Document:

exhibit10-27.htm

THE CLOROX COMPANY

EXECUTIVE RETIREMENT PLAN

(Effective July 1, 2011) 

 

ARTICLE I.

PURPOSE 

 

     This Plan is designed to provide for additional retirement benefits for selected executives of The Clorox Company. 

 

     This Plan is intended to be a plan that is unfunded and that is maintained by The Clorox Company primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of the Employee Retirement Income Security Act. This Plan also is intended to comply with the requirements of Section 409A of the Code. 

 

ARTICLE II.

DEFINITIONS 

 

     In this Plan, the following terms have the meanings indicated below. 

 

     2.01 “Account” means a bookkeeping entry used to record deferrals and contributions made on a Participant’s behalf under Article III of the Plan and gains and losses credited to these deferrals and contributions under Article IV of the Plan.

 

     2.02 “Beneficiary” means the person or persons, natural or otherwise, designated in writing, to receive a Participant’s vested Account if the Participant dies before distribution of his or her entire vested Account. A Participant may designate one or more primary Beneficiaries and one or more secondary Beneficiaries. A Participant’s Beneficiary designation will be made pursuant to such procedures as the Committee may establish, and delivered to the Committee 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 may establish. If the Committee 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 vested 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 children in equal shares, or if none, the Participant’s estate. 

 

     2.03 “Board” means the Board of Directors of the Company. 

 

     2.04 “Change in Control” means: 

 

          (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 (i) 50% of either the total fair market value or 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”), or (ii) during a 12 month period ending on the date of the most recent acquisition by such Person, 30% of 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 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 Section 2.05; or 

 

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          (b) Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason within any period of 12 months to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date 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; 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 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 common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (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, providing for such Business Combination. Notwithstanding any other provision in this Section 2.05, any transaction defined in Section 2.05(a) through (c) above that does not constitute a “change in the ownership or effective control” of the Company, or “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Treasury Regulations 1.409A-3(a)(5) and 1.409A-3(i)(5) shall not be treated as a Change in Control for purposes of this Plan.

 

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     2.05 “Code” means the Internal Revenue Code of 1986, as amended. 

 

     2.06 “Committee” means the Management Development and Compensation Committee of the Company’s Board of Directors. The Committee has full, discretionary authority to administer and interpret the Plan, to determine eligibility for Plan benefits, to select employees for Plan participation, and to correct errors. The Committee may delegate its duties and responsibilities and, unless the Committee expressly provides to the contrary, any such delegation will carry with it the Committee’s full discretionary authority to accomplish the delegation. Decisions of the Committee and its delegate will be final and binding on all persons. 

 

     2.07 “Company” means The Clorox Company, a Delaware corporation. 

 

     2.08 “Disability” means the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under the Company’s insurance plans. 

 

     2.09 “Effective Date” means July 1, 2011. 

 

     2.10 “Eligible Employee” means an employee of the Company or of a Subsidiary who has been selected by the Committee, and notified by the Company of eligibility, for Plan participation. Unless otherwise determined by the Committee, an individual will cease to be an Eligible Employee on the earliest of (i) the date the individual ceases to be employed by the Company and all Subsidiaries, (ii) the date the Plan is terminated, or (iii) the date the Committee, in its discretion, determines that the individual is no longer an Eligible Employee. In addition to the foregoing, the Committee may, in its discretion, deny eligibility to any employee or group of employees who may previously have been Eligible Employees. 

 

     2.11 “Employer” means the entity for whom services are performed and with respect to whom the legally binding right to compensation arises, and all entities with whom such entity would be considered a single employer under Section 414(b) of the Code; provided that in applying Section 1563(a)(1), (2), and (3) of the Code for purposes of determining a controlled group of corporations under Section 414(b) of the Code, the language “at least 50 percent” is used instead of “at least 80 percent” each place it appears in Section 1563(a)(1), (2), and (3) of the Code, and in applying Treasury Regulation § 1.414(c)-2 for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c) of the Code, “at least 50 percent” is used instead of “at least 80 percent” each place it appears in Treasury Regulation § 1.414(c)-2; provided, however, “at least 20 percent” shall replace “at least 50 percent” in the preceding clause if there is a legitimate business criteria for using such lower percentage. 

 

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     2.12 “Exchange Act” means the Securities Exchange Act of 1934, as amended. 

 

     2.13 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. 

 

     2.14 “Identification Date” means each December 31. 

 

     2.15 “Measuring Fund” means one or more of the investment funds selected by the Committee pursuant to Article IV. 

 

     2.16 “Participant” means a current or former Eligible Employee who retains an Account and/or has been selected by the Committee as eligible to receive contributions pursuant to Section 3.01. All Eligible Employees who are actively employed by the Company on the Effective Date and who are participants in the Prior SERP shall be considered Participants as of the Effective Date. 

 

     2.17 “Plan” means The Clorox Company Executive Retirement Plan, as amended from time to time. 

 

     2.18 “Plan Year” means a calendar year. 

 

     2.19 “Prior SERP” means The Clorox Company Supplemental Executive Retirement Plan, as amended. 

 

     2.20 “Retirement Contribution” means a contribution credited to a Participant’s Account by the Company pursuant to Section 3.01. 

 

     2.21 “Section 409A” means Section 409A of the Code, as the same may be amended from time to time, and any successor statute to such section of the Code. References to Section 409A or any requirement under Section 409A, as the same may be interpreted, construed or applied to this Plan at any particular time, shall be deemed to mean and include, to the extent then applicable and then in force and effect (but not to the extent overruled, limited or superseded), published rulings and similar announcements issued by the Internal Revenue Service under or interpreting Section 409A, regulations issued by the Secretary of the Treasury under or interpreting Section 409A, decisions by any court of competent jurisdiction involving a Participant or a Beneficiary and any closing agreement made under Section 7121 of the Code that is approved by the Internal Revenue Service and involves a Participant, all as determined by the Board in good faith, which determination may (but shall not be required to) be made in reliance on the advice of such tax counsel or other tax professional(s) with whom the Board from time to time may elect to consult with respect to any such matter. 

 

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     2.22 “Separation from Service” means termination of employment with the Employer, 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 or any of its Subsidiaries in a capacity other than as an employee and if the former employee is providing services at an annual rate that is fifty percent or more of the services rendered, on average, during the immediately preceding thirty-six months of employment with the Employer (or if employed by the Employer less than thirty-six months, such lesser period); provided, however, that a Separation from Service will be deemed to have occurred if a Participant’s service with the Employer is reduced to an annual rate that is less than twenty percent of the services rendered, on average, during the immediately preceding thirty-six months of employment with the Employer (or if employed by the Employer less than thirty-six months, such lesser period). 

 

     2.23 “Specified Employee” means a Participant who, on an Identification Date, is a “Specified Employee” as such term is defined in Section 409A. As of the Effective Date, a Specified Employee 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 Specified Employees as of any Identification Date; 

 

          (b) A five percent owner of the Company regardless of compensation; 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 Specified Employee on an Identification Date, then such Participant shall be considered a Specified 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. 

 

     2.24 “Subsidiary” means shall mean any entity (other than the Company) in an unbroken chain of entities beginning with the Company, provided each entity (other than the last entity) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of equity in one of the other entities in such chain.

 

     2.25 “Unforeseeable Emergency” shall have the meaning given to it in Section 409A. As of the Effective Date, the term means a severe financial hardship to the Participant or Beneficiary resulting from: 

 

          (a) An illness or accident of the Participant or Beneficiary, the Participant’s or Beneficiary’s spouse, or the Participant’s or Beneficiary’s dependent (as defined in Section 152(a) of the Code); or 

 

          (b) Loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance); or 

 

          (c) Other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. 

 

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Hardship shall not constitute an Unforeseeable Emergency under the Plan to the extent that it is, or may be, relieved by: 

 

(x) Reimbursement or compensation, by insurance or otherwise;

 

(y) Liquidation of the Participant’s assets to the extent that the liquidation of such assets would not itself cause severe financial hardship. Such assets shall include but not be limited to stock options, Company stock, and 401(k) plan balances; or

 

(z) Cessation of deferrals under the Plan. 

 

An Unforeseeable Emergency under the Plan does not include (among other events):

 

(A) Sending a child to college; or

 

(B) Purchasing a home. 

 

ARTICLE III.

CONTRIBUTIONS 

 

     3.01 Retirement Contributions. Accounts for the Participants may be credited with discretionary contributions as described below.

 

          (a) Contributions. For each Plan Year of the Company or at such other times as the Committee may determine, the Company may credit a Participant with a discretionary contribution under the Plan. Such Retirement Contribution, if any, and the amount thereof, will be determined in the sole and absolute discretion of the Committee, and to such Participants or groups or categories of Participants as shall be determined in the sole and absolute discretion of the Company.

 

          (b) Crediting. Retirement Contributions will be credited to Participants’ Accounts as of the date specified by the Committee. 

 

          (c) Vesting. Unless otherwise determined by the Committee or provided elsewhere in the Plan, Participants will vest in their Retirement Contributions on the third anniversary of the date the applicable Retirement Contribution is made, subject to the Participant’s continued employment with the Company through the applicable vesting date; provided, however, that from and after the date a Participant attains the age of 62 with at least 10 years of service with the Company the Participant will be considered fully vested in all Retirement Contributions under the Plan. In addition, each Participant who is also a participant in the Prior SERP and who is at least 55 years of age on the Effective Date will be considered fully vested in all Retirement Contributions under the Plan. Furthermore, in the event of a Participant’s Separation from Service by reason of his or her death or Disability, all unvested Retirement Contributions shall become immediately and fully vested as of immediately prior to such Separation from Service. 

 

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ARTICLE IV.

EARNINGS 

 

     4.01 General. A Participant’s Account shall be credited with earnings in accordance with this Article IV.

 

     4.02 Investment Options. The Committee shall select the Measuring Funds whose performance will measure the amounts to be credited under Section 4.03 to the Participants’ Accounts. The selection of Measuring Funds shall be for bookkeeping purposes only, and the Company shall not be obligated actually to invest any money in the Measuring Funds, or to acquire or maintain any actual investment. The Committee may, in its discretion, change its selection of the Measuring Funds at any time. If a Participant has elected pursuant to this Section 4.02 to invest all or a portion of his Account in a Measuring Fund which the Committee decides to discontinue, such portion of his Account shall be invested after such discontinuance in the continuing Measuring Fund which the Committee determines, in its discretion, most nearly resembles the discontinued Measuring Fund. The Committee shall provide each Participant with a list of the Measuring Funds available for hypothetical investment, and the Participant shall designate, on a form provided by the Committee, one or more of such Measuring Funds in which his Account will be deemed to be invested. The Committee, in its discretion, shall designate the times, procedures and limitations for the designation of hypothetical investments by Participants of their Accounts among the Measuring Funds (including, but not limited to, the times when a Participant may change his hypothetical investments, the increments (expressed as a dollar amount or as a percentage of the Participant’s Account) in which a Participant may chose to make a hypothetical investment in a Measuring Fund, and any minimum increment (expressed as a dollar amount or as a percentage of the Participant’s Account) that may be deemed to be invested in a Measuring Fund); provided, however, that a Participant may make a selection of a hypothetical investment in a Measuring Fund on a prospective basis only. 

 

     4.03 Earnings Credits. The Committee shall determine, in its discretion, the exact times and methods for crediting or charging each Participant’s Account with the earnings, gains, losses, and changes in value of the Measuring Funds selected by the Participant. The Committee may, at any time, change the timing or methods for crediting or debiting earnings, gains, losses, and changes in value of Measuring Funds. 

 

ARTICLE V.

DISTRIBUTIONS 

 

     5.01 Distribution Elections.

 

          (a) Initial Election. Upon commencement of participation in the Plan and for each subsequent Plan Year, prior to the commencement of such Plan Year, a Participant will elect, in writing, which of the distribution options described in Section 5.02 will govern payment of the deferrals and applicable earnings credited thereon to Participant’s Account for the following Plan Year. Subject to Section 5.01(b) below, the election made under this subsection (a) shall be irrevocable as of the first day of the applicable Plan Year. 

 

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          (b) Subsequent Election. A Participant may change the time and form of a distribution election with respect to all or a portion of his or her Account by submitting the change to the Committee, in writing, at least one calendar year before the originally scheduled distribution date, provided that the new distribution date is at least five years after the originally scheduled distribution date. A change election made under this paragraph (b) shall be irrevocable as of the date that is one year prior to the originally scheduled distribution date. If such a subsequent election is not valid because, for example, it is not made in a timely manner, the Participant’s most recent effective distribution election will govern the payment of the Participant’s Account. 

 

     5.02 Distribution Options. 

 

          (a) Separation from Service. A Participant’s vested Account will be distributed to the Participant upon the Participant’s Separation from Service. A Participant may elect a distribution upon his or her Separation from Service in one of the following forms, subject to the timing requirements outlined in paragraph (c) below: 

 

               (i) Lump Sum. Payment in one lump sum within 90 days following the date of the Participant’s Separation from Service. 

 

               (ii) Installments. Payment in up to fifteen annual installments. Installment distributions will commence on January 1 of the calendar year immediately following the Participant’s Separation from Service. For purposes of this Plan, installment payments shall be treated as a single distribution under Section 409A of the Code. 

 

          (b) Timing. Subject to the provisions of paragraph (d) below, payments made pursuant to paragraph (a) above, will be made as soon as administratively practicable, but not later than 90 days after the applicable date or dates determined under Section 5.02(a) above. 

 

          (c) Default Distribution. If the Committee does not have a proper distribution election on file for a portion or all of a Participant’s Account, the vested portion of that Participant’s Account will be distributed to the Participant, following the Participant’s Separation from Service, in one lump sum as soon as administratively practicable, but not later than 90 days after the Participant’s Separation from Service. 

 

          (d) Delayed Distribution to Specified Employees. Notwithstanding any other provision of this Section 5.02 to the contrary, a distribution scheduled to be made to a Participant upon his or her Separation from Service who is identified as a Specified Employee as of the date he Separates 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 Section 5.02 during the six-month period following the Participant’s Separation from Service shall be made as soon as administratively practicable, but not later than 90 days after the six-month anniversary of the Participant’s Separation from Service. The identification of a Participant as a Specified Employee shall be made by the Committee in its sole discretion in accordance with Section 2.23 of the Plan and Sections 416(i) and 409A of the Code and the regulations promulgated thereunder. 

 

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          (e) Limited Cashout. Notwithstanding the foregoing or anything in this Plan to the contrary, to the extent that the sum of Participant’s Account and account balance for any other plan or arrangement with respect to which deferrals of compensation are treated as having been deferred under a single nonqualified deferred compensation plan under Treasury Regulation § 1.409A-1(c)(2) is less than the limit under Section 402(g)(1)(A) of the Code at the time of Separation from Service, to the extent permitted by Section 409A and the regulations promulgated thereunder, the Company may cause the Account to be paid in a lump sum.

 

     5.03 Subsequent Credits. Amounts, if any, that become payable to a Participant’s Account after distributions have begun from that Account, and before the Participant is rehired or dies, will, be paid out pursuant to the distribution election in effect for that Participant upon his or her Separation from Service. 

 

     5.04 Death or Disability. If a Participant dies or becomes Disabled with a vested amount in his or her Account, whether or not the Participant was receiving distributions from that Account at the time of his or her death or Disability, the Participant or his or her Beneficiary will receive the entire vested amount in the Participant’s Account in accordance with the distribution election made by the Participant. Such election must be made no later than the time of the Participant’s initial deferral election made in accordance with Article V in one of the following forms, subject to the timing requirements outlined in Section 5.02(b) above: 

 

          (a) Lump Sum. Payment in one lump sum. 

 

          (b) Installments. Payment in up to fifteen annual installments. Installment distributions will commence on January 1 of the calendar year immediately following the Participant’s death or Disability. For purposes of this Plan, installment payments shall be treated as a single distribution under Section 409A of the Code. 

 

If no valid election is on file, the vested portion of Participant’s Account shall be distributed in a single lump sum. Distributions under this Section 5.04 shall be made as soon as administratively practicable, but not later than 90 days after Participant is determined to have a Disability or Participant’s death, as applicable. 

 

     5.05 Unforeseeable Emergency. In the event of a Participant’s Unforeseeable Emergency, and upon application by such Participant, the Committee may determine at its sole discretion that payment of all, or part, of such Participant’s Account shall be made in one lump sum payment with the last payroll of the month following the month in which the distribution is approved by the Committee. Payments due to a Participant’s Unforeseeable Emergency shall be permitted only to the extent reasonably required to satisfy the Participant’s need. 

 

     5.06 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. 

 

     5.07 Withholding. The Company will deduct from Plan distributions, or from other compensation payable to a Participant or Beneficiary, amounts required by law to be withheld for taxes with respect to benefits under this Plan. The Company reserves the right to reduce any deferral or contribution that would otherwise be made to this Plan on behalf of a Participant by a reasonable amount, and to use all or a portion of this reduction to satisfy the Participant’s tax liabilities under this Section 5.07. 

 

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ARTICLE VI.

MISCELLANEOUS 

 

     6.01 Limitation of Rights. Participation in this Plan does not give any individual the right to be retained in the service of the Company or of any related entity. 

 

     6.02 Satisfaction of Claims. Payments to 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 hereunder against the Committee, the Company, and all Subsidiaries, any of which may require, as a condition to payment, that the recipient execute a receipt and release in a form determined by the Committee, the Company, or an Subsidiary. 

 

     6.03 Claims and Review Procedure. 

 

          (a) Informal Resolution of Questions. Any Participant or Beneficiary who has questions or concerns about his or her benefits under the Plan is encouraged to communicate with The Clorox Company Executive Compensation Manager. If this discussion does not give the Participant or 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 6.03. 

 

          (b) Formal Benefits Claim — Review by Executive Compensation Manager. A Participant or Beneficiary may make a written request for review of any matter concerning his or her benefits under this Plan. The claim must be addressed to The Clorox Company Executive Retirement Plan, Attn: Executive Compensation Manager 1221 Broadway, Oakland, California 94612-1888. The Executive Compensation Manager 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 Executive Compensation Manager shall review the request and shall issue his or her 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 Executive Compensation Manager 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) Notice of Denied Request. If the Executive Compensation Manager denies a request in whole or in part, he or she 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, 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. 

 

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          (d) Appeal to Committee. 

 

               (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 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 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. 

 

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          (e) Exhaustion of Remedies. 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 Executive Compensation Manager or Committee has failed to act on the claim within the time prescribed in paragraph (b) and paragraph (d), respectively. 

 

     6.04 Indemnification. The Company and its Subsidiaries will indemnify the Committee, the Board, and employees of the Company and its Subsidiaries to whom responsibilities have been delegated under the Plan for all liabilities and expenses arising from an act or omission in the management of the Plan if the person to be indemnified did not act dishonestly or otherwise in willful violation of the law under which the liability or expense arises. 

 

     6.05 Assignment. 

 

          (a) General. To the fullest extent permitted by law, rights to benefits under the Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of a Participant or a Beneficiary. 

 

          (b) Domestic Relations Orders. 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 unvested Account may be awarded to an alternate payee. 

 

     6.06 Lost Recipients. If the Committee cannot locate a person entitled to payment of a Plan benefit after a reasonable search, the Committee may at any time thereafter treat that person’s Account as forfeited and amounts credited to that Account will revert to the Company. If the lost person subsequently presents the Committee with a valid claim for the forfeited benefit amount, the Company will pay that person the amount forfeited. 

 

     6.07 Amendment. The Board may, at any time, amend the Plan in writing. In addition, the Committee may amend the Plan (other than this Section 6.07) in writing, provided that the amendment will not cause any substantial increase in cost to the Company or to any Subsidiary. No amendment may, without the consent of an affected Participant (or, if the Participant is deceased, the Participant’s Beneficiary), adversely affect the Participant’s or the Beneficiary’s rights and obligations under the Plan with respect to amounts already credited to a Participant’s Account, unless such amendment is required to comply with any provision of the Code, ERISA or other applicable law. 

 

     6.08 Suspension. The Board may, at any time, suspend the Plan. 

 

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     6.09 Termination. 

 

          (a) General. The Board may terminate the Plan at any time and in the Board’s discretion the Accounts of Participants 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 Sections 5.02(a) of the Plan, if earlier. If the Plan is terminated and Accounts are distributed, the Company shall terminate all plans and arrangements (which would be treated as aggregated and having been deferred under a single plan under Treasury Regulation § 1.409A-1(c)(2)(i)(A)) with respect to all participants and shall not adopt a new account balance non-qualified deferred compensation plan for at least three years after the date the Plan was terminated. 

 

          (b) Change in Control. The Board, in its discretion, may terminate the Plan thirty days prior to or twelve months following a Change in Control and distribute the Accounts of the Participants (whether previously vested or unvested) within the twelve-month period following the termination of the Plan. If the Plan is terminated and Accounts are distributed, the Company shall terminate all plans and arrangements (which would be treated as aggregated and having been deferred under a single plan under Treasury Regulation § 1.409A-1(c)(2)(i)(A)) sponsored by the Company and all of the benefits of the terminated plans shall be distributed within twelve months following the termination of the plans. 

 

          (c) Dissolution or Bankruptcy. The Board, in its discretion, 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’ Accounts 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 Accounts is administratively practicable. 

 

     6.10 Applicable Law. To the extent not governed by Federal law, the Plan is governed by the laws of the State of California without choice of law rules.

 

     6.11 Severability. If any one or more of the provisions contained in this Plan, or any application thereof, shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and all other applications thereof shall not in any way be affected or impaired thereby. This Plan shall be construed and enforced as if such invalid, illegal or unenforceable provision has never comprised a part hereof, and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the invalid, illegal or unenforceable provision or by its severance herefrom. In lieu of such invalid, illegal or unenforceable provisions there shall be added automatically as a part hereof a provision as similar in terms and economic effect to such invalid, illegal or unenforceable provision as may be possible and be valid, legal and enforceable. 

 

     6.12 No Funding. The Plan constitutes a promise by the Company and its Subsidiaries to make payments in the future in accordance with the terms of the Plan. Participants and Beneficiaries have the status of general unsecured creditors of the Company and its Subsidiaries. Plan benefits will be paid from the general assets of the Company and its Subsidiaries and nothing in the Plan will be construed to give any Participant or any other person rights to any specific assets of the Company or its Subsidiaries. In all events, it is the intention of the Company, all Subsidiaries and all Participants that the Plan be treated as unfunded for tax purposes and for purposes of Title I of ERISA. 

 

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     6.13 Authority to Establish a Grantor Trust. The Committee is authorized in its sole discretion to establish a grantor trust for the purpose of providing security for the payment of Accounts under the Plan; provided, however, that no Participant or Beneficiary shall be considered to have a beneficial ownership interest (or any other sort of interest) in any specific asset of the Corporation or of its Subsidiaries as a result of the creation of such trust or the transfer of funds or other property to such trust. The Committee may establish such a trust at any time, including without limitation the time of a Change in Control. 

 

     6.14 Code Section 409A Compliance. To the extent applicable, it is intended that this Plan and any distributions hereunder comply with the requirements of Section 409A. Any provision that would cause the Plan or any distributions granted hereunder to fail to satisfy Section 409A shall have no force or effect until amended to comply with Section 409A, which amendment may be retroactive to the extent permitted by Section 409A. 

 

     IN WITNESS WHEREOF, The Clorox Company has caused this Plan to be executed by its duly authorized representative on the date indicated below. 

 

	THE CLOROX COMPANY	 	 
	 	 	 
	 	 	 
	/s/ Jackie P. Kane	     	 	March 4, 2011
	NAME: Jacqueline P. Kane	 	DATE
	TITLE: SVP-Human Resource & Corporate Affairs	 	 

 

14f8k050211a1ex10i_jbi.htm

Exhibit 10.1

 

	

	
JBI, Inc.

1783 Allanport Road

Thorold, Ontario

LOS 1K0

Phone: 905 384 4383

Fax: 905 384 0076

 

April 13, 2011

 

CONFIDENTIAL

 

Smurfit-Stone Container Corporation Attention:

Andrea Barish

 

RE: Referral Agreement with JBI, Inc. Dear Madams/Sirs:

 

This letter agreement (this "Agreement") sets forth the mutual understanding of JBI, Inc. ("JBI") and Smurfit-Stone Container Corporation ("Smurfit-Stone"). Smurfit-Stone, together with JBI constitute the "Parties" and each, a "Party" with respect to a referral arrangement. JBI has developed a proprietary process (the "Plastic2OilTM Process") to convert waste plastic ("Plastic Feedstock") into various liquid hydrocarbon fuels (each, a "Fuel") that it wishes to leverage, and Smurfit-Stone has a number of clients, including their respective subsidiaries and affiliates, and any other Person (each, a "Smurfit-Stone Client"), that may be producing significant amounts of feedstock, that may be referred to JBI. Smurfit-Stone shall refer those clients to JBI in order for JBI to leverage the Plastic2OilTm Process. "Person" shall be shall mean any natural person, corporation, legal person, business trust, joint venture, association, company, limited liability company, partnership or government, or any agency or political subdivision thereof.

 

In consideration of the mutual covenants set forth in the letter and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each Party), the Parties agree as follows:

 

1.            Smurfit-Stone Client Introductions

 

Smurfit-Stone shall use commercially reasonable efforts, but shall have no affirmative obligation or a minimum commitment, to identify and introduce Smurfit-Stone Clients to JBI. Upon each introduction of a Smurfit-Stone Client to JBI, JBI shall assess, in its commercially reasonable discretion whether such Smurfit-Stone Client generates a sufficient amount of Plastic Feedstock to ensure that at least one JBI Machine (as hereinafter defined) operating at such Smurfit-Stone Client's facility (with respect to such Smurfit-Stone Client, the "Client Facility") will be able to operate at full capacity, which is at least 10 metric tons/day.

 

  

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For the purposes of this Agreement, "JBI Machine" means a machine developed by JBI that implements the Plastic2OilTM Process together with any related support equipment and infrastructure required for such machine to operate; and "full capacity" means, with respect to a JBI Machine, such JBI Machine processing the maximum amount of Plastic Feedstock it can process while running 24 hours a days, 7 days a week (subject to reasonable downtime for maintenance).

 

2.           Client Agreements

 

If JBI determines that such Smurfit-Stone Client generates a sufficient amount of Plastic Feedstock at its facility to ensure that at least one JBI Machine operating at the Client Facility will be able to operate at full capacity, JBI shall notify Smurfit-Stone of the same and then JBI shall attempt to negotiate, on a good faith basis, an agreement (each, a "Client Agreement") with such Smurfit-Stone Client, on terms and conditions and in a form satisfactory to JBI in its sole reasonable discretion, to have JBI: (a) install at least one JBI Machine at such Client Facility to convert Plastic Feedstock generated by such Smurfit-Stone Client into Fuel; and (b) sell the Fuel produced by the JBI Machines at such Client Facility to such Smurfit-Stone Client for its consumption or to third parties. If JBI enters into, amends or terminates a Client Agreement with a Smurfit-Stone Client that has been introduced to JBI by Smurfit-Stone, JBI shall provide a copy of such Client Agreement, the amendment thereto or the termination thereof to Smurfit-Stone promptly after execution of the same.

 

3.           Royalty Payment

 

The royalties to be paid to Smurfit Stone is five percent: (5%) of the Gross Revenue and five percent (5%) of the Third Party Gross Revenue realized from the sale of Client Fuel produced by JBI Machines installed at Smurfit Stone Clients.

 

Within 30 days following the last day of each calendar quarter in which at least one Client Agreement remained in force and effect, JBI shall provide Smurfit-Stone with an accounting of the aggregate of Gross Revenue and Third Party Gross Revenue for such calendar quarter and together with Smurfit-Stone's aggregate royalty payment (either by cheque or wire transfer).

 

For the purposes of this Agreement:

 

	
(a) 

	
"Gross Revenue" means, during a period of time with respect to a Client Agreement between JBI and a Smurfit-Stone Client, an amount equal to: the aggregate gross revenue invoiced by JBI during such period of time from such Smurfit-Stone Client in connection with the sale of Client Fuel of such Smurfit-Stone Client by JBI to such Smurfit-Stone Client for its consumption, Gross Revenue excludes invoiced post-production line items like transportation, taxes, and other charges that are not fuel revenue.

 

	
(b) 

	
"Third Party Gross Revenue" means, during a period of time with respect to a Client Agreement between JBI and a Smurfit-Stone Client, an amount equal to: the aggregate gross revenue collected by JBI during such period of time from those third persons that have purchased Client Fuel of such Smurfit-Stone Client from JBI. Third Party Gross Revenue excludes invoiced post-production line items like transportation, taxes, and other charges that are not fuel revenue.

 

  

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(c) 

	
"Client Fuel" means, with respect to a Smurfit-Stone Client, Fuel generated by JBI Machines operating at the Client Facility of such Smurfit-Stone Client that: (i) was introduced by Smurfit-Stone to JBI pursuant to this Agreement; and (ii) is a party to a Client Agreement with JBI.

 

4.           Dispute Resolution Process

 

If a Dispute arises, a Party shall first give written notice of the Dispute to the other Party describing the Dispute and requesting it be resolved pursuant to the dispute resolution process set forth in this section (for the purposes of this section, a "Dispute Notice"). If the Parties are unable to resolve the Dispute within 30 days of delivery of the Dispute Notice, then each Party shall promptly (but no later than five business days thereafter): (a) appoint a designated representative who has sufficient authority to settle the Dispute, and who is at a higher management level than the person with direct responsibility for the administration of this Agreement (for the purposes of this section, each a "Designated Representative"); and (b) notify the other Party in writing of the name and contact information of such Designated Representative. The Designated Representatives shall then meet as often as they deem necessary in their reasonable judgment in order to discuss the Dispute and negotiate in good faith to resolve the Dispute. The Designated Representatives shall mutually determine the format for such discussions and negotiations, provided that all reasonable requests for relevant information relating the Dispute made by one Party to the other Party shall be honoured. If the Parties are unable to resolve the Dispute within 60 days after the appointment of both Designated Representatives, then either Party may proceed to arbitration in accordance with section 5.

 

For purposes of this Agreement, "Dispute" means any dispute, controversy or difference arising out of, or relating to, any provision in this Agreement, including, without limiting the generality of the foregoing, its negotiation, validity, existence, breach, termination, construction or application, or the rights or obligations of any Party, or the relationship between the Parties.

 

5.           Arbitration

 

If a Dispute has not been resolved by the Parties in accordance with section 4, the Dispute may he referred by either Party to and determined by arbitration under International Commercial Arbitration Act, 1990, R.S.O. 1990, c. 19, as amended. The seat of arbitration shall be Ontario and hearings shall be conducted in the City of Toronto. The language of the arbitration shall be English. Any matter referred to arbitration shall be heard by three arbitrators with JBI appointing one arbitrator, Smurfit-Stone appointing one arbitrator, and such two arbitrators selecting the third arbitrator (for the purposes of this section, the "Arbitral Tribunal"). The Arbitral Tribunal shall have jurisdiction to award all remedies available at common law and equity, including specific performance and injunctive relief. The costs of the arbitration shall be in the discretion

  

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of the Arbitral Tribunal. The Parties shall keep confidential and not disclose to a third party the existence of the arbitration, or any element of it, except to the Arbitral Tribunal, such Parties' respective legal counsel, any person necessary to the conduct of the arbitration or as may be required by law. The Parties further agree that, in the case of any court proceeding seeking to set aside the decision of the Arbitral Tribunal, they will seek to maintain as confidential any confidential financial or other information disclosed in connection with the arbitration. It is understood and agreed that any performance required under this Agreement shall continue without interruption or delay during the course of any arbitration proceedings and any subsequent court proceedings arising therefrom.

 

6.           Public Notices

 

The Parties shall jointly plan and co-ordinate any public notices, press releases, and any other publicity concerning the transactions contemplated by this Agreement and no Party shall act in this regard without the prior approval of the other, such approval not to be unreasonably withheld, unless such disclosure is required to meet timely disclosure obligations of any Party under applicable laws or stock exchange rules in circumstances where prior consultation with the other Party is not practicable and a copy of such disclosure is provided to the other Party.

 

7.           Expenses

 

Except as otherwise provided in this Agreement, each Party shall pay all costs and expenses (including the fees and disbursements of legal counsel and other advisers) it incurs in connection with the negotiation, preparation and execution of this Agreement and the transactions contemplated by this Agreement.

 

8.           Term

 

The term of this Agreement shall commence on the date hereof and shall continue unless earlier terminated by either Party upon 30 days prior written notice to the other Party. If this Agreement is terminated by JBI and there shall still be active: Client Agreements, JBI shall still be bound to make Royalty payments.

 

9.           Amendment

 

No amendment to this Agreement shall be valid or binding unless set forth in writing and duly executed by each of the Parties.

 

10.         Assignment

 

No Party may assign this Agreement or any rights or obligations under this Agreement without the prior written consent of the other Party.

 

11.         Enurement

 

This Agreement shall enure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.

 

  

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12.         Governing Law

 

This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable in the Province of Ontario.

 

13.         Treatment and Protection of Confidential Information

 

Either Party (for purposes of this section 13, the "Receiving Party") acknowledges that other Party (for purposes of this section 13, the "Disclosing Party") may disclose Confidential Information (as hereinafter defined) to the Receiving Party in connection with either Party's obligations under this Agreement. The Receiving Party shall take reasonable steps to protect the Confidential Information. The Receiving Party shall not use, disclose, copy, or allow access to, the Confidential Information without the express prior written consent of the Disclosing Party, except that the Receiving Party may disclose the Disclosing Party's Confidential Information to the Receiving Party's Representatives (as hereinafter defined) and allow such Representatives to use, copy and have access to such Confidential Information, in each case, on a "need to know" basis; provided that such Representatives are under an obligation of confidentiality to the Receiving Party.

 

For purposes of this Agreement:

 

(a)             "Confidential Information" means all written, visual or oral information concerning the relationship of the Parties pursuant to this Agreement which may be of an operational, technical and/or sales nature, furnished by the Disclosing Party to the Receiving Party and/or its respective Representatives by or on behalf of the Disclosing Party, irrespective of the form of communication and whether the information is furnished before, on or after the date hereof. Such Confidential Information shall not include information which: (i) was rightfully in the Receiving Party's possession or was rightfully known to the Receiving Party prior to its receipt from the Disclosing Party; (ii) is or becomes public knowledge by acts other than those of the Receiving Party; (iii) is developed by the Receiving Party independent of the Confidential Information received under this Agreement; (iv) is rightfully received from a third party without a duty of confidentiality to the Disclosing Party; (v) the Receiving Party is required to disclose under operation of law; provided, however, that the Receiving Party shall give the Disclosing Party sufficient advance notice to allow the Disclosing Party to seek a protective order as may be available at law to protect the confidentiality of the information; or (vi) is disclosed by the Receiving Party with the Disclosing Party's prior written approval. Confidential Information shall not be deemed to be in the public domain merely because any part of such information is embodied in general disclosures by the Disclosing Party or because individual features, components or combinations are now or become known to the public.

 

(b)             "Representatives" of a Party, means such Party's directors, officers, employees, affiliates and advisors.

 

  

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14.          Return of Property

 

The Receiving Party shall return to the Disclosing Party promptly upon the termination of this Agreement, or at any other time when requested, the Disclosing Party's property, including but not limited to all Confidential Information and copies thereof.

 

15.          Consequential Damages

 

In no event shall either party be liable for any direct, indirect, incidental, special, exemplary, or consequential damages, however caused and on any theory of liability, whether in contract, strict liability, or tort (including negligence or otherwise) arising in any way out of this Agreement or the Services to be performed hereunder, even if advised of the possibility of such damage.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

  

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If the foregoing correctly sets forth our mutual understanding, please execute and return two copies of this Agreement to the undersigned to signify your acceptance. Upon such signature, this Agreement shall constitute a binding agreement between us.

 

Sincerely,

 

JBI, INC.

 

By:  /s/John Bordynuik          

Name: John Bordynuik

Title: Chief Executive Officer

 

Accepted and agreed to by:

 

SMURFIT-STONE CONTAINER CORPORATION

 

By:  /s/ Michael Oswald         

Name: Michael Oswald

Title: SVP

 

 

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