exv10wa1



 



Exhibit 10a1



FORTUNE BRANDS, INC.


2002 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

(revised as of April 29, 2003)


1. Purpose of Plan


     The purpose of this 2002 Non-Employee Director Stock Option Plan (the
“Plan”) is to enable Fortune Brands, Inc. (“Fortune”) to attract and retain
Eligible Directors (as defined below) of outstanding ability by making it
possible to offer them the opportunity to acquire shares of common stock of
Fortune and thereby further align their interests with those of other
stockholders of Fortune.


2. Definitions


     As used in the Plan, the following words shall have the following
meanings:


     (a)  “Board of Directors” means the Board of Directors of Fortune;


     (b)  “Committee” means the Nominating and Corporate Governance Committee of
the Board of Directors;


     (c)  “Common Stock” means common stock of Fortune;


     (d)  “Eligible Director” means:



		
	 	     (i) Any current or future director of Fortune who is not a full-time
employee of Fortune or a Subsidiary who became a member of the Board of
Directors on or after April 30, 1997; or
	 
	 	     (ii) Any current director of Fortune who is not a full-time employee
of Fortune or a Subsidiary, who became a director prior to April 30, 1997
and who irrevocably elected to cease to accrue benefits under Fortune’s
retirement benefit plan for non-employee directors for so long as the
Company maintains the Non-Employee Director Stock Option Plan adopted on
April 30, 1997, this Plan, or a successor plan hereto; or
	 
	 	     (iii) Any current or future director of Fortune who ceases to serve
as an employee of Fortune or a Subsidiary and to whom the Committee
determines in its sole discretion to grant options.



     (e)  “Exchange Act” means the Securities Exchange Act of 1934, as amended;


     (f)  “Limited Right” means a right to receive cash in lieu of the exercise
of an Option as set forth in Section 7(b);


     (g)  “Option” means a stock option to purchase shares of Common Stock which
is intended not to qualify as an incentive stock option as defined in Section
422 of the Internal Revenue Code;


     (h)  “Option Agreement” means an agreement between Fortune and a
Participant that sets forth the terms, conditions and limitations applicable to
an Option;


     (i)  “Participant” means a person to whom one or more Options have been
granted that have not all been forfeited or terminated under the Plan;


 






 


     (j)  “Retirement” means retirement from service as a member of the Board of
Directors by an Eligible Director after five or more years of service as an
Eligible Director; and


     (k)  “Subsidiary” means any corporation other than Fortune in an unbroken
chain of corporations beginning with Fortune if each of the corporations other
than the last corporation in the unbroken chain owns 50% or more of the voting
stock in one of the other corporation in such chain.


3. Administration of Plan


     The Plan shall be administered by the Committee whose members shall be
appointed by the Board of Directors and consisting of at least two members of
the Board of Directors. Members of the Committee shall qualify to administer
the plan for purposes of Rule 16b-3 (and any other applicable rule) promulgated
under Section 16(b) of the Exchange Act. The Committee may adopt its own rules
of procedure, and the action of a majority of the Committee, taken at a
meeting, or taken without a meeting by unanimous written consent of the members
of the Committee, shall constitute action by the Committee. The Committee
shall have the power and authority to administer, construe and interpret the
Plan, to make rules for carrying it out and to make changes in such rules.


4. Granting of Options


     Subject to all the terms and conditions of the Plan, each Eligible
Director shall, for each of the years 2002 through 2006 be granted an Option
covering 2,500 shares of Common Stock per year for services as a non-employee
Fortune director during such year, such grant to be made on the date of the
Annual Meeting of stockholders of Fortune during such year. To be entitled to
receive such Option with respect to any year, an Eligible Director must be
serving as a director of Fortune immediately following such Annual Meeting;
provided, however, that the Committee in its discretion may award interim or
partial grants to Eligible Directors to reflect partial years of service by
Eligible Directors who are elected or appointed to the Board of Directors after
the most recent Annual Meeting. Options under the Plan may be in such form and
contain such terms, conditions and limitations as the Committee may determine.
The terms, conditions and limitations of each Option under the Plan shall be
set forth in an Option Agreement, in a form approved by the Committee,
consistent, however, with the terms of the Plan.


5. Grant of Options


     (a)  The terms and conditions with respect to each Option granted under the
Plan shall be consistent with the following:



		
	 	     (i) The Option price per share shall not be less than fair market
value at the time the Option is granted.
	 
	 	     (ii) Exercise of the Option shall be conditioned upon the
Participant named therein having remained as an Eligible Director of
Fortune for at least eleven months after the date of the grant of the
Option; provided, however, that this condition shall not be applicable in
the event of the death of the Participant or as otherwise provided in
Section 7(b). The Option shall be exercisable in whole or in part from
time to time during the period beginning at the completion of the
required time stated in the Option Agreement and ending at the expiration
of ten years from the date of grant of the Option, unless an earlier
expiration date shall be stated in the Option or the Option shall cease
to be exercisable pursuant to Section 5(a)(iv) or because of the exercise
of the Limited Right pertaining thereto as provided in Section 7(b).
	 
	 	     (iii) Payment in full of the Option price shall be made upon
exercise of each Option and may be made in cash, by the delivery of
shares of Common Stock with a fair market value



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	 	equal to the Option
price, provided the Participant has held such shares for a period of at
least one year, or by a combination of cash and such shares that have
been held by the Participant for a period of at least one year whose fair
market value together with such cash shall equal the Option price. The
Committee may also permit Participants, either on a selective or
aggregate basis, simultaneously to exercise Options and sell the shares
of Common Stock thereby acquired pursuant to a brokerage or similar
arrangement, approved in advance by the Committee, and use the proceeds
from such sale as payment of the purchase price of such shares.
	 
	 	     (iv) If a Participant’s status as an Eligible Director ceases other
than by reason of the Participant’s death, disability or Retirement, the
Participant’s Option shall terminate and cease to be exercisable 30 days
after such cessation of service except as otherwise provided in Section
7(b). If a Participant’s status as an Eligible Director terminates by
reason of death, disability or Retirement, the Participant’s Option shall
continue to be exercisable until the expiration date stated in the Option
Agreement, provided that an Option may be exercised within one year from
the date of death even if later than such expiration date.
	 
	 	     (v) Each Option shall contain a Limited Right to receive cash in
lieu of shares under the circumstances set forth in Section 7(b).



     (b)  The holder of an Option who decides to exercise the Option in whole or
in part shall give notice to the Secretary of Fortune of such exercise in
writing on a form approved by the Committee. Any exercise shall be effective
as of the date specified in the notice of exercise, but not earlier than the
date the notice of exercise, together with payment in full of the Option price,
is actually received and in the hands of the Secretary of Fortune.


6. Limitations and Conditions


     (a)  The total number of shares of Common Stock that may be made subject to
Options under the Plan is 200,000 shares. Such total number of shares may
consist, in whole or in part, of unissued shares or reacquired shares. The
foregoing number of shares may be increased or decreased by the events set
forth in Section 7(a). In the event that Fortune or a Subsidiary makes an
acquisition or is party to a merger or consolidation and Fortune assumes the
options or other awards consistent with the purpose of this Plan of the company
acquired, merged or consolidated which are administered pursuant to this Plan,
shares of Common Stock subject to the assumed options or other awards shall not
count as part of the total number of shares of Common Stock that may be made
subject to Options under this Plan.


     (b)  Any shares that have been made subject to an Option that cease to be
subject to the Option (other than by reason of exercise or payment of the
Option) shall again be available for grant and shall not be considered as
having been theretofore made subject to option.


     (c)  No Option shall be granted under the Plan after December 31, 2006, but
the terms of Options granted on or before the expiration thereof may extend
beyond such expiration. At the time an Option is granted or amended or the
terms or conditions of an Option are changed, the Committee may provide for
limitations or conditions on such Option.


     (d)  No Option or portion thereof shall be transferable by the Participant
otherwise than by will or by the laws of descent and distribution, except that
an Option may be transferred by gift to any member of the Participant’s
immediate family or to a trust for the benefit of such immediate family
members, if permitted in the applicable Option Agreement. During the lifetime
of the Participant, an Option shall be exercisable only by the Participant
unless it has been transferred to a member of the Participant’s immediate
family or to a trust for the benefit of such immediate family members, in which


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case it shall be exercisable only by such transferee. For the purpose of this
provision, a Participant’s “immediate family” shall mean the Participant’s
spouse, children and grandchildren.


     (e)  No person who receives an Option under the Plan shall have any rights
of a stockholder as to shares under option until, after proper exercise of the
Option, such shares have been recorded on Fortune’s official stockholder
records as having been issued or transferred.


     (f)  Fortune shall not be obligated to deliver any shares until they have
been listed (or authorized for listing upon official notice of issuance) upon
each stock exchange upon which outstanding shares of such class at the time are
listed nor until there has been compliance with such laws or regulations as
Fortune may deem applicable. Fortune shall use its best efforts to effect such
listing and compliance. No fractional shares shall be delivered.


     (g)  Nothing herein shall be deemed to create the right in any Eligible
Director to remain a member of the Board of Directors, to be nominated for
reelection or to be reelected as such or, after claiming to be such a member,
to receive any Options under the Plan to which he or she is not already
entitled with respect to any year.


7. Stock Adjustments, Change in Control and Divestitures


     (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 corporate event, the Committee may make
such adjustments in (i) the aggregate number of shares subject to the Plan and
(ii) the number and kind of shares that are subject to any Option (including
any Option outstanding after cessation of director status) and the Option price
per share without any change in the aggregate Option price to be paid therefor
upon exercise of the Option. The determination by the Committee as to the
terms of any of the foregoing adjustments shall be conclusive and binding.


     (b)  (i) In the event of a Change in Control (as defined in Section
7(b)(iii)), then each Option held by a Participant that is not then exercisable
shall become immediately exercisable and shall remain exercisable as provided
in Section 5 notwithstanding anything to the contrary in the first sentence of
Section 5(a)(ii). In addition, unless the Committee otherwise determines at
the time of grant or at any time thereafter but prior to such Change in
Control, each Limited Right outstanding at the time of such Change in Control
shall be deemed to be automatically exercised as of the date of such Change in
Control or as of such other date during the 60-day period beginning on the date
of such Change in Control as the Committee may determine prior to such Change
in Control. In the event that the Limited Right is not automatically
exercised, the Participant may during the 60-day period beginning on the date
of the Change in Control (the “Limited Right Exercise Period”), in lieu of
exercising such Option in whole or in part, exercise the Limited Right (or part
thereof) pertaining to such Option. Such Participant, whether the exercise is
pursuant to his election or automatic pursuant to the terms hereof, shall be
entitled to receive in cash an amount determined by multiplying the number of
shares subject to such Option (or part thereof) by the amount by which the
exercise price of each share is exceeded by the greater of (x) the highest
purchase price per share paid for the shares of Fortune beneficially acquired
in the transaction or series of transactions resulting in the Change in Control
by the person or persons deemed to have acquired control pursuant to the Change
in Control and (y) the highest fair market value of shares of Common Stock
during the Limited Right Exercise Period prior to the time of exercise. A
Limited Right shall be exercised in whole or in part by giving written notice
of such exercise on a form approved by the Committee to the Secretary of
Fortune, except that no written notice shall be required in the event such
Limited Right is automatically exercised pursuant to the terms hereof. The
exercise shall be effective as of the date specified in the notice of exercise,
but not earlier than the date the notice of exercise is actually


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received and
in the hands of the Secretary of Fortune. In the event the last day of a
Limited Right Exercise Period shall fall on a day that is not a business day,
then the last day thereof shall be deemed to be the next following business
day. To the extent an Option is exercised in whole or in part, the Limited
Right in respect of such Option shall terminate and cease to be exercisable.
To the extent a Limited Right is exercised in whole or in part, the Option (or
part thereof) to which such Limited Right pertains shall terminate and cease to
be exercisable.


     (ii)  Notwithstanding anything to the contrary in the first sentence of
Section 5(a)(ii) or in 5(a)(iv), the provisions of this Section 7(b)(ii) will
be applicable in the event of a termination of a Participant’s status of a
member of the Board of Directors on or after a Change in Control and prior to
the expiration of the Limited Right Exercise Period applicable thereto. No
Option or Limited Right held by a Participant shall terminate or cease to be
exercisable as a result of his termination as a member of the Board of
Directors on or after a Change of Control and prior to the expiration of the
Limited Right Exercise Period applicable thereto, but shall be exercisable
throughout the Limited Right Exercise Period applicable thereto; provided,
however, that in no event shall any Option be exercisable after ten years from
its date of grant (except in the event of death as provided in Section
5(a)(iv)).


     (iii)  A “Change in Control” shall be deemed to have occurred if (A) any
person (as that term is used in Sections 13(d) and 14(d) of the Exchange Act,
as in effect on January 30, 2001) 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 January 30, 2001) 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 Fortune, excluding, however, the following: (1) any acquisition directly
from Fortune, other than an acquisition by virtue of the exercise of a
conversion privilege unless the security being so converted was itself acquired
directly from Fortune, (2) any acquisition by Fortune, (3) any acquisition by
an employee benefit plan (or related trust) sponsored or maintained by Fortune
or entity controlled by Fortune, or (4) any acquisition pursuant to a
transaction that complies with clauses (1), (2) and (3) of Section
12(b)(iii)(C), (B) more than 50% of the members of the Board of Directors of
Fortune shall not be Continuing Directors (which term, as used herein, means
the directors of Fortune (1) who were members of the Board of Directors of
Fortune on January 30, 2001 or (2) who subsequently became directors of Fortune
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
Fortune’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), (C) Fortune shall be merged or
consolidated with, or, in any transaction or series of transactions,
substantially all of the business or assets of Fortune shall be sold or
otherwise acquired by, another corporation or entity unless, as a result
thereof, (1) the stockholders of Fortune 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 Fortune or all or substantially all of Fortune’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, (2) 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 January 30, 2001), 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 Fortune existed prior to such corporate transaction and (3) more
than 50% of the members of the Board of Directors of Newco shall be Continuing
Directors or (D) the stockholders of Fortune approve a complete liquidation or
dissolution of Fortune.


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8. Amendment and Termination


     (a)  The Board of Directors shall have the power to amend the Plan. It
shall not, however, except as otherwise provided in the Plan, increase the
maximum number of shares authorized for the Plan, nor change the class of
eligible recipients to other than Eligible Directors, nor reduce the basis upon
which the minimum Option price is determined, nor extend the period within
which Options under the Plan may be granted, nor provide for an Option that is
exercisable more than ten years from the date it is granted except in the event
of death. It shall have no power to change the terms of any Option theretofore
granted under the Plan so as to impair the rights of a Participant without the
consent of the Participant whose rights would be affected by such change except
to the extent, if any, provided in the Plan or in the Option.


     (b)  The Board of Directors may suspend or terminate the Plan at any time.
No such suspension or termination shall affect Options or Limited Rights then
in effect.


9. Foreign Options


     (a)  The Committee may grant Options to Eligible Directors who are subject
to the tax laws of nations other than the United States, which Options may have
terms and conditions that differ from the terms thereof as provided elsewhere
in the Plan for the purpose of complying with foreign tax laws.


     (b)  The terms and conditions of Options granted under Section 9(a) may
differ from the terms and conditions which the Plan would require to be imposed
upon Options if the Committee determines that the grants are desirable to
promote the purposes of the Plan for the Eligible Directors identified in
Section 9(a); provided that the Committee may not grant such Options that do
not comply with the limitations of Section 8(a).


10. Withholding Taxes


     Fortune shall have the right to deduct from any cash payment made under
the Plan any federal, state or local income or other taxes required by law to
be withheld with respect to such payment. It shall be a condition to the
obligation of Fortune to deliver shares upon the exercise of an Option, that
the Participant pay to Fortune such amount as may be requested by Fortune for
the purpose of satisfying any liability for such withholding taxes. Any Option
Agreement may provide that the Participant may elect, in accordance with any
conditions set forth in such Option Agreement, to pay any withholding taxes in
shares of Common Stock.


11. Effective Date


     The Plan shall be subject to its approval by the stockholders of Fortune.
If approved by the stockholders, the Plan will become effective on January 1,
2002.



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