Document:

EXHIBIT 10.1

 

Exhibit
10.1

RETENTION BONUS AGREEMENT

          THIS RETENTION BONUS AGREEMENT (the “Agreement”), effective as of November 3, 2005 (the
“Effective Date”), is between UST Inc., a Delaware corporation (the “Company”), and Vincent A.
Gierer, Jr. (the “Executive”).

          WHEREAS, the Executive and the Company are parties to an employment agreement dated July 23,
1987 (the “Employment Agreement”); and

          WHEREAS, the Board of Directors of the Company has determined that the Employment Agreement
should remain in full force and effect and that appropriate steps should be taken to encourage the
Executive to remain employed by the Company as its Chairman and Chief Executive Officer through
December 31, 2006, consistent with the Company’s succession plan.

          NOW, THEREFORE, in consideration of the mutual agreements set forth herein and for other good
and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Company
and the Executive hereby agree as follows:

          1. Definitions. All capitalized terms not defined herein shall have the meanings set
forth in the Employment Agreement.

          2. Duties of the Executive. During the period commencing on the Effective Date and
ending on the close of business on December 31, 2006 (the “Retention Period”), the Executive hereby
agrees to continue to serve in the position of Chairman and Chief Executive Officer and continue to
perform services for the Company pursuant to the Employment Agreement.

          3. No Future Equity Awards. The Executive acknowledges and agrees that the Retention
Bonus referred to in Section 4(a) hereof shall be in lieu of any grants of equity awards to the
Executive by the Company during 2005 and 2006 and that the Executive shall have no rights to be
granted any such equity awards.

          4. Retention Bonus.

          (a) Except as otherwise provided in Section 4(b) and 4(c) hereof, so long as the Executive
remains employed by the Company through the last day of the Retention Period, the Executive shall
earn a retention bonus (the “Retention Bonus”) in the amount of five million dollars ($5,000,000),
such Retention Bonus to be paid to the Executive in a single cash lump sum as soon as practicable
on or after July 1, 2007 (the “Payment Date”).

          (b) Notwithstanding anything in Section 4(a) to the contrary, in the event that, prior to the
end of the Retention Period, the Company terminates the Executive’s

 

 

employment without Cause, the Executive terminates his employment for Good Reason or the
Executive’s employment terminates by reason of his death or Disability, the Company shall pay to
the Executive (or his estate as applicable), on the Payment Date, a pro rata portion of the
Retention Bonus, such pro rata portion to be based upon a fraction the numerator of which is the
number of full months elapsed from the Effective Date to the date of termination and the
denominator of which is fourteen (14).

          (c) In the event that, prior to the end of the Retention Period, the Executive terminates his
employment (other than for Good Reason) or the Company terminates the Executive’s employment for
Cause, no Retention Bonus shall be paid to the Executive. Elective early retirement under any of
the Company’s pension plans, prior to the end of the Retention Period, shall result in no Retention
Bonus paid under the Agreement.

          5. Nature of Payments Under this Agreement. No amount paid or payable to the
Executive under this Agreement shall constitute salary or compensation for the purposes of any
employee benefit plan maintained by the Company, including but not limited to any retirement plan.

          6. Assignment; Successors and Assigns. The Executive agrees that he will not assign,
sell, transfer, delegate or otherwise dispose of, whether voluntarily or involuntarily, any rights
or obligations under this Agreement. Any purported assignment, transfer, or delegation in
violation of this Section shall be null and void. Nothing in this Agreement shall prevent the
merger or the consolidation of the Company with any other entity, or the sale of the Company of all
or substantially all of its properties or assets, or the assignment by the Company of this
Agreement and the performance of its obligations hereunder to any successor in interest. Subject
to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the
parties and their respective heirs, legal representatives, successors, and permitted assigns, and
shall not benefit any person or entity other than those enumerated above.

          7. Notices. Unless otherwise provided herein, any notice, request, instruction or
other document to be given hereunder by any party to the other shall be in writing and delivered in
person or by courier, or mailed by certified mail, postage prepaid, return receipt requested (such
mailed notice to be effective on the date of such receipt), as follows: if to the Executive, to
the home address of the Executive as provided in the records of the Company; if to the Company, to
UST Inc., 100 West Putnam Avenue, Greenwich, Connecticut 06830, Attention: Corporate Secretary, or
to such other place and with such other copies as any party may designate as to itself by written
notice to the other.

          8. 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 the
Executive 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

2

 

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
Delaware. The Executive and the Company agree that the provisions of Section 16 of the Employment
Agreement shall govern any dispute arising under this Agreement and that the Employment Agreement
in its entirety shall remain unmodified and in full force and effect.

          9. Withholding; Set-off. All amounts payable to the Executive under this Agreement
shall be subject to applicable withholding of income, wage and other taxes. The Executive agrees
that the Company shall have the right to set off against any amount payable hereunder any amounts
that the Executive owes the Company at the time of such payment.

          10. Severability; Enforcement. If any provision of this Agreement, of the
application thereof to any person, place, or circumstance, shall be held by a court of competent
jurisdiction to be invalid, unenforceable, or void, the remainder of this Agreement and such
provisions as applied to other persons, places, and circumstances shall remain in full force and
effect.

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date set
forth above.

	 	 	 	 	 
	 	UST INC.

 	 
	 	BY: /s/ Richard A. Kohlberger
 	 
	 	Name:  	Richard A. Kohlberger 	 
	 	Title:  	Senior Vice President, General Counsel and

Secretary 	 
	 
	 	EXECUTIVE

 	 
	 	/s/
Vincent A. Gierer, Jr.
 	 
	 	Vincent A. Gierer, Jr. 	 
	 	 	 

3EXHIBIT 10.2

 

	 	 	 	 	 

Exhibit 10.2

[UST INC. Letterhead]

                November 3, 2005

Mr. Murray S. Kessler

President

U.S. Smokeless Tobacco Company

100 West Putnam Avenue

Greenwich, CT 06830

Dear Mr. Kessler:

     The Board of Directors of UST Inc. (“UST”) and the Board of Directors of U.S. Smokeless
Tobacco Company (the “Company”), a wholly owned subsidiary of UST, (together, the “Boards of
Directors” or the “Board”) have determined that it is in the best interests of UST and the Company
to amend the agreement entered into with you, dated September 13, 2004 (the “Agreement”), in order
to reflect the fact that you shall hereafter be employed by UST and to make certain other
clarifying amendments, as set forth below. In connection with this amendment (the “Amendment”),
UST agrees that it shall undertake all of the obligations of the Company under the Agreement.

     For valuable consideration, the receipt of which is hereby acknowledged, the parties hereto
agree that the Agreement shall be amended as follows, effective as of November 3, 2005:

     1. Each reference to the Company set forth in the Agreement shall be replaced with a reference
to UST, except where the context otherwise requires.

     2. Section 3(h) of the Agreement is hereby amended to delete the final sentence thereof and to
add the following sentence in lieu of the aforementioned sentence: “In the event of your
termination of employment with UST for any reason, if requested to do so by UST, you shall resign
from all offices or directorships that you may then hold with UST, the Company or any of their
affiliates, effective as of the date of such termination, in a form acceptable to UST and the
Company.”

     3. The form of release referenced in Section 3(h) of the Agreement and attached thereto as
Annex 1 is hereby amended to refer to the Agreement as amended hereby, as set forth in Annex 1
hereto.

 

 

     4. Except as expressly set forth in this Amendment, the Agreement shall remain unmodified and
in full force and effect.

          If this letter sets forth our agreement on the subject matter hereof, kindly sign and return
to UST the enclosed copy of this letter, which will then constitute our agreement with respect to
the Amendment.

	 	 	 	 	 	 	 
	U.S. Smokeless Tobacco Company

	 	 	 	UST Inc.	 	 
	 
	 	 	 	 	 	 
	By /s/ Daniel W. Butler
 

President

	 	 
	 	By /s/ Richard A. Kohlberger
 

Senior Vice President,
	 	 
	 

	 	 	 	General Counsel and	 	 
	 

	 	 	 	Secretary	 	 
	Agreed
to as of the 7th day
	 	 	 	 	 	 
	of November, 2005
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	/s/ Murray S. Kessler
 
 Murray
S. Kessler

	 	 	 	 	 	 

2

 

Annex 1

RELEASE AGREEMENT

     THIS RELEASE, entered into this [       ] day of [       ] by Murray S. Kessler,
residing at
[       ] (hereinafter referred to as the “Employee”).

W I T N E S S E T H:

     WHEREAS, the Employee, UST Inc., a Delaware corporation (“UST”), and U.S. Smokeless Tobacco
Company, a Delaware corporation (“USSTC”), each having its principal offices in Greenwich,
Connecticut, entered into a letter agreement, dated as of September 13, 2004 (as such Agreement may
be amended from time to time, the “Agreement”), 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 subsidiaries and affiliates, together with their respective 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
USSTC or UST, 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.

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 his behalf.

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 USSTC
or UST or any of their 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 USSTC, UST or any of their
affiliates which relate to events or occurrences that transpired while you were employed by
USSTC 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 your performance of obligations pursuant to this paragraph 4 for which you
have obtained prior approval from UST.

5. The Employee acknowledges that UST has hereby advised him to consult with an attorney of
his choosing 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.

	 	 	 	 	 
	 	 	
Murray S. Kessler

 	 
	 	 	 
	WITNESS

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