Exhibit 10.6

     
 
  NOTICE OF NONQUALIFIED
 
  STOCK OPTION AGREEMENT

September 29, 2003

         
Company: [
  ]   Date(s) First Exercisable:
Date of Grant: [
  ]     [     ] — September 29, 2004
No. of Shares: [
  ]     [     ] — September 29, 2005
Option Price per Share: [
  ]     [     ] — September 29, 2006

PERSONAL AND CONFIDENTIAL
[Name]
[Address]
Dear [       ]:
We are pleased to inform you that as a key employee of the company referred to
above you have been granted a Nonqualified Stock Option by the Compensation and
Stock Option Committee of the Board of Directors under the Fortune Brands, Inc.
2003 Long-Term Incentive Plan, as amended (the “Plan”).
These options are granted under and governed by the Plan and the September 2003
Nonqualified Stock Option Terms and Conditions (the “Terms”). For your
information, we have attached to this notice the following documents: (1) the
Terms, (2) the Plan, (3) the Plan Prospectus, and (4) Notice of Exercise of
Stock Option and Notice of Exercise of Limited Right forms. You should review
these documents carefully in order to fully understand how your option operates
and your rights as an option recipient.
Under the terms of the 2003 Plan, you do not need to sign and return, or
otherwise acknowledge your receiving, this notice. If you have any questions
about your options, please contact Grace Cherico, Stock Plans Administrator, at
(847) 484-4423.
Sincerely yours,

     
FORTUNE BRANDS, INC.
   
 
         
Senior Vice President — Strategy
   
and Corporate Development
   

 

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SEPTEMBER 2003
NONQUALIFIED STOCK OPTION
TERMS AND CONDITIONS
As a participant in the 2003 Long-Term Incentive Plan (the Plan), you will be
able to purchase shares of Common Stock of Fortune Brands, Inc. (Fortune).
Subject to the terms and conditions below, the minimum amount that may be
purchased at any one time is 50 shares unless you have fewer remaining shares
covered by your option.
The date of the grant, the maximum number of shares the option entitles you to
purchase, the option price per share and the date or dates on which the option
will ordinarily be first exercisable are listed at the top of your Notice of
Incentive Stock Option Award. The option is not intended (but not guaranteed) to
be an incentive stock option within the meaning of Section 422 of the Internal
Revenue Code.
          1. Exercise.
          (a) Except as provided in this paragraph 1 and paragraphs 3, 4, 5 and
9, the option shall be exercisable during the period beginning on the date or
dates set forth under the heading “Date(s) First Exercisable” in the Notice of
Incentive Stock Option Award and ending ten years from the date of grant (its
expiration date). During this period, the option is exercisable in whole or in
part from time to time in amounts of not less than 50 shares (except that if you
have fewer than 50 shares remaining covered by the option, the option may be
exercised for the full number of remaining shares).
          (b) The option shall not become exercisable unless you remain employed
by Fortune or one of its subsidiaries for one year from the date of grant,
except in the event of your death and except as provided in paragraph 9.
          2. Transferability of Option. The option shall not be transferable by
you except in the event of your death. During your lifetime the option shall be
exercisable only by you.
          3. Death. If your employment by Fortune or an entity in which Fortune
has an equity interest terminates by reason of your death, the option may
immediately be exercised in full and shall continue to be exercisable in full
until its expiration date, provided that the option may be exercised within one
year from the date of your death even if this one-year period extends beyond the
expiration date.

 

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          4. Retirement. If your employment by Fortune or an entity in which
Fortune has an equity interest terminates by reason of disability or Retirement
(as defined below), provided that you have remained in the employ of Fortune or
an entity in which Fortune has an equity interest for one year from the date of
grant, the option shall become immediately exercisable in full and shall
continue to be exercisable in full until its expiration date. For purposes of
this paragraph, Retirement means either (a) termination of employment on or
after attaining age 55 and completion of at least ten years of service with
Fortune or an entity in which Fortune has an equity interest, provided that
Retirement shall not include termination of employment by reason of failure to
maintain work performance standards, violation of company policies or dishonesty
or other misconduct prejudicial to the company, or (b) retirement under Section
3(b) of the Fortune Brands, Inc. Supplemental Plan.
          5. Termination of Employment. If your employment by Fortune or a
entity in which Fortune has an equity interest terminates other than in the
circumstances referred to in paragraphs 3 and 4, any portion of the option that
is not yet exercisable shall not thereafter become exercisable and any portion
of the option that is exercisable shall terminate and cease to be exercisable
three months from the date of your termination from employment, except as
otherwise provided in paragraph 9; provided that in no event shall the option be
exercisable after the expiration of ten years from the date of grant. For the
purpose of these terms and conditions, your employment by an entity in which
Fortune has an equity interest shall be considered terminated on the date on
Fortune sells or otherwise divests its equity interest in your employer.
          6. Stock Exchange Listing. Fortune is not obligated to deliver any
shares until they have been listed on each stock exchange on which Fortune’s
common stock is listed and until Fortune is satisfied that all applicable laws
and regulations have been met. Fortune agrees to use its best efforts to list
the shares and meet all legal requirements so that the shares can be delivered.
No fractional shares will be delivered.
          7. Transfer of Employment; Leave of Absence. For the purposes of your
option, (a) if you transfer between Fortune and an entity in which Fortune has
an equity interest or from one entity in which Fortune has an equity interest to
another entity in which Fortune has an equity interest, without an intervening
period, it will not be considered a termination of employment, and (b) any leave
of absence granted in writing will not constitute an interruption in your
employment.
          8. Adjustments.
          (a) In the event of any merger, consolidation, stock or other non-cash
dividend, extraordinary cash dividend, split-up, spin-off, combination or
exchange of shares, reorganization or recapitalization or change in
capitalization, or any other similar

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corporate event, the number and kind of shares that are subject to the option
and the option price per share immediately prior to such event may be
proportionately and appropriately adjusted, without increase or decrease in the
aggregate option price.
          (b) The determination of the committee of the Board of Directors of
Fortune administering the Plan (the Committee) as to the terms of any adjustment
is binding and conclusive upon you and any other person who is entitled to
exercise the option.
          9. Change in Control of Fortune.
          (a) In the event of a Change in Control (as defined in the attached
Plan), your option, if it is not then immediately exercisable in full and
provided that it has not expired, shall become immediately exercisable in full
and shall remain exercisable in full. In addition, under certain circumstances
as described in Section 12(b) of the attached Plan, you may have the right to
receive cash instead of exercising your option. This right, called a Limited
Right, may be automatically exercised under certain circumstances described in
the attached Plan. You will be informed of any Change in Control.
          (b) Notwithstanding paragraphs 1(b), 3, 4 and 5, the provisions of
this paragraph 9(b) will be applicable in the event of a termination of your
employment during the 60-day period following a Change in Control. Your option
shall not terminate or cease to be exercisable as a result of the termination of
your employment during this period, but shall be exercisable in full throughout
it; provided, however, that in no event shall your option be exercisable after
ten years from its date of grant (except in the event of death as provided in
paragraph 3 above). However, in the event that on the date of termination you
have not held your option for more than six (6) months, the preceding sentence
shall apply only if your employment has been terminated other than for just
cause (as defined below) or you have voluntarily terminated your employment for
certain reasons: (i) because you in good faith believe that as a result of the
Change in Control you are unable effectively to discharge your duties or the
duties of the position you occupied immediately prior to the Change in Control,
or (ii) because of a reduction in your aggregate compensation or in your
aggregate benefits below that in effect immediately prior to the Change in
Control. For purposes of this paragraph, termination shall be for “just cause”
only if it is based on fraud, misappropriation or embezzlement on your part
which results in a final conviction of a felony. Nothing in this paragraph 9(b)
limits any rights otherwise provided in the event of your death, disability or
Retirement (as defined in paragraph 4 above), or your right to exercise your
option following a termination of employment as provided in paragraph 5.

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          10. Stockholder Rights. Neither you nor any other person shall have
any rights of a stockholder as to shares under the option until, after proper
exercise of the option, such shares shall have been recorded on Fortune’s
official stockholder records as having been issued or transferred.
          11. Notice of Exercise. Subject to these terms and conditions, the
option may be exercised, by a written notice of exercise on a form approved by
the Committee that (i) is signed by the person or persons exercising the option,
(ii) is delivered to the Stock Plans Administrator of Fortune, 300 Tower
Parkway, Lincolnshire, Illinois (or to such other person and place as Fortune
may specify in writing), (iii) signifies election to exercise the option as
indicated in the notice of exercise, (iv) states the number of shares as to
which the option is being exercised, and (v) unless otherwise provided in the
notice of exercise, is accompanied by payment in full of the option price of
such shares. The notice of exercise may be delivered by facsimile transmission.
Any notice of exercise delivered as required by this paragraph will be effective
only in accordance with the provisions of and to the extent set forth in the
notice of exercise. If a properly executed notice of exercise is not delivered
to the Stock Plans Administrator (or other person designated by Fortune), by the
applicable expiration date specified in paragraphs 3, 4, 5 and 9, the notice
will be deemed null and void and of no effect. If notice of exercise of the
option is given by a person other than you, Fortune may require as a condition
to exercising the option that appropriate proof of the right of such person to
exercise the option be submitted to Fortune. Certificates for any shares
purchased upon exercise will be issued and delivered as soon as practicable.
          12. Exercise of Limited Right. In the event a Limited Right referred
to in paragraph 9 becomes exercisable, it shall be exercised in whole or in part
by giving written notice of such exercise, on a form approved by the Committee,
to the Stock Plans Administrator (or other person designated by Fortune). No
written notice is required if the Limited Right is automatically exercised as
provided in Section 12(b) of the attached Plan. The exercise will be effective
as of the date specified in the notice of exercise, but not earlier than the
date the notice is actually received by the Stock Plans Administrator. The
notice must be actually received by the Stock Plans Administrator by no later
than the close of business on the last day of the applicable Limited Right
Exercise Period, as defined in the attached Plan (or the date the related option
expires, whichever is earlier).
          13. Payment of Option Price. You may pay the option price for shares
(i) in cash, (ii) by the delivery of shares of Fortune Common Stock that have
been held by you for at least one year and that have a total market value equal
to the option price, or (iii) by a combination of cash and such shares that have
been held by you for a period of at least one year and that have a total market
value which, together with such cash, equals the option price. The “market
value” of shares or per share of Fortune Common Stock as of any date means the
value determined by reference to the closing price of a share of

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Fortune Common Stock as finally reported on the New York Stock Exchange for the
trading day next preceding such date. You may also pay the option price from the
proceeds of the sale of shares covered by the option, called a cashless
exercise, to the extent provided in the notice of exercise referred to in
paragraph 11.
          14. Tax Withholding. Upon exercise of any portion of your option (or
at such later time as taxable income from the exercise is deemed to be
realized), Federal income tax withholding (and state and local income tax
withholding, if applicable) may be required by the Company in respect of taxes
on income realized by you. The Company may withhold such required amounts from
your future paychecks or may require that you deliver to the Company the amounts
to be withheld. In addition, you may pay the minimum required Federal income tax
withholding (and state and local income tax withholding, if applicable) by
electing either to have the Company withhold a portion of the shares of Common
Stock otherwise issuable upon exercise of the option, or to deliver other shares
of Common Stock owned by you, in either case having a fair market value (on the
date that the amount of tax you have elected to have withheld is to be
determined) of the minimum amount to be withheld, provided that the election
shall be irrevocable and shall be subject to such rules as the Committee may
adopt. You may also arrange to have such tax (or taxes) paid directly to the
Company on your behalf from the proceeds of the sale of Common Stock to the
extent provided in the notice of exercise referred to in paragraph 11.

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