THE CLOROX COMPANY
1987 LONG-TERM
COMPENSATION PROGRAM
TABLE OF CONTENTS
Article Section Page
1 Establishment, Purpose,
and Effective Date of
Plan
1.1 Establishment 1
1.2 Purpose 1
1.3 Effective Date 1
2 Definitions
2.1 Definitions 2
2.2 Gender and Number 3
3 Eligibility and Participation
3.1 Eligibility and Participation 4
4 Administration
4.1 Administration 5
5 Stock Subject to Program
5.1 Number 6
5.2 Lapsed Awards 6
5.3 Adjustment in Capitalization 6
6 Duration of Program
6.1 Duration of Program 7
7 The Stock Option Plan
7.1 Grant of Options 8
7.2 Option Agreement 8
7.3 Option Price 8
7.4 Duration of Options 8
7.5 Exercise of Options 9
7.6 Payment 9
7.7 Restrictions on Stock
Transferability 9
7.8 Termination of Employment
Due to Death, Disability,
or Retirement 10
- -i-
THE CLOROX COMPANY
1987 LONG-TERM
COMPENSATION PROGRAM
TABLE OF CONTENTS
(Continued)
Article Section Page
7.9 Termination of Employment
Other Than for Death,
Disability, Retirement or
Termination for Cause 10
7.10 Nontransferability 10
7.11 Time of Exercise for
Incentive Stock Options 11
8 The Restricted Stock Plan
8.1 Grant of Restricted Stock 12
8.2 Nontransferability 12
8.3 Other Restrictions 12
8.4 Voting Rights 12
8.5 Dividends and Other
Distributions 12
8.6 Termination of Employment
Due to Retirement 13
8.7 Termination of Employment
Due to Death or Disability 13
8.8 Termination of Employment
for Reasons Other Than
Death, Disability, or
Retirement 13
9 The Performance Unit Plan
9.1 Grant of Performance Units 14
9.2 Value of Performance Units 14
9.3 Payment of Performance Units 14
9.4 Form and Timing of Payment 14
9.5 Termination of Employment
Due to Death, Disability,
or Retirement 14
9.6 Termination of Employment
for Other than Death,
Disability or Retirement
Reasons 15
9.7 Nontransferability 15
Amended 11/17/93 - Former Article 8, Stock Indemnification
Rights, deleted
(ii)
THE CLOROX COMPANY
1987 LONG-TERM
COMPENSATION PROGRAM
TABLE OF CONTENTS
Article Section Page
10 Beneficiary Designation
10.1 Beneficiary Designation 16
11 Rights of Employees
11.1 Employment 17
11.2 Participation 17
12 Change of Control
12.1 Acceleration of Rights Due
to Change of Control 18
12.2 Definition 18
13 Amendment, Modification, and
Termination of Programs
13.1 Amendment, Modification, and
Termination of Program 19
14 Tax Withholding
14.1 Tax Withholding 20
15 Indemnification
15.1 Indemnification 21
16 Requirements of Law
16.1 Requirements of Law 22
16.2 Governing Law 22
THE CLOROX COMPANY
1987 LONG-TERM
COMPENSATION PROGRAM
Article 1. Establishment, Purpose, and
Effective Date of Plan
1.1 Establishment. The Clorox Company, a Delaware
corporation, hereby establishes "THE CLOROX COMPANY 1987
LONG-TERM COMPENSATION PROGRAM" (the "Program") for key
employees. The Program consists of the separate plans
contained herein which permit the grant of stock options,
stock indemnification rights, restricted stock and
performance units, with common stock or cash serving as
a payout medium for payments under the plans.
1.2 Purpose. The purpose of the Program is to
advance the interests of the Company, by encouraging
and providing for the acquisition of an equity interest
in the success of the Company by key employees, by
providing additional incentives and motivation toward
superior performance of the Company, and by enabling the
Company to attract and retain the services of key
employees upon whose judgment, interest, and special
effort the successful conduct of its operations is
largely dependent.
1.3 Effective Date. The Program and each underlying
plan became effective upon approval by the stockholders
of the Company on October 21, 1987, that date being the
Effective Date.
7/15/87
Article 2. Definitions
2.1 Definitions. Whenever used herein, the following
terms shall have their respective meanings set forth below:
(a) "Award" means any Option, Stock Indemnification
Right, Restricted Stock, or Performance Unit
granted under the Program.
(b) "Board" means the Board of Directors of the
Company.
(c) "Code" means the Internal Revenue Code of 1986,
as amended. To the extent required by the context
and the purpose of the Program, any reference to
a particular Code provision shall be deemed to
include the successor to such provision.
(d) "Committee" means the committee of three or more
persons constituting the "outside," independent
directors serving on the Employee Benefits and
Management Compensation committee of the Board.
No person, while a member of the Committee, shall
be eligible for participation in the Program, and
no person shall become a member of the Committee
if, within one year prior to becoming a member,
that person shall have been eligible for selection
as a Participant in the Program, or any other plan
of the Company entitling participants to acquire
Stock, or be granted Options or Stock
Indemnification Rights.
(e) "Company" means The Clorox Company, a Delaware
corporation.
(f) "Disability" means permanent and total disability
as defined in the Company's Pension Plan.
(g) "Employee" means a regular salaried employee
(including directors who are also employees) of
the Company or its subsidiaries, or any branch
or division thereof.
(h) "Fair Market Value" (unless another definition
is required by the Code or regulations thereunder)
means the average of the highest and lowest prices
of the Stock as reported in publications of general
circulation for the New York Stock Exchange
Composite Transactions on a particular date. In
the event that there are no Stock transactions
on such date, the Fair Market Value shall be
determined as of the immediately preceding date
on which there were Stock transactions.
(i) "Option" means the right to purchase shares of
Stock at a stated price for a specified period
of time. An Option may be either an "incentive
stock option" within the meaning of Section 422A
of the Code, any other type of option encompassed
by the Code, or a non-statutory option.
(j) "Participant" means any Employee designated by
the committee to participate in any of the plans
in the Program.
7/15/87
(k) "Performance Unit" means a right to receive a
payment equal to the value of a Performance Unit as
determined by the Committee pursuant to Article 9.
(l) "Period of Restriction" means the period during
which the transfer of shares of Restricted Stock is
restricted pursuant to Article 8 of this Program.
(m) "Restricted Stock" means Stock granted to a
participant pursuant to Article 8 of this Program.
(n) "Retirement" (including "Early Retirement" and
"Normal Retirement") means termination of employment
under the terms of the Company's Pension Plan.
(o) "Stock" means the common stock of the Company.
(p) "Termination for Cause" means termination by
the Company because of the Employees' dishonesty, an
assault by an employee on another person which adversely
affects the Company or for any other violation of Company
policy which follows a warning to cease such violation.
The Committee, in its discretion, shall make the final
decision as to whether a particular termination constitutes
a Termination for Cause.
2.2 Gender and Number. Except when otherwise indicated
by the context, words in the masculine gender when used in
the Program shall include the feminine gender, the singular
shall include the plural, and the plural shall include the
singular.
11/17/93 References To Article numbers changed, definition
of Stock Indemnification right deleted
Article 3. Eligibility and Participation
3.1 Eligibility and Participation. Participants in
each plan under the Program shall be selected by the
Committee from among those Employees who are recommended
for participation by the chief executive officer of the
Company and who, in the opinion of the Committee, are key
Employees in a position to contribute materially to the
Company's continued growth and development and to its
long-term success. Selection for participation under one
plan does not automatically result in selection for
participation under another plan unless such result is
specified by the Committee or by the terms of the Program.
7/15/87
Article 4. Administration
4.1 Administration. The Committee shall be responsible
for the administration of the Program. The Committee, by
majority action thereof, is authorized to interpret the
Program, to prescribe, amend, and rescind rules and
regulations relating to the Program, to provide for
conditions and assurances deemed necessary or advisable
to protect the interests of the Company, and to make all
other determinations necessary or advisable for the
administration of the Program, but only to the extent
not contrary to the express provisions of the Program.
Determinations, interpretations, or other actions made
or taken by the Committee pursuant to the provisions of
the Program shall be final and binding and conclusive
for all purposes and upon all persons whomsoever.
7/15/87
Article 5. Stock Subject to Program
5.1 Number. The total number of shares of Stock
subject to Awards under the Program may not exceed
4,800,000 subject to adjustment upon occurrence of any
of the events indicated in section 5.3. The shares to
be delivered under the Program may consist, in whole or
in part, of authorized but unissued Stock or treasury
Stock, not reserved for any other purpose.
5.2 Lapsed Awards. If any Award granted under the
Program terminates, expires or lapses or for any reason,
any shares subject to such Award shall again be available
for the grant of an Award.
5.3 Adjustment in Capitalization. In the event of
any change in the outstanding shares that occurs after the
Effective Date by reason of a Stock dividend or split,
recapitalization, merger, consolidation, combination,
exchange of shares, or other similar corporate change,
the aggregate number of shares subject to each outstanding
Option, and its stated Option price, shall be adjusted
appropriately by the Committee, whose determination shall
be conclusive.
11/17/93 Number of Authorized Shares Increased from 3.1
Million to 4.8 Million
Article 6. Duration of Program
6.1 Duration of Program. The Program shall remain
in effect, subject to the Board's right to terminate the
Program earlier pursuant to Article 13, until all Stock
subject to it shall have been purchased or acquired pursuant
to the provisions hereof. Notwithstanding the foregoing,
no Award may be granted under the Program on or after
July 14, 1997.
7/15/87
Article 7. The Stock Option Plan
7.1 Grant of Options. One plan under the Program
shall relate to Options. Subject to the other applicable
provisions of the Program, Options may be granted to
Participants at any time and from time to time as shall be
determined by the Committee. The Committee shall have
complete discretion in determining the number of Options
granted to each Participant. The Committee may grant any
type of Option permitted by law at the time of grant and
shall specify whether or not any Option is intended to be
an incentive stock option described in section 422A of the
Code. In the case of incentive stock options, the following
conditions shall apply in addition to any other requirements
of this plan or the Code:
(a) 10-Percent Stockholders. An optionee must not,
immediately before an incentive stock option is granted,
own stock representing more than ten percent of the voting
power or value of all classes of Stock of the Company or of
any subsidiary. This requirement is waived if (i) the
exercise price of the incentive stock option to be granted
is at least 110 percent of the Fair Market Value of the
Stock subject to the Option, determined at the time the
Option is granted, and (ii) the Option is not exercisable
more than five years from the date the Option is granted.
(b) Annual Limitation. The aggregate Fair Market
Value (determined at the time the Option is granted) of
the Stock with respect to which incentive stock options
are exercisable for the first time by the optionee during
any calendar year may not exceed $100,000.
7.2 Option Agreement. Each Option shall be evidenced
by an Option agreement that shall specify the type of Option
granted, the Option price, the duration of the Option, the
number of shares to which the Option pertains, and such other
provisions as the Committee shall determine.
7.3 Option Price. No Option granted pursuant to this
plan shall have an Option price that is less than the Fair
Market Value of the Stock on the date the Option is granted.
7.4 Duration of Options. Each Option shall expire at
such time as the Committee shall determine at the time it
is granted, provided; however, that no Option shall be
exercisable later than ten years and one day from the date
of its grant.
7/15/87
7.5 Exercise of Options. Options granted under this
plan shall be exercisable at such times and be subject to
such restrictions and conditions as the Committee shall in
each instance approve, which need not be the same for all
Participants. Each Option which is intended to qualify
as an incentive stock option pursuant to Section 422A of
the Code shall comply with the applicable provisions of
the Code pertaining to such Options.
7.6 Payment. The Option price of Stock upon exercise
of any Option shall be paid in full either (i) in cash, or
(ii) in shares of Stock valued at their Fair Market Value
on the date of exercise, or (iii) by a combination of (i)
and (ii), in the manner provided in the Option agreement.
Certificates for such shares tendered in payment shall be
in a form of good delivery and, if the certificates were
issued pursuant to the exercise of an incentive stock
option, the optionee must have held the tendered shares
for at least one year.
7.7 Restrictions on Stock Transferability. The
Committee may impose such restrictions on any shares
acquired pursuant to the exercise of an Option under this
plan as it may deem advisable, including, without
limitation, restrictions under applicable Federal
securities law, under the requirements of any stock
exchange upon which such shares of Stock are then
listed and under any state securities laws applicable
to such shares.
7/15/87
7.8 Termination of Employment Due to Death,
Disability, or Retirement. In the event the employment
of a Participant is terminated by reason of death or
Disability, any outstanding Options then exercisable may
be exercised at the time prior to the expiration date of
the Options or within 12 months after such date of
termination of employment, whichever period is the
shorter. In the event of termination of employment by
reason of Retirement, all of the Participant's options
which have been outstanding for more than six months shall
become immediately exercisable and may be exercised at any
time prior to the expiration date of the Options or within
a period following the Participant's Retirement specified
from time to time by the Committee, whichever period is
shorter. Options which have been outstanding for less than
six months on the date of the Participant's Retirement shall
not become exercisable until they have been outstanding for
six months and thereafter may be exercised at any time prior
to the expiration of the Option or within the period
following the Participant's Retirement specified from time
to time by the Committee, whichever period is shorter.
However, in the case of incentive stock options, the
favorable tax treatment prescribed under section 422A of
the Code shall not be available if such options are not
exercised within three months after date of termination,
or 12 months in the case of death or disability as defined
in section 22(e) (3) of the Code. If an incentive stock
option is not exercised within three months of termination
due to Retirement, it shall be treated as a nonstatutory
stock option for the remainder of its allowable exercise
period.
If the Compensation Committee changes the time period
following Retirement in which an Option may be exercised,
the change will not (i) have the effect of shortening the
exercise period of Options held by persons who retired
before the effective date of the Compensation Committee's
action, or (ii) make exercisable any Option which had
expired pursuant to an exercise time period previously
set by the Compensation Committee.
7.9 Termination of Employment Other Than for Death,
Disability, Retirement or Termination for Cause. If the
employment of the Participant shall terminate for any reason
other than death, Disability, Retirement, or Termination for
Cause, the rights under any then outstanding Option granted
pursuant to this plan shall terminate upon the expiration
date of the Option or three months after such date of
termination of employment, whichever first occurs. Upon
a Termination for Cause rights under all Options shall
terminate immediately.
7.10 Nontransferability. No Option granted under the
plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, otherwise than by will
or by the laws of descent and distribution. Further, all
Options granted to a Participant under this plan shall be
exercisable during his lifetime only by such Participant.
10/16/91 - Section 7.8 effective Retroactively to 7/1/91.
11/17/93 - Section 7.8 regarding post retirement exercise
period changed.
11/17/93 - Last paragraph of Section 7.8 added.
7.11 Time of Exercise for Incentive Stock Options.
Notwithstanding other provisions pertaining to the times
at which Options may be exercised, no Option that is
intended to be an incentive stock option shall first
become exercisable at a time earlier than that originally
specified in the Option grant, if the result would be to
cause such Option, when granted, not to be treated as an
incentive stock option (whether by reason of the possible
future violation of the annual limitation of section 7.1(b)
or otherwise).
7/15/87
Article 8. The Restricted Stock Plan
8.1 Grant of Restricted Stock. One plan under the
Program shall relate to Restricted Stock. Subject to
other applicable provisions of the Program, the Committee,
at any time and from time to time, may grant shares of
Restricted Stock under the plan to such Participants and
in such amounts as it shall determine. The Committee may
also offer participants in the Company's management
incentive compensation plan, or any other Company bonus
or incentive plan in which awards are otherwise paid
primarily or totally in cash, the opportunity to elect
to receive Restricted Stock, including a bonus amount of
Restricted Stock to serve as an incentive to make such an
election, in lieu of receiving all or a portion of the
participant's award in cash. Each grant of Restricted
Stock shall be in writing and shall specify the Period(s)
of Restriction and the time or times, which may be
accelerated upon the attainment of specific financial
goals, at which such period(s) shall lapse with respect
to a specified number of shares of Stock. The Periods of
Restriction shall not exceed ten years from the date of
grant of the Restricted Stock.
8.2 Nontransferability. Except as provided in section
8.8 hereof, the shares of Restricted Stock granted hereunder
may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated for such period of time as shall
be determined by the Committee and shall be specified in
the Restricted Stock grant, or upon earlier satisfaction
or other conditions as specified by the Committee in its
sole discretion and set forth in the Restricted Stock grant.
8.3 Other Restrictions. The Committee may impose such
other restrictions on any shares of Restricted Stock granted
pursuant to this plan as it may deem advisable including,
without limitation, restrictions under applicable Federal
or state securities laws, and may legend the certificates
representing Restricted Stock to give appropriate notice
of such restrictions.
8.4 Voting Rights. Participants holding shares of
Restricted Stock granted hereunder may exercise full voting
rights with respect to those shares during the Period of
Restriction.
8.5 Dividends and Other Distributions. During the
Periods of Restriction, Participants holding shares of
Restricted Stock granted hereunder shall be entitled to
receive all dividends and other distributions paid with
respect to those shares while they are so held. If any
such dividends or distributions are paid in shares of Stock,
those shares shall be subject to the same restrictions on
transferability as the shares of Restricted Stock with
respect to which they were paid.
11/17/93 - Former Article 8 (Stock Indemnification Rights)
Deleted. Section 8.1 added accelerated vesting upon meeting
goals and right to receive Restricted Stock in lieu of cash
bonus.
8.6 Termination of Employment Due to Retirement.
(a) In the event that a Participant terminates his
employment due to Retirement, the Periods of
Restriction applicable to the Restricted Stock
pursuant to subsection 8.2 hereof, shall lapse
automatically and, except as otherwise provided
in subsection 8.3 and 8.6 (b), the Shares of
Restricted Stock shall thereby be free of
restrictions and freely transferable if such
Restricted Stock was issued to the Participant
more than six months prior to the Participant's
Retirement Date. With regard to Restricted Stock
issued to the Participant less than six months
before the Participant's Retirement Date, the
Periods of Restriction shall lapse only after
six months have elapsed since the issuance.
(b) If the grant of Restricted Stock contains a
provision permitting lapse of the Period(s)
of Restriction to be accelerated upon the
attainment of specific financial goals, a
Participant's Retirement will not accelerate
the lapse of the Period(s) of Restriction.
In such a case the Participant's Restricted
Stock shall not be forfeited but the Period(s)
of Restriction will lapse at the earlier of the
Participant's death or upon the achievement of
the conditions specified in the grant of the
Restricted Stock.
8.7 Termination of Employment Due to Death or
Disability. In the event a Participant's employment with
the Company terminates because of his death or Disability
during the Periods of Restriction, the restrictions
applicable to the shares of Restricted Stock pursuant to
section 8.2 hereof shall lapse automatically.
8.8 Termination of Employment for Reasons Other Than
Death, Disability, or Retirement. Except as otherwise
provided in this section, in the event that a Participant's
employment with the Company terminates for any reason other
than those set forth in sections 8.6 and 8.7 during the
Periods of Restriction, any shares of Restricted Stock
still subject to restrictions at the date of such
termination automatically shall be forfeited and returned
to the Company. In the event of an involuntary termination
of the employment of a Participant by the Company other
than a Termination for Cause, the Committee in its sole
discretion may waive the automatic forfeiture of any or
all such shares. With regard to Restricted Stock granted
pursuant to an election to receive Restricted Stock in
lieu of a cash award under the Company's Management
Incentive Compensation Plan, or any other Company bonus
or incentive plan in which awards are otherwise paid
primarily or totally in cash, the Committee may provide
at the time of the grant that upon the Participant's
termination of employment for any reason, or for any
reason other than Termination for Cause, the restrictions
applicable to those shares of Restricted Stock, including
any bonus amount, shall lapse automatically.
10/16/91 Section 8.6 Effective Retroactively to 7/1/91
11/17/93 Section 8.6 (b) added
11/17/93 Provision for vesting Restricted Stock received
in lieu of cash bonus.
Article 9. The Performance Unit Plan
9.1 Grant of Performance Units. One plan under the
Program shall relate to Performance Units. Subject to
other applicable provisions of the Program, Performance
Units may be granted to Participants at any time and from
time to time as shall be determined by the Committee. The
Committee shall have complete discretion in determining the
number of Performance Units granted to each Participant.
9.2 Value of Performance Units. Each Performance Unit
shall have an arbitrary value to be determined by the
Committee at the time of grant. The Committee shall
establish performance goals in its discretion which,
depending on the extent to which they are met, will
determine the ultimate value of the Performance Unit to
the Participant. The time period during which the
performance goals must be met shall be called a performance
period, and also is to be determined by the Committee.
9.3 Payment of Performance Units. After a performance
period has ended, the holder of a Performance Unit shall be
entitled to receive the value thereof as determined pursuant
to section 9.2.
9.4 Form and Timing of Payment. Payment under section
9.3 above shall be made in cash and/or shares of Stock and
shall be in the form of a lump sum or installments as
prescribed by the Committee. If any payment is to be made
on a deferred basis, the Committee may provide for the
payment of additional compensation computed in a manner
like interest during the deferral period. In general, the
time and manner of making installment payments and the
interest component that is applied during the period of
deferral shall be determined by the Committee.
9.5 Termination of Employment Due to Death, Disability,
or Retirement. In the case of death, Disability or
Retirement, the holder of a Performance Unit shall receive
perorate payment based on the number of full months' of
service completed during the performance period but based
on the achievement of performance goals during the entire
performance period. Payment shall be made at the time
payments are made to Participants who did not terminate
service during the performance period.
11/17/93 Sections renumbered.
9.6 Termination of Employment for Other than Death,
Disability or Retirement Reasons. In the event that
a Participant terminates employment with the Company
for any reason other than death, Disability or Retirement,
all Performance Units shall be forfeited. In the event
of an involuntary termination of employment of the
Participant by the Company other than a Termination for
Cause, the Committee in its sole discretion may waive
the automatic forfeiture provisions and pay out on a
perorate basis.
9.7 Nontransferability. No Performance Unit granted
under this plan may be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, other than by will
or by the laws of descent and distribution to the extent
permitted by section 9.5 until the termination of the
applicable performance period.
11/17/93 Sections renumbered.
Article 10. Beneficiary Designation
10.1 Beneficiary Designation. If the Program permits
the transfer of any right granted in the event of a
Participant's death, the beneficiary of such transfer
shall be the person(s) designated by the Participant for
this Company sponsored group life insurance benefits,
provided, however, a Participant may designate different
beneficiaries in a written instrument delivered to the
Committee.
11/17/93 Sections renumbered.
Article 11. Rights of Employees
11.1 Employment. The Program shall not constitute a
contract of employment. Nothing in the Program shall
interfere with or limit in any way the right of the Company
to terminate any Participant's employment at any time, nor
shall it confer upon any Participant any right to continue
in the employ of the Company.
11.2 Participation. No Employee shall have the right
to be selected as a Participant, or, having been so
selected, to be selected again as a Participant.
11/17/93 Sections renumbered.
Article 12. Change of Control
12.1 Acceleration of Rights Due to Change of Control.
Upon a change in control, as defined in section 12.2, the
Period of Restriction on any Restricted Stock shall end,
all unexpired Options held by Participants shall immediately
vest and become exercisable (except as otherwise provided in
section 7.11), and all Performance Units shall become
subject to immediate payment based upon the extent to which
performance goals during the performance period have been
met up to the date of the change of control, or at 100% of
the total value of the Performance Unit, whichever produces
the greater payout.
12.2 Definition. For purposes of the Program, a "change
of control" shall be deemed to have occurred if:
(a) the Company consolidates or merges with, or sells
or otherwise transfers more than 50% of its assets
or earning power to, any Person in a transaction
or series of transactions which result in the
holders of the outstanding common stock of the
Company immediately prior to the first such
transaction holding (either by such shares
remaining outstanding or by being converted into
securities of the surviving entity) less than a
majority of the shares entitled to vote for the
election of directors of the surviving entity
outstanding immediately after such merger,
consolidation, sale or transfer, or
(b) any Person becomes the beneficial owner of more
than 30% of the outstanding common shares (a "30%
Beneficial Owner") and a majority of the members
of the Board of Directors of the Company are not
Continuing Directors.
(c) For purposes of this section 12.2:
(i) Beneficial ownership shall be determined in
accordance with Rule 13d-3 under the
Securities Exchange Act of 1934 (the "1934
Act"), but shall not include ownership by
any Subsidiary or any employee benefit plan
of the Company.
(ii) "Continuing Director" shall mean any member
of the Board of Directors of the Company
who is not a 30% Beneficial Owner or a
representative of a 30% Beneficial Owner and
who was either (a) a member of the Board
prior to the time that any Person becomes a
30% Beneficial Owner or (b) subsequently
becomes a member of the Board, if such
Person's election to the Board is recommended
or approved by a majority of Continuing
Directors.
(iii) "Person" shall mean any individual, firm,
partnership, corporation or other entity,
and shall include any successor of such
entity and all Affiliates, Associate and
Subsidiaries (as those terms are defined
in Rule 12b-2 under the 1934 Act) of such
Person; provided, however, that the term
"Person" shall not include Henkel Corporation
or any of its Subsidiaries.
11/17/93 Sections renumbered.
Article 13. Amendment, Modification, and Termination of
Programs
13.1 Amendment, Modification, and Termination of
Program. The Board at any time may terminate, and from
time to time may amend or modify the Program, provided,
however, that no such action of the Board, without approval
of the stockholders, may:
(a) Increase the total amount of Stock which may be
issued under the Program, except as provided in
section 5.3 of the Program.
(b) Change the provisions of the Program regarding
the Option price except as provided by section
5.3.
(c) Change the class of employees to whom incentive
stock options may be granted.
(d) Extend the period during which Awards may be
granted.
(e) Extend the maximum period after the date of grant
during which Options may be exercised.
No amendment, modification, or termination of the Program
shall in any manner adversely affect any Award theretofore
granted under the Program, without the consent of the
Participant.
11/17/93 Sections renumbered.
Article 14. Tax Withholding
14.1 Tax Withholding. The Company shall have the power
to withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy any Federal, state,
local or foreign withholding tax requirements on any Award
under the Program.
To the extent permissible under applicable tax, securities,
and other laws, the Company may, in its sole discretion,
permit the Participant to satisfy a tax withholding
requirement by directing the Company to apply shares of
stock to which the Participant is entitled as a result of
the exercise of an option or the lapse of a Period of
Restriction, to satisfy such requirement.
11/17/93 Sections renumbered.
Article 15. Indemnification
15.1 Indemnification. Each person who is or shall
have been a member of the Committee or of the Board shall
be indemnified and held harmless by the Company against
and from any loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by him in connection
with or resulting from any claim, action, suit, or
proceeding to which he may be a party or in which he may
be involved by reason of any action taken or failure to
act under the Program and against and from any and all
amounts paid by him in settlement thereof, with the approval
of the Committee, or for members thereof of the Board, or
paid by him in satisfaction of any judgment in any such
action, suit, or proceeding against him, provided he shall
give the Company an opportunity, at its own expense, to
defend the same before he undertakes to defend it on his
own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's
Certificate of Incorporation or Bylaws, as a matter of law,
or otherwise, or any power that the Company may have to
indemnify them or hold them harmless.
11/17/93 Sections renumbered.
Article 16. Requirements of Law
16.1 Requirements of Law. The granting of Awards and
the issuance of shares of Stock upon the exercise of an
Option shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be
required.
16.2 Governing Law. The Program, and all agreements
hereunder, shall be construed in accordance with and governed
by the laws of the State of California.
11/17/93 Sections renumbered.