AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT
Exhibit 10.3
AMENDED AND RESTATED CHANGE IN CONTROL
AGREEMENT
AGREEMENT
THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT (the “Agreement”) effective
, is between THE CLOROX COMPANY, a Delaware corporation (the “Company”) and
(the “Executive”).
The Board of Directors of the Company (the “Board”), has determined that it is in the best
interests of the Company and its stockholders to amend and restate the Change in Control Agreement
with the Executive, effective , to assure that the Company will have the continued dedication
of the Executive, notwithstanding the possibility, threat or occurrence of a Change in Control (as
defined below) of the Company. The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks created by a pending
or threatened Change in Control and to encourage the Executive’s full attention and dedication to
the Company currently and in the event of any threatened or pending Change in Control, and to
provide the Executive with compensation and benefits arrangements upon a Change in Control which
ensure that the compensation and benefits expectations of the Executive will be satisfied and which
are competitive with those of other corporations. Therefore, in order to accomplish these
objectives, the Board has caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Certain Definitions.
(a) The “Effective Date” shall mean the first date during the Change in Control Period (as
defined in Section 1(b)) on which a Change in Control (as defined in Section 2) occurs. Anything
in this Agreement to the contrary notwithstanding, if a Change in Control occurs and if the
Executive’s employment with the Company is terminated prior to the date on which the Change in
Control occurs, and if it is reasonably demonstrated by the Executive that such termination of
employment (i) was at the request of a third party who has taken steps reasonably calculated to
effect a Change in Control or (ii) otherwise arose in connection with or anticipation of a Change
in Control, then for all purposes of this Agreement the “Effective Date” shall mean the date
immediately prior to the date of such termination of employment.
(b) The “Change in Control Period” shall mean the period commencing on the date hereof and
ending on the third anniversary of the date hereof; provided, however, that commencing on the date
one year after the date hereof, and on each annual anniversary of such date (such date and each
annual anniversary thereof shall be hereinafter referred to as the “Renewal Date”), unless
previously terminated, the Change in Control Period shall be automatically extended so as to
terminate three years from such Renewal Date, unless at least 60 days prior to the Renewal Date the
Company shall give notice to the Executive that the Change in Control Period shall not be so
extended.
(c) Reserved.
(d) The “Separation Period” shall mean the period from the Date of Termination through the
earlier of the first day of the month following the Executive’s 65th birthday or the date three
years after the Date of Termination.
(e) “Annual Bonus” shall mean the annual award the Executive receives in any year under the
Company’s Annual Incentive Plan (“AIP Plan”) and/or the Company’s Executive Incentive Compensation
Plan (“EIC Plan”)
(f) The “Average Annual Bonus” shall mean the average Annual Bonus the Executive received for
the three (3) completed fiscal years immediately preceding the Date of Termination, provided that
the First Year Bonus Target, shall be used in the average computation for any year in which the
Executive was not eligible to participate in the AIP Plan and/or the EIC Plan for the full fiscal
year.
(e) “Bonus Target” means the annual bonus that the Executive would have received in a fiscal
year under the AIP Plan and/or the EIC Plan, if the target goals had been achieved.
(f) “First Year Bonus Target” means the Executive’s Bonus Target as of June 30 for the first
fiscal year in which he was eligible to participate in the AIP Plan and/or the EIC Plan.
2. Change in Control. For the purpose of this Agreement, a “Change in Control” shall
mean:
(a) The acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a
“Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of 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 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; or
(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date 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, 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
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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; or
(d) Approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.
3. Employment Period.
(a) This Agreement shall become effective on the Effective Date. Before the Effective Date,
the terms and conditions of the Executive’s employment shall be as set forth in the Employment
Agreement between the Executive and the Company effective ,(the “Current
Agreement”) during the term thereof. From and after the Effective Date, this Agreement shall
supersede the Current Agreement and any other agreement between the parties with respect to the
subject matter hereof.
(b) The Company agrees to continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company subject to the terms and conditions of this
Agreement, for the period commencing on the Effective Date and ending on the
earlier of the second anniversary of such date or the first day of the month following the
Executive’s 65th birthday (the “Employment Period”).
4. Terms of Employment.
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(a) Position and Duties. (i) During the Employment Period, (A) the Executive’s
position (including status, offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with the most significant
of those held, exercised and assigned to the Executive at any time during the 120-day period
immediately preceding the Effective Date and (B) the Executive’s services shall be performed at the
location where the Executive was employed immediately preceding the Effective Date or any office or
location not more than 50 miles from such location.
(ii) During the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the Executive hereunder, to use the
Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities.
During the Employment Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions on a part-time basis not to exceed five
hours per week in the aggregate and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive’s responsibilities as an employee
of the Company in accordance with this Agreement. It is expressly understood and agreed that to
the extent that any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities similar in nature and
scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with
the performance of the Executive’s responsibilities to the Company.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive shall receive an annual
base salary (“Annual Base Salary”), which shall be paid at a monthly rate, at least equal to twelve
times the highest monthly base salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the Effective Date occurs. During the
Employment Period, the Annual Base Salary shall be reviewed no more than 12 months after the last
salary increase awarded to the Executive prior to the Effective Date and thereafter at least
annually. Any increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after
any such increase and the term Annual Base Salary as utilized in this Agreement shall refer to
Annual Base Salary as so increased. As used in this Agreement, the term “affiliated companies”
shall include any company controlled by, controlling or under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the Executive shall have the
opportunity to earn, for each fiscal year ending during the Employment Period, an Annual Bonus in
cash at least equal to the highest Annual Bonus the Executive had the opportunity to earn for any
of the last three full fiscal years prior to the Effective Date (annualized in the event that the
Executive was not employed by the Company for the whole of such fiscal year). Each such Annual
Bonus shall be paid no later than the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
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(iii) Incentive, Savings and Retirement Plans. During the Employment Period, the
Executive shall be entitled to participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to other peer executives of the Company and
its affiliated companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect to both regular and
special incentive opportunities, to the extent, if any, that such distinction is applicable),
savings opportunities and retirement benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company and its affiliated companies
for the Executive under such plans, practices, policies and programs as in effect at any time
during the 120-day period immediately preceding the Effective Date or if more favorable to the
Executive, those provided generally at any time after the Effective Date to other peer executives
of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the
Executive’s family, as the case may be, shall be eligible for participation in and shall receive
all benefits under welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical, prescription drugs, dental,
disability, salary continuance, severance pay, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Executive with benefits which are less favorable, in
the aggregate, than the most favorable of such plans, practices, policies and programs in effect
for the Executive at any time during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, those provided generally at any time after the Effective
Date to other peer executives of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance
with the most favorable policies, practices and procedures of the
Company and its affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of the Company and
its affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the Executive shall be entitled
to fringe benefits, including, without limitation, tax and financial planning services, payment of
club dues, and, if applicable, use of an automobile and payment of related expenses, in accordance
with the most favorable plans, practices, programs and policies of the Company and its affiliated
companies in effect for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period, the Executive shall be
entitled to an office or offices of a size and with furnishings and other appointments, and to
exclusive personal secretarial and other assistance, at least equal to the most favorable of the
foregoing provided to the Executive by the Company and its affiliated companies at any time during
the 120-day period immediately preceding the Effective Date or, if more
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favorable to the Executive,
as provided generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Executive shall be entitled to
paid vacation in accordance with the most favorable plans, policies, programs and practices of the
Company and its affiliated companies as in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of the Company and
its affiliated companies.
5. Termination of Employment.
(a) Death or Disability. The Executive’s employment shall terminate automatically
upon the Executive’s death during the Employment Period. If the Company determines in good faith
that the Disability of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written notice in
accordance with Section 12(b) of this Agreement of its intention to terminate the Executive’s
employment. In such event, the Executive’s employment with the Company shall terminate effective
on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”),
provided that, within the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability”
shall mean the absence of the Executive from the Executive’s duties with the Company on a full-time
basis for 180 consecutive business days as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive’s legal representative.
(b) Cause. The Company may terminate the Executive’s employment during the
Employment Period for Cause. For purposes of this Agreement, “Cause” shall mean:
(i) the willful and continued failure of the Executive to perform substantially the
Executive’s duties with the Company or one of its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by the Board, the Chief Executive
Officer or a senior officer of the Company which specifically identifies the manner in which
the Board, Chief Executive Officer or senior officer believes that the Executive has not
substantially performed the Executive’s duties, or
(ii) the willful engaging by the Executive in illegal conduct or gross misconduct
which is materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of the Executive, shall be
considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of
the Company or based upon the advice of counsel for the Company shall be conclusively presumed to
be done, or omitted to be done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be deemed to be for Cause
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unless
and until there shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.
(c) Good Reason. The Executive’s employment may be terminated by the Executive for
Good Reason. For purposes of this Agreement, “Good Reason” shall mean:
(i) the assignment to the Executive of any duties inconsistent in any respect with the
Executive’s position (including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section 4(a) of this Agreement, or
any other action by the Company which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions of Section 4(b)
of this Agreement, other than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company’s requiring the Executive to be based at any office or location
other than as provided in Section 4(a)(i)(B) hereof or the Company’s requiring the Executive
to travel on Company business to a substantially greater extent than required immediately
prior to the Effective Date;
(iv) any purported termination by the Company of the Executive’s employment otherwise
than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section 11(c) of this
Agreement.
For purposes of this Section 5(c), any good faith determination of “Good Reason” made by the
Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for Cause, or by the
Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto
given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a
“Notice of Termination” means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date (which date shall
be not more than thirty days after the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which contributes
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to a
showing of Good Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively, from asserting
such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.
(e) Date of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of
receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii)
if the Executive’s employment is terminated by the Company other than for Cause or Disability, the
date on which the Company notifies the Executive of such termination and
(iii) if the Executive’s employment is terminated by reason of death or Disability, the date of
death of the Executive or the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination.
(a) By the Executive for Good Reason; or by the Company Other Than for Cause, Death or
Disability. If, during the Employment Period, the Company shall terminate the Executive’s
employment other than for Cause or Disability or the Executive shall terminate employment for Good
Reason:
(i) the Company shall pay to the Executive in a lump sum in cash within 30 days after
the Date of Termination the aggregate of the following amounts:
A. the sum of (1) the Executive’s Annual Base Salary through the Date of
Termination to the extent not theretofore paid, (2) the product of (x) the Average
Annual Bonus and (y) a fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination, and the denominator of which is
365 and (3) any compensation previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued vacation pay, in each case to
the extent not theretofore paid and in full satisfaction of the rights of the
Executive thereto (the sum of the amounts described in clauses (1), (2), and (3)
shall be hereinafter referred to as the “Accrued Obligations”); and
B. the amount equal to the product of (1) 3 and (2) the sum of (x) the
Executive’s Annual Base Salary and (y) the Average Annual Bonus; and
C. an amount equal to the difference between (a) the actuarial equivalent of
the aggregate benefits under the Company’s qualified pension and profit-sharing
plans (the “Retirement Plans”) and any excess or supplemental pension and
profit-sharing plans in which the Executive participates (collectively, the
“Nonqualified Plans”) which the Executive would have been entitled to receive if the
Executive’s employment had continued for the Separation Period, assuming (to the
extent relevant) that the Executive’s compensation during the Separation Period
would have been equal to the Executive’s compensation as in effect immediately
before the termination or, if higher, on the Effective Date, and that employer
contributions to the Executive’s accounts in the Retirement Plans and the
Nonqualified Plans during the Separation Period would have been equal to the average
of such contributions for the three years immediately preceding the Date of
Termination or, if higher, the three years immediately preceding the Effective Date,
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and (b) the actuarial equivalent of the Executive’s actual aggregate benefits (paid
or payable), if any, under the Retirement Plans and the Nonqualified Plans as of the
Date of Termination (the actuarial assumptions used for purposes of determining
actuarial equivalence shall be no less favorable to the Executive than the most
favorable of those in effect under the Retirement Plan and the Nonqualified Plans on
the Date of Termination and the date of the Change in Control);
(ii) for the Separation Period, the Company shall continue benefits to the Executive
and/or the Executive’s family at least equal to those which would have been provided to them
in accordance with the plans, programs, practices and policies described in Section 4(b)(iv)
of this Agreement if the Executive’s employment had not been terminated or, if more
favorable to the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies and their families (in
each case with such contributions by the Executive as would have been required had the
Executive’s employment not been terminated); provided, however, that if the Executive
becomes reemployed with another employer and is eligible to receive medical or other welfare
benefits under another employer-provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan during such
applicable period of eligibility, and for purposes of determining eligibility (but not the
time of commencement of benefits) of the Executive for retiree benefits pursuant to such
plans, practices, programs and policies, the Executive shall be considered to have remained
employed during the Separation Period and to have retired on the last day of such period.
The Separation Period shall not be subtracted from the period of months for which the
Executive is eligible for benefits under the Consolidated Omnibus Budget Reconciliation Act
of 1985.;
(iii) if the Executive was entitled to receive financial planning and/or tax return
preparation benefits immediately before the Date of Termination, the Company shall continue
to provide the Executive with such financial planning and/or tax return preparation benefits
with respect to the calendar year in which the Date of Termination occurs (including without
limitation the preparation of income tax returns for that year), on the same terms and
conditions as were in effect immediately before the Date of Termination (disregarding for
all purposes of this clause (iii) any reduction or elimination of such benefits that was the
basis of a termination of employment by the Executive for Good Reason); and
(iv) the Executive shall be entitled to purchase the Company-leased automobile, if
any, being used by the Executive prior to termination at the “buyout amount” specified by
the vehicle’s lessor.
(v) to the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Executive any other amounts or benefits required to be paid or provided or
which the Executive is eligible to receive under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the “Other Benefits”).
(vi) any awards granted to the Executive prior to the Change in Control under the
Company’s 2005 Stock Incentive Plan or any successor plan thereto will become
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immediately
exercisable in the event that the Executive’s termination (other than for Cause or
Disability (as defined under the Company’s Long-term Disability Plan or Policy, as in
effect on the date of termination of the Executive’s employment)) occurs within twenty-four
(24) months of the Change in Control.
To the extent any benefits described in Section 6(a)(ii) and (iii) cannot be provided pursuant to
the appropriate plan or program maintained for employees, the Company shall provide such benefits
outside such plan or program at no additional cost (including without limitation tax cost) to the
Executive.
(b) Death. If the Executive’s employment is terminated by reason of the Executive’s
death during the Employment Period, this Agreement shall terminate without further obligations to
the Executive’s legal representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be
paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days
of the Date of Termination.
(c) Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination.
(d) Cause; Other than for Good Reason. If the Executive’s employment shall be
terminated for Cause during the Employment Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to the Executive (x) the Annual Base
Salary through the Date of Termination, (y) the amount of any compensation previously deferred by
the Executive, and (z) Other Benefits, in each case to the extent theretofore unpaid. If the
Executive voluntarily terminates employment during the Employment Period, excluding a termination
for Good Reason, this Agreement shall terminate without further obligations to the Executive, other
than for Accrued Obligations and the timely payment or provision of Other Benefits. In such case,
all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the
Date of Termination.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the
Executive’s continuing or future participation in any plan, program, policy or practice provided by
the Company or any of its affiliated companies and for which the Executive may qualify, nor,
subject to Section 3(a), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or agreement except
as explicitly modified by this Agreement.
8. Full Settlement. The Company’s obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may
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have against the Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and except as specifically provided in Section
6(a)(ii), such amounts shall not be reduced whether or not the Executive obtains other employment.
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required under this Section 9)
(a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the “Code”), or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled
to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments, provided, however, that
a Gross-Up Payment shall only be made in the event that application of the gross-up feature would
result in the Executive receiving total after-tax Payments of at least one hundred five percent
(105%) of the benefits the Executive would be entitled to receive without becoming subject to the
tax imposed by Section 4999 of the Code (“Maximum Amount”). In the event that a Gross-Up Payment
under this Agreement would result in total after-tax Payments of less than one hundred five percent
(105%) of the Maximum Amount, the Executive’s Payments shall be capped at the Maximum Amount. If
the Payments become subject to the cap described above, the amount due to the Executive under
Sections 6(a)(i)A, 6(a)(i)B or 6(a)(i)C (cash Payments) shall be reduced initially; thereafter,
the Management Development and Compensation Committee of the Company’s Board of Directors shall
determine how the Payments subject to the cap shall be paid.
(b) Subject to the provisions of Section 9(c), all determinations required to be made under
this Section 9, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by Ernst & Young LLP or such other certified public accounting firm as may be designated by
the Executive (the “Accounting Firm”), which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the Company. In the event
that the Accounting Firm is serving as accountant or auditor for the individual, entity or group
effecting the Change in Control, the Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 9,
shall be paid by the Company to the Executive within five days of the receipt of the Accounting
Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company
and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code
at the time of the initial determination
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by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 9(c) and
the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten business days after
the Executive is informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the 30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the Company relating to
such claim,
(ii) take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order effectively to contest such
claim, and
(iv) permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such representation and payment
of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the
Company shall control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect to any imputed income
with respect to such advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect to which such
contested
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amount is claimed to be due is limited solely to such contested amount. Furthermore, the
Company’s control of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 9(c), the Executive becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of Section 9(c)) promptly
pay to the Company the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 9(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
10. Post Termination Obligations.
(a) Proprietary Information Defined. “Proprietary Information” is all information
and any idea in whatever form, tangible or intangible, pertaining in any manner to the business of
the Company or any Affiliated Company, or to its clients, consultants, or business associates,
unless: (i) the information is or becomes publicly known through lawful means; (ii) the
information was rightfully in the Executive’s possession or part of his general knowledge prior to
his employment by the Company; or (iii) the information is disclosed to the Executive without
confidential or proprietary restriction by a third party who rightfully possesses the information
(without confidential or proprietary restriction) and did not learn of it, directly or indirectly,
from the Company.
(b) General Restrictions on Use of Proprietary Information. The Executive agrees to
hold all Proprietary Information in strict confidence and trust for the sole benefit of the Company
and not to, directly or indirectly, disclose, use, copy, publish, summarize, or remove from
Company’s premises any Proprietary Information (or remove from the premises any other property of
the Company), except (i) during his employment to the extent necessary to carry out the Executive’s
responsibilities under this Agreement, and (ii) after termination of his employment as specifically
authorized in writing by the Board.
(c) Non-Solicitation and Non-Raiding. To forestall the disclosure or use of
Proprietary Information in breach of Section 10(b), and in consideration of this Agreement,
Executive agrees that for a period of two years after termination of his
employment, he shall not, for himself or any third party, directly or indirectly (i) divert or
attempt to divert from the Company (or any Affiliated Company) any business of any kind in which it
is engaged, including, without limitation, the solicitation of its customers as to products which
are directly competitive with products sold by the Company at the time of the Executive’s
termination, or interference with any of its suppliers or customers, or (ii) solicit for employment
any person employed by the Company, or by any Affiliated Company, during the period of such
person’s employment and for a period of one year after the termination of such person’s employment
with the Company.
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(d) Contacts with the Press. Following termination, the Executive will continue to
abide by the Company’s policy that prohibits discussing any aspect of Company business with
representatives of the press without first obtaining the permission of the Company’s Public
Relations Department.
(e) Remedies. Nothing in this Section 10 is intended to limit any remedy of the
Company under the California Uniform Trade Secrets Act (California Civil Code Section 3426), or
otherwise available under law.
(f) In no event shall an asserted violation of the provisions of this Section 10 constitute a
basis for deferring or withholding any amounts otherwise payable to the Executive pursuant to this
Agreement.
11. Successors.
(a) This Agreement is personal to the Executive and without the prior written consent of the
Company shall not be assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place. As
used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with the laws of the
State of California, without reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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If to the Executive:
To the address written below the Executive’s signature on the last page of this Agreement.
If to the Company:
The Clorox Company
0000 Xxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
0000 Xxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement shall not affect
the validity or enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable under this Agreement such Federal,
state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or
regulation.
(e) This Agreement may not be modified, amended, or terminated except by an instrument in
writing, signed by the Executive and by a duly authorized representative of the Company other than
Executive. By an instrument in writing similarly executed, either party may waive compliance by
the other party with any provision of this Agreement that such other party was or is obligated to
comply with or perform, provided, however, that such waiver shall not operate as a waiver of, or
estoppel with respect to, any other or subsequent failure. No failure to exercise and no delay in
exercising any right, remedy, or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, or power hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, or power provided herein or by law or
in equity.
(f) Together with the Current Agreement, the terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to the employment of Executive
by the Company and may not be contradicted by evidence of any prior or contemporaneous agreement.
The parties further intend that this Agreement and the Current Agreement shall constitute the
complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be
introduced in any judicial, administrative, or other legal proceeding involving either Agreement.
The Current Agreement and this Agreement supersede any prior Agreements, written or oral, between
the Company and the Executive concerning the terms of his employment.
13. Executive Acknowledgment. Executive acknowledges (a) that he has consulted with
or has had the opportunity to consult with independent counsel of his own choice concerning
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this Agreement and has been advised to do so by the Company, and (b) that he has read and
understands the Agreement, is fully aware of its legal effect, and has entered into it freely based
on his own judgment.
14. Arbitration. Any controversy between the Executive or the Executive’s heirs or
estate and the Company or any employee of the Company, including but not limited to, those
involving the construction or application of any of the terms, provisions or conditions of this
Agreement or otherwise arising out of or related to this Agreement, shall be settled by arbitration
before a single arbitrator in accordance with the then current commercial arbitration rules of the
American Arbitration Association, and judgment on the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof. The location of the arbitration shall be San
Francisco, California if the Executive’s current or most recent location of employment with the
Company is or was located in Alameda County, California. If it is or was elsewhere, the
arbitration shall be held at the city nearest to the Executive’s last location of employment with
the Company which has an office of the American Arbitration Association. The arbitrator shall
award attorney’s fees to the Executive to the extent that the Executive prevails in the arbitration
proceeding.
The parties have duly executed this Agreement as of the effective date that appears at the
beginning of this Agreement.
| THE CLOROX COMPANY | ||||||||
| The Company | ||||||||
By: |
||||||||
| Chairman of the Board, Chief | ||||||||
| Executive Officer and President | ||||||||
| (Address) | ||||||||
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