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Exhibit
10.1
FORM OF
CHANGE IN CONTROL
AGREEMENT
AGREEMENT dated as of
between FORTUNE BRANDS, INC., a Delaware corporation (the
“Company”), and
(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;
WHEREAS, the Company
recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control may exist and
that, in the event action is taken to bring about a change in
control, uncertainty and questions may arise among management that
could result in the distraction or departure of management
personnel to the detriment of the Company and its stockholders;
and
WHEREAS, the Company has
determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of senior members
of the Company’s management to their assigned duties without
distraction in the face of the potentially disruptive circumstances
arising from the possibility of a change in control; and
WHEREAS, the Executive
desires to continue in full-time employment with the Company, but
desires 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 following a
change in control; 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 agree as follows:
1. Termination Following
Change in Control .
(a) Entitlement to
Benefits . If and only if a Change in Control (as defined in
this Section 1) of the Company occurs and if subsequent to
such Change in Control and during the term of this 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 (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 under this
Agreement 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.
(b) Change in Control
. 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 the date of
this Agreement) 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 the date of
this Agreement) 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 the date hereof 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 the date hereof), 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.
(c) 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 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.
(d) Cause .
Termination of employment by the Company shall be deemed to be for
Cause only if (i) termination shall have been the result of
(A) an act or acts of dishonesty
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on the Executive’s part that
results in Executive being indicted for a felony, 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 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 two-thirds (2/3) of the members of the Board of Directors
of the Company at a meeting 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 that the Executive was guilty of conduct set forth above in
clause (i)(A) or (i)(B) of this Section 1(d) 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
(1) as a result of bad judgment or negligence on his part, or
(2) 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.
(e) Notice of
Termination . 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
shall be communicated by Notice of Termination to the Company. For
purposes of this Agreement, a “Notice of Termination”
shall mean a notice in writing which indicates the specific
termination provision in this Agreement relied upon and sets 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.
(f) 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 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, and (iv) 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 finally determined to be the Termination Date, either by
written agreement of the parties or by a final judgment, order or
decree of court of competent jurisdiction (the time for appeal
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 be the date determined under
clauses (i) through (iv) of this Section 1(f)
.
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(g) 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) without Executive’s
express written consent, the assignment to Executive of any duties
inconsistent with his positions, duties, responsibilities and
status with the Company at the time of a Change in Control, or a
change in Executive’s reporting responsibilities, titles or
offices as in effect at the time of a Change in Control, or any
removal of him from, or any failure to re-elect Executive to, any
of such positions, except in connection with the termination of his
employment as a result of Executive’s death or by the Company
for Disability or Cause or by Executive other than for Good
Reason;
(ii) a reduction by the
Company in Executive’s then current base salary;
(iii) the failure of the
Company substantially to maintain and to continue Executive’s
participation in the Company’s benefit plans as in effect at
the time of a Change in Control and with all subsequent
improvements (other than those plans or improvements that have
expired in accordance with their original terms), or the taking of
any action which would materially reduce Executive’s benefits
under any of such plans or deprive him of any material fringe
benefit enjoyed by Executive at the time of a Change in Control.
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 Company’s
Retirement Plan, Supplemental Plan (as defined in
Section 2(b)(i)) (including the supplemental profit-sharing of
the Supplemental Plan), the Fortune Brands Retirement Savings Plan
(including the tax deferred and related Company matching
contributions) and Long-Term Incentive Plan;
(iv) the target bonus awarded
by the Compensation and Stock Option Committee of the Company to
Executive under the Annual Executive Incentive Compensation Plan of
the Company subsequent to a Change in Control is less than such
amount last awarded to Executive prior to a Change in
Control;
(v) the sum of the
Executive’s base salary and amount paid to him 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 the
Executive’s base salary and the amount awarded (whether or
not fully paid) to him as incentive compensation under the Annual
Executive Incentive Compensation Plan of the Company for the for
the calendar year prior to the Change in Control or any subsequent
calendar year in which the sum of such amounts was
greater;
(vi) the relocation of the
offices at which Executive is employed to a location more than
35 miles from his location at the time of a Change in Control
or the Company requiring Executive to be based anywhere other than
at such offices, except for required travel on the Company’s
business to an extent substantially consistent with
Executive’s business travel obligations at the time of a
Change in Control;
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(vii) the failure of the
Company to provide Executive with a number of paid vacation days at
least equal to the number of paid vacation days to which Executive
is entitled at the time of Change in Control;
(viii) any purported
termination of Executive’s employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of
subsection (e) of this Section 1 (and, if applicable,
subsection (d) of this Section 1), and for purposes of
this Agreement, no such purported termination shall be effective;
or
(ix) Executive’s good
faith determination that due to a Change in Control he is not able
effectively to discharge his duties.
2. Compensation Upon
Termination .
(a) If the Executive’s
employment is terminated by the Company for Disability or Cause or
by the Executive for other than Good 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 terminates
the Executive’s employment other than for Disability or
Cause, or if the Executive terminates his employment for Good
Reason, then in addition to the Company paying the Executive his
base salary and accrued but unpaid vacation pay through the
Termination Date, the Company shall pay to the Executive as
severance pay in a lump sum on the eighth da
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