Executive Benefit Trust Agreement

CLARCOR INC.


EXECUTIVE BENEFIT TRUST


Dated as of December 22, 1997


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CLARCOR INC.


EXECUTIVE BENEFIT TRUST


TABLE OF CONTENTS


Page
---- ARTICLE I - TRUST, TRUSTEE AND TRUST FUND . . . . . . . . . . 2


Section 1.1. Trust . . . . . . . . . . . . . . . . 2
Section 1.2. Trustee . . . . . . . . . . . . . . . 2
Section 1.3. Trust Fund. . . . . . . . . . . . . . 3
Section 1.4. Irrevocability of Trust . . . . . . . 3
Section 1.5. Delivery of Funds . . . . . . . . . . 3


ARTICLE II - THE PLANS. . . . . . . . . . . . . . . . . . . . 5


ARTICLE III - AUTHORIZED COMPANY REPRESENTATIVES. . . . . . . 6


ARTICLE IV - CHANGE IN CONTROL. . . . . . . . . . . . . . . . 6


Section 4.1. Definition of Change in Control . . . 6
Section 4.2. Definition of Potential Change
of Control . . . . . . . . . . . . 9
Section 4.3. Notification of the Company . . . . . 9


ARTICLE V - RETURNS AND DISTRIBUTIONS FROM THE FUND . . . . . 10


Section 5.1. Return of Trust Assets to the
Company. . . . . . . . . . . . . . 10
Section 5.2. Distributions to Beneficiaries . . . 14
Section 5.3. Non-Duplication of Benefits . . . . . 15
Section 5.4. Withholding of Taxes. . . . . . . . . 16
Section 5.5. Interests Nonassignable . . . . . . . 16


ARTICLE VI - INVESTMENT OF FUND . . . . . . . . . . . . . . . 17


ARTICLE VII - POWERS AND RIGHTS OF TRUSTEE. . . . . . . . . . 19


Section 7.1. Trustee's Powers. . . . . . . . . . . 19
Section 7.2. Advice of Counsel . . . . . . . . . . 20
Section 7.3. Indemnification of Trustee. . . . . . 20
Section 7.4. Compensation and Expenses . . . . . . 21


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ARTICLE VIII - ACCOUNTS AND REPORTS OF THE TRUSTEE. . . . . . 21


Section 8.l. Records and Accounts of the
Trustee. . . . . . . . . . . . . . 2l
Section 8.2. Cash Basis of Accounts. . . . . . . . 22
Section 8.3. Fiscal Year . . . . . . . . . . . . . 22
Section 8.4. Annual Report . . . . . . . . . . . . 22
Section 8.5. Approval of Reports . . . . . . . . . 22


ARTICLE IX - REMOVAL, RESIGNATION AND SUCCESSION OF
THE TRUSTEE. . . . . . . . . . . . . . . . . . 24


Section 9.l. Removal . . . . . . . . . . . . . . . 24
Section 9.2. Resignation . . . . . . . . . . . . . 24
Section 9.3. Appointment, Qualifications and
Powers of Successor Trustee. . . . 24
Section 9.4. Changes in Organization of
Corporate Trustee. . . . . . . . . 25


ARTICLE X - AMENDMENT OR TERMINATION. . . . . . . . . . . . . 26


Section l0.l. Authority to Amend or Terminate. . . 26
Section 10.2. Method of Making Amendment . . . . . 26
Section 10.3. Termination of Trust . . . . . . . . 27


ARTICLE XI - MISCELLANEOUS. . . . . . . . . . . . . . . . . . 27


Section ll.l. Protection of Persons Dealing
with Trustee . . . . . . . . . . . 27
Section ll.2. Tax Status of Trust. . . . . . . . . 27
Section ll.3. No Interest in Company Given
by Trust. . . . . . . . . . . . . 28
Section ll.4. Gender and Plurals. . . . . . . . . 28
Section ll.5. Governing Law. . . . . . . . . . . . 28


ARTICLE XII - EXECUTION . . . . . . . . . . . . . . . . . . . 28


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CLARCOR INC.
EXECUTIVE BENEFIT TRUST


This TRUST AGREEMENT dated as of December 22, 1997 (this "Agreement") is made between CLARCOR Inc., a Delaware corporation (the "Company"), and AMCORE Investment Group, N.A., as Trustee (the "Trustee").


WHEREAS, the Company is or may hereafter become obligated under certain plans or agreements identified herein, and any other plan or agreement as the Company may from time to time designate in writing to the Trustee, to make payments to certain of its officers, directors and key employees, or the beneficiaries thereof (such officers, directors, key employees and beneficiaries being hereinafter called the "Beneficiaries");


WHEREAS, the Company's obligations under such plans or agreements are not funded or otherwise secured; and


WHEREAS, for purposes of assuring that payment of such Company obligations will not improperly be withheld in the event of a Change of Control (as hereinafter defined), the Company desires to deposit with the Trustee, subject only to the claims of the Company's existing or future creditors, assets sufficient


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to enable the Trustee to make such payments as they may become due and payable;


NOW THEREFORE, in consideration of the mutual agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


ARTICLE I


TRUST, TRUSTEE AND TRUST FUND


Section 1.1. Trust. This Agreement and the trust evidenced hereby, as amended and supplemented from time to time, shall be known collectively as the CLARCOR Inc. Executive Benefit Trust (the "Trust").


Section 1.2. Trustee. AMCORE Investment Group, N.A. is hereby designated as the Trustee of the Trust, to receive, hold, invest, administer and distribute the Fund (as hereinafter defined) in accordance with the provisions of this Agreement for the exclusive purpose of providing benefits to the Beneficiaries under the plans or agreements identified in Article II (the


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"Plans") and paying the reasonable expenses of administering such Plans.


Section 1.3. Trust Fund. All cash and marketable securities delivered by the Company to the Trustee hereunder, together with all other assets held in the Trust by the Trustee, are hereinafter called the "Fund." Except as herein otherwise provided, title to the Fund shall at all times be vested in the Trustee, subject to the right of the Trustee to hold title to particular assets in bearer form or in the name of a nominee or nominees, and the interest of the Beneficiaries in the assets of the Fund shall be limited to the right to have such assets received, held, invested, administered and distributed by the Trustee in accordance with the provisions of the Trust.


Section 1.4. Irrevocability of Trust. The Trust shall not be subject to revocation, amendment or modification except as provided in Section 10.1.


Section 1.5. Delivery of Funds. (a) Concurrently with the execution and delivery of this Agreement, the Company has delivered to the Trustee the sum of $1,000.00 in cash, to be held in the Fund. The Company, in its sole discretion, may at any time, or from time to time, deliver additional amounts of cash or property to the Trustee to be held in the Fund. Neither


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the Trustee nor any Beneficiary shall have any right to compel the delivery of such additional amounts.


(b) Not later than the fifth business day after the occurrence of a Change in Control or a Potential Change in Control (as hereinafter defined in Article IV), the Company shall deliver to the Trustee, to be held in the Fund, cash or marketable securities having a fair market value (or any combination thereof) equal to 125% or the sum of (i) the amount of the Company's obligations to the Beneficiaries under the Plans and (ii) such additional amount as is reasonably estimated to be necessary to pay the expenses and other costs of maintaining the Trust (collectively the "Required Funding Amount").


(c) At the end of the six calendar month period beginning on the first day of the calendar month commencing immediately after the date of a Potential Change in Control or Change in Control, and at the end of each six calendar months thereafter, the Company shall, unless the Fund shall theretofore have been paid to the Company pursuant to Section 5.1(a), recalculate the Required Funding Amount as of the end of the calendar month immediately preceding such first-specified month-end as though such Potential Change in Control or Change in Control were then occurring. If the Required Funding Amount, as so recalculated, shall exceed the fair market value of the Fund,


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the Company shall promptly notify the Trustee and the Company shall promptly (and in no event later than seven days from the date of such notification) deliver to the Trustee cash or marketable securities having a fair market value (or any combination thereof) equal to such excess.


ARTICLE II


THE PLANS


Benefits payable pursuant to the CLARCOR Inc. 1994 Incentive Plan, the CLARCOR Inc. 1994 Supplemental Retirement Plan, and the individual employment agreements listed on Exhibit I hereto, and any other plan or agreement, including any individual employment agreement, as the Company may, from time to time designate in writing to the Trustee, as each may be amended or supplemented from time to time (collectively the "Plans"), copies of which are attached hereto, shall be payable from the Trust.


The Company shall provide to the Trustee any and all amendments, supplements or other documentation with regard to the Plans, including any successor plan, and copies of any additional plans or agreements which the Company designates in writing to the Trustee as providing benefits payable from the Trust. The


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Company further agrees to provide to the Trustee any and all pertinent information regarding the Obligations of the Trustee to the Beneficiaries hereunder. The Trustee's duties and responsibilities shall be defined by this Trust Agreement without any reference to any Plan or other agreement.


ARTICLE III


AUTHORIZED COMPANY REPRESENTATIVES


The Company shall furnish the Trustee the name and specimen signature of each person upon whose certification of any calculation, decision or direction of the Company the Trustee is authorized to rely. Until notified of a change in the identity of such person or persons, the Trustee shall act upon the assumption that there has been no such change.


ARTICLE IV
CHANGE IN CONTROL


Section 4.l. Definition of Change in Control. For the purpose of this Agreement, a "Change of Control" of the Company shall mean:


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(a) The acquisition (other than from the Company) by any person, entity or "group," within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act"), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 15% or more of either the then outstanding shares of common stock or the combined voting power of the Company's then outstanding voting securities entitled to vote generally in the election of directors; provided, however, no Change of Control shall be deemed to have occurred for any acquisition by any corporation with respect to which, following such acquisition, more than 60% of the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals or entities who were the beneficial owners, respectively, of the then outstanding shares of common stock or the combined voting power of the Company's then outstanding voting securities immediately prior to such acquisition in substantially the same proportions as their ownership, immediately prior to such acquisition, of the Company's then outstanding common stock and then outstanding voting securities, as the case may be; or

(b) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to


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constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority or the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose Initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors or the Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or


(c) Approval by the stockholders of the Company of a reorganization, merger or consolidation, in each case, with respect to which persons who were the stockholders of the Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than 60% of the combined voting power entitled to vote generally in the election of directors of the recognized, merged or consolidated corporation's then outstanding voting securities, or a liquidation or dissolution of the Company or of the sale of all or substantially all of the assets of the Company.


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Section 4.2. Definition of Potential Change of Control. For the purposes of this Agreement, a "Pote ...