Change of Control Severance Program For Key Executives - Gillette Co.
THE GILLETTE COMPANY CHANGE OF CONTROL
SEVERANCE PROGRAM FOR KEY EXECUTIVES
INTRODUCTION
The Gillette Company (the "Company") believes that it is
consistent with the Company's long-standing employment practices and policies
and in the best interests of the Company and its shareholders to treat fairly
its employees whose employment terminates in connection with or following a
Change of Control.
Accordingly, the Company has determined that appropriate steps
should be taken to assure the Company of the continued employment and attention
and dedication to duty of certain of its key management employees and to seek to
ensure the availability of their continued service, notwithstanding the
possibility or occurrence of a Change of Control.
Therefore, in order to fulfill the above purposes, the
following Change of Control Severance Program for Key Executives has been
developed and is hereby adopted.
1.
ARTICLE I
ESTABLISHMENT OF PLAN
As of the Effective Date, the Company hereby establishes The
Gillette Company Change of Control Severance Program for Key Executives, as set
forth in this document.
2.
ARTICLE II
DEFINITIONS
As used herein the following words and phrases shall have the
following respective meanings (unless the context clearly indicates otherwise):
(a) AFFILIATE. Any entity controlled by, controlling or under common
control with the Company.
(b) ANNUAL BASE SALARY. Twelve times the higher of (i) the highest
monthly base salary paid or payable to the Participant by the Company and its
Affiliates in respect of the twelve-month period immediately preceding the month
in which the Change of Control occurs, and (ii) the highest monthly base salary
in effect at any time thereafter, in each case including any base salary that
has been earned and deferred.
(c) BOARD. The Board of Directors of The Gillette Company.
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(d) BONUS PAYMENT AMOUNT. The amount actually paid to a Participant
pursuant to Section 13 of the Company's Incentive Bonus Plan or any comparable
provision of any successor annual bonus plan.
(e) CAUSE. As defined in Section 4.2(b)(i).
(f) CHANGE OF CONTROL. The first to occur of the following events:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (a) the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (b) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting
Securities"); PROVIDED, HOWEVER, that for purposes of this subsection
(i), the following acquisitions shall not constitute a Change of
Control: (A) any acquisition directly from the Company, (B) any
acquisition by the Company, (C) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (D) any acquisition pursuant
to a transaction which complies with clauses (A), (B) and (C) of
subsection (iii) of this Section 2(e); or
(ii) Individuals who, as of the Effective Date, constitute
the Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; PROVIDED, HOWEVER, that any individual
becoming a director subsequent to the Effective Date whose election, or
nomination for election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board; or
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all
of the assets of the Company or the acquisition of assets of another
entity (a "Corporate Transaction"), in each case, unless, immediately
following such Corporate Transaction, (A) all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Corporate
Transaction beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the
Company's assets either
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directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Corporate
Transaction of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (B) no Person (excluding
any employee benefit plan (or related trust) of the Company or such
corporation resulting from such Corporate Transaction) beneficially
owns, directly or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such Corporate Transaction or the combined voting power of the then
outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Corporate Transaction and (C)
at least a majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction were members of
the Incumbent Board at the time of the execution of the initial Plan,
or of the action of the Board, providing for such Corporate
Transaction; or
(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(g) CODE. The Internal Revenue Code of 1986, as amended from time to
time.
(h) COMMITTEE. The Personnel Committee of the Board.
(i) COMPANY. The Gillette Company and any successor thereto.
(j) COVERAGE PERIOD. As defined in Section 3A.1.
(k) DATE OF TERMINATION. (i) If the Participant's employment is
terminated by the Company for Cause or by the Participant for Good Reason, the
date of receipt of the Notice of Termination (as described in Section 4.2(c)) or
any later date specified therein, as the case may be, (ii) if the Participant's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Participant of such termination and (iii) if the Participant's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Participant or the Disability Effective Date, as the
case may be.
(l) DISABILITY. As defined in Section 4.2(b)(ii).
(m) DISABILITY EFFECTIVE DATE. As defined in Section 4.2(b)(ii).
(n) EFFECTIVE DATE. December 16, 1999.
(o) EMPLOYER. The Company or any of its Affiliates.
(p) EXCISE TAX. The excise tax imposed by Section 4999 of the Code,
together with any interest or penalties imposed with respect to such excise tax.
(q) GOOD REASON. As defined in Section 4.2(a).
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(r) HIGHEST ANNUAL BONUS. An amount equal to the product of the
Participant's Annual Base Salary at the Date of Termination and the Highest
Annual Bonus Percentage.
(s) HIGHEST ANNUAL BONUS PERCENTAGE. The higher of the Participant's
Recent Annual Bonus Percentage and thirty-five percent (35%).
(t) KEY EXECUTIVE. An employee who is employed on a regular basis by an
Employer in a position having grade 25 or above (or having a personal grade of
25 or above) or in such other position designated by the Company's Senior Vice
President - Personnel and Administration as being eligible to participate in
this Plan, excluding any such employee who is a party to an employment agreement
with the Company which becomes effective in the event of a Change of Control.
(u) NON-US EXECUTIVE. A Key Executive whose designated home country,
for purposes of the Employer's personnel and benefits programs and policies, is
other than the United States.
(v) PARTICIPANT. A Key Executive who meets the eligibility requirements
of Section 3.1; provided, however, that any Non-US Executive who, under the laws
of his or her designated home country or the legally enforceable programs or
policies of the Employer in such designated home country, is entitled to
receive, in the event of termination of employment (whether or not by reason of
a Change of Control), separation benefits at least equal in aggregate amount to
the Separation Pay prescribed under Section 4.3(b), shall not be considered a
Participant for the purposes of this Plan.
(w) PAYMENT. Any payment or distribution in the nature of compensation
(within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of
the Participant, whether paid or payable pursuant to this Plan or otherwise.
(x) PLAN. The Gillette Company Change of Control Severance Program for
Key Executives, as set forth herein.
(y) PLAN ADMINISTRATOR. The third-party accounting, actuarial or
consulting firm retained by the Company prior to a Change of Control to
administer this Program following a Change of Control.
(z) RECENT ANNUAL BONUS PERCENTAGE. The highest actual annual bonus
percentage awarded to the Participant under the Company's annual incentive
plans, or any comparable bonus under any predecessor or successor plan, for the
last three full fiscal years prior to the Change of Control (and equal to 35% in
the event that the Participant was not employed by the Employer for one full
fiscal year prior to the Change of Control).
(aa) REQUIRED COMPENSATION. With respect to any Participant, the sum of
(i) the Participant's Annual Base Salary and (ii) an amount equal to the product
of (A) the Participant's Annual Base Salary and (B) the Recent Annual Bonus
Percentage.
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(bb) SEPARATION BENEFITS. The amounts and benefits payable or required
to be provided in accordance with Section 4.3.
(cc) SEPARATION PAY. The amounts or amounts payable in accordance with
Section 4.3(b).
(dd) US PARTICIPANT. A Participant whose designated home country, for
purposes of the Employer's personnel and benefits programs and policies, is the
United States.
3.
ARTICLE III
ELIGIBILITY
3.1 PARTICIPATION. Except as set forth in paragraph (v) of Article II, each
employee who is a Key Executive on the Effective Date shall be a Participant in
the Plan effective as of the Effective Date and each other employee shall become
a Participant in the Plan effective as of the date of the employee's promotion
or hire as a Key Executive.
3.2 DURATION OF PARTICIPATION. A Participant shall cease to be a Participant in
the Plan if (i) he or she ceases to be employed by an Employer under
circumstances not entitling him or her to Separation Benefits or (ii) he or she
otherwise ceases to be a Key Executive, provided that no Key Executive may be so
removed from Plan participation in connection with or in anticipation of a
Change of Control that actually occurs. Notwithstanding the foregoing, a
Participant who is entitled, as a result of ceasing to be a Key Executive of an
Employer, to receive benefits under the Plan shall remain a Participant in the
Plan until the amounts and benefits payable under the Plan have been paid or
provided to the Participant in full.
ARTICLE III-A
BENEFITS FOLLOWING CHANGE OF CONTROL
3A.1 CONTINUATION OF BENEFIT PLAN PARTICIPATION. During the period commencing on
the date a Change of Control occurs and ending on the second anniversary of such
date ("Coverage Period"), each US Participant and/or the US Participant's
family, as the case may be, shall be eligible for participation in and shall
receive all benefits under the savings, retirement, welfare and fringe benefit
plans, practices, policies and programs provided by the Employer to the extent
applicable generally to other peer executives of the Employer, but in no event
shall such plans, practices, policies and programs provide the US Participant
with benefits of lesser value, in the aggregate, than the plans, practices,
policies and programs in which the US Participant participated immediately prior
to the Change of Control or, if more favorable to the US Participant, those
provided generally at any time after the Effective Date to other peer executives
of the Employer.
3A.2 ANNUAL BONUS. For each fiscal year of the Company ending during the
Coverage Period, each Participant shall be awarded an annual bonus in cash which
shall not be less than the product of (i) the Participant's Annual Base Salary
and (ii) the Participant's Recent Annual Bonus Percentage. If, prior to the end
of a fiscal year ending during the Coverage Period, a
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Participant's employment is terminated for Disability or as a result of the
Participant's death, or the Participant terminates his or her own employment
other than for Good Reason, the Participant shall be awarded a prorated annual
bonus (determined in accordance with the preceding sentence) for such fiscal
year. Each such annual bonus shall be paid to the Participant no later than the
end of the third month of the fiscal year next following the fiscal year for
which such annual bonus is awarded, unless the Participant elects to defer the
receipt of such annual bonus.
4.
ARTICLE IV
SEPARATION BENEFITS
4.1 RIGHT TO SEPARATION BENEFITS. A Participant shall be entitled to receive
from the Company the Separation Benefits as provided in Section 4.3, if a Change
of Control has occurred and the Participant's employment by an Employer is
terminated under circumstances specified in Section 4.2(a), whether the
termination is voluntary or involuntary, and if (i) such termination occurs
after such Change of Control and on or before the second anniversary thereof, or
(ii) such termination is reasonably demonstrated by the Participant to have been
initiated by a third party that has taken steps reasonably calculated to effect
a Change of Control or otherwise to have arisen in connection with or in
anticipation of such Change of Control.
4.2 TERMINATION OF EMPLOYMENT.
(a) TERMINATIONS WHICH GIVE RISE TO SEPARATION BENEFITS UNDER THIS
PLAN. The circumstances specified in this Section 4.2(a) are any termination of
employment with an Employer by action of the Company or any of its Affiliates or
by a Participant for Good Reason, other than as set forth in Section 4.2(b)
below. For purposes of this Plan, "Good Reason" shall mean:
(i) the assignment to the Participant of any duties
inconsistent in any respect with the Participant's position (including
status, offices, titles and reporting requirements), authority, duties
or responsibilities as in effect immediately prior to the Change of
Control, or any other action by the Company or the Employer that
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith and that is remedied by
the Company and/or the Employer promptly after receipt of notice
thereof given by the Participant;
(ii) a decrease in the Participant's compensation below the
Required Compensation, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and that is remedied by
the Company and/or the Employer promptly after receipt of notice
thereof given by the Participant;
(iii) the Company's or the Affiliate's requiring the
Participant to be based at any office or location other than (A) the
office or where the Participant was based and performed services
immediately prior to the Change of Control or (B) any other location
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less than 35 miles from such office, or the Company's or the
Affiliate's requiring the Participant to travel on business to a
substantially greater extent than required immediately prior to the
Change of Control;
(iv) any purported termination by the Company or the Affiliate
of the Participant's employment otherwise than as expressly permitted
by this Plan; or
(v) any failure by the Company to require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of
the Company to assume expressly and agree to perform this Plan in the
same manner and to the same extent that the Company would be required
to perform it if no such succession had taken place, as required by
Article V.
(b) TERMINATIONS WHICH DO NOT GIVE RISE TO SEPARATION BENEFITS UNDER
THIS PLAN. Notwithstanding Section 4.2(a), if a Participant's employment is
terminated for Cause or Disability (as those terms are defined below) or as a
result of the Participant's death, or the Participant terminates his or her own
employment other than for Good Reason, the Participant shall not be entitled to
Separation Benefits under the Plan, regardless of the occurrence of a Change of
Control.
(i) A termination for "Cause" shall have occurred where a
Participant is terminated because of:
(A) the willful and continued failure of the
Participant to perform substantially the Participant's duties
with the Company or any of the Affiliates (other than any such
failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance
is delivered to the Participant by the Board or an elected
officer of the Company which specifically identifies the
manner in which the Board or the elected officer believes that
the Participant has not substantially performed the
Participant's duties; or
(B) the willful engaging by the Participant in
illegal conduct or gross misconduct which is materially and
demonstrably injurious to the Company or the Affiliate.
For purposes of this Section 4.2(b)(i), no act, or failure to act, on
the part of the Participant shall be considered "willful" unless it is
done, or omitted to be done, by the Participant in bad faith or without
reasonable belief that the Participant's action or omission was in the
best interests of the Company or the Affiliate. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted
by the Board or upon the instructions of the Chief Executive Officer of
the Company or a senior officer of the Company or based upon the advice
of counsel for the Company or the Affiliate shall be conclusively
presumed to be done, or omitted to be done, by the Participant in good
faith and in the best interests of the Company or the Affiliate.
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(ii) A termination for "Disability" shall have occurred where
a Participant is absent from the Participant's duties with the Employer
on a full-time basis for 180 consecutive business days as a result of
incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its
insurers and acceptable to the Participant or the Participant's legal
representative. In such event, the Participant's employment with the
Employer shall terminate effective on the 30th day after receipt of
such notice by the Participant (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, the Participant
shall not have returned to full-time performance of the Participant's
duties.
(c) NOTICE OF TERMINATION. Any termination by the Company for Cause, or
by the Participant for Good Reason, shall be communicated by a Notice of
Termination to the other party. For purposes of this Plan, a "Notice of
Termination" means a written notice which (i) indicates the specific termination
provision in this Plan relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Participant's employment under the provision so indicated and
(iii) if the Date of Termination is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than 30
days after the giving of such notice). The failure by the Participant or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Participant or the Company, respectively, hereunder or preclude the
Participant or the Company, respectively, from asserting such fact or
circumstance in enforcing the Participant's or the Company's rights hereunder.
4.3 SEPARATION BENEFITS. If a Participant's employment is terminated under the
circumstances set forth in Section 4.2(a) entitling him or her to Separation
Benefits, the Company shall pay or provide, as the case may be, to the
Participant the amounts and benefits set forth in items (a) through (e) below
(the "Separation Benefits"):
(a) The Company shall pay to the Participant, in a lump sum in cash
within 30 days after the Date of Termination, the sum of (A) the Participant's
Annual Base Salary through the Date of Termination to the extent not theretofore
paid, (B) the product of (x) the Participant's Highest Annual Bonus and (y) a
fraction, the numerator of which is the number of days in the current fiscal
year through the Date of Termination and the denominator of which is 365,
reduced (but not below zero), if the Date of Termination occurs in the same
fiscal year as the Change of Control, by the Participant's Bonus Payment Amount,
(C) if elected by the Participant, any compensation previously deferred by the
Participant under the Company's Supplemental Savings Plan, Incentive Bonus Plan
and/or Stock Equivalent Unit Plan (together with any accrued interest or
earnings thereon), and (D) any accrued vacation pay, in each case to the extent
not theretofore paid (the sum of the amounts described in subclauses (A), (B),
(C) and (D), the "Accrued Obligations").
(b) The Company also shall pay to the Participant an amount
("Separation Pay") equal to the product of (A) two and (B) the sum of (x) the
Participant's Annual Base Salary and (y) the Participant's Highest Annual Bonus,
reduced (but not below zero) in the case of any Participant who is a Non-US
Executive by the US dollar equivalent (determined as of the
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Participant's Date of Termination) of any payments made to the Participant under
the laws of his or her designated home country or any program or policy of the
Employer in such country on account of the Participant's termination of
employment. A Participant may elect to receive Separation Pay either ratably as
continuing salary payments over a period not to exceed two years following the
Participant's Date of Termination or as a single lump sum cash payment;
provided, however, that a Participant who, as of the Date of Termination, is
within five years of qualifying for early or normal retirement under a
tax-qualified retirement plan maintained by the Company or its Affiliates, may
extend the period for payment of the Separation Pay as continued salary payments
until the date of earliest eligibility for retirement. Separation Pay received
as a lump sum payment is not eligible for Savings Plan contribution, nor is such
payment considered pension-eligible compensation.
(c) Solely with respect to US Participants, for two years after the
Participant's Date of Termination, or such longer period as may be provided by
the terms of the appropriate plan, program, practice or policy, the Company
shall continue welfare benefits to the Participant and/or the Participant's
family at least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies (including, without
limitation, medical, prescription, dental, disability, employee/spouse/child
life insurance, executive life, estate preservation (second-to-die life
insurance) and travel accident insurance plans and programs), as if the
Participant's employment had not been terminated, or, if more favorable to the
Participant, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its Affiliates and their families; provided,
however, that if the Participant becomes reemployed with another employer and is
eligible to receive medical or other welfare benefits under another employer
provided plan, the medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such applicable period
of eligibility. For purposes of determining the Participant's eligibility for
retiree benefits pursuant to such welfare plans, practices, programs and
policies, the Participant shall be considered to have remained employed until
two years after the Date of Termination, provided, however, that the Executive's
commencement of such retiree benefits shall not be any sooner than the
Executive's earliest retirement date under the Company's tax-qualified
Retirement Plan.
(d) The Company shall, at its sole expense, provide the Participant
with outplacement services through the provider of the Company's choice, the
scope of which shall be chosen by the Participant in his or her sole discretion
within the terms and conditions of the Company's outplacement services policy as
in effect immediately prior to the Change of Control.
(e) To the extent not theretofore paid or provided, the Employer shall
timely pay or provide to the Participant any other amounts or benefits required
to be paid or provided or that the Participant is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company and
its Affiliates.
4.4 CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in this Plan to the
contrary notwithstanding, with respect to any Participant who is a citizen or
resident of the United States, in the event it shall be determined that any
Payment would be subject to the Excise Tax, then the Participant shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Participant of all taxes (including any interest
or penalties
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imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Participant retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 4.4(c), all determinations
required to be made under this Section 4.4, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
KPMG Peat Marwick LLP or such other nationally recognized certified public
accounting firm as may be designated by the Participant (the "Accounting Firm")
which shall provide detailed supporting calculations both to the Company and the
Participant within 15 business days of the receipt of notice from the
Participant that there has been a Payment, or such earlier time as is requested
by the Company. All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Subject to Section 4.4(e) below, any Gross-Up Payment, as
determined pursuant to this Section 4.4, shall be paid by the Company to the
Participant within five days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Participant. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 4.4(c) and the
Participant thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Participant.
(c) The Participant shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Participant is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Participant shall not pay such claim prior to the expiration of the 30-day
period following the date on which it gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Participant in writing prior to the
expiration of such period that it desires to contest such claim, the Participant
shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
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(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
PROVIDED, HOWEVER, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Participant harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 4.4(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Participant to pay the tax claimed and sue for a refund or contest
the claim in any permissible manner, and the Participant agrees to prosecute
such contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts, as the Company
shall determine; PROVIDED, HOWEVER, that if the Company directs the Participant
to pay such claim and sue for a refund, the Company shall advance the amount of
such payment to the Participant, on an interest-free basis and shall indemnify
and hold the Participant harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Participant
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Participant shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Participant of an amount advanced by
the Company pursuant to Section 4.4(c), the Participant becomes entitled to
receive any refund with respect to such claim, the Participant shall (subject to
the Company's complying with the requirements of Section 4.4(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Participant of an amount advanced by the Company pursuant to Section 4.4(c), a
determination is made that the Participant shall not be entitled to any refund
with respect to such claim and the Company does not notify the Participant in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
(e) Notwithstanding any other provision of this Section 4.4, the
Company may withhold and pay over to the Internal Revenue Service for the
benefit of the Participant all or any portion of the Gross-Up Payment that it
determines in good faith that it is or may be in the future required to
withhold, and the Participant hereby consents to such withholding.
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4.5 PAYMENT OBLIGATIONS ABSOLUTE. Upon a Change of Control, the obligations of
the Company and its Affiliates to pay or provide the Separation Benefits
described in Section 4.3 shall be absolute and unconditional and shall not be
affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company or any of the
Affiliates may have against any Participant. In no event shall a Participant be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to a Participant under any of the provisions of this
Plan, nor shall the amount of any payment or value of any benefits hereunder be
reduced by any compensation or benefits earned by a Participant as a result of
employment by another employer, except as specifically provided under Section
4.3.
4.6 NON-EXCLUSIVITY OF RIGHTS. Nothing in this Plan shall prevent or limit the
Participant's continuing or future participation in any plan, program, policy or
practice provided by the Company or any of the Affiliates and for which the
Participant may qualify, nor, subject to Section 7.2, shall anything herein
limit or otherwise affect such rights as the Participant may have under any
contract or agreement with the Company or any of the Affiliates. Amounts or
benefits which the Participant is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with the Company or
any of the Affiliates shall be payable in accordance with such plan, policy,
practice or program or contract or agreement, except as explicitly modified by
this Plan.
5.
ARTICLE V
SUCCESSOR TO COMPANY
This Plan shall bind any successor of the Company, its assets
or its businesses (whether direct or indirect, by purchase, merger,
consolidation or otherwise), in the same manner and to the same extent that the
Company would be obligated under this Plan if no succession had taken place.
In the case of any transaction in which a successor would not
by the foregoing provision or by operation of law be bound by this Plan, the
Company shall require such successor expressly and unconditionally to assume and
agree to perform the Company's obligations under this Plan, in the same manner
and to the same extent that the Company would be required to perform if no such
succession had taken place. The term "Company," as used in this Plan, shall mean
the Company as hereinbefore defined and any successor or assignee to the
business or assets which by reason hereof becomes bound by this Plan.
6.
ARTICLE VI
DURATION, AMENDMENT AND TERMINATION
6.1 DURATION. This Plan shall remain in effect until terminated as provided in
Section 6.2. Notwithstanding the foregoing, if a Change of Control occurs, this
Plan shall continue in full
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<PAGE> 13
force and effect and shall not terminate or expire until after all Participants
who become entitled to any payments or benefits hereunder shall have received
such payments or benefits in full.
6.2 AMENDMENT AND TERMINATION. The Plan may be terminated or amended in any
respect by resolution adopted by a majority of the Board, unless a Change of
Control has previously occurred. However, after the Board has knowledge of a
possible transaction or event that if consummated would constitute a Change of
Control, this Plan may not be terminated or amended in any manner which would
adversely affect the rights or potential rights of Participants, unless and
until the Board has determined that all transactions or events that, if
consummated, would constitute a Change of Control have been abandoned and will
not be consummated, and, provided that, the Board does not have knowledge of
other transactions or events that, if consummated, would constitute a Change of
Control. If a Change of Control occurs, the Plan shall no longer be subject to
amendment, change, substitution, deletion, revocation or termination in any
respect that adversely affects the rights of Participants, and no Participant
shall be removed from Plan participation.
ARTICLE VII
MISCELLANEOUS
7.
7.1 LEGAL FEES. The Company agrees to pay, to the full extent permitted by law,
all legal fees and expenses which the Participant may reasonably incur as a
result of any contest (regardless of the outcome thereof) by the Company or the
Affiliates, the Participant or others of the validity or enforceability of, or
liability under, any provision of this Plan or any guarantee of performance
thereof (including as a result of any contest by the Participant about the
amount of any payment pursuant to this Plan), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code.
7.2 EMPLOYMENT STATUS. This Plan does not constitute a contract of employment or
impose on the Participant, the Company or the Participant's Employer any
obligation to retain the Participant as an employee, to change the status of the
Participant's employment as an "at will" employee, or to change the Company's or
the Affiliates' policies regarding termination of employment.
7.3 TAX WITHHOLDING. The Company may withhold from any amounts payable under
this Plan such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
7.4 VALIDITY AND SEVERABILITY. The invalidity or unenforceability of any
provision of the Plan shall not affect the validity or enforceability of any
other provision of the Plan, which shall remain in full force and effect, and
any prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
7.5 GOVERNING LAW. The validity, interpretation, construction and performance of
the Plan shall in all respects be governed by the laws of Delaware, without
reference to principles of conflict of law.
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<PAGE> 14
7.6 CLAIM PROCEDURE. If a Participant makes a written request alleging a right
to receive Separation Benefits under the Plan or alleging a right to receive an
adjustment in benefits being paid under the Plan, the Company shall treat it as
a claim for benefits. All claims for Separation Benefits under the Plan shall be
sent to the General Counsel of the Company and must be received within 30 days
after the Date of Termination. If the Company determines that any individual who
has claimed a right to receive Separation Benefits under the Plan is not
entitled to receive all or a part of the benefits claimed, it will inform the
claimant in writing of its determination and the reasons therefor in terms
calculated to be understood by the claimant. The notice will be sent within 90
days of the written request, unless the Company determines additional time, not
exceeding 90 days, is needed. The notice shall make specific reference to the
pertinent Plan provisions on which the denial is based, and describe any
additional material or information that is necessary. Such notice shall, in
addition, inform the claimant what procedure the claimant should follow to take
advantage of the review procedures set forth below in the event the claimant
desires to contest the denial of the claim. The claimant may within 90 days
thereafter submit in writing to the Plan Administrator a notice that the
claimant contests the denial of his or her claim by the Company and desires a
further review. The Plan Administrator shall within 60 days thereafter review
the claim and authorize the claimant to appear personally and review the
pertinent documents and submit issues and comments relating to the claim to the
persons responsible for making the determination on behalf of the Plan
Administrator. The Plan Administrator will render its final decision with
specific reasons therefor in writing and will transmit it to the claimant within
60 days of the written request for review, unless the Plan Administrator
determines additional time, not exceeding 60 days, is needed, and so notifies
the Participant. If the Plan Administrator fails to respond to a claim filed in
accordance with the foregoing within 60 days or any such extended period, the
Plan Administrator shall be deemed to have denied the claim.
7.7 UNFUNDED PLAN STATUS. This Plan is intended to be an unfunded plan and to
qualify as a severance pay plan within the meaning of Labor Department
Regulations section 2510.3-2(b). All payments pursuant to the Plan shall be made
from the general funds of the Company and no special or separate fund shall be
established or other segregation of assets made to assure payment. No
Participant or other person shall have under any circumstances any interest in
any particular property or assets of the Company as a result of participating in
the Plan. Notwithstanding the foregoing, the Company may (but shall not be
obligated to) create one or more grantor trusts, the assets of which are subject
to the claims of the Company's creditors, to assist it in accumulating funds to
pay its obligations under the Plan.
7.8 RELIANCE ON ADOPTION OF PLAN. Each person who shall become a Key Executive
shall be deemed to have served and continue to serve in such capacity in
reliance upon the change of control provisions contained in this Plan.
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7.9 PROGRAM SUPERSEDES PRIOR US ARRANGEMENTS. For the period of two years
following the occurrence of a Change of Control, the provisions of this Program
shall supersede, with respect to US Participants, any and all plans, programs,
policies and arrangements of the Company providing severance benefits.
IN WITNESS WHEREOF, The Gillette Company has caused this Plan to be executed by
its duly authorized officer effective as of the Effective Date set forth above.
THE GILLETTE COMPANY
By: /s/ Robert E. DiCenso
---------------------------------
Senior Vice President - Personnel
and Administration
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