EXHIBIT 10p1
SEVERANCE AGREEMENT
AGREEMENT dated as of January 29, 1996 between AMERICAN BRANDS, INC., a
Delaware corporation (the "Company"), and XXXXX X. XXXXXXX (the "Executive"),
W I T N E S S E T H :
WHEREAS, the Executive is currently employed by the Company and has
throughout his period of employment rendered valuable service to the Company;
and
WHEREAS, the Executive desires to continue in full-time employment with
the Company, but to be provided with the assurance of receiving certain
severance benefits in the event the Company were to take certain actions
resulting in the termination of his employment; and
WHEREAS, the Company desires to continue to have the benefits of the
Executive's knowledge and experience as a full-time employee of the Company and
considers encouraging the continued employment of the Executive by providing
him with the assurance of receiving severance benefits to be a vital element in
protecting and enhancing the best interests of the Company and its
stockholders; and
WHEREAS, the Company and the Executive desire to enter into this Agreement
to set forth the terms and conditions of such severance benefits;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter contained, the parties do hereby agree as follows:
1. Termination of Employment.
(a) Entitlement to Benefits. If and only if during the term of this
Agreement the Executive's employment with the Company is terminated by the
Company other than for Disability or Cause (each as defined in this Section 1),
the Executive shall be entitled to benefits as provided in Section 2. The
Executive shall not be entitled to any benefits hereunder in the event his
employment with the Company is terminated as a result of his death, by the
Company for Disability or Cause or by the Executive for any reason.
(b) Disability. Termination of employment by the Company for
Disability hereunder shall be deemed to have occurred only if, as a result of
the Executive's incapacity due to physical or mental illness, the Executive
shall have
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been absent from his duties with the Company on a full-time basis for 180
consecutive days and, within 30 days after Notice of Termination (as defined in
Section 1(d)) is given to the Executive by the Company, the Executive shall not
have returned to the full-time performance of his duties.
(c) Cause. Termination of employment by the Company for Cause shall
be deemed to have occurred only if (i) termination shall have been the result
of (A) an act or acts of dishonesty on the Executive's part constituting a
felony and intended to result directly or indirectly in substantial gain or
personal enrichment to him at the expense of the Company, or (B) the
Executive's willful and continued failure substantially to perform his duties
and responsibilities as an officer of the Company (other than any such failure
resulting from his incapacity due to physical or mental illness) after a demand
for substantial performance is delivered to the Executive by the Board of
Directors of the Company which specifically identifies the manner in which such
Board believes that the Executive has not substantially performed his duties
and the Executive is given a reasonable time after such demand substantially to
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perform his duties, and (ii) 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 members of the Board of Directors of the Company at a
meeting thereof called and held for the purpose (after reasonable notice to the
Executive and an opportunity for him, together with his counsel, to be heard
before such Board), finding that in the good faith opinion of the Board of
Directors of the Company the Executive was guilty of conduct set forth above in
clause (i)(A) or (i)(B) of this Section 1(c) and specifying the particulars
thereof in detail. The Executive's employment shall in no event be considered
to have been terminated by the Company for Cause if the act or failure to
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act upon which such termination is based (x) was done or omitted to be done (1)
as a result of bad judgment or negligence on his part, or (2) without intent of
gaining therefrom directly or indirectly a profit to which the Executive was
not legally entitled or (3) as a result of his good faith belief that such act
or failure to act was in or was not opposed to the interests of the Company, or
(y) is an act or failure to act in respect of which the Executive meets the
applicable standard of conduct prescribed for indemnification or reimbursement
or payment of expenses under the By-laws of the Company or the laws of the
state of its incorporation or the directors' and officers' liability insurance
of the Company, in each case as in effect at the time of such act or failure to
act.
(d) Notice of Termination. Any termination by the Company for
Disability or Cause shall be communicated by Notice of Termination to the
Executive. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice in writing which shall indicate the specific termination
provision in this Agreement relied upon and shall set 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.
(e) Termination Date. As used herein, "Termination Date" shall mean
(i) if employment is terminated by the Company for Disability, 30 days after
Notice of Termination is given (provided that the Executive shall not have
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returned to the performance of his duties on a full-time basis during such
30-day period), (ii) if employment is terminated by the Company for Cause, the
date on which a Notice of Termination is given and (iii) if employment is
terminated for any other reason, the date on which the Executive ceases to
perform his duties as an officer of the Company; provided, however, that, in
the case of any termination by the Company, if within 30 days after any
required Notice of Termination is given the Executive, the Executive notifies
the Company that a dispute exists concerning the termination, the Termination
Date shall be the date on which the dispute is finally determined, either by
written agreement of the parties or by a final judgment, order or decree of
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected); provided further, however, that if the
dispute is resolved in favor of the Company, the Termination Date shall not be
so extended but shall be the date determined under clauses (i) and (ii) of this
Section 1(e).
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2. Compensation Upon Termination.
(a) If the Executive's employment is terminated by the Company for
Disability or Cause or by the Executive for any reason, the Company shall have
no obligation to pay any compensation to the Executive under this Agreement in
respect of periods beginning on and after the Termination Date, but this
Agreement shall have no effect on any other obligation the Company may have to
pay the Executive compensation to which he may otherwise be entitled.
(b) If the Company shall terminate the Executive's employment other
than for Disability or Cause, then the Company shall pay to the Executive as
severance pay in a lump sum on the fifth day following the Termination Date the
following amounts:
(i) his full base salary through the Termination Date at the rate
in effect on the date hereof plus any increases therein subsequent thereto;
(ii) in lieu of any further salary payments, incentive compensation
awards or profit-sharing plan allocations to the Executive for periods
subsequent to the Termination Date, an amount equal to the product
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of (A) the sum of (1) his annual base salary at the rate in effect on the
date hereof plus any increases therein subsequent thereto, plus (2) the
greater of 45% of his annual base salary in effect in 1996 and the amount
awarded to him under Article XII of the By-laws of the Company and any
other plans or any arrangements of the Company and its affiliates (the
"Incentive Compensation Plans") for the calendar year immediately
preceding the year in which the Termination Date occurs (whether or not
fully paid), but (if the Termination Date occurs in 1997 or a later year)
not less than the amount the Executive would have received if the
Executive had received the same percentage of the total amount available
for allotment as he receives for 1996, plus (3) the greater of the amount
that was allocated to the Executive's account under the Defined
Contribution Plan of American Brands, Inc. and Participating Operating
Companies (the "Profit-Sharing Plan"), including the Company 401(k)
matching contribution thereto, the profit-sharing provisions of the
Supplemental Plan of
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American Brands, Inc. (the "Supplemental Plan"), including the Company
matching award related to the supplemental tax deferred amounts therein,
and any other defined contribution plan of the Company or an affiliate
thereof for 1996 and the amount that would have been required to be so
allocated to him for the year immediately preceding the year in which the
Termination Date occurs, multiplied by (B) the lesser of the number one
and the fraction of a year from the Termination Date to the Executive's
Normal Retirement Date (as defined in the Retirement Plan for Employees
and Former Employees of American Brands, Inc. (the "Retirement Plan"));
and
(iii) all legal fees and expenses incurred by the Executive as a
result of such termination (including, but not limited to, all such fees
and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement).
(c) If the Company shall terminate the Executive's employment other
than for Disability or Cause, the Company
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shall maintain in full force and effect, for the Executive's continued benefit
for a one-year period (or, if shorter, the period until his Normal Retirement
Date) after the Termination Date, all employee life, health, accident,
disability, medical and other employee welfare benefit plans, programs or
arrangements in which he was participating immediately prior to the date hereof
plus all improvements therein subsequent thereto, provided that his continued
participation is possible under the terms and provisions of such plans,
programs and arrangements. In the event that the Executive's participation in
any such plan, program or arrangement is barred, the Company shall arrange to
provide him with benefits substantially similar to those which he would have
been entitled to receive under such plan, program or arrangement if he had
remained a participant for such additional one-year period (or, if shorter,
such additional period until his Normal Retirement Date) after the Termination
Date.
(d) If the Company shall terminate the Executive's employment other
than for Disability or Cause, then in addition to the retirement benefits to
which the Executive
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is entitled under the Retirement Plan, the Supplemental Plan and any other
defined benefit pension plan maintained by the Company or any affiliate, and
any other program, practice or arrangement of the Company or any affiliate to
provide the Executive with a defined pension benefit after termination of
employment, and any successor plans thereto (all such plans being collectively
referred to herein as the "Pension Plans"), the Company shall pay the Executive
monthly beginning at the earliest date that payments commence under any of the
Pension Plans an amount equal to the excess of (i) over (ii) below where
(i) equals the sum of the aggregate monthly amounts of pension
payments (determined as a straight life annuity) to which the Executive
would have been entitled under the terms of each of the Pension Plans in
which he was an active participant (without regard to any amendment made
subsequent to the date hereof which adversely affects in any manner the
computation of the Executive's benefits) determined as if he were fully
vested thereunder and had accumulated one additional year (or, if less,
the fraction of a year
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from the Termination Date to the Executive's Normal Retirement Date) of
Service thereunder (subsequent to his Termination Date) at his rate of
Actual Earnings in effect on the date hereof plus any increases subsequent
thereto,
and where
(ii) equals the sum of the aggregate monthly amounts of
pension payments (determined as a straight life annuity) to which the
Executive is entitled under the terms of each of the Pension Plans in
which he was an active participant at the date hereof or subsequently.
For purposes of clause (i), the amounts payable pursuant to Sections
2(b)(ii)(A)(1) and (2) and (2)(b)(ii)(B) shall be considered as part of the
Executive's Actual Earnings and such amounts shall be deemed to represent one
year (or, if less, the fraction of a year from the Termination Date to the
Executive's Normal Retirement Date) of Actual Earnings for purposes of
determining his highest consecutive five-year average rate of Actual Earnings.
The supplemental pension benefits determined under this Section 2(d) shall be
payable by the Company to the Executive and his
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contingent annuitant, if any, or to the Executive's surviving spouse as a
spouse's benefit if the Executive dies prior to commencement of benefits under
this Agreement, in the same manner and for as long as his pension benefits
under the Supplemental Plan and shall be adjusted actuarially to reflect
payment in a form other than a straight life annuity. Benefits hereunder which
commence prior to age 60 shall be actuarially reduced to reflect early
commencement to the extent, if any, provided in the Retirement Plan as if the
Executive's Termination Date were an Early Retirement Date. All capitalized
terms used in this Section 2(d) shall have the same meaning as in the
Retirement Plan as in effect on the date hereof, unless otherwise defined
herein or otherwise required by the context.
(e) If the Company shall terminate the Executive's employment other
than for Disability or Cause, the Company shall pay to the Executive as
additional severance pay in a lump sum on the fifth day following the
Termination Date an amount, if any, equal to the nonvested portion of his
account balances under the Profit-Sharing Plan and the
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defined contribution plan of any affiliate of the Company in which there is
maintained for him an account balance which is not fully vested.
(f) If the Company shall terminate the Executive's employment other
than for Disability or Cause, the Executive shall be entitled to the following
as incentive compensation through the Termination Date:
(i) the unpaid portion of the amount awarded to him as incentive
compensation under the Incentive Compensation Plans for the calendar year
immediately preceding the year in which the Termination Date occurs,
payable at the time awards thereunder are normally paid; and
(ii) incentive compensation under the Incentive Compensation Plans
for the calendar year in which the Termination Date occurs, payable at the
time awards thereunder are normally paid, in an amount equal to the amount
the Executive would have received thereunder for such period if he had
been allocated a percentage of the total amount
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available for allotment equal to the same percentage of the total
amount available for allotment as he is allocated for 1996 or, if
higher, the percentage for the calendar year immediately preceding the
year in which the Termination Date occurs (provided that such
incentive compensation shall be 45% of his annual base salary in
effect in 1996 if the Termination Date occurs in 1996), with such
incentive compensation amount prorated for the portion of the year
(g) If the Company shall terminate the Executive's employment other
than for Disability or Cause and a dispute exists concerning the termination as
set forth in Section 1(e), the Company shall continue to pay the Executive's
full base salary through the date the dispute is finally resolved as provided
in Section 1(e).
(h) The Executive shall not be required to mitigate the amount of
any payment provided for in this Section 2 by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this Section 2
be reduced by any compensation earned by the Executive as the result of
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employment by another employer after the Termination Date or by any other
compensation.
(i) Subject to Section 2(j), this Agreement and the obligations of
the Company hereunder shall not be in derogation of any other obligations of
the Company not set forth herein to pay any compensation or to pay or provide
any benefit to the Executive.
(j) Notwithstanding any other provision of this Agreement, (a) any
amount otherwise payable to the Executive pursuant to the agreement dated as of
January 29, 1996 between the Company and the Executive providing compensation
after termination of employment following a change in control of the Company
shall be reduced by the amount of any payments made by the Company to the
Executive under this Section 2, and (b) any benefits to which the Executive is
entitled under the Company's severance pay program covering salaried employees
generally shall be reduced by benefits paid under Section 2(b)(ii) of this
Agreement.
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3. Successors; Binding Agreement.
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, and any parent
company thereof, by agreement or agreements in form and substance satisfactory
to the Executive, expressly to assume and agree to perform this Agreement, and
in the case of any such parent company expressly to guarantee and agree to
cause the performance of this Agreement, in the same manner and to the same
extent as 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
defined in the first sentence of this Agreement and any successor to all or
substantially all its business or assets or which otherwise becomes bound by
all the terms and provisions of this Agreement, whether by the terms hereof, by
operation of law or otherwise.
(b) 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
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the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive and his personal or legal
representatives and successors in interest under this Agreement.
4. Term. This Agreement shall continue in full force and effect
until the third anniversary of the date that notice of termination of this
Agreement is given by the Company to the Executive or by the Executive to the
Company.
5. Notice. Any notice, demand or other communication required or
permitted under this Agreement shall be effective only if it is in writing and
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Company:
American Brands, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Secretary
If to the Executive:
Xxxxx X. Xxxxxxx
0 Xxxxxx Xxxx
Xxx Xxxxxxxxx, Xxxxxxxxxxx 00000
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or to such other address as either party may designate by notice to the other
and shall be deemed to have been given as of the date so personally delivered
or mailed.
6. Miscellaneous. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware. This Agreement cannot be
modified or any term or condition waived in whole or in part except by a
writing signed by the party against whom enforcement of the modification or
waiver is sought. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. The headings in this Agreement are included for convenience
of reference only and shall not in any way affect the meaning or interpretation
of this Agreement.
7. Separability. The invalidity or unenforceability of any
provision of this Agreement shall
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not affect the validity or enforceability of any other provision of this
Agreement.
8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, and
such counterparts will together constitute but one Agreement.
9. Withholding of Taxes. The Company may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes as shall
be required pursuant to any law or governmental regulation or ruling.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its officer thereunto duly authorized and its seal to be hereunto affixed
and attested and the Executive has hereunto set his hand as of the date first
above written.
[Seal] AMERICAN BRANDS, INC.
By_________________________________
SRUPANO CHIEF
ADMINISTRATIVE
OFFICER
ATTEST:
__________________________
Secretary
__________________________________
Xxxxx X. Xxxxxxx
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