Exhibit 10.2
THE CLOROX COMPANY
SUPPLEMENTAL
EXECUTIVE
RETIREMENT PLAN
RESTATED
EFFECTIVE
JANUARY 1, 2005

 

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PURPOSE OF THE PLAN
The purpose of The Clorox Company Supplemental Executive Retirement Plan (the
“Plan”) is to provide retirement benefits for certain executives of The Clorox
Company (the “Company”) in addition to the retirement benefits provided
generally to all Company salaried employees. These supplemental benefits are
intended to provide greater retirement security for those executives and to aid
in attracting and retaining future executives.

 

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ARTICLE I.
DEFINITIONS
The following words and phrases as used herein shall have the following
meanings, unless a different meaning is plainly required by the context.

1.1   “Accrued Benefit” means the benefit of a Participant calculated under
Article II at the time of the Participant’s Separation from Service, or for
Participants who have not Separated from Service, at the time of their assumed
Separation from Service. In the latter case, the benefit will be based upon the
following as of their assumed Separation from Service: (a) Compensation,
(b) total years and completed months of service, (c) any vested accrued benefit
from a Company sponsored Defined Benefits Plan, (d) the monthly benefit which
could be provided based on the actuarially determined annuity value of the
Participant’s vested Company contributions account under any Company sponsored
Defined Contribution Plan, and (e) any monthly primary insurance benefit to
which the Participant may be entitled under the Social Security Act

1.2   “Board of Directors” means the board of directors of the Company as from
time to time constituted.   1.3   “Change in Control” means the effective date
of any one 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 Exchange Act ) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 30% of either (i) the then outstanding shares of common stock of the Company
(the “Outstanding Company Common Stock”) or (ii) the combined voting power of
the then outstanding voting securities of the Company entitled to vote generally
in the election of directors (the “Outstanding Company Voting Securities”);
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, including any
acquisition which, by reducing the number of shares outstanding, is the sole
cause

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      for increasing the percentage of shares beneficially owned by any such
Person to more than the applicable percentage set forth above, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or
(iv) any acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (c) of this definition; or

  (b)   Individuals who, as of the date hereof, constitute the Board of
Directors (the “Incumbent Board”) cease for any reason within any period of
24 months to constitute at least a majority of the Board of Directors; provided,
however, that any individual becoming a director subsequent to the date hereof
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 of Directors; or

  (c)   Consummation by the Company of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets of the
Company or the acquisition of assets of another corporation (a “Business
Combination”), in each case, unless, following such Business Combination,
(i) more than 50% of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including without
limitation, a corporation which as a result of such transaction owns the Company
or all or substantially all of the Company’s assets either directly or through
one or more subsidiaries) is represented by Outstanding Company Common Stock and
Outstanding Company Voting Securities, respectively, that were outstanding
immediately prior to such

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      Business Combination (or, if applicable, is represented by shares into
which such Outstanding Company Common Stock and Outstanding Company Voting
Securities were converted pursuant to such Business Combination) and such
ownership of common stock and voting power among the holders thereof is in
substantially the same proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (ii) no Person (excluding 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 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
(iii) 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 of Directors, providing for such Business Combination.

1.4   “Code” means the Internal Revenue Service of 1986, as amended.   1.5  
“Committee” means the Management Development and Compensation Committee of the
Board of Directors.   1.6   “Company” means The Clorox Company.   1.7  
“Compensation” means the total of annual base salary plus the Annual Incentive
Plan Compensation and/or Executive Incentive Compensation awarded to a
Participant and in each case includes amounts the receipt of which the
Participant has elected to defer or to take in the form of restricted stock or a
stock option. For purposes of the calculation of benefits in Sections 2.3 and
2.5, the total of the Participant’s three highest Annual Incentive Plan
Compensation and/or Executive Incentive Compensation (referred to collectively
as “Incentive Compensation”) awards will be apportioned evenly over the 36
consecutive months of highest base salary. If a Participant receives a pro-rated
Incentive

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    Compensation award because of Separation from Service other than at the end
of the Company’s fiscal year, (a) that pro-rated amount shall be divided by the
number of months the Participant was employed during the fiscal year and (b) the
Participant’s third highest Incentive Compensation award shall be divided by 12.
If the result of (a) above is greater than the result of (b) above, one of the
Participant’s three highest Incentive Compensation awards for purposes of this
paragraph shall be deemed to be the Participant’s final year pro-rated Incentive
Compensation award plus the amount determined in (b) above multiplied by the
result of subtracting from 12 the number of months Participant was employed by
the Company during his or her final year of employment.

1.8   “Defined Benefit Plan” means a plan, fund or program under which an
employer undertakes systematically for the payment of definitely determinable
benefits to its employees over a period of years after retirement. The benefit
an employee will receive upon retirement can be determined from a formula
defined in the plan instrument.

1.9   “Defined Contribution Plan” means a plan which provides for an individual
account for each participant and for benefits based solely on the amount
contributed to the participant’s account, and any income, expenses, gains and
losses and any forfeitures of accounts of other participants which may be
allocated to such participant’s account. Beginning July 1, 1994 “Defined
Contribution Plan” shall include NonQualified Deferred Compensation Plans which
a) restore amounts for a Participant’s benefit which cannot be contributed to a
defined benefit or contribution plan deemed qualified under the Internal Revenue
Code, or b) account for annual distributions, whether deferred or received in
cash, made from a Defined Contribution Plan rather than credited to the
Participant’s account in such plan.

1.10   “Disability” means that an individual is eligible for disability benefits
under the Federal Social Security Act as determined by the Social Security
Administration.

1.11   “Effective Date” means July 1, 1981.   1.12   “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.

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1.13   “Executive” means a member of the Clorox Leadership Committee.   1.14  
“Identification Date” means each December 31.   1.15   “Key Employee” means a
Participant who, on an Identification Date, is:

  (a)   An officer of the Company having annual compensation greater than the
compensation limit in Section 416(i)(1)(A)(i) of the Code, provided that no more
than fifty officers of the Company shall be determined to be Key Employees as of
any Identification Date;     (b)   A five percent owner of the Company; or    
(c)   A one percent owner of the Company having annual compensation from the
Company of more than $150,000.

If a Participant is identified as a Key Employee on an Identification Date, then
such Participant shall be considered a Key Employee for purposes of the Plan
during the period beginning on the first April 1 following the Identification
Date and ending on the next March 31.

1.16   “Married Participant” means a Participant who is lawfully married on the
date Retirement Benefits become payable pursuant to Article II (Retirement
Benefits).

1.17   “Participant” means any employee who becomes a Participant pursuant to
Section 2.1 (Participation), or a former employee who has become entitled to a
Normal or Early Retirement Benefit pursuant to the Plan.

1.18   “Retirement Benefit” means the retirement income provided to Participants
and their joint annuitants in accordance with the applicable provisions of
Article II (Retirement Benefits).

1.19   “Separation from Service” means termination of employment with the
Company, other than by reason of death. A Participant shall not be deemed to
have Separated from Service if the Participant continues to provide services to
the Company in a capacity other than as an employee and if the former employee
is providing services at an annual

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    rate that is fifty percent or more of the services rendered, on average,
during the immediately preceding three full calendar years of employment with
the Company (or if employed by the Company less than three years, such lesser
period) and the annual remuneration for such services is fifty percent or more
of the annual remuneration earned during the final three full calendar years of
employment (of if less, such lesser period); provided, however, that a
Separation from Service will be deemed to have occurred if a Participant’s
service with the Company is reduced to an annual rate that is less than twenty
percent of the services rendered, on average, during the immediately preceding
three full calendar years of employment with the Company (or if employed by the
Company less than three years, such lesser period) or the annual remuneration
for such services is less than twenty percent of the annual remuneration earned
during the three full calendar years of employment with the Company (or if less,
such lesser period).

Words importing males shall be construed to include females wherever
appropriate.
ARTICLE II.
RETIREMENT BENEFITS

2.1   Participation       The employees of the Company named in Exhibit A are
the Participants currently accruing benefits or who have vested deferred
benefits and have not begun to receive such benefits. From time to time, the
Committee may designate additional employees as Plan Participants. A Participant
who is an Executive of the Company and who is removed from office or is not
reappointed as an Executive, or who is not an Executive and who voluntarily or
involuntarily Separates from Service, will thereupon cease to be a Participant
and will have no vested interest in the Plan unless he is entitled to a Normal
or Early Retirement Benefit pursuant to this Article II.   2.2   Normal
Retirement Date       A Participant who Separates from Service on or after age
sixty-five with ten or more years of employment with the Company will receive a
Normal Retirement Benefit beginning on the first day of the month following his
Separation from Service. Such date will be the Participant’s Normal Retirement
Date.

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2.3   Normal Retirement Benefit       The Normal Retirement Benefit payable to a
Participant will be equal to 3-2/3% of the monthly average of the Participant’s
Compensation during the thirty-six (36) consecutive months of employment
producing the highest such average, times the Participant’s total years and
completed months of employment with the Company as of his Separation from
Service, to a maximum of 15 years, offset by:

  (a)   the monthly benefit payable under a 50% joint and survivor annuity form
for a Married Participant or an annuity payable for the life of a single
Participant, which would be provided to the Participant on his Normal Retirement
Date (i) by Company contributions under any Company sponsored Defined Benefit
Plan plus (ii) the monthly benefit which could be provided based on the
actuarially determined annuity value of his vested Company contributions account
under any Company sponsored Defined Contribution Plan, plus     (b)   the
monthly primary insurance benefit to which the Participant may be entitled under
the Social Security Act as of his Normal Retirement Date.

    For purposes of this Section 2.3, Company contributions shall not include
voluntary reductions of compensation under the provisions of a Company sponsored
Defined Contribution Plan. Company matching contributions under such a plan
shall be considered Company contributions.   2.4   Early Retirement Date       A
Participant who Separates from Service on or after age fifty-five with ten or
more years of employment with the Company will receive an Early Retirement
Benefit beginning on the first day of the month following his Separation from
Service. The date of the commencement of the Early Retirement Benefit will be
the Participant’s Early Retirement Date.

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2.5   Early Retirement Benefit       The Early Retirement Benefit payable to a
Participant on his Early Retirement Date will be calculated in the same manner
as the Normal Retirement Benefit in Section 2.3 except that:

  (a)   Before deducting the offsets provided in Section 2.3(a) and (b), the
benefit derived by the calculation in the first paragraph of Section 2.3 shall
be reduced to reflect the Participant’s retirement before his Normal Retirement
Date. This reduction will be one quarter of one percent (0.25%) for each month
that the Participant’s Early Retirement Date precedes his Normal Retirement
Date.     (b)   In calculating the offset described in Section 2.3(a) and (b),
the reference to “Normal Retirement Date” shall be changed to “Early Retirement
Date.” If the Early Retirement Date is prior to the Participant’s attainment of
age 62, then the monthly primary insurance benefit payable at age 62 shall be
multiplied by the appropriate factor from the table below:

             Age at Early     Retirement Date   Factor
62
    1.00  
61
    .90  
60
    .81  
59
    .73  
58
    .66  
57
    .60  
56
    .54  
55
    .49  

    If the Participant’s Age on the Early Retirement Date is not an integral
age, the factors above shall be interpolated to reflect the age in years and
months. If the Participant is 62 or older on his/her Early Retirement Date, the
offset shall be the actual monthly primary insurance benefit to which the
Participant is entitled under the Social Security Act as of that date.

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2.6   Form of Payment       A Participant’s Normal or Early Retirement Benefit
will be paid to him monthly beginning on his Normal or Early Retirement Date and
ending with the payment due for the month in which his death occurs. If the
spouse of a Participant who is receiving a Retirement Benefit survives the
Participant, monthly payments equal to 50% of the monthly amount payable to the
Participant will continue to such spouse ending with the payment due for the
month in which such spouse’s death occurs.   2.7   Delayed Distribution to Key
Employees       Notwithstanding any other provision of this Article II to the
contrary, any payment of a Normal or Early Retirement Benefit scheduled to be
made on or after January 1, 2005 to a Participant who is identified as a Key
Employee on the date of his Separation from Service shall be delayed for a
minimum of six months following the Participant’s Separation from Service. Any
payment that otherwise would have been made pursuant to this Article II during
such six-month period shall be made on the first day of the month following the
date that is the six-month anniversary of the Participant’s Separation from
Service. The identification of a Participant as a Key Employee shall be made by
the Committee in its sole discretion in accordance with Section 1.15 of the Plan
and Sections 416(i) and 409A of the Code and the regulations promulgated
thereunder.   2.8   Termination other than Early or Normal Retirement       A
Participant who voluntarily or involuntarily Separates from Service and who does
not meet the requirements for an Early or Normal Retirement Benefit will not be
entitled to a benefit under the Plan.   2.9   Pre-Retirement Death Benefit      
The surviving spouse of a Participant with ten or more years of employment with
the Company who dies before he has begun receiving a Normal or Early Retirement
Benefit shall be entitled to receive a Pre-Retirement Death Benefit. The
Pre-Retirement Death Benefit shall be one-half of a 50% joint and survivor
annuity form of the Early or Normal Retirement Benefit the Participant would
have received had he elected to begin receiving a Retirement Benefit on the
first day of the month following his death. If the

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    Participant’s death occurs before he has attained the age at which he could
elect to receive an Early Retirement Benefit, the Pre-Retirement Death Benefit
will commence on the first day of the month following the date upon which the
Participant would have attained that age had he survived; provided, however,
that if the surviving spouse dies before that date, there shall be no
Pre-Retirement Death Benefit available to any survivors of the Participant or
his spouse.

2.10   Disability       A Participant who becomes Disabled prior to his Normal
Retirement Date and who prior to becoming Disabled has ten or more years of
employment with the Company shall be eligible for a Disability Benefit under the
Plan. During the period the Participant is Disabled and prior to attaining age
65, the Participant shall continue to be credited with years and months of
employment with the Company even if the Participant Separates from Service prior
to his Normal Retirement Date. Upon attaining age 65, the Disabled Participant
shall receive his Disability Benefit which is an amount equal to his Normal
Retirement Benefit calculated and paid in accordance with Sections 2.2 and 2.3
as if the Participant Separated from Service on his 65th birthday.   2.11  
Prohibition on Acceleration.       Notwithstanding any other provision of the
Plan to the contrary, no distribution will be made from the Plan that would
constitute an impermissible acceleration of payment as defined in
Section 409A(a)(3) of the Code and the regulations promulgated thereunder.

ARTICLE III.
MISCELLANEOUS PROVISIONS

3.1   Plan Administration       The Committee shall have the power and the duty
to take all action and to make all decisions necessary and proper to carry out
the Plan. Without limiting the generality of the foregoing, the Committee hereby
designates the Employee Benefits Committee of the Company to control and manage
the operation and administration of the Plan. The Committee shall have the
authority to allocate among themselves or to the Employee

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    Benefits Committee or to delegate to any other person, any administrative
responsibility with respect to the Plan.

3.2   Amendment, Suspension and Plan Termination

  (a)   Except by the written consent of 75% of Plan Participants actually or
potentially affected thereby and the approval of the Board of Directors, the
Plan may not be amended in any way which would reduce the benefits payable
hereunder or reduce or eliminate the funding provided for in Article IV until
the first regularly scheduled meeting of the Board of Directors held after
June 30, 2011.     (b)   The Board of Directors, without the consent of the Plan
Participants, may amend the Plan to improve or increase the benefits payable
hereunder at any time.     (c)   With the written consent of 75% of Plan
Participants actually or potentially affected thereby, or at any time on or
after the first regularly scheduled meeting of the Board of Directors held after
June 30, 2011, the Board of Directors may suspend the Plan. Upon such
suspension, no new benefits will accrue under the Plan and distributions from
the Plan shall be made pursuant to Article II of the Plan.     (d)   On or after
the first regularly scheduled meeting of the Board of Directors held after
June 30, 2011, the Board of Directors may terminate the Plan at any time and in
the Board of Directors’ discretion the Participants’ Accrued Benefits may be
distributed within the period beginning twelve months after the date the Plan
was terminated and ending twenty-four months after the date the Plan was
terminated, or pursuant to Article II of the Plan, if earlier. In addition to
the foregoing, the Board of Directors may distribute a Participant’s Accrued
Benefit in the form of a single lump sum payment if the present value of the
Participant’s Accrued Benefit is less than $30,000 adjusted annually beginning
July 1, 2004 for changes in the Consumer Price Index. If the Plan is terminated
and Accrued Benefits are distributed, the Company shall terminate all
non-account balance non-qualified deferred compensation plans with respect to
all participants and

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      shall not adopt a new non-account balance non-qualified deferred
compensation plan for at least five years after the date the Plan was
terminated.     (e)   On or after the first regularly scheduled meeting of the
Board of Directors held after June 30, 2011, the Board of Directors may
terminate the Plan upon a corporate dissolution of the Company that is taxed
under Section 331 of the Code or with the approval of a bankruptcy court
pursuant to 11 U.S.C. Section 503(b)(1(A), provided that the Participants’
Accrued Benefits are distributed and included in the gross income of the
Participants by the latest of (i) the calendar year in which the Plan terminates
or (ii) the first calendar year in which payment of the Accrued Benefits is
administratively practicable.

3.3   Assignment of Benefits       A Participant may not, either voluntarily or
involuntarily, assign, anticipate, alienate, commute, pledge or encumber any
benefits to which he is or may become entitled to under the Plan nor may the
same be subject to attachment or garnishment by any creditor of a Participant.
Notwithstanding the foregoing, the procedures established by the Company for the
determination of the qualified status of domestic relations orders and for
making distributions under qualified domestic relations orders, as provided in
Section 206(d) of ERISA, shall apply to the Plan, to the extent pertinent.
Amounts awarded to an alternate payee under a qualified domestic relations order
shall be distributed in the form of a lump sum distribution as soon as
administratively feasible following the determination of the qualified status of
the domestic relations order; provided, however, that no portion of the
Participant’s benefit under the Plan may be awarded to an alternate payee until
the Participant’s benefit is an Accrued Benefit.   3.4   Not An Employment
Agreement       Nothing in the establishment of the Plan is to be construed as
giving any Participant the right to be retained in the employ of the Company.  
3.5   Change in Control       In the event that the Company shall, pursuant to
action by its Board of Directors, at any time propose a Change in Control and
provision is not made pursuant to the terms of such

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    transaction for the continuation of the Plan by the surviving, resulting or
acquiring corporation or for the substitution of a comparable plan hereto, the
provisions of this Plan shall remain in effect.

3.6   Claims and Review Procedure

  (a)   Any Participant or his beneficiary who has questions or concerns about
his benefits under the Plan is encouraged to communicate with the Committee. If
this discussion does not give the Participant or his beneficiary satisfactory
results, a formal claim for benefits may be made within one year of the event
giving rise to the claim in accordance with the procedures of this Section 3.6.
    (b)   A Participant or his beneficiary may make a written request for review
of any matter concerning his benefits under this Plan. The claim must be
addressed to The Clorox Company Supplemental Executive Retirement Plan, 1221
Broadway, Oakland, California 94612-1888. The Committee shall decide the action
to be taken with respect to any such request and may require additional
information if necessary to process the request. The Committee shall review the
request and shall issue its decision, in writing, no later than 90 days after
the date the request is received, unless the circumstances require an extension
of time. If such an extension is required, written notice of the extension shall
be furnished to the person making the request within the initial 90-day period,
and the notice shall state the circumstances requiring the extension and the
date by which the Committee expects to reach a decision on the request. In no
event shall the extension exceed a period of 90 days from the end of the initial
period.     (c)   If the Committee denies a request in whole or in part, it
shall provide the person making the request with written notice of the denial
within the period specified in paragraph (b) above. The notice shall set forth
the specific reason for the denial, reference to the specific Plan provisions
upon which the denial is based, a description of any additional material or
information necessary to perfect the request, an explanation of why such
information is required, and an explanation of the Plan’s appeal procedures and
the time limits applicable to such procedures,

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      including a statement of the claimant’s right to bring a civil action
under Section 502(a) of ERISA following an adverse benefit determination on
review.     (d)   Decision on Appeal.

  (i)   A person whose request has been denied in whole or in part (or such
person’s authorized representative) may file an appeal of the decision in
writing with the Committee within 60 days of receipt of the notification of
denial. The appeal must be addressed to: The Clorox Company Supplemental
Executive Retirement Plan, 1221 Broadway, Oakland, California 94612-1888. The
Committee, for good cause shown, may extend the period during which the appeal
may be filed for another 60 days. The appellant and/or his or her authorized
representative shall be permitted to submit written comments, documents, records
and other information relating to the claim for benefits. Upon request and free
of charge, the applicant should be provided reasonable access to and copies of,
all documents, records or other information relevant to the appellant’s claim.  
  (ii)   The Committee’s review shall take into account all comments, documents,
records and other information submitted by the appellant relating to the claim,
without regard to whether such information was submitted or considered in the
initial benefit determination. The Committee shall not be restricted in its
review to those provisions of the Plan cited in the original denial of the
claim.     (iii)   The Committee shall issue a written decision within a
reasonable period of time but not later than 60 days after receipt of the
appeal, unless special circumstances require an extension of time for
processing, in which case the written decision shall be issued as soon as
possible, but not later than 120 days after receipt of an appeal. If such an
extension is required, written notice shall be furnished to the appellant within
the initial 60-day period. This notice shall state the circumstances requiring
the extension

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      and the date by which the Committee expects to reach a decision on the
appeal.

  (iv)   If the decision on the appeal denies the claim in whole or in part
written notice shall be furnished to the appellant. Such notice shall state the
reason(s) for the denial, including references to specific Plan provisions upon
which the denial was based. The notice shall state that the appellant is
entitled to receive, upon request and free of charge, reasonable access to, and
copies of, all documents, records, and other information relevant to the claim
for benefits. The notice shall describe any voluntary appeal procedures offered
by the Plan and the appellant’s right to obtain the information about such
procedures. The notice shall also include a statement of the appellant’s right
to bring an action under Section 502(a) of ERISA.     (v)   The decision of the
Committee on the appeal shall be final, conclusive and binding upon all persons
and shall be given the maximum possible deference allowed by law.

  (e)   No legal or equitable action for benefits under the Plan shall be
brought unless and until the claimant has submitted a written claim for benefits
in accordance with paragraph (b) above, has been notified that the claim is
denied in accordance with paragraph (c) above, has filed a written request for a
review of the claim in accordance with paragraph (d) above, and has been
notified in writing that the Committee has affirmed the denial of the claim in
accordance with paragraph (d) above; provided, however, that an action for
benefits may be brought after the Committee has failed to act on the claim
within the time prescribed in paragraph (b) and paragraph (d), respectively.

3.7   Unfunded Status       The Plan is intended to be a plan that is unfunded
and that is maintained by the Company primarily for the purpose of providing
deferred compensation for a select group of

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    management or highly compensated employees within the meaning of ERISA. The
Plan also is intended to comply with the requirements of Section 409A of the
Code.

ARTICLE IV.
FUNDING

4.1   Establishment of Irrevocable Trust       The Company shall establish an
irrevocable trust of which the Company is the owner for federal income tax
purposes (within the meaning of Sections 671 through 677 of the Internal Revenue
Code of 1986) (the “Trust”) and fund the Trust as hereinafter provided in order
to provide a source from which to satisfy the Company’s obligations to
Participants under this Plan.   4.2   Amount of Funding       The Company shall
make such contributions to the Trust as the Board of Directors from time to time
determines appropriate.   4.3   Actuarial Assumptions and Method       The
Plan’s actuary shall use the following assumptions and methods when advising the
Board of Directors with regard to contributions to the Trust:

  (a)   Mortality:         1983 Group Annuity Mortality Table for periods after
benefits have commenced, or are assumed to have commenced. No mortality will be
assumed prior to the assumed retirement age for benefits not yet in payment
status.     (b)   Return on Investment:         Assets are assumed to earn, the
liabilities are discounted at, eight percent (8%) per year.     (c)   Assumed
Retirement Age:         For Participants whose benefits are not in payment
status as of July 1 of each year, the Assumed Retirement Age will be age 60, or
their current age if older. For beneficiaries, the Assumed Retirement Age is the
beneficiary’s age on the

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      date their deceased spouse would have reached 60, or their current age if
their spouse would have already been older than age 60.     (d)   Annual Pay
Increases:         Eight percent (8%) per year.     (e)   Employee Turnover:    
    None.     (f)   Social Security Increases:         Social security benefits
are assumed to increase 5% per year.     (g)   IRC Limits:         The Code
Section 415 and Section 401(a)(17) limits are assumed to increase 5% per year.  
  (h)   Defined Contribution Plan Offset:         Annuity equivalent of
projected account balance assuming an annual earnings rate of 8.0%; Profit
Sharing Plan contributions of 8.0% of pay; annual 401(k) contributions of $1000
(no inflation); and assuming no further PAYSOP contributions are made.     (i)  
Actuarial Cost Method:         The Entry Age Normal Cost Method will be used.
The unfunded actuarial liability as of each July 1 will be amortized over ten
years.

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