 481.1 65.9 90.2
Liabilities assumed $224.7 $ (3.6) $ 72.9
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE> 15
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries. Inter-company accounts and transactions are eliminated.
Accounts of subsidiaries outside the United States and Canada are included on
the basis of fiscal years generally ending November 30, except for the Braun
group of companies, whose fiscal year ends September 30.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash, time deposits and all highly liquid
debt instruments with an original maturity of three months or less.
INVENTORY VALUATION
Inventories are valued at the lower of cost or market. In general, cost is
currently adjusted standard cost, which approximates actual cost on a
first-in, first-out basis.
DEPRECIATION
Depreciation is computed primarily on a straight-line basis over the
estimated useful lives of assets.
INTANGIBLE ASSETS
Intangible assets principally consist of goodwill, which is being amortized
to expense using the straight-line method over a period of 40 years. Other
intangible assets are being amortized to expense on the straight-line method
over a weighted average period of approximately 19 years. The carrying amount
of intangible assets is assessed for impairment when operating profit from
the applicable segment indicates that the carrying amount of the assets may
not be recoverable.
NET INCOME PER COMMON SHARE
Net income per common share is calculated by dividing net income less
dividends on preferred stock, net of tax benefits, by the weighted average
number of common shares outstanding.
The calculation of fully diluted net income per common share assumes
conversion of the preferred stock into common stock, and also adjusts net
income for the ESOP debt service expense due to the assumed replacement of
the preferred stock dividends with common stock dividends. The dilutive
effect is not significant.
INCOME TAXES
The Company reinvests unremitted earnings of foreign operations and,
accordingly, does not provide for Federal income taxes which could result
from the remittance of such earnings. These unremitted earnings amounted to
$1,688 million at December 31, 1993.
Commencing in 1993, deferred taxes are provided using the asset and liability
method for temporary differences between financial and tax reporting.
ACQUISITIONS AND
DIVESTITURES
On May 7, 1993, the Company acquired Parker Pen Holdings Limited (Parker
Pen), a worldwide writing instruments company, headquartered in England. The
acquisition has been accounted for by the purchase method of accounting. The
purchase price and other costs of the acquisition amounted to $458 million
and have been allocated to goodwill pending an independent appraisal of
Parker Pen's net assets acquired. The consolidated statement of income for
1993 includes Parker Pen's results from June 1, 1993, including amortization
of a proportionate amount of the goodwill over a 40-year period.
The following unaudited pro forma summary presents the combined results of
operations of the Company and Parker Pen as if the acquisition had occurred
at the beginning of each period presented. The results do not purport to
indicate what would have occurred had the acquisition been made on those
dates or what results may be in the future.
<TABLE>
<CAPTION>
(Millions of dollars,
except per share amounts) 1993((a)) 1993((b)) 1992
<S> <C> <C> <C>
Net sales $5,562 $5,562 $5,496
Before cumulative effect of
accounting changes:
Income $ 435 $ 599 $ 523
Income per common share $ 1.95 $ 2.69 $ 2.36
</TABLE>
(a) after charge for realignment (b) before charge for realignment
During 1992 and 1991, the Company also acquired or increased its interest in
several businesses at a total cost of $54 million and $130 million,
respectively. These acquisitions did not materially affect results of
operations in those years.
In 1993, the Netherlands company in which the Company owned a 22.9% nonvoting
equity interest, and for which Gillette had provided part of the subordinated
debt financing, sold its Wilkinson blade and razor business. This resolved
all proceedings brought by the European antitrust authorities with respect to
the Company's investment in the Netherlands company. The results of this
<PAGE> 16
transaction had no material impact on the Company's results of operations.
REALIGNMENT EXPENSE
The Board of Directors approved a realignment plan to take advantage of
opportunities created by the continuing trend to more open world trade and
the growth of the Company's global operations. The realignment plan involves
various facilities and business units of the Company.
These actions resulted in a fourth quarter charge to profit from operations
of $262.6 million ($164.1 million after taxes, or $.74 per share). This
charge includes the accrual of estimated employee severance costs, provisions
for the write-down of affected property, plant and equipment to net
realizable values and other related costs.
FOREIGN CURRENCY
TRANSLATION
Net exchange gains or losses resulting from the translation of assets and
liabilities of foreign subsidiaries, except those in highly inflationary
economies, are accumulated in a separate section of stockholders' equity
titled, "Cumulative foreign currency translation adjustments." Also included
are the effects of exchange rate changes on intercompany transactions of a
long-term investment nature and transactions designated as hedges of net
foreign investments.
An analysis of this account follows.
<TABLE>
<CAPTION>
(Millions of dollars) 1993 1992 1991
<S> <C> <C> <C>
Balance at beginning of year $(265.2) $(216.9) $(209.5)
Translation adjustments, (154.2)
including the effect
of hedging (60.2) 6.5
Related income tax effect 4.4 11.9 (13.9)
Balance at end of year $(415.0) $(265.2) $(216.9)
</TABLE>
Included in other charges were net exchange losses of $105.4 million, $68.8
million and $53.4 million for 1993, 1992 and 1991, respectively, relating to
subsidiaries in highly inflationary countries, primarily Brazil.
<TABLE>
<CAPTION>
INVENTORIES
December 31, December 31,
1993 1992
<S> <C> <C>
Raw materials and supplies $ 209.1 $ 192.4
Work in process 90.8 94.1
Finished goods 574.7 565.9
$ 874.6 $ 852.4
PROPERTY, PLANT AND
EQUIPMENT
Land $ 29.9 $ 28.2
Buildings 420.5 388.7
Machinery and equipment 2,125.5 1,996.7
2,575.9 2,413.6
Less accumulated depreciation 1,361.4 1,338.2
$1,214.5 $1,075.4
INTANGIBLE ASSETS
Goodwill ($43.7 million not $ 884.5
subject to amortization) $ 398.6
Other intangible assets 168.7 143.5
1,053.2 542.1
Less accumulated amortization 136.3 110.0
$ 916.9 $ 432.1
</TABLE>
<TABLE>
<CAPTION>
ACCOUNTS PAYABLE AND
ACCRUED LIABILITIES
December 31, December 31,
(Millions of dollars) 1993 1992
<S> <C> <C>
Accounts payable $ 268.9 $ 305.7
Advertising and
sales promotion 170.1 149.0
Payroll and payroll taxes 187.6 173.0
Other taxes 48.9 53.3
Interest payable 9.9 22.6
Dividends payable on 46.4
common stock 39.6
Realignment expense 155.4 --
Miscellaneous 235.2 185.7
$1,122.4 $ 928.9
OTHER LONG-TERM
LIABILITIES
Pensions $ 311.7 $ 284.3
Postretirement medical 193.9 --
Incentive plans 111.2 106.3
Realignment expense 107.2 --
Miscellaneous 111.5 69.1
$ 835.5 $ 459.7
DEBT
</TABLE>
Loans payable at December 31, 1993 and 1992, included $54 million and $42
million, respectively, of commercial paper. The Company's commercial paper
program is supported by its revolving credit facility.
Long-term debt is summarized as follows.
<PAGE> 17
<TABLE>
<S> <C> <C>
Commercial paper, 3.38% $ 100.0 $ --
5.75% Notes due 2005 200.0 --
6.25% Notes due 2003 150.0 --
4.75% Notes due 1996 150.0 --
6% Deutschmark notes due 1994 167.9 180.9
6.375% Deutschmark bonds --
due 1993 148.9
9.625% Pound sterling notes --
due 1993 106.0
6.7%-6.725% Deutschmark --
notes due 1993 71.0
8.03% Guaranteed ESOP notes 60.7
due through 2000 71.0
7.5% ECU notes due 1993 -- 66.3
Other, primarily foreign 57.7
currency borrowings 78.7
Total long-term debt 886.3 722.8
Less current portion 46.2 168.6
Long-term portion $840.1 $554.2
</TABLE>
In 1993, the Company's shelf registrations, filed with the Securities and
Exchange Commission and providing for the issuance of up to $600 million in
debt securities, became effective. During the year, under the shelf
registrations, a total of $500 million in notes was issued, consisting of
$150 million of 4.75% notes due 1996, $150 million of 6.25% notes due 2003
and $200 million of 5.75% notes due 2005. The Company used the net proceeds
from these issues to refinance existing indebtedness and for other general
corporate purposes. At December 31, 1993, there remained $100 million of
debt securities available under the Company's shelf registration expiring
October 5, 1995.
The Company has swap agreements that effectively convert the interest
obligations of the $500 million in debt securities issued under the shelf
registrations from fixed to floating interest rates over the term of the
respective issues, resulting in a weighted average interest rate of 3.5% at
December 31, 1993.
In addition, the Company has swap agreements, maturing in 1994, that
effectively establish U.S. dollar-denominated principal and interest
obligations of certain European currency debt. As of December 31, 1993 and
1992, the respective aggregate U.S. dollar principal amounts were $409.3
million, with a weighted average interest rate of 3.2%, and $474.1 million,
with a weighted average interest rate of 4.3%. Amounts associated with these
swap agreements were liabilities of $14.6 million at December 31, 1993, and
$3.6 million at December 31, 1992. Exchange rate movements give rise to
changes in the values of these agreements which offset changes in the values
of the underlying debt obligations.
The weighted average interest rate on total long-term debt, including
associated swaps and excluding the guaranteed ESOP notes, was 3.5% at
December 31, 1993, compared with 5.0% at December 31, 1992.
The Company's $350 million revolving bank credit agreement that extends
through June 1995 may be used for general corporate purposes, including stock
repurchases. Under the agreement, the Company has the option to borrow at
various interest rates, including the prime rate, and is required to pay a
facility fee of 1/8 of 1% per annum. In addition, the Company must meet
certain financial covenants relating to interest coverage and net worth. At
December 31, 1993, the Company was in com- pliance with all financial
covenants, and its net worth exceeded the amount required by $479.0 million.
At year-end 1993 and 1992, there were no borrowings under this agreement.
Based on the Company's intention and ability to maintain its revolving credit
agreement beyond 1994, $100 million of commercial paper borrowings and $150
million of 1994 long-term debt maturities were classified as long-term at
December 31, 1993. At December 31, 1992, $250 million of 1993 long-term debt
maturities were so classified.
Aggregate maturities of total long-term debt for the five years subsequent to
December 31, 1993, are $196.2 million, $27.0 million, $173.6 million, $14.0
million and $10.4 million, respectively.
Unused lines of credit, including the revolving credit facility, amounted to
$799 million at December 31, 1993.
FINANCIAL INSTRUMENTS
The Company uses financial instruments, principally swaps, forward contracts
and options, in its management of foreign currency and interest rate
exposures. These contracts hedge transactions and balances for periods
consistent with its committed exposures.
Realized and unrealized foreign exchange gains and losses are recognized and
offset foreign exchange gains or losses on the underlying exposures. The
interest differential paid or received on swap agreements is recognized as an
adjustment to interest.
At December 31, 1993, the Company had $75 million of contracts
outstanding, which mature during 1994. In 1992, similar contracts amounted to
$701 million. These amounts exclude the swap agreements described in the Debt
note. The contracts primarily require the Company to purchase, sell or swap
certain foreign currencies either with or for U.S. dollars and Deutschmarks
at the contracted rate.
Several major international financial institutions are counterparties to the
Company's financial instruments. It is Company practice to monitor the
financial standing of the counterparties and limit the amount of exposure
with any one institution. The Company may be exposed to credit loss in the
event of nonperformance by the counterparties to these contracts, but does
not anticipate such nonperformance.
<PAGE> 18
With respect to trade receivables, concentration of credit risk is limited,
due to the diverse geographic areas covered by Company operations. Any
probable bad debt loss has been provided for in the allowance for doubtful
accounts.
The estimated fair values of the Company's financial instruments are
summarized below.
<TABLE>
<CAPTION>
Carrying Estimated
(Millions of dollars) Amount Fair Value
December 31, 1993
<S> <C> <C>
Long-term investments $ 54.8 $ 58.5
Total long-term debt (886.3) (887.6)
Foreign currency and (4.7)
interest
rate contracts (11.0)
December 31, 1992
Long-term investments $ 43.9 $ 50.9
Total long-term debt (722.8) (718.2)
Foreign currency and
interest
rate contracts 4.7 3.8
</TABLE>
<PAGE> 19
The carrying amounts for cash, short-term investments, receivables, accounts
payable and accrued liabilities, and loans payable approximate fair value
because of the short maturity of these instruments. The fair value of
long-term investments is estimated based on quoted market prices. The fair
value of long-term debt, including the current portion, is estimated based on
current rates offered to the Company for debt of the same remaining
maturities. The fair values of foreign currency and interest rate contracts,
including swaps described in the Debt note, are estimated based on dealer
quotes. These values represent the estimated amount the Company would receive
or pay to terminate agreements, taking into consideration current exchange
and interest rates and the current creditworthiness of the counterparties.
INCOME TAXES
Effective January 1, 1993, the Company changed its way of accounting for
income taxes from the deferred method to the asset and liability method.
Accordingly, deferred income taxes are recognized for the expected tax
consequences of temporary differences by applying enacted statutory tax
rates, applicable to future years, to differences between the financial
reporting basis and tax basis of assets and liabilities.
The cumulative effect of this change was a charge of $13.0 million, or $.06
per common share. Prior periods were not restated.
<TABLE>
Income before income taxes and income tax expense are summarized below.
<CAPTION>
(Millions of dollars) 1993 1992 1991
<S> <C> <C> <C>
Income before income
taxes
United States $271.7 $325.0 $252.1
Foreign 411.0 504.7 442.0
Total income before $682.7
income taxes $829.7 $694.1
Current tax expense:
Federal $ 88.7 $ 88.3 $ 89.5
Foreign 222.7 176.1 163.8
State 37.1 28.1 22.7
Deferred tax expense:
Federal (15.8) 25.7 .2
Foreign (73.9) (1.9) (9.5)
State (3.0) -- --
Total income tax expense $255.8 $316.3 $266.7
</TABLE>
Income tax expense does not include the cumulative effect of accounting
changes. The impact of this change relating solely to 1993 is immaterial and
is also expected to be immaterial in subsequent years.
<TABLE>
<CAPTION>
An analysis of deferred tax expense/(benefit) follows.
(Millions of dollars) 1993 1992 1991
<S> <C> <C> <C>
Depreciation $ 2.6 $(1.9) $ 7.4
Stock equivalent
unit plan .9 (2.3) (5.1)
Realignment program (98.5) -- --
Oil and gas operations -- (.4) .1
Other 2.3 28.4 (11.7)
Total deferred tax $(92.7)
expense $23.8 $(9.3)
</TABLE>
<TABLE>
A reconciliation of the statutory Federal income tax rate and the Company's
effective tax rate follows.
<S> <C> <C> <C>
Statutory Federal tax rate 35.0% 34.0% 34.0%
Lower effective tax rate
on foreign income (3.4) (.8) (1.9)
Effect of foreign currency 4.1
translation 1.2 2.4
State taxes (net of
Federal tax benefits) 3.2 2.2 2.2
Other differences (1.4) 1.5 1.7
Effective tax rate 37.5% 38.1% 38.4%
</TABLE>
<TABLE>
The components of deferred tax assets and liabilities at December 31, 1993,
are shown below.
<CAPTION>
Deferred Tax Deferred Tax
(Millions of dollars) Assets Liabilities
Current
<S> <C> <C>
Realignment program $ 58.3 --
Incentive plans 33.8 --
Advertising and sales 15.5
promotion --
Inventory reserves 9.7 --
Misc. reserves & accruals 25.6 --
All other 148.6 6.2
Total Current 291.5 6.2
Noncurrent
Postretirement benefits 64.6 --
Property, plant and
equipment -- 74.8
Realignment program 40.2 --
Incentive plans 17.8 --
All other 14.3 91.3
</TABLE>
<PAGE> 20
<TABLE>
<S> <C> <C>
Total Noncurrent 136.9 166.1
Total $428.4 $172.3
Net Deferred Tax Assets $256.1
Included in:
$291.5
Prepaid expenses $291.5 $ --
Other assets 136.9 --
Income taxes -- 6.2
Deferred income taxes -- 166.1
$428.4 $172.3
</TABLE>
<PAGE> 21
PENSION PLANS
The Company has noncontributory defined benefit pension plans in effect for
substantially all of its domestic employees. Benefits are based on age, years
of service and the level of compensation during the final years of
employment. The funding policy of the Company for these plans is to
contribute annually the amount necessary to meet the minimum funding
standards established by the Employee Retirement Income Security Act. In
addition, the Company has various foreign retirement programs, including
defined benefit, defined contribution and other plans, covering the majority
of foreign employees. In Germany, under common local practice and enabling
tax law, pension costs are accrued but unfunded.
<TABLE>
Total pension expense for 1993 was $57.0 million, compared with $53.6 million
and $50.2 million in 1992 and 1991, respectively. The components of net
pension expense follow.
<CAPTION>
1993 1992 1991
(Millions of dollars) Domestic Foreign Domestic Foreign Domestic Foreign
<S> <C> <C> <C> <C> <C> <C>
Defined Benefit Plans
Service cost--benefits earned $12.3 $20.1 $11.8 $19.1 $ 9.6 $15.8
Interest cost on projected benefit obligation 38.1 35.5 34.9 35.3 31.8 29.0
Actual return on plan assets (46.3) (64.5) (30.9) (12.2) (80.5) (54.6)
Net amortization and deferral 9.9 46.0 (1.8) (9.2) 53.8 39.1
14.0 37.1 14.0 33.0 14.7 29.3
Other Pension Costs
Defined contribution plans -- 1.7 -- 1.9 -- 1.6
Foreign plans not on SFAS 87 -- 4.2 -- 4.7 -- 4.6
Total Pension Expense $14.0 $43.0 $14.0 $39.6 $14.7 $35.5
</TABLE>
<TABLE>
The funded status of the Company's principal defined benefit plans and the
amounts recognized in the balance sheet at December 31 follow.
<CAPTION>
1993 1992 1991
(Millions of dollars) Domestic Foreign Domestic Foreign Domestic Foreign
<S> <C> <C> <C> <C> <C> <C>
Vested benefit $431.1 $ 438.8 $343.9 $ 340.6 $327.7 $ 280.6
Nonvested benefit 70.4 22.0 25.8 17.5 22.0 15.2
Accumulated benefit obligation 501.5 460.8 369.7 358.1 349.7 295.8
Benefit obligation related to future
compensation levels 108.8 66.4 106.4 74.1 101.2 85.0
Projected benefit obligation 610.3 527.2 476.1 432.2 450.9 380.8
Fair value of plan assets, invested primarily
in equities and bonds 489.4 268.1 423.3 174.6 400.8 204.3
Plan assets less than projected benefit
obligation (120.9) (259.1) (52.8) (257.6) (50.1) (176.5)
Unrecognized transition obligation (asset) (2.3) 10.8 (2.6) 13.5 (2.9) 7.5
Unrecognized prior service cost 27.4 9.5 17.8 6.3 18.6 6.8
Unrecognized net loss 117.1 44.3 54.4 36.2 48.4 21.8
Minimum liability adjustment (8.9) (15.4) -- -- -- --
Net prepaid (accrued) pension cost included
in consolidated balance sheet $ 12.4 $(209.9) $ 16.8 $(201.6) $ 14.0 $(140.4)
</TABLE>
<TABLE>
The primary assumptions used in determining related obligations of the plans
are shown below.
<CAPTION>
1993 1992 1991
(Percent) Domestic Foreign Domestic Foreign Domestic Foreign
<S> <C> <C> <C> <C> <C> <C>
Discount rate 7 5-9 8 5-10 8 5-11
Increase in compensation levels 5 3-1/2 - 7-1/2 5-1/2 3-1/2 - 6-1/2 5-1/2 3-1/2 - 8
Long-term rate of return on
assets 9 5-10 9 5-11 9 5-11
</TABLE>
<PAGE> 22
OTHER POSTRETIREMENT
BENEFITS
The Company and its subsidiaries also provide certain health care and life
insurance benefits to retired employees. Substantially all of the Company's
domestic employees and some employees in foreign countries become eligible
for these benefits upon retirement. At the time of retirement, domestic
employees who elect to participate are required to pay some portion of such
medical costs if hired before July 1, 1990, or all of such costs if hired
after that date. The Company's employee stock ownership plan (ESOP) was
established to assist employees who retire after January 1, 1992, to finance
their retiree medical costs.
Effective January 1, 1993, the Company adopted SFAS 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," for U.S.
operations and recognized immediately the aftertax transitional obligation of
$109 million as a cumulative effect of an accounting change. This standard
requires that the cost of these benefits be recognized in the financial
statements during employees' active working lives. Previously, they were
recognized as claims were incurred and amounted to $10.6 million and $10.0
million in 1992 and 1991, respectively.
The other postretirement benefit expense for 1993 was $9.2 million. The
components of the net expense follow.
<TABLE>
<CAPTION>
(Millions of dollars) 1993
<S> <C>
Interest cost $14.7
Service cost (income) (5.2)
Actual loss (return) on assets (.4)
Net amortization and expense .1
Other postretirement benefit expense $9.2
</TABLE>
The status of the Company's plans and the amounts recognized in the balance
sheet at December 31, 1993, follow.
<TABLE>
<S> <C>
Retirees $113.0
Fully eligible active employees 32.8
Other active employees 65.4
Accumulated postretirement benefit obligation 211.2
Fair value of plan assets (7.2)
Unrecognized net loss (10.1)
Accrued postretirement liability $193.9
</TABLE>
The accumulated postretirement benefit obligation was determined using an
assumed discount rate of 7%. The assumed health care cost trend rate was 13%
in 1993, decreasing to 5% by the year 2001. A one percentage point increase
in the health care cost trend would have increased the accumulated
postretirement benefit obligation by $33 million and the cost for 1993 by
$1.7 million.
ESOP shares allocated to participants reduce Company obligations over the
period of allocation. The account balance is assumed to have an annual yield
of 12 percent. In addition, the Company established a retiree health benefits
account within its domestic pension plan that will be used to partially fund
health care benefits for future retirees.
Adoption for foreign operations is not mandatory until 1995. Since most of
the Company's foreign operations are covered by government-sponsored
programs, the effect of adopting the statement is expected to be immaterial
to the results of operations.
EMPLOYEE STOCK
OWNERSHIP PLAN
Under this plan, the Company sold to the ESOP 165,872 shares of a new issue
of Series C cumulative convertible preferred stock for $100 million, or
$602.875 per share. The Series C stock pays an annual dividend of 8% and will
be allocated to eligible employees over a 10-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 common shares at $30.14375 per share.
At December 31, 1993, 164,243 Series C shares were outstanding. This was
equivalent to 3,284,851 shares of common stock, about 1.5% of the Company's
outstanding voting stock.
Each Series C share carries rights under the Company's preferred stock
purchase rights plan and currently is entitled to five rights.
Proceeds received from the sale of Series C shares to the ESOP were used to
retire Company debt. The ESOP purchased the Series C shares with borrowed
funds. The ESOP loan principal and interest will be repaid on a semi-annual
basis over a 10-year period by Company contributions to the ESOP and by the
dividends paid on the Series C shares. Company cash contributions and
dividend payments of $15.8 million and $18.1 million were paid to the ESOP
during 1993 and 1992, respectively. The ESOP made principal and interest
payments of $10.3 million and $5.5 million during 1993, $11.7 million and
$6.5 million during 1992, and $14.1 million and $7.6 million during 1991,
respectively.
The Company has guaranteed the ESOP's borrowings and has reported the unpaid
balance of this loan as a liability of the Company. An unearned ESOP
compensation amount is reported as an offset to the Series C share amount in
the equity section.
Compensation expense related to the plan is based upon the preferred shares
allocated to participants and amounted to $8.5 million, $11.1 million and
$14.5 million in 1993, 1992 and 1991, respectively.
<PAGE> 23
COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL
On April 1, 1991, the 600,000 shares of 8-3/4%
Series B Cumulative Convertible Preferred Stock,
held by insurance subsidiaries of Berkshire Hathaway Inc., were converted
into 24,000,000 shares of the Company's common stock. Shares of common stock
held in the Company's treasury were used in the conversion.
<TABLE>
Changes in these capital accounts are summarized below.
<CAPTION>
(Thousands of shares) (Millions of dollars)
Common Stock
Additional
Common Paid-in Treasury
Issued In Treasury Outstanding Stock Capital Stock
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1990 276,167 (81,730) 194,437 $276.2 $ 38.7 $(1,483.2)
Conversion of Series B --
Preferred Stock 24,000 24,000 -- 161.4 435.5
Conversion of Series C ESOP --
Preferred Stock 8 8 -- .1 .2
Stock option and purchase plans 734 -- 734 .7 12.8 --
Balance at December 31, 1991 276,901 (57,722) 219,179 276.9 213.0 (1,047.5)
Conversion of Series C ESOP --
Preferred Stock 17 17 -- .2 .3
Stock option and purchase plans 973 -- 973 1.0 23.7 --
Balance at December 31, 1992 277,874 (57,705) 220,169 277.9 236.9 (1,047.2)
Conversion of Series C ESOP --
Preferred Stock 7 7 -- .1 .1
Stock option and purchase plans 714 -- 714 .7 22.4 --
Balance at December 31, 1993 278,588 (57,698) 220,890 $278.6 $259.4 $(1,047.1)
</TABLE>
PREFERRED STOCK PURCHASE RIGHTS
At December 31, 1993, the Company had 56,043,617 preferred stock purchase
rights outstanding as follows: one-quarter of a right for each outstanding
share of common stock and a total of 821,212 rights for the outstanding
Series C preferred stock. Each right may be exercised to purchase one
two-hundredth of a share of junior participating preferred stock for $160.
The rights only become exercisable, or separately transferable, 10 days after
a person acquires 20% or more, or 10 business days after a tender offer
commences which could result in ownership of more than 30%, of the Company's
stock.
If any person acquires 30% or more of the 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 or 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) having double that value.
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.
At December 31, 1993, there were authorized 5,000,000 shares of preferred
stock without par value, of which 164,243 Series C shares were issued and
400,000 Series A shares were reserved for issuance upon exercise of the
rights.
<PAGE> 24
STOCK AND STOCK EQUIVALENT UNIT PLANS
Stock Option Plan activity is summarized below.
<TABLE>
<CAPTION>
1993 1992 1991
Average Average Average
Per Share Per Share Per Share
(Thousands of shares) Shares Option Price Shares Option Price Shares Option Price
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 4,347 $32.84 4,160 $26.22 3,988 $21.30
Granted 982 48.40 1,311 44.85 1,164 35.97
Exercised (765) 26.91 (1,116) 22.21 (905) 16.85
Cancelled (22) 39.88 (8) 38.54 (87) 28.95
Outstanding at end of year 4,542 37.17 4,347 32.84 4,160 26.22
Shares reserved for future grants 62 1,022 2,325
</TABLE>
The Stock Option Plan authorizes the granting of options on shares of the
Company's common stock to selected key employees, including those who also
may be officers, and to nonemployee directors, at not less than the fair
market value of the stock on the date of grant. All outstanding options have
10-year terms and are exercisable one year from the date of grant, provided
the employee optionee is still employed or the director continues to serve.
The plan also permits payment for options exercised in shares of the
Company's common stock and the granting of incentive stock options.
The Stock Purchase Plan provides for the sale at fair market value of the
Company's common stock to selected key employees, excluding officers and
directors. At December 31, 1993, 184,739 shares were reserved for issuance
under the plan.
The Stock Equivalent Unit Plan provides for awards of basic stock units to
key employees, excluding officers who are directors. Each unit is treated as
equivalent to one share of the Company's common stock. However, the employee
only receives appreciation, if any, in the market value of the stock and
dividend equivalent units as dividends are paid. Appreciation on basic stock
units is limited to 100% of the original market value. Benefits accrue over
seven years and vesting commences in the third year.
Stock Equivalent Unit Plan expense amounted to $14.5 million in 1993, $22.1
million in 1992 and $31.5 million in 1991.
CONTINGENCIES
The Company is subject to legal proceedings and claims arising out of its
business which cover a wide range of matters, including antitrust and trade
regulation, contracts, environmental issues, product liability, patent and
trademark matters and taxes.
Management, after review and consultation with counsel, considers that any
liability from all of these pending lawsuits and claims would not materially
affect the consolidated financial position or results of operations of the
Company.
LEASE COMMITMENTS
Minimum rental commitments under noncancellable leases, primarily for office
and warehouse facilities, are $40.6 million in 1994, $32.4 million in 1995,
$26.2 million in 1996, $22.8 million in 1997, $20.3 million in 1998 and $32.1
million for years thereafter. Rental expense amounted to $60.5 million in
1993, $59.7 million in 1992 and $52.3 million in 1991.
RESEARCH AND DEVELOPMENT
Research and development costs, included in selling, general and
administrative expenses, amounted to $133.1 million in 1993, $123.8 million
in 1992 and $108.9 million in 1991.
26
<PAGE> 25
PRINCIPAL DIVISIONS AND SUBSIDIARIES
North Atlantic Group
The North Atlantic Group manufactures and markets the Company's traditional
shaving and personal care products in Western Europe and North America. Sales
showed good progress, and profits moved considerably above those of the year
before.
Stationery Products Group
The Stationery Products Group produces and sells the Company's stationery
products in Western Europe and North America. In 1993, sales and profits
increased substantially.
International Group
The International Group makes and markets the Company's traditional shaving,
personal care and stationery products throughout the world except for Western
Europe and North America. Sales and profits climbed sharply in 1993.
Diversified Group
The Diversified Group consists of Braun, Oral-B and Jafra, each organized on
a worldwide product line basis. Sales were slightly lower in 1993, and
profits posted a moderate gain.
<PAGE> 26
CORPORATE AND STOCKHOLDER INFORMATION
ANNUAL MEETING
The Annual Meeting of the stockholders will take place on Thursday, April 21,
1994, at the John F. Kennedy Library and Museum, Columbia Point, Boston,
Massachusetts. The meeting will convene at 10 a.m.
CORPORATE HEADQUARTERS
Prudential Tower Building
Boston, Massachusetts 02199
(617) 421-7000
INCORPORATED
State of Delaware
COMMON STOCK
Major stock exchanges: New York, Boston,
Midwest, Pacific, London, Frankfurt, Zurich
New York Stock Exchange Symbol: G
At year-end, stockholders numbered 29,100, living in all 50 states and more
than 30 countries abroad.
TRANSFER AGENT AND
REGISTRAR
The First National Bank of Boston
Shareholder Services Division
P.O. Box 644
Mail Stop 45-02-09
Boston, Massachusetts 02102
(617) 575-2900
AUDITORS
KPMG Peat Marwick
FORM 10-K
The Company's 1993 Annual Report on Form 10-K, filed with the Securities and
Exchange Commission, is available without charge by written request from the
office of the Secretary, or by calling toll-free (800) 291-7615.
DIVIDEND REINVESTMENT
AND STOCK PURCHASE PLAN
All stockholders of record are invited to participate in the Dividend
Reinvestment and Stock Purchase Plan. The plan provides a convenient,
economical and systematic means of acquiring additional shares of the
Company's common stock through the reinvestment of cash dividends.
Participants also may invest additional cash amounts in the purchase of
shares as frequently as once each month.
Interested stockholders can obtain a descriptive brochure and enrollment card
from:
The First National Bank of Boston
Dividend Reinvestment and Stock Purchase Plan
P.O. Box 1681
Mail Stop 45-01-06
Boston, Massachusetts 02105
(617) 575-2900
QUARTERLY REPORTS
If you are a registered holder of Gillette common stock, the Company mails
quarterly reports directly to you. If your shares are held of record by a
bank, broker or other nominee, however, you probably receive the Company's
quarterly reports as much as a month later than a registered stockholder
because the reports are first forwarded to your financial institution.
Many stockholders have noted that, after such a delay, the quarterly
information is of limited value--even though it costs the Company more to
forward reports through financial institutions.
In an effort to provide more timely information to all stockholders and as
part of the Company's continuing effort to reduce costs, Gillette will
continue to mail quarterly reports to stockholders of record, but, beginning
in 1994, will no longer forward these reports through financial institutions.
If your shares are registered in the name of a broker or other nominee, and
you would like to continue to receive the quarterly reports, the Company will
gladly mail them directly to you. You may add your name to our mailing list
by writing to the office of the Secretary, or by calling toll-free (800)
291-7615.
<PAGE> 27
<TABLE>
FINANCIAL INFORMATION BY BUSINESS SEGMENT
<CAPTION>
Blades & Toiletries & Stationery Braun Oral-B
(Millions of dollars) Razors Cosmetics Products Products Products Other Corporate Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1993
Net sales $2,117.6 $1,047.1 $ 633.1 $1,248.8 $363.1 $1.1 $ -- $5,410.8
Profit from operations* 692.2 (6.2) 27.0 146.4 16.9 (.6) (51.0) 824.7
Identifiable assets 1,643.7 624.2 1,070.7 959.5 307.9 1.2 495.1 5,102.3
Capital expenditures 161.7 40.5 23.7 90.5 27.7 .1 7.8 352.0
Depreciation 73.0 20.5 19.8 64.4 8.2 .3 2.8 189.0
* After realignment
expense of 104.3 64.6 37.5 20.9 28.7 -- 6.6 262.6
1992
Net sales $1,978.2 $ 970.9 $ 520.4 $1,325.6 $365.9 $1.8 $ -- $5,162.8
Profit from operations 665.3 89.4 48.9 162.7 46.8 (.3) (45.7) 967.1
Identifiable assets 1,533.9 545.8 469.5 1,057.1 261.2 5.2 317.2 4,189.9
Capital expenditures 133.5 46.7 25.5 87.4 23.4 .6 4.3 321.4
Depreciation 75.2 20.1 15.6 64.4 8.5 .3 3.9 188.0
1991
Net sales $1,750.1 $ 946.9 $ 460.3 $1,215.8 $308.1 $2.7 $ -- $4,683.9
Profit from operations 555.6 114.1 48.8 145.3 38.8 (.1) (40.9) 861.6
Identifiable assets 1,477.9 486.9 423.2 883.2 248.4 2.3 364.8 3,886.7
Capital expenditures 126.5 37.6 27.8 78.0 11.1 -- 5.0 286.0
Depreciation 71.6 19.1 11.9 56.3 7.8 .3 5.4 172.4
</TABLE>
<TABLE>
FINANCIAL INFORMATION BY GEOGRAPHIC AREA
<CAPTION>
Western Latin Total United
(Millions of dollars) Europe America Other Foreign States Corporate Total
<S> <C> <C> <C> <C> <C> <C> <C>
1993
Net sales $1,948.9 $761.7 $940.7 $3,651.3 $1,759.5 $ -- $5,410.8
Profit from operations* 316.0 177.6 125.8 619.4 256.3 (51.0) 824.7
Identifiable assets 2,199.9 647.9 505.0 3,352.8 1,254.4 495.1 5,102.3
* After realignment
expense of 109.8 39.6 30.6 180.0 76.0 6.6 262.6
1992
Net sales $2,105.5 $646.6 $819.0 $3,571.1 $1,591.7 $ -- $5,162.8
Profit from operations 411.7 176.9 121.8 710.4 302.4 (45.7) 967.1
Identifiable assets 1,870.4 504.4 444.4 2,819.2 1,053.5 317.2 4,189.9
1991
Net sales $1,896.7 $557.6 $733.8 $3,188.1 $1,495.8 $ -- $4,683.9
Profit from operations 364.0 156.3 105.1 625.4 277.1 (40.9) 861.6
Identifiable assets 1,723.5 449.3 460.6 2,633.4 888.5 364.8 3,886.7
</TABLE>
SEGMENT AND AREA COMMENTARY
Profit from operations is net sales less cost of sales and selling, general
and administrative expenses, but is not affected either by nonoperating
charges/income or by income taxes. Nonoperating charges/income consists
principally of net interest expense and exchange losses.
In calculating profit from operations for individual business segments,
substantial expenses incurred at the operating level which are common to more
than one segment are allocated on a net sales basis. Certain headquarters
expenses of an operational nature also are allocated to business segments and
geographic areas. In 1993, components of some geographic areas were
redefined. Prior years were restated.
The principal products included in each of the Company's major business
segments are described in the review of operations, which appears earlier.
All intercompany transactions have been eliminated, and transfers of finished
goods between geographic areas are not significant. Assets in the Corporate
column include deferred income tax assets, primarily relating to the
realignment program and to mandated accounting changes, prepaid and
intangible pension assets, oil and gas investments, and nonqualified benefit
trusts.
The Company is responsible for the objectivity and integrity of the
accompanying consolidated financial statements, which have been prepared in
conformity with generally accepted accounting principles. The financial
statements of necessity include the Company's estimates and judgments
relating to matters not concluded by year-end. Financial information
contained elsewhere in the Annual Report is consistent with that included in
the financial statements.
<PAGE> 28
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
RESPONSIBILITY FOR FINANCIAL STATEMENTS
The Company maintains a system of
internal accounting controls that includes careful selection and development
of employees, division of duties, and written accounting and operating
policies and procedures augmented by a continuing internal audit program.
Although there are inherent limitations to the effectiveness of any system of
accounting controls, the Company believes that its system provides
reasonable, but not absolute, assurance that its assets are safeguarded from
unauthorized use or disposition and that its accounting records are
sufficiently reliable to permit the preparation of financial statements that
conform in all material respects with generally accepted accounting
principles.
KPMG Peat Marwick, independent auditors, are engaged to render an independent
opinion regarding the fair presentation in the financial statements of the
Company's financial condition and operating results. Their report appears
below. Their examination was made in accordance with generally accepted
auditing standards and included a review of the system of internal accounting
controls to the extent they considered necessary to determine the audit
procedures required to support their opinion.
The Audit Committee of the Board of Directors is composed solely of directors
who are not employees of the Company. The Committee meets periodically and
privately with the independent auditors, with the internal auditors and with
the financial officers of the Company to review matters relating to the
quality of the financial reporting of the Company, the internal accounting
controls and the scope and results of audit examinations. The Committee also
reviews compliance with the Company's statement of policy as to the conduct
of its business, including proper accounting and dealing with auditors. In
addition, it is responsible for recommending the appointment of the Company's
independent auditors, subject to stockholder approval.
INDEPENDENT AUDITORS' REPORT
Peat Marwick
The Stockholders and Board of Directors
of The Gillette Company
We have audited the accompanying consolidated balance sheet of The Gillette
Company and subsidiary companies as of December 31, 1993 and 1992, and the
related consolidated statements of income and earnings reinvested in the
business and cash flows for each of the years in the three-year period ended
December 31, 1993. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The
Gillette Company and subsidiary companies at December 31, 1993 and 1992, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1993, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick
Boston, Massachusetts
January 27, 1994
29
<PAGE> 29
<TABLE>
BUSINESS SEGMENTS
The percentages of consolidated net sales and segment profit from operations,
before corporate expenses, during the last five years for each of the
Company's major business segments are set forth below.
<CAPTION>
Blades & Toiletries & Stationery Braun Oral-B
Razors Cosmetics Products Products Products
Net Segment Net Segment Net Segment Net Segment Net Segment
Year Sales Profit Sales Profit Sales Profit Sales Profit Sales Profit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1993* 39% 70% 19% 5% 12% 6% 23% 15% 7% 4%
1992 38% 66% 19% 9% 10% 5% 26% 16% 7% 4%
1991 37% 62% 20% 13% 10% 5% 26% 16% 7% 4%
1990 36% 60% 22% 13% 11% 8% 25% 15% 6% 4%
1989 32% 62% 27% 10% 11% 10% 24% 15% 6% 3%
<FN>
*Segment profit percentages are before realignment expense.
</TABLE>
<TABLE>
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
OTHER FINANCIAL INFORMATIONQUARTERLY FINANCIAL INFORMATION
<CAPTION>
(Millions of dollars, except per share amounts) Three Months Ended
1993 March 31 June 30 September 30 December 31* Total Year
<S> <C> <C> <C> <C> <C>
Net sales $1,216.6 $1,237.3 $1,339.7 $1,617.2 $5,410.8
Gross profit 753.1 773.6 839.0 1,000.8 3,366.5
Profit from operations 262.4 244.2 266.8 51.3 824.7
Income before income taxes and cumulative
effect of accounting changes 227.7 215.5 232.0 7.5 682.7
Income before cumulative
effect of accounting changes 142.3 134.7 145.0 4.9 426.9
Cumulative effect of accounting changes (138.6) -- -- -- (138.6)
Net income 3.7 134.7 145.0 4.9 288.3
Income per common share before cumulative
effect of accounting changes .64 .61 .65 .02 1.92
Cumulative effect of accounting changes (.63) -- -- -- (.63)
Net income per common share .01 .61 .65 .02 1.29
Dividends declared per common share -- .21 .21 .42 .84
Stock price range: (composite basis)
High 61-3/8 60-5/8 59-1/4 63-3/4
Low 52-1/2 47-3/8 50 57-1/8
<FN>
*In the fourth quarter of 1993, a charge for realignment expense reduced profit
from operations and income before income taxes by $262.6 million, income by
$164.1 million and income per common share by $.74.
</TABLE>
<TABLE>
<CAPTION>
1992
<S> <C> <C> <C> <C> <C>
Net sales $1,206.8 $1,198.9 $1,249.2 $1,507.9 $5,162.8
Gross profit 743.9 734.0 764.1 895.0 3,137.0
Profit from operations 248.5 226.5 236.6 255.5 967.1
Income before income taxes 210.4 192.6 206.9 219.8 829.7
Net income 129.4 120.5 128.2 135.3 513.4
Net income per common share .58 .55 .58 .61 2.32
Dividends declared per common share -- .18 .18 .36 .72
Stock price range: (composite basis)
High 54-7/8 52-1/2 58-3/4 61-1/4
Low 46-3/8 43-7/8 47-1/2 54-1/2
</TABLE>
<PAGE> 30
<TABLE>
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
HISTORICAL FINANCIAL SUMMARY
(In millions, except per share amounts, stock price and employees)
<CAPTION>
Profit Income Net Depreciation
Net from before Net interest and Total Capital
Year sales operations taxes income expense amortization assets expenditures
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1993* $5,411 $825 $683 $288 $ 33 $219 $5,102 $352
1992 5,163 967 830 513 56 211 4,190 321
1991 4,684 862 694 427 94 193 3,887 286
1990 4,345 773 593 368 120 177 3,671 255
1989 3,819 664 474 285 115 149 3,114 223
1988 3,581 614 449 269 101 141 2,868 189
1987 3,167 523 392 230 82 126 2,731 147
1986** 2,818 229 58 16 47 108 2,540 199
1985 2,400 371 272 160 48 88 2,425 157
1984 2,289 347 259 159 35 82 2,024 119
1983 2,183 319 239 146 33 81 1,696 90
1982 2,239 319 225 135 46 80 1,667 91
<FN>
* In 1993, a charge for realignment expense reduced profit from operations and
income before income taxes by $263 million, income by $164 million and income
per common share by $.74. In addition, in 1993, the cumulative effect of
adopting mandated changes in the methods of accounting for income taxes,
postretirement benefits and postemployment benefits reduced net income by
$139 million and net income per common share by $.63.
** In 1986, special charges for restructuring expense reduced profit from
operations by $179 million and, along with tender offer response costs and a
change in accounting for oil and gas investments, reduced income before taxes
by $243 million, net income by $165 million and net income per common share
by $.65.
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>
Per Common Share
Net property, Average com- Year-end
plant and Long-term Stockholders' Net Dividends mon shares stock
equipment debt equity income declared outstanding price Employees Year
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$1,215 $ 840 $1,479 $1.29 $.84 220 $59-5/8 33,400 *1993
1,075 554 1,496 2.32 .72 220 56-7/8 30,900 1992
931 742 1,157 1.94 .62 211 56-1/8 31,200 1991
862 1,046 265 1.60 .54 194 31-3/8 30,400 1990
745 1,041 70 1.35 .48 193 24-5/8 30,400 1989
683 1,675 (85) 1.23 .43 219 16-5/8 29,600 1988
664 840 599 1.00 .39-1/4 230 14-1/4 30,100 1987
637 915 461 .06 .34 255 12-3/8 32,100 **1986
504 436 898 .65 .32-1/2 247 8-3/4 31,400 1985
430 443 791 .65 .31 246 7-1/8 31,400 1984
406 278 757 .60 .29-5/8 244 6-1/8 29,400 1983
420 293 721 .56 .28-1/8 243 5-5/8 30,200 1982
</TABLE>
<PAGE> 1
EXHIBIT 22
THE GILLETTE COMPANY
SUBSIDIARIES OF REGISTRANT
DECEMBER 31, 1993
<TABLE>
<CAPTION>
ORGANIZED
UNDER
NAME LAWS OF
---- ---------
<S> <C>
Compania Gillette de Argentina............................................ Delaware
Its Subsidiaries:
Compania Gillette de Argentina S.A................................... Argentina
SylvaPen Distribuidora S.A.C.I. y F.................................. Argentina
Gillette (Australia) Pty. Limited......................................... Australia
Braun Inc................................................................. Delaware
Gillette Beteiligungs -- GmbH............................................. Germany
Its subsidiaries:
Gillette Finance B.V................................................. Netherlands
Gillette Deutschland GmbH & Co....................................... Germany
Helit Innovative Buroproduckte Gmbh.................................. Germany
Societe de Participations Financieres Gillette....................... France
Its subsidiary:
Waterman S.A.................................................... France
Braun AG............................................................. Germany
Its subsidiaries:
Braun Electric Austria Gesellschaft mbH......................... Austria
Braun Canada Ltd./Ltee.......................................... Canada
Braun Espanola, S.A............................................. Spain
Braun Finland Oy................................................ Finland
Braun France S.A................................................ France
Braun Ireland Ltd............................................... Ireland
Braun Italia S.r.l. ............................................ Italy
Braun Japan K.K................................................. Japan
Braun de Mexico y Cia. de C.V................................... Mexico
Braun Nederland B.V............................................. Netherlands
Braun (U.K.) Ltd................................................ England
Silk-Epil S.A................................................... France
Gillette do Brasil, Inc. and Jafra Comercio Participacoes e Servicos, Delaware
Inc.....................................................................
Their subsidiary:
Gillette do Brasil & Cia............................................. Brazil
Its subsidiary:
Gillette da Amazonia S.A. ...................................... Brazil
Fabrica Amazonense de Componentes Plasticos e Metalicos Ltda.... Brazil
Gillette Canada Inc. ..................................................... Canada
Its subsidiaries:
Oral-B Laboratories Pty. Limited..................................... Australia
Oral-B Laboratories Inc./Laboratories Oral-B Inc..................... Canada
Oral-B Laboratories GmbH............................................. Germany
Oral-B Laboratorios, S.A. de C.V..................................... Mexico
Oral-B Laboratories Limited.......................................... England
Gillette de Colombia S.A.................................................. Colombia
Colton Development, Inc. ................................................. Delaware
Colton Gulf Coast, Inc.................................................... Delaware
Colton East, Inc.......................................................... Delaware
Colton North Central, Inc................................................. Delaware
Colton West, Inc.......................................................... Delaware
</TABLE>
<TABLE>
<S> <C>
Gillette Capital Corporation.............................................. Delaware
Its subsidiaries:
Jafra Cosmetics, Inc................................................. California
Lustrasilk Corporation of America, Inc............................... Minnesota
</TABLE>
18
<PAGE> 2
<TABLE>
THE GILLETTE COMPANY
SUBSIDIARIES OF REGISTRANT -- (CONTINUED)
<CAPTION>
ORGANIZED
UNDER
NAME LAWS OF
---- ---------
<S> <C>
Gillette Direct Response Group, Inc. ..................................... Massachusetts
Gillette Espanola, S.A. .................................................. Spain
Gillette Far East Trading Limited......................................... Hong Kong
Gillette Foreign Sales Corporation Limited................................ Jamaica
Gillette France S.A....................................................... France
Gilfin B.V................................................................ Netherlands
Parkfin Limited........................................................... England
Compania Giva, S.A. ...................................................... Delaware
Its subsidiary:
Compania Gillette de Venezuela S.A................................... Venezuela
Indian Shaving Products Limited........................................... India
Compania Interamericana Gillette, S.A. ................................... Panama
Gillette Egypt S.A.E...................................................... Egypt
Interpak Shaving Products Limited......................................... Pakistan
Inversiones Gilco (Chile) Limitada........................................ Chile
Gillette Group Italy S.p.A. .............................................. Italy
Grupo Jafra, S.A. de C.V.................................................. Mexico
Gillette (Japan) Inc...................................................... Delaware
Gillette de Mexico, Inc. and Mexico Manufacturing Company................. Delaware
Their subsidiary:
Gillette de Mexico S.A. de C.V. ..................................... Mexico
Gillette del Peru, Inc. and Lima Manufacturing Company.................... Delaware
Partners in:
Gillette del Peru, S.C............................................... Peru
Gillette (Philippines), Inc............................................... Philippines
Gillette Sanayi ve Ticaret A.S............................................ Turkey
Gillette (Shanghai) Limited............................................... China
Shenmei Daily Use Products Limited Company................................ China
Gillette South Africa Limited............................................. South Africa
Gillette (Switzerland) AG................................................. Switzerland
Gillette Industries Plc................................................... England
Its subsidiaries:
Gillette U.K. Limited................................................ England
Jafra Cosmetics International Limited................................ England
Parker Pen Holdings Limited.......................................... England
The Gillette Company (USA)................................................ Delaware
Wizamet S.A. ............................................................. Poland
</TABLE>
All of the voting securities of each subsidiary listed above are owned by
its parent company or parent partners except that the percentage ownership in
Indian Shaving Products Limited, Shenmei Daily Use Products Limited Company,
Gillette (Shanghai) Limited, Interpak Shaving Products Limited, Gillette Egypt
S.A.E., Wizamet S.A., Gillette France S.A., and the Waterman S.A. group of
companies is 51%, 50%, 70%, 75%, 80%, 93.4%, 99.9% and 99.8%, respectively.
There are a number of additional subsidiaries in the United States and
foreign countries which, considered in the aggregate, do not constitute a
significant subsidiary.
19
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Stockholders and Board of Directors
of THE GILLETTE COMPANY:
We consent to incorporation by reference in the following registration
statements of The Gillette Company (1) No. 33-9495 on Form S-8, (2) No. 2-93230
on Form S-8, (3) Nos. 33-56218 and 33-27916 on Form S-8 which incorporate by
reference therein registration statements on Form S-8 Nos. 2-90276, 2-63951 and
1-50710 and No. 2-41016 on Form S-7, (4) No. 33-54974 on Form S-3, (5) No.
33-50303 on Form S-3, and (6) No. 33-52465 on Form S-8, of our report dated
January 27, 1994, relating to the consolidated balance sheet of The Gillette
Company and subsidiary companies as of December 31, 1993 and 1992, and the
related consolidated statements of income and earnings reinvested in the
business, and cash flows and related schedules for each of the years in the
three-year period ended December 31, 1993, which reports appear or are
incorporated by reference in the December 31, 1993 Annual Report on Form 10-K of
The Gillette Company.
KPMG PEAT MARWICK
Boston, Massachusetts
March 22, 1994
20
<PAGE> 1
EXHIBIT 23 (a)
INDEPENDENT AUDITOR'S CONSENT
The Stockholders and Board of Directors
of The Gillette Company
We consent to the incorporation in the 1993 Annual Report to
Stockholders of The Gillette Company, and the incorporation by reference of
that report in the 1993 Annual Report to the Securities and Exchange Commission
of The Gillette Company on Form 10-K, 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.
COOPERS & LYBRAND
- -----------------
Coopers & Lybrand
Maidstone, England
23 March 1994
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
We, the undersigned hereby constitute Thomas F. Skelly and Joseph E.
Mullaney, or either of them, our true and lawful attorneys with full power to
sign for us in our name and in the capacity indicated below the Annual Report on
Form 10-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, filed for the Company with the Securities and Exchange Commission for the
year ended December 31, 1993, and any and all amendments and supplements
thereto, hereby ratifying and confirming our signatures as they may be signed by
our said attorneys, or either of them, to said Report and to any and all
amendments and supplements to said Report.
WITNESS Our Hand and Seal on the Date set forth below.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
ALFRED M. ZEIEN Chairman of the Board March 17, 1994
__________________________________________ of Directors, Chief Executive
Alfred M. Zeien Officer and Director
JOSEPH E. MULLANEY Vice Chairman of the Board and March 17, 1994
__________________________________________ Director
Joseph E. Mullaney
THOMAS F. SKELLY Senior Vice President and March 17, 1994
__________________________________________ Chief Financial Officer
Thomas F. Skelly
ANTHONY S. LUCAS Vice President, March 17, 1994
__________________________________________ Controller and Chief
Anthony S. Lucas Accounting Officer
WARREN E. BUFFETT Director March 17, 1994
__________________________________________
Warren E. Buffett
LAWRENCE E. FOURAKER Director March 17, 1994
__________________________________________
Lawrence E. Fouraker
WILBUR H. GANTZ Director March 17, 1994
__________________________________________
Wilbur H. Gantz
MICHAEL B. GIFFORD Director March 17, 1994
__________________________________________
Michael B. Gifford
CAROL R. GOLDBERG Director March 17, 1994
__________________________________________
Carol R. Goldberg
HERBERT H. JACOBI Director March 17, 1994
__________________________________________
Herbert H. Jacobi
RICHARD R. PIVIROTTO Director March 17, 1994
__________________________________________
Richard R. Pivirotto
JUAN M. STETA Director March 17, 1994
__________________________________________
Juan M. Steta
ALEXANDER B. TROWBRIDGE Director March 17, 1994
__________________________________________
Alexander B. Trowbridge
JOSEPH F. TURLEY Director March 17, 1994
__________________________________________
Joseph F. Turley
</TABLE>
21
