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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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(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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(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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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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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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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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