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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 30th day of June, 2000, 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 as follows:
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 date hereof 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(c) herein, it
will not exercise its termination rights in the first year of this
Employment Agreement. 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. 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 Related 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.
(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
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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 at the end of Executive's employment; 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 incurred and
accounted for in accordance with the policies and procedures established by
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
(i) a Company automobile in accordance with UST Inc.'s Officers'
Car Policy;
(ii) 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;
(iii) the initiation fee, but not membership dues or any other
club expenses, at one country club of the Executive's choice; and
(iv) 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;
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.
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(f) hereof).
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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. If, as a result of the Executive's incapacity due
to physical or mental illness, the Executive shall have been absent from
his duties hereunder on a full-time basis for the entire period of six
(6) consecutive months, and within thirty (30) days after written notice
of termination is given (which may occur before or after the end of such
six-month period) shall not have returned to the performance of his
duties hereunder on a full-time basis, the Company may terminate the
Executive's employment. If the Company terminates the Executive's
employment based upon total disability, the Company shall pay to
Executive or his legal representative on his behalf his full salary and
full ICP or cash equivalent for the balance of the full term of this
Agreement 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. If the Executive should become totally
disabled prior to the expiration of the Term of this Agreement, he shall
be deemed to have retired under SOP the day before his total disability.
(c) 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.
(d) Resignation. Executive may resign his employment upon thirty
(30) days notice to the Company.
(e) 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 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(e), then in consideration therefor, he shall also be entitled to
the benefits provided in Section 9(d) hereof upon execution of the
Subsequent Agreement (as defined in Section 9(d) hereof).
(ii) In consideration of the benefits provided under Section
9(d) 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
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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(e), other than a failure or refusal of the Company
to pay the Executive (1) the benefits described in Section 9(d)
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(e)(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 16
of this Agreement.
(f) Date of Termination; Notice of Termination. 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 Agreement relied upon and, except in the event that
the Executive's employment is terminated pursuant to Section 8(e)
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 Disability pursuant to
subsection (b) hereof, thirty (30) days after Notice of Termination
is given (provided that the Executive shall not have returned to the
performance of his duties on a full-time basis during such thirty
(30) day period, 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.
9. Compensation During Disability or Upon Termination.
(a) Disability. During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to physical
or mental illness ("disability period"), the Executive shall continue to
receive his full salary at the rate then in effect for such period until
his employment is terminated pursuant to Section 8(b) hereof, provided
that payments so made to the Executive during the first ninety (90) days
of the disability period 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 disability benefit plans of the Company or under the
Social Security disability insurance program, and which amounts were not
previously applied to reduce any such payment. If the Executive shall
terminate his employment under Section 8(d) 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.
(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 cash equivalent for the balance of the full Term of this
Agreement 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
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.
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(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(b) or 8(c) hereof (it being
understood that a purported termination pursuant to Section 8(b) or 8(c)
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(b) or 8(c) hereof), or (b) the Executive's employment terminates by
Mutual Consent and the Executive is in compliance with the provisions of
Section 8(e) hereof, then
(i) 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;
(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 cash equivalent; such payment to be made
in substantially equal periodic installments in accordance with the
Company's then regular payroll practice, commencing with the month
following the month in which the Date of Termination occurs and
ending on the third anniversary of the Date of Termination (the
"Continuation Period).
(iii) subject (if applicable) to execution of the Subsequent
Agreement, the Company shall maintain in full force and effect, for
the continued benefit of the Executive during the Continuation
Period, all life insurance and health and medical coverage plans, the
survivor income plans in which the Executive was entitled to
participate immediately prior to the Date of Termination provided
that the Executive" 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); and
(iv) except in the event of Termination by Mutual Consent
pursuant to Section 8(e) 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 16 hereof shall not exceed, in the aggregate, the sum of
$100,000.
(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.
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
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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 by 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:
If to Executive:
Xxxxxxx X. Xxxxxxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
If to Company:
UST Inc.
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
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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. 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(e) 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(e)
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:
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Name:
Title:
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Xxxxxxx X. Xxxxxxxxxx
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