EX-10.1



 





Exhibit 10.1




UST INC.

2005 LONG-TERM INCENTIVE PLAN

NOTICE OF GRANT OF STOCK OPTION




     This Notice is to certify that the Optionee named below has been granted the number of options
set forth below under the UST Inc. 2005 Long-Term Incentive Plan (the “Plan”) and the terms and
conditions set forth in this Notice and attached Nonstatutory Stock Option Agreement (the
“Agreement”). This Notice is subject to and incorporates by reference the terms and conditions of
the Agreement, a copy of which is enclosed. Please refer to the Agreement and the Plan document
for an explanation of the terms and conditions of this grant and a full description of your rights
and obligations. If the Agreement is not signed and returned to the Company, on or before the date
on which these Stock Options vest, the Stock Options granted hereunder shall be forfeited. Please
sign and date the Agreement and return it promptly in the enclosed envelope.



	 	 	 
	Name
of Optionee:
	 	Raymond P. Silcock
	 
	 	 
	 
	 	 
	Type
of Option:

	 	Nonstatutory
	 
	 	 
	 
	 	 
	Number
of Shares Under Option:

	 	 50,000
	 
	 	 
	 
	 	 
	Per
Share Exercise Price:

	 	 [$xx.xx]
	 
	 	 
	 
	 	 
	Grant
Date:

	 	August 6, 2007
	 
	 	 
	 
	 	 
	Vesting
Date:

	 	August 6, 2010
	 
	 	 
	 
	 	 
	Expiration
Date:

	 	August 5, 2017
	 
	 	 
	 
	 	 
	Additional
Terms:

	 	See the Nonstatutory Stock Option Agreement.
	 
	 	 





 









 




UST INC.

2005 LONG-TERM INCENTIVE PLAN

NONSTATUTORY STOCK OPTION AGREEMENT



                NONSTATUTORY
STOCK OPTION AGREEMENT, made as of the date set forth on the
Notice of Grant of Stock Option pursuant to the UST Inc. 2005
Long-Term Incentive Plan (the “Plan”), between UST Inc., a
Delaware corporation (the “Company”), and the employee of
the Company or a Subsidiary named on the Notice of Grant of Stock
Option (the “Employee”).



                WHEREAS,
the Company desires, by affording the Employee an opportunity to
purchase shares of its common stock, $.50 par value (“Common
Stock”), as hereinafter provided and subject to the terms and
conditions hereof, to carry out the purpose of the Plan; and



                WHEREAS,
the Committee administering the Plan has granted (as of the effective
date of grant specified in the Notice of Grant of Stock
Option) to the Employee the number of options as set forth in the
Notice of Grant of Stock Option which is incorporated herein
by reference.



                NOW,
THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties
hereto have agreed and do hereby agree as follows:



                1.        Grant.    The
Company has granted to the Employee a Nonstatutory Stock Option (the
“Option”) to purchase the aggregate number of shares as
shown on the Notice of Grant of Stock Option, subject to
adjustment as provided in the Plan, on the terms and conditions
herein set forth.



                2.        Exercise
Price.    The exercise price of the shares of
Common Stock covered by the Option shall be as shown on the Notice
of Grant of Stock Option.



                3.        Vesting
and Exercise.    Except as set forth below,
the Option shall vest and become exercisable in accordance with the
Vesting Schedule as shown on the Notice of Grant of Stock
Option, and shall expire at the close of business on the date
shown on the Notice of Grant of Stock Option. The Option, to
the extent vested, may be exercised either for the total number of
shares granted, or for less than the total number in multiples of 100
shares. In the event that the Employee makes a “hardship
withdrawal” under the UST Inc. Employees’ Savings Plan (the
“Savings Plan”), as amended from time to time, the right of
exercise shall be suspended during the period prescribed by the
Savings Plan beginning on the date of such withdrawal, except that
this restriction shall not apply if for any reason such suspension is
not required under Section 401(k) of the Code or any final
regulations issued thereunder.



 









 




                4.        Method
of Exercise.    Upon the exercise of the
Option, the exercise price may be paid (i) in full in cash; (ii) by
tendering previously owned mature shares with a value on the date of
exercise equal to the purchase price as described below or (iii) by
any such other method of exercise approved by the Committee. The
Option shall be exercised in accordance with the procedures adopted
by the Company from time to time.



                The
Employee may pay the purchase price by tendering to the Company, in
whole or in part, in lieu of cash, shares of Common Stock owned by
such purchaser for at least six months prior to the date of exercise,
accompanied by the certificates therefor registered in the name of
such purchaser and properly endorsed for transfer, having a Fair
Market Value equal to the cash exercise price applicable to the
portion of such Option being so exercised.



                5.        No
Rights as a Stockholder or to Continued
Employment.    The Employee shall not have
any of the rights of a stockholder with respect to the shares of
Common Stock covered by the Option, including, without limitation,
the right to vote on all matters with respect to which the
stockholders of the Company have the right to vote and the right to
receive current cash dividends thereon, until the shares are issued
or transferred to the Employee upon exercise of the Option. The
Option shall not confer on the Employee any right to continued
employment.



                6.        Restrictions
on Transfer.    The Option shall not be
transferred or otherwise disposed of by the Employee, including by
way of sale, assignment, transfer, pledge, hypothecation or
otherwise, except as permitted by the Committee in its discretion, or
by will or the laws of descent and distribution and shall be
exercisable during the Employee’s lifetime only by the Employee
or by his/her guardian or legal representative. The Committee may, in
its sole discretion, permit the transfer of the Option subject to any
conditions that the Committee may prescribe; provided, however, that
in no event may the Option be transferred for consideration.



                7.        Invalid
Transfers.    No purported sale, assignment,
mortgage, hypothecation, transfer, pledge, encumbrance, gift,
transfer in trust (voting or otherwise) or other disposition of, or
creation of a security interest in or lien on, the Option by any
holder thereof in violation of the provisions of this Nonstatutory
Stock Option Agreement shall be valid, and the Company will not
transfer the Option on its books, unless and until there has been
full compliance with these provisions to the satisfaction of the
Committee. The foregoing restrictions are in addition to and not in
lieu of any other remedies, legal or equitable, available to enforce
these provisions.



                8.        Adjustments;
Change in Control.    In the event of any
change in the outstanding shares of Common Stock, through declaration
of stock or other dividends or distributions with respect to such
shares, through restructuring, recapitalization or other similar
event or through stock splits, change in par value, combination or
exchange of shares, or the like, then the number or kind of shares
covered by the Option and/or the purchase price of the shares covered
by the Option, as appropriate, shall be adjusted proportionately, as
necessary to reflect equitably such changes; provided, however, that
any fractional shares resulting from such adjustment shall be
eliminated. Upon the occurrence of a Change in Control prior to the
expiration of the Option, any then unexercisable portion of the
Option shall become immediately vested and/or exercisable. Upon a
Change in Control where the Company is not the surviving corporation
(or survives only as a subsidiary of another corporation) or other
Change in Control described in clause (iii) or (iv) of the definition
of “Change in Control,” the Option shall be canceled and,
in exchange therefore the Company shall pay the Employee an amount in
cash equal to the difference between the per share exercise price of
such Option and the Fair Market Value of a share of Common Stock. For
this purpose the Fair Market Value of a share of Common Stock shall
be the highest Fair Market Value of such Common Stock during the
sixty-day period prior to the date of the Change in Control.



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                9.        Effect
of Termination of Employment.    If the
employment of the Employee is terminated by reason of his/her death
or Disability, or for any other reason if the Committee so
determines, any portion of the Option that has not theretofore become
vested and exercisable shall become fully vested and exercisable as
of the date of such termination of employment. If the employment of
the Employee is terminated due to his Retirement, the Employee shall
become vested as of the date of his/her Retirement with respect to a
pro rata portion of the option. For purposes of the foregoing
the pro rata portion shall be the number of shares covered by
the option multiplied by a fraction, the numerator of which is the
number of full months which have elapsed from the Grant Date
specified in the Notice of Grant of Stock Option until the
date of termination and the denominator of which is 36. If the
resulting number is not a whole number of shares, the number
calculated shall be rounded up or down (as appropriate) to the
nearest whole number of shares. Options that remain outstanding at
the effective date of a termination by reason of death, Disability or
Retirement shall remain exercisable until the expiration of the
original term. If the employment of the Employee is terminated for
any other reason and if the Committee does not determine otherwise,
any portion of the Option that has not theretofore become vested and
exercisable shall be forfeited and shall lapse. Any portion of the
Option that has vested as of the date of the Employee’s
termination of employment other than for Cause shall be exercisable
for a period of 90 days following the date of termination. Upon
expiration of such 90 day period, any unexercised portion of the
Option shall terminate in full and shall lapse. Notwithstanding the
foregoing, in no event may the Option be exercised after the
Option’s Expiration Date. For purposes of this Agreement, the
term “Disability” shall mean a “disability,” as
defined in the Company’s Long-Term Disability Plan or, if such
plan is not applicable to the Employee, as defined by the State or
federal disability program which applies to the Employee.



                10.      Non-Competition.



                           (a)        In
consideration of the grant of the Option made pursuant to this
Agreement, during the term of the Employee’s employment with the
Company and for a period of one (1) year after that employment is
terminated, by the Company or the Employee, for any reason other than
the cessation of business by the Company pursuant to a filing for
bankruptcy protection or liquidation initiated by the Company, the
Employee will not, without the Company’s prior written approval,
directly or indirectly:



                                       (i)        recruit,
solicit or knowingly induce, or attempt to induce, any employee or
consultant of the Company to terminate his/her employment or
consulting relationship with, or otherwise cease his/her relationship
with, the Company; or



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                                       (ii)      solicit,
divert or take away, or attempt to divert or to take away, the
business or patronage of any of the clients, customers or accounts,
or prospective clients, customers or accounts, of the Company. For
purposes of this Agreement, a prospective client, customer or account
is any individual or entity whose business is solicited by the
Company, proposed to be solicited by the Company, or who approaches
the Company with respect to possibly becoming a client, customer, or
account during the period of Employee’s employment with the
Company; or



                                       (iii)    engage
(whether for compensation or without compensation), directly or
indirectly, as an individual proprietor, partner, officer, employee,
director, independent contractor, consultant or in any other capacity
whatsoever, in any business currently involved in, or actually
contemplating involvement in, the manufacture or distribution of
smokeless tobacco or tobacco seed, wines or distilled spirits,
whether or not the same is pursued for gain, profit or other
pecuniary advantage. The foregoing shall not, however, be construed
as preventing the Employee from making investments in any other
business, provided, however, that such investments do not require
his/her services in the operation of the affairs of the businesses in
which such investments are made.



                           (b)        If
any restriction set forth in this Section 10 is found by any court of
competent jurisdiction to be unenforceable because it extends for too
long a period of time or over too great a range of activities or in
too broad a geographic area, it shall be interpreted to extend only
over the maximum period of time, range of activities or geographic
areas to which it may be enforceable.



                           (c)        The
restrictions contained in this Section 10 are necessary for the
protection of the business and goodwill of the Company and are
considered by the Employee to be reasonable for this purpose. The
Employee agrees that any breach of this Section 10 will cause the
Company substantial and irrevocable damage and, therefore, in the
event of any such breach, in addition to such other remedies which
may be available, the Company will have the right to seek specific
performance and injunctive relief, attorney’s fees, costs and
disbursements to enforce its rights hereunder.



                11.      Finding
of Cause; Violation of Non-Competition Covenant.



                           (a)        If
(i) the employment of the Employee is terminated for Cause or (ii)
after the Employee’s termination of employment with the Company
other than for Cause, the Company discovers the occurrence of an act
or failure to act by the Employee, while in the employ of the
Company, that would have enabled the Company to terminate the
Employee’s employment for Cause had the Company known of such
act or failure to act at the time of its occurrence, or (iii)
subsequent to the Employee’s termination of employment, the
Employee violates the restrictions set forth in Section 10 of this
Agreement and, in each case, such act is discovered by the Company
within three (3) years of its occurrence, then, unless otherwise
determined by the Committee,



                                       (i)        any
portion of the Option (whether or not then exercisable) that has not
been exercised as of the date of such termination or discovery shall
thereupon be forfeited and shall lapse; and




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                                       (ii)      the
Employee (or, in the event of the Employee’s death following the
commission of such act, his beneficiaries or estate) shall (A) sell
back to Company all Acquired Shares (as defined in paragraph (b) of
this Section 11) held by the Employee (or, if applicable, his
beneficiaries or estate) as of the date of such termination or
discovery, for a per share price equal to the per share exercise
price of the Option (or if less, the Fair Market Value at the time of
such sale back to the Company), and (B) to the extent such Acquired
Shares have previously been sold or otherwise disposed of by the
Employee, other than by reason of death (or if applicable, by his
beneficiaries or estate), repay to the Company the excess of the
aggregate Fair Market Value of such Acquired Shares on the date of
such sale or disposition over the aggregate exercise price of such
Acquired Shares.



                                       (iii)    for
purpose of clause (ii)(B) above, (A) the amount of repayment
described therein shall not be affected by whether the Employee (or,
if applicable, his/her beneficiaries or estate) actually received
such Fair Market Value with respect to such sale or other
disposition, and (B) repayment may, without limitation, be affected,
at the discretion of the Company, by means of offset against any
amount owed by the Company to the Employee (or, if applicable,
his/her beneficiaries or estate).



                           (b)        For
purposes of this Agreement, Acquired Shares shall mean shares of
Common Stock that were acquired upon exercise of the Option on or
after the date which is 180 days prior to the Employee’s
termination of employment.



                12.      Approvals.    The
sale and delivery of any shares of Common Stock hereunder is subject
to approval of any government agency which may, in the opinion of
counsel, be required in connection with the authorization, issuance
or sale of Common Stock. No Common Stock shall be issued under the
Option prior to compliance with such requirements and with the
Company’s listing agreement with the New York Stock Exchange (or
other national exchange upon which the Company’s shares may then
be listed).



                13.      Taxes.    The
Employee understands that he or she (and not the Company) shall be
responsible for any tax liability that may arise as a result of the
transactions contemplated by this Agreement. As a condition precedent
to the delivery of shares of Common Stock upon exercise of the
Option, the Employee shall, upon request by the Company, pay to the
Company in addition to the exercise price, such amount of cash as the
Company may be required, under all applicable federal, state, local
or other laws or regulations, to withhold and pay over as income or
other withholding taxes (the “Required Tax Payments”) with
respect to such exercise of the Option. If the Employee shall fail to
advance the Required Tax Payments after request by the Company, the
Company may, in its discretion, deduct any Required Tax Payments from
any amount then or thereafter payable by the Company to the Employee.
In lieu of the cash payment described above, the Employee may elect
to satisfy his or her obligation to advance the Required Tax Payments
by tendering to the Company shares of Common Stock owned by the
Employee for at least six months prior to the date of tender,
accompanied by the certificates evidencing such shares registered in
the name of the Employee and properly endorsed for transfer, having a
Fair Market Value, determined as of the date the obligation to
withhold or pay taxes first arises in connection with the Option (the
“Tax Date”), equal to the Required Tax Payments, or by such
other method approved by the Committee. No certificate representing a
share of Common Stock shall be delivered until the Required Tax
Payments have been satisfied in full.



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                14.      Section
409A.    This Agreement shall be interpreted
and applied so that the Option will not be subject to Code section
409A. In addition, this Agreement shall be interpreted and applied as
if it contains any additional provisions that it is required to
contain in order for the Option to be exempt from Code section
409A.



                15.      Compliance
with Law and Regulations.    This Agreement
and any obligation of the Company hereunder shall be subject to all
applicable federal, state and local laws, rules and regulations and
to such approvals by any government or regulatory agency as may be
required.



                16.      Incorporation
of Plan.    This Agreement is made under the
provisions of the Plan (which is incorporated herein by reference)
and shall be interpreted in a manner consistent with it. To the
extent that this Agreement is silent with respect to, or in any way
inconsistent with, the terms of the Plan, the provisions of the Plan,
as determined by the Committee, shall control and this Agreement
shall be deemed to be modified accordingly. Unless otherwise defined
herein or otherwise required by the context, all terms used herein
shall have the meaning ascribed to them in the Plan.



                17.      Notices.    Any
notices required or permitted hereunder shall be addressed to the
Company, at 100 West Putnam Avenue, Greenwich, Connecticut 06830, or
to the Employee at the address then on record with the Company, as
the case may be, and deposited, postage prepaid, in the United States
mail; provided, however, that a notice of exercise pursuant to
paragraph 7 hereof shall be effective only upon receipt by the
Company of such notice and all necessary documentation, including
payment. Either party may, by notice to the other given in the manner
aforesaid, change his/her or its address for future notices.



                18.      Governing
Law.    This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.
The Committee shall have final authority to interpret and construe
the Plan and this Agreement and to make any and all determinations
under them, and its decision shall be binding and conclusive upon the
Employee and his/her legal representative in respect of any questions
arising under the Plan or this Agreement.



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                19.      Successor.    This
Agreement shall bind and inure to the benefit of the Company, its
successors and assigns, and the Employee and his or her personal
representatives and beneficiaries.



                20.      Amendment.    This
Agreement may be amended or modified by the Company at any time;
provided that notice is provided to the Employee in accordance with
Section 17; and provided further that no amendment or modification
that is adverse to the rights of the Employee as provided by this
Agreement and the related Notice of Grant of Stock Option
shall be effective unless set forth in a writing signed by the
parties hereto (except that an amendment or modification that is made
to comply with Code section 409A, or to preserve an exemption from
Code section 409A, shall be effective upon adoption by the Company
unless expressly rejected by the Employee in writing).



                21.      Binding
Agreement.    By signing below, the Employee
acknowledges that he or she has read this Agreement and the Notice
of Grant of Stock Option and agrees to the terms and conditions
specified therein and in the Plan. This Agreement shall be binding
upon the Employee and his or her personal representatives and
beneficiaries without any need for additional action by the Employee,
and any attempt by the Employee and his or her personal
representatives and beneficiaries to exercise any rights under this
Agreement shall be conclusive evidence of such person’s
acceptance thereof.



IN
WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officer thereunder duly authorized and the Employee
has hereunto set his or her hand, all as of the day and year set
forth above.



UST INC.



 

Name: Richard A. Kohlberger

Title: Senior Vice President, General Counsel and Chief Administrative Officer



	 	 	 
	 
	 	 

	Employee Signature	 	Date



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