EXHIBIT 10m3
[Letterhead of Fortune Brands, Inc.]
December 1, 2000
Dear :
Reference is made to the agreement dated January 29, 1996
between American Brands, Inc., now called Fortune Brands, Inc. (the "Company")
and you covering the Company's obligation to make certain payments and provide
certain benefits in the event of a termination of your employment following a
change in control of the Company (the "Agreement").
In order to more precisely define the circumstances under which
a change in control of the Company would occur and the amounts payable in lieu
of an incentive bonus in the event of termination of your employment following a
change in control, as well as to reflect a change in names and addresses to
which notices may be sent under the Agreement, it is hereby agreed that the
Agreement is amended as follows:
1. The second paragraph of the Agreement containing the
definition of "Change in Control" is amended in its entirety as
follows:
The Company must, of course, remain free to effect changes
in management and terminate employment. However, in order
to induce you to remain in the employ of the Company, this
letter agreement sets forth the severance benefits which
the Company agrees will be provided to you in the event
your employment with the Company is terminated subsequent
to a Change in Control (as defined below) under the
circumstances described below. You shall also be entitled
to any Gross-Up Payment provided by the last section hereof
with respect to the exercise of stock options, performance
awards, limited rights and other awards under the Company's
Long-Term Incentive Plan and any successor plans whether or
not your employment is terminated. For purposes of this
Agreement, a "Change in Control" shall be deemed to have
occurred if (i) any person (as that term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") as in effect on
February 28, 2000) is or becomes the beneficial owner (as
that term is used in Section 13(d) of the Exchange Act, and
the rules and regulations promulgated thereunder, as in
effect on February 28, 2000) of 20% or more of the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors
("Voting Securities") of the Company, excluding, however,
the following: (A) any acquisition directly from the
Company, other than an acquisition by virtue of the
exercise of a conversion privilege unless the security
being so converted was itself acquired directly from the
Company, (B) any acquisition by the Company, (C) any
acquisition by an employee benefit plan (or related trust)
sponsored or maintained
by the Company or entity controlled by the Company, or (D)
any acquisition pursuant to a transaction that complies
with clauses (A), (B) and (C) of clause (iii) below, (ii)
more than 50% of the members of the Board of Directors of
the Company shall not be Continuing Directors (which term,
as used herein, means the directors of the Company (A) who
were members of the Board of Directors of the Company on
February 28, 2000 or (B) who subsequently became directors
of the Company and who were elected or designated to be
candidates for election as nominees of the Board of
Directors, or whose election or nomination for election by
the Company's stockholders was otherwise approved, by a
vote of a majority of the Continuing Directors then on the
Board of Directors but shall not include, in any event, any
individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest
(as such terms are used in Rule 14(a)-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on
behalf of a person other than the Board of Directors),
(iii) the Company shall be merged or consolidated with, or,
in any transaction or series of transactions, substantially
all of the business or assets of the Company shall be sold
or otherwise acquired by, another corporation or entity
unless, as a result thereof, (A) the stockholders of the
Company immediately prior thereto shall beneficially own,
directly or indirectly, at least 60% of the combined Voting
Securities of the surviving, resulting or transferee
corporation or entity (including, without limitation, a
corporation that 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)
("Newco") immediately thereafter in substantially the same
proportions as their ownership immediately prior to such
corporate transaction, (B) no person beneficially owns (as
such terms are used in Sections 13(d) and 14(d) of the
Exchange Act, and the rules and regulations promulgated
thereunder (as in effect on February 28, 2000)), directly
or indirectly, 20% or more of the combined Voting
Securities of Newco immediately after such corporate
transaction except to the extent that such ownership of the
Company existed prior to such corporate transaction and (C)
more than 50% of the members of the Board of Directors of
Newco shall be Continuing Directors or (iv) the
stockholders of the Company approve a complete liquidation
or dissolution of the Company.
2. Sections 1(c)(iii), (iv) and (v) of the Agreement are
amended in their entirety as follows:
(iii) the failure of the Company substantially to
maintain and to continue your participation in
the Company's benefit plans as in effect at
the time of a Change in Control and with all
improvements therein subsequent thereto (other
than those plans or improvement that have
expired thereafter in accordance with their
original terms), or the taking of any action
which would materially reduce your benefits
under any of such plans or deprive you of any
material fringe benefit enjoyed by you at the
time of a Change in Control. For the purposes
hereof such benefit plans shall include, but
not be limited to, the provisions for
incentive compensation under the Annual
Executive Incentive Compensation Plan of the
Company and the
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Company's Retirement Plan, Supplemental Plan
(as defined in Section 2(d)) (including the
supplemental profit-sharing and supplemental
tax deferred and related Company matching
award provisions thereof), Profit Sharing Plan
(as defined in Section 2(e)) (including the
tax deferred and related Company matching
contributions thereof) and Long-Term Incentive
Plan;
(iv) the target bonus awarded by the Compensation
and Stock Option Committee of the Company to
you under the Annual Executive Incentive
Compensation Plan of the Company subsequent to
a Change in Control is less than such amount
last awarded to you prior to a Change in
Control (or, if greater, 45% of your annual
base salary in effect in 1996);
(v) the sum of your base salary and amount paid to
you as incentive compensation under the Annual
Executive Incentive Compensation Plan of the
Company for the calendar year in which the
Change in Control occurs or any subsequent
year is less than the sum of your base salary
and the amount awarded (whether or not fully
paid) to you as incentive compensation under
the Annual Executive Incentive Compensation
Plan of the Company for the calendar year
prior to the Change in Control or any
subsequent calendar year in which the sum of
such amounts was greater;
3. Section 2(b)(ii) of the Agreement is amended in its
entirety as follows:
(ii) in lieu of any further salary payments, annual
incentive compensation awards or
profit-sharing allocations to you for periods
subsequent to the Termination Date, an amount
equal to the product of (A) the sum of (1)
your annual base salary at the rate in effect
at the time of a Change in Control plus any
increases therein subsequent thereto, plus (2)
the greater of 45% of your annual base salary
in effect in 1996, the amount that was awarded
to you under the Annual Executive Compensation
Plan of the Company as in effect at the time
of a Change in Control for the year
immediately preceding the year in which the
Change in Control occurs (but, for any such
immediately preceding year as to which the
award has not been determined and paid at the
time of the Change in Control, not less than
the amount that you would have received if you
had been awarded the same amount as for the
last year prior to the Change in Control for
which an award was actually paid) and the
amount awarded to you under such Annual
Executive Incentive Compensation Plan for the
year immediately preceding the year in which a
Notice of Termination is given, plus (3) the
greater of the amount that was allocated to
your account under the Profit-Sharing Plan (as
defined in Section 2(e)) (including the
Company 401(k) matching contribution
thereunder) and the supplemental
profit-sharing provisions (including the
Company 401(k) matching award related to the
supplemental tax
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deferred amounts therein) of the Supplemental
Plan (as defined in Section 2(d)), each as in
effect at the time of a Change in Control, for
the year immediately preceding the year in
which the Change in Control occurs and that
amount that would have been required to be so
allocated to you under each such plan for the
year immediately preceding the year in which a
Notice of Termination is given, multiplied by
(B) the number three; and"
4. Section 2(e) of the Agreement is hereby amended by changing
the reference "Defined Contribution Plan of Fortune Brands, Inc. and
Participating Operating Companies" to "Fortune Brands Retirement
Savings Plan".
5. Sections 2(j)(i) and (ii) of the Agreement are hereby
amended in their entirety as follows:
(i) the unpaid portion of the amount awarded to
you as incentive compensation under the
Company's Annual Executive Incentive
Compensation Plan for the calendar year
immediately preceding the year in which the
Termination Date occurs (but, for any such
immediately preceding year as to which the
award has not been determined and paid, not
less than the amount that you would have
received if you had been awarded the same
amount paid to you for the most recent year
for which an award was actually paid) in a
lump sum of the fifth day following the
Termination Date; and
(ii) incentive compensation under the Company's
Annual Executive Incentive Compensation Plan
as in effect at the time of a Change in
Control for the calendar year in which the
Termination Date occurs, in an amount equal to
the amount you would have received thereunder
if you had been awarded an amount for the year
in which your Termination Date occurs equal to
the amount awarded to you for the year
immediately preceding the year in which the
Change in Control occurs (but, for any such
immediately preceding year as to which the
award has not been determined and paid at the
time of the Change in Control, not less than
the amount that you would have received if you
had been awarded the same amount for the year
immediately preceding the year in which the
Change in Control occurs as the amount awarded
to you for the last year prior to the Change
in Control for which an award was actually
paid) or, if greater, the amount awarded to
you for the year immediately preceding the
year in which a Notice of Termination is
given, with such incentive compensation amount
prorated for the portion of the year through
the Termination Date and paid at the time
awards thereunder are paid under the terms of
such Annual Executive Incentive Compensation
Plan as in effect immediately prior to the
Change in Control. In the event the Notice of
Termination is given prior to your first full
year's award under the Annual Executive
Incentive Compensation Plan, the incentive
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compensation amount in this clause (ii) shall
be no less than 45% of your annual base salary
in 1996, which amount shall then be subject to
proration as set forth in the immediately
preceding sentence. The payments under this
Section 2(j)(ii) shall be reduced by the
amount actually paid to you under the
Company's Annual Executive Incentive
Compensation Plan for the calendar year in
which the Termination Date occurs.
6. All notices under this Agreement shall be delivered or sent
to the respective addresses set forth on the first page of this
letter instead of the addresses on the first page of the January 29,
1996 letter.
7. All references to "American Brands, Inc." in the Agreement
be and they are hereby changed to references to "Fortune Brands,
Inc.".
Except as amended hereby, all provisions of the Agreement
remain in full force and effect.
Sincerely,
FORTUNE BRANDS, INC.
By______________________________
Vice President-Human Resources
Accepted this _______ day of December, 2000.
____________________________________________
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