Estate Preservation Plan - Gillette Co.
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.
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(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
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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
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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
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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.
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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:
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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
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vction or administration of the Plan provided that such action or omission is
made in good faith.