Vice President, Human Resources Employment Agreement

ex10-2.htm

Exhibit 10.2


EMPLOYMENT AGREEMENT

AGREEMENT made as of the 16th day of December, 2008, between UST Inc., a Delaware corporation (the “Company”) and Richard A. Kohlberger(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


(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.To the extent that anyreimbursement 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 ...