DATE]
Exhibit
10.5
[DATE]
Xxxxxx
X. Xxxxxx
U.S.
Smokeless Tobacco Company
000
Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx,
XX 00000
Dear
Xxx:
U.S.
Smokeless Tobacco Company (the “Company”), a wholly owned subsidiary of UST Inc.
(“UST”), is pleased to provide you with this letter agreement (the
"Agreement"). The Board of Directors of UST (the "Board of Directors"
or the "Board") considers it essential to the best interests of the Company and
the interests of UST's stockholders to xxxxxx the continuous employment of key
management personnel. In addition, the Board recognizes that, as is
the case with many publicly held corporations, the possibility of a change in
control of UST may exist, and that the uncertainty and questions which may arise
among Company management as a result of the foregoing may cause the departure or
distraction of Company management personnel to the detriment of the Company and
of UST and its stockholders.
In
order to induce you to remain in the employ of the Company, the Company and UST
agree that you shall receive the severance benefits set forth in this Agreement
in the event your employment with the Company is terminated under the
circumstances described below either prior to or subsequent to a "Change in
Control" (as defined in Section 2).
You
have an existing agreement with the Company and UST (“Existing Agreement”),
dated June 23, 2006 (the “Original Effective Date”), regarding the payment of
severance benefits to you. This Agreement amends and restates your Existing
Agreement, effective December
16, 2008, in order to evidence formal compliance with section 409A of the
Internal Revenue Code of 1986, as amended, and the guidance thereunder (the
“Code”).
1.
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Term of
Agreement. This Agreement shall commence on the Original
Effective Date and end on the third anniversary of such date; provided, however, that
if a Change in Control, as defined in Section 2, shall have occurred
during the term of this Agreement, this Agreement shall continue in effect
for a period of not less than twenty-four (24) months beyond the month in
which such Change in Control occurred. Prior to a Change in
Control, in no event shall the term of this Agreement extend beyond the
date on which you cease to be an officer of the Company, UST, or a
subsidiary thereof, whether or not you continue to be an employee of the
Company, UST, or a subsidiary thereof; provided, however, if
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you
cease to be an officer of the Company, UST or any subsidiary thereof for
Good Reason as defined herein, this Agreement shall continue in effect for
a period of not less than thirty (30) days. You acknowledge and
agree that the non-renewal of the term of this Agreement shall not be
considered a termination of employment hereunder for any purpose,
including entitlement to severance payments or any other benefits provided
for herein.
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2.
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Change in
Control. For purposes of this Agreement, a “Change in
Control” shall be a change in control of UST and shall be deemed to have
occurred if:
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(A)
any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), other than (1) UST or
any of its subsidiaries, (2) any "person" who on the date hereof is a director
or officer of UST, (3) any trustee or other fiduciary holding securities under
an employee benefit plan of UST, (4) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (5) any corporation
owned, directly or indirectly, by the stockholders of UST in substantially the
same proportions as their ownership of stock of UST (a "Person"), is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act (a
"Beneficial Owner")), directly or indirectly, of securities of UST (not
including in the securities beneficially owned by such Person any securities
acquired directly from UST or its affiliates) representing 20% or more of the
combined voting power of UST's then outstanding securities, excluding
any Person who becomes such a Beneficial Owner in connection with a transaction
described in clause (C)(1) below; or
(B)
the following individuals cease for any reason to constitute a majority of the
number of directors of UST then serving: individuals who, on the date hereof,
constitute the Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of UST) whose appointment or election by the Board or
nomination for election by UST's stockholders was approved or recommended by a
vote of at least two-thirds (2/3) of the directors then still in office who
either were directors on the date hereof or whose appointment, election or
nomination for election was previously so approved or recommended;
or
(C)
there is consummated a merger or consolidation of UST or any direct or indirect
subsidiary of UST with any other corporation, other than (1) a merger or
consolidation which would result in the voting securities of UST outstanding
immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity or any parent thereof), in combination with the ownership
of any trustee or other fiduciary holding securities under an employee benefit
plan of UST or any subsidiary of UST, more than 50% of the combined voting power
of the securities of UST or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (2) a merger or
consolidation
2
effected
to implement a recapitalization of UST (or similar transaction) in which no
Person is or becomes the Beneficial Owner, directly or indirectly, of securities
of UST (not including in the securities Beneficially Owned by such Person any
securities acquired directly from UST or its subsidiaries) representing 20% or
more of the combined voting power of UST's then outstanding securities;
or
(D)
the stockholders of UST approve a plan of complete liquidation or dissolution of
UST or there is consummated an agreement for the sale or disposition by UST of
all or substantially all of UST's assets, other than a sale or disposition by
UST of all or substantially all of UST's assets to an entity, more than 50% of
the combined voting power of the voting securities of which are owned by
stockholders of UST in substantially the same proportions as their ownership of
UST immediately prior to such sale.
3.
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Termination of
Employment.
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(a)
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General. You
shall be entitled to the benefits provided in Section 4 upon the
termination of your employment during the term of this Agreement prior to
a Change in Control. If any of the events described in Section
2 constituting a Change in Control shall have occurred, you shall be
entitled to the benefits provided in Section 5 upon the coincident or
subsequent termination of your employment during the term of this
Agreement or, as provided in Section 5, upon the Change in
Control. In the event your employment with the Company is
terminated for any reason prior to a Change in Control and subsequently a
Change in Control shall have occurred, you shall not be entitled to the
benefits provided in Section 5, unless such termination occurs within
thirty (30) days prior to a Change in Control and such termination is by
you for Good Reason or the Company without Cause in anticipation or
contemplation of such Change in
Control.
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(b)
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Disability. The
Company will terminate your employment at the conclusion of a twelve (12)
month period during which you continuously have a General Disability (as
defined below), a 409A Disability (as defined below) or
both. In determining whether a disability is continuous for
this purpose, a temporary return to work shall be disregarded (I) in the
case of a General Disability, if it would be disregarded under the
Company’s long-term disability plan for salaried employees, and (II) in
the case of a 409A Disability, if it would be disregarded under the
Company’s long-term disability plan for salaried employees and it may be
disregarded under Treasury Regulation
§1.409A-3(i)(4).
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(i)
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You
will be deemed to have a “General Disability” if, as a result of your
incapacity due to physical or mental illness, you shall have been absent
from the full-time performance of your duties with the Company for six (6)
consecutive months, and within thirty (30) days after written notice of
termination is given you shall not have returned to the full time
performance of your duties.
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(ii)
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You
will be deemed to have a “409A Disability” if (A) you are unable to engage
in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result
in death or can be expected to last for a continuous period of not less
than 12 months, (B) you are, by reason of any medically determinable
physical or mental impairment that can be expected to result in death or
can be expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not less
than three (3) months under an accident and health plan covering Company
employees; or (C) you are determined to be totally disabled by the Social
Security Administration.
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(c)
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Cause. The
Company may terminate your employment hereunder for Cause. For
purposes of this Agreement, "Cause" shall mean (i) the willful and
continuous failure by you to substantially perform your duties hereunder
(other than any such failure resulting from your incapacity due to
physical or mental illness), which failure is not cured within thirty (30)
business days after demand for substantial performance is delivered by the
Company that specifically identifies the manner in which the Company
believes you have willfully and continuously not substantially performed
your duties; (ii) the willful engaging by you in misconduct which is
materially injurious to the Company, monetarily or otherwise (including,
but not limited to, your violation of the Company's Code of Corporate
Responsibility); or (iii) the commission of an act or omission that
constitutes a material breach of this Agreement (including, but not
limited to, the violation of your obligations under Sections 6, 7 or 8
hereof). For purposes of this subsection, no act, or failure to
act, on your part shall be considered "willful" unless done, or omitted to
be done, by you not in good faith and without reasonable belief that your
action or omission was legal, compliant with the Company’s Code of
Corporate Responsibility and in the best interest of the
Company.
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(d)
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Good
Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement,
“Good Reason” shall mean, without your express written consent, (1) the
occurrence prior to a Change in Control of any of the circumstances set
forth in paragraphs (i) through (iv) below and (2) the occurrence on a
Change in Control, in contemplation or anticipation of a Change in Control
provided such termination occurs within thirty (30) days prior to the
Change in Control, or following a Change in Control of any of the
circumstances set forth in paragraphs (A) through (H) below, unless, in
any case, such circumstances are fully corrected prior to the Date of
Termination specified in Notice of Termination, as defined in Sections
3(f) and 3(g), respectively, given in respect
thereof.
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Good Reason Prior to a
Change in Control.
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(i)
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A
diminution in title or status as an
officer;
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(ii)
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Other
than a Company-wide reduction, a reduction in your total target
compensation as in effect on the date hereof or as the same may be
increased from time to time; provided, however, in no event shall a
reduction in your actual bonus under UST’s Incentive Compensation Plan
that is based on performance against pre-established criteria be
considered a reduction in your target
bonus;
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(iii)
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The
relocation (except for required travel on the Company’s business to an
extent reasonably consistent with either your present business travel
obligations or changes in the Company’s business) of your principal place
of employment to a location more than fifty (50) miles from the Company’s
principal executive offices in Greenwich, Connecticut or any other
metropolitan area to which the Company’s principal executive offices are
relocated, it being understood that
a relocation of the Company’s principal executive offices that applies to
all or substantially all personnel and not to you alone shall not
constitute Good Reason hereunder;
or
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(iv)
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Any
purported termination of your employment which is not effected pursuant to
a Notice of Termination satisfying the requirements of Subsection (f)
hereof (and, if applicable, the requirements of Subsection (c) hereof);
for purposes of this Agreement, no such purported termination shall be
effective. Your right to terminate your employment pursuant to
this Subsection (d) shall not be affected by your incapacity due to
physical or mental illness. Your continued employment shall not
constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason hereunder; provided that the
Company’s reassignment of your duties and responsibilities during a period
of your incapacity due to physical or mental illness shall not under any
circumstance constitute Good Reason
hereunder.
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Good Reason on or Following
a Change in Control.
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(A)
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The
assignment to you of any duties inconsistent with the position in the
Company that you held immediately prior to the Change in Control, or a
significant adverse alteration in the nature or status of your
responsibilities, including your reporting responsibilities, from those in
effect immediately prior to such change; provided, however, that
no such alteration in your reporting responsibilities alone shall be
considered Good Reason hereunder prior to the date which is six (6) months
following the date of the Change in
Control;
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(B)
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A
reduction by the Company in your annual base salary or target bonus as in
effect on the date hereof or as the same may be increased from time to
time; provided, however, in no event shall a reduction in your actual
bonus under UST’s Incentive Compensation Plan that is based on performance
against pre-established criteria be considered a reduction in your target
bonus;
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(C)
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The
relocation of your principal place of employment to a location more than
fifty (50) miles from the Greenwich, Connecticut metropolitan area (or, if
different, the metropolitan area in which the Company’s principal
executive offices are located immediately prior to the Change in Control)
except for required travel on the Company’s business to an extent
substantially consistent with your present business travel
obligations;
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(D)
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The
failure by the Company to pay to you any portion of your current
compensation except pursuant to an across-the-board compensation deferral
similarly affecting all officers of the Company and all officers of any
person whose actions resulted in a Change in Control or any person
affiliated with the Company or such person, or to pay to you any portion
of an installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such
compensation is due;
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(E)
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The
failure by the Company or UST to continue in effect any compensation plan
in which you participate immediately prior to the Change in Control which
is material to your total compensation, including but not limited to the
UST Inc. Retirement Income Plan for Salaried Employees, UST Inc.
Employees’ Savings Plan, UST Inc. Officers’ Supplemental Retirement Plan,
UST Inc. Incentive Compensation Plan and the 2005 UST Inc. Long-Term
Incentive Plan, or any substitute plans adopted prior to the Change in
Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan,
or the failure by the Company to continue your participation therein (or
in a substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the level
of your participation relative to other participants, as existed at the
time of the Change in Control;
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(F)
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The
failure by the Company to continue to provide you with benefits
substantially similar to those enjoyed by you under any of
the life insurance, medical, health and accident, or disability
plans in which you are participating at the time of the Change in Control,
the taking of any action by the Company or UST which would
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directly or indirectly materially reduce any of such benefits or deprive you of any material fringe benefit enjoyed by you at the time of the Change in Control, or the failure by the Company to provide you with the number of paid vacation days to which you are entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy in effect at the time of the Change in Control; | ||
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(G)
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The
failure of the Company to obtain a satisfactory agreement from any
successor to assume and agree to perform this Agreement, as contemplated
in Section 9 hereof; or
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(H)
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Any
purported termination of your employment which is not effected pursuant to
a Notice of Termination satisfying the requirements of Subsection (f)
hereof (and, if applicable, the requirements of Subsection (c) hereof);
for purposes of this Agreement, no such purported termination shall be
effective. Your right to terminate your employment pursuant to
this Subsection (d) shall not be affected by your incapacity due to
physical or mental illness. Your continued employment shall not
constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason
hereunder.
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(e)
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Employment by
Affiliates. For purposes of this Agreement, in no event
shall a termination of your employment with the Company be deemed to occur
as a result of your transfer to, or employment by, UST or any of its
affiliates during the term of this
Agreement.
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(f)
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Notice of
Termination. Any purported termination of your
employment by the Company or by you shall be communicated by written
"Notice of Termination" to the other party hereto in accordance with this
Section 3(f). "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of your employment under the
provision so indicated.
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(g)
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Date of Termination;
Severance Start Date
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(i)
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"Date
of Termination" shall mean (A) if your employment is terminated for
General Disability or 409A Disability, thirty (30) days after Notice of
Termination is given (but not before the end of the twelve (12) month
period specified in Subsection (b) above, and not if you have returned to
the full-time performance of your duties for a period that breaks the
period of continuous disability in accordance with Subsection (b) above),
and (B) if your employment is terminated pursuant to Subsection (c) or (d)
hereof
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or for any other reason (other than General Disability or 409A Disability), the date specified in the Notice of Termination (which, in the case of a termination pursuant to Subsection (c) hereof shall not be less than thirty (30) days, unless a shorter time is provided by the Company prior to the occurrence of a Change in Control, and in the case of a termination pursuant to Subsection (d) hereof shall not be less than fifteen (15) nor more than sixty (60) days, respectively, from the date such Notice of Termination is given). Notwithstanding the foregoing, following the occurrence of a Change in Control, if you reasonably believe in good faith the Company is not providing you with a benefit or payment to which you are entitled under the terms of this Agreement, you may notify the Company, within forty-five (45) days after the Date of Termination or, if any such payment or benefit is due after such 45-day period, within 45 days following such payment date, that a dispute exists concerning the termination and/or the amount of such payment or benefit. In this event, the Company shall act within fifteen (15) days to restore fully the disputed benefits and payments (so that all benefits and payments are provided as of such date as would have been provided had there been no delay in providing such benefits and payments) and to continue to provide such benefits and payments as contemplated by this Agreement thereafter (provided, however, that in all events any payment or benefit shall not be paid or provided to you before the payment date set forth in this Agreement or any applicable document), but subject to termination and recapture from you of these disputed benefits and payments in accordance with the terms of a mutual written agreement of the parties, a binding arbitration award, or a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected). | ||
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(ii)
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“Severance
Start Date” shall mean the date on which you incur a “separation from
service” under section 409A(a)(2)(A)(i) of the
Code.
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(h)
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Release/Resignations. As
a condition and in consideration of the benefits provided under Section
4(c) and Section 5 of this Agreement, you agree and covenant (i) to
execute a general release, in the form attached hereto as Annex I (the
"Release"), of any and all claims you may have or may believe you have
against UST and/or its affiliates and their officers,
directors, employees, agents or representatives and any of
their successors and/or assigns; (ii) not to seek any recovery against UST
and/or its affiliates and their officers, directors, employees, agents or
representatives and any of their successors and/or assigns for any cause
or reason related to or arising from your employment with the Company, UST
or any of their affiliates or the termination thereof, other than a
failure or refusal of
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the
Company to pay you (x) the benefits described in Section 4(c) of Section 5
hereof, and (y) the benefits to which you are entitled subsequent to your
termination of employment pursuant to the terms of one or more of the
employee benefit plans maintained by the Company or UST; and (iii) to
cooperate fully with the Company, UST and their affiliates concerning
reasonable requests for information about the business of the Company, UST
or any of their affiliates or your involvement and participation therein,
including, but not limited to, with respect to the defense or prosecution
of any claims or actions in existence now or in the future as more
particularly described in the Release. The covenant set forth
in clause (ii) of this Section 3(h) includes, without limitation, seeking
any recovery against the Company, UST, any of their affiliates or their
officers, directors, employees, agents or representatives and any of their
successors and/or assigns in any forum, including without limitation any
court, administrative agency or otherwise. In the event of your
termination of employment under any of the circumstances described in
Section 3, you further agree to resign all offices or directorships that
you may hold with the Company, UST and any of their affiliates, as the
case may be, in a form acceptable to the
Company.
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4.
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Severance Compensation
Prior to a Change in Control. Prior to a Change in
Control, you shall be entitled to the following benefits, provided that
such termination occurs during the term of this
Agreement:
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(a)
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If
your employment is terminated by the Company for Cause or by you for any
reason other than Good Reason, or if your employment terminates because of
your death, the Company shall pay you your full base salary in accordance
with the Company’s standard payroll practices through the Date of
Termination at the rate in effect at the time Notice of Termination is
given, and provide you with all other normal post-termination amounts (if
any) to which you are entitled under the terms and conditions of any
compensation or benefit plan maintained by the Company or UST
in which you participated as of the Date of Termination at the time such
payments are due, and the Company shall have no further obligations to you
under this Agreement.
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(b)
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During
any period that you fail to perform your full-time duties with the Company
as a result of:
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(i)
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a
period of 409A Disability, you shall continue to receive your base salary
in accordance with the Company’s standard payroll practices at the rate in
effect at the commencement of any such period, together with any
compensation payable to you under the Company’s short-term and long-term
disability plans for salaried employees during such period and any benefit
coverages customarily provided to disabled salaried employees, until your
employment is terminated pursuant to Section 3(b) hereof;
or
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(ii)
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a
period of General Disability, you shall receive any compensation payable
to you under the Company’s short-term and long-term disability plans for
salaried employees during such period, as well as any benefit coverages
customarily provided to disabled salaried employees, until your employment
is terminated pursuant to Section 3(b)
hereof.
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Thereafter
your benefits shall be determined under the Company's retirement, insurance and
other compensation programs then in effect in accordance with the terms of such
programs.
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(c)
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If
your employment is terminated by the Company (other than for Cause,
General Disability, 409A Disability or death) or by you for Good Reason as
defined in Section 3(d)(i) through(iv), then you shall be entitled to the
benefits provided below, subject to your execution of a release described
in Section 3(h) and provided that such release becomes effective and has
not been revoked in accordance with the terms
thereof:
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(i)
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the
Company shall pay to you your full base salary through the Date of
Termination at the rate in effect at the time Notice of Termination is
given, no later than the fifth day following the Date of Termination; and
shall provide you with all other normal post-termination amounts (if any)
to which you are entitled under the terms and conditions of any
compensation or benefit plan of the Company, at the time such payments are
due;
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(ii)
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to
the extent that an annual bonus has not been paid to you in respect of any
fiscal year, the Company shall pay to you, in the immediately following
fiscal year at the time that annual bonuses in respect of such initial
fiscal year are regularly paid by the Company (but not later than 2-½
months after the end of such initial fiscal year), the product of (x) the
actual annual bonus that you would have been entitled to under the UST
Inc. Incentive Compensation Plan had you remained employed through the
regular payment date and (y) a fraction, the numerator of which is the
number of days that have elapsed in each such fiscal year through the Date
of Termination, and the denominator of which is
365;
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(iii)
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in
lieu of any further salary and bonus payments to you for periods
subsequent to the Date of Termination, the Company shall pay to you, in 24
equal monthly installments, a severance payment equal to the product of
(1) the sum of (A) your annual salary rate in effect immediately prior to
the Date of Termination, and (B) an amount equal to
seventy-five percent (75%) of the target annual bonus in effect as of the
Date of Termination, and (2) the number two (2); these installments shall
begin to be paid upon your
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Severance
Start Date (in accordance with the Company’s standard payroll practices
for severance pay), except in the event you are a “specified employee” on
your Severance Start Date, as determined by the Company in accordance with
rules established by the Company in writing in advance of the “specified
employee identification date” that relates to your Severance Start Date
or, if later, by December 31, 2008, such payments shall be delayed until
the date that is six (6) months after your Severance Start Date, with the
lump sum value of all payments that are so delayed paid on the date that
is six (6) months after your Severance Start Date (if you die after your
Severance Start Date but before payment of all twenty-four (24)
installments, any remaining installments will be paid to your estate as a
lump sum and without regard to any six-month delay that otherwise applies
to specified employees). For purposes of this Agreement,
“specified employee” shall be defined as provided in section
409A(a)(2)(B)(i) of the Code and “specified employee identification date”
shall be defined as provided in Treasury Regulation
§1.409A-1(i);
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(iv)
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for
a twenty-four (24) month period following the Date of Termination, the
Company shall arrange to provide you with life insurance benefits
substantially similar to those which you were receiving immediately prior
to the Notice of Termination at a cost and level of benefits which are
substantially similar to those you were receiving prior to the Date of
Termination. Benefits otherwise receivable by you pursuant to
this paragraph (iv) shall be reduced to the extent comparable coverage is
actually provided to you by another employer during the
twenty-four (24) month period following your termination, and any such
coverage actually provided to you by such employer
shall be reported to the
Company;
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(v)
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the Company shall provide you with
group health insurance coverage in accordance with Section 5(d)
below. Benefits otherwise receivable pursuant to this paragraph
(v) shall be reduced to the extent comparable benefits are actually
received by you from another employer during the twenty-four (24) month
period following your termination, and any such benefits actually received
by you from such employer shall be reported to the Company;
and
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(vi)
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UST shall extend to you the same
indemnification arrangements as are generally provided to other similarly
situated officers to the extent authorized by applicable law and in
accordance with Article VIII of UST’s
By-Laws.
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(c)
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Except
as provided in Section 4(b)(iv) or Section 5(d) hereof, you shall not be
required to mitigate the amount of any payment provided for in this
Section 4 by seeking other employment or otherwise, nor shall the amount
of any payment or benefit provided for in this Section 4 be reduced by any
compensation earned by you as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to
be owed by you to the Company, or
otherwise.
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5.
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Severance Compensation
on, in Anticipation or Contemplation of or Following a Change in
Control. On or following a Change in Control, and in the
event of a termination by you for Good Reason or by the Company without
Cause that is made in anticipation or contemplation of and occurs within
thirty (30) days prior to a Change in Control, you shall be entitled to
the following benefits during a period of Disability, or upon termination
of your employment, as the case may be, provided that such period or
termination occurs during the term of this Agreement, or as otherwise
provided below in subsection (e)(A) or (B) of this Section
5:
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(a)
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During
any period that you fail to perform your full-time duties with the Company
as a result of:
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(i)
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a
period of 409A Disability, you shall continue to receive your base salary
in accordance with the Company’s standard payroll practices at the rate in
effect at the commencement of any such period, together with any
compensation payable to you under the Company’s short-term and long-term
disability plans for salaried employees during such period and any benefit
coverages customarily provided to disabled salaried employees, until your
employment is terminated pursuant to Section 3(b)
hereof.
|
|
(ii)
|
a
period of General Disability, you shall receive any compensation payable
to you under the Company’s short-term and long-term disability plans for
salaried employees during such period, as well as any benefit coverages
customarily provided to disabled salaried employees, until your employment
is terminated pursuant to Section 3(b)
hereof.
|
Thereafter
your benefits shall be determined under the Company's retirement, insurance and
other compensation programs then in effect in accordance with the terms of such
programs.
|
(b)
|
If
your employment is terminated by reason of your death or by the Company
for Cause or by you other than for Good Reason as defined in Section
3(d)(A) through (H), the Company shall pay you your full base salary in
accordance with the Company’s standard payroll practices through the Date
of Termination at the rate in effect at the time Notice of Termination is
given, and provide you with all other normal
post-
|
12
termination amounts (if any) to which you are entitled under the terms and conditions of any compensation or benefit plan of the Company at the time such payments are due, and the Company shall have no further obligations to you under this Agreement. | ||
|
(c)
|
If
your employment is terminated by you for Good Reason as defined in Section
3(d)(A) through (H), or by the Company other than for Cause, General
Disability, 409A Disability or death, then, you shall be entitled to the
benefits provided below, subject to your execution of a release described
in Section 3(h) and provided that such release becomes effective and has
not been revoked in accordance with the terms
thereof:
|
|
(i)
|
the
Company shall pay to you your full base salary through the Date of
Termination at the rate in effect at the time Notice of Termination is
given, no later than the fifth day following the Date of Termination; and
provide you with all other normal post-termination amounts (if any) to
which you are entitled under the terms and conditions of any compensation
or benefit plan of the Company at the time such payments are
due;
|
|
(ii)
|
to
the extent that an annual bonus has not been paid to you in respect of any
fiscal year, the Company shall pay to you, in the immediately following
fiscal year at the time that annual bonuses in respect of such initial
fiscal year are regularly paid by the Company (but not later than 2-½
months after the end of such initial fiscal year), the product of (x) an
amount equal to the target annual bonus in effect immediately
preceding the Date of Termination or, if greater, such target in effect
immediately prior to the Change in Control, and (y) a fraction, the
numerator of which is the number of days that have elapsed in the fiscal
year in which the Date of Termination occurs through the Date of
Termination, and the denominator of which is
365;
|
|
(iii)
|
in
lieu of any further salary and bonus payments to you for periods
subsequent to the Date of Termination, the Company shall pay as severance
pay to you an amount equal to the product of (1) the sum of (A) your
annual salary rate in effect as of the Date of Termination or, if greater,
such rate in effect immediately prior to the Change in Control, and (B) an
amount equal to 100% of the target annual bonus in effect as of the Date
of Termination or, if greater, such target in effect immediately prior to
the Change in Control, and (2) the number two (2); in the event
your Severance Start Date occurs on or within two (2) years following an
event that constitutes a change in the ownership or effective
control of the Company or in the ownership of a substantial portion of the
assets of the Company within the meaning of section 409A(a)(2)(a)(vi) of
the Code, except as set forth below with
|
13
respect to status as a specified employee, such amount will be paid in a lump sum no later than the fifth day following your Severance Start Date; otherwise, except as set forth below with respect to status as a specified employee, such amount shall be paid in twenty-four (24) equal monthly installments that shall begin to be paid upon your Severance Start Date (in accordance with the Company’s standard payroll practices for severance pay); in either case, in the event you are a “specified employee” on your Severance Start Date, as determined by the Company in accordance with rules established by the Company in writing in advance of the “specified employee identification date” that relates to your Severance Start Date or, if later, December 31 2008, such payments shall be delayed until the date that is six (6) months after your Severance Start Date, with the lump sum value of all payments that are so delayed paid on the date that is six (6) months after your Severance Start Date (if you die after your Severance Start Date but before payment of the lump sum or all twenty-four (24) installments, any remaining amounts will be paid to your estate as a lump sum and without regard to any six-month delay that otherwise applies to specified employees); | ||
|
(iv)
|
the
Company also shall promptly reimburse you for all legal fees and expenses
incurred by you as a result of such termination (including all such fees
and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement. To the extent that any such
reimbursement does not qualify for exclusion from Federal income taxation,
the Company will make the reimbursement only if (A) the corresponding
expense is incurred by you during your lifetime (or by your estate on your
behalf after your death and within ten years of such termination), and (B)
the request for reimbursement is submitted no later than two months prior
to the last day of the calendar year following the calendar year in which
the expense was incurred so that the Company can make the reimbursement on
or before the last day of the calendar year following the calendar year in
which the expense was incurred. The amount of expenses eligible
for such reimbursement during a calendar year will not affect the amount
of expenses eligible for such reimbursement in another calendar year, and
the right to such reimbursement is not subject to liquidation or exchange
for another benefit from the Company. The Company shall also promptly
reimburse you for all legal fees and expenses incurred by you in
connection with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code to any payment or benefits
provided hereunder); each
such reimbursement shall be paid no later than the end of the
calendar year next following the calendar year in which you or the
|
14
Company
remit to the Internal Revenue Service the taxes that are the subject of
the audit or proceeding or, where as a result of the audit or proceeding
no taxes are due or are remitted but other reimbursable expenses have been
incurred, the end of the calendar year following the calendar year in
which the audit is completed or there is a final and nonappealable
settlement or other resolution of the proceeding. For purposes
of the foregoing, in the event you are a “specified employee” on your
Severance Start Date (as determined by the Company in accordance with
rules established by the Company in writing in advance of the “specified
employee identification date” that relates to your Severance Start Date
or, if later, December 31, 2008), and to the extent that any portion of
the reimbursements described above in this paragraph (iv) relate to
expenses that were triggered by your “separation from service” within the
meaning of section 409A(a)(2)(A)(i) of the Code and such reimbursements
constitute a “deferral of compensation” within the meaning of section 409A
of the Code, such reimbursements shall be paid no earlier than the date
that is six (6) months after your Severance Start Date (if you die after
your Severance Start Date but before such reimbursements have been made,
such reimbursements will be paid to your estate in a lump sum without
regard to any six-month delay that otherwise applies to specified
employees); and
|
||
|
(v)
|
for
a twenty-four (24) month period after such termination, the Company shall
arrange to provide you with life insurance benefits substantially similar
to those which you were receiving immediately prior to the Notice of
Termination (as well as the group health coverage described in Section
5(d) below), at a cost and level of benefits which are substantially
similar to those you were receiving prior to the Date of
Termination. Benefits otherwise receivable by you pursuant to
this paragraph (v) shall be reduced to the extent comparable coverage is
actually provided to you by another employer during the twenty-four (24)
month period following your termination, and any such coverage actually
provided to you by such employer shall be reported to the
Company.
|
|
(d)
|
For
a twenty-four (24) month period after the termination referenced in
Section 4(c) or Section 5(c), the Company shall arrange to provide you
with group health coverage substantially similar to that which you were
receiving immediately prior to the Notice of
Termination.
|
|
(i)
|
If
such coverage is provided under a self-insured medical reimbursement plan
maintained by the Company (within the meaning of section 105(h) of the
Code):
|
15
|
(A)
|
there
will be no charge to you for such coverage for any month that falls within
the first six months following your Severance Start
Date;
|
|
(B)
|
the
charge to you for each remaining month of coverage will equal the
Company’s monthly COBRA charge for such coverage, and you will be required
to pay such monthly charge in accordance with the Company’s standard COBRA
premium payment requirements; and
|
|
(C)
|
on
the date that is six months following your Severance Start Date the
Company will pay you a lump sum in cash equal to the product of (I) the
Company’s monthly COBRA charge on the payment date for family coverage
under the Company’s group health plan, and (II) the difference between (a)
the number twenty-four (24), and (b) the number of months of coverage
provided under clause (A)
above.
|
|
(ii)
|
If
such coverage is provided under a fully-insured medical reimbursement plan
(within the meaning of section 105(h) of the Code), there will be no
charge to you for such coverage.
|
|
(e)
|
If
any of the Total Payments (as defined below) will be subject to the tax
(the "Excise Tax") imposed by section 4999 of the Code, the Company shall
pay to you an additional amount (the "Gross-Up Payment") such that the net
amount retained by you, after deduction of any Excise Tax on the Total
Payments and any federal, state and local income and employment taxes and
Excise Tax upon the Gross-Up Payment, shall be equal to the Total
Payments. The Gross-Up Payment will be paid to you or remitted
by the Company to the appropriate tax authorities in a lump sum no later
than the applicable date. For this purpose, the applicable date shall be –
(A) in the case of that portion of the Total Payments that is payable upon
a Change in Control, that is payable without the occurrence of your
termination of employment and that is exempt from section 409A of the
Code, the date of a Change in Control but not before January 1, 2009; (B)
in the case of that portion of the Total Payments that is payable upon or
as result of a Change in Control, that is payable without the occurrence
of your termination of employment and that is subject to section 409A of
the Code, the date you remit the specified taxes to the appropriate tax
authorities (or, if the specified taxes are remitted by the Company, the
date the taxes are due) but not before January 1, 2009; (C) in the case of
that portion of the Total Payment that is payable upon your termination of
employment and that is exempt from section 409A of the Code, your Date of
Termination; and (D) in the case of that portion of the Total Payments
that is payable upon your Severance Start Date and that is subject to
section 409A of the Code, your Severance Start Date. However,
|
16
|
|
notwithstanding
provision (D) immediately above, in the event you are a “specified
employee” on your Severance Start Date (as determined by the Company in
accordance with rules established by the Company in writing in advance of
the “specified employee identification date” that relates to your
Severance Start Date or, if later, by December 31, 2008), and to the
extent that any portion of the Gross-Up Payment relates to Total Payments
that were triggered by your “separation from service” within the meaning
of section 409A(a)(2)(A)(i) of the Code, payment of such portion of the
Gross-Up Payment which constitutes a “deferral of compensation” within the
meaning of section 409A of the Code and is not deemed to be payable upon
another permissible payment date under section 409A of the Code shall be
delayed until the date that is six (6) months after your Severance Start
Date (if you die after your Severance Start Date but before the Gross-Up
Payment is made, it will be paid to your estate as a lump sum and without
regard to any six-month delay that otherwise applies to specified
employees). Notwithstanding the foregoing provisions of this
Section 5(e), if it shall be determined that you are entitled to the
Gross-Up Payment, but that the Parachute Value (as defined below) of the
Total Payments does not equal or exceed 110% of the Safe Harbor Amount (as
defined below), then except as provided by the full paragraph that
immediately follows paragraph (iii) of this subsection (e), no Gross-Up
Payment shall be made to you and the amounts payable to you under Section
5(c) and (d) of this Agreement shall be reduced to the extent necessary to
cause the Parachute Value of the Total Payments, in the aggregate, to be
equal to the Safe Harbor Amount. Any such reduction shall be
applied under Section 5(c) and (d) as
follows:
|
|
(i)
|
first, for purposes of Section
5(d)(i)(A), there will be a charge to you for each month of
coverage, applied on a month-to-month basis as necessary to cause
the aggregate Parachute Value of the Total Payments to equal the
Safe Harbor Amount, in an amount equal to the Company's monthly
COBRA charge for such coverage, and you will be required to pay such
monthly charge in accordance with the Company's standard COBRA premium
payment requirements;
|
|
(ii)
|
second,
for purposes of Section
5(c)(v), there will be a charge to you for each month of coverage,
applied on a dollar-for-dollar basis as necessary to cause the aggregate
Parachute Value of the Total
Payments to equal the Safe Harbor Amount, in an amount equal to the
premium paid by the Company for such coverage, and you will be required to
pay such monthly charge to the Company at the same time as the Company is
required to make payment of such premium to the insurance carrier;
and
|
|
(iii)
|
third,
the amount payable under Section 5(c)(ii), the amount payable under
Section 5(c)(iii) and the amount payable under
|
17
|
|
Section
5(d)(i)(C) shall each be reduced, on a pro rata basis (based on the dollar
amounts payable under Section 5(c)(ii), Section 5(c)(iii) and Section
5(d)(i)(C)), as necessary to cause the aggregate Parachute Value of the Total Payments to equal the
Safe Harbor Amount;
|
However, solely to the extent that the
prior two sentences become applicable (determined before the application of this
paragraph) and in the event that the right to the Gross-Up Payment is not
considered subject to a substantial risk of forfeiture under section 409A of the
Code, then you shall continue to be entitled to the Gross-Up Payment, but
the amounts payable to you under Section 5(c) and (d) plus the Gross-Up
Payment shall be reduced to the extent necessary to cause the Parachute Value of
the Total Payments, in the aggregate, to be equal to the Safe Harbor Amount. These reductions generally
shall be made in the order specified above, provided however, that the amount of
the Gross-Up Payment shall be added to the payments specified in subsection
(iii) above and shall also be subject to pro rata reduction as specified in
subsection (iii) based on the dollar amount of the Gross-Up
Payment.
|
[In
the event that application of the above ordering rules results in the
imposition upon you of an excise tax or penalty interest under section
409A of the Code, the Company will pay you an additional payment (the
“409A Gross-Up Payment”) in an amount equal to such excise tax and penalty
interest plus all income and employment taxes on such excise tax and
penalty interest, including, if the 409 Gross-Up Payment is a Total
Payment, payment of any Gross-Up Payment on this payment. For
this purpose, all income taxes will be assumed to apply to you at the
highest marginal rate in effect on the date the 409A Gross-Up Payment is
made. The 409A Gross-Up Payment shall be paid no later than the
end of the calendar year next following the calendar year in which you
remit the corresponding excise tax and penalty interest to the Internal
Revenue Service.]
|
|
(f)
|
For
purposes of determining whether any of the Total Payments will be subject
to the Excise Tax and the amount of such Excise Tax, (i) all payments or
benefits received or to be received by you in connection with a Change in
Control or the termination of your employment (whether payable pursuant to
the terms of this Agreement or of any other plan, arrangement or agreement
with the Company, UST or any of their affiliates or successors, any person
whose actions result in a Change in Control or any person affiliated (or
which, as a result of the completion of the transactions causing a Change
in Control, will become affiliated) with the Company or UST or such person
within the meaning of section 1504 of the Code (such payments or benefits,
excluding the Gross-Up Payments, being hereinafter referred to as the
"Total Payments")) shall be treated as "parachute payments" (within the
meaning of section
|
18
280G(b)(2) of the Code) unless, in the opinion of tax counsel selected by the independent auditors of the Company (as of the date immediately prior to the Change in Control) and reasonably acceptable to you, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code; (ii) all "excess parachute payments" (within the meaning of section 280G(b)(1) of the Code) shall be treated as subject to the Excise Tax, unless in the opinion of such tax counsel such excess parachute payments represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code) in excess of the "base amount" (within the meaning of section 280G(b)(3) of the Code), or are not otherwise subject to the Excise Tax; and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of sections 280G(d)(3) and (4) of the Code and the regulations promulgated thereunder. For purposes of determining the amount of the Gross-Up Payment, you shall be deemed to pay federal income taxes at your applicable rate of federal income taxation in the calendar year in which the taxes upon which the Gross-Up Payment is made are due and state and local income and employment taxes at your applicable rate of taxation in your state and locality of residence on the date the taxes upon which the Gross-Up Payment is made are due, net of the maximum reduction in federal income taxes that could be obtained from deduction of such state and local taxes. For purposes of this Agreement, (x) the term "Parachute Value" when applied to any payment shall mean the present value as of the date of the Change in Control of the portion of such payment that is treated as a "parachute payment" under section 280G(b)(2) of the Code, as determined by tax counsel for purposes of determining whether and to what extent the Excise Tax will apply to you and (y) the term "Safe Harbor Amount" shall mean 2.99 times your "base amount", within the meaning of section 280G(b)(3) of the Code. | ||
|
(g)
|
In
the event that the Excise Tax is subsequently determined to be less than
the amount taken into account hereunder, you shall repay to the Company at
the time that the amount of such reduction in Excise Tax is finally
determined (subject to the last sentence of this subsection) the portion
of the Gross-Up Payment attributable to such reduction (plus the portion
of the Gross-Up Payment attributable to the Excise Tax and federal, state
and local income and employment taxes imposed on the Gross-Up Payment
being repaid by you if such repayment results in a reduction in Excise Tax
or a federal, state and local income and employment taxes deduction) plus
interest on the amount of such repayment at 120% of the applicable federal
rate (as defined in section 1274(d) of the Code). In the event
that the Excise Tax is determined to exceed the amount taken into account
hereunder (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-Up Payment) or
additional Total Payments are made to you after the application of any
|
19
cutback as provided in Section 5(e) hereof, which additional Total Payments result in the cutback to the Safe Harbor Amount no longer being applicable, the Company shall pay you an additional amount equal to the gross-up payment in respect of such excess and the value of the Total Payments which were originally cutback and are subject to restoration hereunder (plus any interest payable with respect to such excess) within five (5) business days following the time that the amount of such excess or restoration is finally determined; provided, however, that in the event you are a “specified employee” on your Severance Start Date (as determined by the Company in accordance with rules established by the Company in writing in advance of the “specified employee identification date” that relates to your Severance Start Date or, if later, December 31, 2008) and any such additional gross-up payment would be made prior to the date that is six (6) months after your Severance Start Date and to the extent that payment of any portion of such additional gross-up payment that relates to Total Payments that were triggered by your “separation from service” within the meaning of section 409A(a)(2)(A)(i) of the Code, payment of such portion of the additional gross-up payment if such payment itself constitutes a “deferral of compensation” within the meaning of section 409A of the Code and is not deemed to be payable upon another permissible payment date under section 409A of the Code shall be delayed until the date that is six (6) months after your Severance Start Date (if you die after your Severance Start Date but before the additional gross-up payment is made, it will be paid to your estate as a lump sum and without regard to any six-month delay that otherwise applies to specified employees); and provided, further, that each additional gross-up payment required to be made by the Company to you and/or each repayment of a gross-up payment required to be made by you to the Company shall be paid no later than the end of the calendar year next following the calendar year in which you or the Company remit the corresponding taxes to the Internal Revenue Service. | ||
|
(h)
|
Except
as provided in Section 5(c)(v) or Section 5(d) hereof, you shall not be
required to mitigate the amount of any payment provided for in this
Section 5 by seeking other employment or otherwise, nor shall the amount
of any payment or benefit provided for in this Section 5 be reduced by any
compensation earned by you as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to
be owed by you to the Company, or
otherwise.
|
6.
|
Noncompetition. You
agree that you will not engage in any Competitive Activity during the
one-year period following your termination of employment with the Company
for any reason (or, where you receive payments pursuant to Section 4(c) or
Section 5(c) hereof, then during the two-year period following your
termination of employment with the Company). For purposes of this Section,
"Competitive Activity" shall mean activity, without the written consent of
an authorized officer of UST, consisting of your participation in the
management of,
|
20
or acting as a consultant for or employee of, any business operation of any enterprise if such operation (a "Competitive Operation") is then in substantial and direct competition with any business operation of UST and/or any of its affiliates, any place in the world, as now or hereafter designated by the Board; provided, however, that no business operation may be designated as a business operation that is in substantial competition with UST and/or any of its affiliates unless the profits, sales or assets attributable to such business operation amount to at least ten percent (10%) of said business' total profits, sales or assets. Competitive Activity shall not include (1) the mere ownership of up to five percent (5%) of the outstanding securities in any enterprise; or (2) the participation in the management of, or acting as a consultant for or employee of, any enterprise or any business operation thereof, other than in connection with a Competitive Operation of such enterprise, provided that you do not furnish advice with respect to inventions, processes, customers, methods of distribution, methods of manufacture, marketing or business strategy relating to any Competitive Operation of such enterprise, or the formation of a Competitive Operation. | |
7.
|
Confidentiality. You agree not to disclose, either
while employed by the Company or at any time thereafter, to any person not
employed by the Company, or not engaged to render services to the Company,
except with the prior written consent of an officer authorized to act in
the matter by the Board, any confidential information of the Company or
its affiliates obtained by you while in the employ of the Company,
including, without limitation, information relating to any of the
Company's or its affiliates' inventions, processes, formulae, plans,
devices, compilations of information, methods of distribution, customers,
client relationships, marketing strategies or trade secrets; provided, however, that this provision shall not
preclude you from the use or disclosure of information known generally to
the public or of information not considered confidential by persons
engaged in the business conducted by the Company or from disclosure
required by law or court order and to your legal counsel in connection
herewith). The agreement herein made in this Section 7 shall be
in addition to, and not in limitation or derogation of, any obligations
otherwise imposed by law upon you in respect of confidential information
and trade secrets of the Company or its
affiliates.
|
8.
|
Non-Solicitation. You
agree that you shall not solicit any person who is a customer of the
businesses conducted by UST or its affiliates, or any business in which
you have been engaged on behalf of UST or its affiliates at any time
during the Term of this Agreement and for a two (2) year period thereafter
on behalf of an employer affiliated with you or any business described in
Section 6; or induce or
attempt to persuade any employee of the Company, UST or any of their
affiliates to terminate his employment relationship in order to enter into
employment with an employer affiliated with you or any business described in Section
6.
|
9.
|
Successors: Binding
Agreement.
|
21
|
(a)
|
The
Company and UST shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company or UST to expressly
assume and agree to perform this Agreement in the same manner and to the
same extent that the Company and UST would be required to perform it if no
such succession had taken place. Failure of the Company and/or
UST to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle
you to compensation from the Company in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your
employment for Good Reason following a Change in Control, except that for
purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or
otherwise.
|
|
(b)
|
This
Agreement shall inure to the benefit of and be enforceable by your
personal or legal representative, executors, administrators, successors,
heirs, distributees, devisees and legatees. If you should die
while any amount would still be payable to you hereunder if you had
continued to live, all such payments, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to
your estate.
|
10.
|
Notice. For
the purpose of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to
have been duly given when delivered or mailed by United States certified
or registered mail, return receipt requested, postage prepaid, addressed
to the respective addresses set forth on the first page of this Agreement,
provided that all notice to the Company shall be directed to the attention
of the Board with a copy to the Secretary of the Company, or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be
effective only upon receipt.
|
11.
|
Miscellaneous. No
provision of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing and signed
by you and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to
the subject matter hereof have been made by either party which are not
expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of
|
22
Delaware without regard to its conflicts of law principles. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law. The obligations of the Company under Sections 4 and 5 and your obligations under Sections 6, 7 and 8 shall survive the expiration of the term of this Agreement. | |
12.
|
Validity. The
invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and
effect.
|
13.
|
Counterparts. This
Agreement may be executed in several counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and
the same instrument.
|
14.
|
Arbitration. Any
dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration, conducted before a panel of
three arbitrators in New York, New York, in accordance with the rules of
the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any court having jurisdiction;
provided, however, that you shall be entitled to seek specific performance
of your right to be paid until the Date of Termination during the pendency
of any dispute or controversy arising under or in connection with the
Agreement.
|
15.
|
Code Section
409A. It is intended, and this Agreement will be so
construed, that any amounts payable under this Agreement and the Company’s
and your exercise of authority or discretion hereunder shall comply with
the provisions of section 409A of the Code and the treasury regulations
relating thereto so as not to subject you to the payment of interest and
tax penalty which may be imposed under section 409A of the
Code. In furtherance of this intent, to the extent that any
regulations or other guidance issued under section 409A of the Code would
result in you being subject to the payment of such interest or tax
penalty, the Company and you agree to amend this Agreement prior to
January 1, 2009 in order to bring this Agreement into compliance with
section 409A of the Code in a manner which has the least adverse effect on
you.
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16.
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Entire
Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral
or written, by any officer, employee or representative of any party
hereto; including, without limitation, the Letter Agreement between you,
the Company and UST, dated March 22, 2005, the Existing Agreement, and any
addendums, amendments or modifications thereof; and any prior agreement of
the parties hereto in respect of the subject matter contained herein is
hereby terminated and cancelled. Notwithstanding the foregoing,
nothing contained herein shall be deemed to be a termination or
cancellation of your right to
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23
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indemnification
by UST as an officer pursuant to: (a) applicable state law, with all
exclusions and exceptions provided by such law to remain in full force and
effect; (b) any indemnification agreement entered into between you and UST
which shall remain in full force and effect; (c) any applicable director
and officer insurance arrangements; and (d) in accordance with Article
VIII of UST’s By-Laws.
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If
this letter sets forth our agreement on the subject matter hereof, kindly sign
and return to the Company the enclosed copy of this letter, which will then
constitute our agreement on this subject.
UST
Inc. and U.S. Smokeless Tobacco Company
By
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/s/ Xxxx X. Xxxxx |
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Name: |
Xxxx X. Xxxxx
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Title: | Vice President, General Counsel and Asst. Secty. |
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Agreed
to this 16th day
of
December, 2008
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx
X. Xxxxxx
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24
THIS RELEASE, entered into this
[ ] day of
[ ]
by [Name], residing at [ ] (hereinafter
referred to as the "Employee").
W
I T N E S S E T H:
WHEREAS, the Employee, and UST
Inc., a Delaware corporation ("UST"), having its principal office in Greenwich,
Connecticut, entered into a letter agreement (the "Agreement") dated as of
________, 2006, pursuant to Section 3(h) of which the Employee agreed and
covenanted, to execute a general release of any and all claims he may have or
may believe he has against UST, its affiliates and/or their respective officers,
directors, employees, agents and representatives; and
WHEREAS, the employment of the
Employee was terminated as of
[ ];
NOW, THEREFORE, in consideration
of the benefits to be provided to the Employee pursuant to the Agreement, it is
agreed as follows:
1. The
Employee voluntarily, knowingly and willingly releases and forever discharges
UST, its parents, subsidiaries and affiliates, together with their respective
past and present officers, directors, partners, shareholders, employees and
agents, and each of their predecessors, successors and assigns, from any and all
charges, complaints, claims, promises, agreements, controversies, causes of
action and demands of any nature whatsoever which against them the Employee or
his executors, administrators, successors or assigns ever had, now have or
hereafter can, shall or may have by reason of any matter, cause or thing
whatsoever arising prior to the time the Employee signs this
agreement.
2. The
release being provided by Employee in this agreement includes, but is not
limited to, any rights or claims relating in any way to the Employee's
employment relationship with UST, its parents, subsidiaries and affiliates, or
the termination thereof, or under any statute, including the federal Age
Discrimination in Employment Act, Title VII of the Civil Rights Act, the
Americans with Disabilities Act, or any other federal, state or local law or
judicial decision. Notwithstanding the foregoing, Employee does not hereby release any
rights in and to employee benefit plans maintained by UST pursuant to the Employee Retirement
Income Security Act ("ERISA") in which Employee has a vested interest as of the
date of Employee's signature on this Agreement. Furthermore, nothing
contained herein shall be deemed a waiver of Employee's right to indemnification
by UST as a corporate officer/director
pursuant to: (a) applicable state law, with all
exclusions and exceptions provided by such law to remain in full force and
effect; (b) any
indemnification agreement entered into between the Employee and UST; (c) any
applicable director and officer insurance arrangements; and (d) in accordance
with Article VIII of UST’s By-Laws.
3. By
signing this release agreement, the Employee represents that he has not and will
not in the future commence any action or proceeding arising out of the matters
released hereby, and that he will not seek or be entitled to any award of legal
or equitable relief in any action or proceeding that may be commenced on
25
his
behalf. This paragraph will not preclude Employee from filing an
administrative charge of discrimination, provided Employee does not seek any
relief for himself/herself in connection with such proceeding.
4. By
signing this release agreement, the Employee agrees to cooperate fully with UST
and its affiliates concerning reasonable requests for information about the
business of UST or any of its affiliates or your involvement and participation
therein; the defense or prosecution of any claims or actions now in existence or
which may be brought in the future against or on behalf of UST or any of its
affiliates which relate to events or occurrences that transpired while the
Employee was employed by UST and its affiliates; and in connection with any
investigation or review by any federal, state or local regulatory,
quasi-regulatory or self-governing authority (including, without limitation, the
Securities and Exchange Commission) as any such investigation or review relates
to events or occurrences that transpired while the Employee was so
employed. The Employee's full cooperation shall include, but not be
limited to, being available to meet and speak with officers or employees of UST
or any of its affiliates and/or their counsel at reasonable times and locations,
executing accurate and truthful documents and taking such other actions as may
reasonably be requested by UST or any of its affiliates and/or their counsel to
effectuate the foregoing. UST agrees to reimburse you for any
reasonable, out-of-pocket travel, hotel and meal expenses incurred in connection
with the Employee’s performance of obligations pursuant to this paragraph 5 for
which the Employee has obtained prior approval from UST.
5. The
Employee acknowledges that UST has hereby advised him to consult with an
attorney prior to signing this release agreement. The Employee
represents that he has had the opportunity to review this agreement and,
specifically, the release in paragraph 1, with an attorney of his
choice. The Employee also agrees that he has entered into this
agreement freely and voluntarily.
6. The
Employee acknowledges that he has been given at least twenty-one days to
consider the terms of this release agreement. Furthermore, once he
has signed this release agreement, the Employee shall have seven additional days
from the date of signing this release agreement to revoke his consent
hereto. The release agreement will not become effective until seven
days after the date the Employee has signed it, which will be the effective date
of this release agreement.
IN WITNESS WHEREOF,
the Employee has executed this release agreement as of the date first set forth
above.
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[Name]
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___________________________________
WITNESS
26