Exhibit 10a1
------------
AMENDMENT TO SEVERANCE AGREEMENT
This AMENDMENT dated as of July 26, 1999 to the Severance Agreement
(the "Agreement") dated as of January 2, 1991, as amended, between FORTUNE
BRANDS, INC., a Delaware corporation (the "Company") and XXXXXXX X. XXXXXXX, XX
(the "Executive"),
W I T N E S S E T H :
WHEREAS, the Company (now known as Fortune Brands, Inc.) and the
Executive entered into the Agreement in order to provide severance benefits in
the event of termination of the Executive's employment and have entered into
amendments thereto, including an Amendment to Severance Agreement dated as of
August 1, 1998; and
WHEREAS, the Company and the Executive desire to terminate the
Amendment to Severance Agreement dated as of August 1, 1998 and to enter into
another Amendment to Severance Agreement in order to provide enhanced severance
benefits in the event that the Executive terminates employment for Good Reason
(as defined herein) or as a result of the Relocation (as defined herein);
NOW, THEREFORE, in consideration of the premises and to further assure
the retention of the Executive in the employ of the Company after the date of
this Amendment to Severance Agreement, the parties hereto do hereby agree as
follows:
1. The Amendment to Severance Agreement dated as of August 1, 1998
between the Company and the Executive is terminated effective upon the Company
and the Executive signing this Amendment to Severance Agreement.
2. Section 1(a) of the Agreement is hereby amended in its entirety as
follows:
"(a) Entitlement to Benefits. If and only if during the term of
the Agreement the Executive's employment with the Company is terminated
by the Company other than for Disability or Cause or by the Executive
for Good Reason or as a result of the Relocation (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 other than for Good Reason or as a result of
the Relocation."
3. Section 1(d) of the Agreement is hereby amended by changing the
first sentence thereof as follows:
"Any termination by the Company for Disability or Cause shall be
communicated by Notice of Termination to the Executive and any
termination by the Executive for Good Reason or as a result of the
Relocation shall be communicated by Notice of Termination to the
Company."
4. Section 1(e) of the Agreement is hereby amended in its
entirety as follows:
"(e) Termination Date. As used herein, 'Termination Date' shall
mean (i) if employment is terminated by the Company for
2
Disability, 30 days after Notice of Termination is given (provided
that the Executive shall not have 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, (iii) if employment is terminated for
Good Reason, the date specified in the Notice of Termination, (iv) if
employment is terminated as a result of the Relocation, December 31,
1999, being the date heretofore communicated to the Executive as his
required Relocation Date and (v) if employment is terminated for any
other reason, the date on which the Executive ceases to perform his
duties for the Company; provided, however, that if within 30 days after
any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party 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)
through (v) of this Section 1(e)."
5. Section 1(f) is hereby added to the Agreement as follows:
"(f) Good Reason. Termination of employment by the Executive for
Good Reason shall be deemed to have occurred only if the Executive
terminates his employment and provides a Notice of Termination to the
Company prior to such date for any of the following reasons:
(i) a reduction by the Company in the Executive's base salary as
in effect on July 26, 1999 plus all increases therein subsequent
thereto;
3
(ii) the failure of the Company substantially to maintain and to
continue the Executive's participation in the Company's benefit
plans as in effect on July 26, 1999 and with all improvements
therein subsequent thereto (other than those plans or improvements
that have expired thereafter in accordance with their original
terms), or the taking of any action which would materially reduce
the Executive's benefits under any of such plans or deprive the
Executive of any material fringe benefit enjoyed by him on July 26,
1999 or subsequently. For the purposes hereof such benefit plans
shall include, but not be limited to, the Incentive Compensation
Plans, the Pension Plans, the Defined Contribution Plan and the
Company's Long-Term Incentive Plans;
(iii) the sum of the Executive's base salary and the amount paid
to the Executive as incentive compensation under the Incentive
Compensation Plans for any calendar year during the term hereof is
less than 90% of the sum of the Executive's base salary and the
amount paid to the Executive under the Incentive Compensation Plans
for 1998 or any subsequent year during the term hereof for which
the sum of such amounts was greater; provided, however, that this
paragraph shall not be applicable if the cause of the reduction of
the sum of the Executive's base salary and incentive compensation
is a failure of the Company to meet performance goals under the
Incentive Compensation Plans;
(iv) the failure of the Company to provide the Executive during
each calendar year with a number of paid vacation days at least
equal to the number of paid vacation days to which he was entitled
at the date hereof plus any increases therein subsequent thereto;
(v) any purported termination of the Executive's employment by
the Company which is not effected pursuant to a Notice of
Termination, and for purposes of this
4
Agreement, no such purported termination shall be effective; or
(vi) any failure of the Company to comply with and satisfy
Section 3;
provided, however, that termination of employment by the Executive
under clauses (i), (ii) and (iii) above shall not be deemed to have
occurred for Good Reason if the reason for the compensation reduction
or failure of benefit plan coverage thereunder is due to a change in
the individual elements of aggregate compensation, which change is
applicable to officers of the Company generally, without a material
reduction in aggregate compensation."
6. Section 1(g) is hereby added to the Agreement as follows:
"(g) Relocation. Relocation means the relocation of the Company's
principal executive offices from Old Greenwich, Connecticut to
Lincolnshire, Illinois or the Company's requiring the Executive to be
based anywhere other than the Company's principal executive offices,
except for required travel on the Company's business to an extent
substantially consistent with his business travel obligations on July
26, 1999. In order to be eligible for benefits hereunder as a result of
the Relocation, the Executive must remain in the employ of the Company
until December 31, 1999, being the date heretofore communicated to the
Executive as his required Relocation Date."
7. Section 2(a) of the Agreement is hereby amended in its entirety as
follows:
"(a) If the Executive's employment is terminated by the Company
for Disability or Cause or by the Executive other than (i) for Good
Reason or (ii) as a result of the Relocation, the Company shall have no
obligation to pay any compensation to the Executive under this
Agreement in respect of
5
periods beginning on or 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."
8. Section 2(b) of the Agreement is hereby amended by adding "or the
Executive terminates his employment for Good Reason or as a result of the
Relocation," after the words "Disability or Cause," in the first sentence
thereof.
9. Section 2(c) of the Agreement is hereby amended by adding "or the
Executive terminates his employment for Good Reason or as a result of the
Relocation," after the words "Disability or Cause," in the first sentence
thereof.
10. Section 2(d) of the Agreement is hereby amended by adding "or the
Executive terminates his employment for Good Reason or as a result of the
Relocation," after the words "Disability or Cause," in the first sentence
thereof and to delete the following sentence therefrom:
"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."
11. Section 2(e) of the Agreement is hereby amended by adding "or the
Executive terminates his employment for Good Reason or as a result of the
Relocation," after the words "Disability or Cause," therein.
6
12. Section 2(f) of the Agreement is hereby amended by adding "or the
Executive terminates his employment for Good Reason or as a result of the
Relocation," after the words "Disability or Cause," in the first sentence
thereof as well as to add "and reduced by the amount actually paid for such
calendar year under the Incentive Compensation Plans" at the end of clause (ii)
thereof.
13. Section 2(g) of the Agreement is hereby amended by adding "or the
Executive terminates his employment as a result of the Relocation or for Good
Reason" after the words "Disability or Cause" therein.
14. Section 2(j) is hereby amended in its entirety as follows:
"(j) Notwithstanding any other provision of this Agreement, (a)
any amount otherwise payable to the Executive pursuant to the agreement
dated as of January 2, 1991 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
(except for Section 2(k)) 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."
15. Section 2(k) is hereby added to the Agreement as follows:
"(k) In addition to any other benefits which may be payable to the
Executive under the Pension Plans and Section 2(d) hereof, if the
Executive's employment with the Company is terminated by the Company
other than for Disability
7
or Cause, or by the Executive for Good Reason or as a result of the
Relocation, and the Termination Date occurs before the Executive
attains Early Retirement Date (as defined in the Retirement Plan), the
Company shall pay to the Executive a supplemental pension benefit in an
amount equal to the difference between (i) the benefits payable from
the Pension Plans and Section 2(d) hereof and (ii) 65% of the
Executive's accrued benefit under the Pension Plans and Section 2(d)
hereof, provided that the Executive's full accrued benefit under the
Pension Plans and Section 2(d) hereof shall be paid without reduction
for early payment if the Executive has completed at least 30 years of
Qualifying Employment (as defined in the Retirement Plan) at the date
of the Executive's termination of employment with entitlement to a
benefit hereunder.
This additional pension benefit shall be payable outside the
Pension Plans and shall commence on the first day of the month
following the Executive's termination of employment with the Company
even though pension benefits may not yet then be payable under the
Pension Plans and Section 2(d) hereof. The benefit payable under this
Section 2(k) shall be paid to the Executive in the form of a 100% joint
and survivor annuity with the Executive's spouse as contingent
annuitant if the Executive is married at the date of commencement of
payments hereunder in which event the benefit shall be further reduced
for the joint and survivor annuity coverage to the same extent as
provided in the Supplemental Plan; provided that if the Executive is
not married at the date the enhanced pension benefits commence
hereunder, the enhanced pension benefits under this Section 2(k) shall
be paid as an annuity for the Executive's life only. At the time that
benefits commence under the Supplemental Plan, the monthly benefits
payable hereunder shall then be actuarially adjusted to the form of
benefit payable under the Supplemental Plan and shall be paid in the
same form as the benefit payable under the Supplemental Plan, with
survivorship benefits hereunder then payable after the Executive's
death to the same contingent annuitant to whom benefits are payable
under the Supplemental Plan, if any, that survives the Executive.
In the event that an employee grantor trust ("Grantor Trust") has
been established among the Company, the Executive and a trustee, the
Company may provide the additional pension benefits payable
8
pursuant to Section 2(d) and Section 2(k) through the Grantor Trust
(or, at the Executive's request, the Segregated Account referred to in
the Grantor Trust) as soon as practicable after the termination of
employment of the Executive using the same actuarial basis and
methodology as for other Supplemental Plan benefits which are provided
through the Grantor Trust and assuming that the underlying monthly
pension benefits which are valued for Grantor Trust funding purposes
are payable in the form of an annuity for the life of the Executive
only and commencing immediately upon termination of employment but with
the early payment reduction calculated as if the Executive had
terminated employment at age 55."
16. All references to "American Brands, Inc." in the Agreement
be and they are hereby changed to references to "Fortune Brands, Inc."
IN WITNESS WHEREOF, the Company has caused this Amendment to Severance
Agreement to be signed by its officer thereunto duly authorized and its seal to
be hereunder affixed and attested and the Executive has hereunto set his hand as
of the date first written above.
FORTUNE BRANDS, INC.
(Corporate Seal) By /s/ Xxxx X. Xxxxxxx
---------------------------------
Xxxx X. Xxxxxxx
ATTEST: Vice President-Human Resources
/s/ Xxxxx X. Xxxxxxx, Xx. /s/ Xxxxxxx X. Xxxxxxx, XX
----------------------------- -----------------------------
Secretary XXXXXXX X. XXXXXXX, XX
9
