EXHIBIT 10j12
SEVERANCE AGREEMENT
AGREEMENT dated as of November 18, 1997 between FORTUNE BRANDS, INC.,
a Delaware corporation (the "Company"), and XXXX X. XXXXXXX (the "Executive"),
W I T N E S S E T H :
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WHEREAS, the Company has offered full-time employment to the Executive
and the Executive desires to accept such offer, 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 her employment; and
WHEREAS, the Company desires to induce the Executive to join its full-
time employ by providing her with the assurance of receiving certain severance
benefits; 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.
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(a) Entitlement to Benefits. If and only if during the term of this
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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 l),
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 her
employment with the Company is terminated as a result of her death, by the
Company for Disability or Cause or by the Executive for any reason.
(b) Disability. Termination of employment by the Company for
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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 been absent from her 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 her duties.
(c) Cause. Termination of employment by the Company for Cause shall
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be deemed to have occurred only if (i) termination shall have been the result of
(A) an
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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 her at the expense of the Company, or (B) the Executive's willful
and continued failure substantially to perform her duties and responsibilities
as an officer of the Company (other than any such failure resulting from her
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 her duties and the Executive
is given a reasonable time after such demand substantially to perform her
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 her, together with her 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
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(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 act upon which such
termination is based (x) was done or omitted to be done (l) as a result of bad
judgment or negligence on her 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 her 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
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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
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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
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(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
returned to the performance of her 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 her
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
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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).
2. Compensation Upon Termination.
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(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 she 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) her full base salary through the Termination Date at the rate
in effect on the date
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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 of (A)
the sum of (1) her annual base salary at the rate in effect on the date
hereof plus any increases therein subsequent thereto, plus (2) the greater
of $94,500 and the amount awarded to her under the Annual Executive
Incentive Compensation Plan 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), plus\\ (3) the greater
of the amount that was allocated to the Executive's account under the
Defined Contribution Plan of Fortune 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 Fortune Brands, Inc. (the "Supplemental Plan"),
including
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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 1998 and the amount that would have been required to
be so allocated to her (assuming that she elected the maximum employee
contribution) 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 Fortune 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 shall maintain in full force and
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effect, for the Executive's continued benefit for a one-year period (or, if
shorter, the period until her 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 she was
participating on the date hereof plus all improvements therein subsequent
thereto, provided that her 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 her with benefits substantially similar to
those which she would have been entitled to receive under such plan, program or
arrangement if she had remained a participant for such additional one-year
period (or, if shorter, such additional period until her 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 is entitled under the Retirement Plan, the Supplemental Plan
and any other defined benefit pension plan maintained by the Company or any
affiliate,
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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 she 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 she were fully
vested thereunder and had accumulated one additional year (or, if less, the
fraction of a year from the Termination Date to the Executive's Normal
Retirement Date) of Service thereunder (subsequent to his Termination Date)
at her rate of Actual Earnings in effect on
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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 she 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)(l) 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 her 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 her pension benefits under the Supplemental Plan and
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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 her
account balances under the Profit-Sharing Plan and the defined contribution plan
of any affiliate of the Company in which there is maintained for her 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:
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(i) the unpaid portion of the amount awarded to her 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 she had
been awarded an amount for the year in which the Termination Date occurs
equal to the amount awarded to her for the calendar year immediately
preceding the year in which the Termination Date occurs (provided that such
incentive compensation shall be $94,500 if the Termination Date occurs in
1998), with such incentive compensation amount prorated for the portion of
the year through the Termination Date.
(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
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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 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
November 18, 1997 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
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Company's severance pay program covering salaried employees generally shall be
reduced by benefits paid under Section 2(b)(ii) of this Agreement.
3. Successors; Binding Agreement.
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(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.
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(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 the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive and her
personal or legal representatives and successors in interest under this
Agreement.
4. Term. This Agreement shall continue in full force and effect
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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
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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:
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If to the Company:
Fortune Brands, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Secretary
If to the Executive:
Xxxx X. Xxxxxxx
000 Xxxx Xxxx
Xxx. 0000
Xxxxxxx, Xxxxxxxx 00000
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
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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
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and shall not in any way affect the meaning or interpretation of this Agreement.
7. Separability. The invalidity or unenforceability of any provision
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of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
8. Counterparts. This Agreement may be executed in any number of
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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
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payable under this Agreement
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all federal, state, city or other taxes as shall be required pursuant to any law
or governmental regulation or ruling.
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] FORTUNE BRANDS, INC.
By
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ATTEST:
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Secretary
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Xxxx X. Xxxxxxx
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