Exhibit 10-4
The Gillette Company
2004 Long-Term Incentive Plan
(Amended and Restated as of August 14, 2007)

 

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Contents

         
Article 1. Establishment, Purpose, and Duration
    1  
Article 2. Administration
    1  
Article 3. Shares Subject to the Plan and Maximum Awards
    3  
Article 4. Eligibility and Participation
    5  
Article 5. Stock Options
    5  
Article 6. Stock Appreciation Rights
    9  
Article 7. Restricted Stock and Restricted Stock Units
    11  
Article 8. Performance Shares
    13  
Article 9. Cash-Based Awards and Other Stock-Based Awards
    14  
Article 10. Performance Measures
    15  
Article 11. Dividend Equivalents
    16  
Article 12. Additional Conditions of Awards
    16  
Article 13. Deferrals
    21  
Article 14. Rights of Participants
    21  
Article 15. Covered Transactions and Change of Control
    21  
Article 16. Amendment, Modification, Suspension, and Termination
    23  
Article 17. Withholding
    24  
Article 18. Successors
    24  
Article 19. General Provisions
    24  
Article 19A. Special Merger Provisions
    27  
Article 20. Definitions
    29  

     
The Gillette Company
  [Revised ___-2005]

 

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The Gillette Company
2004 Long-Term Incentive Plan
Article 1. Establishment, Purpose, and Duration
     1.1 Establishment. The Gillette Company, a Delaware corporation has
established this 2004 Long-Term Incentive Plan (the “Plan”) as a long-term
incentive compensation plan. The Plan permits the grant of Cash-Based Awards,
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Performance Shares, and Other
Stock-Based Awards. The Plan is effective as of May 20, 2004 (the “Effective
Date”) and shall remain in effect as provided in Section 1.4 hereof.
     1.2 Assumption of the Plan. As of the Effective Time, The Procter & Gamble
Company, an Ohio corporation, has assumed the Plan according to the Merger
Agreement. Unless otherwise specified, amendments to the Plan made in connection
with the Merger Agreement shall be effective upon the Effective Time. Should the
Merger not become effective, the Plan shall revert to the form approved by the
shareholders of The Gillette Company on May 20, 2004, without prejudice to any
Awards then outstanding.
     1.3 Purpose of the Plan. The purpose of the Plan is to promote the
interests of the Company and its stockholders by strengthening the Company’s
ability to attract, motivate, and retain Employees and, until the Effective
Time, Nonemployee Directors of the Company upon whose judgment, initiative, and
efforts the financial success and growth of the business of the Company depend,
and to provide an additional incentive for such individuals through stock
ownership and other rights that promote and recognize the financial success and
growth of the Company and create value for stockholders.
     1.4 Duration of the Plan. Unless sooner terminated as provided herein, the
Plan shall terminate ten years from the Effective Date. After the Plan is
terminated, no Awards may be granted but Awards previously granted shall remain
outstanding in accordance with their applicable terms. No Incentive Stock
Options may be granted more than ten years after December 9, 2003.
Article 2. Administration
     2.1 General. The Committee shall be responsible for administering the Plan,
subject to this Article 2 and the other provisions of the Plan. The Committee
may employ attorneys, consultants, accountants, agents, and other persons, any
of whom may be an Employee, and shall be entitled to rely upon the advice,
opinions, or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee shall be final and
binding upon the Participants, the Company, and all other interested persons.
     2.2 Authority of the Committee. The Committee shall have full discretionary
power to interpret the terms and the intent of the Plan and any Award Agreement
or other agreement or document ancillary to or in connection with the Plan; to
determine eligibility for Awards ; to adopt such rules, regulations, forms,
instruments, and guidelines for administering the Plan, as it may deem necessary
or proper. Such authority shall include, but not be limited to, selecting Award
recipients including prospective Employees and establishing all Award terms and
conditions, including the

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terms and conditions set forth in Award Agreements. In addition, for any grant
following the Effective Time, the Committee shall have the further authority to:

  (a)   waive the provisions of Section 12.1A(a) hereof     (b)   waive the
provisions of Section 12.1A(b) hereof     (c)   waive the provisions of
Section 12.1A(c) hereof     (d)   waive the provisions of Section 5.8(a),
5.8(b), and 5.8(c) hereof as well as Sections 6.7(a), 6.7(b), and 6.7(c) hereof
and     (e)   impose conditions in lieu of those set forth in Articles 5, 6, 7,
8, and 9 for Options, SARs, Restricted Stock, RSUs, Performance Shares, or other
Awards which do not increase or extend the rights of the Participant.

Notwithstanding the foregoing, Awards to Nonemployee Directors shall be made by
the Board, and all references in the Plan to the Committee, where the Committee
is referred to as having discretion or authority to grant Awards, shall, as
applied to Awards made to Nonemployee Directors, be construed to refer to the
Board. Awards to Nonemployee Directors are not subject to management’s
discretion.
     2.3 Composition. The Committee shall consist of not fewer than three
(3) members of the Board who are “Non-Employee Directors” as defined in
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “1934
Act”), or any successor rule or definition adopted by the Securities and
Exchange Commission, to be appointed by the Board from time to time and to serve
at the discretion of the Board. The Committee shall report to the Board on the
administration of the Plan not less than once each year.
     The Committee may delegate to one or more of its members or to one or more
officers of the Company, and/or its Subsidiaries or to one or more agents or
advisors such administrative duties or powers as it may deem advisable. The
Committee may also delegate to one or more officers (each, a “delegated
officer”) of the Company the power to designate Employees (other than the
delegated officer and other than any officer subject to Section 16 of the
Exchange Act) to receive Awards under the Plan, on such terms as the delegated
officer determines, subject to the following: (i) any such delegation with
respect to Options shall comply with the requirements set forth therein, and
(ii) in the case of any such delegation with respect to other Awards involving
the issuance of Shares, the Committee shall authorize the issuance of the
Shares, limiting the aggregate number thereof that shall be subject to Awards to
which the delegation applies, and shall determine the price, if any, to be paid
therefor. Any officer to whom a delegation under the preceding sentence is made
shall report periodically to the Committee, in such detail as the Committee may
require, concerning Awards allocated or granted pursuant to such delegation.
References to the Committee herein shall be deemed to include any person to whom
the Committee has delegated responsibilities under this Section 2.3, to the
extent of such delegation.

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Article 3. Shares Subject to the Plan and Maximum Awards
     3.1 Number of Shares Available for Awards.

  (a)   Subject to adjustment as provided in Section 3.4 hereof, the maximum
number of Shares available for issuance to Participants under the Plan (the
“Share Authorization”) shall be:

  (i)   Nineteen million (19,000,000), plus     (ii)   The sum of (1) the
authorized Shares not issued or subject to outstanding awards under the
Company’s Prior Plan as of the Effective Date plus (2) any unissued Shares
subject to outstanding awards as of the Effective Date under the Prior Plan that
on or after the Effective Date cease for any reason to be subject to such awards
(other than by reason of exercise or settlement of the awards to the extent they
are exercised for or settled in vested and nonforfeitable Shares).

  (b)   Subject to the foregoing limit on the number of Shares that may be
issued in the aggregate under the Plan, the maximum number of Shares that may be
issued in the following categories shall be as follows:

  (i)   No more than thirty seven million (37,000,000) Shares may be issued
pursuant to Awards in the form of ISOs; and     (ii)   No more than thirty seven
million (37,000,000) Shares may be issued pursuant to Awards in the form of
NQSOs; and     (iii)   No more than one million (1,000,000) Shares may be issued
pursuant to Awards made to Nonemployee Directors.

     3.2 Share Usage.

  (a)   Shares related to Awards that terminate by expiration, forfeiture,
cancellation, or otherwise without the issuance of such Shares, are settled in
cash in lieu of Shares, or are exchanged with the Committee’s permission, prior
to the issuance of Shares, for Awards not involving Shares, are not issued
Shares and, consistent with Section 3.1 above, shall be available for Awards
granted under the Plan. If the Option Price of any Option granted under the Plan
or the tax withholding requirements with respect to any Award granted under the
Plan are satisfied by tendering Shares to the Company (by either actual delivery
or by attestation), or if shares are tendered for any other purpose under any
other form of Award, the number of Shares treated as issued under the Plan for
purposes of Section 3.1 above shall be determined net of any Shares tendered to
the Company. The Shares available for issuance under the Plan may be authorized
and unissued Shares or treasury Shares, or shares acquired in the open market as
the Committee determines.

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  (b)   The Committee shall have the authority to grant Awards as an alternative
to or as the form of payment for grants or rights earned or due under other
compensation plans or arrangements of the Company.

     3.3 Annual Award Limits. The following limits (each an “Annual Award
Limit,” and, collectively, “Annual Award Limits”) shall apply to grants of
Awards under the Plan:

  (a)   Options: The maximum aggregate number of Shares subject to Options
granted in any one Plan Year to any one Participant shall be three million
(3,000,000) plus the amount of the Participant’s unused applicable Annual Award
Limit as of the close of the previous Plan Year.     (b)   SARs: The maximum
number of Shares subject to Stock Appreciation Rights granted in any one Plan
Year to any one Participant shall be three million (3,000,000) plus the amount
of the Participant’s unused applicable Annual Award Limit as of the close of the
previous Plan Year.     (c)   Restricted Stock or Restricted Stock Units: The
maximum aggregate grant with respect to Awards of Restricted Stock or Restricted
Stock Units granted in any one Plan Year to any one Participant shall be two
million (2,000,000) plus the amount of the Participant’s unused applicable
Annual Award Limit as of the close of the previous Plan Year.     (d)  
Performance Shares: The maximum aggregate grant of Performance Shares in any one
Plan Year to any one Participant shall be one and one-half million (1,500,000)
Shares plus the amount of the Participant’s unused applicable Annual Award Limit
as of the close of the previous Plan Year.     (e)   Cash-Based Awards: The
maximum aggregate grant amount with respect to Cash-Based Awards granted in any
one Plan Year to any one Participant may not exceed ten million dollars
($10,000,000) plus the amount of the Participant’s unused applicable Annual
Award Limit as of the close of the previous Plan Year.     (f)   Other
Stock-Based Awards. The maximum aggregate grant with respect to Other
Stock-Based Awards granted in any one Plan Year to any one Participant shall be
one and one-half million (1,500,000) Shares plus the amount of the Participant’s
unused applicable Annual Award Limit as of the close of the previous Plan Year.
    (g)   Awards to Nonemployee Directors. The maximum aggregate grant with
respect to Awards made in any one Plan Year to any one Nonemployee Director
shall be twenty thousand (20,000) Shares plus the amount of the Participant’s
unused applicable Annual Award Limit as of the close of the previous Plan Year.
Notwithstanding any other provision to the contrary in this Plan, there shall be
no Awards granted to any Nonemployee Director after May 2005, provided that the
Merger closes according to the terms and conditions of the Merger Agreement.

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     3.4 Adjustments in Authorized Shares. In the event of any corporate event
or transaction (including, but not limited to, a change in the shares of the
Company or the capitalization of the Company) such as a merger, consolidation,
reorganization, recapitalization, separation, stock dividend, stock split,
reverse stock split, split up, spin-off, or other distribution of stock or
property of the Company, combination of Shares, exchange of Shares, dividend in
kind, or other like change in capital structure, or a distribution (other than a
normal cash dividend) to stockholders of the Company, or any similar corporate
event or transaction, the Committee, in order to prevent dilution or enlargement
of Participants’ rights under the Plan, shall substitute or adjust, as
applicable, the number and kind of Shares that may be issued under the Plan or
under particular forms of Award, the number and kind of Shares subject to
outstanding Awards, the Option Price or Grant Price applicable to outstanding
Awards, the Annual Award Limits, and other value determinations applicable to
outstanding Awards.
     The Committee may also make such other adjustments in Awards as are
authorized by Article 15 or Article 16. Any adjustment made pursuant to this
Section 3.4 or pursuant to Article 15 or Article 16 that is made with respect to
an Award intended to be an ISO shall be made only to the extent consistent with
such intent, and any such adjustment that is made with respect to an Award to a
Covered Employee that is intended to qualify for the performance-based
compensation exception under Section 162(m) of the Code shall be made consistent
with that intent. The determination of the Committee as to Award adjustments, if
any, shall be conclusive and binding on Participants under the Plan.
     3.5 Adjustments Resulting from the Merger. The Share Authorization, Annual
Award Limits, and other Award limitations and maximums set forth in this
Article 3 shall be multiplied by the Exchange Ratio to establish an adjusted
Share Authorization, Annual Award Limits, and other Award limitations and
maximums following the Effective Time.
Article 4. Eligibility and Participation
     4.1 Eligibility. Individuals eligible to participate in this Plan include
all key Employees who, in the opinion of the Committee, have demonstrated a
capacity for contributing in a substantial manner to the success of the Company
and/or its subsidiaries. Nonemployee Directors of the Company are also eligible
for participation in the Plan until and including May 2005, after which time no
further grants shall be made to Nonemployee Directors, provided that the Merger
closes according to the terms and conditions of the Merger Agreement.
     4.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible individuals those to
whom Awards shall be granted and the amount, type, and terms of each Award.
Article 5. Stock Options
     5.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Participants in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Committee;
provided that ISOs may be granted only to eligible Employees of the Company or
of any parent or subsidiary corporation (as these terms are defined in
Section 424 of the Code and the regulations thereunder).

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     5.2 Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the maximum duration of the
Option, the number of Shares to which the Option pertains, the conditions upon
which an Option shall become vested and exercisable, and such other provisions
as the Committee shall determine that are not inconsistent with the terms of the
Plan. The Award Agreement also shall specify whether the Option is intended to
be an ISO or a NQSO.
     5.3 Option Price. The Option Price for each grant of an Option under this
Plan shall be as determined by the Committee and shall be specified in the Award
Agreement. The Option Price shall be fixed and shall be equal to or greater than
the FMV on the date of grant of the Shares subject to the Option.
     5.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth (10th) anniversary of the date
of its grant.
     5.5 Exercise of Options. Options shall be exercisable at such times and be
subject to such restrictions and conditions as the Committee shall in each
instance approve, which terms and restrictions need not be the same for each
grant or for each Participant.
     5.6 Payment. Options granted under this Article 5 shall be exercised by the
delivery of a notice of exercise to the Company or an agent designated by the
Company in a form specified or accepted by the Committee, or by complying with
any alternative procedures which may be authorized by the Committee, setting
forth the number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.
     The issuance of Shares with respect to any Option exercise shall be
conditioned on full payment of the related Option Price. The Option Price of any
Option shall be payable to the Company either: (a) in cash or its equivalent;
(b) by tendering (either by actual delivery or attestation) previously acquired
Shares having an aggregate Fair Market Value at the time of exercise equal to
the Option Price (provided that, except as otherwise determined by the
Committee, the Shares that are tendered must have been held by the Participant
for at least six (6) months prior to their tender to satisfy the Option Price or
have been purchased on the open market); (c) by any other method approved or
accepted by the Committee, including, without limitation, if the Committee so
determines, a cashless (broker assisted) exercise; or (d) by any combination of
the foregoing.
     Subject to any governing rules or regulations, as soon as practicable after
receipt of written notification of exercise and full payment (including
satisfaction of any applicable tax withholding), the Company shall deliver to
the person exercising the Option evidence of book entry Shares, or upon such
person’s request, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s).
     Unless otherwise determined by the Committee, all cash payments under all
of the methods indicated above shall be paid in United States dollars.
     5.7 Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 5 as it may deem

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advisable, including, without limitation, minimum holding period requirements,
restrictions under applicable securities laws, or under the requirements of any
stock exchange or market upon which such Shares are then listed and/or traded.
     5.8 Termination of Employment.
Except as provided in Section 19A hereof and the Merger Agreement, in the event
that a Participant ceases to be an employee of the Company or any of its
subsidiaries while holding an unexercised Option:

  (a)   Any unexercisable portions thereof are then void, except in the case of:
(1) death of the Participant; (2) Retirement or Special Separation that occurs
more than six months from the date the Options were granted; or (3) any Option
as to which the Committee has waived, at the time of grant, the provisions of
this Section 5.8(a) hereof     (b)   Any exercisable portions thereof are then
void, except in the case of: (1) death of the Participant which for Options
granted prior to the Effective Time shall be exercised within the shorter of the
term of the original grant or three years from the date of death, and for
Options granted after the Effective Time shall be exercised within the term of
the original grant; (2) Retirement or Special Separation; (3) a voluntary
resignation that is not for Good Reason, but only with respect to Options
granted prior to the Effective Time, which must be exercised (if at all) within
30 days after the date of termination of employment; or (4) any Option as to
which the Committee has waived, at the time of grant, the provisions of this
Section 5.8(b)     (c)   In the case of a Special Separation which occurs prior
to October 2, 2007, any Option must be exercised within the time specified in
the original grant or five (5) years from the date of Special Separation,
whichever is shorter. For a Special Separation which occurs on or after
October 2, 2007, any Option must be exercised within the time specified in the
original grant.     (d)   In the case of the death of a Participant, the persons
to whom the Options granted following the Effective Time have been transferred
by will or the laws of descent and distribution shall have the privilege of
exercising remaining Options or parts thereof, whether or not exercisable on the
date of death of such Participant, at any time prior to the expiration date of
the Options. Options granted before the Effective Time may be exercised during a
period ending on the earlier of the term of the original grant or three years
from the date of death.

     5.9 Transferability of Options.

  (a)   Incentive Stock Options. No ISO granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, all ISOs
granted to a Participant under this Article 5 shall be exercisable during his or
her lifetime only by such Participant, or, in the event of the legal
incompetence of the Participant, by the Participant’s duly appointed legal
guardian.

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  (b)   Nonqualified Stock Options. Except as otherwise provided in a
Participant’s Award Agreement or otherwise at any time by the Committee, no NQSO
granted under this Article 5 may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution; provided that the Board or Committee may permit
further transferability, on a general or a specific basis, and may impose
conditions and limitations on any permitted transferability. Further, except as
otherwise provided in a Participant’s Award Agreement or otherwise at any time
by the Committee, or unless the Board or Committee decides to permit further
transferability, all NQSOs granted to a Participant under this Article 5 shall
be exercisable during his or her lifetime only by such Participant or, in the
event of the legal incompetence of the Participant, by the Participant’s duly
appointed legal guardian. With respect to those NQSOs, if any, that are
permitted to be transferred to another person, relevant references in the Plan
to the Participant, as determined by the Committee, shall be deemed to include
the Participant’s permitted transferee.

     For the purpose of exercising any Options after the death of the
Participant, the duly appointed executors and administrators of the estate of
the deceased Participant shall have the same rights with respect to the Options
as legatees or distributees would have after distribution to them from the
Participant’s estate. Notwithstanding the foregoing, the Committee may authorize
the transfer of Options upon such terms and conditions as the Committee may
require. Such transfer shall become effective only upon the Committee’s complete
satisfaction that the proposed transferee has strictly complied with such terms
and conditions, and both the original Participant and the transferee shall be
subject to the same terms and conditions hereunder as the original Participant.
     5.10 Notification of Disqualifying Disposition. If any Participant shall
make any disposition of Shares issued pursuant to the exercise of an ISO under
the circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions), such Participant shall notify the Company of such
disposition within ten (10) days thereof.
     5.11. Substituting SARs. In the event the Company no longer uses APB
Opinion 25 to account for equity compensation and is required to or elects to
expense the cost of Options pursuant to FAS 123 (or a successor standard), the
Committee shall have the ability to substitute, without receiving Participant
permission, SARs paid only in Stock (or SARs paid in Stock or cash at the
Committee’s discretion) for outstanding Options awarded after the adoption of
FAS 123; provided, the terms of the substituted Stock SARs correspond in
relevant respects to the terms of the Options and the difference between the
Fair Market Value of the underlying Shares and the Grant Price of the SARs is
equivalent to the difference between the Fair Market Value of the underlying
Shares and the Option Price of the Options, as determined by the Committee.
     5.12 ISOs. The aggregate fair market value (determined at the time when the
ISO is exercisable for the first time by a Participant during any calendar year)
of the shares for which any Participant may be granted ISOs under the Plan and
all other stock option plans of the Company and its subsidiaries in any calendar
year shall not exceed $100,000 (or such other amount as reflected in the limits
imposed by Section 422(d) of the Internal Revenue Code of 1986, as it may be
amended from time to time).
     5.13. Additional Terms and Conditions.

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  (a)   Unless otherwise authorized by the shareholders of the Company, neither
the Board nor the Committee shall authorize the amendment of any Option to
reduce the Option Price. This Paragraph shall not be construed to prohibit the
adjustments permitted under Section 3.4 the Plan.     (b)   No Option shall be
cancelled and replaced with awards having a lower Option Price without the prior
approval of the shareholders of the Company. This Paragraph is intended to
prohibit the repricing of “underwater” Options and shall not be construed to
prohibit the adjustments permitted under Section 3.4 the Plan.     (c)   The
Committee may require any Participant to accept any Option by means of
electronic signature.     (d)   No Options granted after the Effective Time
shall be exercisable within one (1) year from their date of grant, except in the
case of the death of the Participant.

Article 6. Stock Appreciation Rights
     6.1 Grant of SARs. Subject to the terms and conditions of the Plan, SARs
may be granted to Participants in such number, and upon such terms, and at any
time and from time to time as shall be determined by the Committee. The
Committee may grant Freestanding SARs, Tandem SARs, or any combination of these
forms of SARs.
     The Grant Price for each grant of a Freestanding SAR shall be determined by
the Committee and shall be specified in the Award Agreement. The Grant Price for
a Freestanding SAR shall be fixed and shall be equal to or greater than the FMV
on the date of grant of the Shares subject to the Freestanding SAR. The Grant
Price of Tandem SARs shall be equal to the Option Price of the related Option.
     6.2 SAR Agreement. Each SAR Award shall be evidenced by an Award Agreement
that shall specify the Grant Price, the maximum duration of the SAR, the number
of Shares to which the SAR pertains, the conditions upon which a SAR shall
become vested and exercisable, and such other provisions as the Committee shall
determine that are not inconsistent with the terms of the Plan.
     6.3 Duration of SAR. Each SAR shall expire at such time as the Committee
shall determine at the time of grant; provided, however, that no SAR shall be
exercisable later than the tenth (10th) anniversary of the date of its grant.
     6.4 Exercise of Freestanding SARs. Freestanding SARs shall be exercisable
at such times and be subject to such restrictions and conditions as the
Committee shall in each instance approve, which terms and restrictions need not
be the same for each grant or for each Participant.
     6.5 Exercise of Tandem SARs. Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.

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     Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (a) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (b) the value of
the payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (c) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.
     6.6 Payment of SAR Amount. Upon the exercise of an SAR, a Participant shall
be entitled to receive payment from the Company in an amount determined by
multiplying:

  (a)   The difference between the Fair Market Value of a Share on the date of
exercise over the Grant Price; by     (b)   The number of Shares with respect to
which the SAR is exercised.

     The payment upon SAR exercise may be in cash, Shares, or any combination
thereof, or in any other manner approved by the Committee. The Committee’s
determination regarding the form of SAR payout shall be set forth in the Award
Agreement pertaining to the grant of the SAR.
     6.7 Termination of Employment. In the event that a Participant ceases to be
an employee of the Company or any of its subsidiaries while holding an
unexercised SAR:

  (a)   Any unexercisable portions thereof are then void, except in the case of:
(1) death of the Participant; (2) Retirement or Special Separation that occurs
more than six months from the date the SARs were granted; or (3) any SAR as to
which the Committee has waived, at the time of grant, the provisions of this
Section 6.7(a).     (b)   Any exercisable portions thereof are then void, except
in the case of: (1) death of the Participant; (2) Retirement or Special
Separation; or (3) any SAR as to which the Committee has waived, at the time of
grant, the provisions of this Section 6.7(b).     (c)   In the case of a Special
Separation which occurs prior to October 2, 2007, any SAR must be exercised
within the time specified in the original grant or five (5) years from the date
of Special Separation, whichever is shorter. For a Special Separation which
occurs on or after October 2, 2007, any SAR must be exercised within the time
specified in the original grant.     (d)   In the case of the death of a
Participant, the persons to whom SARs have been transferred by will or the laws
of descent and distribution shall have the privilege of exercising remaining
stock appreciation rights or parts thereof, whether or not exercisable on the
date of death of such Participant, at any time prior to the expiration date of
the SARs.

     6.8 Nontransferability of SARs. Except as otherwise provided in a
Participant’s Award Agreement or otherwise at any time by the Committee, no SAR
granted under the Plan may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the

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laws of descent and distribution. Further, except as otherwise provided in a
Participant’s Award Agreement or otherwise at any time by the Committee, all
SARs granted to a Participant under the Plan shall be exercisable during his or
her lifetime only by such Participant or, in the event of the legal incompetence
of the Participant, by the Participant’s duly appointed legal guardian. With
respect to those SARs, if any, that are permitted to be transferred to another
person, relevant references in the Plan to the Participant, as determined by the
Committee, shall be deemed to include the Participant’s permitted transferee.
     For the purpose of exercising SARs after the death of the Participant, the
duly appointed executors and administrators of the estate of the deceased
Participant shall have the same rights with respect to the SARs as legatees or
distributees would have after distribution to them from the Participant’s
estate. Notwithstanding the foregoing, the Committee may authorize the transfer
of SARs upon such terms and conditions as the Committee may require. Such
transfer shall become effective only upon the Committee’s complete satisfaction
that the proposed transferee has strictly complied with such terms and
conditions, and both the original Participant and the transferee shall be
subject to the same terms and conditions hereunder as the original Participant.
     6.9 Other Restrictions. The Committee shall impose such other conditions
and/or restrictions on any Shares received upon exercise of a SAR granted
pursuant to the Plan as it may deem advisable or desirable. These restrictions
may include, but shall not be limited to, a requirement that the Participant
hold any Shares received upon exercise of a SAR for a specified period of time.
     6.10. Additional Terms and Conditions.

  (a)   Unless otherwise authorized by the shareholders of the Company, neither
the Board nor the Committee shall authorize the amendment of any outstanding SAR
to reduce the Grant Price. This Paragraph shall not be construed to prohibit the
adjustments permitted under Section 3.4 the Plan.     (b)   No SAR shall be
cancelled and replaced with awards having a lower Grant Price without the prior
approval of the shareholders of the Company. This Paragraph is intended to
prohibit the repricing of “underwater” SARs and shall not be construed to
prohibit the adjustments permitted under Section 3.4 of the Plan.     (c)   The
Committee may require any Participant to accept any SAR by means of electronic
signature.     (d)   No SARs granted after the Effective Time shall be
exercisable within one (1) year from their date of grant, except in the case of
the death of the Participant.

Article 7. Restricted Stock and Restricted Stock Units
     7.1 Grant of Restricted Stock or Restricted Stock Units. Subject to the
terms and provisions of the Plan, Shares of Restricted Stock and/or Restricted
Stock Units may be granted to Participants in such number, and upon such terms,
and at any time and from time to time as shall be determined by the Committee.

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     7.2 Restricted Stock or Restricted Stock Unit Agreement. Each Restricted
Stock and/or Restricted Stock Unit grant shall be evidenced by an Award
Agreement that shall specify the Period(s) of Restriction, the number of Shares
of Restricted Stock or the number of Restricted Stock Units granted, the
conditions upon which Restricted Stock or Restricted Stock Units shall become
vested, and such other provisions as the Committee shall determine that are not
inconsistent with the terms of the Plan.
     7.3 Transferability. Except as provided in this Plan or an Award Agreement,
the Shares of Restricted Stock and/or Restricted Stock Units granted herein may
not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated until the end of the applicable Period of Restriction established
by the Committee and specified in the Award Agreement or otherwise at anytime by
the Committee (and in the case of Restricted Stock Units until the date of
delivery or other payment), or upon earlier satisfaction of any other
conditions, as specified by the Committee, and set forth in the Award Agreement
or otherwise at any time by the Committee. All rights with respect to the
Restricted Stock and/or Restricted Stock Units granted to a Participant under
the Plan shall be available during his or her lifetime only to such Participant
or, in the event of the legal incompetence of the Participant, by the
Participant’s duly appointed legal guardian, except as otherwise provided in an
Award Agreement or at any time by the Committee.
     7.4 Other Restrictions. The Committee shall impose such other conditions
and/or restrictions on any Shares of Restricted Stock or Restricted Stock Units
granted pursuant to the Plan as it may deem advisable including, without
limitation, a requirement that Participants pay a stipulated purchase price for
each Share of Restricted Stock or each Restricted Stock Unit, restrictions based
upon the achievement of specific performance goals, time-based restrictions,
and/or restrictions under applicable laws or under the requirements of any stock
exchange or market upon which such Shares are listed or traded, or holding
requirements or sale restrictions placed on the Shares by the Company upon
vesting of such Restricted Stock or Restricted Stock Units.
     Except with respect to a maximum of five percent (5%) of the Shares
authorized in Section 3.1(a) and disregarding the impact of Article 15, any
Awards of Restricted Stock or Restricted Stock Units that vest on the basis of
the Participant’s continued employment with or provision of service to the
Company shall provide for vesting at a rate that is not more rapid than annual
pro rata vesting over a three (3) year period and any Awards of Restricted Stock
or Restricted Stock Units that vest upon the attainment of performance goals
shall provide for a performance period of at least twelve (12) months.
     To the extent deemed appropriate by the Committee, the Company may retain
the certificates representing Shares of Restricted Stock in the Company’s
possession until such time as all conditions and/or restrictions applicable to
such Shares have been satisfied or lapse.
     After all conditions and restrictions under the Plan applicable to an Award
under this Article 7 have been satisfied or have lapsed, including the
satisfaction of all applicable tax withholding obligations, then (a) if the
Award was an Award of Restricted Stock, the Shares subject to the Award shall be
free of all transfer restrictions imposed under the Plan, and (b) if the Award
was an Award of Restricted Stock Units, the Shares subject to the Award, or cash
in lieu thereof, or a combination of Shares and cash, as the Committee
determines, shall be issued and delivered to the holder of the Award.

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     7.5 Voting Rights. Except as otherwise specified in an Award Agreement,
Participants holding Shares of Restricted Stock shall have full voting rights
with respect to those Shares during the Period of Restriction. A Participant
shall have no voting rights with respect to any Restricted Stock Units granted
hereunder except as to Shares actually issued and delivered under such Units.
     7.6 Termination of Employment. Each Award Agreement shall set forth the
extent, if any, to which the Participant shall have the right to retain
Restricted Stock and/or Restricted Stock Units following termination of the
Participant’s employment with or provision of services to the Company and/or its
Subsidiaries, as the case may be. Such provisions shall be determined by the
Committee, shall be included in the Award Agreement entered into with each
Participant, need not be uniform among all Shares of Restricted Stock or
Restricted Stock Units issued pursuant to the Plan, and may reflect distinctions
based on the reasons for termination.
     7.7 Section 83(b) Election. The Committee may provide in an Award Agreement
relating to Restricted Stock that the Award is conditioned upon the Participant
making or refraining from making an election with respect to the Restricted
Stock under Section 83(b) of the Code. If a Participant makes an election
pursuant to Section 83(b) of the Code concerning Restricted Stock, the
Participant shall be required to file promptly a copy of such election with the
Company.
Article 8. Performance Shares
     8.1 Grant of Performance Shares. Subject to the terms and provisions of the
Plan, Performance Shares may be granted in such number, and upon such terms,
which may include requirements of continued service as well as performance
conditions, and at any time and from time to time as shall be determined by the
Committee. Each Award under this Article 8 shall specify the performance
measures applicable to the Award, as determined by the Committee, and the period
or periods (each, a “Performance Period”) over which the performance measures so
determined are to be measured. Each Performance Share shall be expressed in
units of Shares or fractions or multiples of Shares and shall provide for
payout, if the applicable performance and other Award conditions are met, based
on the value of the underlying Shares, or on appreciation in such value, or on
such other Share-related measures of value as the Committee may determine. For
the avoidance of doubt, an Award granted under Articles 5, 6, 7 or 9 may provide
for the acceleration of vesting or payment upon the satisfaction of performance
conditions and shall not thereby be considered a Performance Share Award under
this Article 8, but a share based Award that would otherwise be described in
Articles 5, 6, 7 or 9 but under which the satisfaction of performance conditions
(other than service) is a precondition to any vesting or exercisability shall be
considered a Performance Share for purposes of the Plan.
     8.2 Payment of Performance Shares. Subject to the terms of this Plan, after
the applicable Performance Period has ended, the holder of a Performance Share
shall be entitled to receive such payout, if any, as the Committee determines is
owed based on the terms of the Award. Payment with respect to a Performance
Share may be made in the form of cash or in Shares (or in a combination
thereof), as the Committee determines.
     8.3 Termination of Employment. Each Award Agreement shall set forth the
extent, if any, to which the Participant shall have the right to retain
Performance Shares following termination of the Participant’s employment with or
provision of services to the Company and/or its Subsidiaries, as the case may
be. Such provisions shall be determined by the Committee, shall be included in
the

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Award Agreement entered into with each Participant, need not be uniform among
all Awards of Performance Shares issued pursuant to the Plan, and may reflect
distinctions based on the reasons for termination.
     8.4 Nontransferability. Except as otherwise provided in a Participant’s
Award Agreement or otherwise at any time by the Committee, Performance Shares
may not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
Further, except as otherwise provided in a Participant’s Award Agreement or
otherwise at any time by the Committee, a Participant’s rights under the Plan
shall be exercisable during his or her lifetime only by such Participant, or, in
the event of the legal incompetence of the Participant, by the Participant’s
duly appointed legal guardian. With respect to those Performance Shares, if any,
that are permitted to be transferred to another person, relevant references in
the Plan to a Participant, as determined by the Committee, shall be deemed to
include the Participant’s permitted transferee.
Article 9. Cash-Based Awards and Other Stock-Based Awards
     9.1 Grant of Cash-Based Awards. Subject to the terms and provisions of the
Plan, Cash-Based Awards may be granted in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Committee. Each
such Award shall be evidenced by an Award Agreement that shall specify the
maximum duration of the Cash-Based Award, the amount of cash to which the
Cash-Based Award pertains, the conditions upon which the Cash-Based Award shall
become vested or exercisable, and such other provisions as the Committee shall
determine which are not inconsistent with the terms of the Plan.
     9.2 Other Stock-Based Awards. Subject to the terms and provisions of the
Plan, Other Stock-Based Awards may be granted in such number, and upon such
terms, and at any time and from time to time as shall be determined by the
Committee. Such Awards shall be evidenced by an Award Agreement that shall
specify the maximum duration of the Other Stock-Based Award, the number of
Shares to which the Other Stock-Based Award pertains, the conditions upon which
the Other Stock-Based Award shall become vested and exercisable, and such other
provisions as the Committee shall determine which are not inconsistent with the
terms of the Plan.
     9.3 Payment of Cash-Based and Other Stock-Based Awards. Each Cash-Based
Award shall specify a cash-denominated payment amount or payment ranges as
determined by the Committee. Each Other Stock-Based Award shall be expressed in
terms of Shares or units based on Shares, as determined by the Committee.
Payment, if any, with respect to a Cash-Based Award or an Other Stock-Based
Award shall be made in accordance with the terms of the Award and, subject to
such terms, may be made under either form of Award in cash or in Shares, as the
Committee determines.
     9.4 Termination of Employment. Each Participant’s Award Agreement shall set
forth the extent, if any, to which the Participant shall have the right to
receive payment under Cash-Based Awards or Other Stock-Based Awards following
termination of the Participant’s employment with or provision of services to the
Company and/or its Subsidiaries, as the case may be. Such provisions shall be
determined by the Committee, shall be included in the Award Agreement entered
into with each Participant, need not be uniform among all Cash-Based Awards or
Other Stock-Based Awards issued pursuant to the Plan, and may reflect
distinctions based on the reasons for termination.

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     9.5 Nontransferability. Except as otherwise determined by the Committee,
neither Cash-Based Awards nor Other Stock-Based Awards may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution. Further, except as otherwise provided
by the Committee, a Participant’s rights under the Plan, if exercisable, shall
be exercisable during his or her lifetime only by such Participant, or, in the
event of the legal incompetence of the Participant, by the Participant’s duly
appointed legal guardian. With respect to those Cash-Based Awards or Other
Stock-Based Awards, if any, that are permitted to be transferred to another
person, relevant references in the Plan to a Participant, as determined by the
Committee, shall be deemed to include the Participant’s permitted transferee.
Article 10. Performance Measures
     10.1 Performance Measures. The performance goals upon which the payment or
vesting of an Award to a Covered Employee that is intended to qualify as
Performance-Based Compensation shall be objectively determinable goals based
upon one or more of the following Performance Measures:

  (a)   Net earnings or net income (before or after taxes);     (b)   Net income
per share;     (c)   Net sales growth;     (d)   Net operating profit;     (e)  
Return measures (including, but not limited to, return on invested capital,
assets, equity, or net sales);     (f)   Cash flow (including, but not limited
to, operating cash flow, free cash flow, and cash flow return on capital);    
(g)   Income before or after taxes, interest, depreciation, and/or amortization;
    (h)   Gross or operating margins;     (i)   Productivity ratios;     (j)  
Share price (including, but not limited to, growth measures and total
stockholder return);     (k)   Expense targets;     (l)   Margins;     (m)  
Operating efficiency;     (n)   Working capital targets; and     (o)   Economic
Value Added or EVA®(net operating profit after taxes minus the sum of capital
multiplied by the cost of capital)

     Performance Measures may be applied to any or any combination of the
Company and its Subsidiaries on a consolidated basis or, as the context permits,
on a divisional, entity, line of business, project or geographical basis or in
combinations thereof. If the Committee so determines, performance goals may
relate to performance under one or more of the Performance Measures as
hereinabove described compared to the performance of a group of comparator
companies or another index or indices. The Committee also has the authority to
provide for accelerated vesting of any Award based on the achievement of
performance goals pursuant to the Performance Measures specified in this
Article 10.
     10.2 Evaluation of Performance. The Committee may provide in any such Award
that any evaluation of performance may include or exclude any of the following
events that are objectively determinable and that occur during a Performance
Period: (a) asset write-downs, (b) litigation,

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claims, judgments, or settlements, (c) the effect of changes in tax laws,
accounting principles, or other laws or provisions affecting reported results,
(d) any reorganization and restructuring programs, (e) extraordinary
nonrecurring items as described in Accounting Principles Board Opinion No. 30
and/or in management’s discussion and analysis of financial condition and
results of operations appearing in the Company’s annual report to stockholders
for the applicable year, (f) acquisitions, divestitures, joint ventures, or
alliances, and (g) foreign exchange gains and losses. To the extent such
inclusions or exclusions affect Awards to Covered Employees, they shall be
prescribed in a form that meets the requirements of Code Section 162(m) for
deductibility.
     10.3 Adjustment of Performance-Based Compensation. Awards that are designed
to qualify as Performance-Based Compensation, and that are held by Covered
Employees, may not be adjusted upward. The Committee may adjust such Awards
downward, either on a formula or a discretionary basis or any combination, as
the Committee determines.
     10.4 Other Changes. In the event that applicable tax and/or securities laws
change to permit Committee discretion to alter the governing Performance
Measures without obtaining stockholder approval of such changes, the Committee
may make such changes without obtaining stockholder approval. In addition, in
the event that the Committee determines that it is advisable to grant Awards
that shall not qualify as Performance-Based Compensation, the Committee may make
such grants without satisfying the requirements of Code Section 162(m) and may
base vesting on Performance Measures other than those set forth in Section 10.1.
Article 11. Dividend Equivalents
     Any Participant selected by the Committee may be granted dividend
equivalents based on the dividends declared on Shares that are subject to any
Award but that have not been issued or delivered, to be credited as of dividend
payment dates during the period between the date the Award is granted and the
date the Award is exercised, vests or expires, as determined by the Committee.
Such dividend equivalents shall be converted to cash or additional Shares by
such formula and at such time and subject to such limitations as may be
determined by the Committee.
Article 12. Additional Conditions of Awards
     Except as otherwise provided in the Merger Agreement or in any employment
agreement (including any amendment thereto) entered between an Employee
Participant and the Company before January 28, 2005, the following additional
provisions shall govern Awards granted under the Plan.
     12.1A Additional Conditions of Awards Granted in or after May 2005.
     With respect to any Awards granted in or after May 2005, in addition to
such other conditions as may be established by the Committee, in consideration
of the granting of any Award under the terms of the Plan, including, without
limitation, any Option, SAR, RSU, or grant of Shares, each Participant agrees as
follows:

  (a)   The right to exercise any Award shall be conditional upon certification
by the Participant at time of exercise that the Participant intends to remain in
the employ of the Company or one of its subsidiaries for at least one (1) year
following the date of the exercise of the

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      Award (provided that termination of employment due to Retirement or
Special Separation shall not constitute a breach of such certification).     (b)
  In order to better protect the goodwill of the Company and its subsidiaries
and to prevent the disclosure of the Company’s or its subsidiaries’ trade
secrets and confidential information and thereby help insure the long-term
success of the business, the Participant, without prior written consent of the
Company, will not engage in any activity or provide any services, whether as a
director, manager, supervisor, employee, adviser, consultant or otherwise, for a
period of three (3) years following the date of the Participant’s termination of
employment with the Company for any reason, in connection with the manufacture,
development, advertising, promotion, or sale of any product which is the same as
or similar to or competitive with:

  (i)   any business of The Gillette Company or its subsidiaries immediately
prior to the Effective Time (including as relates to both existing products as
well as products known to the Participant, as a consequence of the Participant’s
employment with The Gillette Company or its subsidiaries, to be in development);
or     (ii)   any business of The Procter & Gamble Company or its subsidiaries
in which the Participant was employed following the Effective Time (including as
relates to both existing products as well as products known to the Participant,
as a consequence of the Participant’s employment with The Procter & Gamble
Company or one of its subsidiaries, to be in development),

      with respect to which, in either case, the Participant’s work has been
directly involved at any time during the two (2) years preceding termination of
employment or with respect to which during that period of time the Participant
acquired knowledge of trade secrets or other confidential information of The
Gillette Company, The Procter & Gamble Company, and/or any of their subsidiaries
as a result of Participant’s job performance and duties.         For purposes of
this paragraph, it shall be conclusively presumed that Participants have
knowledge of information they were directly exposed to through actual receipt or
review of memos or documents containing such information, or through actual
attendance at meetings at which such information was discussed or disclosed.    
(c)   Following the Effective Time, unless otherwise provided pursuant to a
termination settlement agreement with the Company or any of its subsidiaries,
while the Participant is employed by the Company and for a period of eighteen
(18) months after the termination or cessation of such employment for any reason
, the Participant shall not directly or indirectly, either alone or in
association with others: (i) solicit or encourage any employee or independent
contractor of the Company to terminate his or her relationship with the Company;
or (ii) recruit, hire or solicit for employment or for engagement as an
independent contractor, any person who is or was employed by the Company at any
time during the Participant’s employment with the Company; provided, that this
Paragraph (c)

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      shall not apply to such person whose employment with the Company has been
terminated for a period of six months or longer.     (d)   The Participant
agrees not to use or disclose the Company’s or its subsidiaries’ trade secrets
and confidential information known to the Participant until any particular trade
secret or confidential information become generally known (through no fault of
the Participant), whereupon the restriction on use and disclosure shall cease as
to that item. Information regarding products in development, in test marketing
or being marketed or promoted in a discrete geographic region, which information
the Company or one of its subsidiaries is considering for broader use, shall not
be deemed generally known until such broader use is actually commercially
implemented. As used in this Section, “generally known” means known throughout
the domestic U. S. industry or, in the case of Participants who have job
responsibilities outside of the United States, the appropriate foreign country
or countries’ industry. Without limiting the generality of the foregoing,
Participant shall not:

  (i)   Disclose or use at any time any secret or confidential information or
knowledge obtained or acquired by the Participant during, after, or by reason
of, employment with The Gillette Company or any of its subsidiaries, as provided
under applicable law and any and all agreements between the Participant and The
Gillette Company or any of its subsidiaries regarding Participant’s employment
with The Gillette Company or the subsidiary; and     (ii)   Disclose or use at
any time any secret or confidential information or knowledge obtained or
acquired by the Participant during, after, or by reason of, employment with The
Procter & Gamble Company or any of its subsidiaries, as provided under
applicable law and any and all agreements between the Participant and The
Procter & Gamble Company or any of its subsidiaries regarding Participant’s
employment with The Procter & Gamble Company or the subsidiary.

  (e)   Following the Effective Time, to the extent permitted by law, the
Participant shall not make, publish or state, or cause to be made, published or
stated, any defamatory or disparaging statement, writing or communication
pertaining to the character, reputation, business practices, competence or
conduct of the Company, its subsidiaries, stockholders, directors, officers,
employees, agents, representatives or successors.     (f)   In accordance with
any and all agreements between the Participant and the Company or any of its
subsidiaries regarding the Participant’s employment, the Participant shall
disclose promptly and transfer and assign to the Company all improvements and
inventions in certain fields made or conceived by the Participant during
employment with the Company or its subsidiaries and within the prescribed
periods thereafter.     (g)   By acceptance of any offered Option, SAR, RSU,
grant of Shares, or any other Award granted under the terms of the Plan, the
Participant acknowledges that if the Participant were, without authority, to
use, disclose, or threaten the use or disclosure of the trade secrets or
confidential information of The Gillette Company or its subsidiaries or,
following the Effective Time, of The Procter & Gamble Company or its
subsidiaries, the

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      Company or one of its subsidiaries would be entitled to injunctive and
other appropriate relief to prevent the Participant from doing so. The
Participant acknowledges that the harm caused to the Company by the breach or
anticipated breach of this Article is by its nature irreparable because, among
other things, it is not readily susceptible of proof as to the monetary harm
that would ensue. The Participant consents that any interim or final equitable
relief entered by a court of competent jurisdiction shall, at the request of the
Company or one of its subsidiaries, be entered on consent and enforced by any
court having jurisdiction over the Participant, without prejudice to any rights
either party may have to appeal from the proceedings which resulted in any grant
of such relief.

     12.1B Additional Conditions of Awards Granted Before May 2005.
With respect to any Awards granted before May 2005, in addition to such other
conditions as may be established by the Committee, in consideration of the
granting of any Award under the terms of the Plan, including, without
limitation, any Option, SAR, RSU, or grant of Shares, each Participant agrees as
follows:

  (a)   Unless otherwise provided pursuant to a termination settlement agreement
with the Company or any of its subsidiaries, while the Participant is employed
by the Company and for a period of eighteen (18) months after the termination or
cessation of such employment for any reason, the Participant shall not directly
or indirectly:

  (i)   As an employee, consultant, independent contractor, officer, director,
individual proprietor, investor, partner, stockholder, agent, principal, joint
venturer, or in any other capacity whatsoever (other than as the holder of not
more than one percent of the combined voting power of the outstanding stock of a
publicly held corporation or company), be employed, work, consult, advise,
assist, or engage in any activity regarding any business, product, service or
other matter which: (A) is substantially similar to or competes with any
business, product, service or other matter regarding which the Participant
worked for the Company, or any of its subsidiaries, during the three (3) years
prior to Participant’s termination of employment; or (B) concerns subject
matters about which Participant gained proprietary information of the Company,
or any of its subsidiaries, during the three (3) year period prior to the
Participant’s termination of employment;     (ii)   Either alone or in
association with others, solicit, divert or take away, or attempt to divert or
to take away, the business or patronage of any of the clients, customers or
accounts, or prospective clients, customers or accounts, of the Company which
were contacted, solicited or served, directly or indirectly, by Participant
while employed by the Company; or     (iii)   Either alone or in association
with others: (A) solicit or encourage any employee or independent contractor of
the Company to terminate his or her relationship with the Company; or
(B) recruit, hire or solicit for employment or for engagement as an independent
contractor, any person who is or was employed by the Company at any time during
the Participant’s employment with the Company; provided, that

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      this Paragraph (iii) shall not apply to such person whose employment with
the Company has been terminated for a period of six months or longer.

  (b)   The Participant shall not disclose or use at any time any secret or
confidential information or knowledge obtained or acquired by the Participant
during, after, or by reason of, employment with the Company or any of its
subsidiaries, as provided under applicable law and any and all agreements
between the Participant and the Company or any of its subsidiaries regarding
Participant’s employment with the Company or the subsidiary.     (c)   In
accordance with any and all agreements between the Participant and the Company
or any of its subsidiaries regarding the Participant’s employment, the
Participant shall disclose promptly and transfer and assign to the Company all
improvements and inventions in certain fields made or conceived by the
Participant during employment with the Company or the subsidiary and within the
prescribed periods thereafter.     (d)   To the extent permitted by law, the
Participant shall not make, publish or state, or cause to be made, published or
stated, any defamatory or disparaging statement, writing or communication
pertaining to the character, reputation, business practices, competence or
conduct of the Company, its subsidiaries, stockholders, directors, officers,
employees, agents, representatives or successors.

     12.2 Scope of Provisions. If any of the provisions contained in
Section 12.1A and 12.1B hereof shall for any reason, whether by application of
existing law or law which may develop after the Participant’s acceptance of an
offer of the granting of an Award, be determined by a court of competent
jurisdiction to be overly broad as to scope of activity, duration, or territory,
the Participant agrees to join the Company or any of its subsidiaries in
requesting such court to construe such provision by limiting or reducing it so
as to be enforceable to the extent compatible with then applicable law. If any
one or more of the terms, provisions, covenants, or restrictions of this Article
shall be determined by a court of competent jurisdiction to be invalid, void or
unenforceable, then the remainder of the terms, provisions, covenants, and
restrictions of this Article shall remain in full force and effect and shall in
no way be affected, impaired, or invalidated.
     12.3 Effect of Change of Control on Conditions. In the event of a Change of
Control, the restrictions contained in Sections 12.1B (a)(i), 12.1B(a)(iii) and
12.1B(d) hereof shall cease and the Participant shall no longer be bound by the
obligations thereunder. However, the provisions of Section 12.1A hereof shall
continue in full force and effect notwithstanding a Change of Control.
     12.4 Consequences of Violation of Conditions. If the Company reasonably
determines that a Participant has materially violated any of the Participant’s
obligations under Section 12.1A or Section 12.1B above, or if a Participant is
terminated for Cause, then, in addition to any other remedies provided in this
Plan and available at law or in equity (including, without limitation,
injunctive and other appropriate relief), the Company may cancel any and all
Awards granted to the Participant, including grants that according to their
terms are vested.

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     12.5 Effect on Other Non-Competition Restrictions. The non-competition
restrictions set forth in Section 12.1B(a) supersede any non-competition
restrictions of less than eighteen (18) months in duration set forth in any
employment agreement between a Participant and the Company or any subsidiary or
predecessor.
Article 13. Deferrals
     The Committee may permit or require a Participant to defer such
Participant’s receipt of the payment of cash or the delivery of Shares that
would otherwise be due to such Participant by virtue of the exercise of an
Option or SAR, the lapse or waiver of restrictions with respect to Restricted
Stock Units, or payment in respect of Performance Shares, Cash-Based Awards, and
Other Stock-Based Awards. If any such deferral election is required or
permitted, the Committee shall establish rules and procedures for such payment
deferrals.
Article 14. Rights of Participants
     14.1 Employment. Nothing in the Plan or an Award Agreement shall interfere
with or limit in any way the right of the Company and/or its Subsidiaries to
terminate any Participant’s employment or service on the Board at any time or
for any reason or confer upon any Participant any right to continue his or her
employment or service as a Nonemployee Director for any specified period of
time.
     Neither an Award nor any benefits arising under this Plan shall constitute
an employment contract with the Company and/or its Subsidiaries. Subject to
Articles 2 and 16, this Plan and the benefits hereunder may be terminated at any
time pursuant to Article 16 without giving rise to any liability on the part of
the Company and/or its Subsidiaries.
     14.2 Participation. No individual shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
     14.3 Rights as a Stockholder. Except as otherwise provided herein, a
Participant shall have none of the rights of a stockholder with respect to
Shares covered by any Award until the Participant becomes the record holder of
such Shares.
Article 15. Covered Transactions and Change of Control
     15.1 Covered Transactions. Unless otherwise specified in an Award
Agreement, in the event of a “covered transaction” (as hereinafter defined) in
which there is an acquiring or surviving entity, the Committee may provide for
the assumption of some or all outstanding Awards, or for the grant of new Awards
in substitution therefor, by the acquirer or survivor or an affiliate of the
acquirer or survivor, in each case on such terms and subject to such conditions
as the Committee determines. The terms and conditions of any substitute Award
shall be substantially equivalent to the terms and conditions of the Award that
it replaces, taking into account changes necessitated by the covered
transaction, all as determined by the Committee. In the absence of such an
assumption or if there is no substitution, except as otherwise provided in the
Award each Stock Option, SAR and other Award requiring exercise will become
fully exercisable, and the delivery of Shares or cash issuable or payable under
each other outstanding Award will be accelerated, prior to the covered
transaction, in each case (where Shares are to be delivered) on a basis that
gives the holder of the Award a reasonable opportunity, as determined by the
Committee, following exercise of the Award or the

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issuance of the Shares, as the case may be, to participate as a stockholder in
the covered transaction, and the Award will terminate upon consummation of the
covered transaction. In the case of Restricted Stock or other Award subject to
restrictions, the Committee may require that any amounts delivered, exchanged or
otherwise paid in respect of such Shares or under the Award in connection with
the covered transaction be placed in escrow or otherwise made subject to such
restrictions as the Committee deems appropriate to carry out the intent of the
Plan. For purposes of the foregoing, a “covered transaction” is any of (i) a
consolidation, merger, or similar transaction or series of related transactions
in which the Company is not the surviving corporation or which results in the
acquisition of all or substantially all of the Company’s then outstanding common
stock by a single person or entity or by a group of persons and/or entities
acting in concert, (ii) a sale or transfer of all or substantially all the
Company’s assets, or (iii) a dissolution or liquidation of the Company. Where a
covered transaction involves a tender offer that is reasonably expected to be
followed by a merger described in clause (i) (as determined by the Committee),
the covered transaction shall be deemed to have occurred upon consummation of
the tender offer.
     15.2 Change of Control of the Company. Unless otherwise specified in an
Award Agreement or an employment agreement between an Employee Participant and
the Company, in the event of a Change of Control, whether or not such Change of
Control also constitutes a “covered transaction” as defined in Section 15.1
above, the following provisions shall apply, subject to Section 19.A hereof and
the Merger Agreement. In the case of a transaction that qualifies as both a
Change of Control and a “covered transaction” as so defined, the vesting
provisions of this Section 15.2 shall be applied whether or not there is an
assumption or substitution under Section 15.1, but the provisions of this
Section 15.2 relating to exercise or enjoyment of an Award following the Change
of Control shall apply only to the extent the Award is continued (through
assumption or substitution) in connection with the transaction.

  (a)   All outstanding Options and SARs held by Participants which are not yet
exercisable on the date such Change of Control first occurs shall become
immediately exercisable and all the rights and benefits relating to such Options
and SARs including, but not limited to, periods during which such Options and
SARs may be exercised shall become fixed and not subject to change or revocation
by the Company except as otherwise provided under Article 16;     (b)   In the
event that, within two (2) years of a Change of Control, the employment of an
employee Participant is terminated by the Company for any reason other than for
Cause, or the employee Participant terminates employment for Good Reason, or the
service as a Nonemployee Director is terminated, the applicable exercise period
for all Options and SARs (including substituted or assumed Awards, if any, in
the case of a Change of Control that is also subject to Section 15.1) held by
him or her at termination of employment shall be the greater of (i) a period of
two (2) years from the date of termination, and (ii) the post-termination
exercise period otherwise applicable to the employee Participant pursuant to
Section 5.8 or 6.7, as applicable, as prescribed by the Committee or set forth
in the employee Participant’s Award Agreement; provided, however, that in no
event shall any Option or SAR be exercisable beyond ten (10) years from its date
of grant;

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  (c)   Any Period of Restriction and restrictions imposed on Restricted Stock
or Restricted Stock Units shall lapse, and, any Shares subject to Restricted
Stock Unit Awards shall be delivered on a basis that gives the holder of the
Award a reasonable opportunity, as determined by the Committee, to participate
as a stockholder in the Change of Control transaction;     (d)   The target
payout opportunities attainable under all outstanding Awards subject to
performance conditions shall be deemed to have been fully earned on the same
basis as if targeted performance had been attained for the Performance Period;

  (i)   The vesting of all Awards denominated in Shares shall be accelerated as
of the effective date of the Change of Control, and shall be paid out to
Participants prior to the effective date of the Change of Control. The Committee
has the authority to pay all or any portion of the value of the Shares in cash;
and     (ii)   Awards denominated in cash shall be paid to Participants in cash
prior to the effective date of the Change of Control; and

  (e)   Upon a Change of Control, unless otherwise specifically provided in a
written agreement entered into between the Participant and the Company, all
conditions for payment to which outstanding Cash-Based Awards and Other
Stock-Based Awards may be subject will be deemed satisfied, and the Committee
shall pay out all such Awards.

Article 16. Amendment, Modification, Suspension, and Termination
     16.1 Amendment of the Plan or Awards. The Board of Directors or the
Committee may, at any time and from time to time, alter, amend, modify, suspend,
or terminate the Plan or any Award Agreement in whole or in part; provided,
however, that, no amendment of the Plan shall be made without shareholder
approval if shareholder approval is required by law, regulation, or stock
exchange rule; and further provided no such amendment shall adversely affect the
rights of any Participant (without his or her consent) under any Award
theretofore granted or other contractual arrangements entered into before or
after a “covered transaction” or Change of Control or deprive any Participant of
any right or benefit which became operative in the event of a “covered
transaction” or Change of Control.
     16.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee may make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 3.4 hereof) affecting the Company or the financial statements of the
Company or of changes in applicable laws, regulations, or accounting principles,
whenever the Committee determines that such adjustments are appropriate in order
to prevent unintended dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan. The determination of the
Committee as to the foregoing adjustments, if any, shall be conclusive and
binding on Participants under the Plan. In the case of performance-based awards
to a Covered Employee that are intended to be exempt under Section 162(m) of the
Code, adjustments by the

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Committee shall be made consistent with Article 10 and only to the extent
consistent with such exemption.
     16.3 Replacement Awards. The Company may grant Awards under the Plan on
terms differing from those provided for in the Plan where such Awards are
granted in substitution for Awards 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
Awards be granted on such terms and conditions as the Committee considers
appropriate in the circumstances. Shares subject to a substitute or replacement
Award granted pursuant to this Section 16.3, or subject to Awards assumed in
connection with a transaction described in this Section 16.3, shall not count
against the Share limitations described in Article 3, nor shall the Award
limitations described in Article 3 apply to such substitute, replacement, or
assumed Awards, in each case except as may otherwise be required to satisfy the
ISO rules under Section 422 of the Code or other applicable legal or stock
exchange requirements.
Article 17. Withholding
     17.1 Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, such
amounts as the Company determines are necessary or desirable to satisfy, or are
required by law or regulation to be withheld, with respect to any taxable event
arising as a result of this Plan.
     17.2 Share Withholding. With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock
and Restricted Stock Units, or upon the achievement of performance goals related
to Performance Shares, or any other taxable event arising as a result of an
Award granted hereunder, Participants may elect, subject to the approval of the
Committee, to satisfy the withholding requirement, in whole or in part, by
having the Company withhold Shares having a Fair Market Value on the date the
tax is to be determined equal to the minimum statutory total tax that could be
imposed on the transaction. All such elections shall be irrevocable, made in
writing, and signed by the Participant, and shall be subject to any restrictions
or limitations that the Committee deems appropriate.
Article 18. Successors
     All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, its business
or its assets whether by direct or indirect purchase, merger, consolidation, or
otherwise.
Article 19. General Provisions
     19.1 Forfeiture Events. The Committee may specify in an Award Agreement
that the Participant’s rights, payments, and benefits with respect to an Award
shall be subject to reduction, cancellation, forfeiture, or recoupment upon the
occurrence of certain specified events, in addition to any otherwise applicable
vesting or performance conditions of an Award. Such events may include, but
shall not be limited to, termination of employment for cause, termination of the
Participant’s provision of services to the Company and/or Subsidiary, violation
of material Company and/or Subsidiary policies, breach of noncompetition,
confidentiality, or other restrictive covenants that may

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apply to the Participant, or other conduct by the Participant that is
detrimental to the business or reputation of the Company and/or its
Subsidiaries.
     19.2 Legend. The certificates for Shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer of such
Shares.
     19.3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
     19.4 Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.
     19.5 Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
     19.6 Investment Representations. The Committee may require any person
receiving Shares pursuant to an Award under this Plan to represent and warrant
in writing that the person is acquiring the Shares for investment and without
any present intention to sell or distribute such Shares.
     19.7 Employees Based Outside of the United States. Notwithstanding any
provision of the Plan to the contrary, in order to comply with the laws in other
countries in which the Company and/or its Subsidiaries operate or have Employees
and/or Nonemployee Directors, the Committee shall have the power and authority,
in addition to such power and authority it otherwise has under the Plan, to:

  (a)   Determine which Subsidiaries shall be covered by the Plan;     (b)  
Determine which Employees and/or Nonemployee Directors outside the United States
are eligible to participate in the Plan;     (c)   Modify the terms and
conditions of any Award granted to Employees and/or Nonemployee Directors,
outside the United States to comply with applicable foreign laws;     (d)  
Establish subplans and modify exercise procedures and other terms and
procedures, to the extent such actions may be necessary or advisable. Any
subplans and modifications to Plan terms and procedures established under this
Section 19.7 by the Committee shall be attached to this Plan document as
appendices; and

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  (e)   Take any action, before or after an Award is made, that it deems
advisable to obtain approval or comply with any necessary local government
regulatory exemptions or approvals.

     Notwithstanding the above, the Committee may not take any actions
hereunder, and no Awards shall be granted, that would violate applicable law.
     19.8 Uncertificated Shares. To the extent that the Plan provides for
issuance of certificates to reflect the transfer of Shares, the transfer of such
Shares may be effected on a noncertificated basis, to the extent not prohibited
by applicable law or the rules of any stock exchange.
     19.9 Unfunded Plan. Participants shall have no right, title, or interest
whatsoever in or to any investments that the Company, and/or its Subsidiaries
may make to aid it in meeting its obligations under the Plan. Nothing contained
in the Plan, and no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind, or a fiduciary relationship between the
Company and any Participant, beneficiary, legal representative, or any other
person. To the extent that any person acquires a right to receive payments from
the Company and/or its Subsidiaries under the Plan, such right shall be no
greater than the right of an unsecured general creditor of the Company or a
Subsidiary, as the case may be. All payments to be made hereunder shall be paid
from the general funds of the Company or a Subsidiary, as the case may be and no
special or separate fund shall be established and no segregation of assets shall
be made to assure payment of such amounts except as expressly set forth in the
Plan. The Plan is not subject to ERISA.
     19.10 No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, Awards, or other property shall be issued or paid in lieu of
fractional Shares or whether such fractional Shares or any rights thereto shall
be forfeited or otherwise eliminated.
     19.11 Retirement and Welfare Plans. Neither Awards made under the Plan nor
Shares or cash paid pursuant to such Awards, except pursuant to Covered Employee
Annual Incentive Awards, will be included as “compensation” for purposes of
computing the benefits payable to any Participant under the Company’s or any
Subsidiary’s retirement plans (both qualified and non-qualified) or welfare
benefit plans unless such other plan expressly provides that such compensation
shall be taken into account in computing a participant’s benefit.
     19.12 Nonexclusivity of the Plan. The adoption of this Plan shall not be
construed as creating any limitations on the power of the Board or Committee, or
the Company or any Subsidiary, to adopt such other compensation arrangements as
it may deem desirable in the case of any Participant.
     19.13 No Constraint on Corporate Action. Nothing in this Plan shall be
construed to: (i) limit, impair, or otherwise affect the Company’s or a
Subsidiary’s right or power to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure, or to merge or
consolidate, or dissolve, liquidate, sell, or transfer all or any part of its
business or assets; or, (ii) limit the right or power of the Company or a
Subsidiary to take any other action which such entity deems to be necessary or
appropriate.
     19.14 Governing Law.

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     (a) Prior to Effective Time: Except as to matters concerning the issuance
of Shares or other matters of corporate governance, which shall be construed
under the General Corporation Law of the State of Delaware, the Plan and each
Award outstanding under it shall be governed by the laws of the Commonwealth of
Massachusetts, excluding any conflicts or choice of law rule or principle that
might otherwise refer construction or interpretation of the Plan to the
substantive law of another jurisdiction. Recipients of an Award under the Plan
are deemed to submit to the exclusive jurisdiction and venue of the federal or
state courts of Massachusetts, to resolve any and all issues that may arise out
of or relate to the Plan or any Award.
     (b) Upon and following Effective Time: The Plan and each Award outstanding
under it shall be governed by and construed in accordance with the laws of the
State of Ohio, United States of America, excluding any conflicts or choice of
law rule or principle that might otherwise refer construction or interpretation
of the Plan to the substantive law of another jurisdiction. Recipients of an
Award under the Plan are deemed to submit to the non-exclusive jurisdiction and
venue of the federal or state courts of Ohio, and any other appropriate
jurisdiction and venue, to resolve any and all issues that may arise out of or
relate to the Plan or any Award.
     19.15. Consent. Every Participant who receives or has received an Option,
SAR, RSU, grant of Shares, or any other Award pursuant to the Plan shall be
bound by the terms and provisions of the Plan and of the Option, SAR, RSU,
Share, or other Award Agreement referable thereto, and the acceptance of any
Option, SAR, RSU, Share, or other Award pursuant to the Plan shall constitute a
binding agreement between the Participant and the Company and its subsidiaries
and any successors in interest to any of them. Every Person who receives an
Option, SAR, RSU, Share, or other Award from a Participant pursuant to the Plan
shall, in addition to such terms and conditions as the Committee may require
upon such grant, be bound by the terms and provisions of the Plan and of the
Option, SAR, RSU, Share, or other Award Agreement referable thereto, and the
acceptance of any Option, SAR, RSU, Share, or other Award by such Person shall
constitute a binding agreement between such Person and the Company and its
subsidiaries and any successors in interest to any of them.
Article 19A. Special Merger Provisions
     19A.1 Acceleration of Certain Options. Except as provided in Section 19A.3,
each Option outstanding under the Plan on January 27, 2005 (the “Accelerated
Options”) shall be vested and fully exercisable effective immediately prior to
the Effective Time as determined by the Authorized Officer.
     19A.2 Special Merger Elections. Under procedures established by the
Authorized Officer, each holder of an Accelerated Option may exercise such
Accelerated Option immediately prior to the Effective Time, in whole or in part,
and in respect thereof shall be entitled to receive, at such holder’s election,
either (i) the Merger Shares or (ii) a cash payment equal to the product of (A)
the excess (if any) of the per share value of the Merger Shares over the per
share exercise price, multiplied by (B) the number of Shares with respect to
which the Accelerated Option is exercised, in each case subject to applicable
withholding taxes.
     19A.3 Terms and Conditions of 2005 Options. Notwithstanding any provision
in the Plan to the contrary, grants of 2005 Options under the Plan shall not
relate to more than 11,500,000 Shares.

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Each 2005 Option shall be subject to such terms and conditions as the Committee
may determine, subject to the provisions of the Plan as revised; provided,
however, that (i) no 2005 Option shall be subject to accelerated vesting upon
consummation of the Merger, but (ii) each 2005 Option shall become fully vested
and exercisable following the consummation of the Merger in the event the
employment of the employee Participant holder thereof is terminated by the
Company or its affiliates other than for Cause, or such holder terminates
employment for Good Reason or, in the case of a Participant eligible for
retirement under the Company’s benefit plans, for Retirement.
     19A.4. Termination Following the Effective Time. Unless otherwise provided
under the terms of an employment agreement with the Company or its subsidiaries,
notwithstanding any other provision in the Plan, a termination of employment for
Good Reason within two (2) years of the Effective Time shall be treated for
purposes of Accelerated Options and 2005 Options as (A) a Special Separation or
(B) in the case of a Participant eligible for retirement under the Company’s
benefit plans, as a Retirement.
     19A.5 Post-Merger Conversion of Outstanding Accelerated Options and 2005
Options. Each Accelerated Option and 2005 Option outstanding at the Effective
Time (together, “Gillette Stock Options”) shall cease to represent a right to
acquire Shares and, after the Effective Time, shall be deemed an option to
acquire, on the same terms and conditions as were applicable under the Gillette
Stock Option (but taking into account any applicable changes thereto provided
for in this Plan as revised or by reason of the Merger Agreement), that number
of shares of Parent Common Stock determined by multiplying the number of Shares
subject to such Gillette Stock Option by the Exchange Ratio, rounded, if
necessary, to the nearest whole share of Parent Common Stock, at a price per
share (rounded to the nearest one-hundredth of a cent) equal to the per share
exercise price specified in such Gillette Stock Option divided by the Exchange
Ratio; provided, however, that in the case of any Gillette Stock Option to which
Section 421 of the Code applies by reason of its qualification under Section 422
of the Code, the option price, the number of shares subject to such option and,
except to the extent otherwise required by the Plan as revised, the terms and
conditions of exercise of such option shall be determined in a manner consistent
with the requirements of Section 424(a) of the Code.
     19A.6. Provisions concerning Options to Nonemployee Directors. Options held
by Nonemployee Directors of The Gillette Company immediately prior to the
Effective Time must be exercised within the term of the original grant or within
five (5) years from the Effective Time, whichever is shorter.
     19A.7 Assumption of Gillette Stock Options and Certain Undertakings.
(a) Subject to the terms of the Merger Agreement, on the Effective Time The
Procter & Gamble Company shall assume the Plan (as revised herein) and each
Gillette Stock Option. To the extent permitted by law but not in derogation of
the provisions of this Article 19A, The Procter & Gamble Company shall take such
reasonable steps as may be necessary to cause the Gillette Stock Options which
qualified under Section 422 of Code as incentive stock options prior to the
Effective Time to continue to qualify as incentive stock options of The Procter
& Gamble Company after the Effective Time.
     (b) Not later than five (5) business days after the Effective Time, The
Procter & Gamble Company shall file a registration statement on Form S-3 or Form
S-8, as the case may be (or any successor or other appropriate forms), with
respect to the shares of Parent Common Stock subject to

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such Gillette Stock Options and shall use commercially reasonable efforts to
maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such Options remain outstanding or for so long
as such registration statement is required with respect to the Plan. The Procter
& Gamble Company shall administer the Plan in a manner consistent with the
exemptions provided by Rule 16b-3 promulgated under the Exchange Act.
Article 20. Definitions
     Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized.

  20.1   “Accelerated Options” has the meaning accorded such term in
Article 19A.     20.2   “Annual Award Limit” or “Annual Award Limits” have the
meaning set forth in Section 3.3.     20.3   “Authorized Officer” means each of
(i) the Chairman, Chief Executive Officer and President, (ii) the Vice Chairman,
(iii) the Senior Vice President, Finance, and Chief Financial Officer, (iv) the
Senior Vice President, Strategy and Business Development, (v) the Senior Vice
President and General Counsel, (vi) the Secretary and (vii) such other officers
of the Company as any of the foregoing may designate in writing.     20.4  
“Award” means, individually or collectively, a grant under this Plan of
Cash-Based Awards, Nonqualified Stock Options, Incentive Stock Options, SARs,
Restricted Stock, Restricted Stock Units, Performance Shares, or Other
Stock-Based Awards, in each case subject to the terms of this Plan.     20.5  
“Award Agreement” means an agreement entered into and executed by the Company
and a Participant setting forth the terms and provisions applicable to an Award
granted under this Plan.     20.6   “Board” or “Board of Directors” means the
Board of Directors of the Company.     20.7   “Cash-Based Award” means an Award
granted to a Participant as described in Section 9.1.     20.8   “Cause”: For
the purposes of the Plan, unless otherwise provided under the terms of an
employment agreement with the Company or any of its Subsidiaries, in which case
the definition contained therein shall control, a discharge for “Cause” shall
have occurred where a Participant is terminated because of:

  (a)   The Participant’s continued failure to perform substantially his or her
duties with the Company or any of its Subsidiaries (other than any such failure
resulting from incapacity due to physical or mental illness), after a written
demand for performance is delivered to Participant by an officer or a senior
manager of the Company or the Subsidiary which identifies the manner in which
the Board or the

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      elected officer or manager believes that Participant has not performed his
or her duties;     (b)   The Participant’s engaging in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company or the
subsidiary; or     (c)   The Participant’s conviction of a felony or a plea of
nolo contendere by Participant with respect to a felony.

  20.9   “Change of Control” means any of the following events:

  (a)   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 Paragraph (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its subsidiaries or (iv) any acquisition by
any corporation pursuant to a transaction that complies with clauses (A),
(B) and (C) of Paragraph (c) below;     (b)   Individuals who, as of
December 16, 1999, constitute the Board of Directors (the “Board”) of the
Company (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 date thereof whose election, or nomination for
election by the Company’s stockholders, 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;     (c)   Consummation of a reorganization, merger, consolidation or sale
or other disposition of all or substantially all of the assets of the Company (a
“Business Combination”), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities that
were the beneficial owners of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of 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,

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      of the corporation resulting from such Business Combination (including,
without limitation, a corporation that, as a result of such transaction, owns
the Company or all or substantially all of the Company’s assets either directly
or through one or more subsidiaries) in substantially the same proportions as
their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities,
as the case may be, (B) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then-outstanding shares of common stock of the corporation resulting from such
Business Combination 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 Business Combination, and (C) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement or of the action of the Board providing for such Business
Combination; or     (d)   Approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.

  20.10   “Closing” means the closing of the Merger upon the terms and subject
to the conditions set forth in Article 6 of the Merger Agreement     20.11  
“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to
time.     20.12   Committee” means:

  (a)   If describing rights, obligations, conditions, and/or circumstances
prior to the Effective Time, the Compensation and Human Resources Committee of
the Board of The Gillette Company.     (b)   If describing rights, obligations,
conditions, and/or circumstances at or following the Effective Time, the
Compensation & Leadership Development Committee (or its functional successor by
another name) of The Procter & Gamble Company

  20.13   “Company” means:

  (a)   If describing rights, obligations, conditions, and/or circumstances
prior to the Effective Time, The Gillette Company, a Delaware corporation;    
(b)   If describing rights, obligations, conditions, and/or circumstances at or
following the Effective Time, The Procter & Gamble Company, an Ohio corporation.

  20.14   “Company Stock Option Plans” means the Plan and the Prior Plan.

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  20.15   “Covered Employee” means a Participant who is a “covered employee,” as
defined in Code Section 162(m) and the regulations promulgated under Code
Section 162(m), or any successor statute.     20.16   “Effective Date” has the
meaning set forth in Section 1.1.     20.17   “Effective Time” has the meaning
accorded such term in the Merger Agreement.     20.18   “Employee” means any
employee of the Company and/or Subsidiaries who was not employed by The Procter
& Gamble Company or any of its subsidiaries prior to the Effective Time.    
20.19   “Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.     20.20   “Exchange Ratio”
has the meaning accorded such term in the Merger Agreement.     20.21   “Fair
Market Value” or “FMV” means a price that is based on the opening, closing,
actual, high, low, or average selling prices of a Share on the New York Stock
Exchange on the applicable date, the preceding trading days, the next succeeding
trading day, or an average of trading days, as determined by the Committee. In
the case of any Option intended to qualify as an ISO, or an Option or SAR
intended to satisfy the performance-based compensation exception requirements of
Section 162(m) of the Code by reason of the special stock option/stock
appreciation right rules under Section 162(m) of the Code, Fair Market Value
(FMV) shall be determined on a basis that is consistent with such intent.    
20.22   “Freestanding SAR” means an SAR that is granted independently of any
Options, as described in Article 6.     20.23   “Good Reason” means, for the
purposes of the Plan, unless otherwise provided under the terms of an employment
agreement with the Company or any of its Subsidiaries, in which case the
definition contained therein shall control, an employee Participant terminating
his or her employment as a direct result of:

  (a)   The assignment to the Participant of any duties materially 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 its Subsidiaries 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 promptly
remedied by the Company and/or the Subsidiary;     (b)   A decrease in the
Participant’s compensation, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and that is promptly remedied by
the Company and/or the Subsidiary; or

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  (c)   The Company’s or the Subsidiary’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 less than 35 miles from such office, or the Company’s or
the Subsidiary’s requiring the Participant to travel on business to a
substantially greater extent than required immediately prior to the Change of
Control.

  20.24   “Grant Price” means the price established at the time of grant of a
SAR pursuant to Article 6, used to determine whether there is any payment due
upon exercise of the SAR.     20.25   “Incentive Stock Option” or “ISO” means an
Option to purchase Shares granted under Article 5 to an Employee and that is
designated as an Incentive Stock Option and that is intended to meet the
requirements of Code Section 422, or any successor provision.     20.26  
“Merger” means the consummation of the transactions contemplated by the Merger
Agreement.     20.27   “Merger Agreement” means the Agreement and Plan of Merger
dated as of January 27, 2005 among The Procter & Gamble Company, Aquarium
Acquisition Corp. and The Gillette Company.     20.28   “Merger Shares” has the
meaning accorded such term in the Merger Agreement.     20.29   “Nonemployee
Director” has the same meaning set forth in Rule 16b-3 promulgated under the
Exchange Act, or any successor definition adopted by the United States
Securities and Exchange Commission.     20.30   “Nonqualified Stock Option” or
“NQSO” means an Option that is intended not to be an ISO, or that otherwise does
not meet the requirements of Code Section 422.     20.31   “Option” means an
Incentive Stock Option or a Nonqualified Stock Option, as described in
Article 5.     20.32   “Option Price” means the price at which a Share may be
purchased by a Participant pursuant to an Option.     20.33   “Other Stock-Based
Award” means an Award denominated in Shares that is not described in Articles 5,
6, 7, or 8.     20.34   “Parent” means The Procter & Gamble Company.     20.35  
“Parent Common Stock” has the meaning accorded such term in the Merger
Agreement.     20.36   “Participant” means any eligible person as set forth in
Article 4 to whom an Award is granted.

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  20.37   “Performance-Based Compensation” means an Award that is intended to
deliver compensation that satisfies the performance-based compensation exception
requirements of Section 162(m) of the Code, other than any such Award that is an
Option or an SAR and that satisfies such requirements by reason of the special
stock option/stock appreciation right rules under Section 162(m).     20.38  
“Performance Measures” means the performance measures listed in Article 10.    
20.39   “Performance Period” means the period of time over which attainment of
performance goals is to be measured.     20.40   “Performance Share” means an
Award denominated in Shares under which vesting of the Award or the right to
payment under the Award (and not merely the possible acceleration of vesting or
payment) depends on the satisfaction of one or more performance goals.     20.41
  “Period of Restriction” means the period when Restricted Stock or Restricted
Stock Units are subject to a substantial risk of forfeiture (based on the
passage of time, the achievement of performance goals, or upon the occurrence of
other events as determined by the Committee), as provided in Article 7.    
20.42   “Plan” means The Gillette Company 2004 Long-Term Incentive Plan as from
time to time amended and in effect.     20.43   “Plan Year” means the calendar
year (January 1 to December 31).     20.44   “Prior Plan” means the 1971 Stock
Option Plan of The Gillette Company.     20.45   “Restricted Stock” means an
Award of restricted Stock pursuant to Article 7.     20.46   “Restricted Stock
Unit” means an Award pursuant to Article 7 under which the Participant is given
a conditional right to receive Stock in the future.     20.47   “Retirement”
means: (a) retirement in accordance with the provisions of any appropriate
retirement plan of the Company or any of its subsidiaries; or (b) termination of
employment under the total and permanent disability provision of any retirement
or disability plan of the Company or any of its subsidiaries or any plan to
which the Company or its subsidiaries contribute for purposes of the retirement
or disability of Employees.     20.48   “Share” means a Share of common stock of
the Company     20.49   “Special Separation” means any termination of employment
that occurs prior to the time a Participant is eligible to retire, except a
termination for Cause or a voluntary resignation that is not initiated or
encouraged by the Company.     20.50   “Stock Appreciation Right” or “SAR” means
an Award pursuant to the terms of Article 6.

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  20.51   “Subsidiary” means any corporation or other entity, whether domestic
or foreign, in which the Company has or obtains, directly or indirectly, a
proprietary interest of more than fifty percent (50%) by reason of stock
ownership or otherwise.     20.52   “Tandem SAR” means an SAR that is granted in
connection with a related Option pursuant to Article 6, the exercise of which
shall require forfeiture of the right to purchase a Share under the related
Option (and when a Share is purchased under the Option, the Tandem SAR shall
similarly be canceled).     20.53   “2005 Options” means each Option granted
hereunder after January 27, 2005 and prior to the Effective Time.

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