EXHIBIT 10r2
[Letterhead of American Brands, Inc.]
November 28, 1994
Mr. Gilbert L. Klemann, II
25 Hope Farm Road
Greenwich, Connecticut 06830
Dear Mr. Klemann:
Reference is made to the agreement dated January 2, 1991
American Brands, Inc. (the "Company") and you covering the Company's obligation
to make certain payments and provide certain benefits in the event of a
termination of your employment following a change in control of the Company, as
amended (the "Agreement").
It was the parties' intent in the Agreement that, following a
change in control of the Company, your entitlement to all benefits being
provided to you under the Company's benefit programs immediately prior to the
change in control be protected. Because of the recent adoption of the
supplemental tax deferred and related Company matching award provisions to the
Company's Supplemental Retirement Plan, the adoption of amendments to the
Company's l990 Long-Term Incentive Plan and in order to provide for a prorated
incentive compensation award for the year in which your termination of
employment might occur, and to further reflect the intent of the parties to the
Agreement, it is hereby agreed that the Agreement is amended as follows:
1. Section 1(c)(iii) of the Agreement is amended by changing
the last sentence thereof as follows:
"For the purposes hereof such benefit plans shall include, but
not be limited to, the provisions for incentive compensation
under Article XII of the By-laws of the Company and the
Company's Retirement Plan, Supplemental Retirement Plan
(including the supplemental profit-sharing and supplemental
tax deferred and related Company matching award provisions
thereof), Profit-Sharing Plan (including the tax deferred and
related Company matching contributions thereof) and Long-Term
Incentive Plan."
2. Section 2(b)(ii)(A)(2) and (3) is hereby amended as
follows:
"(2) the greater of the amount that was awarded to you under
Article XII of the Company's By-laws as in effect at the time
of a Change in Control for the year immediately preceding the
year in which the Change in Control occurs (but, for any such
immediately preceding year as to which the award has not been
determined and paid at the time of the Change in Control, not
less than the amount that you would have received if you had
been allotted the same percentage of the total amount
available for allotment for the year immediately preceding the
year in which the Change in Control occurs as the percentage
allotted to you for the last year prior to the Change in
Control for which an award was actually paid) and the amount
awarded to you under such Article XII for the year immediately
preceding the year in which a Notice of Termination is given,
plus (3) the greater of the amount that was allocated to your
account under the Company's Profit-Sharing Plan (including the
Company 401(k) matching contribution thereunder) and the
supplemental profit-sharing provisions (including the Company
matching award related to the supplemental tax deferred
amounts therein) of the Supplemental Plan (as defined in
Section 2(d)), each as in effect at the time of a Change in
Control, for the year immediately preceding the year in which
the Change in Control occurs and that amount that would have
been required to be so allocated to you under each such plan
for the year immediately preceding the year in which a Notice
of Termination is given . . ."
3. Section 2 is hereby amended by adding a new last paragraph
thereto as follows:
"If the Company shall terminate your employment other than for
Disability or Cause or if you shall terminate your employment
for Good Reason subsequent to a Change in Control, the Company
shall pay to you as incentive compensation for the period
through the Termination Date:
(i) the unpaid portion of the amount awarded to you
as incentive compensation under Article XII of the
Company's By-laws for the calendar year immediately
preceding the year in which the Termination Date occurs
(but, for any such immediately preceding year as to
which the award has not been determined and paid at the
time of the Change in Control, not less than the amount
that you would have received if you had been allotted
the same percentage of the total amount available for
allotment for such year as the percentage awarded to you
for the most recent year for which an award was actually
paid) in a lump sum on the fifth day following the
Termination Date; and
(ii) incentive compensation under Article XII of
the Company's By-laws as in effect at the time of a
Change in Control for the calendar year in which the
Termination Date occurs, in an amount equal to the
amount you would have received thereunder if you had
been allotted a percentage of the total amount available
for allotment for the year in which your Termination
Date occurs equal to the same percentage of the total
amount available for allotment as had been allotted to
you for the year immediately preceding the year in which
the Change in Control occurs (but, for any such
immediately preceding year as to which the award has not
been determined and paid at the time of the Change in
Control, not less than the amount that you would have
received if you had been allotted the same percentage of
the total amount available for allotment for the year
immediately preceding the year in which the Change in
Control occurs as the percentage allotted to you for the
last year prior to the Change in Control for which an
award was actually paid) or, if greater, the same
percentage as allotted to you for the year immediately
preceding the year in which a Notice of Termination is
given, with such incentive compensation amount prorated
for the portion of the year through the Termination Date
and paid at the time awards thereunder are paid under
the terms of such Article XII as in effect immediately
prior to the Change in Control."
Except as amended hereby, all provisions of the Agreement
remain in full force and effect.
Sincerely,
AMERICAN BRANDS, INC.
By Steven C. Mendenhall
--------------------
Steven C. Mendenhall
Vice President and
Chief Administrative
Officer
Agreed to this 4th day of
January, l995
Gilbert L. Klemann, II
----------------------
Gilbert L. Klemann, II
NY2:32618.01