EMPLOYMENT AGREEMENT
Exhibit
10.2
AGREEMENT
made as of the 16th day of December, 2008, between UST Inc., a
Delaware corporation (the “Company”) and Xxxxxxx X. Xxxxxxxxxx (the
“Executive”).
The
Company wishes to employ the Executive as a Senior Vice President of the
Company.
The
Board of Directors of the Company (the “Board”) desires to provide for the
employment of the Executive as a member of the management of the Company, in the
best interest of the Company. The Executive is willing to commit
himself to service the Company, on the terms and conditions herein
provided.
In
order to effect the foregoing, the Company and the Executive wish to enter into
an Employment Agreement on the terms and conditions set forth
below. Accordingly, in consideration of the promises and the
respective covenants and agreements of the parties herein contained, and
intending to be legally bound hereby, the parties hereto agree to the terms set
out below.
The
Executive has an existing employment agreement with the Company (“Existing
Agreement”), dated June 30, 2000 (the “Original Effective Date”). This Agreement
amends and restates the 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.
Employment. The
Company hereby agrees to employ the Executive, and the Executive hereby agrees
to serve the Company, on the terms and conditions set forth herein.
2.
Term. The
term of this Agreement (the “Term”) shall commence on the Original Effective
Date and end on the third anniversary of such date, unless sooner terminated as
hereinafter provided. On May 31, 2001 and on the last day of May of
each year thereafter, the term of the Executive’s employment shall be
automatically extended one (1) additional year unless, prior to such last day of
May, the Company shall have delivered to the Executive or the Executive shall
have delivered to the Company written notice that the term of the Executive’s
employment hereunder will not be extended. Company agrees that unless
there is “Cause” as defined in Section 8(d) herein, it will not exercise its
termination rights in the first year following the Original Effective
Date. In no event, however, shall the term of this Employment
Agreement extend beyond the end of the calendar month in which the Executive’s
65th birthday occurs.
3.
Position and
Duties. As of the Original Effective Date, the Executive shall
serve as Senior Vice President, Human Resources overseeing administration,
training and development, labor relations, compensation, employee relations,
benefits, security, workers’ compensation, safety and the environment and shall
have such additional responsibilities and authority as may from time-to-time be
assigned to the Executive by the Chief Executive Officer of the
Company. The Executive shall devote substantially all his working
time and efforts to the business and affairs of the Company. If at
any point during the term of this Employment
Agreement
the Executive is dissatisfied with his reporting relationship or the duties
assigned to him, or if the Company breaches this Agreement, he shall so notify
the Company within thirty (30) days. The Company shall then have
fifteen (15) days to cure the reason for Executive’s dissatisfaction or the
breach. If the Company fails to do so, the Executive may resign and
shall receive the payments pursuant to Section 9(d) herein.
4.
Place of
Performance. In connection with the Executive’s employment by
the Company, the Executive shall be based at the principal executive office of
the Company in Greenwich, Connecticut except for required travel on the
Company’s business.
5.
Compensation and Reared
Matters.
(a)
Salary. During
the period of the Executive’s employment hereunder, the Company shall pay to the
Executive a salary at an annual rate of $260,000, such salary to be adjusted in
accordance with the present officer review cycle, payable in accordance with the
Company’s standard payroll practices.
(b)
Incentive
Compensation. Subject to the meeting of performance objectives
by the Executive, the Company shall recommend, with respect to each fiscal
year,
(i)
to
the ICP Committee of UST Inc., that the Executive receive a minimum bonus under
the UST Inc. Incentive Compensation Plan (“ICP”) no less than the Executive
received in the then previous year unless the officers’ ICP pool is reduced in
which case Executive’s bonus shall be reduced no more than the percentage
reduction of said pool, provided that the Executive is performing services
hereunder on the last day of each such respective fiscal year, but in no event
will Executive’s average annual cash compensation for the overall term of this
Agreement be any less than his total cash compensation received in calendar year
2000 provided that shortfalls, if any, will be paid to Executive in a lump sum
on the Severance Start Date (as defined pursuant to Section 8(h) below), subject
to the six (6) month delay specified in Section 9(d)(ii) below);
and
(ii)
to
the Nominating and Compensation Committee of UST Inc., that the Executive
receive a minimum stock option grant under the UST Inc. 1992 Stock Option Plan,
or any successor plan, of 20,000 shares provided that the Executive is
performing services hereunder at the time during each respective year that UST
Inc. makes such grants to its employees.
(c) Other
Benefits. The Executive shall be eligible, while performing
services hereunder, to participate in or to receive benefits under any other
employee welfare or retirement benefit plan or arrangement made available by
Company to its key management employees, subject to and on a basis consistent
with the terms, conditions and overall administration of such plans and
arrangements.
(d) Expenses. The
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in performing services hereunder, including
all expenses of travel and living expenses while away from home on business or
at the request of and in the service of the Company, provided that such expenses
are
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incurred
and accounted for in accordance with the policies and procedures established by
the Company. To the extent that any such reimbursement does not
qualify for exclusion from Federal income taxation, the Company will make the
reimbursement only if the Executive incurs the corresponding expense during the
Term and submits the request for reimbursement 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.
(e) Vacations. The
Executive shall be entitled to thirty (30) vacation days in each calendar year,
determined in accordance with the Company’s vacation policy. The
Executive shall also be entitled to all paid holidays given by the Company to
its executives.
(f) Services
Furnished. The Company shall furnish the Executive with office
space, secretarial support and such other facilities and services while the
Executive is performing services hereunder, as shall be suitable to the
Executive’s position and adequate for the performance of his duties as set forth
in Section 3 hereof.
(g) Automobile and Other
Perquisites. Subject to the maximum aggregate amount described
below, the Executive shall be entitled, while the Executive is performing
services hereunder, to
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(i)
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a
Company automobile in accordance with UST Inc.’s Officers’ Car
Policy;
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(ii)
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the
installation, on a fully reimbursed basis, of a home security system if
the Executive does not already have such a system, and the reimbursement
of all system monitoring and surveillance charges;
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(iii)
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the
initiation fee, but not membership dues or any other club expenses, at one
country club of the Executive’s choice; and
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(iv)
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the
reimbursement of the cost of outside services related to the preparation
or review of all income tax returns, as well as for any financial and
estate planning and consultation services;
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provided,
however, that the aggregate annual amount for the above items shall not exceed
$40,000, valuing the Company car in accordance with its lease valuation and
personal mileage calculation, as determined annually by the UST Inc. Tax
Department. To the extent that any reimbursement described
in clauses (ii) – (iv) above does not qualify for exclusion from Federal income
taxation, the Company will make the reimbursement only if the Executive incurs
the corresponding expense during the Term and submits the request for
reimbursement 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
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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.
6. Offices. The
Executive agrees to serve without additional compensation, if elected or
appointed thereto, as a director of any of the Company’s direct or indirect
subsidiaries, provided that the Executive is indemnified for serving in any and
all such capacities on a basis no less favorable than is currently provided by
Article VIII of the Company’s By-Laws. The Executive further agrees
that, upon the termination of the Executive’s employment for any reason, he will
resign from the board of directors of any subsidiary of the Company, effective
as of the Date of Termination (as defined in Section 8(h) hereof).
7. Improvements; Confidential
Information. Annex I hereto, as from time-to-time amended, is
a form of Employee Secrecy Agreement between the Executive and the Company,
concerning the treatment of Improvements and Confidential Proprietary
Information (as defined herein) and related matters. The Executive
agrees to comply with all terms of said Employee Secrecy Agreement.
8. Termination. The
Executive’s employment hereunder may be terminated without any breach of this
Agreement only under the following circumstances:
(a) Death. The
Executive’s employment hereunder shall terminate upon his death. See
Section 9(b) with respect to acceleration of payments upon the death of the
Executive.
(b) Disability. The
Company will terminate the Executive’s employment at the conclusion of a twelve
(12) month period during which the Executive continuously has 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).
(i)
The
Executive will be deemed to have a “General Disability” if, as a result of his
incapacity due to physical or mental illness, he shall have been absent from the
full-time performance of his duties with the Company for six (6) consecutive
months, and within thirty (30) days after written notice of termination is given
he shall not have returned to the full time performance of his
duties.
(ii)
The
Executive will be deemed to have a “409A Disability” if (A) he is 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) he is, 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
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plan
covering Company employees; or (C) he is determined to be totally disabled by
the Social Security Administration.
(c) If
the Company terminates the Executive’s employment based upon General Disability
or 409A Disability, the Company shall pay to Executive or his legal
representative on his behalf his full salary and full ICP or fair market value
cash equivalent in effect on his Date of Termination and the Company shall,
except for payment to the Executive or named beneficiary under SOP, have no
further obligations to the Executive under this Agreement. Such
amount shall be payable in substantially equal periodic installments in
accordance with the Company’s standard payroll practices for severance pay that
shall commence with the month following the month in which the Severance Start
Date occurs and shall end on the third anniversary of the Severance Start Date,
except in the event the Executive is a “specified employee” on the 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 the Severance Start Date or, if later, by December 31,
2008, such payments shall be delayed until the date that is six (6) months after
the 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 the Severance Start Date
(if the Executive dies or incurs a 409A Disability after the Severance Start
Date but before payment of all installments, any remaining installments will be
paid to the Executive’s 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). If the Executive should
incur a General Disability prior to the expiration of the Term of this
Agreement, he shall be deemed to have retired under SOP the day before his
General Disability.
(d) Cause. The
Company may terminate the Executive’s employment hereunder for
Cause. For purposes of this Agreement, “Cause” shall mean (i) the
willful continued failure by the Executive to substantially perform his duties
hereunder (other than any such failure resulting from the Executive’s incapacity
due to physical or mental illness), which failure is not cured within ten (10)
business days after demand for substantial performance is delivered by the
Company that specifically identifies the manner in which the Company believes
the Executive has not substantially performed his duties; (ii) the willful
engaging by the Executive in conduct that constitutes Competitive Activity (as
defined in Section 10 hereof); (iii) the Executive’s conviction, and final
adjudication for the commission of a felony relating to the Company; or (iv) the
commission of an act that constitutes a material breach of this Agreement,
including without limitation, the willful violation by the Executive of the
provisions of the Employee Secrecy Agreement in the form of Annex I
hereto.
(e) Resignation. Executive
may resign his employment upon thirty (30) days notice to the
Company.
(f) Termination by Mutual
Consent.
(i) The
Company may also terminate the Executive’s employment at any time, without
Cause, if, in its sole discretion, the Chief Executive Officer of the Company
determines that such termination is in the best interests of the
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Company. The
Executive acknowledges and agrees that, upon such a determination by the Chief
Executive Officer, he shall be deemed to have resigned from the Company
effective as of the date set forth in the Notice of Termination (“Termination by
Mutual Consent”) and shall be entitled to the benefits payable pursuant to
Section 9(c) hereof; provided, however, that if the Executive complies with the
provisions of this Section 8(f), then in consideration therefor, he shall also
be entitled to the benefits provided in Section 9(d)(ii) – (v)
hereof.
(ii) In consideration of the benefits provided under Section 9(d)(ii) – (v)
hereof, the Executive agrees and covenants (a) to execute a general release, in
the form attached hereto as Annex II (the “Release”), of any and all claims the
Executive may have or may believe he has against the Company and/or its
officers, directors, employees, agents and representatives; and (b) not to seek
any recovery against the Company or its officers, directors, employees, agents
or representatives for any cause or reason related to or arising from his
employment with the Company or the termination thereof pursuant to this
Section 8(f), other than a failure or refusal of the Company to pay the
Executive (1) the benefits described in Section 9(d)(ii) – (v) hereof, as
specified in the Subsequent Agreement (as defined in Section 9(d)(ii) hereof),
and (2) the benefits to which he is entitled subsequent to his termination of
employment pursuant to the terms of one or more of the Company’s employee
benefit plans. The covenant set forth in Clause (b) of this Section
8(f)(ii) includes, without limitation, seeking any recovery against the Company
or its officers, directors, employees, agents or representatives in any forum,
including, without limitation, any court, administrative agency or
otherwise. A Termination by Mutual Consent shall not be subject to
the dispute resolution procedures set forth in Section 17 of this
Agreement. The receipt of any benefits pursuant to Section 9(d)(ii) –
(v) will be subject to the Executive signing and not revoking the
Release. No benefits will be paid or provided under Section 9(d)(ii)
– (v) unless and until the release of claims is timely executed and returned by
the Executive to the Company, becomes effective and has not been timely revoked
in accordance with the terms thereof. The Company will complete and
provide the Release to the Executive in sufficient time so that if the Executive
timely executes and returns it, the revocation period will expire before
severance payments are required to commence under Section 9(d).
(g) Employment by
Affiliates. For purposes of this Agreement, in no event shall
a termination of the Executive’s employment with the Company be deemed to occur
as a result of his transfer to, or employment by, UST or any of its affiliates
during the term of this Agreement.
(h) Date of Termination; Notice
of Termination; Severance Start Date. Any termination of the
Executive’s employment by the Company or by the Executive (other than
termination pursuant to subsection (a) hereof) shall be communicated by written
Notice of Termination to the other party hereto. For purposes of this
Agreement, a “Notice of Termination” shall mean a notice which shall indicate
the specific termination provision in this
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Agreement
relied upon and, except in the event that the Executive’s employment is
terminated pursuant to Section 8(f) hereof, shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated. “Date of
Termination” shall mean (i) if the Executive’s employment is terminated by his
death, the date of his death, (ii) if the Executive’s employment is terminated
for General Disability or 409A Disability pursuant to subsection (b) hereof, a
date specified in the Notice of Termination that is at least thirty (30) days
after the Notice of Termination is given (but not before the end of the twelve
(12) month period specified in subsection (b) above, and not if the Executive
shall have returned to the full-time performance of his duties for a period that
breaks the period of continuous disability in accordance with subsection (b)
above), and (iii) if the Executive’s employment is terminated for any other
reason, the later of the date on which a Notice of Termination is given or the
date set forth in such notice. “Severance Start Date” shall mean the
date on which the Executive incurs a “separation from service” under section
409A(a)(2)(A)(i) of the Code.
9.
Compensation During
Disability or on Termination.
(a) Disability. During
any period that the Executive fails to perform his full-time duties with the
Company as a result of:
(i) a
period of 409A Disability, until the Executive’s employment is terminated
pursuant to this subsection he shall (A) continue to receive his full salary in
accordance with the Company’s standard payroll practices at the rate in effect
at the commencement of any such period, provided that payments so made to the
Executive during the first ninety (90) days of the period of 409A Disability
shall be reduced by the sum of the amounts, if any, payable to the Executive at
or prior to the time of any such payment under the Company’s short-term and
long-term disability plans or under the Social Security disability insurance
program, (B) receive any compensation payable to the Executive under the
Company’s short-term and long-term disability plans for salaried employees
during such period, and (C) receive any benefit coverages customarily provided
to disabled salaried employees; or
(ii)
a
period of General Disability, he shall receive any compensation payable to the
Executive 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 the Executive’s
employment is terminated pursuant to this subsection.
Thereafter
the Executive’s 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. If the Executive shall terminate his
employment under Section 8(f) hereof, the Company shall pay the Executive his
full salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given payable in accordance with the Company’s standard
payroll practices.
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(b) Death. If
the Executive’s employment is terminated by his death, the Company shall pay to
the Executive’s estate his full salary and full ICP or fair market value cash
equivalent in effect on his Date of Termination for the balance of the full Term
of this Agreement, payable in a lump sum within five days following the date of
the Executive’s death, and the Company shall, except for payment to his estate
or named beneficiary under the UST’s Officers’ Supplemental Retirement Plan,
have no further obligations to the Executive under this Agreement. If
the Executive should die prior to the expiration of the Term of this Agreement,
he shall be deemed to have retired under UST Inc.’s Officers’ Supplemental
Retirement Plan the day before his death.
(c) Cause;
Resignation. If the Executive’s employment shall be terminated
for Cause or if the Executive shall resign, except as set forth in Section 3,
the Company shall pay the Executive his full 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 the Company shall have
no further obligations to the Executive under this Agreement. The
Executive agrees that if, subsequent to the Executive’s termination of
employment with the Company for any reason, he violates the Employee Secrecy
Agreement or Section 10 hereof, he shall be entitled to no further amounts
hereunder.
(d) Termination by the Company
other than for Disability or Cause or by Mutual Consent. If
(a) the Company shall terminate the Executive’s employment other than pursuant
to Section 8(c) or 8(d) hereof (it being understood that a purported termination
pursuant to Section 8(c) or 8(d) hereof which is disputed and finally determined
not to have been proper shall be a termination by the Company other than
pursuant to Section 8(c) or 8(d) hereof), or (b) the Executive’s employment
terminates by Mutual Consent and the Executive is in compliance with the
provisions of Section 8(f) hereof, then
(i) the
Company shall pay the Executive his full 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;
(ii) in
lieu of any further salary payments to the Executive for periods subsequent to
the Date of Termination, the Company shall continue to pay as severance pay to
the Executive an amount equal to the sum of (a) the Executive’s annual salary
rate in effect as of the Date of Termination and (b) the highest annual amount
payable to the Executive under the ICP or fair market value cash equivalent;
such payment to be made in substantially equal periodic installments in
accordance with the Company’s standard payroll practices for severance pay
commencing with the month following the month in which the Severance Start Date
occurs and ending on the third anniversary of the Severance Start Date (the
“Continuation Period), except in the event the Executive is a “specified
employee” on the 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 the Severance Start Date or, if
later, by December 31, 2008, such payments shall be delayed until the date that
is six (6) months after the 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 the
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Severance
Start Date (if the Executive dies after the Severance Start Date but before
payment of all installments, any remaining installments will be paid to the
Executive’s estate as a lump sum and without regard to any six-month delay that
otherwise applies to specified employees).
(iii)
subject
(if applicable) to Section 8(f) above, the Company shall maintain in full force
and effect, for the continued benefit of the Executive during the Continuation
Period, all life insurance and survivor income plans in which the Executive was
entitled to participate immediately prior to the Date of Termination provided
that the Executive’s continued participation is possible under the general terms
and provisions of such plans and programs. In the event that the
Executive’s participation in any such plan or program is barred, the Company
shall arrange to provide the Executive with benefits substantially similar to
those which the Executive would otherwise have been entitled to receive under
such plans and programs from which his continued participation is
barred. Benefits otherwise receivable by the Executive pursuant to
this Section 9(d)(iii) shall be reduced to the extent comparable benefits are
actually received by or made available to the Executive without cost during the
Continuation Period (and any such benefits actually received by or made
available to the Executive shall be reported to the Company by the
Executive);
(iv) during
the Continuation Period, the Company shall arrange to provide the Executive with
group health coverage substantially similar to that which he was receiving
immediately prior to the Notice of Termination.
(A) 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):
(1) there
will be no charge to the Executive for such coverage for any month that falls
within the first six months following the Severance Start
Date;
(2) the
charge to the Executive for each remaining month of coverage will equal the
Company’s monthly COBRA charge for such coverage, and the Executive will be
required to pay such monthly charge in accordance with the Company’s standard
COBRA premium payment requirements; and
(3) on the date
that is six months following the Severance Start Date the Company will pay the
Executive 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 total number of months
during the Continuation Period, and (b) the number of months of coverage
provided under clause (1) above.
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(B) 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 the Executive for such coverage.
(v) except
in the event of Termination by Mutual Consent pursuant to Section 8(f) hereof,
the Company shall pay all legal fees and expenses incurred by the Executive as a
result of his termination of employment; provided, however, that the legal fees
and expenses to which an Executive is entitled pursuant to this paragraph (iv)
and Section 17 hereof shall not exceed the sum of $100,000 for each of the
calendar year in which the termination of employment occurs and the next two
following calendar years. To the extent that any such payment does
not qualify for exclusion from Federal income taxation, the Company will make
the payment only if the Executive submits the request for payment 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 payment
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 payment
during a calendar year will not affect the amount of expenses eligible for such
payment in another calendar year, and the right to such payment is not subject
to liquidation or exchange for another benefit from the Company. For
purposes of the foregoing, in the event the Executive is a “specified employee”
on the 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 the Severance Start Date or, if
later, by December 31, 2008), and to the extent that any portion of the payments
described above in this subsection relate to expenses that were triggered by the
Executive’s “separation from service” within the meaning of section
409A(a)(2)(A)(i) of the Code and such payments constitute a “deferral of
compensation” within the meaning of section 409A of the Code, such payments
shall be paid no earlier than the date that is six (6) months after the
Severance Start Date (if the Executive dies after the Severance Start Date but
before such payments have been made, such payments will be paid to the
Executive’s estate in a lump sum without regard to any six-month delay that
otherwise applies to specified employees).
(e) Mitigation;
Set-Off. The Executive shall not be required to mitigate the
amount of any payment provided for in this Section 9 by seeking other employment
or otherwise. In addition, the amount of any payment or benefit
provided for in this Agreement (other than Section 9(d)(iii) hereof) shall not
be reduced by any compensation earned by the Executive as the result of
employment by another employer or by retirement benefit, and, except as provided
in Section 9(c) hereof, shall not be reduced by offset against any amount
claimed to be owed by the Executive of the Company, or otherwise.
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10. Non-competition. The
Executive agrees that he will not engage in any Competitive Activity during any
period with respect to which he is entitled to severance pay pursuant to Section
9(d)(ii) hereof or to employee welfare benefits pursuant to Section 9(d)(iii)
hereof. For purposes of this Section, “Competitive Activity” shall
mean activity, without the written
consent of an authorized officer of the Company (which consent shall not be
unreasonably withheld), consisting of the Executive’s participation in the
management of, or his 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 a principal business operation
of the Company, as now or hereafter designated by the Board; provided, however,
that no business operation may be designated a principal business operation of
such entity unless the entity’s profits, sales or assets attributable to such
business operation amount to at least ten (10%) percent of the entity’s total
profits, sales or assets. Competitive Activity shall not include (a)
the mere ownership of up to five (5%) percent of the outstanding securities in
any enterprises; or (b) 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 the Executive does not furnish advice with respect to inventions,
processes, customers, methods of distribution or methods of manufacture of any
Competitive Operation of such enterprise.
11. Successors; Binding
Agreement.
(a) In
addition to any obligations imposed by law upon any successor to the Company,
the Company 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, by agreement in form and substance
satisfactory to the Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. 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 executes and
delivers the agreement provided for in this Section 11 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
(b) This
Agreement and all rights of the Executive hereunder shall inure to the benefit
of and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive’s devisee, legatee, or other designee or, if
there be no such designee, to the Executive’s estate.
12. Notice. For
the purposes of this Agreement, notices, demands and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or (unless otherwise specified) mailed by United
States certified mail, return receipt requested, postage pre-paid, addressed as
follows:
11
|
If
to Executive:
|
Xxxxxxx
X. Xxxxxxxxxx
|
|
00
Xxxxxxxxxxx Xxxxx
|
|
|
Xxxxxxxxx,
Xxxxxxxxxxx 00000
|
|
|
If
to Company:
|
|
|
000
Xxxx Xxxxxx Xxxxxx
|
|
Xxxxxxxxx,
Xxxxxxxxxxx 00000
|
|
|
Attn: Corporate
Secretary
|
or to such other address as any party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.
13. Miscellaneous. No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed by the
Executive and the Company’s Chief Executive Officer or such other 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 hereof, 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. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Connecticut 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 and any
additional withholding to which the Executive has agreed. The
obligations of the Company and the Executive under this Agreement which by their
nature may require either partial or total performance after the expiration of
the Term shall survive such expiration.
14.
Validity. The
invalidity or unenforceability of any provision or provisions 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.
15.
Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the
same instrument.
16. 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 the
Executive’s 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 the Executive 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 the Executive being
subject to the payment of such interest or tax penalty, the Company and the
Executive 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 the Executive.
12
17. Settlement of Disputes:
Arbitration.
(a) All
claims by the Executive for benefits under this Agreement (other than in
connection with a termination of the Executive’s employment pursuant to Section
8(f) hereof) shall be directed to and determined by the Nominating and
Compensation Committee of UST Inc. (the “Committee”) and shall be in
writing. Any denial by the Committee of a claim for benefits
under this Agreement shall be delivered to the Executive in writing and shall
set forth the specific reasons for the denial and the specific provisions of
this Agreement relied upon. The Committee shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Committee a decision of the
Committee within sixty (60) days after notification by the Committee that the
Executive’s claim has been denied.
(b) Any
further dispute or controversy arising under or in connection with this
Agreement (other than in connection with a termination of the Executive’s
employment pursuant to Section 8(f) hereof) shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Stamford,
Connecticut, 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 the
Company shall be entitled to seek a restraining order or injunction in any court
of competent jurisdiction to prevent any anticipated or continued violation of
the provisions of Section 10 hereof or the Employee Secrecy Agreement in the
form of Annex I hereto, and the Executive hereby consents that such restraining
order or injunction may be granted without the necessity of the Company’s
posting any bond. Subject to the provisions of Section 9(d)(v)
hereof, the expense of such arbitration (including legal fee) shall be borne by
the Company.
IN
WITNESS WHEREOF, the parties have executed this Agreement on the date and year
first above written.
UST
INC.
|
By:
|
/s/ Xxxx X. Xxxxx | ||
|
Name:
|
Xxxx X.
Xxxxx
|
||
|
Title:
|
Vice
President
|
||
|
/s/ Xxxxxxx X.
Xxxxxxxxxx
|
||
|
XXXXXXX
X. XXXXXXXXXX
|
||
13
APPENDIX
“A”
Xx.
Xxxxxxx X. Xxxxxxxxxx
00
Xxxxxxxxxxx Xxxxx
Xxxxxxxxx,
Xxxxxxxxxxx 00000
Dear
Xx. Xxxxxxxxxx:
With
reference to the Existing Agreement, should you retire, die or become totally
disabled prior to the expiration of the Term as defined in the Employment
Agreement, you shall be deemed to have accrued the number of months of age and
service credits as if you had continued your employment through your 65th
birthday. You or your estate would then receive benefits under SOP
accordingly. In
the event you are a “specified employee” on the 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 the Severance Start Date of, if later, by December 31, 2008, any SOP payments
accrued pursuant to this provision that are paid on account of your
“separation from service” within the meaning of section 409A(a)(2)(A)(i) of the
Code shall be delayed until the date that is six (6) months after the 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 the Severance Start Date (if you die after
the Severance Start Date but before such lump sum is paid, it will be paid to
your estate without regard to any six-month delay that otherwise applies to
specified employees).
Very
truly yours,
14
