As filed with the Securities and Exchange
Commission on November 27, 1996. Registration No. 333-------
- ------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
THE CLOROX COMPANY
(Exact name of registrant as specified in its charter)
Delaware 31-0595760
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1221 Broadway, Oakland, CA 94612-1888
(Address of Principal Executive Offices) (Zip Code)
THE CLOROX COMPANY VALUE SHARING PLAN FOR PUERTO RICO
(Full title of the plan)
Edward A. Cutter, Senior Vice President -
General Counsel and Secretary
The Clorox Company,
1221 Broadway, Oakland, CA 94612-1888
(Name and address of agent for service)
510-271-7000
(Telephone number, including area code,
of agent for service)
-----------------------------
Calculation of Registration Fee
- -----------------------------------------------------------
Proposed Proposed
Title of Number Maximum Maximum Amount of
Securities of shares Offering Aggregate Regis-
to be to be Price Per Offering tration
Registered Registered Share Price Fee
- -----------------------------------------------------------
Common Stock 20,000 $105.6875* $2,113,750 $728.88*
- -----------------------------------------------------------
* Pursuant to Rule 457(h), estimate based on the average
high and low sale prices of Clorox common stock on The New York
Stock Exchange on November 22, 1996.
<PAGE>
Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents are incorporated by
reference herein:
(a) The Company's annual report on Form 10-K for
the fiscal year ended June 30, 1996,
filed pursuant to Section 13 of the
Securities Exchange Act of 1934, as
amended (the "Exchange Act");
(b) The Company's quarterly report on Form 10-Q
for the quarter ended September 30, 1996, filed
pursuant to Section 13 of the Exchange Act;
(c) All other reports filed by the Company since
June 30, 1996 with the Securities and Exchange
Commission pursuant to Section 13(a) or 15(d)
of the Exchange Act.
(d) The description of the Company's common stock
contained in the paragraph entitled "Voting at
the Annual Meeting," on page 1 of the
Company's proxy statement dated September 30,
1996.
(e) All documents subsequently filed by the
Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act, prior to the filing
of a post-effective amendment which indicates
that all securities offered hereby have been
sold or which deregisters all such securities
then remaining unsold, shall be deemed to be
incorporated by reference herein and to be
part hereof from the date of filing of such
documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Edward A. Cutter, Esq., who has rendered an opinion
regarding the validity of the securities being registered
hereby, is the Senior Vice President-General Counsel and
Secretary of the Company. As of July 30, 1996, Mr. Cutter
owned 55,884 shares of the Company's common stock, including
38,753 shares issuable upon the exercise of stock options
that were exercisable within 60 days of such date.
<PAGE>
II-1
Item 6. Indemnification of Directors and Officers.
The Company, a Delaware corporation, is empowered
by Section 145 of the Delaware General Corporation Law (the
"DGCL"), subject to the procedures and limitations stated
therein, to indemnify any person against expenses (including
attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person
in the defense of any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative or investigative, in which such person is
made a party by reason of his or her being or having been a
director or officer of the Company. The statute provides
that indemnification pursuant to its provisions is not
exclusive of other rights of indemnification to which a
person may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise.
Part I of Article Eight of the Restated Certificate of
Incorporation of the Company provides that the Company shall
indemnify its directors and officers substantially to the
fullest extent permitted by the DGCL.
The Company is also empowered by Section 102(b) of
the DGCL to include a provision in its certificate of
incorporation to limit a director's liability to the Company
or its stockholders for monetary damages for breaches of
fiduciary duty as a director. Article Nine of the Restated
Certificate of Incorporation of the Company states that
directors of the Company shall not be liable for monetary
damages for breach of fiduciary duty except for liability
for (i) a breach of their duty of loyalty to the Company or
its stockholders; (ii) any acts or omissions not in good
faith; (iii) their intentional misconduct or knowing
violation of law; (iv) improper dividend payments, stock
repurchases or redemptions; and (v) any transaction from
which the director derived an improper personal benefit.
Policies of insurance are maintained by the Company
under which the directors and officers of the Company are
insured, within the limits and subject to the limitations of
the policies, against certain expenses in connection with
the defense of actions, suits or proceedings, and certain
liabilities which might be imposed as a result of such
actions, suits or proceedings, to which they are parties by
reason of being or having been such directors or officers.
The Clorox Company Value Sharing Plan for Puerto Rico
(the "Plan") provides that no member of the committee selected
by the board of directors to administer the Plan shall be liable
for any liabilities, claims, costs and expenses, including
attorneys' fees, arising out of an alleged breach in the
performance of his or her fiduciary duties under the Plan
and under the Employee Retirement Income Security Act of 1974,
as amended, other than such liabilities, claims, costs and
expenses as may result from his or her gross negligence or
willful misconduct.
II-2
<PAGE>
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exh. No. Description
(4) The Clorox Company Value Sharing Plan for Puerto
Rico (located at page E-1 hereof)
(5) Opinion of Edward A. Cutter, Esq., Senior Vice
President-General Counsel and Secretary
of the Company (located at page E-53 hereof).
(23)(a) Consent of Deloitte & Touche LLP (located at
page E-54 hereof).
(b) Consent of Edward A. Cutter, Esq. (included in
Exhibit 5 above).
(24) Manually executed Power of Attorney of John W. Collins,
Ursula Fairchild, Dean O. Morton, Edward L. Scarff,
Lary R. Scott, Forrest N. Shumway, James A. Vohs and
C.A. Wolfe, dated November 22, 1996 (located at
page E-55 hereof).
Item 9. Undertakings.
The Company hereby undertakes:
(a) To file, during any period in which offers or
sales are being made, a post-effective
amendment to this registration statement to
include any material information with respect
to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement;
(b) That, for the purpose of determining any
liability under the Securities Act of 1933,
(the "Act") each post-effective amendment referred
to in undertaking (a) above shall be deemed to
be a new registration statement relating to the
securities offered therein, and the offering
of such securities at that time shall be
deemed to be the initial bona fide offering
thereof;
(c) To remove from registration by means of a
post-effective amendment any of the securities
being registered which remain unsold at the
termination of the offering;
II-3
<PAGE>
(d) That, for purposes of determining any
liability under the Act,
each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of
the Exchange Act that is incorporated by
reference in the registration statement shall
be deemed to be a new registration statement
relating to the securities offered therein,
and the offering of such securities at that
time shall be deemed to be the initial bona
fide offering thereof;
(e) That, insofar as indemnification for
liabilities arising under the Act
may be permitted to directors,
officers and controlling persons of the
registrant pursuant to the foregoing
provisions, or otherwise, the registrant has
been advised that in the opinion of the
Securities and Exchange Commission such
indemnification is against public policy as
expressed in the Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liability (other
than the payment by the registrant of expenses
incurred or paid by a director, officer or
controlling person of the registrant in the
successful defense of any action, suit or
proceeding) is asserted by such director,
officer or controlling person in connection
with the securities being registered, the
registrant will, unless in the opinion of its
counsel the matter has been settled by
controlling precedent, submit to a court of
appropriate jurisdiction the question whether
such indemnification by it is against public
policy as expressed in the Act and will be
governed by the final adjudication of such
issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933, the registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for
filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Oakland, State of
California on November 26, 1996.
THE CLOROX COMPANY
By: /S/ G. CRAIG SULLIVAN
G. Craig Sullivan
Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Act
of 1933, this Registration Statement has been signed by the
following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
- -------------------- ----------------------- -------------------
<S> <C> <C>
/S/ G. CRAIG SULLIVAN Chairman of the Board, November 26, 1996
G. Craig Sullivan Chief Executive Officer
and Director (principal
executive officer)
/S/ WILLIAM F. AUSFAHL Group Vice President, November 26, 1996
William F. Ausfahl Chief Financial Officer
and Director (principal
financial officer)
/S/ HENRY J. SALVO, JR. Vice President-Controller November 26, 1996
Henry J. Salvo, Jr. (principal accounting
officer)
/S/ Director November 26, 1996
* Daniel Boggan, Jr.
/S/ JOHN W. COLLINS Director November 26, 1996
* John W. Collins
/s/ URSULA FAIRCHILD Director November 26, 1996
* Ursula Fairchild
II-6
<PAGE>
Signature Title Date
- -------------------- ----------------------- -------------------
/S/ Director November 26, 1996
* Juergen Manchot
/S/ DEAN O. MORTON Director November 26, 1996
* Dean O. Morton
/S/ Director November 26, 1996
* Klaus Morwind
/S/ EDWARD L. SCARFF Director November 26, 1996
* Edward L. Scarff
/S/ LARY R. SCOTT Director November 26, 1996
* Lary R. Scott
/S/ FORREST N. SHUMWAY Director November 26, 1996
* Forrest N. Shumway
/S/ JAMES A. VOHS Director November 26, 1996
* James A. Vohs
/S/ C. A WOLFE Director November 26, 1996
* C. A. Wolfe
* By /S/ EDWARD A. CUTTER
Edward A. Cutter, Esq.
(Attorney in Fact)
</TABLE>
<PAGE>
II-7
Exhibit Index
Exh. No. Description
(4) The Clorox Company Value Sharing Plan for Puerto
Rico (located at page E-1 hereof)
(5) Opinion of Edward A. Cutter, Esq., Senior Vice
President-General Counsel and Secretary
of the Company (located at page E-53 hereof).
(23)(a) Consent of Deloitte & Touche LLP (located at
page E-54 hereof).
(b) Consent of Edward A. Cutter, Esq. (included in
Exhibit 5 above).
(24) Manually executed Power of Attorney of John W. Collins,
Ursula Fairchild, Dean O. Morton, Edward L. Scarff,
Lary R. Scott, Forrest N. Shumway, James A. Vohs and
C.A. Wolfe, dated November 22, 1996 (located at
page E-55 hereof).
II-8
EXHIBIT 5 TO
FORM S-8 REGISTRATION STATEMENT
REGARDING
THE CLOROX COMPANY
VALUE SHARING PLAN FOR PUERTO RICO
November 26, 1996
Ladies and Gentlemen:
This is with respect to the Registration Statement on
Form S-8, to which this opinion is an exhibit,
covering 20,000 shares of Clorox Common Stock which
may be issued pursuant to exercise of options granted
under The Clorox Company Value Sharing Plan for Puerto Rico.
It is my opinion that:
1. All necessary corporate action has been duly taken
to adopt said Plan and said Plan was duly approved by
action of the stockholders of The Clorox Company.
2. Said 20,000 shares of Clorox Common Stock have been
reserved for purposes of said Plan and such shares, when
issued on exercise of options granted in accordance with
the terms and conditions of said Plan, will be legally
issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to the
aforesaid registration statement.
Very truly,
/s/ EDWARD A. CUTTER
Edward A. Cutter
Senior Vice President -
General Counsel and
Secretary
EXHIBIT 23(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this
Registration Statement of The Clorox Company on Form S-8
of our report dated August 8, 1996, incorporated by
reference in the Company's Annual Report on Form 10-K
for the year ended June 30, 1996.
/s/ DELOITTE & TOUCHE LLP
Oakland, California
November 26, 1996
POWER OF ATTORNEY
Know All Men By These Presents:
WHEREAS, The Clorox Company, a Delaware corporation
(the "Company"), contemplates filing with the Securities
and Exchange Commission (the "Commission") at Washington,
D.C., under the provisions of the Securities Act of 1933,
as amended, and the regulations promulgated thereunder,
a Registration Statement on Form S-8 (and amendments
thereto, including post-effective amendments), with
respect to up to 20,000 shares of the Company's common
stock to be purchased pursuant to The Clorox Company
Value Sharing Plan for Puerto Rico.
WHEREAS, each of the undersigned is an officer
or director, or both, of the Company.
NOW, THEREFORE, each of the undersigned hereby
constitutes and appoints Edward A. Cutter his or her
true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for each
such person and in his or her name, place and stead,
in any and all capacities, to sign the aforementioned
Registration Statement (and any and all amendments
thereto, including post-effective amendments) and to
file the same, with all exhibits thereto, and other
documents in connection therewith, with the Commission,
granting unto said attorney-in-fact and agent full
power and authority to do and perform each and every
act and thing requisite and necessary to be done, as
fully as to all intents and purposes he or she might
or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or their
substitutes, may lawfully do and cause to be done by
virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has
hereunto set his or her hand on the
22nd day of November, 1996.
- ---------------------- /S/ JOHN W. COLLINS
Daniel Boggan, Jr. John W. Collins
/S/ URSULA FAIRCHILD ----------------------
Ursula Fairchild Klaus Morwind
- ---------------------- /S/ DEAN O. MORTON
Juergen Manchot Dean O. Morton
/S/ EDWARD L. SCARFF /S/ LARY R. SCOTT
Edward L. Scarff Lary R. Scott
/S/ FORREST N. SHUMWAY /S/ JAMES A. VOHS
Forrest N. Shumway James A. Vohs
/S/ C. A. WOLFE
C. A. Wolfe
THE CLOROX COMPANY VALUE
SHARING PLAN FOR PUERTO RICO
Effective as of December 1, 1996
<PAGE>
THE CLOROX COMPANY VALUE
SHARING PLAN FOR PUERTO RICO
TABLE OF CONTENTS
Page
ARTICLE I
HISTORY 6
ARTICLE II
DEFINITIONS 9
2.01 Account 9
2.02 Affiliated Company 9
2.03 Annuity Starting Date 9
2.04 Beneficiary 9
2.05 Clorox Stock 10
2.06 Committee 10
2.07 Company 10
2.08 Compensation 10
2.09 Directors 11
2.10 Disability 11
2.11 Effective Date 11
2.12 Eligible Employee 11
2.13 Employee 11
2.14 ERISA 12
2.15 1165(e) Contributions 12
2.16 Highly Compensated Employee 12
2.17 Hour of Service 12
2.18 Non-Highly Compensated Employee 12
2.19 Participant 12
2.20 Participating Company 12
2.21 Permitted Securities 12
2.22 Plan 12
2.23 Plan Year 13
2.24 PR-Code 13
2.25 Regulations 13
2.26 Trust Agreement 13
2.27 Trustee 13
2.28 TRIP 13
2.29 Valuation Date 13
2.30 Value Sharing Plan 13
2.31 Year of Service 13
ARTICLE III
SERVICE 14
9.01 Hour of Service 14
9.02 Year of Service 14
9.03 One Year Period of Severance 14
9.04 Severance from Service Date 14
9.05 Reemployment Date 15
9.06 Military Service 15
9.07 Prior Service 16
ARTICLE IV
PARTICIPATION 16
10.01 Service 16
10.02 Cessation and Resumption 16
ARTICLE V
CONTRIBUTIONS 17
5.01 Salary Deferral Contributions 17
5.02 Matching Contributions 17
5.03 Value Sharing Contribution 18
5.04 Special Contributions 20
5.05 Rollover Contributions 20
5.06 Trust-to-Trust Transfers 20
5.07 Voluntary Contributions 20
5.08 Restoration 20
5.09 Deductibility 21
5.10 Mistake 21
5.11 Limits 21
ARTICLE VI
INVESTMENT FUNDS AND COMMON STOCK 22
6.01 Individual Direction of
Investments 22
6.02 PAYSOP Accounts and Common Stock 22
6.03 Responsibility 23
ARTICLE VII
VALUATION 24
ARTICLE VIII
VESTING 25
8.01 Vesting 25
8.02 Forfeitures 26
8.03 Change in Vesting Schedule 27
ARTICLE IX
IN-SERVICE WITHDRAWALS 28
9.01 Hardship Withdrawals 28
9.02 Form 29
ARTICLE X
LOANS 30
10.01 Authorization 30
10.02 Amount 30
10.03 Security 31
10.04 Individual Account 31
10.05 Interest 31
10.06 Repayment 31
10.07 Default 31
10.08 Guidelines 31
ARTICLE XI
DISTRIBUTION OF BENEFITS 32
11.01 Date Benefits Become
Distributable 32
11.02 Date Benefits Will Be
Distributed 33
11.03 No Election 33
11.04 Retroactive Payment 33
11.05 Inability to Locate Recipient 33
11.06 Distribution to Minor or
Incompetent 33
11.07 Small Account 34
11.08 Form of Distribution 34
11.09 Continued Employment 35
11.10 Notice 36
11.11 Waiver 36
ARTICLE XII
BENEFICIARY DESIGNATIONS 37
12.01 All Participants 37
12.02 Married Participants 37
12.03 Ineffective Designation 38
12.04 Installments 38
ARTICLE XIII
CLAIMS PROCEDURE 39
ARTICLE XIV
ALIENATION AND QUALIFIED DOMESTIC
RELATIONS ORDERS 40
14.01 Prohibition 40
14.02 Qualified Domestic Relations
Order 40
ARTICLE XV
ADMINISTRATION 41
15.01 Committee 41
15.02 Power 41
15.03 Indemnification 41
15.04 Expenses 41
15.05 Allocation of Responsibility 42
ARTICLE XVI
AMENDMENTS 43
ARTICLE XVII
TERMINATION, MERGER AND TRANSFER 44
17.01 Participating Companies 44
17.02 Company 44
17.03 Mergers and Transfers 44
ARTICLE XVIII
MISCELLANEOUS 45
18.01 Limitation of Rights 45
18.02 Satisfaction of Claims 45
18.03 Construction 45
18.04 Severability 46
18.05 Source of Benefits 46
THE CLOROX COMPANY VALUE
SHARING PLAN FOR PUERTO RICO
ARTICLE I
HISTORY
In June of 1996, The Clorox Company ("Clorox")
maintained and The Clorox Company of Puerto Rico ("Clorox-PR")
participated in The Clorox Company Profit Sharing Plan
("Profit Sharing Plan") and The Clorox Company Tax Reduction
Investment Plan ("TRIP"). The Profit Sharing Plan was
originally established by Clorox effective as of July 1, 1955
and adopted by Clorox-PR effective as of July 1, 1977 and
TRIP was originally established by Clorox effective as of
October 1, 1983 and adopted by Clorox-PR effective as of
December 1, 1992. Effective as of 11:59 pm on June 30,
1996, TRIP was merged into the Profit Sharing Plan, and
the Profit Sharing Plan was renamed The Clorox Company
Value Sharing Plan (the "Value Sharing Plan"). The
principal purposes for the merger was to make certain
administrative changes to the eligibility, contribution,
and benefit provisions of the Value Sharing Plan. The
Value Sharing Plan is qualified under Sections 1165(a)
and (e) of the Puerto Rico Internal Revenue Code of 1994
(the "PR-Code") and is funded through a United States
situs trust.
Effective December 1, 1996, Clorox established and
Clorox-PR adopted The Clorox Company Value Sharing Plan
for Puerto Rico (the "Plan"). The Plan will be
exclusively qualified under the provisions of PR-Code
Sections 1165(a) and (e) and will be funded through a
Puerto Rico situs trust. The principal purposes for
establishing the Plan was to (i) simplify the administration
of the Value Sharing Plan; (ii) ensure the continued
qualification of the Value Sharing Plan under the United
States Internal Revenue Code of 1986, as amended, (the
"US-Code") as well as providing the Eligible Employees
similar benefits under a plan qualified under the
provisions of PR-Code Sections 1165(a) and (e); and
(iii) prevent United States taxation on trust earnings.
As soon as administratively practicable, after
11:59 pm on November 30, 1996, all the assets and
liabilities in the Value Sharing Plan related to
participants in the Value Sharing Plan who were or are
Employees of Clorox-PR will be transferred to the Plan.
The rights and benefits of a TRIP participant
who ceased to be an Employee on or prior to June 30,
1996 will be determined in accordance with the provisions
of TRIP in effect on the date on which that participant
ceased to be an Employee, and in accordance with any
provisions of the Value Sharing Plan that are
specifically made effective to that date.
Similarly, the rights and benefits of a
Profit Sharing Plan participant who ceased to be
an Employee on or prior to June 30, 1996 will be
determined in accordance with the provisions of
the Profit Sharing Plan in effect on the date on
which that participant ceased to be an Employee,
and in accordance with any provisions of the Value
Sharing Plan that are specifically made effective
to that date.
ARTICLE II
DEFINITIONS
This Plan is subject to technical restrictions
that are outlined in Appendices which, by this
reference, are incorporated into the Plan. Terms
used in a single Article or Appendix are generally
defined in that Article or Appendix. The following
terms are used throughout the Plan.
2.01 "Account" means the value of all Accounts
maintained on behalf of a Participant or Beneficiary. An
Account may include a Salary Deferral Contributions
Account, a Matching Contributions Account, a Rollover
Account, a Value Sharing Contributions Account (containing
profit sharing contributions), a Special Contributions
Account, PAYSOP Account, a Cash-or-Deferred Value Sharing
Bonus Deferral Account, and a Grandfathered Account
(containing profit sharing contributions made to The Clorox
Company Profit Sharing Plan before July 1, 1996).
2.02 "Affiliated Company" means a Participating
Company and, with respect to a Participating Company,
(i) any corporation that, pursuant to ERISA Section 210(a),
is a member of a controlled group of corporations of which
the Participating Company is a member; (ii) any employer
that is under common control with the Participating
Company; (iii) any employer that, pursuant to ERISA
Section 210(d), is a member of an affiliated service
group of which the Participating Company is a member and
(iv) any employer that, pursuant to the PR-Code, may be
required to be aggregated with the Participating Company.
2.03 "Annuity Starting Date" means the first
day of the first period for which an amount is payable
as an annuity or, in the case of a benefit not payable
as an annuity, the first day on which all events have
occurred that entitle the Participant to such a benefit.
2.04 "Beneficiary" means the person or persons,
natural or otherwise, designated pursuant to Article XII
or, with regard to the Plan's installment payment
option, pursuant to the "Installments" provisions of
Article XI, to receive a Participant's vested Account
if the Participant dies before distribution of his or
her entire Account.
2.05 "Clorox Stock" means the Company's
common stock.
2.06 "Committee" means the entity that, pursuant
to Article XV, administers the Plan.
2.07 "Company" means The Clorox Company, a
Delaware corporation, and any successor to all or a
major portion of the assets or business of The Clorox
Company that, by appropriate action, adopts the Plan.
2.08 "Compensation" means, except as provided
below, wages as defined in PR-Code Section 1141.
(a) Exclusions. Notwithstanding the
foregoing, Compensation does not include, settlements,
compensation adjustments made due to foreign service,
payments made by third party payors, reimbursements or
other expense allowances, welfare benefits (e.g.
severance benefits, short term disability benefits
other than sick pay for Employees, the terms of whose
employment is governed by a Collective Bargaining
Agreement, long term disability benefits), fringe
benefits, moving expenses, contributions to or
distributions from a deferred compensation plan, or
amounts included in income due to the following:
(i) the grant or exercise of qualified or non-qualified
stock options, stock appreciation rights, or phantom stock,
(ii) the grant of restricted stock, (iii) lapse of
forfeiture restrictions on restricted property, (iv)
the sale of stock obtained under a compensatory plan,
and (v) the receipt of dividends on restricted stock.
Except as specifically provided to the contrary in
Article V (Special Cash-or-Deferred Value Sharing Bonus
Deferral), Compensation does not include Cash-or-Deferred
Valuing Sharing Bonuses (whether taken in cash or deferred).
(b) Date. Compensation includes only
Compensation paid while an Employee is a Participant
and an Eligible Employee. Notwithstanding the foregoing,
Compensation also includes amounts earned while an
Employee is a Participant and an Eligible Employee but,
due to the timing of pay periods and pay days, paid
during the first few weeks after the individual ceases
to be a Participant and an Eligible Employee (e.g.
cashouts of vacation pay upon termination of employment
or receipt of a final paycheck after termination of
employment). For purposes of allocating the Value
Sharing Contribution described in Article V of this
document, the following additional rules apply.
(i) Compensation as described in the
preceding paragraph, is further limited to include
only Compensation paid after an Eligible Employee
has satisfied the "One Year Hold Out" requirement in
Section 5.04 of this Plan.
(c) Nonresidents with No Puerto Rico Source
Income. Puerto Rico payroll income earned by
nonresidents from Affiliated Companies will be treated
as Compensation to the extent that it would have been
treated as Compensation under the above definition if
the income were Puerto Rico source income.
2.09 "Directors" means the Board of Directors
of the Company.
2.10 "Disability" means the mental or physical
inability of a Participant to perform his or her normal
job, as evidenced by receipt of disability benefits
under the Social Security Act.
2.11 "Effective Date" means December 1, 1996.
2.12 "Eligible Employee" means any Employee
of a Participating Company other than (i) a leased
employee, (ii) a non-resident alien with no Puerto
Rico source income, and (iii) Employees whose
compensation and conditions of employment are governed by
the terms of a collective bargaining agreement unless and
to the extent that a written agreement between a
Participating Company or its delegate and the relevant
union makes such coverage available.
2.13 "Employee" means a common law employee of
a Participating Company that is either a resident of
Puerto Rico or who performs services for a Participating
Company primarily in Puerto Rico, as required by ERISA
Section 1022(i)(1).
2.14 "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
2.15 "1165(e) Contributions" means Salary Deferral
Contributions and Cash-or-Deferred Value Sharing Bonus
Deferrals under this Plan.
2.16 "Highly Compensated Employee" means any
Employee who is more highly compensated than two-thirds
of all Eligible Employees.
2.17 "Hour of Service" is defined in Article III.
2.18 "Non-Highly Compensated Employee" is an
Employee who is not a Highly Compensated Employee.
2.19 "Participant" means any Employee who
became a Participant and who retains an Account under
the Plan.
2.20 "Participating Company" means the Company,
The Clorox Company of Puerto Rico and any other
Affiliated Company of the Company in Puerto Rico that is
authorized by the Directors (or by a committee appointed
by the Directors) to participate in the Plan, and that
elects to participate in the Plan on behalf of its
Eligible Employees.
2.21 "Permitted Securities" means any stock,
bond, mutual fund share, mortgage, deed of trust or other
like investment instrument, all of which must be freely
negotiable, not subject to any restrictions on transfer
and approved by the Committee.
2.22 "Plan" means The Clorox Company Value
Sharing Plan for Puerto Rico set forth in this document,
as amended from time to time.
2.23 "Plan Year" means July 1 through June 30.
2.24 "PR-Code" means the Puerto Rico Internal
Revenue code of 1994, as amended.
2.25 "Regulations" means the Puerto Rico
Internal Revenue Code of 1994 Regulations, as amended.
2.26 "Trust Agreement" means an agreement entered
into between the Company (on behalf of all Participating
Companies) and a Trustee to provide for the investment,
management and control of Plan assets.
2.27 "Trustee" means any person or entity appointed
by the Company to hold the Plan's assets. The Plan may
have more than one Trustee.
2.28 "TRIP" means The Clorox Company Tax
Reduction Investment Plan ("TRIP") in effect prior to July 1,
1996.
2.29 "Valuation Date" means the last business day
of each Plan Year, and such other date or dates as may be
designated by the Committee for the valuation of Accounts.
2.30 "Value Sharing Plan" means The Clorox Company
Value Sharing Plan in effect prior to December 1, 1996.
2.31 "Year of Service" is defined in Article III
of the Plan.
ARTICLE III
SERVICE
Unless otherwise indicated, the following provisions
apply for purposes of determining eligibility to participate
in the Plan and for computing vesting service under the Plan.
9.01 Hour of Service. An Hour of Service is
each hour for which an Employee is paid or entitled to
payment from an Affiliated Company for the performance of
services for an Affiliated Company.
9.02 Year of Service. A Year of Service is a
consecutive or non-consecutive 12-month period beginning on
the first date that an Employee performs an Hour of Service,
on a Reemployment Date (as defined below) or on an anniversary
of either of these dates. If an Employee is terminated and
rehired within a 12-month period, any period of less than
12 consecutive months during which an Employee does not
perform an Hour of Service will be counted when computing
Years of Service. A One Year (or longer) Period of Severance
(as defined below) will not be counted when computing Years of
Service.
9.03 One Year Period of Severance. A One Year
Period of Severance is a 12 consecutive month period that
begins on an individual's Severance from Service Date, or
on an anniversary of that date, during which the individual
does not perform an Hour of Service.
9.04 Severance from Service Date. An Employee's
Severance from Service Date is the earliest of the date on
which the Employee quits, retires, is discharged or dies,
or the first anniversary of the first date of an Employee's
absence for any other reason (e.g., illness, disability,
vacation, a temporary layoff, public service).
(a) Crediting. Notwithstanding the foregoing,
the Severance from Service Date for a Participant who is
on an Authorized Leave of Absence (as defined below) will
be the date that his or her Authorized Leave of Absence
has terminated. In addition, for the purpose of determining
whether a Participant has incurred a One Year Period of
Severance, a Participant will not incur the first One Year
Period of Severance that would otherwise be counted if
severance is due to an Authorized Leave of Absence (as
defined below) or a Maternity/Paternity Leave (as defined
below).
(b) Authorized Leave of Absence. Authorized
Leave of Absence means a cessation from active employment
with an Affiliated Company pursuant to an established policy,
due to illness, disability, vacation, a temporary layoff,
public service, or any other reason.
(c) Maternity/Paternity Leave.
Maternity/Paternity Leave means an unpaid absence from work
for any period by reason of the Employee's pregnancy, birth
of the Employee's child, placement of a child with the
Employee in connection with the adoption of such child, or
any absence for the purpose of caring for such child for a
period immediately following such birth or placement.
9.05 Reemployment Date. An Employee's Reemployment
Date is the first date on which the Employee performs an
Hour of Service after a One Year Period of Severance.
9.06 Military Service. To the extent required by
applicable law, Hours of Service will be credited for periods
of military service.
9.07 Prior Service. The Company (or a committee
appointed by the Directors) may grant credit for prior
service to individuals who become Eligible Employees on or
after December 1, 1996. Individuals who become Participants
on December 1, 1996 will continue to be credited with all
service with which they were credited under the Value
Sharing Plan as of November 30, 1996.
ARTICLE IV
PARTICIPATION
10.01 Service. Every Eligible Employee who was a
Participant in the Value Sharing Plan on the Effective
Date will automatically become a Participant in this Plan.
Subject to Section 10.02, every Eligible Employee who was
not a Participant in the Value Sharing Plan on the Effective
Date will become a Participant in this Plan on the later
of the Effective Date or the first day on which the
Eligible Employee first performs an Hour of Service as an
Eligible Employee.
10.02 Cessation and Resumption. An individual
ceases to be a Participant when he or she ceases to have
an Account. Such an individual will again become a
Participant on the date that the individual again performs
an Hour of Service as an Eligible Employee.
ARTICLE V
CONTRIBUTIONS
5.01 Salary Deferral Contributions. A Participant
who is an Eligible Employee may elect to have a
Participating Company reduce the amount of his or her
Compensation for each payroll period by from 2% to 10% (or
such other percentages as the Committee or its delegate
may determine from time to time) and to have that amount
contributed to the Plan as a Salary Deferral Contribution
on his or her behalf. A Participant may initiate or change
the percentage of Salary Deferral Contribution (in 1%
increments) by providing notice to the Committee or its
delegate that satisfies such requirements as the Committee
may determine.
(a) Special Cash-or-Deferred Value Sharing
Bonus Deferral. A Participant who is an Eligible Employee
may submit a special election to the Committee or its
delegate that satisfies such requirements as the Committee
may determine, to defer up to 100% of any Cash-or-Deferred
Value Sharing Bonus that becomes payable to that Participant
after the Participant submits this election and during the
Plan Year for which this election is effective.
Notwithstanding the foregoing, if a Participant is eligible
to defer all or part of a Cash-or-Deferred Value Sharing
Bonus under any other deferred compensation plan (including,
but not limited to The Clorox Company Nonqualified Deferred
Compensation Plan), the Participant will not be eligible to
defer any part of that Cash-or-Deferred Value Sharing Bonus
under this Plan.
(b) Timing. 1165(e) Contributions will be
paid to the Trustee as soon as practical after the date on
which those amounts would have been paid to Participants
in the absence of a deferral election and in no event later
than the fifteenth working day of the month following such
date.
5.02 Matching Contributions. Subject to (a) and
(b) below, each Participating Company will contribute a
Matching Contribution equal to 100% of the Salary Deferral
Contribution received by a Trustee on behalf of a
Participant for a Plan Year up to a maximum of $750 for any
one Plan Year.
(a) Cash-or-Deferred Value Sharing Bonus.
Notwithstanding the foregoing, no Cash-or-Deferred Value
Sharing Bonus that is deferred under the preceding Section
will attract a Matching Contribution.
(b) One Year Hold Out. Notwithstanding
anything to the contrary in this Plan, an Employee who is
hired or rehired on or after the Effective Date, will not
be eligible to receive a Matching Contribution under this
Plan until that Employee completes One Year of Service.
For this purpose, prior service will be counted to the
extent provided in Article III.
5.03 Value Sharing Contribution. For each Plan
Year, the Participating Companies will make a Value Sharing
Contribution to the Trust in an amount determined by the
Company.
(a) Condition. The Value Sharing Contribution
for a Plan Year will be conditioned on the contribution
not exceeding the maximum amount currently deductible by
the Company in determining its consolidated taxable income
under the PR-Code, after first subtracting the amount of
all deductible contributions (including matching
contributions) to all pension plans for all employees of
all Affiliated Companies.
(b) Allocations. The Value Sharing
Contribution for each Plan Year and any forfeitures for that
Plan Year will be allocated as follows:
(i) Standard Allocation. First, the
balance of the Value Sharing Contribution will be allocated
to the Value Sharing Contributions Accounts of Qualified
Participants (as defined below) in the same proportion
that each Qualified Participant's Compensation from all
Participating Companies for the Plan Year bears to the
total Compensation of all Qualified Participants from all
Participating Companies for that Plan Year. The maximum
amount of Value Sharing Contribution allocated under this
paragraph (ii) to a Qualified Participant for a Plan Year
may not exceed 7% of that Qualified Participant's
Compensation from all Participating Companies for the Plan
Year.
(ii) Unvested Participant Allocation.
Second, the balance of the Value Sharing Contribution will
be allocated to the Value Sharing Contributions Accounts of
Qualified Participants who were not 100% vested in their
Value Sharing Contributions Accounts on the last day of
the Plan Year for which the allocation is made (each an
"Unvested Participant") in the same proportion that each
Unvested Participant's Compensation from all Participating
Companies for the Plan Year bears to the total
Compensation of all Unvested Participants from all
Participating Companies for that Plan Year.
(iii) Allocation of Forfeitures. For
each Plan Year, available forfeitures will be allocated
to the Value Sharing Contributions Account of a
Qualified Participant in the same proportion that the
Qualified Participant's Compensation from all Participating
Companies for the Plan Year bears to the total
Compensation of all Qualified Participants from all
Participating Companies for that Plan Year.
(iv) Qualified Participant. A
Qualified Participant is a Participant who was an Eligible
Employee on the last day of the Plan Year. A Participant
who separates from service as an Eligible Employee during a
Plan Year due to his or her death, Disability, attainment
of age 60, attainment of age 55 with 10 or more years of
Service or, as determined by the Committee, a plant
closing, a reduction in force, or a divestiture, will be
considered, for purposes of this definition, to have been
an Eligible Employee on the last day of that Plan Year.
Notwithstanding the foregoing, a Qualified Participant
does not include a Grandfathered Participant (as defined
below), unless and until the Grandfathered Participant
again becomes an Eligible Employee after January 1, 1996.
(v) One Year Hold Out. Notwithstanding
anything to the contrary in this Plan, an Eligible
Employee will not be eligible to receive a Value Sharing
Contribution under this Plan for a Plan Year unless that
Employee has completed One Year of Service prior to the
end of the Plan Year for which the Value Sharing
Contribution is made. For this purpose, prior service
will be counted to the extent provided in Article III.
5.04 Special Contributions. A Participating
Company may authorize qualified nonelective employer
contributions to the extent, and only to the extent,
needed to satisfy the tests described in the Testing
1165(e) Appendix to this Plan. These qualified nonelective
employer contributions will be allocated to
Non-Highly Compensated Eligible Employees from the
lowest paid to the highest paid.
5.05 Rollover Contributions. The Committee or
its delegate may authorize a Trustee to accept a
Rollover Contribution made in cash and attributable to
a distribution received by an Eligible Employee from
another Puerto Rico tax-qualified plan. Rollover
Contributions will be held in the Participant's Rollover
Account unless they are used to satisfy the buy back
provision in Article VIII of the Plan. If the Committee
should determine that a rollover was improperly
contributed to this Plan, that amount, adjusted for
earnings and losses, will immediately be (1) segregated
from all other Plan assets, (2) treated as a nonqualified
trust established by and for the benefit of the
individuals on whose behalf the contribution was made,
and (9) distributed to those individuals. Any such
nonqualifying contribution will be deemed never to have
been a part of the Plan.
5.06 Trust-to-Trust Transfers. The Committee
or its delegate may authorize a Trustee to accept a
Trust-to-Trust Transfer of assets (other than assets
that are subject to the survivor annuity requirements
of ERISA Section 205), from another tax-qualified plan.
5.07 Voluntary Contributions. The Plan will
not accept any voluntary (after-tax) employee
contributions other than buy back contributions
pursuant to Article VIII.
5.08 Restoration. If a Participant was
improperly excluded at any time from an allocation
or was allocated an insufficient amount, an amount
computed on the same basis as the allocation will
be added to that Participant's Account, after that
amount has been adjusted to reflect the gain or
loss that was allocated to Participants' Accounts
in each Plan Year since the Plan Year for which
the restoration is to be made.
5.09 Deductibility. To the extent that a
Participating Company is not allowed a current
deduction under the PR-Code for any contribution
made to the Plan, the Participating Company may,
within one year following a final determination
of the disallowance, whether by agreement with the
Puerto Rico Treasury Department or by final
decision of a court of competent jurisdiction,
demand repayment of the disallowed contribution,
and the Trustee shall return the contribution
within one year following the disallowance.
Earnings of the Plan attributable to such a
contribution may not be returned to the
Participating Company, but losses attributable
to such a contribution will reduce the amount
returned.
5.10 Mistake. If, within one year of
making a contribution to the Plan, the Committee
certifies to the Trustee that the contribution
was made by the Company under a mistake of fact,
the Trustee will, before the expiration of that
year, return the contribution to the Company.
5.11 Limits. As more fully discussed
in the Appendices to this Plan, 1165(e) Contributions
are subject to additional limits.
ARTICLE VI
INVESTMENT FUNDS AND COMMON STOCK
6.01 Individual Direction of Investments. At
the direction of the Committee, the Trustee may establish
separate funds to which Participants may direct the
investment of their Accounts. Investment in these funds
will be subject to such restrictions and administrative
procedures as are imposed by the Committee or its delegate,
pursuant to their discretionary authority to administer
and interpret the Plan, including, but not limited to,
procedures for investment of amounts for which no
investment direction is given by a Participant.
6.02 PAYSOP Accounts and Common Stock.
(a) Definition. A PAYSOP Account is an
account established for a Participant under this Plan
to record any PAYSOP contributions made by the Company
pursuant to the terms of a prior plan document and
amounts transferred from The Clorox Company Payroll-Based
Stock Ownership Plan for Hourly Paid Employees, as
adjusted for earnings and losses.
(b) Investment. Until the Company
receives a determination letter from the Internal
Revenue Service confirming the tax-qualified status
of the Value Sharing Plan and the tax-qualified
status of the terminated TRIP Plan (including the
terminated PAYSOP provisions contained in that Plan),
amounts held in PAYSOP Accounts and interest received
on those amounts will be held in a Clorox Company
Common Stock Fund identified in the Trust Agreement
and will be subject to the terms and conditions of
the Trust Agreement.
(i) Elections. Once a Participant
who is also an Employee has attained age 55 and has
completed 10 years of participation in a PAYSOP
feature contained in this Plan (including any years
of participation in The Clorox Company Payroll-Based
Stock Ownership Plan for Hourly Paid Employees) the
Participant may elect, pursuant to procedures
established by the Committee or its delegate, to
invest all or part of his or her PAYSOP Account in
one or more of the separate funds established by
the Committee pursuant Section 6.01 above. Such an
election is also available to Alternate Payees, to
Beneficiaries, and to Participants who are eligible
to receive a distribution from the Plan under the
provisions of Article XI.
(ii) Deletion of PAYSOP Provisions.
As soon as administratively practicable after the
Company receives a determination letter from the
United States Internal Revenue Service confirming
the tax-qualified status of the Value Sharing Plan
and a determination letter from the United States
Internal Revenue Service confirming the tax-qualified
status of the TRIP Plan merged into the Value Sharing
Plan (including the terminated PAYSOP provisions
formerly contained in that Plan), this Section 6.02
and all references to PAYSOP in this Plan document
will be null and void, amounts subject to this Section
will be transferred to a Clorox Company Common Stock
Fund maintained pursuant to Section 6.01 above, and
amounts subject to this Section 6.02 will be treated,
for all purposes under this Plan, in the same manner
that fully vested Value Sharing Contributions are
treated.
6.03 Responsibility. Except to the extent that
a Participant's PAYSOP Account is required to be invested
in a Clorox Company Stock Fund, each Participant is
solely responsible for the investment of his or her
Account. No Plan fiduciary and no Employee is authorized
to advise a Participant regarding this investment. The
offering of an investment fund under this Plan is not
to be treated as a recommendation for investment in that
fund.
ARTICLE VII
VALUATION
The value of a Participant's Account on any date
will be deemed to be the net balance of the Account
on the Valuation Date immediately preceding the date
as of which the value is to be determined, adjusted
by the Committee or its delegate, pursuant to their
discretionary authority to administer and interpret
the Plan and to determine eligibility for benefits
under the Plan. Adjustments will include increases
due to contributions to the Account since the
relevant Valuation Date; decreases due to Plan
expenses, distributions, loans, or withdrawals paid
from the Account since the relevant Valuation Date;
and adjustments for income or loss.
ARTICLE VIII
VESTING
8.01 Vesting. The vesting service of a
Participant in the Value Sharing Plan, Profit Sharing
Plan and/or TRIP who does not have an Hour of Service
on or after the Effective Date of this Plan will be
governed by the terms of the Value Sharing Plan,
Profit Sharing Plan and/or TRIP, as the case may be,
in effect on the date that the Participant ceased to
be an Employee. Participants who have an Hour of
Service on or after the Effective date will have
nonforfeitable, vested rights to their Salary Deferral
Contributions Accounts, Cash-or-Deferred Value
Sharing Bonus Deferral Accounts, Matching Contributions
Accounts, Special Contributions Accounts, Rollover
Accounts, and PAYSOP Accounts at all times. The
Value Sharing Contributions Account of a Participant
who has an Hour of Service on or after the Effective
Date will vest in accordance with the following
schedule.
If Years of Service Percentage of
Equal Account Vested
1 0%
2 0%
9 34%
10 66%
5 100%
In addition, a Participant will have a fully vested,
nonforfeitable interest in the entire amount of his or
her Value Sharing Contributions Account on the first to
occur of the following events:
(a) The Participant's death while employed
by an Affiliated Company.
(b) The Participant's attainment of age 60
while employed by an Affiliated Company.
(c) The Participant's separation from
service with all Affiliated Companies due to a
Disability.
8.02 Forfeitures.
(a) Allocation of Forfeitures from Value
Sharing Contributions Accounts. If a Participant
separates from service before the Participant is fully
vested in his or her Account, then the unvested portion
of that Account will be forfeited immediately after a
distribution is made of the Participant's vested Account.
If a Participant is not vested in any part of his or
her Account, the Participant's entire Account will be
deemed to have been distributed pursuant to the
preceding sentence. Even if the Participant's vested
Account is not distributed, the unvested portion of
the Participant's Account will be forfeited upon
expiration of five consecutive One Year Periods of
Severance. These forfeited amounts will be used, as
determined by the Committee, in its sole discretion,
to pay administrative expenses, to reduce contributions
to the Plan, to make earnings adjustments to
Participants' Accounts, to restore forfeitures as
provided in (c) below, and/or to increase the amount
allocated under the Value Sharing Contribution
provisions of this Plan.
(b) Failure to Vest. If a Participant
incurs five consecutive One Year Periods of Severance,
Years of Service after that five-year period will not be
taken into account for purposes of determining the
vested percentage of amounts that are forfeited pursuant
to paragraph (a) above and not restored under paragraph
(c) below.
(c) Restoration. Should an individual
resume Employee status after terminating employment,
but before incurring five consecutive One Year Periods
of Severance, then any amount forfeited under
paragraph (a) above will be restored to that individual's
Account without earnings if the individual pays to this
Plan the full amount of the distribution described in
paragraph (a) above, before the earlier of 5 years
after the individual resumed Employee status or the
close of the first period of 5 consecutive One Year
Periods of Severance following the date of the last
distribution described in paragraph (a) above.
Funds for restoring forfeitures under this Section
will be drawn first from forfeitures in the Plan Year
in which the Participant resumes Employee status and then
from a special contribution to the Plan made by a
Participating Company designated by the Committee or
its delegate.
8.03 Change in Vesting Schedule. If the Plan's
vesting schedule is amended, the vested percentage of
every Employee who is a Participant on the amendment
adoption date or the amendment effective date, whichever
is later, may not be less than the Participant's vested
percentage determined under the Plan without regard to
the amendment. In addition, if the Plan's vesting
schedule is amended, each such Participant who has
completed three Years of Service and whose vested
percentage is determined under the new vesting schedule
may elect to have his or her vested percentage
determined under the old vesting schedule if the old
vesting schedule would be more favorable.
ARTICLE IX
IN-SERVICE WITHDRAWALS
9.01 Hardship Withdrawals. Subject to such
administrative procedures as the Committee or its
delegate may establish, if a Participant has an
immediate and heavy financial need (as defined below),
and has no other resources reasonably available to
meet this need (as defined below), the Participant
may request a hardship withdrawal from the vested
portion of his or her Value Sharing Contributions
Account, Grandfathered Contributions Account,
Rollover Account, Salary Deferral Contributions Account
and Cash-or-Deferred Value Sharing Bonus Deferral
Account.
(a) Immediate and Heavy Financial Need.
A Participant's request for a hardship withdrawal
may not exceed the amount immediately required
(including the amount necessary to pay any federal,
state or local income taxes or penalties reasonably
anticipated to result from the withdrawal) by the
Participant to (i) purchase the Participant's
primary residence (excluding mortgage payments),
(ii) pay deductible medical expenses incurred by
the Participant, the Participant's dependents or
the Participant's spouse, or necessary for those
persons to obtain medical care, (iii) prevent
eviction from, or foreclosure of, the Participant's
primary residence, or (iv) pay for post-high school
tuition, related educational fees, and room and
board for the next 12 months for the Participant,
the Participant's spouse, or the Participant's
dependents.
(b) No Other Resources Reasonably
Available. A Participant who makes a hardship
withdrawal request must represent in a form satisfactory
to the Committee or its delegate that his or her
immediate and heavy financial need cannot be
relieved (i) through reimbursement or compensation by
insurance or otherwise, (ii) by reasonable liquidation
of the Participant's assets, to the extent such
liquidation would not itself cause an immediate and
heavy financial need, (iii) by cessation of 1165(e)
Contributions to this Plan or of contributions to any
other plan of deferred compensation, (iv) by other
distributions or nontaxable (at the time of the loan)
loans from plans maintained by any employer, or (v) by
borrowing from commercial sources on reasonable
commercial terms. For purpose of this Section, the
Participant's assets are deemed to include those assets
of the Participant's spouse and minor children that are
reasonably available to the Participant.
9.02 Form. All in-service withdrawals from
the Plan will be made in the form of a single sum cash
payment.ARTICLE X
LOANS
10.01 Authorization. The Committee or its
delegate may direct the Trustee to make a new loan to
a Participant who is employed by a Participating
Company and, to the extent that they are parties in
interest within the meaning of Section 408(b)(1) of
ERISA (but only to that extent), to other Participants
and to Beneficiaries (collectively referred to as
"Borrowers").
(a) Available Funds. Funds in the
following Accounts are available for loans, to the
extent those funds are vested.
- Rollover Account
- Grandfathered Contributions Account
- Value Sharing Contributions Account
- Salary Deferral Contributions Account
- Cash-or-Deferred Value Sharing Bonus Deferral Account
- Matching Contributions Account
(b) Number of Loans. A Borrower may not
have more than two loans outstanding from any Plan
maintained by an Affiliated Company at any one time.
Loans transferred into this Plan from TRIP will be
governed by the relevant provisions of the TRIP Plan and
will count against this two-loan limit.
10.02 Amount. The amount of any loan will not
be less than $750. Immediately after the origination of
the loan, the loan may not exceed 50% of the Borrower's
vested benefits under this Plan. Furthermore, the amount
of any loan, when added to the outstanding balance of all
other loans to the Borrower from this Plan and the plans
of Affiliated Companies, may not exceed the lesser of
(a) one half of the Borrower's vested benefits under this
Plan and the plans of Affiliated Companies, valued as of
each plan's most recent valuation date; and (b) $50,000
reduced by the excess, if any, of (i) the Borrower's
highest outstanding loan balance under this Plan and the
plans of Affiliated Companies during the 12-month period
ending on the day before the loan is made; over (ii) the
Borrower's outstanding loan balance under this Plan and
the plans of Affiliated Companies on the date the loan
is made.
10.03 Security. Each loan will be secured by
the portion of the Participant's Account from which the
loan is made and by payroll deduction as provided below.
10.04 Individual Account. All loans will be
investments of the Borrower's Account. Costs charged by
the Trustee to establish, process or collect the loan will
be charged to the Borrower's Account.
10.05 Interest. Interest will be charged on Plan
loans at a formula rate based on factors considered by
commercial entities that make similar loans. At the
discretion of the Committee or its delegate, the interest
rate will be redetermined as new loans are made.
10.06 Repayment. The term of any loan will not
exceed 5 years; provided, however, that a loan to purchase
a principal residence for the Borrower must not exceed 15
years. Except to the extent provided in Regulations,
substantially level amortization of the loan, with payments
not less frequently than quarterly, will be required over
the term of the loan. The loan will be repaid by payroll
deduction; provided, however, that periodic cash payments
may be made when payroll deduction is not possible.
10.07 Default. If a Borrower fails to repay a
loan within the time prescribed by the Committee, the
Trustee may levy on the Borrower's Account at such time
as the Borrower is eligible for a distribution or a
withdrawal under the Plan. In addition, in the event of
a failure to repay, the Trustee may exercise every
creditor's right at law or equity available to the Trustee.
10.08 Guidelines. The Committee or its delegate
will develop guidelines for administration of the Plan's
loan program.
ARTICLE XI
DISTRIBUTION OF BENEFITS
11.01 Date Benefits Become Distributable. Vested
Plan benefits will become distributable under the
following circumstances:
(a) Termination of Employment. The
Participant's termination of employment due to death,
Disability, or separation from service.
(b) Plan Termination. Termination of the Plan;
provided, however, that neither a Participant's Salary
Deferral Contributions Account, nor a Participant's
Cash-or-Deferred Value Sharing Bonus Deferral Account, nor
a Participant's Matching Contributions Account, nor a
Participant's Special Contributions Account may be
distributed pursuant to this paragraph unless the Participant
elects to receive his or her distribution in the form of a
lump sum and there is no successor plan.
(c) Sale of Assets. The sale of substantially
all the assets used by a Participating Company in a trade or
business to an unrelated corporation; provided, however,
that neither a Participant's Salary Deferral Contributions
Account, nor a Participant's Cash-or-Deferred Value Sharing
Bonus Deferral Account, nor a Participant's Matching
Contributions Account, nor a Participant's Special Contributions
Account may be distributed pursuant to this paragraph unless
the Participant continues employment with the unrelated
corporation, the Company continues to maintain this Plan, and
the Participant elects to receive his or her distribution in
the form of a lump sum.
(d) Sale of Subsidiary. The sale of a
Participating Company's interest in a subsidiary to an
unrelated entity; provided, however, that neither a
Participant's Salary Deferral Contributions Account, nor a
Participant's Cash-or-Deferred Value Sharing Bonus Deferral
Account, nor a Participant's Matching Contributions Account,
nor a Participant's Special Contributions Account may be
distributed pursuant to this paragraph unless the
Participant continues employment with the subsidiary, the
Company continues to maintain this Plan, and the
Participant elects to receive his or her distribution in
the form of a lump sum.
11.02 Date Benefits Will Be Distributed. Once
Plan benefits become distributable, they will be
distributed as soon as practicable after the Participant
or the Beneficiary, as the case may be, has elected,
pursuant to procedures established by the Committee or
its delegate, to receive a distribution.
11.03 No Election. If a Participant, or a
Beneficiary, as the case may be, does not elect a
distribution, benefits will be distributed pursuant to
the Distribution Provisions Appendix of this Plan. A
Participant's or Beneficiary's failure to affirmatively
elect a distribution will be deemed an election to defer
payment of benefits under this Plan.
11.04 Retroactive Payment. If the amount of a
distribution cannot be ascertained by the date payment
is required pursuant to this Article, or it is not
possible to make such payment because the Committee has
been unable to locate the Participant or Beneficiary
after making reasonable efforts to do so, a payment may
be made no later than 60 days after the earliest date
on which the amount of such payment can be ascertained
under the Plan, or the date on which the recipient is
located.
11.05 Inability to Locate Recipient. If a
benefit under the Plan remains unpaid for two years from
the date it becomes payable, solely by reason of the
inability of the Committee, exercising due diligence, to
locate the recipient of the payment, the benefit shall be
treated as a forfeiture pursuant to the terms of the Plan.
Any amount forfeited in this manner shall be restored,
without earnings, pursuant to the restoration of forfeitures
provisions of this Plan, upon presentation of an authenticated
claim by the recipient or the recipient's personal
representative.
11.06 Distribution to Minor or Incompetent. In the
event a distribution is to be made to a minor, or to an
incompetent person, the Committee may direct that the
distribution be paid to the legal guardian, or if none, to
a parent of such person, or to a responsible adult with
whom the person maintains residence, or to the custodian
for the person under the Uniform Gift to Minors Act or Gift
to Minors Act, if permitted by the laws of the state in
which the person resides.
11.07 Small Account. Notwithstanding any provision
of this Plan, if the vested portion of a Participant's
Account on the date the Participant ceases to be an Employee
is, and at the time of any earlier distribution or withdrawal
was, $9,500 or less, the Participant's Account will be
distributed, in cash, to the Participant, or Beneficiary, as
the case may be, as soon as practicable, without the consent
of the Participant or the Participant's spouse.
11.08 Form of Distribution. Amounts held in a
Participant's Account will be paid in cash as a total
distribution, unless the Participant (or Beneficiary) elects
otherwise pursuant to (a) or (b) below:
(a) Installments. If a Participant has a
Termination of Employment as defined in Section 11.01(a) above,
if that Participant attained age 55 with 10 Years of Service
(or age 60 without a Years of Service requirement) prior to
Termination of Employment, and if that Participant has amounts
in his or her Value Sharing Contributions Account attributable
to contributions made before July 1, 1996 ("Grandfathered
Amount"), the Participant may request that his or her
Grandfathered Amount, adjusted for investment gains and
losses, be paid out in a series of substantially equal monthly
installments over a period of 5, 10, 15, or 20 years;
provided, however, that the period selected by the Participant
must satisfy the requirements contained in the Distribution
Provisions Appendix to this Plan.
(i) Beneficiary. If a Participant dies
before receiving all of his or her elected installments, the
Beneficiary named by the Participant when electing to receive
installments will receive the balance of these installments;
provided, however, that if that Beneficiary dies after the
Participant but before having received the balance of these
installments, the unpaid balance will be paid to the
Beneficiary's estate in a single sum payment as soon as
administratively practicable after the Beneficiary's death.
If the Participant dies after his or her Annuity Starting
Date and after his or her named Beneficiary has died, any
remaining unpaid installments will be paid, as soon as
administratively practicable, to the Participant's estate
in a single sum payment.
(ii) Designation. The Participant will
follow the procedures outlined in Sections 12.01 and 12.02
(if applicable) when naming a Beneficiary to receive any
unpaid installments; provided, however, that a Participant
may name only one Beneficiary to receive such installments.
(iii) Single Sum. A Participant or a
Beneficiary who is receiving installments may elect, at
any time, to cease receiving installments and to receive the
remaining installments in a single sum payment as soon as
administratively practicable.
(b) Clorox Stock. When requesting a
distribution as provided in this Article, a Participant
(or Beneficiary) may elect to receive the portion of his
or her Account that is invested in a Clorox Company Common
Stock Fund in cash or in whole shares of Clorox Common Stock.
Any balance representing fractional units of a Clorox Company
Common Stock Fund will be distributed in cash.
(c) PAYSOP Account. A Participant (or
Beneficiary) may elect an Annuity Starting Date for his or
her PAYSOP Account (if any) that is different from the
Annuity Starting Date elected for the balance of his or her
Plan Account. As provided in Section 6.02 of this Plan
document, as soon as administratively practicable after the
Company receives a determination letter from the United States
Internal Revenue Service confirming the tax-qualified status
of the Value Sharing Plan, PAYSOP Accounts will cease to
exist and this paragraph (c) will become null and void because
amounts previously subject to PAYSOP provisions will be
treated under this Plan in the same manner that fully vested
Value Sharing Contributions are treated.
11.09 Continued Employment.
(a) Cessation of Benefits. Subject to the
Distribution Provisions Appendix to this Plan, a Participant
("Reemployed Participant") will cease to receive benefits
from the Plan if he or she is reemployed by an Affiliated
Company (including the Company).
(b) Annuity Starting Date. When a Reemployed
Participant ceases covered employment under the Plan, the
Participant will be treated as having a new Annuity
Starting Date and his or her subsequent Plan benefits
will be redetermined to reflect prior benefit payments.
(c) Death. If a Reemployed Participant dies
while benefits are suspended, any death benefits will be
provided in accordance with the Participant's most recent,
properly completed, Beneficiary designation.
11.10 Notice. The Committee or its delegate will
provide each Participant with a general notice of
distribution no less than 30 nor more than 90 days before
the participant's Annuity Starting Date. The notice will
set forth the following information (i) an explanation of
the eligibility requirements for, the material features of,
and the relative values of the optional forms of benefits
available under the Plan, (ii) the Participant's right to
defer receipt of a distribution under the Plan, and (iii)
the Participant's right (if any) to authorize a rollover
of his or her Plan benefits.
11.11 Waiver. Notwithstanding anything to the
contrary in this Plan, if a distribution is one to which
ERISA Section 205 does not apply, that distribution may
begin less than 30 days after the notice required under
ERISA is given, provided that (1) the Committee or its
delegate clearly informs the Participant that the
Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of
whether or not to elect a distribution (and, if
applicable, a particular distribution option), and (2)
the Participant, after receiving the notice, affirmatively
elects a distribution.
ARTICLE XII
BENEFICIARY DESIGNATIONS
12.01 All Participants. A Participant may
designate one or more primary Beneficiaries and one or
more secondary Beneficiaries to receive any benefit
payable from the Participant's Account on the Participant's
death. A Participant's Beneficiary designation will be
made pursuant to such procedures as the Committee may
establish, and shall be delivered to the Committee or
its delegate before the Participant's death. The
Participant may revoke or change this designation at
any time before his or her death by following such
procedures as the Committee or its delegate may establish.
The Beneficiary of a Participant who is living on
December 1, 1996 and whose Value Sharing benefits are
merged into this Plan on or after December 1, 1996 will be
the Beneficiary who would have received the Participant's
benefits under the terms of the Value Sharing Plan, unless
another properly designated Beneficiary is named by the
Participant.
12.02 Married Participants. If the Participant
is married, and if the Participant names a Beneficiary
other than his or her surviving spouse as a primary
Beneficiary, the Participant's surviving spouse must
irrevocably waive his or her right to the Participant's
Account in a written document, delivered to the Committee
or its delegate, that acknowledges the effect of the
waiver, and that is witnessed or notarized by a notary
public or, to the extent permitted by the Company, witnessed
by a Company representative. In the waiver, the
Participant's surviving spouse must consent to the
specific non-spouse Beneficiary(s) named by the Participant.
The waiver will be effective only with respect to that
spouse. If the Participant is legally separated or
abandoned and the Participant has a court order to that
effect (and there is no qualified domestic relations
order that provides otherwise), or the surviving spouse
cannot be located, then a waiver need not be filed with
the Committee or its delegate when a married Participant
names a Beneficiary other than his or her spouse.
Spousal consent will be irrevocable unless the
Participant changes his or her Beneficiary or form of
distribution designation; upon such event, spousal
consent shall be deemed to be revoked. If the spouse
consents to the designation of a trust as the Participant's
beneficiary, spousal consent will not be required for the
designation of or change in trust beneficiaries.
12.03 Ineffective Designation. If the Company
has not received a Participant's Beneficiary designation
before the Participant's death or if the Participant does
not otherwise have an effective Beneficiary designation
on file when he or she dies, the Participant's Account
will be distributed to the Participant's spouse if surviving
at the Participant's death, or if there is no such spouse,
the Participant's estate.
12.04 Installments. The "Installments" provision
in Article XI contains additional information regarding
designation of a Beneficiary for purposes of the Plan's
installment payment option.
ARTICLE XIII
CLAIMS PROCEDURE
If a Participant or Beneficiary ("Claimant") believes
that he or she is entitled to a benefit under the Plan, the
Claimant may submit a signed, written application to the
Committee or its delegate within 90 days of having been
denied such a benefit. The Claimant will generally be
notified of the approval or denial of this application
within 90 days (180 days in unusual circumstances) of the
date that the Committee or its delegate receives the
application. If the claim is denied, the notification
will state specific reasons for the denial and the
Claimant will have 60 days to file a signed, written
request for a review of the denial with the Committee or
its delegate. This request will include the reasons for
requesting a review, facts supporting the request and any
other relevant comments. The Committee or its delegate,
operating pursuant to its discretionary authority to
administer and interpret the Plan and to determine
eligibility for benefits under the terms of the Plan,
will generally make a final, written determination of
the Claimant's eligibility for benefits within 60 days
(120 days in unusual circumstances) of receipt of the
request for review.
ARTICLE XIV
ALIENATION AND QUALIFIED DOMESTIC RELATIONS ORDERS
14.01 Prohibition. Plan benefits may not be
assigned or alienated and will not be subject to the
claims of creditors. The Plan will, however, honor
properly executed federal or Puerto Rico tax levies,
executions on federal or Puerto Rico tax judgments,
Qualified Domestic Relations Orders within the meaning
of ERISA Section 206(d), and the provisions of this
Plan regarding loans and distributions to minors and
incompetent persons.
14.02 Qualified Domestic Relations Order. A
distribution to an Alternate Payee authorized by a
Qualified Domestic Relations Order may be made even
if the affected Participant would not be eligible to
receive a similar distribution from the Plan at that
time. The Committee has full discretionary authority
to determine whether a domestic relations order is
"Qualified" within the meaning of ERISA Section 206(d).
Rights and benefits provided to a Participant or
Beneficiary are subject to the rights and benefits of
an Alternate Payee under a Qualified Domestic Relations
Order.
ARTICLE XV
ADMINISTRATION
15.01 Committee. The Directors may appoint a
Committee to administer the Plan. The Committee will
hold office at the pleasure of the Directors and will
be a named fiduciary of the Plan. To the extent that
the Directors have not appointed a Committee, the term
Committee, as used in this Article, shall be deemed to
refer to the Company.
15.02 Power. The Committee has full discretionary
authority to administer and interpret the Plan, including
discretionary authority to determine eligibility for
participation and for benefits under the Plan, to appoint
one or more investment managers, to correct errors, and
to construe ambiguous terms. The Committee may delegate
its discretionary authority and such duties and
responsibilities as it deems appropriate to facilitate the
day-to-day administration of the Plan and, unless the
Committee provides otherwise, such a delegation will carry
with it the fully discretionary authority to accomplish
the delegation. Determinations by the Committee or the
its delegate will be final and conclusive upon all persons.
15.03 Indemnification. The Participating
Companies will indemnify and hold harmless the Directors,
the members of the Committee, and any Employees, from and
against any and all liabilities, claims, costs and expenses,
including attorneys' fees, arising out of an alleged breach
in the performance of their fiduciary duties under the Plan
and under ERISA, other than such liabilities, claims, costs
and expenses as may result from the gross negligence or
willful misconduct of such persons. The Participating
Companies shall have the right, but not the obligation,
to conduct the defense of such persons in any proceeding
to which this Section applies.
15.04 Expenses. All proper expenses incurred in
administering the Plan will be paid from the Trust if not
paid by the Participating Companies. If expenses are
initially paid by a Participating Company, the Participating
Company may be reimbursed from the Trust. Committee members
will receive no compensation for their services in
administering the Plan.
15.05 Allocation of Responsibility. Except to the
extent provided in Section 405 of ERISA, no fiduciary shall
have any liability for a breach of fiduciary responsibility
of another fiduciary with respect to the Plan and Trust.
ARTICLE XVI
AMENDMENTS
The Directors, by written action, may amend the Plan
(prospectively or retroactively). The Directors may
delegate this authority to a committee of Directors. Upon
adoption, the amendment will become effective in accordance
with its terms. Except as provided elsewhere in this Plan,
no amendment will (a) cause Plan assets to revert to a
Participating Company or to be used for purposes other
than the exclusive benefit of Participants and Beneficiaries
and payment of reasonable expenses, (b) deprive any
Participant of a benefit already accrued, or (c) change the
duties or liabilities of a Trustee without consent of the
Trustee.
ARTICLE XVII
TERMINATION, MERGER AND TRANSFER
17.01 Participating Companies. A Participating
Company may, in its sole discretion, by written action of
its board of directors or by a committee appointed by its
board of directors, discontinue contributions to or
terminate the Plan, in whole or in part, at any time with
respect to its own Employees.
17.02 Company. The Directors reserve the right
to terminate the Plan, at any time, in their sole and
absolute discretion by written action. The Directors may
delegate this authority to a committee of Directors. If
the Plan is terminated with respect to all Participating
Companies, the Trustees will pay to each Participant
affected by the termination, or that Participant's
Beneficiary, within a reasonable time, the net value of
the Participant's Account in accordance with the written
directions of the Committee; provided that, if termination
of the Plan does not constitute a distribution event within
the meaning of the requirements of PR-Code Section 1165(e),
the Participants' Salary Deferral Contributions Account,
Cash-or-Deferred Value Sharing Bonus Deferral Account,
Matching Contributions Account, and Special Contributions
Account will continue to be held in trust for subsequent
distribution in accordance with the applicable requirements.
17.03 Mergers and Transfers. This Plan may be
merged or consolidated with another tax-qualified retirement
Plan and assets and liabilities may be transferred from this
Plan to any other retirement plan qualified under PR-Code
Section 1165(e) if each Participant is entitled to receive
from this Plan, or from the surviving or transferee plan,
immediately after the merger, consolidation or transfer, a
benefit equal to or greater than the benefit the Participant
would have been entitled to receive under this Plan if this
Plan had been terminated immediately before the merger,
consolidation or transfer.
ARTICLE XVIII
MISCELLANEOUS
18.01 Limitation of Rights. Participation in this
Plan will not give to any Employee the right to be retained
in the employ of an Affiliated Company, nor any right or
interest in this Plan other than as provided in this Plan
document.
18.02 Satisfaction of Claims. Any payment to (or
on behalf of) a Participant, the Participant's legal
representative or Beneficiary, in accordance with the terms
of this Plan will, to the extent thereof, be in full
satisfaction of all claims that person may have against
the Trust, the Plan, each Trustee, the Committee and all
Participating Companies, any of whom may require the
recipient, as a condition precedent to such payment, to
execute a receipt and release therefor in such form as
shall be determined by the Trustee, the Committee or a
Participating Company, as the case may be. The
Participating Companies do not guarantee the Trust, the
Participants, or their Beneficiaries against loss of or
depreciation in value of any right or benefit that any
of them may acquire under this Plan.
18.03 Construction. Although contributions
made by the Participating Companies are not limited
to profits, the Plan is intended to be a profit sharing
plan. The Plan is to be construed and administered in
accordance with ERISA and other pertinent federal laws
and in accordance with the laws of the Commonwealth of
Puerto Rico to the extent not preempted by ERISA;
provided, however, that if any provision is susceptible
of more than one interpretation, such interpretation
shall be given thereto as is consistent with the intent
that this Plan and its related Trusts be exempt from
Puerto Rico income tax under PR-Code Section 1165(a).
The headings and subheadings of this instrument are
inserted for convenience of reference only and are not
to be considered in the construction of this Plan.
18.04 Severability. If a provision of this
Plan is held by a court of competent jurisdiction to be
invalid or unenforceable, the remaining provisions of
the Plan will remain fully effective.
18.05 Source of Benefits. All benefits payable
under the Plan shall be paid and provided for solely from
the Trust, and the Participating Companies assume no
liability or responsibility therefor.
IN WITNESS WHEREOF, the Company has caused this
Plan to be executed this 27th day of November, 1996.
THE CLOROX COMPANY
By: /s/ EDWARD A. CUTTER
Edward A. Cutter
APPENDIX I: TESTING 1165(E) CONTRIBUTIONS
1.01 Individual Limit on Elective Deferrals.
(a) Definition. "Elective Deferrals" means
contributions on behalf of a Participant under a qualified
cash or deferred arrangement described in PR-Code Section
1165(e).
(b) Limit. A Participant's 1165(e)
Contributions under the Plan for any calendar year may not
exceed the lesser of 10% of a Participant's Compensation or
$7,500 (not indexed) limit of PR-Code Section 1165(e)(7)(A).
(c) Distribution. If a Participant notifies
the Committee or its delegate following the close of the
Participant's taxable year, pursuant to procedures established
by the Committee or its delegate, that the Participant's total
Elective Deferrals for the taxable year exceed the 10%/$7,500
limit of PR-Code Section 1165(e)(7)(A) or if 1165(e)
Contributions exceed the amount permitted by PR-Code Section
1165(e)(7)(A), the excess, together with income earned on the
excess during the calendar year will be distributed to the
Participant by April 15 following the year in which the excess
contribution was made. Income will be determined using a
method used for allocating income to Participants' Accounts
during the Plan Year and will not include income earned after
the end of the Plan Year.
1.02 Limit on 1165(e) Contributions.
(a) Deferral Percentage means, for a group of
Eligible Employees, the average of the ratios (calculated
separately for each individual) of (i) to (ii) where (i) is
the 1165(e) Contributions allocated for the Plan Year to the
individual, and (ii) is the Participant's Compensation for the
Plan Year. The Deferral Percentage for an Eligible Employee
who does not elect to make 1165(e) Contributions is zero.
(b) Tests. 1165(e) Contributions must satisfy
one of the following tests:
(i) The Deferral Percentage for Highly
Compensated Employees must not be more than 125% of the
Deferral Percentage for Non-Highly Compensated Employees.
(ii) The Deferral Percentage for Highly
Compensated Employees must not be more than 2 percentage
points plus the Deferral Percentage for Non-Highly
Compensated Employees.
(c) Deferral Percentage Test Operational
Rules.
(i) Aggregated Plans. If 2 or more plans
that include cash or deferred arrangements are considered a
single plan for purposes of PR-Code Section 165(a)(9) or
PR-Code Section 1165(a)(10) (other than for purposes of
the average benefits test of PR-Code Section 1165(a)(9)(B)),
the cash or deferred arrangements included in those plans
will be treated as a single arrangement.
(ii) Highly Compensated. If an eligible
Highly Compensated Employee is a participant under two or
more cash or deferred arrangements of an Affiliated Employer,
for purposes of determining that Employee's Deferral
Percentage, all such cash or deferred arrangements will be
treated as a single cash or deferred arrangement.
(iii) Disregarded Employees. Any Employee
who is not, at any time during the Plan Year, eligible to
authorize a 1165(e) Contribution will be disregarded.
(d) Satisfaction of Deferral Percentage Test.
(i) Reduction of Contributions. If, at
any time, the Committee or its delegate determines that the
Deferral Percentage test is not likely to be satisfied, the
Committee or its delegate may reduce the 1165(e) Contributions
of Highly Compensated Employees or a Participating Company
make a Special Contribution to the Plan.
(ii) Recalculation. If the Plan does not
satisfy the Deferral Percentage test the Deferral Percentage
for the Highly Compensated Employee with the greatest
Deferral Percentage will be reduced to the extent required to
enable the Plan to satisfy the Deferral Percentage test, or
to cause the Deferral Percentage of the Highly Compensated
Employee with the greatest Deferral Percentage to equal the
Deferral Percentage of the Highly Compensated Employee with
the next greatest Deferral Percentage. The Deferral
Percentages of these Highly Compensated Employees will then
be reduced together and this process will be repeated as
necessary until the Plan satisfies the Deferral Percentage
test.
(iii) Excess Contributions. A Highly
Compensated Employee's excess contributions are the amount
by which the 1165(e) Contribution made on behalf of the
Highly Compensated Employee for the Plan Year must be reduced
pursuant to the recalculation provisions of this paragraph
(2) for the Plan to satisfy the Deferral Percentage test.
Subject to the following provisions, excess contributions
will be distributed to the Participant for whom they were
contributed.
(iv) Adjustments. Distributions of excess
contributions will be adjusted for income and loss using a
method used for allocating income to Participants' Accounts
during the Plan Year and they will be reduced by the excess
deferrals distributed pursuant to Section 1.01 of this
Appendix. Income earned after the end of the Plan Year will
not be distributed. Federal, state or local income tax
withholding obligations attributable to the distribution may
be satisfied out of the distribution. Distributions of
excess contributions will be reduced by distributions of
excess deferrals. Unmatched 1165(e) Contributions will be
distributed before matched Salary Deferral Contributions.
If matched 1165(e) Contributions must also be distributed,
they will be accompanied by the forfeiture of a proportionate
share of Matching Contributions.
(v) Timing. Excess contributions for a
Plan Year will be distributed no later than the last day
of the Plan Year immediately following the Plan Year for
which the contributions were made.
APPENDIX II: DISTRIBUTION PROVISIONS
The information contained in this Appendix is consistent
with the Plan's distribution provisions, and is generally
required by law to be explicitly stated in the Plan.
1.01 Incorporation by Reference of US-Code
Section 401(a)(9) Regulations. Distributions will be
made in accordance with the regulations under US-Code Section
401(a)(9), including the minimum distribution incidental
benefit requirement of US-Code Section 401(a)(9)(G).
1.02 Installment Distributions. Once a
Participant has attained age 70-1/2, the amount of the
installments distributed each calendar year must be at
least an amount ("401(a)(9) amount") equal to the
quotient obtained by dividing the Participant's entire
interest in the Plan by the life expectancy of the
Participant. Life expectancies will not be recalculated.
To the extent that the minimum distribution requirements
under US-Code Section 401(a)(9) are not satisfied for a
given calendar year, an Employee will receive installments
distributed each calendar year that are in an amount at
least equal to the Employee's 401(a)(9) amount. Such an
Employee will have a new Annuity Starting Date upon the
occurrence of a standard distribution event under this
Plan (e.g. the Employee's termination of employment or the
termination of the Plan), and that Employee's subsequent
Plan benefits will be redetermined to reflect prior
benefit payments.
1.03 401(a)(9) Deferral Limitations for Beneficiaries.
(a) Death After Required Beginning Date.
If a Participant dies after the Participant's required
beginning date, the remaining portion of that Participant's
Account will continue to be distributed at least as
rapidly as under the method of distribution in effect
before the Participant's death.
(b) Death Before Required Beginning Date.
If the Participant dies before the Participant's required
beginning date, distribution of the Participant's entire
Account shall be completed by December 31 of the calendar
year containing the fifth anniversary of the Participant's
death, except to the extent that an election is made in
accordance with the following paragraphs:
(1) Designated Beneficiary. If any
portion of the Participant's Account is payable to a
designated Beneficiary, distributions may be made for a
period certain not greater than the life expectancy of
the designated Beneficiary commencing on or before
December 31 of the calendar year immediately following
the calendar year in which the Participant died.
(2) Surviving Spouse. If the
designated Beneficiary is the Participant's surviving
spouse, the date that distributions payable for a period
certain not greater than the life expectancy of the
Participant's surviving spouse are required to begin to
the Participant's surviving spouse shall not be earlier
than the later of December 31 of the calendar year
immediately following the calendar year in which the
Participant died, and December 31 of the calendar year
in which the Participant would have attained age 70-1/2.
(9) Death of Spouse. If the surviving
spouse dies after the Participant, but before payments
to the spouse begin, the provisions of this subsection,
with the exception of paragraph (2), shall be applied
as if the surviving spouse were the Participant.
1.04 TEFRA 242(b) Election. If a Participant
made a written election, prior to January 1, 1984, to
defer commencement of his or her distribution in a
manner consistent with the Tax Equity and Fiscal
Responsibility Act of 1982, such an election will be
honored.
1.05 Timing. Subject to US-Code
Regulation 1.411(a)-11(c)(7) and the provisions of this
Plan, benefits of a former Participant shall become
payable no later than 60 days after the last to occur of
(a) the last day of the Plan Year in which the
Participant attains age 65, (b) the last day of the
Plan Year in which the Participant separates from
employment with the Company, or (c) the 10th anniversary
of the last day of the Plan Year in which the
Participant commenced participation in the Plan.
1.06 Normal Retirement Date means the first
day of the month coinciding with or next following a
Participant's attainment of age 65 ("Normal Retirement Age").
